Form N-CSRS iShares, Inc. For: Oct 31

January 5, 2022 11:07 AM EST

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT

OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09102

 

 

iShares, Inc.

(Exact name of registrant as specified in charter)

 

 

c/o: State Street Bank and Trust Company

100 Summer Street, 4th Floor, Boston, MA 02110

(Address of principal executive offices) (Zip code)

 

 

The Corporation Trust Incorporated

2405 York Road, Suite 201, Lutherville-Timonium, Maryland 21093

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (415) 670-2000

Date of fiscal year end: April 30, 2022

Date of reporting period: October 31, 2021

 

 

 


Item 1.

Reports to Stockholders.

(a) The Report to Shareholders is attached herewith.


 

LOGO

  OCTOBER 31, 2021

 

  

2021 Semi-Annual Report

(Unaudited)

 

iShares, Inc.

 

·  

iShares Asia/Pacific Dividend ETF | DVYA | NYSE Arca

 

·  

iShares Emerging Markets Dividend ETF | DVYE | NYSE Arca


The Markets in Review

Dear Shareholder,

The 12-month reporting period as of October 31, 2021 was a remarkable period of adaptation and recovery, as the global economy dealt with the implications of the coronavirus (or “COVID-19”) pandemic. The United States began the reporting period as the initial reopening-led economic rebound was beginning to slow. Nonetheless, the economy continued to grow at a solid pace for the reporting period, eventually regaining the output lost from the pandemic. However, a rapid rebound in consumer spending pushed up against supply constraints and led to elevated inflation.

Equity prices rose with the broader economy, as the implementation of mass vaccination campaigns and passage of two additional fiscal stimulus packages further boosted stocks, and many equity indices neared or surpassed all-time highs late in the reporting period. In the United States, returns of small-capitalization stocks, which benefited the most from the resumption of in-person activities, outpaced large-capitalization stocks. International equities also gained, as both developed and emerging markets continued to recover from the effects of the pandemic.

The 10-year U.S. Treasury yield (which is inversely related to bond prices) had fallen sharply prior to the beginning of the reporting period, which meant bonds were priced for extreme risk avoidance and economic disruption. Despite expectations of doom and gloom, the economy expanded rapidly, stoking inflation concerns in early 2021, which led to higher yields and a negative overall return for most U.S. Treasuries. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and led to solid returns for high-yield corporate bonds, outpacing investment-grade corporate bonds.

The Fed remained committed to accommodative monetary policy by maintaining near-zero interest rates and by reiterating that inflation could exceed its 2% target for a sustained period without triggering a rate increase. In response to rising inflation late in the period, the Fed changed its market guidance, raising the possibility of higher rates in 2022 and reducing bond purchasing beginning in late 2021.

Looking ahead, we believe that the global expansion will continue to broaden as Europe and other developed market economies gain momentum, although the Delta variant of the coronavirus remains a threat, particularly in emerging markets. While we expect inflation to remain elevated in the medium-term as the expansion continues, we believe the recent uptick owes more to temporary supply disruptions than a lasting change in fundamentals. The change in Fed policy also means that moderate inflation is less likely to be followed by interest rate hikes that could threaten the economic expansion.

Overall, we favor a moderately positive stance toward risk, with an overweight in equities. Sectors that are better poised to manage the transition to a lower-carbon world, such as technology and health care, are particularly attractive in the long-term. U.S. small-capitalization stocks and European equities are likely to benefit from the continuing vaccine-led restart, while Chinese equities stand to gain from a more accommodative monetary and fiscal environment as the Chinese economy slows. We are underweight long-term credit, but inflation-protected U.S. Treasuries, Asian fixed income, and emerging market local-currency bonds offer potential opportunities. We believe that international diversification and a focus on sustainability can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments.

In this environment, 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.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

 

Total Returns as of October 31, 2021

 

 
     6-Month     12-Month  
   

U.S. large cap equities

(S&P 500® Index)

    10.91%       42.91%  
   

U.S. small cap equities

(Russell 2000® Index)

    1.85          50.80     
   

International equities

(MSCI Europe, Australasia, Far East Index)

    4.14          34.18     
   

Emerging market equities

(MSCI Emerging Markets Index)

    (4.87)         16.96     
   

3-month Treasury bills

(ICE BofA 3-Month U.S. Treasury Bill Index)

    0.01          0.06     
   

U.S. Treasury securities

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

    1.59          (4.77)    
   

U.S. investment grade bonds

(Bloomberg U.S. Aggregate Bond Index)

    1.06          (0.48)    
   

Tax-exempt municipal bonds

(S&P Municipal Bond Index)

    0.33          2.76     
   

U.S. high yield bonds

(Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index)

    2.36          10.53     
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

 

 

      Page  

The Markets in Review

     2  

Fund Summary

     4  

About Fund Performance

     6  

Shareholder Expenses

     6  

Schedules of Investments

     7  

Financial Statements

  

Statements of Assets and Liabilities

     13  

Statements of Operations

     14  

Statements of Changes in Net Assets

     15  

Financial Highlights

     16  

Notes to Financial Statements

     18  

Board Review and Approval of Investment Advisory Contract

     26  

Supplemental Information

     30  

General Information

     31  

Glossary of Terms Used in this Report

     32  

 

 

 


Fund Summary  as of October 31, 2021     iShares® Asia/Pacific Dividend ETF

 

Investment Objective

The iShares Asia/Pacific Dividend ETF (the “Fund”) seeks to track the investment results of an index composed of relatively high dividend paying equities in Asia/Pacific developed markets, as represented by the Dow Jones Asia/Pacific Select Dividend 50 IndexTM (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      
     6 Months      1 Year      5 Years     Since
Inception
             1 Year      5 Years      Since
Inception
 

Fund NAV

    (4.77 )%       23.19      1.29     1.97       23.19      6.60      20.84

Fund Market

    (4.71      23.17        1.35       1.97         23.17        6.96        20.81  

Index

    (4.85      23.34        1.61       2.27               23.34        8.30        24.25  

The inception date of the Fund was 2/23/12. The first day of secondary market trading was 2/24/12.

Past performance is no guarantee 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” on page 6 for more information.

Expense Example

 

Actual              Hypothetical 5% Return           

 

 

 

Beginning
Account Value
(05/01/21)

 

 
 
 

      

Ending
Account Value
(10/31/21)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
            

 

 

 

Beginning
Account Value
(05/01/21)

 

 
 
 

      

Ending
Account Value
(10/31/21)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $         1,000.00        $         952.30        $         2.41                $         1,000.00        $ 1,022.70        $         2.50          0.49

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days). 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 “Shareholder Expenses” on page 6 for more information.

 

Portfolio Information    

 

ALLOCATION BY SECTOR

Sector   Percent of    
Total Investments (a)
 

Financials

    28.3%  

Real Estate

    20.1     

Utilities

    13.6     

Industrials

    10.8     

Materials

    8.5     

Communication Services

    7.7     

Consumer Discretionary

    5.1     

Information Technology

    4.0     

Energy

    1.9     

GEOGRAPHIC ALLOCATION    

 

Country/Geographic Region   Percent of    
Total Investments (a)
 

Japan

    39.0%  

Hong Kong

    35.7     

Australia

    17.1     

China

    3.3     

New Zealand

    2.8     

Singapore

    2.1     
 
  (a)

Excludes money market funds.

