2024 Prospectus - iShares
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Table of Contents
MARCH 1, 2024
2024 Prospectus
iShares, Inc.
• iShares J.P. Morgan EM Corporate Bond ETF | CEMB | CBOE BZX
The Securities and Exchange Commission (“SEC”) has not approved or disapproved
these securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.Table of Contents
Table of Contents
Table of Contents
Fund Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
More Information About the Fund . . . . . . . . . 1
A Further Discussion of Principal Risks . . 2
A Further Discussion of Other Risks . . . . . . 22
Portfolio Holdings Information . . . . . . . . . . . . . 28
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Shareholder Information . . . . . . . . . . . . . . . . . . . . 32
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Index Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
“J.P. Morgan” and “J.P. Morgan CEMBI Broad Diversified Core Index” are trademarks of JPMorgan Chase & Co.
and have been licensed for use for certain purposes by BlackRock Fund Advisors or its affiliates. iShares® and
BlackRock® are registered trademarks of BlackRock Fund Advisors and its affiliates.
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iSHARES® J.P. MORGAN EM CORPORATE
BOND ETF
Ticker: CEMB Stock Exchange: Cboe BZX
Investment Objective
The iShares J.P. Morgan EM Corporate Bond ETF (the “Fund”) seeks to track the
investment results of an index composed of U.S. dollar-denominated, emerging market
corporate bonds.
Fees and Expenses
The following table describes the fees and expenses that you will incur if you buy, hold
and sell shares of the Fund. The investment advisory agreement between iShares, Inc.
(the “Company”) and BlackRock Fund Advisors (“BFA”) (the “Investment Advisory
Agreement”) provides that BFA will pay all operating expenses of the Fund, except: (i)
the management fees, (ii) interest expenses, (iii) taxes, (iv) expenses incurred with
respect to the acquisition and disposition of portfolio securities and the execution of
portfolio transactions, including brokerage commissions, (v) distribution fees or
expenses, and (vi) litigation expenses and any extraordinary expenses.
You may pay other fees, such as brokerage commissions and other fees to
financial intermediaries, which are not reflected in the tables and examples
below.
Annual Fund Operating Expenses
(ongoing expenses that you pay each year as a
percentage of the value of your investments)1
Total Annual
Distribution Fund
Management and Service Other Operating
Fees (12b-1) Fees Expenses2 Expenses
0.50% None 0.00% 0.50%
1
Operating expenses paid by BFA under the Investment Advisory Agreement exclude
acquired fund fees and expenses, if any.
2
The amount rounded to 0.00%.
Example. This Example is intended to help you compare the cost of owning shares of
the Fund with the cost of investing in other funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The Example also assumes that your investment
has a 5% return each year and that the Fund’s operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions, your
costs would be:
1 Year 3 Years 5 Years 10 Years
$51 $160 $280 $628
S-1Table of Contents
Portfolio Turnover. The Fund may pay are eligible for inclusion in the
transaction costs, such as commissions, Underlying Index if (i) the issuer is
when it buys and sells securities (or headquartered in an emerging market
“turns over” its portfolio). A higher country, (ii) the issue is 100%
portfolio turnover rate may indicate guaranteed by an entity within an
higher transaction costs and may result emerging market economy, or (iii) 100%
in higher taxes when Fund shares are of the issuer’s operating assets are
held in a taxable account. These costs, located within emerging market
which are not reflected in the Annual economies. Eligible individual securities
Fund Operating Expenses or in the must have a minimum outstanding face
Example, affect the Fund’s value of $500 million or more. All
performance. During the most recent component securities included in the
fiscal year, the Fund’s portfolio turnover Underlying Index must be U.S. dollar-
rate was 25% of the average value of its denominated bonds with a minimum of
portfolio. 2.5 years to maturity or greater to be
eligible for the Underlying Index and a
Principal Investment remaining maturity of one year or
Strategies greater at the time of rebalancing to
The Fund seeks to track the investment remain eligible for the Underlying Index.
results of the J.P. Morgan CEMBI Broad There are no ratings restrictions on
Diversified Core Index (the “Underlying either the individual bonds or the
Index”), which tracks the performance country of risk. As a result, the
of the U.S. dollar-denominated Underlying Index consists of both
emerging market corporate bond investment-grade and non-investment-
market. All bonds included in the grade bonds (commonly referred to as
Underlying Index are selected according “junk bonds”).
to a set of rule-based inclusion criteria The Underlying Index uses J.P. Morgan’s
regarding issue size, bond type, proprietary market capitalization
maturity, and liquidity. The securities weighted methodology. The
included in the Underlying Index are methodology is designed to distribute
rebalanced on the last business day of the weight of each country within the
each month. Eligible countries included Underlying Index by limiting the weights
in the Underlying Index are determined of countries with higher debt
by JPMorgan Chase & Co. or its affiliates outstanding and reallocating this excess
(the “Index Provider” or “J.P. Morgan”) to countries with lower debt
based on the Index Provider’s definition outstanding. As of October 31, 2023,
of emerging market countries. the Underlying Index included issuers
The Underlying Index includes bonds located in 46 emerging and frontier
issued by corporations based in Latin market countries. Components of the
American, Eastern European, Middle Underlying Index primarily include
Eastern/African, and Asian countries companies in the financials industry or
(excluding Japan). Once the universe of sector. The components of the
emerging markets countries has been Underlying Index are likely to change
defined, the eligible securities from over time.
