LOGO

  JULY 31, 2023

 

 

   2023 Annual Report

 

 

iShares Trust

 

·  

iShares Breakthrough Environmental Solutions ETF | ETEC | NASDAQ

 

·  

iShares Cybersecurity and Tech ETF | IHAK | NYSE Arca

 

·  

iShares Exponential Technologies ETF | XT | NASDAQ

 

·  

iShares Future Cloud 5G and Tech ETF | IDAT | NYSE Arca

 

·  

iShares Genomics Immunology and Healthcare ETF | IDNA | NYSE Arca

 

·  

iShares Neuroscience and Healthcare ETF | IBRN | NYSE Arca

 

·  

iShares Robotics and Artificial Intelligence Multisector ETF | IRBO | NYSE Arca

 

·  

iShares Self-Driving EV and Tech ETF | IDRV | NYSE Arca

 

·  

iShares Virtual Work and Life Multisector ETF | IWFH | NYSE Arca


The Markets in Review

Dear Shareholder,

Despite an uncertain economic landscape during the 12-month reporting period ended July 31, 2023, the resilience of the U.S. economy in the face of ever tighter financial conditions provided an encouraging backdrop for investors. While inflation was near multi-decade highs at the beginning of the period, it declined precipitously as commodity prices dropped. Labor shortages also moderated, although wages continued to grow and unemployment rates reached the lowest levels in decades. This robust labor market powered further growth in consumer spending, backstopping the economy.

Equity returns were solid, as the durability of consumer sentiment eased investors’ concerns about the economy’s trajectory. The U.S. economy resumed growth in the third quarter of 2022 and continued to expand thereafter. Most major classes of equities advanced, including large- and small-capitalization U.S. stocks and equities from developed and emerging markets.

The 10-year U.S. Treasury yield rose during the reporting period, driving its price down, as investors reacted to elevated inflation and attempted to anticipate future interest rate changes. The corporate bond market also faced inflationary headwinds, although high-yield corporate bond prices fared significantly better than investment-grade bonds as demand from yield-seeking investors remained strong.

The U.S. Federal Reserve (the “Fed”), acknowledging that inflation has been more persistent than expected, raised interest rates seven times during the 12-month period ended July 31, 2023. Furthermore, the Fed wound down its bond-buying programs and incrementally reduced its balance sheet by not replacing securities that reach maturity. However, the Fed declined to raise interest rates at its June 2023 meeting, the first time it paused its tightening in the current cycle, before again raising rates in July 2023.

Supply constraints appear to have become an embedded feature of the new macroeconomic environment, making it difficult for developed economies to increase production without sparking higher inflation. Geopolitical fragmentation and an aging population risk further exacerbating these constraints, keeping the labor market tight and wage growth high. Although the Fed has decelerated the pace of interest rate hikes and recently opted for a pause, we believe that the new economic regime means that the Fed will need to maintain high rates for an extended period to keep inflation under control. Furthermore, ongoing structural changes may mean that the Fed will be hesitant to cut interest rates in the event of faltering economic activity lest inflation accelerate again. We believe investors should expect a period of higher volatility as markets adjust to the new economic reality and policymakers attempt to adapt.

While we favor an overweight position to developed market equities in the long term, we prefer an underweight stance in the near-term. Expectations for corporate earnings remain elevated, which seems inconsistent with macroeconomic constraints. Nevertheless, we are overweight on emerging market stocks in the near-term as growth trends for emerging markets appear brighter. We also believe that stocks with an A.I. tilt should benefit from an investment cycle that is set to support revenues and margins. We are neutral on credit overall amid tightening credit and financial conditions; however, there are selective opportunities in the near term. For fixed income investing with a six- to twelve-month horizon, we see the most attractive investments in short-term U.S. Treasuries, U.S. inflation-linked bonds, U.S. mortgage-backed securities, and hard-currency emerging market bonds.

Overall, our view is that investors need to think globally, position themselves to be prepared for a decarbonizing economy, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit iShares.com for further insight about investing in today’s markets.

 

LOGO

Rob Kapito

President, BlackRock, Inc.

LOGO

Rob Kapito

President, BlackRock, Inc.

Total Returns as of July 31, 2023

 

    

 

6-Month  

 

 

 

12-Month

 

   

U.S. large cap equities
(S&P 500® Index)

  13.52%   13.02%
   

U.S. small cap equities
(Russell 2000® Index)

  4.51    7.91 
   

International equities
(MSCI Europe, Australasia, Far East Index)

  6.65    16.79   
   

Emerging market equities
(MSCI Emerging Markets Index)

  3.26    8.35 
   

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

  2.34    3.96 
   

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

  (2.08)   (7.56)
   

U.S. investment grade bonds
(Bloomberg U.S. Aggregate Bond Index)

  (1.02)   (3.37)
   

Tax-exempt municipal bonds
(Bloomberg Municipal Bond Index)

  0.20    0.93 
   

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

  2.92    4.42 

Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

 

 

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T H I S  P A G E  I S  N O T  P A R T  O F   Y O U R  F U N D  R E P O R T


Table of Contents

 

     Page  

The Markets in Review

    2  

Annual Report:

 

Market Overview

    4  

Fund Summary

    6  

About Fund Performance

    24  

Disclosure of Expenses

    24  

Schedules of Investments

    25  

Financial Statements:

 

Statements of Assets and Liabilities

    49  

Statements of Operations

    52  

Statements of Changes in Net Assets

    55  

Financial Highlights

    60  

Notes to Financial Statements

    69  

Report of Independent Registered Public Accounting Firm

    81  

Important Tax Information

    82  

Board Review and Approval of Investment Advisory Contract

    83  

Supplemental Information

    89  

Trustee and Officer Information

    90  

General Information

    93  

Glossary of Terms Used in this Report

    94  

 

 

  3


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.

 

 

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  5


Fund Summary as of July 31, 2023    iShares® Breakthrough Environmental Solutions ETF

 

Investment Objective

The iShares Breakthrough Environmental Solutions ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. and non-U.S. companies involved in breakthrough innovations and development of new technologies that address the climate transition, as represented by the Morningstar Global Emerging Green Technologies Select 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

 

     Cumulative Total Returns   
    

Since

Inception

 

Fund NAV

    8.54

Fund Market

    8.36  

Index

    9.18  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was March 28, 2023. The first day of secondary market trading was March 30, 2023.

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

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(03/28/23)
 
 
(a)  
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(b)  
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(b)  
    

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 1,000.00        $ 1.61             $ 1,000.00        $ 1,022.50        $ 2.36        0.47

 

  (a) 

Commencement of operations.

 
  (b) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 125/365 for actual expenses and 181/365 for hypothetical expenses (to reflect the six month period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

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Fund Summary as of July 31, 2023 (continued)    iShares® Breakthrough Environmental Solutions ETF

 

Portfolio Information

 

INDUSTRY ALLOCATION

 

Industry    
Percent of
Total Investments
 
(a) 

Automobiles

    21.9

Semiconductors & Semiconductor Equipment

    21.5  

Electrical Equipment

    16.9  

Machinery

    13.7  

Chemicals

    7.2  

Electronic Equipment, Instruments & Components

    5.4  

Building Products

    5.4  

Multi-Utilities

    4.8  

Automobile Components

    2.2  

Independent Power and Renewable Electricity Producers

    1.0  

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a) 

United States

    22.6

China

    21.3  

Japan

    10.4  

Germany

    6.7  

Switzerland

    6.6  

Cayman Islands

    5.9  

Sweden

    5.3  

South Korea

    4.5  

Belgium

    4.1  

Denmark

    3.7  

Netherlands

    3.4  

United Kingdom

    3.1  

Canada

    1.5  

Other (each representing less than 1%)

    0.9  

 

  (a) 

Excludes money market funds.

 

 

 

F U N D  S U M M A R Y

  7


Fund Summary as of July 31, 2023    iShares® Cybersecurity and Tech ETF

 

Investment Objective

The iShares Cybersecurity and Tech ETF (the “Fund”) seeks to track the investment results of an index composed of developed and emerging market companies that are involved in cyber security and technology, including cyber security hardware, software, products, and services, as represented by the NYSE® FactSet® Global Cyber Security 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

 

     Average Annual Total Returns             Cumulative Total Returns   
     1 Year      Since
Inception
           1 Year      Since
Inception
 

Fund NAV

    7.57      12.20       7.57      61.08

Fund Market

    7.78        12.22         7.78        61.18  

Index

    8.08        12.62               8.08        63.51  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was June 11, 2019. The first day of secondary market trading was June 13, 2019.