 

 

 

4  

2 0 2 1   I S H A R E S   S E M I - A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Fund Summary  as of October 31, 2021    iShares® Emerging Markets Dividend ETF

 

Investment Objective

The iShares Emerging Markets Dividend ETF (the “Fund”) seeks to track the investment results of an index composed of relatively high dividend paying equities in emerging markets, as represented by the Dow Jones Emerging Markets Select Dividend IndexTM (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  
     6 Months      1 Year      5 Years     Since
Inception
             1 Year      5 Years      Since
Inception
 

Fund NAV

    2.94      39.74      7.49     1.74       39.74      43.47      18.18

Fund Market

    3.25        40.06        7.48       1.74         40.06        43.44        18.23  

Index

    3.29        40.59        7.76       1.83               40.59        45.30        19.15  

The inception date of the Fund was 2/23/12. The first day of secondary market trading was 2/24/12.    

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.    

Past performance is no guarantee 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” on page 6 for more information.    

Expense Example    

 

Actual              Hypothetical 5% Return           
 

Beginning
Account Value
(05/01/21)
 
 
 
      

Ending
Account Value
(10/31/21)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
              

Beginning
Account Value
(05/01/21)
 
 
 
      

Ending
Account Value
(10/31/21)
 
 
 
      

Expenses
Paid During
the Period
 
 
 (a) 
      

Annualized
Expense
Ratio
 
 
 
  $         1,000.00        $  1,029.40        $ 2.51                $  1,000.00        $  1,022.70        $ 2.50          0.49

 

  (a) 

Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days). 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 “Shareholder Expenses” on page 6 for more information.

 

Portfolio Information    

 

ALLOCATION BY SECTOR    

 

   
Sector   Percent of    
Total Investments(a)
 

Financials

    16.1%  

Energy

    14.9     

Utilities

    13.2     

Materials

    12.2     

Real Estate

    9.4     

Industrials

    8.9     

Communication Services

    8.0     

Information Technology

    7.1     

Consumer Staples

    5.7     

Consumer Discretionary

    4.5     

 

  (a)

Excludes money market funds.    

 

TEN LARGEST GEOGRAPHIC ALLOCATION

 

   
Country/Geographic Region   Percent of    
Total Investments(a)
 

Russia

    22.5%  

China

    19.8     

Taiwan

    12.6     

Brazil

    10.5     

Thailand

    7.4     

Indonesia

    5.4     

South Africa

    4.4     

India

    3.8     

United Arab Emirates

    3.6     

Malaysia

    2.3     
 

 

 

F U N D   S U M M A R Y

  5


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 by 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.

Shareholder Expenses

As a shareholder of your Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The expense example, which is based on an investment of $1,000 invested at the beginning of the period (or from the commencement of operations if less than 6 months) and held through the end of the period, is intended to help you understand your ongoing costs (in dollars and cents) of investing in your Fund and to compare these costs with the ongoing costs of investing in other funds.

Actual Expenses – The table provides information about actual account values and actual expenses. Annualized expense ratios reflect contractual and voluntary fee waivers, if any. To estimate the expenses that you paid on your account over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled “Expenses Paid During the Period.”

Hypothetical Example for Comparison Purposes – The table also provides information about hypothetical account values and hypothetical expenses based on your Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions and other fees paid on purchases and sales of fund shares. Therefore, the hypothetical examples are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

6  

2 0 2 1   I S H A R E S   S E M I - A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments  (unaudited)

October 31, 2021

  

iShares® Asia/Pacific Dividend ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Australia — 16.9%  

AusNet Services Ltd.

    805,422     $ 1,497,803  

Fortescue Metals Group Ltd.

    117,976       1,229,314  

JB Hi-Fi Ltd.

    30,559       1,166,723  

Magellan Financial Group Ltd.

    27,416       721,208  

Mineral Resources Ltd.

    28,697       843,643  

Perpetual Ltd.

    31,975       913,927  

Rio Tinto Ltd.

    9,871       676,289  
   

 

 

 
      7,048,907  
China — 3.3%            

BOC Aviation Ltd.(a)

    68,500       599,428  

Gemdale Properties & Investment Corp. Ltd.

    7,932,000       772,005  
   

 

 

 
      1,371,433  
Hong Kong — 35.3%            

BOC Hong Kong Holdings Ltd.

    274,500       869,848  

CK Asset Holdings Ltd.

    127,000       784,486  

CK Hutchison Holdings Ltd.

    113,000       757,599  

CK Infrastructure Holdings Ltd.

    168,000       1,012,871  

Haitong International Securities Group Ltd.

    2,288,000       525,930  

Hang Seng Bank Ltd.

    34,000       646,100  

Henderson Land Development Co. Ltd.

    221,000       925,367  

Hongkong Land Holdings Ltd.

    156,700       865,340  

Hysan Development Co. Ltd.

    187,000       650,132  

Kerry Properties Ltd.

    323,500       914,437  

New World Development Co. Ltd.

    182,250       790,496  

PCCW Ltd.

    2,258,000       1,162,484  

Power Assets Holdings Ltd.

    205,000       1,252,817  

Sino Land Co. Ltd.(b)

    580,000       762,343  

Sun Hung Kai Properties Ltd.

    47,000       623,141  

Swire Pacific Ltd., Class A

    106,000       666,378  

Swire Properties Ltd.

    200,800       538,338  

VTech Holdings Ltd.

    125,000       962,558  
   

 

 

 
          14,710,665  
Japan — 38.6%            

Asahi Holdings Inc.

    42,000       749,621  

Electric Power Development Co. Ltd.

    44,700       590,916  

Fukuoka Financial Group Inc.

    40,800       732,985  

Haseko Corp.

    71,800       934,911  

Idemitsu Kosan Co. Ltd.

    29,100       794,788  

Kansai Electric Power Co. Inc. (The)

    78,000       718,154  

Kumagai Gumi Co. Ltd.

    27,500       680,665  

Mebuki Financial Group Inc.

    372,800       763,314  

Mitsubishi Corp.

    27,800       883,983  

Mitsubishi HC Capital Inc.

    134,400       673,908  
Security   Shares      Value  
Japan (continued)             

Mitsubishi UFJ Financial Group Inc.

    148,400      $ 813,751  

Mizuho Financial Group Inc.

    59,070        779,604  

MS&AD Insurance Group Holdings Inc.

    30,600        988,605  

Oki Electric Industry Co. Ltd.

    83,400        685,058  

ORIX Corp.

    44,800        890,458  

Resona Holdings Inc.

    212,100        796,775  

Sojitz Corp.

    45,980        758,626  

Sumitomo Corp.

    55,600        792,281  

Sumitomo Mitsui Financial Group Inc.

    25,200        817,731  

Sumitomo Mitsui Trust Holdings Inc.

    22,000        723,664  

Tohoku Electric Power Co. Inc.

    79,800        517,753  
    

 

 

 
       16,087,551  
New Zealand — 2.8%             

Spark New Zealand Ltd.

    356,905        1,168,390  
    

 

 

 
Singapore — 2.0%             

Singapore Telecommunications Ltd.

    458,500        850,626  
    

 

 

 

Total Common Stocks — 98.9%
(Cost: $42,553,541)

           41,237,572  
    

 

 

 

Short-Term Investments

    
Money Market Funds — 2.0%             

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.05%(c)(d)(e)

    809,565        809,970  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.00%(c)(d)

    10,000        10,000  
    

 

 

 
       819,970  
    

 

 

 

Total Short-Term Investments — 2.0%
(Cost: $819,970)

       819,970  
    

 

 

 

Total Investments in Securities — 100.9%
(Cost: $43,373,511)

 

     42,057,542  

Other Assets, Less Liabilities — (0.9)%

       (381,087
    

 

 

 

Net Assets — 100.0%

     $ 41,676,455  
    

 

 

 

 

(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) 

All or a portion of this security is on loan.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period end.