these countries must be selected for The Fund will invest in privately issued
inclusion in the Underlying Index. Bonds securities, including those that are
S-2Table of Contents
normally purchased pursuant to Rule invest at least 90% of its assets in fixed
144A or Regulation S promulgated income securities of the types included
under the Securities Act of 1933, as in the Underlying Index that BFA
amended (the “1933 Act”). believes will help the Fund track the
BFA uses an indexing approach to try to Underlying Index. The Fund will invest
achieve the Fund’s investment no more than 10% of its assets in
objective. Unlike many investment futures, options and swaps contracts
companies, the Fund does not try to that BFA believes will help the Fund
“beat” the index it tracks and does not track the Underlying Index as well as in
seek temporary defensive positions fixed income securities other than the
when markets decline or appear types included in the Underlying Index,
overvalued. but which BFA believes will help the
Fund track the Underlying Index. Cash
Indexing may eliminate the chance that and cash equivalent investments
the Fund will substantially outperform associated with a derivative position will
the Underlying Index but also may be treated as part of that position for
reduce some of the risks of active the purposes of calculating the
management, such as poor security percentage of investments included in
selection. Indexing seeks to achieve the Underlying Index. The Fund seeks to
lower costs and better after-tax track the investment results of the
performance by aiming to keep portfolio Underlying Index before fees and
turnover low in comparison to actively expenses of the Fund.
managed investment companies.
The Fund may lend securities
BFA uses a representative sampling representing up to one-third of the value
indexing strategy to manage the Fund. of the Fund’s total assets (including the
“Representative sampling” is an value of any collateral received).
indexing strategy that involves investing
in a representative sample of securities The Underlying Index is sponsored by
that collectively has an investment J.P. Morgan, which is independent of the
profile similar to that of an applicable Fund and BFA. The Index Provider
underlying index. The securities determines the composition and relative
selected are expected to have, in the weightings of the securities in the
aggregate, investment characteristics Underlying Index and publishes
(based on factors such as market value information regarding the market value
and industry weightings), fundamental of the Underlying Index.
characteristics (such as return Industry Concentration Policy. The
variability, duration (i.e., a security’s Fund will concentrate its investments
price sensitivity to a change in interest (i.e., hold 25% or more of its total
rates), maturity or credit ratings and assets) in a particular industry or group
yield) and liquidity measures similar to of industries to approximately the same
those of an applicable underlying index. extent that the Underlying Index is
The Fund may or may not hold all of the concentrated. For purposes of this
securities in the Underlying Index. limitation, securities of the U.S.
The Fund will invest at least 80% of its government (including its agencies and
assets in the component securities of instrumentalities), repurchase
the Underlying Index, and the Fund will agreements collateralized by U.S.
S-3Table of Contents
government securities, and securities of significant obstacles to obtaining
state or municipal governments and information necessary for investigations
their political subdivisions are not into or litigation against companies and
considered to be issued by members of shareholders may have limited legal
any industry. remedies. The Fund is not actively
managed and does not select
Summary of Principal Risks investments based on investor
As with any investment, you could lose protection considerations.
all or part of your investment in the Interest Rate Risk. During periods of
Fund, and the Fund’s performance could very low or negative interest rates, the
trail that of other investments. The Fund Fund may be unable to maintain positive
is subject to certain risks, including the returns or pay dividends to Fund
principal risks noted below, any of shareholders. Very low or negative
which may adversely affect the Fund’s interest rates may magnify interest rate
net asset value per share (“NAV”), risk. Changing interest rates, including
trading price, yield, total return and rates that fall below zero, may have
ability to meet its investment objective. unpredictable effects on markets, result
Certain key risks are prioritized below in heightened market volatility and
(with others following in alphabetical detract from the Fund’s performance to
order), but the relative significance of the extent the Fund is exposed to such
any risk is difficult to predict and may interest rates. Additionally, under
change over time. You should review certain market conditions in which
each risk factor carefully. interest rates are low and the market
Risk of Investing in Emerging prices for portfolio securities have
Markets. Investments in emerging increased, the Fund may have a very low
market issuers may be subject to a or even negative yield. A low or negative
greater risk of loss than investments in yield would cause the Fund to lose
issuers located or operating in more money in certain conditions and over
developed markets. Emerging markets certain time periods. An increase in
may be more likely to experience interest rates will generally cause the
inflation, social instability, political value of securities held by the Fund to
turmoil or rapid changes in economic decline, may lead to heightened
conditions than more developed volatility in the fixed-income markets
markets. Companies in many emerging and may adversely affect the liquidity of
markets are not subject to the same certain fixed-income investments,
degree of regulatory requirements, including those held by the Fund.
accounting standards or auditor Because rates on certain floating rate
oversight as companies in more debt securities typically reset only
developed countries, and as a result, periodically, changes in prevailing
information about the securities in interest rates (and particularly sudden
which the Fund invests may be less and significant changes) can be
reliable or complete. Emerging markets expected to cause some fluctuations in
often have less reliable securities the net asset value of the Fund to the
valuations and greater risk associated extent that it invests in floating rate
with custody of securities than debt securities. The historically low
developed markets. There may be interest rate environment in recent
S-4Table of Contents
years heightens the risks associated a period of time or at all, which may
with rising interest rates. have an adverse impact on the Fund and
Credit Risk. Debt issuers and other its shareholders. Unusual market
counterparties may be unable or conditions or other unforeseen
unwilling to make timely interest and/or circumstances (such as natural
principal payments when due or disasters, political unrest or war) may
otherwise honor their obligations. impact the Index Provider or a third-
Changes in an issuer’s credit rating or party data provider, and could cause the
the market’s perception of an issuer’s Index Provider to postpone a scheduled
creditworthiness may also adversely rebalance. This could cause the
affect the value of the Fund’s Underlying Index to vary from its normal
investment in that issuer. The degree of or expected composition.