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

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
    

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 1,154.30        $ 2.51             $ 1,000.00        $ 1,022.50        $ 2.36        0.47

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

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Fund Summary as of July 31, 2023 (continued)    iShares® Cybersecurity and Tech ETF

 

Portfolio Management Commentary

Stocks of global cybersecurity and technology companies advanced for the reporting period. Stocks in growth-oriented companies, including many in the information technology sector, outperformed the broader market. While growth stocks declined sharply in 2022 amid high inflation and rising interest rates, they rebounded in 2023 amid moderating inflation and investor optimism that interest rates would stabilize. Global cybersecurity attacks increased significantly in 2022, contributing to higher spending on technology-related security and risk management by global governments and businesses. Broadly, demand for cybersecurity analysts and engineers grew at twice the rate of employment demand for the general workforce. The increased adoption of artificial intelligence (“AI”) capabilities heightened cybersecurity concerns while at the same time aiding and improving security efforts.

U.S. stocks contributed the most to the Index’s return, led by the industrials sector. Research and consulting services companies specializing in cyber and digital intelligence reported strong demand for their services, partly reflecting new contracts from government agencies seeking to improve cloud and other technology security. Contractors providing technical and engineering assistance to the U.S. military benefited from new and renewing projects.

The U.S. information technology sector contributed significantly to the Index’s return. Systems software companies benefited from increased demand for software focused on helping companies secure their technology systems. Increased adoption of cloud platforms for cybersecurity programs and the modernization of companies’ security operation centers helped feed demand and encouraged the pursuit of smaller providers by larger technology conglomerates. Integration of security and networks into single platforms also boosted revenue and market share gains for systems software providers.

Stocks in Taiwan also contributed to the Index’s return, with AI-related demand attracting investors to the country’s information technology sector. Communications equipment companies benefited from rising sales of network appliances, ethernet switches, and other related hardware.

On the downside, Japanese stocks detracted from the Index’s return. Systems software companies, in the information technology sector, declined as rising global interest rates early in the reporting period pressured the broader Japanese equity market, particularly technology stocks.

Portfolio Information

 

INDUSTRY ALLOCATION

 

Industry    
Percent of
Total Investments
 
(a) 

Software

    64.9

Professional Services

    13.8  

Communications Equipment

    11.2  

IT Services

    10.1  

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a) 

United States

    73.2

Israel

    8.8  

Japan

    4.5  

Taiwan

    4.0  

Canada

    2.8  

Germany

    2.2  

Denmark

    2.0  

United Kingdom

    1.4  

Other (each representing less than 1%)

    1.1  

 

  (a) 

Excludes money market funds.

 

 

 

F U N D  S U M M A R Y

  9


Fund Summary as of July 31, 2023    iShares® Exponential Technologies ETF

 

Investment Objective

The iShares Exponential Technologies ETF (the “Fund”) seeks to track the investment results of an index composed of stocks of developed and emerging market companies that create or use exponential technologies, as represented by the Morningstar® Exponential Technologies IndexSM (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

    Average Annual Total Returns            Cumulative Total Returns  
     1 Year      5 Years     Since
Inception
            1 Year      5 Years      Since
Inception
 

Fund NAV

    13.05      10.26     11.70        13.05      62.96      152.48

Fund Market

    13.04        10.23       11.69          13.04        62.77        152.31  

Index

    13.55        10.66       12.03                13.55        65.92        158.67  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was March 19, 2015. The first day of secondary market trading was March 23, 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

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid Durintg
the Period
 
 
(a)  
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
    

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 1,107.70        $ 2.40             $ 1,000.00        $ 1,022.50        $ 2.31        0.46

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

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Fund Summary as of July 31, 2023 (continued)    iShares® Exponential Technologies ETF

 

Portfolio Management Commentary

Stocks of global companies that create or use exponential technologies advanced for the reporting period. Stocks in growth-oriented companies, including many in the information technology sector, outperformed the broader market. While growth stocks declined sharply in 2022 amid high inflation and rising interest rates, they rebounded in 2023 amid moderating inflation and investor optimism that interest rates would stabilize. The widespread emergence of artificial intelligence (“AI”) applications increased demand for machine learning capabilities, boosting the stocks of companies heavily involved in the burgeoning technology.

U.S. stocks, which represented approximately 64% of the Index on average during the reporting period, contributed the most to the Index’s return, led by the information technology sector. Demand for software and services rose as business and government enterprises sought increased implementation of machine learning and AI capabilities. That included increased demand from the U.S. intelligence and defense communities for AI-assisted software platforms. As providers of customer relationship management platforms developed new AI-powered offerings, demand for their software increased. Meanwhile, the rising proliferation of data-intensive applications and related analytics supported companies building platforms for the expanding data aggregation and cloud monitoring market.

U.S. semiconductor firms also contributed to the Index’s return. As with software, AI’s widespread emergence buoyed stocks of companies producing chips that power generative AI services, such as ChatGPT, other specialized AI applications, and the data centers that support AI functions. Makers of solar panels and microchips used in electric vehicles received a boost from the federal government’s Inflation Reduction Act, which created subsidies and tax credits for green energy initiatives.

Australian stocks contributed notably to the Index’s return. The information technology sector led the advance as logistics software firms benefited from businesses’ needs to improve supply chain efficiency following coronavirus pandemic-related disruptions. In Germany, information technology stocks also contributed as stronger-than-expected demand supported semiconductor manufacturers, particularly makers of microchips for automotive and industrial uses.

Portfolio Information

 

SECTOR ALLOCATION

 

Sector    
Percent of
Total Investments
 
(a) 

Information Technology

    51.4

Health Care

    16.7  

Industrials

    7.7  

Financials

    7.4  

Consumer Discretionary

    5.5  

Communication Services

    4.2  

Materials

    2.8  

Utilities

    2.4  

Real Estate

    1.3  

Consumer Staples

    0.6  

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a)
 

United States

    65.0

China

    5.7  

Japan

    4.8  

Australia

    3.4  

Netherlands

    2.7  

Canada

    2.4  

Germany

    2.0  

United Kingdom

    2.0  

Switzerland

    2.0  

France

    1.4  

 

  (a) 

Excludes money market funds.

 

 

 

F U N D  S U M M A R Y

  11


Fund Summary as of July 31, 2023    iShares® Future Cloud 5G and Tech ETF

 

Investment Objective

The iShares Future Cloud 5G and Tech ETF (the “Fund”) (Formerly the iShares Cloud 5G and Tech ETF) seeks to track the investment results of an index composed of companies from developed and emerging markets that could benefit from providing products, services, and technologies related to cloud computing and 5G, as represented by the Morningstar® Global Digital Infrastructure & Connectivity 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

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      Since
Inception
           1 Year      Since
Inception
 

Fund NAV

    14.84      1.71       14.84      3.71

Fund Market

    14.74        1.63         14.74        3.52  

Index

    15.28        1.73               15.28        3.75  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

 

LOGO

The inception date of the Fund was June 8, 2021. The first day of secondary market trading was June 10, 2021.

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

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
    

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 1,101.00        $ 2.45             $ 1,000.00        $ 1,022.50        $ 2.36        0.47

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

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Fund Summary as of July 31, 2023 (continued)    iShares® Future Cloud 5G and Tech ETF

 

Portfolio Management Commentary

Equities with considerable exposure to cloud computing and 5G networking advanced for the reporting period. Stocks in growth-oriented companies, including many in the information technology sector, outperformed the broader market. While growth stocks declined sharply in 2022 amid high inflation and rising interest rates, they rebounded in 2023 amid moderating inflation and investor optimism that interest rates would stabilize. The swift emergence of artificial intelligence (“AI”) applications drove rising demand for cloud computing solutions and the microchips that power AI. Mobile carriers continued expanding 5G networks as governments and carriers throughout the world increased their commitment to building them.

U.S. stocks, which represented approximately 73% of the Index on average during the reporting period, contributed the most to the Index’s return, led by the information technology sector. Amid strong growth forecasts, application software providers, particularly cloud computing platforms, benefited from ongoing digital transformation and data center modernization. Revenue for cloud service providers increased substantially amid rising demand for simplified and aggregated platform solutions. Likewise, companies providing software used to monitor network infrastructure, allowing companies to trouble-shoot technical problems, reported higher demand and revenue. Speculation that larger technology conglomerates might seek to expand their cloud operations via acquisitions also supported smaller cloud providers. The U.S. semiconductors industry also advanced, as investments in AI spurred rising demand for microchips used in data centers and specialized microchips that speed AI applications, boosting revenue for firms supplying them. Revenue also increased for firms that produce microchips for converting analog signals into digital data, particularly products used in automobile and industrial manufacturing.

Stocks in Taiwan contributed notably to the Index’s return. Within the information technology sector, technology hardware and equipment companies advanced amid strong demand from customers building AI servers. German information technology stocks also contributed, as supply chain improvements following disruptions caused by the coronavirus pandemic and the beginning of the war in Ukraine increased revenue for companies supplying microchips to automotive and industrial markets.

Portfolio Information

 

INDUSTRY ALLOCATION

 

Industry    
Percent of
Total Investments
 
(a)
 

Semiconductors & Semiconductor Equipment

    33.1

Communications Equipment

    14.1  

IT Services

    13.8  

Software

    13.4  

Technology Hardware, Storage & Peripherals

    5.8  

Electronic Equipment, Instruments & Components

    5.4  

Specialized REITs

    5.2  

Consumer Finance

    5.0  

Chemicals

    2.4  

Diversified Telecommunication Services

    1.0  

Media

    0.8  

 

  (a) 

Excludes money market funds.