(e) 

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

 

 

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

  7


Schedule of Investments  (unaudited) (continued)

October 31, 2021

  

iShares® Asia/Pacific Dividend ETF

 

Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the six months ended October 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliated Issuer  

Value at

04/30/21

    Purchases
at Cost
   

Proceeds

from Sales

   

Net Realized

Gain (Loss)

   

Change in

Unrealized

Appreciation

(Depreciation)

   

Value at

10/31/21

   

Shares

Held at

10/31/21

    Income    

Capital

Gain

Distributions

from

Underlying

Funds

       

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 677,992     $ 131,938 (a)    $     $ (24   $ 64     $ 809,970       809,565     $ 637 (b)    $    

BlackRock Cash Funds: Treasury, SL Agency Shares

    10,000                               10,000       10,000       1          
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   
        $ (24   $ 64     $ 819,970       $ 638     $    
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

  (a) 

Represents net amount purchased (sold).

  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

 

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 MSCI Singapore Index

    8       11/29/21     $ 219     $ (485

Mini TOPIX Index

    12       12/09/21       210       (4,429
       

 

 

 
        $ (4,914
       

 

 

 

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:

 

 

 
     Equity
Contracts
 

 

 

Liabilities — Derivative Financial Instruments

  

Futures contracts

  

Unrealized depreciation on futures contracts(a)

   $ 4,914  
  

 

 

 

 

  (a)

Net cumulative 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 October 31, 2021, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Equity
Contracts
 

 

 

Net Realized Gain (Loss) from:

  

Futures contracts

   $ 8,748  
  

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

  

Futures contracts

   $ 3,258  
  

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

 

 

Futures contracts:

  

Average notional value of contracts — long

   $ 317,729  

 

 

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

 

 

8  

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Schedule of Investments  (unaudited) (continued)

October 31, 2021

  

iShares® Asia/Pacific Dividend ETF

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.

 

 

 
     Level 1      Level 2      Level 3      Total  

 

 

Investments

           

Assets

           

Common Stocks

   $ 650,132      $ 40,587,440      $                 —      $ 41,237,572  

Money Market Funds

     819,970                      819,970  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,470,102      $ 40,587,440      $      $ 42,057,542  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Liabilities

           

Futures Contracts

   $                 —      $ (4,914    $      $ (4,914
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (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

  9


Schedule of Investments  (unaudited)

October 31, 2021

  

iShares® Emerging Markets Dividend ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Brazil — 6.2%            

AES Brasil Energia SA

    3,233,224     $ 6,244,400  

BB Seguridade Participacoes SA

    1,660,346       6,498,643  

CCR SA

    2,785,725       5,641,737  

Cyrela Brazil Realty SA Empreendimentos e Participacoes

    2,427,314       6,059,898  

Telefonica Brasil SA

    1,333,434       10,754,796  

Transmissora Alianca de Energia Eletrica SA

    2,263,987       14,706,007  
   

 

 

 
      49,905,481  
China — 19.7%            

Agile Group Holdings Ltd.

    5,540,000       4,343,043  

Agricultural Bank of China Ltd., Class H

    15,874,000       5,394,100  

Bank of China Ltd., Class H

    19,082,000       6,753,149  

BBMG Corp., Class H

    36,708,000       6,167,784  

China Aoyuan Group Ltd.(a)

    8,202,000       3,239,303  

China Construction Bank Corp., Class H

    6,233,000       4,242,059  

China Merchants Port Holdings Co. Ltd.

    3,838,000       6,398,635  

China Minsheng Banking Corp. Ltd., Class H(a)

    13,286,500       5,268,051  

China Petroleum & Chemical Corp., Class H

    8,898,000       4,335,397  

China Power International Development
Ltd.(a)

    36,399,999       18,286,961  

China Sanjiang Fine Chemicals Co. Ltd.(a)

    16,970,000       5,115,915  

China Shenhua Energy Co. Ltd., Class H

    4,674,000       10,050,477  

Chongqing Rural Commercial Bank Co. Ltd., Class H

    15,140,000       5,446,133  

Guangzhou R&F Properties Co. Ltd., Class H(a)

    9,081,600       5,681,029  

Industrial & Commercial Bank of China Ltd., Class H

    7,333,000       4,019,672  

Lonking Holdings Ltd.

    22,948,000       6,697,176  

PICC Property & Casualty Co. Ltd., Class H

    9,594,000       8,931,491  

Poly Property Group Co. Ltd.

    26,943,000       6,648,745  

Shenzhen Investment Ltd.

    17,188,000       4,215,881  

Sinopec Engineering Group Co. Ltd., Class H

    16,266,000       8,573,373  

Sinopec Shanghai Petrochemical Co. Ltd., Class H

    26,462,000       6,174,528  

Times China Holdings Ltd.(a)

    5,066,000       3,447,186  

Yanzhou Coal Mining Co. Ltd., Class H(a)

    7,734,000       11,471,513  

Yuzhou Group Holdings Co. Ltd.

    26,936,051       2,936,668  

Zhejiang Expressway Co. Ltd., Class H

    6,112,000       5,428,176  
   

 

 

 
      159,266,445  
Czech Republic — 1.4%            

CEZ AS(a)

    348,472       11,503,938  
   

 

 

 
Hong Kong — 2.0%            

Atlas Corp

    236,158       3,306,212  

CP Pokphand Co. Ltd

    89,730,000       12,685,946  
   

 

 

 
      15,992,158  
India — 3.8%            

Coal India Ltd

    5,196,339       11,435,759  

Oil India Ltd

    2,915,099       8,763,530  

REC Ltd

    5,127,879       10,206,000  
   

 

 

 
      30,405,289  
Indonesia — 5.3%            

Adaro Energy Tbk PT

    149,749,000       17,738,371  

Bukit Asam Tbk PT

    87,392,700       16,540,151  

Hanjaya Mandala Sampoerna Tbk PT

    120,873,000       8,844,607  
   

 

 

 
      43,123,129  
Malaysia — 2.2%            

British American Tobacco Malaysia Bhd(a)

    2,794,100       10,188,580  

Malayan Banking Bhd

    4,097,700       7,965,826  
   

 

 

 
      18,154,406  
Security   Shares     Value  

Philippines — 1.2%

   

PLDT Inc.

    286,500     $ 9,358,985  
   

 

 

 
Qatar — 0.6%            

Barwa Real Estate Co.

    6,074,577       5,240,684  
   

 

 

 
Russia — 20.9%            

Federal Grid Co. Unified Energy System PJSC

    3,931,914,828       10,291,831  

Globaltrans Investment PLC(b)

    2,892,609       25,562,145  

LUKOIL PJSC

    111,481       11,376,843  

Magnit PJSC

    155,111       14,155,681  

Magnitogorsk Iron & Steel Works PJSC

    13,161,371       12,298,828  

MMC Norilsk Nickel PJSC

    21,234       6,628,549  

Mobile TeleSystems PJSC, ADR

    1,219,105       11,203,575  

Moscow Exchange MICEX-RTS PJSC

    2,638,970       6,477,696  

Novolipetsk Steel PJSC, GDR

    303,196       9,581,957  

PhosAgro PJSC, GDR(b)

    484,536       11,590,101  

Rostelecom PJSC

    4,177,187       5,493,053  

Sberbank of Russia PJSC

    2,371,525       11,930,647  

Severstal PAO

    621,612       14,126,692  

Tatneft PJSC

    1,038,231       7,933,593  

Unipro PJSC

    267,134,000       10,285,259  
   

 

 

 
      168,936,450  
South Africa — 4.4%            

Coronation Fund Managers Ltd.