credit risk depends on an issuer’s or Asset Class Risk. Securities and other
counterparty’s financial condition and assets in the Underlying Index or in the
on the terms of an obligation. Fund’s portfolio may underperform in
Market Risk. The Fund could lose comparison to the general financial
money over short periods due to short- markets, a particular financial market or
term market movements and over other asset classes.
longer periods during more prolonged Authorized Participant Concentration
market downturns. Local, regional or Risk. Only an Authorized Participant (as
global events such as war, acts of defined in the Creations and
terrorism, public health issues, Redemptions section of this prospectus
recessions, the prospect or occurrence (the “Prospectus”)) may engage in
of a sovereign default or other financial creation or redemption transactions
crisis, or other events could have a directly with the Fund, and none of
significant impact on the Fund and its those Authorized Participants is
investments and could result in obligated to engage in creation and/or
increased premiums or discounts to the redemption transactions. The Fund has
Fund’s NAV. a limited number of institutions that
Index-Related Risk. There is no may act as Authorized Participants on
guarantee that the Fund’s investment an agency basis (i.e., on behalf of other
results will have a high degree of market participants). To the extent that
correlation to those of the Underlying Authorized Participants exit the
Index or that the Fund will achieve its business or are unable to proceed with
investment objective. Market creation or redemption orders with
disruptions and regulatory restrictions respect to the Fund and no other
could have an adverse effect on the Authorized Participant is able to step
Fund’s ability to adjust its exposure to forward to create or redeem, Fund
the required levels in order to track the shares may be more likely to trade at a
Underlying Index. Errors in index data, premium or discount to NAV and
index computations or the construction possibly face trading halts or delisting.
of the Underlying Index in accordance Authorized Participant concentration
with its methodology may occur from risk may be heightened for exchange-
time to time and may not be identified traded funds (“ETFs”), such as the Fund,
and corrected by the Index Provider for that invest in securities issued by non-
U.S. issuers or other securities or
S-5Table of Contents
instruments that have lower trading the Index Provider and other service
volumes. providers, market makers, Authorized
Call Risk. During periods of falling Participants or the issuers of securities
interest rates, an issuer of a callable in which the Fund invests have the
bond held by the Fund may “call” or ability to cause disruptions, negatively
repay the security before its stated impact the Fund’s business operations
maturity, and the Fund may have to and/or potentially result in financial
reinvest the proceeds in securities with losses to the Fund and its shareholders.
lower yields, which would result in a While the Fund has established business
decline in the Fund’s income, or in continuity plans and risk management
securities with greater risks or with systems seeking to address system
other less favorable features. breaches or failures, there are inherent
limitations in such plans and systems.
Commodity Risk. The Fund invests in Furthermore, the Fund cannot control
companies that are susceptible to the cybersecurity plans and systems of
fluctuations in certain commodity the Fund’s Index Provider and other
markets and to price changes due to service providers, market makers,
trade relations. Any negative changes in Authorized Participants or issuers of
commodity markets that may be due to securities in which the Fund invests.
changes in supply and demand for
commodities, market events, war, Financials Sector Risk. The
regulatory developments, other performance of companies in the
catastrophic events, or other factors financials sector may be adversely
that the Fund cannot control could have impacted by many factors, including,
an adverse impact on those companies. among others, changes in government
regulations, economic conditions, and
Concentration Risk. The Fund may be interest rates, credit rating downgrades,
susceptible to an increased risk of loss, adverse public perception, exposure
including losses due to adverse events concentration and decreased liquidity in
that affect the Fund’s investments more credit markets. The impact of changes
than the market as a whole, to the in regulation of any individual financial
extent that the Fund’s investments are company, or of the financials sector as
concentrated in the securities and/or a whole, cannot be predicted.
other assets of a particular issuer or Cybersecurity incidents and technology
issuers, country, group of countries, malfunctions and failures have become
region, market, industry, group of increasingly frequent and have caused
industries, sector, market segment or significant losses to companies in this
asset class. sector, which may negatively impact the
Custody Risk. Less developed Fund.
securities markets are more likely to Geographic Risk. A natural disaster
experience problems with the clearing could occur in a geographic region in
and settling of trades, as well as the which the Fund invests, which could
holding of securities by local banks, adversely affect the economy or the
agents and depositories. business operations of companies in the
Cybersecurity Risk. Failures or specific geographic region, causing an
breaches of the electronic systems of adverse impact on the Fund’s
the Fund, the Fund’s adviser, distributor,
S-6Table of Contents
investments in, or which are exposed to, Income Risk. The Fund’s income may
the affected region. decline if interest rates fall. This decline
High Yield Securities Risk. Securities in income can occur because the Fund
that are rated below investment-grade may subsequently invest in lower-
(commonly referred to as “junk bonds,” yielding bonds as bonds in its portfolio
which may include those bonds rated mature, are near maturity or are called,
below “BBB-” by S&P Global Ratings and bonds in the Underlying Index are
Fitch Ratings, Inc. (“Fitch”) or below substituted, or the Fund otherwise
“Baa3” by Moody’s Investors Service, needs to purchase additional bonds.
Inc. (“Moody’s”)), or are unrated, may be Indexing Investment Risk. The Fund is
deemed speculative, may involve not actively managed, and BFA generally
greater levels of risk than higher-rated does not attempt to take defensive
securities of similar maturity and may positions under any market conditions,
be more likely to default. including declining markets.