 

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a)
 

United States

    76.0

Taiwan

    9.0  

Japan

    3.8  

Germany

    2.9  

Australia

    2.1  

Finland

    1.7  

Sweden

    1.7  

United Kingdom

    1.0  

Other (each representing less than 1%)

    1.8  

 

 

F U N D  S U M M A R Y

  13


Fund Summary as of July 31, 2023     iShares® Genomics Immunology and Healthcare ETF

 

Investment Objective

The iShares Genomics Immunology and Healthcare ETF (the “Fund”) seeks to track the investment results of an index composed of developed and emerging market companies that could benefit from the long-term growth and innovation in genomics, immunology and bioengineering, as represented by the NYSE® FactSet® Global Genomics and Immuno Biopharma IndexTM (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

 

     Average Annual Total Returns            Cumulative Total Returns  
     1 Year      Since
Inception
           1 Year      Since
Inception
 

Fund NAV

    (24.04 )%       0.12       (24.04 )%       0.52

Fund Market

    (24.04      0.14         (24.04      0.58  

Index

    (23.55      0.27               (23.55      1.14  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was June 11, 2019. The first day of secondary market trading was June 13, 2019.

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

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
    

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 890.80        $ 2.25             $ 1,000.00        $ 1,022.40        $ 2.41        0.48

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

14  

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Fund Summary as of July 31, 2023 (continued)    iShares® Genomics Immunology and Healthcare ETF

 

Portfolio Management Commentary

Global genomics, immunology, and healthcare stocks declined significantly for the reporting period. Growth-oriented stocks declined sharply in 2022 amid high inflation, a slowing economy, and rising interest rates. They rebounded in 2023 as inflation moderated and investors’ optimism increased that interest rates would stabilize. However, innovation-related healthcare stocks did not benefit from that recovery, as growth investors mostly targeted technology stocks while generally avoiding the healthcare sector. Waning demand for COVID-19 vaccines and legislative challenges to drugmakers’ prices further reduced investor interest. Patent disputes between vaccine makers exacerbated biotech stocks’ weakness from falling vaccine demand.

U.S. equities, which represented approximately 64% of the Index on average during the reporting period, detracted the most from the Index’s return, driven by declines in the healthcare sector. Biotechnology stocks, in particular, accounted for the majority of the Index’s decline. Notably, an innovative biotechnology company focused on developing cellular immunotherapies declined after ending a research collaboration with a major healthcare-centered company. Despite an increase in COVID-19 vaccine prices, falling demand reduced revenue for vaccine makers. In May 2023, the U.S. government officially ended the coronavirus health emergency and lifted its vaccine mandate for international travelers. Biotechnology companies faced headwinds as demand for COVID-19 vaccinations and booster shots trailed expectations and manufacturers anticipated deliveries falling by as much as two-thirds overall for 2023. Vaccine makers responded with plans to significantly cut costs through infrastructure consolidation and considerable layoffs. Investors’ lessening interest in biotechnology stocks extended to companies not involved in vaccine development, especially startups facing delays in clinical trials and early-stage firms yet to receive approval for marketable treatments.

Healthcare stocks in Germany and Taiwan also detracted from the Index’s return. Patent disputes weighed on German biotechnology companies. Additionally, a leading biotechnology firm reduced its earnings outlook after suffering a cyberattack. In Taiwan, biotechnology firms involved in vaccine production faced headwinds as global demand for COVID-19 vaccines waned.

Portfolio Information

 

INDUSTRY ALLOCATION

 

Industry    
Percent of
Total Investments
 
(a)
 

Biotechnology

    76.7

Pharmaceuticals

    15.5  

Chemicals

    6.3  

Health Care Providers & Services

    1.0  

Life Sciences Tools & Services

    0.5  

 

 

  (a) 

Excludes money market funds.

 

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a)
 

United States

    62.7

Switzerland

    7.1  

France

    6.3  

Germany

    4.8  

Denmark

    4.3  

China

    3.9  

Japan

    3.9  

Netherlands

    2.3  

Taiwan

    2.2  

South Korea

    1.8  

 

 

F U N D  S U M M A R Y

  15


Fund Summary as of July 31, 2023    iShares® Neuroscience and Healthcare ETF

 

Investment Objective

The iShares Neuroscience and Healthcare ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. and non-U.S. companies that could benefit from the growth and innovation in neuroscience, as represented by the NYSE® FactSet® Global Neuro Biopharma and MedTech 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

 

                                Cumulative Total Returns  
     

          

                           

Since

Inception

 

Fund NAV

                (2.45 )% 

Fund Market

                (2.27

Index

                                        (2.29

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was August 24, 2022. The first day of secondary market trading was August 26, 2022.

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

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
    

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 916.60        $ 2.23             $ 1,000.00        $ 1,022.50        $ 2.36        0.47

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

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Fund Summary as of July 31, 2023 (continued)    iShares® Neuroscience and Healthcare ETF

 

Portfolio Management Commentary

Global stocks of companies involved in neuroscience, treatments for neurological disorders, and related healthcare innovation declined slightly for the reporting period. After falling earlier in the reporting period amid high inflation, a slowing economy, and rising interest rates, growth-oriented stocks rebounded in 2023 as inflation moderated and investors’ optimism increased that interest rates would stabilize. However, despite the Food and Drug Administration (“FDA”) approval of the first drug proven to slow the progression of Alzheimer’s disease, innovation-related healthcare stocks did not fully participate in that recovery. Investors who gravitated toward the healthcare sector as the stock market declined in 2022 increasingly sought other alternatives as stocks recovered later in the reporting period.

Equities in Switzerland detracted the most from the Index’s return, led by biotechnology stocks in the healthcare sector. Financial losses widened at a leading provider of treatments for insomnia and other conditions; the company responded by adopting cost cuts aimed at reducing its cash outflow by half. Amid a cash shortfall, the firm secured bridge financing while attempting to sell a portion of its operations. In the meantime, its revenue continued rising and it launched an innovative drug targeting the effects of chronic insomnia.

U.S. stocks also detracted from the Index’s performance. In the healthcare sector, the healthcare equipment and supplies industry declined. Ongoing struggles to achieve profitability weighed on the stocks of medical device makers, including a supplier of systems aimed at alleviating chronic pain via spinal cord stimulation and a manufacturer of devices to help patients with bladder and bowel dysfunction. Though reporting varying degrees of revenue growth, these companies disclosed either minimal profits or ongoing net losses.

Some countries contributed to the Index’s return. In Ireland, a fledging drugmaker benefited from the FDA’s approval of new treatment for daytime drowsiness in adults with narcolepsy, boosting stocks in the country’s pharmaceutical industry. Stocks in South Korea’s pharmaceutical industry also rose amid expansion plans, acquisitions, and partnerships announced by a leading maker of treatments for central nervous system disorders.

Portfolio Information

 

INDUSTRY ALLOCATION

 

Industry    
Percent of
Total Investments
 
(a)
 

Biotechnology

    57.1

Pharmaceuticals

    28.6  

Health Care Equipment & Supplies

    14.0  

Life Sciences Tools & Services

    0.3  

 

 

 

  (a)

Excludes money market funds.

 

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a)
 

United States

    72.4

Ireland

    6.5  

South Korea

    4.8  

Canada

    3.8  

British Virgin Islands

    2.9  

Sweden

    2.8  

Australia

    2.4  

Switzerland

    2.4  

China

    1.2  

Singapore

    0.8  

 

 

F U N D  S U M M A R Y

  17


Fund Summary as of July 31, 2023     iShares® Robotics and Artificial Intelligence Multisector ETF

 

Investment Objective

The iShares Robotics and Artificial Intelligence Multisector ETF (the “Fund”) seeks to track the investment results of an index composed of developed and emerging market companies that could benefit from the long-term growth and innovation in robotics technologies and artificial intelligence, as represented by the NYSE® FactSet® Global Robotics and Artificial Intelligence 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

 

    Average Annual Total Returns         Cumulative Total Returns  
     1 Year      5 Years      Since
Inception
         1 Year     5 Years      Since
Inception
 

Fund NAV

    22.55      9.00      8.67       22.55     53.87      52.77

Fund Market

    23.16        8.95        8.73         23.16       53.50        53.24  

Index

    22.44        9.22        8.87           22.44       55.40        54.21  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was June 26, 2018. The first day of secondary market trading was June 28, 2018.

