iShares Trust

Table of Contents

iShares Trust

Global Market Overview

Global equity markets advanced during the 12 months ended July 31, 2023 (“reporting period”), supported by continued economic growth and moderating inflation. The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned 12.91% in U.S. dollar terms for the reporting period. Despite concerns about the impact of higher interest rates and rising prices, the global economy continued to grow, albeit at a slower pace than during the initial post-pandemic recovery. Inflation began to subside in most regions of the world, and lower energy prices reduced pressure on consumers, leading consumer and business sentiment to improve. While the Russian invasion of Ukraine continued to disrupt trade in Europe and elsewhere, market adaptation lessened the economic impact of the ongoing war. The prices of oil, natural gas, and wheat all declined during the reporting period, easing pressure on the world’s economies.

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

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

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

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

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was April 28, 2015. The first day of secondary market trading was April 30, 2015.

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

Expense Example

Portfolio Management Commentary

Global stocks with favorable exposure to five target style factors—value, quality, momentum, low volatility, and small size—advanced strongly for the reporting period, as the world economy showed resilience despite the challenges of inflation and higher interest rates. Stocks from the U.S., which represented approximately 59% of the Index on average for the reporting period, contributed the most to the Index’s return.

Among U.S. stocks, the information technology sector was the largest source of strength. While rising interest rates negatively impacted companies in the sector, the size and pace of interest rate increases lessened in 2023, and investor optimism surrounding artificial intelligence (“AI”) applications boosted information technology stocks. The U.S. software and services industry contributed significantly, driven by strength among systems software companies. An investment by a large systems software company in a leading AI company enabled the incorporation of AI into a search engine and drove optimism about future applications. Sales of cloud software grew robustly, including for a new product that utilizes AI tools on a cloud-based platform.

The technology hardware, storage, and peripherals industry also gained amid growing revenues from services and an increasing installed base of users. While sales of smartphones declined globally, high-end devices continued to sell well, enabling higher dividends and additional stock buybacks to return cash to shareholders. The semiconductors and semiconductor equipment industry also advanced, as generative AI is computationally intensive, and the strong interest in the area benefited manufacturers of specialty chips that can be used for these applications.

The U.S. consumer discretionary sector also contributed to the Index’s performance, helped by the resilience of U.S. consumers. Consumer spending continued to rise during the reporting period and consumer sentiment rebounded as inflation decelerated. The broadline retail industry drove gains in the sector amid rising sales and cost savings from more efficient fulfillment operations. Growing sales of online cloud services also benefited the industry and a significant investment in AI drove optimism among investors about new offerings utilizing AI technology.

Japanese stocks also advanced, particularly the industrials sector, which benefited from government reforms that aimed to improve the corporate environment for investors. The low value of the Japanese yen relative to the U.S. dollar helped exporters in the capital goods industry and drove strong earnings guidance. The French industrials sector posted gains, driven by strong North American and Asian sales of building products.

Portfolio Information

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was April 28, 2015. The first day of secondary market trading was April 30, 2015.

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

Expense Example

Portfolio Management Commentary

Global developed market stocks with favorable exposure to five target style factors—value, quality, momentum, low volatility, and small size—advanced significantly for the reporting period, as the world economy showed resilience despite the challenges of inflation and higher interest rates. Stocks in Japan were the largest contributors to the Index’s performance, helped by Japan’s improving economy. After contracting in the third quarter and a flat fourth quarter in 2022, the Japanese economy rebounded with moderate growth in the first half of 2023. In October 2022, Japan lifted strict pandemic-related border controls, driving a significant increase in tourism and stimulating consumer spending. A series of corporate reforms benefited Japanese stocks, boosting investor confidence and reorienting focus on corporate profits. Japan’s industrials sector advanced notably, as higher net fees and trading profits boosted earnings in the capital goods industry. The low value of the Japanese yen relative to the U.S. dollar benefited exporters in the industry and drove strong earnings guidance. Elevated energy prices early in the reporting period also bolstered capital goods companies that were involved in liquified natural gas projects.

European stocks, particularly from France and Germany, also gained for the reporting period. While economic growth in the Eurozone was tepid, inflation came down significantly and unemployment declined to a historic low. In France, the consumer discretionary sector was a source of strength, driven primarily by the textiles and apparel industry. Sales of luxury goods supported revenues in the industry, and European sales were particularly strong, helped by an increase in tourism from North America. In Germany, the consumer discretionary sector was powered by strength in the automobiles industry. Improving supply chains allowed companies in the industry to increase deliveries and substantially grow revenue and operating income. The financials sector advanced in both France and Germany, as the ECB’s interest rate increases bolstered profitability among French banks and the German insurance industry.

U.K. stocks also contributed to the Index’s performance, despite slow economic growth during the reporting period. The energy sector was the leading source of strength, as companies in the oil, gas, and consumable fuels industry increased dividend payments to shareholders. Financials stocks posted an advance in Switzerland, where a deal brokered by the government for a failed bank to be taken over by a rival stabilized the capital markets industry.