Illiquid Investments Risk. The Fund Infectious Illness Risk. A widespread
may not acquire any illiquid investment outbreak of an infectious illness, such
if, immediately after the acquisition, the as the COVID-19 pandemic, may result
Fund would have invested more than in travel restrictions, disruption of
15% of its net assets in illiquid healthcare services, prolonged
investments. An illiquid investment is quarantines, cancellations, supply chain
any investment that the Fund disruptions, business closures, lower
reasonably expects cannot be sold or consumer demand, layoffs, ratings
disposed of in current market downgrades, defaults and other
conditions in seven calendar days or significant economic, social and political
less without significantly changing the impacts. Markets may experience
market value of the investment. To the temporary closures, extreme volatility,
extent the Fund holds illiquid severe losses, reduced liquidity and
investments, the illiquid investments increased trading costs. Such events
may reduce the returns of the Fund may adversely affect the Fund and its
because the Fund may be unable to investments and may impact the Fund’s
transact at advantageous times or ability to purchase or sell securities or
prices. In addition, if the Fund is limited cause elevated tracking error and
in its ability to sell illiquid investments increased premiums or discounts to the
during periods when shareholders are Fund’s NAV. Despite the development of
redeeming their shares, the Fund will vaccines, the duration of the COVID-19
need to sell liquid securities to meet pandemic and its effects cannot be
redemption requests and illiquid predicted with certainty.
securities will become a larger portion Issuer Risk. The performance of the
of the Fund’s holdings. During periods of Fund depends on the performance of
market volatility, liquidity in the market individual securities to which the Fund
for the Fund’s shares may be impacted has exposure. The Fund may be
by the liquidity in the market for the adversely affected if an issuer of
underlying securities or instruments underlying securities held by the Fund is
held by the Fund, which could lead to unable or unwilling to repay principal or
the Fund’s shares trading at a premium interest when due. Changes in the
or discount to the Fund’s NAV.
S-7Table of Contents
financial condition or credit rating of an through controls and procedures.
issuer of those securities may cause the However, these measures do not
value of the securities to decline. address every possible risk and may be
Management Risk. As the Fund will not inadequate to address significant
fully replicate the Underlying Index, it is operational risks.
subject to the risk that BFA’s Privately Issued Securities Risk. The
investment strategy may not produce Fund will invest in privately issued
the intended results. securities, including those that are
Market Trading Risk. The Fund faces normally purchased pursuant to Rule
numerous market trading risks, 144A or Regulation S promulgated
including the potential lack of an active under the 1933 Act. Privately issued
market for Fund shares, losses from securities are securities that have not
trading in secondary markets, periods of been registered under the 1933 Act and
high volatility and disruptions in the as a result may be subject to legal
creation/redemption process. ANY OF restrictions on resale. Privately issued
THESE FACTORS, AMONG OTHERS, securities are generally not traded on
MAY LEAD TO THE FUND’S SHARES established markets. As a result of the
TRADING AT A PREMIUM OR absence of a public trading market,
DISCOUNT TO NAV. privately issued securities may be
deemed to be illiquid investments, may
Non-U.S. Issuers Risk. Securities be more difficult to value than publicly
issued by non-U.S. issuers carry traded securities and may be subject to
different risks from securities issued by wide fluctuations in value. Delay or
U.S. issuers. These risks include difficulty in selling such securities may
differences in accounting, auditing and result in a loss to the Fund.
financial reporting standards, the
possibility of expropriation or Privatization Risk. Some countries in
confiscatory taxation, adverse changes which the Fund invests have privatized,
in investment or exchange control or have begun the process of
regulations, political instability, privatizing, certain entities and
regulatory and economic differences, industries. Privatized entities may lose
and potential restrictions on the flow of money or be re-nationalized.
international capital. The Fund is Reliance on Trading Partners Risk.
specifically exposed to Asian The Fund invests in countries or regions
Economic Risk and Middle Eastern whose economies are heavily
Economic Risk. dependent upon trading with key
Operational Risk. The Fund is exposed partners. Any reduction in this trading
to operational risks arising from a may have an adverse impact on the
number of factors, including, but not Fund’s investments. Through its
limited to, human error, processing and holdings of securities of certain issuers,
communication errors, errors of the the Fund is specifically exposed to
Fund’s service providers, counterparties Asian Economic Risk, Eastern
or other third parties, failed or European Economic Risk, European
inadequate processes and technology Economic Risk and U.S. Economic
or systems failures. The Fund and BFA Risk.
seek to reduce these operational risks
S-8Table of Contents
Risk of Investing in China. Chinese government or Chinese
Investments in bonds of Chinese issuers companies, may impact China’s
(including variable interest entities economy and Chinese issuers of
associated with an underlying Chinese securities in which the Fund invests.
operating company) subject the Fund to Incidents involving China’s or the
risks specific to China. China may be region’s security may cause uncertainty
subject to considerable degrees of in Chinese markets and may adversely
economic, political and social instability. affect the Chinese economy and the
China is an emerging market and Fund’s investments. Export growth
demonstrates significantly higher continues to be a major driver of
volatility from time to time in China’s rapid economic growth.
comparison to developed markets. Over Reduction in spending on Chinese
the last few decades, the Chinese products and services, supply chain
government has undertaken reform of diversification, institution of additional
economic and market practices and has tariffs or other trade barriers (including
expanded the sphere of private as a result of heightened trade tensions
ownership of property in China. or a trade war between China and the
However, Chinese markets generally U.S. or in response to actual or alleged
continue to experience inefficiency, Chinese cyber activity) or a downturn in
volatility and pricing anomalies resulting any of the economies of China’s key
from governmental influence, a lack of trading partners may have an adverse
publicly available information and/or impact on the Chinese economy. The
political and social instability. Underlying Index may include
Chinese issuers are also subject to the companies that are subject to economic
risk that Chinese authorities can or trade restrictions (but not investment
intervene in their operations and restrictions) imposed by the U.S. or
structure. Internal social unrest or other governments due to national
confrontations with neighboring security, human rights or other
countries, including military conflicts in concerns of such government. So long
response to such events, may also as these restrictions do not include
disrupt economic development in China restrictions on investments, the Fund is
and result in a greater risk of currency generally expected to invest in such
fluctuations, currency non-convertibility, companies, consistent with its objective
interest rate fluctuations and higher to track the performance of the
rates of inflation. Underlying Index.