    2,916,010       9,661,490  

Exxaro Resources Ltd.

    787,764       8,625,436  

Kumba Iron Ore Ltd.

    309,919       9,430,893  

Truworths International Ltd.

    2,257,702       7,969,577  
   

 

 

 
      35,687,396  
Taiwan — 12.6%            

Asustek Computer Inc.

    545,000       6,929,029  

Chong Hong Construction Co. Ltd.

    3,409,000       9,048,002  

Far EasTone Telecommunications Co. Ltd.

    2,110,000       4,642,906  

Formosa Taffeta Co. Ltd.

    9,939,000       10,730,110  

Huaku Development Co. Ltd.

    3,526,000       11,534,111  

Inventec Corp.

    7,578,475       7,248,108  

Merry Electronics Co. Ltd.

    1,062,146       3,142,242  

Radiant Opto-Electronics Corp.

    2,078,000       7,280,694  

Simplo Technology Co. Ltd.

    411,600       4,434,308  

Supreme Electronics Co. Ltd.

    7,548,513       12,202,718  

Systex Corp.

    2,525,000       7,839,780  

Taiwan Cement Corp.

    4,886,884       8,479,852  

WPG Holdings Ltd.

    4,327,280       8,083,879  
   

 

 

 
      101,595,739  
Thailand — 7.4%            

Jasmine International PCL, NVS(a)

    114,122,100       9,853,013  

Kiatnakin Phatra Bank PCL, NVS

    2,404,000       4,355,177  

Land & Houses PCL, NVS

    30,411,400       7,758,047  

Quality Houses PCL, NVS

    83,983,400       5,821,196  

Thanachart Capital PCL, NVS

    10,457,200       11,124,419  

Tisco Financial Group PCL, NVDR(a)

    2,745,100       7,638,534  

Total Access Communication PCL, NVDR(a)

    11,235,800       12,956,518  
   

 

 

 
      59,506,904  
Turkey — 1.4%            

Tofas Turk Otomobil Fabrikasi AS(a)

    1,817,494       11,115,940  
   

 

 

 
United Arab Emirates — 3.6%            

Abu Dhabi Commercial Bank PJSC

    3,316,608       7,494,343  

Aldar Properties PJSC

    5,184,037       5,703,951  

Dubai Investments PJSC

    21,797,271       10,111,028  
 

 

 

10  

2 0 2 1   I S H A R E S   S E M I - A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Schedule of Investments  (unaudited) (continued)

October 31, 2021

  

iShares® Emerging Markets Dividend ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United Arab Emirates (continued)            

Dubai Islamic Bank PJSC

    4,333,360     $ 6,041,833  
   

 

 

 
      29,351,155  
United Kingdom — 1.1%            

Evraz PLC

    1,015,949       8,629,468  
   

 

 

 

Total Common Stocks — 93.8%
(Cost: $707,189,383)

      757,773,567  
   

 

 

 

Preferred Stocks

   
Brazil — 4.3%            

Cia. de Transmissao de Energia Eletrica Paulista, Preference Shares, NVS

    3,316,467       14,291,165  

Cia. Energetica de Minas Gerais, Preference Shares, NVS

    3,565,093       8,136,078  

Cia. Energetica de Sao Paulo, Class B, Preference Shares, NVS

    2,675,452       12,088,314  
   

 

 

 
      34,515,557  
Russia — 1.4%            

Transneft PJSC, Preference Shares, NVS

    5,458       11,712,731  
   

 

 

 

Total Preferred Stocks — 5.7%
(Cost: $46,780,006)

      46,228,288  
   

 

 

 
Security          Shares     Value  

Short-Term Investments

 

   
Money Market Funds — 4.2%              

BlackRock Cash Funds: Institutional,
SL Agency Shares, 0.05%(c)(d)(e)

 

    31,603,820     $ 31,619,622  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 0.00%(c)(d)

 

    1,930,000       1,930,000  
     

 

 

 
        33,549,622  
     

 

 

 

Total Short-Term Investments — 4.2%
(Cost: $ 33,545,674)

 

      33,549,622  
     

 

 

 

Total Investments in Securities — 103.7%
(Cost: $ 787,515,063)

 

      837,551,477  
Other Assets, Less Liabilities — (3.7)%           (29,742,213)  
     

 

 

 
Net Assets — 100.0%           $  807,809,264  
     

 

 

 

 

(a) 

All or a portion of this security is on loan.

(b) 

This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the Securities Act of 1933.    

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period end.

(e) 

All or a portion of this security was purchased with the cash collateral from loaned securities.

 

 

Affiliates    

Investments in issuers considered to be affiliate(s) of the Fund during the six months ended October 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:    

 

    Affiliated Issuer   Value at
04/30/21
    Purchases
at Cost
    Proceeds
from Sales
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
10/31/21
    Shares
Held at
10/31/21
    Income     Capital
Gain
Distributions
from
Underlying
Funds
 

BlackRock Cash Funds: Institutional,
SL Agency Shares

  $ 9,627,376     $ 21,992,641 (a)    $     $ (1,055   $ 660     $ 31,619,622       31,603,820     $ 413,553 (b)    $  

BlackRock Cash Funds: Treasury,
SL Agency Shares

    1,090,000       840,000 (a)                        1,930,000       1,930,000       61        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (1,055   $ 660     $ 33,549,622       $ 413,614     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

All or a portion represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.    

 

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

          

MSCI Emerging Markets Index

    48        12/17/21      $ 3,029      $ 21,993  
          

 

 

 

 

 

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

  11


Schedule of Investments  (unaudited) (continued)

October 31, 2021

  

iShares® Emerging Markets Dividend ETF

 

Derivative Financial Instruments Categorized by Risk Exposure    

As of period end, the fair values of derivative financial instruments located in the Statements of Assets and Liabilities were as follows:    

 

     Equity
Contracts
 

Assets — Derivative Financial Instruments

 

Futures contracts

 

Unrealized appreciation on futures contracts(a)

  $ 21,993  
 

 

 

 

 

  (a)

Net cumulative 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 October 31, 2021, the effect of derivative financial instruments in the Statements of Operations was as follows:    

 

     Equity
Contracts
 

Net Realized Gain (Loss) from:

 

Futures contracts

  $ (884,385
 

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on:

 

Futures contracts

  $ 39,249  
 

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

       

Average notional value of contracts — long

  $ 10,439,732  

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

Fair Value Hierarchy as of Period End    

Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.    

The following table summarizes the Fund’s financial instruments categorized in the fair value hierarchy. The breakdown of the Fund’s financial instruments into major categories is disclosed in the Schedule of Investments above.    

 

         
      Level 1      Level 2      Level 3      Total  

Investments

           

Assets

           

Common Stocks

   $ 181,114,562      $ 576,659,005      $                 —      $ 757,773,567  

Preferred Stocks

     34,515,557        11,712,731               46,228,288  

Money Market Funds

     33,549,622                      33,549,622  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 249,179,741      $ 588,371,736      $      $ 837,551,477  
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments(a)

           

Assets

           

Futures Contracts

   $ 21,993      $      $      $ 21,993  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a)

Derivative financial instruments are futures contracts. Futures contracts are valued at the unrealized appreciation (depreciation) on the instrument.    

 

See notes to financial statements.    