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

 

Actual           Hypothetical 5% Return           
 

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
           

Beginning
Account Value
(02/01/23)
 
 
 
   

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
      

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 1,164.50        $ 2.52             $ 1,000.00     $ 1,022.50        $ 2.36          0.47

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

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Fund Summary as of July 31, 2023 (continued)    iShares® Robotics and Artificial Intelligence Multisector ETF

 

Portfolio Management Commentary

Stocks of global companies producing or using robotics and artificial intelligence applications advanced considerably for the reporting period. Many stocks, particularly in the information technology sector, benefited from renewed investor interest in growth-oriented companies. Although growth stocks declined sharply in 2022 amid high inflation and rising interest rates, they rebounded in 2023 as inflation moderated and optimism increased that interest rates would stabilize. The widespread emergence of artificial intelligence (“AI”) applications increased demand for machine learning capabilities, boosting the stocks of companies heavily involved in the burgeoning technology.

U.S. equities, which represented approximately 53% of the Index on average for the reporting period, contributed the most to the Index’s return, led by the information technology sector. AI-related demand boosted the software and services industry, as business and government enterprises increasingly sought to implement machine learning and artificial intelligence capabilities. Providers of customer relationship management platforms benefited from new AI-powered offerings and related integration that increased demand for their software. In addition, revenue rose for makers of data analytics platforms. Strong interest in AI also buoyed stocks of companies producing chips that power generative AI services.

Chinese stocks also contributed to the Index’s return, led by the communications sector. Global investment demand for exposure to the Chinese market increased after the country lifted restrictive Covid-19 pandemic policies. Stocks within the media and entertainment industry rose, as subscriber growth rebounded for both visual and audio streaming services after a stretch of industry-wide declines. Social media and livestream platforms, including dating and other apps, also benefited from improved financial performance and changes in leadership that boosted investors’ optimism. In addition, a popular app provider generated first-time profits.

Stocks in Taiwan further benefited performance, driven by gains in the semiconductors and semiconductor equipment industry. Chipmakers that also provide engineering, consulting, and technical-support services advanced, as demand for engineering designs and solutions increased alongside the surge in orders for AI-related chips needed to train and deploy AI models.

Portfolio Information

 

SECTOR ALLOCATION

 

Sector    
Percent of
Total Investments
 
(a)
 

Information Technology

    55.6

Communication Services

    19.0  

Industrials

    13.1  

Consumer Discretionary

    10.4  

Financials

    1.0  

Health Care

    0.9  

 

 

 

  (a) 

Excludes money market funds.

 

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a)
 

United States

    51.2

China

    13.1  

Japan

    9.9  

Taiwan

    8.6  

Israel

    2.9  

South Korea

    2.5  

Switzerland

    1.8  

Germany

    1.6  

France

    1.3  

Australia

    1.2  

 

 

F U N D  S U M M A R Y

  19


Fund Summary as of July 31, 2023    iShares® Self-Driving EV and Tech ETF

 

Investment Objective

The iShares Self-Driving EV and Tech ETF (the “Fund”) seeks to track the investment results of an index composed of developed and emerging market companies that may benefit from growth and innovation in and around electric vehicles, battery technologies and autonomous driving technologies, as represented by the NYSE® FactSet® Global Autonomous Driving and Electric Vehicle 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

 

    Average Annual Total Returns           Cumulative Total Returns  
     1 Year      Since
Inception
           1 Year      Since
Inception
 

Fund NAV

    14.17      16.50       14.17      92.61

Fund Market

    13.93        16.44         13.93        92.24  

Index

    14.57        16.63               14.57        93.45  

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was April 16, 2019. The first day of secondary market trading was April 18, 2019.

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

 

Actual           Hypothetical 5% Return         
 

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
           

Beginning
Account Value
(02/01/23)
 
 
 
      

Ending
Account Value
(07/31/23)
 
 
 
      

Expenses
Paid During
the Period
 
 
(a)  
    

Annualized
Expense
Ratio
 
 
 
 $ 1,000.00        $ 1,121.20        $ 2.47             $ 1,000.00        $ 1,022.50        $ 2.36        0.47

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

20  

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Fund Summary as of July 31, 2023 (continued)    iShares® Self-Driving EV and Tech ETF

 

Portfolio Management Commentary

Stocks of companies related to innovation in electric vehicles (“EVs”) and self-driving cars advanced for the reporting period. Globally, EV sales increased in 2022 by approximately 52% to 10 million vehicles, with forecasts of continued growth in 2023. The U.S. government’s Inflation Reduction Act of 2022 expanded subsidies and taxes for green energy initiatives, including EVs, with a goal of pushing EVs to half of all U.S. car sales by 2030. Building on EV initiatives from the 2021 Infrastructure Investment and Jobs Act, the 2022 act spurred several new manufacturing investments from makers of vehicles and batteries. The impacts of those new programs increased capacity of global EV supply chains to support strong consumer demand. Meanwhile, automakers expanded investments in self-driving cars, which made inroads into ride-hailing and taxi services.

Stocks in China contributed the most to the Index’s return, led by the automobiles industry. China accounted for nearly 60% of global EV sales in 2022, while EVs almost doubled as a proportion of domestic car sales. EV sales also rose after China lifted highly restrictive coronavirus policies late in 2022, reopening large parts of the economy for the first time since the pandemic started. Stocks of EV manufacturers also benefited from announced plans to cut costs amid increasing global competition, and an investment from a large German automaker further aided the industry. The introduction of new models boosted new vehicle deliveries, which grew substantially even as price competition intensified. Rising sales bolstered industry profitability and raised expectations that the nation’s leading EV manufacturer might soon take over the top spot in the world.

The automobiles industry in Germany also contributed to the Index’s return. During the first seven months of 2023, new EV car registrations increased at a year-over-year rate of 13%, pushing sales to a fifth of the total market. South Korean stocks also aided performance, led by the materials sector. Stocks of chemical makers increased, as rising demand for materials used to manufacture batteries drove increased sales and profitability.

Portfolio Information

 

SECTOR ALLOCATION

 

Sector    
Percent of
Total Investments
 
(a)
 

Consumer Discretionary

    63.1

Materials

    16.0  

Industrials

    14.5  

Information Technology

    6.4  

Communication Services

    0.0  

GEOGRAPHIC ALLOCATION

 

Country/Geographic Region    
Percent of
Total Investments
 
(a)
 

United States

    38.9

China

    19.3  

South Korea

    11.1  

Germany

    8.2  

Australia

    7.6  

France

    5.4  

Switzerland

    3.5  

Sweden

    2.7  

Japan

    1.5  

United Kingdom

    1.1  

 

  (a) 

Excludes money market funds.

 

 

 

F U N D  S U M M A R Y

  21


Fund Summary as of July 31, 2023    iShares® Virtual Work and Life Multisector ETF

 

Investment Objective

The iShares Virtual Work and Life Multisector ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. and non-U.S. companies that provide products, services and technologies that empower individuals to work remotely, and support an increasingly virtual way of life across entertainment, wellness and learning, as represented by the NYSE® FactSet® Global Virtual Work and Life 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

 

     Average Annual Total Returns             Cumulative Total Returns  
     1 Year      Since
Inception
           1 Year      Since
Inception
 

Fund NAV

    12.58      (13.73 )%        12.58      (34.23 )% 

Fund Market

    12.59        (13.75       12.59        (34.30

Index

    13.71        (13.32             13.71        (33.34

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

 

LOGO

The inception date of the Fund was September 29, 2020. The first day of secondary market trading was October 1, 2020.

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

 

Actual           Hypothetical 5% Return         
 

Beginning

Account Value

(02/01/23)

 

 

 

      

Ending

Account Value

(07/31/23)

 

 

 

      

Expenses

Paid During

the Period

 

 

(a)  

           

Beginning

Account Value

(02/01/23)

 

 

 

      

Ending

Account Value

(07/31/23)

 

 

 

      

Expenses

Paid During

the Period

 

 

(a)  

    

Annualized

Expense

Ratio

 

 

 

$ 1,000.00        $ 1,079.10        $ 2.42             $ 1,000.00        $ 1,022.50        $ 2.36        0.47

 

  (a) 

Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown). Other fees, such as brokerage commissions and other fees to financial intermediaries, may be paid which are not reflected in the tables and examples above. See “Disclosure of Expenses” for more information.

 

 

 

22  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Fund Summary as of July 31, 2023 (continued)    iShares® Virtual Work and Life Multisector ETF

 

Portfolio Management Commentary

Global stocks of companies focused on helping people work, consume entertainment, or study from home advanced during the reporting period. Stocks in growth-oriented companies, including many in the communication services and information technology sectors, outperformed the broader market. Even as the U.S. government proclaimed an official end to the coronavirus emergency, the growing shift to working from home persisted. Compared with prior to the pandemic, about six times as many total workdays occurred from home, and job listings mentioning remote work also rose almost sixfold.

U.S. equities contributed the most to the Index’s return, led by the communication services sector. In the entertainment industry, stocks of visual and audio streaming services, including content providers and the interfaces and platforms from which consumers access them, benefited from subscription and revenue growth after a post-pandemic lull. The U.S. software and services industry within the information technology sector also contributed to the Index’s performance, led by companies providing business software designed to enhance remote work environments. Demand increased for cloud-based applications used to manage workflow, organization, and customer relationships, boosting revenue for the firms providing them. Amid substantial customer growth, subscription revenue also rose for suppliers of software targeting innovative project management collaboration.