China has experienced security Chinese issuers are not subject to the
concerns, such as terrorism and same degree of regulatory
strained international relations. requirements, accounting standards or
Additionally, China is alleged to have auditor oversight as issuers in more
participated in state-sponsored developed countries. As a result,
cyberattacks against foreign companies information about the Chinese
and foreign governments. Actual and securities in which the Fund invests may
threatened responses to such activity be less reliable or complete. There may
and strained international relations, be significant obstacles to obtaining
including purchasing restrictions, information necessary for investigations
sanctions, tariffs or cyberattacks on the into or litigation against Chinese
S-9Table of Contents
issuers, and investors may have limited all. The Fund could also lose money in
legal remedies. The Fund is not actively the event of a decline in the value of
managed and does not select collateral provided for loaned securities
investments based on investor or a decline in the value of any
protection considerations. investments made with cash collateral.
Risk of Investing in Saudi Arabia. The These events could also trigger adverse
ability of foreign investors (such as the tax consequences for the Fund.
Fund) to invest in the securities of Saudi Security Risk. Some countries and
Arabian issuers is relatively new. Such regions in which the Fund invests have
ability could be restricted by the Saudi experienced security concerns, such as
Arabian government at any time, and war, terrorism and strained international
unforeseen risks could materialize with relations. Incidents involving a country’s
respect to foreign ownership in such or region’s security may cause
securities. The economy of Saudi Arabia uncertainty in its markets and may
is dominated by petroleum exports. A adversely affect its economy and the
sustained decrease in petroleum prices Fund’s investments.
could have a negative impact on all Tracking Error Risk. The Fund may be
aspects of the economy. Investments in subject to “tracking error,” which is the
the securities of Saudi Arabian issuers divergence of the Fund’s performance
involve risks not typically associated from that of the Underlying Index.
with investments in securities of issuers Tracking error may occur because of
in more developed countries that may differences between the securities and
negatively affect the value of the Fund’s other instruments held in the Fund’s
investments. Such heightened risks may portfolio and those included in the
include, among others, expropriation Underlying Index, pricing
and/or nationalization of assets, differences (including, as applicable,
restrictions on and government differences between a security’s price
intervention in international trade, at the local market close and the Fund’s
confiscatory taxation, political valuation of a security at the time of
instability, including authoritarian and/ calculation of the Fund’s NAV),
or military involvement in governmental transaction costs incurred by the Fund,
decision making, armed conflict, crime the Fund’s holding of uninvested cash,
and instability as a result of religious, differences in timing of the accrual or
ethnic and/or socioeconomic unrest. the valuation of distributions, the
There remains the possibility that requirements to maintain pass-through
instability in the larger Middle East tax treatment, portfolio transactions
region could adversely impact the carried out to minimize the distribution
economy of Saudi Arabia, and there is of capital gains to shareholders,
no assurance of political stability in acceptance of custom baskets, changes
Saudi Arabia. to the Underlying Index or the costs to
Securities Lending Risk. The Fund may the Fund of complying with various new
engage in securities lending. Securities or existing regulatory requirements,
lending involves the risk that the Fund among other reasons. This risk may be
may lose money because the borrower heightened during times of increased
of the loaned securities fails to return market volatility or other unusual
the securities in a timely manner or at market conditions. Tracking error also
S-10Table of Contents
may result because the Fund incurs fees suspensions or for other reasons. In
and expenses, while the Underlying addition, the value of the securities or
Index does not. INDEX ETFs THAT other assets in the Fund’s portfolio may
TRACK INDICES WITH SIGNIFICANT change on days or during time periods
WEIGHT IN EMERGING MARKETS when shareholders will not be able to
ISSUERS MAY EXPERIENCE HIGHER purchase or sell the Fund’s shares.
TRACKING ERROR THAN OTHER Authorized Participants who purchase or
INDEX ETFs THAT DO NOT TRACK redeem Fund shares on days when the
SUCH INDICES. Fund is holding fair-valued securities
Valuation Risk. The price the Fund may receive fewer or more shares, or
could receive upon the sale of a security lower or higher redemption proceeds,
or other asset may differ from the than they would have received had the
Fund’s valuation of the security or other securities not been fair valued or been
asset and from the value used by the valued using a different methodology.
Underlying Index, particularly for The ability to value investments may be
securities or other assets that trade in impacted by technological issues or
low volume or volatile markets or that errors by pricing services or other third-
are valued using a fair value party service providers.
methodology as a result of trade
Performance Information
The bar chart and table that follow show how the Fund has performed on a calendar
year basis and provide some indication of the risks of investing in the Fund by showing
how the Fund’s average annual returns for 1, 5, and 10 years compare with the
Underlying Index. Both assume that all dividends and distributions have been
reinvested in the Fund. Past performance (before and after taxes) does not necessarily
indicate how the Fund will perform in the future.
Calendar Year by Year Returns
20%
13.48%
10.94%
10% 7.88% 6.74% 8.07%
2.62%
0%
-0.60% -0.45%
-2.83%
-10%
-12.30%
-20%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
The best calendar quarter return during the periods shown above was 11.31% in the
2nd quarter of 2020; the worst was -10.42% in the 1st quarter of 2020.