 

 

12  

2 0 2 1   I S H A R E S   S E M I - A N N U A L   R E P O R T   T O   S H A R E H O L D E R S


Statements of Assets and Liabilities  (unaudited)

October 31, 2021

 

   

iShares

Asia/Pacific
Dividend ETF

    iShares
Emerging
Markets
Dividend ETF
 

 

 

ASSETS

   

Investments in securities, at value (including securities on loan)(a):

   

Unaffiliated(b)

  $ 41,237,572     $ 804,001,855  

Affiliated(c)

    819,970       33,549,622  

Cash

    6,540       407  

Foreign currency, at value(d)

    74,266       1,171,969  

Cash pledged:

   

Futures contracts

          177,000  

Foreign currency collateral pledged:

   

Futures contracts(e)

    18,879        

Receivables:

   

Securities lending income — Affiliated

    5       81,064  

Dividends

    348,548       1,556,419  

Tax reclaims

          13,054  
 

 

 

   

 

 

 

Total assets

    42,505,780       840,551,390  
 

 

 

   

 

 

 

LIABILITIES

   

Collateral on securities loaned, at value

    809,970       31,611,309  

Deferred foreign capital gain tax

          745,527  

Payables:

   

Variation margin on futures contracts

    1,915       43,421  

Investment advisory fees

    17,440       341,869  
 

 

 

   

 

 

 

Total liabilities

    829,325       32,742,126  
 

 

 

   

 

 

 

NET ASSETS

  $ 41,676,455     $ 807,809,264  
 

 

 

   

 

 

 

NET ASSETS CONSIST OF:

   

Paid-in capital

  $ 59,495,046     $ 934,431,984  

Accumulated loss

    (17,818,591     (126,622,720
 

 

 

   

 

 

 

NET ASSETS

  $ 41,676,455     $ 807,809,264  
 

 

 

   

 

 

 

Shares outstanding

    1,100,000       20,800,000  
 

 

 

   

 

 

 

Net asset value

  $ 37.89     $ 38.84  
 

 

 

   

 

 

 

Shares authorized

    500 million       500 million  
 

 

 

   

 

 

 

Par value

  $ 0.001     $ 0.001  
 

 

 

   

 

 

 

(a) Securities loaned, at value

  $ 724,226     $ 29,522,940  

(b) Investments, at cost — Unaffiliated

  $ 42,553,541     $ 753,969,389  

(c)  Investments, at cost — Affiliated

  $ 819,970     $ 33,545,674  

(d) Foreign currency, at cost

  $ 74,173     $ 1,172,408  

(e) Foreign currency collateral pledged, at cost

  $ 19,016     $  

See notes to financial statements.    

 

 

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

  13


Statements of Operations  (unaudited) 

Six Months Ended October 31, 2021

 

   

iShares

Asia/Pacific
Dividend ETF

    iShares
Emerging
Markets
Dividend ETF
 

 

 

INVESTMENT INCOME

   

Dividends — Unaffiliated

  $ 1,627,684     $ 44,897,126  

Dividends — Affiliated

    1       61  

Securities lending income — Affiliated — net

    637       413,553  

Foreign taxes withheld

    (42,390     (4,405,824
 

 

 

   

 

 

 

Total investment income

    1,585,932       40,904,916  
 

 

 

   

 

 

 

EXPENSES

   

Investment advisory fees

    108,924       2,079,286  

Commitment fees

          6,064  
 

 

 

   

 

 

 

Total expenses

    108,924       2,085,350  
 

 

 

   

 

 

 

Net investment income

    1,477,008       38,819,566  
 

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

   

Net realized gain (loss) from:

   

Investments — Unaffiliated(a)

    (156,293     (4,280,709

Investments — Affiliated

    (24     (1,055

In-kind redemptions — Unaffiliated

          5,945,567  

Futures contracts

    8,748       (884,385

Foreign currency transactions

    (7,928     (211,657
 

 

 

   

 

 

 

Net realized gain (loss)

    (155,497     567,761  
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

   

Investments — Unaffiliated(b)

    (3,441,203     (16,431,513

Investments — Affiliated

    64       660  

Futures contracts

    3,258       39,249  

Foreign currency translations

    (8,534     (56,062
 

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation)

    (3,446,415     (16,447,666
 

 

 

   

 

 

 

Net realized and unrealized loss

    (3,601,912     (15,879,905
 

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (2,124,904   $ 22,939,661  
 

 

 

   

 

 

 

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

  $     $ 13,017  

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

  $     $ (690,191

See notes to financial statements.    

 

 

14  

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Statements of Changes in Net Assets

 

    iShares
Asia/Pacific Dividend ETF
    iShares
Emerging Markets Dividend ETF
 
   

Six Months

Ended

10/31/21

(unaudited)

   

Year Ended

04/30/21

   

Six Months

Ended

10/31/21

(unaudited)

   

Year Ended

04/30/21

 

 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 1,477,008     $ 1,449,294     $ 38,819,566     $ 37,635,152  

Net realized gain (loss)

    (155,497     (7,352,423     567,761       (50,964,970

Net change in unrealized appreciation (depreciation)

    (3,446,415     13,799,889       (16,447,666     204,326,186  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    (2,124,904     7,896,760       22,939,661       190,996,368  
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (1,225,848     (1,205,054     (42,575,662     (36,483,407
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

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

          14,297,841       (14,539,801     102,187,925  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    (3,350,752     20,989,547       (34,175,802     256,700,886  

Beginning of period

    45,027,207       24,037,660       841,985,066       585,284,180  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of period

  $ 41,676,455     $ 45,027,207     $ 807,809,264     $ 841,985,066  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

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

See notes to financial statements.    

 

 

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

  15


Financial Highlights

(For a share outstanding throughout each period)

 

    iShares Asia/Pacific Dividend ETF  
    

Six Months Ended

10/31/21

(unaudited)

   

Year Ended

04/30/21

   

Year Ended

04/30/20

   

Year Ended

04/30/19

   

Year Ended

04/30/18

   

Year Ended

04/30/17

 

Net asset value, beginning of period

  $ 40.93     $ 32.05     $ 43.76     $ 46.83     $ 48.14     $ 43.26  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income(a)

    1.34       1.80       2.05       2.49       2.30       2.46  

Net realized and unrealized gain (loss)(b)

    (3.27     8.51       (11.57     (2.96     (1.21     4.38  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) from investment operations

    (1.93     10.31       (9.52     (0.47     1.09       6.84  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Distributions(c)                                    

From net investment income

    (1.11     (1.43     (2.19     (2.60     (2.40     (1.96
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

    (1.11     (1.43     (2.19     (2.60     (2.40     (1.96
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 37.89     $ 40.93     $ 32.05     $ 43.76     $ 46.83     $ 48.14  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return(d)

           

Based on net asset value

    (4.77 )%(e)      32.93     (22.50 )%      (0.83 )%      2.19     16.13
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios to Average Net Assets

           

Total expenses

    0.49 %(f)      0.49     0.49     0.49     0.49     0.49
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses after fees waived

    0.49 %(f)      0.49     0.49     0.49     0.49     0.49
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    6.64 %(f)      4.89     4.99     5.65     4.72     5.38
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Data

           

Net assets, end of period (000)

  $ 41,676     $ 45,027     $ 24,038     $ 32,823     $ 39,803     $ 45,730  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate(g)

    3 %(e)       130     5     46     21     37
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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) 

Not annualized.

(f) 

Annualized.

(g) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.    

