iShares Trust

Table of Contents

Market Overview

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 MSCI ACWI ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization developed and emerging market equities, as represented by the MSCI ACWI (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

Global stocks advanced notably for the reporting period, as the world economy showed resilience despite the challenges of inflation and higher interest rates. U.S. stocks, which represented approximately 61% of the Index on average, drove the majority of gains.

Among U.S. stocks, the information technology sector was the largest contributor to the Index’s return. While companies in the sector were negatively impacted by rising interest rates, the pace of interest rate increases slowed as the reporting period continued, and investor optimism surrounding new developments in artificial intelligence (“AI”) applications boosted stocks in the sector. The semiconductors and semiconductor equipment industry was the leading source of strength, as the potential for growth in AI buoyed the industry. Generative AI is computationally intensive, and the strong interest in the area benefited companies that manufacture specialty chips that can be used for these applications. The U.S. software and services industry also advanced, driven by strength among systems software companies. An investment in a leading AI company by a large systems software company enabled the incorporation of AI into a search engine, driving optimism about other future applications. The technology hardware, storage, and peripherals industry also gained amid growing revenues from services.

The U.S. communication services sector was another notable contributor to the Index’s performance, helped by aggressive cost-cutting in the media and entertainment industry. Stocks in the industrials sector advanced amid a surge in new manufacturing capacity, leading to higher demand for machinery and equipment.

Japanese stocks also contributed to the Index’s return, as the economy returned to growth and the government lifted strict border controls. The industrials sector gained the most, helped by higher profits and government reforms that aimed to improve the corporate environment for investors.

European stocks, particularly from France and Germany, also contributed. The French consumer discretionary sector benefited from solid European sales of luxury goods, while German industrials stocks were buoyed by strong earnings guidance amid easing supply chain bottlenecks.

Portfolio Information

Investment Objective

The iShares MSCI ACWI Low Carbon Target ETF (the “Fund”) seeks to track the investment results of an index composed of large and mid-capitalization developed and emerging market equities with a lower carbon exposure than that of the broad market, as represented by the MSCI ACWI Low Carbon Target 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 ASSETVALUE)

The inception date of the Fund was December 8, 2014. The first day of secondary market trading was December 9, 2014.

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

As the global economy continued to recover from the effects of the COVID-19 pandemic, rising economic activity drove an increase in energy use and global carbon emissions grew by 0.9% in 2022. However, this represented a significant slowdown from the prior year’s sharp increase as the global economy rebounded. In addition, emissions growth in 2022 trailed global economic growth. Renewable energy output increased significantly and was able to meet 90% of the growth in demand for electricity. Nonetheless, elevated prices for fossil fuels drove a wave of switching from natural gas to coal for energy generation, which offset some of the benefits of increased renewable capacity.

In this environment, stocks of companies with lower carbon exposure advanced strongly for the reporting period. U.S. stocks contributed the most to the Index’s return, driven primarily by the information technology sector. Investor optimism surrounding new developments in artificial intelligence (“AI”) applications boosted stocks in the sector. The semiconductors and semiconductor equipment industry gained notably, as generative AI is computationally intensive, and the strong interest in the area benefited companies that manufacture specialty chips that can be used for these applications.

The U.S. software and services industry also advanced, as an investment in a leading AI company by a large systems software company enabled the incorporation of AI into a search engine. The communication services sector also gained, helped by cost cutting measures and improved advertising targeting.

The Japanese financials sector was a source of strength, 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. In France, strong European sales of luxury goods drove gains in the consumer discretionary sector.

In terms of relative performance, the Index underperformed the broader market, as represented by the MSCI ACWI Index, while tracking it fairly closely. Relative to broader market, the investment approach for CRBN leads to overweight positions in stocks with lower carbon exposure and underweight positions in stocks with higher carbon exposure. For the reporting period, the Index had underweight positions in the energy and materials sectors, resulting in relative underperformance, while overweight positions in the financials and communication services sectors contributed positively to relative performance. Security selection within the energy sector was the primary detractor from relative performance, meanwhile security selection within the financials sector offset these losses.