Updated performance information, including the Fund’s current NAV, may be obtained
by visiting our website at www.iShares.com or by calling 1-800-iShares (1-800-474-
2737) (toll free).
S-11Table of Contents
Average Annual Total Returns
(for the periods ended December 31, 2023)
One Year Five Years Ten Years
(Inception Date: 4/17/2012)
Return Before Taxes 8.07% 2.71% 3.09%
Return After Taxes on Distributions1 5.93% 0.97% 1.28%
Return After Taxes on Distributions and Sale of Fund
Shares1 4.72% 1.35% 1.57%
J.P. Morgan CEMBI Broad Diversified Core Index
(Index returns do not reflect deductions for fees,
expenses, or taxes)2 8.59% 3.01% 3.55%
1
After-tax returns in the table above are calculated using the historical highest individual
U.S. federal marginal income tax rates and do not reflect the impact of state or local taxes.
Actual after-tax returns depend on an investor’s tax situation and may differ from those
shown, and after-tax returns shown are not relevant to tax-exempt investors or investors
who hold shares through tax-deferred arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). Fund returns after taxes on distributions and sales of Fund
shares are calculated assuming that an investor has sufficient capital gains of the same
character from other investments to offset any capital losses from the sale of Fund shares.
As a result, Fund returns after taxes on distributions and sales of Fund shares may exceed
Fund returns before taxes and/or returns after taxes on distributions.
2
Index returns through May 31, 2017 reflect the performance of the Morningstar®
Emerging Markets Corporate Bond IndexSM. Index returns beginning on June 1, 2017
reflect the performance of the J.P. Morgan CEMBI Broad Diversified Core Index, which,
effective as of June 1, 2017, replaced the Morningstar® Emerging Markets Corporate Bond
IndexSM as the Underlying Index of the Fund.
S-12Table of Contents
Management Tax Information
Investment Adviser and Sub-Adviser. The Fund intends to make distributions
The Fund’s investment adviser is BFA. that may be taxable to you as ordinary
The Fund’s sub-adviser is BlackRock income or capital gains, unless you are
International Limited (“BIL” or the “Sub- investing through a tax-deferred
Adviser”). arrangement such as a 401(k) plan or
Portfolio Managers. James Mauro and an IRA, in which case, your distributions
Karen Uyehara (the “Portfolio generally will be taxed when withdrawn.
Managers”) are primarily responsible for Payments to Broker-Dealers
the day-to-day management of the
Fund. Each Portfolio Manager
and Other Financial
supervises a portfolio management Intermediaries
team. Mr. Mauro and Ms. Uyehara have If you purchase shares of the Fund
been Portfolio Managers of the Fund through a broker-dealer or other
since 2012 and 2021, respectively. financial intermediary (such as a bank),
BFA or other related companies may
Purchase and Sale of Fund pay the intermediary for marketing
Shares activities and presentations, educational
The Fund is an ETF. Individual shares of training programs, conferences, the
the Fund may only be bought and sold in development of technology platforms
the secondary market through a broker- and reporting systems or other services
dealer. Because ETF shares trade at related to the sale or promotion of the
market prices rather than at NAV, Fund. These payments may create a
shares may trade at a price greater than conflict of interest by influencing the
NAV (a premium) or less than NAV (a broker-dealer or other intermediary and
discount). An investor may incur costs your salesperson to recommend the
attributable to the difference between Fund over another investment. Ask your
the highest price a buyer is willing to salesperson or visit your financial
pay to purchase shares of the Fund (bid) intermediary’s website for more
and the lowest price a seller is willing to information.
accept for shares of the Fund (ask)
when buying or selling shares in the
secondary market (the “bid-ask
spread”).
S-13Table of Contents
[THIS PAGE INTENTIONALLY LEFT BLANK]Table of Contents
More Information About the Fund
This Prospectus contains important information about investing in the Fund. Please
read this Prospectus carefully before you make any investment decisions. Additional
information regarding the Fund is available at www.iShares.com.
BFA is the investment adviser to the Fund and BIL is the Sub-Adviser to the Fund.
Shares of the Fund are listed for trading on Cboe BZX Exchange, Inc. (“Cboe BZX”). The
market price for a share of the Fund may be different from the Fund’s most recent
NAV.
ETFs are funds that trade like other publicly traded securities. The Fund is designed to
track an index. Similar to shares of an index mutual fund, each share of the Fund
represents an ownership interest in an underlying portfolio of securities and other
instruments intended to track a market index. Unlike shares of a mutual fund, which
can be bought and redeemed from the issuing fund by all shareholders at a price based
on NAV, shares of the Fund may be purchased or redeemed directly from the Fund at
NAV solely by Authorized Participants and only in aggregations of a specified number of
shares (“Creation Units”). Also unlike shares of a mutual fund, shares of the Fund are
listed on a national securities exchange and trade in the secondary market at market
prices that change throughout the day.
The Fund invests in a particular segment of the securities markets and seeks to track
the performance of a securities index that is not representative of the market as a
whole. The Fund is designed to be used as part of broader asset allocation strategies.
Accordingly, an investment in the Fund should not constitute a complete investment
program.
An index is a financial calculation, based on a grouping of financial instruments, and is
not an investment product, while the Fund is an actual investment portfolio. The
performance of the Fund and the Underlying Index may vary for a number of reasons,
including transaction costs, non-U.S. currency valuations, asset valuations, corporate
actions (such as mergers and spin-offs), timing variances and differences between the
Fund’s portfolio and the Underlying Index resulting from the Fund’s use of
representative sampling or from legal restrictions (such as diversification
requirements) that apply to the Fund but not to the Underlying Index. From time to
time, the Index Provider may make changes to the methodology or other adjustments
to the Underlying Index. Unless otherwise determined by BFA, any such change or
adjustment will be reflected in the calculation of the Underlying Index performance on
a going-forward basis after the effective date of such change or adjustment. Therefore,
the Underlying Index performance shown for periods prior to the effective date of any
such change or adjustment will generally not be recalculated or restated to reflect
such change or adjustment.