 

 

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Financial Highlights  (continued)

(For a share outstanding throughout each period)

 

    iShares Emerging Markets Dividend ETF  
   

Six Months Ended

10/31/21
(unaudited)

   

Year Ended
04/30/21

   

Year Ended
04/30/20

    

Year Ended
04/30/19

    

Year Ended
04/30/18

    

Year Ended
04/30/17

 
             

Net asset value, beginning of period

  $ 39.62     $ 30.97     $ 40.67      $ 41.91      $ 39.86      $ 33.87  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income(a)

    1.81       1.94       2.25        2.31        1.86        1.52  

Net realized and unrealized gain (loss)(b)

    (0.61     8.62       (9.42      (1.33      2.24        6.06  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) from investment operations

    1.20       10.56       (7.17      0.98        4.10        7.58  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
Distributions(c)                                       

From net investment income

    (1.98     (1.91     (2.53      (2.22      (2.05      (1.59
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total distributions

    (1.98     (1.91     (2.53      (2.22      (2.05      (1.59
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net asset value, end of period

  $ 38.84     $ 39.62     $ 30.97      $ 40.67      $ 41.91      $ 39.86  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Return(d)

              

Based on net asset value

    2.94 %(e)       35.51     (18.44 )%       2.68      10.50      23.22
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Ratios to Average Net Assets

              

Total expenses

    0.49 %(f)       0.49     0.49      0.49      0.49      0.52
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses after fees waived

    0.49 %(f)       0.49     0.49      0.49      0.49      0.49
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    N/A       0.49     N/A        N/A        N/A        N/A  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income

    9.15 %(f)       5.62 %(g)       6.00      5.79      4.42      4.23
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Supplemental Data

              

Net assets, end of period (000)

  $ 807,809     $ 841,985     $ 585,284      $ 571,435      $ 456,817      $ 298,932  
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio turnover rate(h)

    8 %(e)       107     15      69      55      68
 

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

(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) 

Not annualized.

(f) 

Annualized.

(g) 

Reflects positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the year ended April 30, 2021:

 

Ratio of net investment income to average net assets by 0.02%.

(h) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

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

  17


Notes to Financial Statements  (unaudited) 

 

1. ORGANIZATION

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

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

 

   
iShares ETF    Diversification
Classification
 

Asia/Pacific Dividend

     Diversified  

Emerging Markets Dividend(a)

     Diversified  

 

  (a)

The Fund intends to be diversified in approximately the same proportion as its underlying index is diversified. The Fund may become non-diversified, as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of its underlying index. Shareholder approval will not be sought if the Fund crosses from diversified to non-diversified status due solely to a change in its relative market capitalization or index weighting of one or more constituents of its underlying index.

 

 

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.

Foreign Currency Translation: Each Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using prevailing market rates as quoted by one or more data service providers. Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of investments for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statements of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. Each Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “Other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of October 31, 2021, if any, are disclosed in the Statements of Assets and Liabilities.

The Funds file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. The Funds may record a reclaim receivable based on collectability, which includes factors such as the jurisdiction’s applicable laws, payment history and market convention. The Statements of Operations includes tax reclaims recorded as well as professional and other fees, if any, associated with recovery of foreign withholding taxes.

Segregation and Collateralization: In cases where a Fund enters into certain investments (e.g., futures contracts) that would be treated as “senior securities” for 1940 Act purposes, a Fund may segregate or designate on its books and record cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, 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 or obligations.

In-kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.

 

 

18  

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Notes to Financial Statements  (unaudited) (continued)

 

Distributions: Dividends and distributions paid by each Fund are recorded on the ex-dividend dates. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Indemnifications: In the normal course of business, each Fund enters into contracts that contain a variety of representations that provide general indemnification. The Funds’ maximum exposure under these arrangements is unknown because it involves future potential claims against the Funds, which cannot be predicted with any certainty.

 

3.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. Each Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). 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 a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

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 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 Global Valuation Committee, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global 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 Global Valuation Committee, or its delegate, 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 Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

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 Global 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 Global 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.

 

 

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

  19


Notes to Financial Statements  (unaudited) (continued)

 

4.

SECURITIES AND OTHER INVESTMENTS

Securities Lending: Each Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by an approved bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund is required to have a value of at least 102% of the current market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund or excess collateral is returned by the Fund, on the next business day. During the term of the loan, each Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested in money market funds managed by BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, or its affiliates is disclosed in the Schedule of Investments. Any non-cash collateral received cannot be sold, re-invested or pledged by the Fund, except in the event of borrower default. The securities on loan, if any, are also disclosed in each Fund’s Schedule of Investments. The market value of any securities on loan and the value of any related cash collateral are disclosed in the Statements of Assets and Liabilities.

Securities lending transactions are entered into by the Funds under Master Securities Lending Agreements (each, an “MSLA”) which provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Funds, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Funds can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the securities on loan by counterparty which are subject to offset under an MSLA:

 

 

 

iShares ETF and Counterparty

    
Market Value of
Securities on Loan

 
    
Cash Collateral
Received
 
(a)  
    
Non-Cash Collateral
Received
 
 
     Net Amount  

 

 

Asia/Pacific Dividend

           

UBS AG

   $ 724,226      $ 724,226      $      $  
  

 

 

    

 

 

    

 

 

    

 

 

 

Emerging Markets Dividend

           

Barclays Capital, Inc.

   $ 2,962,686      $ 2,962,686      $      $  

BofA Securities, Inc.

     1,924,131        1,924,131                

Credit Suisse Securities (USA) LLC

     1,338,113        1,338,113                

Goldman Sachs & Co. LLC

     2,398,825        2,398,825                

HSBC Bank PLC

     1,862,042        1,862,042                

J.P. Morgan Securities LLC

     2,682,922        2,682,922                

Jefferies LLC

     199,927        199,927                

Macquarie Bank Ltd

     14,586        14,586                

Morgan Stanley

     16,042,595        16,042,595                

SG Americas Securities LLC

     97,113        97,113                
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 29,522,940      $ 29,522,940      $      $  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Collateral received in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s statement of assets and liabilities.

 

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, each Fund benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of the securities loaned to the extent the collateral received does not cover the value of the securities loaned in the event of borrower default. Each Fund could incur a loss if the value of an investment purchased with cash collateral falls below the market value of the loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. Such losses are borne entirely by each Fund.

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

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

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

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statements of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, are shown as cash pledged for futures contracts in the Statements of Assets and Liabilities. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statements of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statements of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest rates, foreign currency exchange rates or underlying assets.

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

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

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

 

   
iShares ETF    Investment Advisory Fee  

Asia/Pacific Dividend

     0.49

Emerging Markets Dividend

     0.49  

Expense Waivers: A fund may incur its pro rata share of fees and expenses attributable to its investments in other investment companies (“acquired fund fees and expenses). The total of the investment advisory fee and acquired fund fees and expenses, if any, is a fund’s total annual operating expenses. Total expenses as shown in the Statement of Operations does not include acquired fund fees and expenses.

For the iShares Asia/Pacific Dividend ETF, BFA has contractually agreed to waive a portion of its investment advisory fee through August 31, 2025 in an amount equal to the acquired fund fees and expenses, if any, attributable to the Fund’s investments in other iShares funds.

For the iShares Emerging Markets Dividend ETF, BFA has contractually agreed to waive a portion of its investment advisory fee for the Fund through August 31, 2022 in an amount equal to the acquired fund fees and expenses, if any, attributable to the Fund’s investments in other iShares funds.

For the six months ended October 31, 2021, there were no fees waived by BFA pursuant to this arrangement.

Distributor: BlackRock Investments, LLC, an affiliate of BFA, is the distributor for each Fund. Pursuant to the distribution agreement, BFA is responsible for any fees or expenses for distribution services provided to the Funds.