Portfolio Information

Investment Objective

The iShares MSCI All Country Asia ex Japan ETF (the “Fund”) seeks to track the investment results of an index composed of Asian equities, excluding Japan, as represented by the MSCI AC Asia ex Japan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Expense Example

Portfolio Management Commentary

Stocks in Asia excluding Japan advanced for the reporting period, albeit at a slower pace than other regions of the world. South Korean stocks were the largest contributor to the Index’s return, led by the information technology sector. The technology hardware, storage, and peripherals industry performed strongly, as companies benefited from a series of positive developments. A U.S. law enacted in August 2022 directed incentives toward a leading South Korean chip producer and electronics conglomerate to expand its manufacturing footprint within the U.S. Investors also responded favorably to early-2023 production cuts by chip producers, which aimed to lower inventories and help the market for chips to recover. In the materials sector, South Korean companies in the metals and mining industry involved in the production of electric vehicle batteries received positive investor attention in the wake of a U.S. government investigation involving the partnership between a U.S. automaker and a Chinese battery manufacturer.

Taiwanese information technology stocks contributed meaningfully to the Index’s performance, as companies in its technology hardware, storage, and peripherals industry and its semiconductors industry were buoyed by growing investor interest in technologies related to artificial intelligence (“AI”). In this environment, companies involved in AI-related activities, such as manufacturing AI servers and producing chips for AI applications, posted strong gains. A slowdown in the inflation rate in the U.S. also provided a tailwind to Taiwanese information technology stocks, as investors grew optimistic that the monetary tightening cycle was nearing an end.

Financials stocks in India added to the Index’s return. The Indian banking industry gained, as investors reacted positively to banks’ robust profits, driven by strength in net interest income (the difference between the return on interest-bearing assets and interest paid to depositors), and welcomed plans by one of the country’s largest banks to expand its service offerings in the wealth management space. Further, against a backdrop of strong economic growth in India, both state-owned and private banks benefited from increased volume of personal loans and term deposits along with improved asset quality.

Portfolio Information

Investment Objective

The iShares MSCI Europe Financials ETF (the “Fund”) seeks to track the investment results of an index composed of developed market European equities in the financials sector, as represented by the MSCI Europe Financials 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

European financials equities advanced for the reporting period, as European stocks outpaced those in most other regions of the globe despite modest economic growth. The 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. The inflation rate slowed significantly, and unemployment declined to a historic low.

U.K. stocks contributed the most to the Index’s performance, despite sluggish economic growth. The banking industry in the financials sector was the leading source of strength. Bank revenues rose in an environment of rising interest rates, and cost cuts in the form of automation and layoffs also improved profitability, resulting in larger dividend payouts and a stock buyback program. A rebound in an international interbank lending rate drove higher net interest margins (a measure of the profitability of interest-bearing assets compared to interest paid to depositors) for large British banks.

German financials stocks added to the Index’s return, led by the insurance industry. Multi-line insurers benefited from higher prices for property and casualty policies, an expansion of life and health insurance business in Asia, and strategic acquisitions. Likewise, reinsurance companies performed strongly during the reporting period. Solid growth in premium volume for property and casualty reinsurance drove robust financial performance for German reinsurers, leading to a dividend increase and a stock buyback initiative.

In Italy, bank stocks further contributed to the Index’s performance. Net interest income (the difference between the return on interest-bearing assets and interest paid to depositors) grew and asset quality remained robust, as the ECB’s program of interest rate increases boosted the profits of the largest lenders. Improved trading revenues amid higher demand for hedging products further supported earnings of Italian diversified banks. Spanish banks also contributed, similarly buoyed by higher net interest income. The largest banks in both Italy and Spain maintained only limited exposure to a major Swiss bank that was forced by the Swiss government to merge with a rival in March 2023.