Because the Fund uses a representative sampling indexing strategy, it can be expected
to have a larger tracking error than if it used a replication indexing strategy.
“Replication” is an indexing strategy in which a fund invests in substantially all of the
1Table of Contents
securities in its underlying index in approximately the same proportions as in the
underlying index.
An investment in the Fund is not a bank deposit and it is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency, BFA or
any of its affiliates.
The Fund’s investment objective and the Underlying Index may be changed without
shareholder approval.
A Further Discussion of Principal Risks
The Fund is subject to various risks, including the principal risks noted below, any of
which may adversely affect the Fund’s NAV, trading price, yield, total return and ability
to meet its investment objective. You could lose all or part of your investment in the
Fund, and the Fund could underperform other investments. The order of the below risk
factors does not indicate the significance of any particular risk factor. The Fund
discloses its portfolio holdings daily at www.iShares.com.
Asian Economic Risk. Certain Asian economies have experienced rapid growth and
industrialization in recent years, but there is no assurance that this growth rate will be
maintained. Other Asian economies, however, have experienced high inflation, high
unemployment, currency devaluations and restrictions, and over-extension of credit.
Geopolitical hostility, political instability, and economic or environmental events in any
one Asian country may have a significant economic effect on the entire Asian region,
as well as on major trading partners outside Asia. Any adverse event in the Asian
markets may have a significant adverse effect on some or all of the economies of the
countries in which the Fund invests. In particular, China is a key trading partner of
many Asian countries and any changes in trading relationships between China and
other Asian countries may affect the region as a whole. Many Asian countries are
subject to political risk, including political instability, corruption and regional conflict
with neighboring countries. North Korea and South Korea each have substantial
military capabilities, and historical tensions between the two countries present the risk
of war. Escalated tensions involving the two countries and any outbreak of hostilities
between the two countries, or even the threat of an outbreak of hostilities, could have
a severe adverse effect on the entire Asian region. Certain Asian countries have
developed increasingly strained relationships with the U.S. or with China, and if these
relations were to worsen, they could adversely affect Asian issuers that rely on the U.S.
or China for trade. In addition, many Asian countries are subject to social and labor
risks associated with demands for improved political, economic and social conditions.
These risks, among others, may adversely affect the value of the Fund’s investments.
Asset Class Risk. The securities and other assets in the Underlying Index or in the
Fund’s portfolio may underperform in comparison to other securities or indexes that
track other countries, groups of countries, regions, industries, groups of industries,
markets, market segments, asset classes or sectors. Various types of securities,
currencies and indexes may experience cycles of outperformance and
underperformance in comparison to the general financial markets depending upon a
number of factors including, among other things, inflation, interest rates, productivity,
global demand for local products or resources, and regulation and governmental
2Table of Contents
controls. This may cause the Fund to underperform other investment vehicles that
invest in different asset classes.
Authorized Participant Concentration Risk. Only an Authorized Participant may
engage in creation or redemption transactions directly with the Fund, and none of
those Authorized Participants is obligated to engage in creation and/or redemption
transactions. The Fund has a limited number of institutions that may act as Authorized
Participants on an agency basis (i.e., on behalf of other market participants). To the
extent that Authorized Participants exit the business or are unable to proceed with
creation or redemption orders with respect to the Fund and no other Authorized
Participant is able to step forward to create or redeem Creation Units, Fund shares
may be more likely to trade at a premium or discount to NAV and possibly face trading
halts or delisting. Authorized Participant concentration risk may be heightened
because ETFs, such as the Fund, that invest in securities issued by non-U.S. issuers or
other securities or instruments that are less widely traded often involve greater
settlement and operational issues and capital costs for Authorized Participants, which
may limit the availability of Authorized Participants.
Call Risk. During periods of falling interest rates, an issuer of a callable bond held by
the Fund may “call” or repay the security before its stated maturity, and the Fund may
have to reinvest the proceeds in securities with lower yields, which would result in a
decline in the Fund’s income, or in securities with greater risks or with other less
favorable features.
Commodity Risk. Companies whose performance is reflected in the Fund’s portfolio
or Underlying Index may be adversely affected by changes or trends in commodity
prices. Commodity prices may be influenced or characterized by unpredictable factors,
including, where applicable, high volatility, changes in supply and demand
relationships, weather, agriculture, trade, pestilence, political instability, war,
catastrophic events, changes in interest rates and monetary and other governmental
policies, action and inaction, including price changes due to trade relations. Securities
of companies held by the Fund that are dependent on a single commodity, or are
concentrated in a single commodity sector, may typically exhibit even higher volatility
attributable to commodity prices.
Concentration Risk. The Fund’s investments will generally follow the weightings of
the Underlying Index, which may result in concentration of the Fund’s investments in a
particular sovereign or quasi-sovereign entity or entities in a particular country, group
of countries, region, market, sector or asset class. To the extent that its investments
are concentrated in a particular sovereign or quasi-sovereign entity or entities in a
particular country, group of countries, region, market, sector or asset class, the Fund
may be more adversely affected by the underperformance of those bonds, may be
subject to increased price volatility and may be more susceptible to adverse economic,
market, political or regulatory occurrences affecting those securities and/or other
assets than a fund that does not concentrate its investments.