Securities Lending: The U.S. Securities and Exchange Commission (the “SEC”) has issued an exemptive order which permits BlackRock Institutional Trust Company, N.A. (“BTC”), an affiliate of BFA, to serve as securities lending agent for the Funds, subject to applicable conditions. As securities lending agent, BTC bears all operational costs directly related to securities lending. Each Fund is responsible for fees in connection with the investment of cash collateral received for securities on loan (the “collateral investment fees”). The cash collateral is invested in a money market fund, BlackRock Cash Funds: Institutional or BlackRock Cash Funds: Treasury, managed by BFA, or its affiliates. However, BTC has agreed to reduce the amount of securities lending income it receives in order to effectively limit the collateral investment fees each Fund bears to an annual rate of 0.04%. The SL Agency Shares of such money market fund will not be subject to a sales load, distribution fee or service fee. The money market fund in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% of the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the money market fund’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment fees. Each Fund retains a portion of securities lending income and remits the remaining portion to BTC as compensation for its services as securities lending agent.

Pursuant to the current securities lending agreement, each Fund retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in that calendar year exceeds a specified threshold, each Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

 

 

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

  21


Notes to Financial Statements  (unaudited) (continued)

 

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its Statements of Operations. For the six months ended October 31, 2021, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   Fees Paid
to BTC
 

Asia/Pacific Dividend

  $ 205  

Emerging Markets Dividend

    94,084  

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates.

Other Transactions: Cross trading is the buying or selling of portfolio securities between funds to which BFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

For the six months ended October 31, 2021, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

       
iShares ETF   Purchases      Sales      Net Realized
Gain (Loss)
 

Emerging Markets Dividend

  $ 39,809      $      $  

Each Fund may invest its positive cash balances in certain money market funds managed by BFA or an affiliate. The income earned on these temporary cash investments is shown as dividends – affiliated in the Statements of Operations.

A fund, in order to improve its portfolio liquidity and its ability to track its underlying index, may invest in shares of other iShares funds that invest in securities in the fund’s underlying index.

 

7.

PURCHASES AND SALES

For the six months ended October 31, 2021, purchases and sales of investments, excluding short-term investments and in-kind transactions, were as follows:

 

     
iShares ETF   Purchases      Sales  

Asia/Pacific Dividend

  $ 1,445,326      $ 1,141,369  

Emerging Markets Dividend

    80,961,676        67,120,022  

For the six months ended October 31, 2021, in-kind transactions were as follows:

 

iShares ETF

  In-kind
Purchases
     In-kind
Sales
 

Emerging Markets Dividend

  $ 12,867,402      $ 41,629,897  

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Company’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 October 31, 2021, 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.

As of April 30, 2021, the Funds had non-expiring capital loss carryforwards available to offset future realized capital gains as follows:

 

   
iShares ETF   Non-Expiring      

Asia/Pacific Dividend

  $ 16,420,818      

Emerging Markets Dividend

    158,058,963      

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.

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

As of October 31, 2021, 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)    
 

Asia/Pacific Dividend

   $     43,889,977      $ 2,522,593      $ (4,359,942    $     (1,837,349)      

Emerging Markets Dividend

     808,760,666        128,410,690        (99,597,886      28,812,804      

 

9.

LINE OF CREDIT

The iShares Emerging Markets Dividend ETF, along with certain other iShares funds (“Participating Funds”), is a party to a $300 million credit agreement (“Credit Agreement”) with State Street Bank and Trust Company, which expires on October 15, 2021. 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 Credit Agreement sets specific sub limits on aggregate borrowings based on two tiers of Participating Funds: $300 million with respect to the funds within Tier 1, including the Fund, and $200 million with respect to Tier 2. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Credit Agreement. The Credit Agreement has the following terms: a commitment fee of 0.20% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) 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 Credit Agreement. The Credit Agreement was terminated on August 12, 2021.

Effective August 13, 2021, the iShares Emerging Markets Dividend ETF, along with certain other iShares funds (“Participating Funds”), is a party to a $800 million credit agreement (“Syndicated Credit Agreement”) with a group of lenders, which expires on August 12, 2022. 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) the one-month LIBOR rate (not less than zero) plus 1.00% per annum or (b) the U.S. Federal Funds rate (not less than zero) 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 six months ended October 31, 2021, the Fund did not borrow under the Credit Agreement or Syndicated Credit Agreement.

 

10.

PRINCIPAL RISKS

In the normal course of business, each Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including, among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate or price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Funds and their investments. Each Fund’s prospectus provides details of the risks to which the Fund is subject.

BFA uses a “passive” or index approach to try to achieve each Fund’s investment objective following the securities included in its underlying index during upturns as well as downturns. BFA does not take steps to reduce market exposure or to lessen the effects of a declining market. Divergence from the underlying index and the composition of the portfolio is monitored by BFA.

The Funds may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00, which may be subject to redemption gates or liquidity fees under certain circumstances.

Market Risk: Investments in the securities of issuers domiciled in countries with emerging capital markets involve certain additional risks that do not generally apply to investments in securities of issuers in more developed capital markets, such as (i) low or nonexistent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities; (ii) uncertain national policies and social, political and economic instability, increasing the potential for expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments; (iii) lack of publicly available or reliable information about issuers as a result of not being subject to the same degree of regulatory requirements and accounting, auditing and financial reporting standards; and (iv) possible fluctuations in exchange rates, differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments.

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. The duration of this pandemic and its effects cannot be determined with certainty.

 

 

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

  23


Notes to Financial Statements  (unaudited) (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.

Counterparty Credit Risk: The Funds may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honoring its obligations. The Funds manage counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statements of Assets and Liabilities, less any collateral held by the Funds.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within each Fund’s portfolio are disclosed in its Schedule of Investments.

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

Certain Funds invest a significant portion of their assets in securities of issuers located in China or with significant exposure to Chinese issuers or countries. Investments in Chinese securities, including certain Hong Kong-listed securities, involves risks specific to China. China may be subject to considerable degrees of economic, political and social instability and demonstrates significantly higher volatility from time to time in comparison to developed markets. Chinese markets generally continue to experience inefficiency, volatility and pricing anomalies resulting from governmental influence, a lack of publicly available information and/or political and social instability. Internal social unrest or confrontations with other neighboring countries may disrupt economic development in China and result in a greater risk of currency fluctuations, currency non-convertibility, interest rate fluctuations and higher rates of inflation. Incidents involving China’s or the region’s security may cause uncertainty in Chinese markets and may adversely affect the Chinese economy and a fund’s investments. Reduction in spending on Chinese products and services, institution of tariffs or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy. In addition, measures may be taken to limit the flow of capital and/or sanctions may be imposed, which could prohibit or restrict the ability to own or transfer fund assets and may also include retaliatory actions, such as seizure of fund assets.

Certain 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.

Certain Funds invest a significant portion of their assets in securities within a single or limited number of market sectors. When a Fund concentrates its investments in this manner, it assumes the risk that economic, regulatory, political and social conditions affecting such sectors may have a significant impact on the fund and could affect the income from, or the value or liquidity of, the fund’s portfolio.

LIBORTransition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”). Although many LIBOR rates will be phased out by the end of 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.

 

 

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Notes to Financial Statements  (unaudited) (continued)

 

11.

CAPITAL SHARE TRANSACTIONS

Capital shares are issued and redeemed by each Fund only in aggregations of a specified number of shares or multiples thereof (“Creation Units”) at NAV. Except when aggregated in Creation Units, shares of each Fund are not redeemable.