Portfolio Information

Investment Objective

The iShares MSCI Europe Small-Cap ETF (the “Fund”) seeks to track the investment results of an index composed of small-capitalization developed market equities in Europe, as represented by the MSCI Europe Small Cap Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

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

Expense Example

Portfolio Management Commentary

Small-capitalization European equities advanced strongly during the reporting period despite modest economic growth in the region. European stocks benefited from a solid recovery following the early phases of the war in Ukraine. While the conflict initially disrupted critical natural gas supplies, new sources were secured and prices declined, while a warm winter helped to moderate consumption. The ECB responded to the highest inflation since the introduction of the euro by raising interest rates eight times, to the highest levels since 2008, and beginning to reduce the size of its debt holdings.

Italian stocks contributed the most to the Index’s performance, as inflation declined substantially and unemployment reached a 14-year low. Banking stocks in the financials sector gained the most, as higher interest rates buoyed the profits of Italian lenders, leading to increased dividend payments and investor optimism about a potential rise in merger and acquisition activity for smaller banks.

Swiss stocks also contributed amid strength in the industrials sector and the growing value of the Swiss franc relative to the U.S. dollar. Continued strong demand for improved energy efficiency and high-quality drinking water resulted in robust sales of casting and piping products, bolstering the machinery industry.

German stocks were another source of strength, led by the industrials sector, as supply chain improvements boosted the sales of industrial trucks in the construction machinery industry. The information technology sector also advanced, as semiconductor materials and equipment companies benefited from growing demand for efficient power electronics.

In France, the diversified support services industry in the industrials sector added to the Index’s return, as a rebound in hospitality business supported revenues of companies that provide facilities management services. Spanish banks in the financials sector also contributed, as higher interest rates drove gains in net interest income (the difference between the return on interest-bearing assets and interest paid to depositors).

On the downside, Swedish real estate stocks detracted from the Index’s performance. Rising interest rates dampened commercial real estate activity and increased the cost of servicing debt.

Portfolio Information

Investment Objective

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

Developed market stocks outside of Japan advanced during the reporting period, as the world economy showed resilience despite the challenges of inflation and higher interest rates. U.S. stocks, which represented approximately 73% of the Index on average, drove the majority of gains.

Among U.S. stocks, the information technology sector was the largest contributor to the Index’s return. While companies in the sector were negatively impacted by rising interest rates, the pace of interest rate increases slowed as the reporting period continued, and investor optimism surrounding new developments in artificial intelligence (“AI”) applications boosted stocks in the sector. The semiconductors and semiconductor equipment industry was the leading source of strength, as the potential for growth in AI buoyed the industry. Generative AI is computationally intensive, and the strong interest in the area benefited companies that manufacture specialty chips that can be used for these applications. Graphics processing units are particularly useful in training AI models, advantaging companies at the forefront of this market. The U.S. software and services industry also advanced, driven by strength among systems software companies. An investment in a leading AI company by a large systems software company enabled the incorporation of AI into a search engine, driving optimism about other future applications. The technology hardware, storage, and peripherals industry also gained amid growing revenues from services and an increasing installed base of users.

The U.S. communication services sector also contributed to the Index’s performance, driven by aggressive cost-cutting in the media and entertainment industry. Stocks in the industrials sector advanced amid a surge in new manufacturing capacity, leading to higher demand for machinery and equipment.

European stocks, particularly from France and Germany, also contributed to the Index’s performance. The French consumer discretionary sector benefited from solid European sales of luxury goods, while German industrials stocks were buoyed by strong earnings guidance amid easing supply chain bottlenecks. U.K. stocks also contributed modestly, as cost-cutting and high interest rates supported the banking industry in the financials sector.

Portfolio Information

About Fund Performance

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

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

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

Disclosure of Expenses

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

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

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

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