Outside the U.S., stocks in China and India contributed to the Index’s return. In China, within the communication services sector, stocks of interactive and media services companies rose as revenue for large social media platforms increased, while cost containment raised profits for suppliers of related mobile-based apps. In addition, stocks in visual and audio streaming services benefited from subscription growth that rebounded after a stretch of widespread declines. In China’s consumer discretionary sector, revenue increased significantly for providers of education services. In India, food delivery companies in the consumer discretionary sector benefited from rising orders. On the downside, Swedish stocks detracted slightly from performance. Streaming services in the communication services sector reported slowing growth amid rising inflation.

Portfolio Information

 

SECTOR ALLOCATION

 

Sector    
Percent of
Total Investments
 
(a) 

Information Technology

    44.5

Communication Services

    31.9  

Consumer Discretionary

    16.9  

Consumer Staples

    3.9  

Health Care

    2.8  

TEN LARGEST HOLDINGS

 

Security    
Percent of
Total Investments
 
(a) 

Roku Inc.

    3.6

DoorDash Inc., Class A

    3.0  

Just Eat Takeaway.com NV

    2.9  

Five9 Inc.

    2.8  

Delivery Hero SE

    2.8  

Teladoc Health Inc.

    2.7  

Match Group Inc.

    2.7  

RingCentral Inc., Class A

    2.7  

Activision Blizzard Inc.

    2.6  

Dropbox Inc., Class A

    2.6  

 

  (a) 

Excludes money market funds.

 

 

 

F U N D  S U M M A R Y

  23


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.

 

 

24  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments 

July 31, 2023

  

iShares® Breakthrough Environmental Solutions ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Automobile Components — 2.1%            

Linamar Corp.

    1,144     $ 66,385  

Tianneng Power International Ltd.

    24,000       26,891  
   

 

 

 
      93,276  
Automobiles — 21.9%  

Li Auto Inc.(a)

    8,400       180,323  

NIO Inc.(a)

    16,800       256,492  

Tesla Inc.(a)

    888       237,478  

XPeng Inc.(a)

    20,800       221,872  

Yadea Group Holdings Ltd.(b)

    24,000       54,616  
   

 

 

 
      950,781  
Building Products — 5.3%  

Munters Group AB(b)

    3,988       50,617  

Nibe Industrier AB, Class B

    20,100       181,056  
   

 

 

 
      231,673  
Chemicals — 7.2%  

Johnson Matthey PLC

    5,878       135,942  

Umicore SA

    6,011       178,017  
   

 

 

 
      313,959  
Electrical Equipment — 16.8%  

ABB Ltd., Registered

    5,092       204,329  

Alfen Beheer BV(a)(b)

    636       44,134  

Goldwind Science & Technology Co. Ltd., Class A

    7,600       11,919  

Gotion High-tech Co. Ltd., Class A(a)

    4,000       15,434  

GS Yuasa Corp.

    2,000       40,244  

Ming Yang Smart Energy Group Ltd., Class A

    5,600       14,152  

NARI Technology Co. Ltd., Class A

    17,760       60,481  

Nordex SE(a)

    3,296       46,574  

Shanghai Electric Group Co. Ltd., Class A(a)

    26,400       17,632  

Signify NV(b)

    3,239       101,839  

SunPower Corp.(a)(c)

    1,496       14,766  

Vestas Wind Systems A/S(a)

    6,041       161,575  
   

 

 

 
      733,079  
Electronic Equipment, Instruments & Components — 5.4%  

Landis+Gyr Group AG

    540       46,888  

Samsung SDI Co. Ltd.

    356       185,834  
   

 

 

 
      232,722  
Independent Power and Renewable Electricity Producers — 1.0%  

Gunkul Engineering PCL, NVDR

    138,800       14,042  

Sunnova Energy International Inc.(a)(c)

    1,756       31,011  
   

 

 

 
      45,053  
Machinery — 13.7%  

Kurita Water Industries Ltd.

    3,200       128,688  

Meidensha Corp.

    1,200       17,888  

NGK Insulators Ltd.

    7,200       88,303  

Xylem Inc./NY

    1,655       186,601  
Security   Shares     Value  
Machinery (continued)  

Yaskawa Electric Corp.

    4,000     $ 173,881  
   

 

 

 
      595,361  
Multi-Utilities — 4.8%  

E.ON SE

    16,537       209,198  
   

 

 

 
Semiconductors & Semiconductor Equipment — 21.5%        

Daqo New Energy Corp., ADR(a)

    1,632       63,762  

Duk San Neolux Co. Ltd.(a)

    348       10,997  

Enphase Energy Inc.(a)(c)

    640       97,171  

First Solar Inc.(a)

    604       125,270  

Hangzhou First Applied Material Co. Ltd., Class A

    4,820       23,622  

JA Solar Technology Co. Ltd., Class A

    4,880       22,729  

LONGi Green Energy Technology Co. Ltd., Class A

    19,900       83,380  

Meyer Burger Technology AG(a)

    57,580       34,619  

SMA Solar Technology AG(a)

    364       34,703  

SolarEdge Technologies Inc.(a)

    399       96,342  

TCL Zhonghuan Renewable Energy Technology Co. Ltd., Class A

    10,400       42,373  

TSEC Corp.

    8,465       8,425  

United Renewable Energy Co. Ltd.

    28,000       15,886  

Universal Display Corp.

    1,320       192,562  

Xinyi Solar Holdings Ltd.

    76,000       82,524  
   

 

 

 
      934,365  
   

 

 

 

Total Long-Term Investments — 99.7%
(Cost: $4,070,081)

 

    4,339,467  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 3.0%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(d)(e)(f)

    130,333       130,372  
   

 

 

 

Total Short-Term Securities — 3.0%
(Cost: $130,370)

 

    130,372  
   

 

 

 

Total Investments — 102.7%
(Cost: $4,200,451)

 

    4,469,839  

Liabilities in Excess of Other Assets — (2.7)%

 

    (118,430
   

 

 

 

Net Assets — 100.0%

 

  $  4,351,409  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

All or a portion of this security is on loan.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

 

 

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

  25


Schedule of Investments (continued)

July 31, 2023

  

iShares® Breakthrough Environmental Solutions ETF

 

Affiliates

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

 

Affiliated Issuer     
Value at
03/28/23
 
(a) 
    
Purchases
at Cost
 
 
    

Proceeds

from Sale

 

 

    

Net Realized

Gain (Loss)

 

 

    

Change in

Unrealized

Appreciation

(Depreciation)

 

 

 

 

    

Value at

07/31/23

 

 

    

Shares

Held at

07/31/23

 

 

 

     Income       

Capital
Gain

Distributions

from

Underlying

Funds


 

 

 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

     $    —        $130,370(b)        $    —      $      $ 2      $ 130,372        130,333      $ 32 (c)     $  

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

            0(b)                                           25         
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 
            $      $ 2      $ 130,372         $ 57      $  
           

 

 

    

 

 

    

 

 

       

 

 

    

 

 

 

 

  (a) 

Commencement of operations.

 
  (b) 

Represents net amount purchased (sold).

 
  (c) 

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

 
  (d) 

As of period end, the entity is no longer held.

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

         
Description   

Number of

Contracts

    

Expiration

Date

      

Notional

Amount

(000)

 

Value/

Unrealized

Appreciation

(Depreciation)

 

Long Contracts

              

Micro E-Mini Russell 2000 Index

   1        09/15/23        $  10   $ 557  
              

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

               
     

Commodity

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total
 

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Unrealized appreciation on futures contracts(a)

   $      $      $ 557      $      $      $      $ 557  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the period ended July 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

               
     

Commodity

Contracts

    

Credit

Contracts

    

Equity

Contracts

    

Foreign

Currency

Exchange

Contracts

    

Interest

Rate

Contracts

    

Other

Contracts

     Total
 

Net Realized Gain (Loss) from

                    

Futures contracts

   $      $      $ 405      $      $      $      $ 405  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                    

Futures contracts

   $      $      $ 557      $      $      $      $ 557  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Futures contracts:

  

Average notional value of contracts — long

   $5,034 

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

 

 

26  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Breakthrough Environmental Solutions ETF

 

Fair Value Hierarchy as of Period End

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

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

 

         
      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 1,111,348        $ 3,228,119        $        $ 4,339,467  

Short-Term Securities

                 

Money Market Funds

     130,372                            130,372  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 1,241,720        $ 3,228,119        $        $ 4,469,839  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Assets

                 

Equity Contracts

   $ 557        $        $   —        $ 557  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

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

  27


Schedule of Investments

July 31, 2023

  

iShares® Cybersecurity and Tech ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

 

Communications Equipment — 11.2%  

Accton Technology Corp.