Credit Risk. Credit risk is the risk that the issuer or guarantor of a debt instrument or
the counterparty to a derivatives contract, repurchase agreement or loan of portfolio
securities will be unable or unwilling to make timely interest and/or principal payments
when due or otherwise honor its obligations.
3Table of Contents
The Fund’s portfolio may include below investment-grade bonds, which generally are
subject to greater levels of credit risk than higher rated securities. There is the chance
that the Fund’s holdings will have their credit ratings downgraded or will default (i.e.,
fail to make scheduled interest or principal payments), or that the market’s perception
of an issuer’s creditworthiness may worsen, potentially reducing the Fund’s income
level and share price. Debt instruments are subject to varying degrees of credit risk,
depending on the issuer’s or counterparty’s financial condition and on the terms of the
obligation, which may be reflected in their credit ratings.
Custody Risk. Custody risk refers to the risks inherent in the process of clearing and
settling trades, as well as the holding of securities by local banks, agents and
depositories. Low trading volumes and volatile prices in less developed markets may
make trades harder to complete and settle, and governments or trade groups may
compel local agents to hold securities in designated depositories that may not be
subject to independent evaluation. Local agents are held only to the standards of care
of their local markets. In general, the less developed a country’s securities markets
are, the higher the degree of custody risk.
Cybersecurity Risk. The Fund, Authorized Participants, service providers and the
relevant listing exchange are susceptible to operational, information security and
related “cyber” risks both directly and through their service providers. Similar types of
cybersecurity risks are also present for issuers of securities in which the Fund invests,
which could result in material adverse consequences for such issuers and may cause
the Fund’s investment in such issuers to lose value. In general, cyber incidents can
result from deliberate attacks or unintentional events. Cyber incidents include, but are
not limited to, gaining unauthorized access to digital systems (e.g., through “hacking”
or malicious software coding) for purposes of misappropriating assets or sensitive
information, corrupting data, or causing operational disruption. Cyberattacks may also
be carried out in a manner that does not require gaining unauthorized access, such as
causing denial-of-service attacks on websites (i.e., efforts to make network services
unavailable to intended users). Geopolitical tensions may increase the scale and
sophistication of deliberate attacks, particularly those from nation-states or from
entities with nation-state backing.
Cybersecurity failures by, or breaches of, the systems of the Fund’s adviser, distributor
and other service providers (including, but not limited to, index and benchmark
providers, fund accountants, custodians, transfer agents and administrators), market
makers, Authorized Participants or the issuers of securities in which the Fund invests
have the ability to cause disruptions and impact business operations, potentially
resulting in: financial losses, interference with the Fund’s ability to calculate its NAV,
disclosure of confidential trading information, impediments to trading, submission of
erroneous trades or erroneous creation or redemption orders, the inability of the Fund
or its service providers to transact business, violations of applicable privacy and other
laws, regulatory fines, penalties, reputational damage, reimbursement or other
compensation costs, or additional compliance costs. In addition, cyberattacks may
render records of Fund assets and transactions, shareholder ownership of Fund shares,
and other data integral to the functioning of the Fund inaccessible, inaccurate or
incomplete. Substantial costs may be incurred by the Fund in order to resolve or
4Table of Contents
prevent cyber incidents. While the Fund has established business continuity plans in
the event of, and risk management systems to prevent, such cyber incidents, there are
inherent limitations in such plans and systems, including the possibility that certain
risks have not been identified, that prevention and remediation efforts will not be
successful or that cyberattacks will go undetected. Furthermore, the Fund cannot
control the cybersecurity plans and systems put in place by service providers to the
Fund, issuers in which the Fund invests, the Index Provider, market makers or
Authorized Participants. The Fund and its shareholders could be negatively impacted as
a result.
Eastern European Economic Risk. An investment in issuers located or operating in
Eastern Europe may subject the Fund to legal, regulatory, political, currency, security
and economic risks specific to Eastern Europe. Economies of certain Eastern European
countries rely heavily on the export of commodities, including oil, gas, and certain
metals. As a result, such economies may be impacted by international commodity
prices and are particularly vulnerable to global demand for these products. Geopolitical
events including armed conflict or war, acts of terrorism, and other instability in certain
Eastern European countries may cause uncertainty in their financial markets and
adversely affect the performance of the issuers to which the Fund has exposure. The
securities markets in some Eastern European countries are substantially smaller and
less developed, with less government supervision and regulation of stock exchanges,
and may be less liquid and more volatile than securities markets in the U.S. or Western
European countries. In addition, investing in securities of issuers located or operating
in Eastern Europe may involve:
䡲 The risk of delays in settling portfolio transactions and the risk of loss arising out of
the system of share registration and custody used in certain Eastern European
countries;
䡲 Risks in connection with the maintenance of the Fund’s portfolio securities and cash
with foreign sub-custodians and securities depositories, including the risk that
appropriate sub-custody arrangements will not be available to the Fund;
䡲 The risk that the Fund’s ownership rights in portfolio securities could be lost through
fraud or negligence as a result of the fact that ownership in shares of certain Eastern
European companies is recorded by the companies themselves and by registrars,
rather than a central registration system;
䡲 The risk that the Fund may not be able to pursue claims on behalf of its shareholders
because of the system of share registration and custody, and because certain
Eastern European banking institutions and registrars are not guaranteed by their
respective governments; and
䡲 Risks in connection with Eastern European countries’ dependence on the economic
health of Western European countries and the European Union (the “EU”) as a
whole.
Other risks related to investing in securities of issuers located or operating in Eastern
Europe include: the potential absence of legal structures governing private and foreign
investments and private property; the possibility of the loss of all or a substantial
portion of the Fund’s assets invested in issuers located or operating in Eastern Europe
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