Portfolio Information

Investment Objective

The iShares International Small-Cap Equity ETF (the “Fund”) (formerly the iShares MSCI International Small-Cap Multifactor ETF) seeks to track the investment results of an index composed of global developed market small-capitalization stocks, excluding the U.S., that have favorable exposure to target style factors subject to constraints, as represented by the STOXX International Small-Cap Equity Factor Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was April 28, 2015. The first day of secondary market trading was April 30, 2015.

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

Expense Example

Portfolio Management Commentary

International small-capitalization stocks with favorable exposure to five target style factors—value, quality, momentum, low volatility and small size—posted an advance for the reporting period, as the world economy showed resilience despite the challenges of inflation and higher interest rates. Stocks in Japan were the largest contributors to the Index’s performance, helped by Japan’s improving economy. After contracting in the third quarter and a flat fourth quarter in 2022, the Japanese economy rebounded with moderate growth in the first half of 2023. In October 2022, Japan lifted strict pandemic-related border controls, driving a significant increase in tourism and stimulating consumer spending. A series of corporate reforms benefited Japanese stocks, boosting investor confidence and reorienting focus on corporate profits.

Among Japanese stocks, the industrials sector contributed the most to the Index’s return. The machinery industry was a leading source of strength, as the relatively low value of the Japanese yen relative to the U.S. dollar helped exporters. The electronic equipment, instruments, and components industry in the information technology sector also benefited from the Japanese yen’s weakness and posted strong sales of watches in Europe despite higher prices. Consumer discretionary stocks advanced amid strength in the automobile components industry, as the easing of a global semiconductor shortage drove a rebound in Japanese cars sales.

Swiss stocks gained in an environment of robust exports and near-record low unemployment. The industrials sector contributed the most to the Index’s return, driven by strength in the machinery industry. Strong global demand for semiconductors drove sales of high-vacuum valves and other equipment used in semiconductor manufacturing. Expansion of vacuum processes into areas such as sustainable energy and biomedical research supported sales and profitability in the industry. The information technology sector also benefited from robust demand from chip manufacturers, which bolstered sales of related products in the electronic equipment, instruments, and components industry.

Stocks in the U.K. also contributed to the Index’s performance, as the hotels, restaurants, and leisure industry in the consumer discretionary sector was supported by a surge in domestic travel and vacationing. Stocks in the financials sector also gained, amid increasing revenues and higher profit margins.

The French information technology sector advanced, bolstered by greater consulting revenues. On the downside, Swedish stocks in the healthcare sector detracted slightly from the Index’s return, as the Central Bank of Sweden raised interest rates substantially.

Portfolio Information

Investment Objective

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

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Expense Example

Portfolio Management Commentary

Lower volatility stocks in developed markets outside the U.S. and Canada advanced for the reporting period, as the world economy showed resilience despite the challenges of inflation and higher interest rates. Stocks in Japan were the largest contributors to the Index’s performance, helped by Japan’s improving economy. After contracting in the third quarter and a flat fourth quarter in 2022, the Japanese economy rebounded with moderate growth in the first half of 2023. In October 2022, Japan lifted strict pandemic-related border controls, driving a significant increase in tourism and stimulating consumer spending. A series of corporate reforms benefited Japanese stocks, which helped boost investor confidence and reoriented focus on corporate profits. Japan’s financials sector advanced notably, as the Bank of Japan eased its policy toward 10-year bond yields, allowing banks to keep portions of their capital in higher-yielding investments. The industrials sector also gained, as higher net fees and trading profits amid volatile energy markets boosted earnings in the trading companies and distributors industry.

French stocks also advanced, driven primarily by the consumer staples sector. Recovering demand for premium spirits in China benefited the beverages industry, while the food products industry gained amid broad-based sales growth in all regions globally. The chemicals industry in the materials sector also advanced, bolstered by price increases and cost savings.

Swiss stocks gained amid strength in the industrials sector and currency appreciation of the Swiss franc relative to the U.S. dollar. Improved supply chains helped companies in the machinery industry that manufacture equipment such as elevators, leading to improved earnings. Industrials stocks in the U.K. also contributed to the Index’s performance, primarily in the aerospace and defense industry, as geopolitical tensions propelled significantly higher orders for defense equipment. On the downside, stocks in Hong Kong detracted slightly from the Index’s performance amid disappointing economic data from China.

In terms of relative performance, the Index significantly underperformed the broader market, as measured by the MSCI EAFE Index. The Index seeks exposure to stocks that experience lower volatility, and as the global economy stabilized and equity markets expanded, investor appetite for risk increased, disadvantaging lower-volatility equities. Overweight positions in the communication services and consumer staples sectors were the primary sources of negative relative performance. Stock selection in the financials, industrials, and utilities sectors also detracted from the Index’s relative return.

Portfolio Information

About Fund Performance

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

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

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

Disclosure of Expenses

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

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

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

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