    2,038,000     $  24,864,330  

ADTRAN Holdings Inc.

    417,890       4,066,070  

Calix Inc.(a)

    343,875       15,512,201  

Juniper Networks Inc.

    739,484       20,557,655  

Radware Ltd.(a)

    232,251       4,363,996  
   

 

 

 
      69,364,252  
IT Services — 10.1%            

Akamai Technologies Inc.(a)(b)

    244,892       23,142,294  

Change Holdings Inc.(b)

    239,000       3,158,978  

Netcompany Group A/S(a)(c)

    259,660       12,053,065  

Okta Inc.(a)(b)

    309,996       23,826,293  
   

 

 

 
      62,180,630  
Professional Services — 13.7%            

Booz Allen Hamilton Holding Corp., Class A

    220,832       26,738,338  

CACI International Inc., Class A(a)

    74,322       26,045,402  

My EG Services Bhd

    27,571,200       4,681,643  

Science Applications International Corp.

    225,755       27,393,112  
   

 

 

 
      84,858,495  
Software — 64.8%            

A10 Networks Inc.

    403,913       6,268,730  

Ahnlab Inc.

    34,411       1,696,115  

Alarm.com Holdings Inc.(a)

    278,665       15,385,095  

BlackBerry Ltd.(a)

    3,383,992       17,219,570  

Check Point Software Technologies Ltd.(a)(b)

    184,646       24,412,048  

Clear Secure Inc., Class A(b)

    475,283       11,268,960  

Crowdstrike Holdings Inc., Class A(a)(b)

    151,208       24,444,285  

CyberArk Software Ltd.(a)

    153,339       25,455,807  

Darktrace PLC(a)

    1,858,603       8,814,529  

Digital Arts Inc.

    63,900       2,528,727  

Everbridge Inc.(a)

    235,396       7,259,613  

ForgeRock Inc., Class A (a)(b)

    257,527       5,317,933  

Fortinet Inc.(a)

    335,775       26,096,433  

OneSpan Inc.(a)

    213,687       2,936,059  

Palo Alto Networks Inc.(a)

    105,307       26,322,538  

Qualys Inc.(a)(b)

    176,137       24,447,816  

 

Security   Shares     Value  
Software (continued)            

Rapid7 Inc.(a)

    345,663     $ 15,869,388  

SentinelOne Inc., Class A(a)(b)

    1,268,547       21,146,678  

TeamViewer AG(a)(c)

    794,908       13,512,355  

Tenable Holdings Inc.(a)(b)

    562,083       27,350,959  

Trend Micro Inc./Japan

    473,100       22,351,955  

Varonis Systems Inc.(a)

    623,376       17,890,891  

VMware Inc., Class A(a)

    165,953       26,159,171  

Zscaler Inc.(a)

    160,748       25,780,764  
   

 

 

 
      399,936,419  
   

 

 

 

Total Long-Term Investments — 99.8%
(Cost: $601,315,149)

 

    616,339,796  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 4.7%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 5.42%(d)(e)(f)

    27,926,516       27,934,894  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 5.22%(d)(e)

    1,260,000       1,260,000  
   

 

 

 

Total Short-Term Securities — 4.7%
(Cost: $29,196,334)

 

    29,194,894  
   

 

 

 

Total Investments — 104.5%
(Cost: $630,511,483)

 

    645,534,690  

Liabilities in Excess of Other Assets — (4.5)%

 

    (27,906,035
   

 

 

 

Net Assets — 100.0%

 

  $ 617,628,655  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

 

 

Affiliates

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

 

 

 
Affiliated Issuer   Value at
07/31/22
    Purchases
at Cost
    Proceeds
from Sale
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
07/31/23
    Shares
Held at
07/31/23
    Income    

Capital

Gain
Distributions
from
Underlying
Funds

 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 56,048,701     $     $ (28,123,025 )(a)    $ 24,358     $ (15,140   $ 27,934,894       27,926,516       $ 92,846 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    510,000       750,000 (a)                        1,260,000       1,260,000       36,112       1  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 24,358     $ (15,140   $ 9,194,894         $128,958     $ 1  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b) 

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

 

 

 

28  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Cybersecurity and Tech ETF

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

 

 
Description    Number of
Contracts
     Expiration
Date
     Notional
Amount
(000)
   Value/
Unrealized
Appreciation
(Depreciation)
 

 

 
Long Contracts                          

E-Mini Technology Select Sector Index

     6        09/15/23      $ 1,085    $ 26,926  
           

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

 

 
     Commodity
Contracts
     Credit
Contracts
       Equity
Contracts
  Foreign
Currency
Exchange
Contracts
       Interest
Rate
Contracts
       Other
Contracts
       Total  

 

 

Assets — Derivative Financial Instruments

                             

Futures contracts

                             

Unrealized appreciation on futures contracts(a)

   $     —      $    —        $ 26,926   $        $        $        $ 26,926  
  

 

    

 

 

      

 

 

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the period ended July 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Commodity
Contracts
     Credit
Contracts
       Equity
Contracts
  Foreign
Currency
Exchange
Contracts
       Interest
Rate
Contracts
       Other
Contracts
       Total  

 

 

Net Realized Gain (Loss) from

                             

Futures contracts

   $    —      $    —        $ 64,187   $        $        $        $ 64,187  
  

 

    

 

 

      

 

 

 

 

      

 

 

      

 

 

      

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                             

Futures contracts

   $    —      $        $(32,713)   $        $        $        $ (32,713
  

 

    

 

 

      

 

 

 

 

      

 

 

      

 

 

      

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 755,745  

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

Fair Value Hierarchy as of Period End

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

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

 

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 522,678,099        $ 93,661,697        $        $ 616,339,796  

Short-Term Securities

                 

Money Market Funds

     29,194,894                            29,194,894  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 551,872,993        $ 93,661,697        $        $ 645,534,690  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Assets

                 

Equity Contracts

   $ 26,926        $        $        $ 26,926  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

 

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

  29


Schedule of Investments

July 31, 2023

  

iShares® Exponential Technologies ETF

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  

Common Stocks

 

Australia — 3.4%  

IRESS Ltd.

    2,261,522      $ 15,809,654  

Megaport Ltd.(a)(b)

    3,509,740        24,112,427  

Netwealth Group Ltd.

    1,572,165        16,062,733  

NEXTDC Ltd.(a)

    2,453,386        21,056,209  

Technology One Ltd.

    1,624,576        17,212,631  

WiseTech Global Ltd.

    412,049        23,795,431  
    

 

 

 
       118,049,085  
Canada — 2.3%             

Ballard Power Systems Inc.(a)(b)

    2,699,708        12,836,742  

BlackBerry Ltd.(a)

    3,351,724        17,055,373  

Boralex Inc., Class A

    534,594        13,832,592  

Brookfield Renewable Corp., Class A

    476,280        14,844,809  

Lithium Americas Corp.(a)(b)

    618,322        12,482,260  

Northland Power Inc.

    531,359        10,279,428  
    

 

 

 
       81,331,204  
Cayman Islands — 0.5%             

NIO Inc.(a)(b)

    1,160,750        17,721,660  
    

 

 

 
China — 5.7%             

Baidu Inc.(a)

    1,030,950        20,155,884  

BYD Co. Ltd., Class A

    376,400        14,367,317  

China Longyuan Power Group Corp. Ltd., Class H

    12,841,000        12,432,098  

China Resources Power Holdings Co. Ltd.

    8,338,000        18,088,791  

Ganfeng Lithium Group Co. Ltd., Class A

    1,259,960        10,567,714  

GDS Holdings Ltd., Class A(a)

    6,856,300        11,288,985  

Genscript Biotech Corp.(a)

    5,452,000        14,042,003  

Innovent Biologics Inc.(a)(c)

    4,154,500        18,576,591  

Li Auto Inc.(a)

    1,306,000        28,035,929  

Shanghai Junshi Biosciences Co. Ltd., Class A(a)

    1,815,327        10,355,104  

Tianqi Lithium Corp.

    1,789,200        11,196,799  

XPeng Inc.(a)

    2,609,600        27,836,414  
    

 

 

 
       196,943,629  
Denmark — 0.8%             

Orsted AS(c)

    159,092        13,844,101  

Vestas Wind Systems A/S(a)

    561,938        15,029,852  
    

 

 

 
       28,873,953  
Finland — 1.0%             

Nokia OYJ

    3,064,816        12,047,605  

Wartsila OYJ Abp

    1,716,031        21,558,234  
    

 

 

 
       33,605,839  
France — 1.4%             

Dassault Systemes SE

    400,950        17,136,057  

Sanofi

    154,353        16,467,076  

Worldline SA/France(a)(c)

    333,456        13,217,996  
    

 

 

 
       46,821,129  
Germany — 2.0%             

Infineon Technologies AG

    454,482        19,967,877  

Merck KGaA

    81,184        14,266,053  

SAP SE

    137,465        18,751,815  

Siemens AG, Registered

    105,139        17,920,117  
    

 

 

 
       70,905,862  
Israel — 0.5%             

Nice Ltd.(a)

    77,319        16,830,064  
    

 

 

 
Italy — 1.0%             

Infrastrutture Wireless Italiane SpA(c)

    1,471,507        18,453,866  
Security   Shares      Value  
Italy (continued)             

Nexi SpA(a)(c)

    1,800,287      $ 15,590,490  
    

 

 

 
       34,044,356  
Japan — 4.7%             

Chugai Pharmaceutical Co. Ltd.