Transactions in capital shares were as follows:

 

 

 
    Six Months Ended
10/31/21
    Year Ended
04/30/21
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

Asia/Pacific Dividend

       

Shares sold

        $       400,000     $ 16,012,813  

Shares redeemed

                (50,000     (1,714,972
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase

        $       350,000     $ 14,297,841  
 

 

 

   

 

 

   

 

 

   

 

 

 

Emerging Markets Dividend

       

Shares sold

    1,450,000     $ 58,695,820       5,700,000     $ 204,176,846  

Shares redeemed

    (1,900,000     (73,235,621     (3,350,000     (101,988,921
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease)

    (450,000   $ (14,539,801     2,350,000     $ 102,187,925  
 

 

 

   

 

 

   

 

 

   

 

 

 

The consideration for the purchase of Creation Units of a fund in the Company generally consists of the in-kind deposit of a designated portfolio of securities and a specified amount of cash. Certain funds in the Company 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 Company’s administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting in Creation Units for cash may also pay an additional variable charge to compensate the relevant fund for certain transaction costs (i.e., stamp taxes, taxes on currency or other financial transactions, and brokerage costs) and market impact expenses relating to investing in portfolio securities. Such variable charges, if any, are included in shares sold in the table above.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind transactions are reflected as a receivable or a payable in the Statements of Assets and Liabilities.

 

12.

SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

 

 

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

  25


Board Review and Approval of Investment Advisory Contract

 

iShares Asia/Pacific Dividend ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (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 Company and BFA (the “Advisory Agreement”) 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 7, 2021 and May 14, 2021, 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 15-16, 2021, 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 (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable 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 overall fund expenses (net of waivers and reimbursements) for the Fund were higher than the median of overall fund 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 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 and proposed enhancements 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, which were provided at the May 7, 2021 meeting and throughout the year.

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

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

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 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, were within a reasonable range in light of the factors and other information considered.

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 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 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 also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board 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 (i) 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 and (ii) other technology-related initiatives aimed to better support the iShares funds. The Board further 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 Emerging Markets Dividend ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Board Members who are not “interested persons” of the Company (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 Company and BFA (the “Advisory Agreement”) 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

 

 

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Board Review and Approval of Investment Advisory Contract  (continued)

 

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 7, 2021 and May 14, 2021, 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 15-16, 2021, 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 (including, where applicable, funds sponsored by an “at cost” service provider), objectively selected by Broadridge as comprising the Fund’s applicable 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 overall fund expenses (net of waivers and reimbursements) for the Fund were within range of the median of the overall fund 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 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 and proposed enhancements 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, which were provided at the May 7, 2021 meeting and throughout the year.

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 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, were within a reasonable range in light of the factors and other information considered.

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 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 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 also considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement. The Board 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 (i) 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 and (ii) other technology-related initiatives aimed to better support the iShares funds. The Board further noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Agreement for the coming year.

Conclusion: Based on a review of the factors described above, as well as such other factors as deemed appropriate by the Board, the Board, including all of the Independent Board Members, determined that the Fund’s investment advisory fee rate under the Advisory Agreement does not constitute a fee that is so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded to approve the continuance of the Advisory Agreement for the coming year.

 

 

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Supplemental Information  (unaudited)

 

Regulation Regarding Derivatives

On October 28, 2020, the Securities and Exchange Commission (the “SEC”) adopted new regulations governing the use of derivatives by registered investment companies (“Rule 18f-4”). The Funds will be required to implement and comply with Rule 18f-4 by August 19, 2022. Once implemented, Rule 18f-4 will impose limits on the amount of derivatives a fund can enter into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, treat derivatives as senior securities and require funds whose use of derivatives is more than a limited specified exposure amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager.

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.

October 31, 2021

 

     Total Cumulative Distributions
for the Fiscal Year-to-Date
    % Breakdown of the Total Cumulative
Distributions for the Fiscal Year-to-Date
 
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
 

Emerging Markets Dividend

  $ 1.978046     $     $     $ 1.978046       100             100

 

 

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General Information

 

Electronic Delivery

Shareholders can sign up for email 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 Company’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

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Glossary of Terms Used in this Report

 

 

Portfolio Abbreviations - Equity
ADR    American Depositary Receipt
GDR    Global Depositary Receipt
NVDR    Non-Voting Depositary Receipt
NVS    Non-Voting Shares
PJSC    Public Joint Stock Company

 

 

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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 S&P Dow Jones Indices LLC, 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.

©2021 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-SAR-407-1021

 

 

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(b) Not Applicable

 

Item 2.

Code of Ethics.

Not applicable to this semi-annual report.

 

Item 3.

Audit Committee Financial Expert.

Not applicable to this semi-annual report.

 

Item 4.

Principal Accountant Fees and Services.

Not applicable to this semi-annual report.

 

Item 5.

Audit Committee of Listed Registrants.

Not applicable to this semi-annual report.


Item 6.

Investments.

(a) Schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form.

(b) Not applicable.

 

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to the registrant.

 

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to the registrant.

 

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to the registrant.

 

Item 10.

Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Directors.

 

Item 11.

Controls and Procedures.

(a) The President (the registrant’s Principal Executive Officer) and Treasurer and Chief Financial Officer (the registrant’s Principal Financial Officer) have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the Investment Company Act of 1940 and Rules 13a-15(b) or 15d-15(b) under the Exchange Act of 1934.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12.

Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable to the registrant.

 

Item 13.

Exhibits.

(a) (1) Not applicable to this semi-annual report.

(a) (2) Section 302 Certifications are attached.

(a) (3) Any written solicitation to purchase securities under Rule 23c-1 – Not Applicable.

(a) (4) Change in Registrant’s independent public accountant – Not Applicable.

(b) Section 906 Certifications are attached.

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

iShares, Inc.

 

  By:     

/s/ Armando Senra                            

       Armando Senra, President (Principal Executive Officer)

Date: January 05, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

  By:     

/s/ Armando Senra                            

       Armando Senra, President (Principal Executive Officer)

Date: January 05, 2022

 

  By:     

/s/ Trent Walker                            

       Trent Walker, Treasurer and Chief Financial Officer (Principal Financial Officer)

Date: January 05, 2022

N-CSR Exhibit for Item 13(a)(2): SECTION 302 CERTIFICATIONS   EX-99.CERT    

 

 

I, Armando Senra, certify that:

1.            I have reviewed this report on Form N-CSR of iShares, Inc. for the following two series: iShares Asia/Pacific Dividend ETF and iShares Emerging Markets Dividend ETF;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.            The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)            Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.   The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:      January 05, 2022                 /s/ Armando Senra   

President

(Principal Executive Officer)

   

  Armando Senra

  [Signature]

   [Title]


N-CSR Exhibit for Item 13(a)(2): SECTION 302 CERTIFICATIONS     EX-99.CERT      

 

 

I, Trent Walker, certify that:

1.            I have reviewed this report on Form N-CSR of iShares, Inc. for the following two series: iShares Asia/Pacific Dividend ETF and iShares Emerging Markets Dividend ETF;

2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.            The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)            Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.            The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:      January 05, 2022                 /s/ Trent Walker   

Treasurer and Chief Financial Officer

(Principal Financial Officer)

   

  Trent Walker

  [Signature]

   [Title]

 

Ex.99.906 CERT

N-CSR Exhibit for Item 13(b): CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002                

 

 

Armando Senra, President (Principal Executive Officer), and Trent Walker, Treasurer and Chief Financial Officer (Principal Financial Officer), of iShares, Inc. (the “Registrant”), each certify, to his knowledge, that:

1.            The Registrant’s periodic report on Form N-CSR for the period ended October 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.            The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

Date:      January 05, 2022                 /s/ Armando Senra   

President

(Principal Executive Officer)

   

  Armando Senra

  [Signature]

   [Title]

 

Date:      January 05, 2022                 /s/ Trent Walker   

Treasurer and Chief Financial Officer

(Principal Financial Officer)

   

  Trent Walker

  [Signature]

   [Title]


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