    553,300        16,466,894  

Denso Corp.

    279,300        19,446,957  

FANUC Corp.

    484,500        14,822,027  

Harmonic Drive Systems Inc.

    554,300        15,266,451  

Murata Manufacturing Co. Ltd.

    274,300        16,293,886  

Nabtesco Corp.

    593,100        12,580,480  

Taiyo Yuden Co. Ltd.

    466,100        13,898,779  

TDK Corp.

    425,300        16,292,500  

Tokyo Electron Ltd.

    134,700        20,216,710  

Yaskawa Electric Corp.

    442,700        19,244,290  
    

 

 

 
       164,528,974  
Netherlands — 2.7%             

Adyen NV(a)(c)

    10,055        18,662,227  

ASM International NV

    52,950        25,155,503  

ASML Holding NV

    24,770        17,741,978  

QIAGEN NV(a)

    302,867        14,210,988  

TomTom NV(a)

    2,016,639        17,617,520  
    

 

 

 
       93,388,216  
South Korea — 0.9%             

Samsung Electro-Mechanics Co. Ltd.

    144,323        16,464,203  

Samsung SDI Co. Ltd.

    27,470        14,339,464  
    

 

 

 
       30,803,667  
Spain — 1.1%             

Amadeus IT Group SA

    278,357        19,968,243  

Cellnex Telecom SA(c)

    422,209        17,242,626  
    

 

 

 
       37,210,869  
Sweden — 1.2%             

Sandvik AB

    815,253        16,559,845  

Swedish Orphan Biovitrum AB(a)(b)

    731,816        14,323,888  

Telefonaktiebolaget LM Ericsson, Class B

    2,332,329        11,732,720  
    

 

 

 
       42,616,453  
Switzerland — 2.0%             

CRISPR Therapeutics AG(a)(b)

    290,965        16,681,023  

Novartis AG, Registered

    161,618        16,920,941  

Roche Holding AG, NVS

    45,736        14,180,508  

STMicroelectronics NV

    392,112        20,972,642  
    

 

 

 
       68,755,114  
Taiwan — 1.3%             

MediaTek Inc.

    640,000        14,083,143  

Taiwan Semiconductor Manufacturing Co. Ltd.

    965,000        17,425,583  

Yageo Corp.

    947,000        13,883,342  
    

 

 

 
       45,392,068  
United Kingdom — 2.0%             

AstraZeneca PLC

    107,044        15,379,675  

GSK PLC

    805,181        14,333,149  

Ocado Group PLC(a)

    1,755,955        21,139,182  

Sage Group PLC (The)

    1,515,857        18,233,602  
    

 

 

 
       69,085,608  
United States — 64.8%             

AbbVie Inc.

    89,409        13,373,799  

Advanced Micro Devices Inc.(a)

    209,923        24,015,191  

AeroVironment Inc.(a)

    178,884        17,040,490  

Agilent Technologies Inc.

    95,996        11,689,433  

Akamai Technologies Inc.(a)

    164,851        15,578,419  

Albemarle Corp.

    57,006        12,101,234  

 

 

 

30  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Exponential Technologies ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)            

Alnylam Pharmaceuticals Inc.(a)

    63,787     $ 12,463,980  

Alphabet Inc., Class A(a)

    155,198       20,597,879  

Amazon.com Inc.(a)

    166,454       22,251,571  

American Tower Corp.

    70,084       13,337,686  

Analog Devices Inc.

    88,746       17,707,489  

Ansys Inc.(a)

    60,660       20,751,786  

Applied Materials Inc.

    138,579       21,007,191  

Aptiv PLC(a)

    150,930       16,525,326  

Arista Networks Inc.(a)(b)

    116,162       18,015,565  

Atlassian Corp., NVS(a)(b)

    117,406       21,360,848  

Autodesk Inc.(a)

    76,358       16,187,132  

Biogen Inc.(a)(b)

    50,435       13,627,033  

BioMarin Pharmaceutical Inc.(a)

    142,459       12,526,420  

Bio-Techne Corp.

    182,779       15,243,769  

Blackbaud Inc.(a)

    261,130       19,702,258  

Block Inc.(a)(b)

    241,671       19,461,766  

Bloom Energy Corp., Class A(a)(b)

    732,297       13,078,824  

Box Inc., Class A(a)(b)

    530,142       16,566,937  

Bristol-Myers Squibb Co.

    183,737       11,426,604  

Broadcom Inc.

    28,383       25,506,383  

Broadridge Financial Solutions Inc.

    103,618       17,399,535  

Cadence Design Systems Inc.(a)

    91,754       21,471,354  

Celanese Corp., Class A

    144,779       18,153,839  

ChargePoint Holdings Inc., Class A(a)(b)

    1,374,552       11,903,620  

Cisco Systems Inc.

    304,943       15,869,234  

Cloudflare Inc., Class A(a)(b)

    332,712       22,880,604  

Cogent Communications Holdings Inc.

    262,107       16,051,433  

Coinbase Global Inc., Class A(a)(b)

    357,108       35,214,420  

CoStar Group Inc.(a)

    184,242       15,470,801  

Crowdstrike Holdings Inc., Class A(a)(b)

    130,163       21,042,151  

Datadog Inc., Class A(a)

    215,764       25,183,974  

Digital Realty Trust Inc.

    135,820       16,925,888  

DISH Network Corp., Class A(a)(b)

    1,022,796       8,110,772  

DocuSign Inc., Class A(a)

    350,138       18,844,427  

Dropbox Inc., Class A(a)

    667,937       18,000,902  

DuPont de Nemours Inc.

    211,778       16,440,326  

Dynatrace Inc.(a)

    408,285       22,329,107  

Edwards Lifesciences Corp.(a)(b)

    203,063       16,665,380  

Elastic NV(a)

    283,384       18,830,867  

Eli Lilly & Co.

    39,613       18,006,089  

Enphase Energy Inc.(a)(b)

    46,191       7,013,180  

Envestnet Inc.(a)(b)

    234,192       14,515,220  

Exact Sciences Corp.(a)(b)

    320,853       31,296,002  

F5 Inc.(a)

    99,397       15,728,581  

FactSet Research Systems Inc.

    32,842       14,287,584  

First Solar Inc.(a)

    95,195       19,743,443  

Five9 Inc.(a)

    228,592       20,058,948  

Fortinet Inc.(a)(b)

    285,649       22,200,640  

Gen Digital Inc.

    654,263       12,725,415  

Gilead Sciences Inc.

    168,342       12,817,560  

Global Payments Inc.

    149,289       16,459,112  

Guardant Health Inc.(a)

    305,592       11,924,200  

Guidewire Software Inc.(a)(b)

    244,376       20,727,972  

Hubbell Inc., Class B

    59,690       18,623,280  

HubSpot Inc.(a)

    53,430       31,018,786  

Illumina Inc.(a)(b)

    70,766       13,597,687  

Incyte Corp.(a)

    174,736       11,134,178  

Intel Corp.

    520,402       18,614,780  

Intellia Therapeutics Inc.(a)(b)

    387,052       16,383,911  

Intuit Inc.

    37,953       19,420,550  
Security   Shares     Value  
United States (continued)            

Intuitive Surgical Inc.(a)(b)

    54,983     $ 17,836,485  

Ionis Pharmaceuticals Inc.(a)(b)

    385,885       15,987,216  

Jazz Pharmaceuticals PLC(a)

    97,882       12,765,770  

Johnson & Johnson

    82,732       13,860,092  

Keysight Technologies Inc.(a)

    82,650       13,313,262  

KLA Corp.

    38,011       19,535,753  

Lam Research Corp.

    33,139       23,810,040  

Livent Corp.(a)(b)

    585,297       14,410,012  

Lumen Technologies Inc.

    2,693,450       4,821,275  

Manhattan Associates Inc.(a)

    124,818       23,792,807  

MarketAxess Holdings Inc.

    53,209       14,324,927  

Merck & Co. Inc.

    134,031       14,294,406  

Meta Platforms Inc, Class A(a)

    129,285       41,190,201  

Microchip Technology Inc.

    196,113       18,422,855  

Micron Technology Inc.(b)

    273,682       19,538,158  

Microsoft Corp.

    60,487       20,318,793  

Moderna Inc.(a)

    82,295       9,682,830  

MongoDB Inc.(a)

    82,618       34,980,461  

Monolithic Power Systems Inc.(b)

    40,034       22,398,623  

Nvidia Corp.

    91,330       42,677,596  

NXP Semiconductors NV

    89,979       20,063,517  

Okta Inc.(a)

    238,977       18,367,772  

ON Semiconductor Corp.(a)(b)

    209,985       22,625,884  

Oracle Corp.

    187,005       21,922,596  

Palantir Technologies Inc., Class A(a)

    2,083,056       41,327,831  

Palo Alto Networks Inc.(a)(b)

    89,458       22,360,922  

Plug Power Inc.(a)(b)

    1,075,870       14,115,414  

PTC Inc.(a)(b)

    121,273       17,682,816  

Qorvo Inc.(a)

    154,591       17,008,102  

Qualcomm Inc.

    124,867       16,503,671  

Regeneron Pharmaceuticals Inc.(a)

    19,294       14,314,412  

Revvity Inc.

    105,327       12,949,955  

RingCentral Inc., Class A(a)

    417,990       17,288,066  

Salesforce Inc.(a)(b)

    112,951       25,415,105  

SEI Investments Co.(b)

    243,906       15,363,639  

ServiceNow Inc.(a)

    37,936       22,116,688  

Skyworks Solutions Inc.

    160,196       18,321,617  

Snowflake Inc., Class A(a)

    107,261       19,061,352  

SoFi Technologies Inc.(a)(b)

    3,424,906       39,215,174  

SolarEdge Technologies Inc.(a)

    47,514       11,472,730  

Splunk Inc.(a)(b)

    176,025       19,068,788  

SunPower Corp.(a)(b)

    667,836       6,591,541  

Sunrun Inc.(a)(b)

    513,134       9,739,283  

Synopsys Inc.(a)

    45,509       20,560,966  

Teradyne Inc.

    161,213       18,207,396  

Tesla Inc.(a)

    84,632       22,633,136  

Texas Instruments Inc.

    84,226       15,160,680  

Toast Inc., Class A(a)(b)

    855,437       18,879,495  

Tradeweb Markets Inc., Class A(b)

    229,101       18,738,171  

Twilio Inc., Class A(a)(b)

    325,201       21,473,022  

Tyler Technologies Inc.(a)(b)

    47,758       18,942,256  

Veeva Systems Inc., Class A(a)(b)

    89,107       18,197,432  

Vertex Pharmaceuticals Inc.(a)

    46,392       16,345,757  

VMware Inc., Class A(a)

    124,795       19,671,436  

Waters Corp.(a)

    43,505       12,016,516  

Zscaler Inc.(a)(b)

    128,946       20,680,359  
   

 

 

 
      2,246,595,824  
   

 

 

 
Total Common Stocks — 99.3%
(Cost: $2,844,888,023)
        3,443,503,574  
   

 

 

 

 

 

 

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

  31


Schedule of Investments (continued)

July 31, 2023

  

iShares® Exponential Technologies ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Preferred Stocks

   
Chile — 0.4%            

Sociedad Quimica y Minera de Chile SA, Class B, Preference Shares

    155,477     $ 11,400,232  
   

 

 

 

Total Preferred Stocks — 0.4%
(Cost: $8,873,464)

 

    11,400,232  
   

 

 

 

Total Long-Term Investments — 99.7%
(Cost: $2,853,761,487)

 

    3,454,903,806  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 6.6%            

BlackRock Cash Funds: Institutional,
SL Agency Shares, 5.42%(d)(e)(f)

    224,335,809       224,403,109  

BlackRock Cash Funds: Treasury,
SL Agency Shares, 5.22%(d)(e)

    5,560,000       5,560,000  
   

 

 

 

Total Short-Term Securities — 6.6%
(Cost: $229,893,594)

 

    229,963,109  
   

 

 

 

Total Investments — 106.3%
(Cost: $3,083,655,081)

 

    3,684,866,915  

Liabilities in Excess of Other Assets — (6.3)%

 

    (217,266,670
   

 

 

 

Net Assets — 100.0%

 

  $  3,467,600,245  
   

 

 

 
(a)

Non-income producing security.

(b)

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

Affiliates

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

 

                   
Affiliated Issuer   Value at
07/31/22
   

Purchases

at Cost

   

Proceeds

from Sale

    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
07/31/23
   

Shares

Held at
07/31/23

    Income    

Capital

Gain
Distributions
from
Underlying
Funds

 

BlackRock Cash Funds: Institutional, SL Agency Shares

    $164,930,879       $59,422,597 (a)      $       —     $ 4,527     $ 45,106     $ 224,403,109       224,335,809     $ 1,825,929 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    5,890,000             (330,000 )(a)                   5,560,000       5,560,000       120,863       1  

BlackRock
Inc.(c)

    14,603,515       588,715       (15,900,340     5,205,181       (4,497,071                 213,368        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 5,209,708     $ (4,451,965   $ 229,963,109       $ 2,160,160     $ 1  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

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

 
  (c) 

As of period end, the entity is no longer held.

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

         
Description    Number of
Contracts
     Expiration
Date
       Notional
Amount
(000)
    Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

              

Euro STOXX 50 Index

   21        09/15/23        $ 1,037     $ 37,113  

MSCI Emerging Markets Index

   28        09/15/23          1,476       60,985  

S&P 500 E-Mini Index

   41        09/15/23          9,460       512,511  
              

 

 

 
               $ 610,609  
              

 

 

 

 

 

 

32   2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Exponential Technologies ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

               
      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Unrealized appreciation on futures contracts(a)

   $      $      $ 610,609      $      $      $      $ 610,609  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the period ended July 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

               
      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from

                    

Futures contracts

   $      $      $ 629,369      $      $      $      $ 629,369  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                    

Futures contracts

   $      $      $ 204,841      $      $      $      $ 204,841  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Futures contracts:

  

Average notional value of contracts — long

   $ 9,791,021   

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

Fair Value Hierarchy as of Period End

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

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

 

         
      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 2,344,608,051        $ 1,098,895,523        $        $ 3,443,503,574  

Preferred Stocks

     11,400,232                            11,400,232  

Short-Term Securities

                 

Money Market Funds

     229,963,109                            229,963,109  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 2,585,971,392        $ 1,098,895,523        $    —        $ 3,684,866,915  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Assets

                 

Equity Contracts

   $ 573,496        $ 37,113        $        $ 610,609  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

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

  33


Schedule of Investments

July 31, 2023

  

iShares® Future Cloud 5G and Tech ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Chemicals — 2.4%            

DuPont de Nemours Inc.

    1,869     $ 145,090  
   

 

 

 
Communications Equipment — 14.1%            

Arista Networks Inc.(a)

    1,026       159,122  

Ciena Corp.(a)

    3,036       128,119  

F5 Inc.(a)

    883       139,726  

Juniper Networks Inc.

    4,074       113,257  

Lumentum Holdings Inc.(a)

    2,165       113,359  

Nokia OYJ

    27,230       107,040  

Telefonaktiebolaget LM Ericsson, Class B

    20,672       103,990  
   

 

 

 
      864,613  
Consumer Finance — 5.0%            

SoFi Technologies Inc.(a)

    26,727       306,024  
   

 

 

 
Diversified Telecommunication Services — 1.0%            

JTOWER Inc.(a)

    200       10,216  

NetLink NBN Trust

    63,000       40,751  

Tower Bersama Infrastructure Tbk PT

    82,200       10,520  
   

 

 

 
      61,487  
Electronic Equipment, Instruments & Components — 5.4%  

Murata Manufacturing Co. Ltd.

    2,400       142,564  

Quectel Wireless Solutions Co. Ltd., Class A

    408       3,271  

Taiyo Yuden Co. Ltd.

    2,700       80,512  

Yageo Corp.

    7,142       104,704  
   

 

 

 
       331,051  
Specialized REITs — 5.2%            

American Tower Corp.

    615       117,041  

Crown Castle Inc.

    939       101,684  

SBA Communications Corp., Class A

    453       99,184  
   

 

 

 
      317,909  
IT Services — 13.8%            

Akamai Technologies Inc.(a)

    1,468       138,727  

Cloudflare Inc., Class A(a)(b)

    2,952       203,009  

Computacenter PLC

    2,288       64,549  

GDS Holdings Ltd., Class A(a)

    21,300       35,071  

Kyndryl Holdings Inc.(a)

    6,575       89,814  

NEXTDC Ltd.(a)

    14,760       126,678  

Twilio Inc., Class A(a)(b)

    2,889       190,761  
   

 

 

 
      848,609  
Media — 0.8%            

DISH Network Corp., Class A(a)

    6,046       47,945  
   

 

 

 
Semiconductors & Semiconductor Equipment — 33.0%  

Analog Devices Inc.

    781       155,833  

Broadcom Inc.

    251       225,561  

Diodes Inc.(a)

    1,431       135,215  
Security   Shares     Value  
Semiconductors & Semiconductor Equipment (continued)  

Infineon Technologies AG

    4,020     $ 176,621  

Intel Corp.

    4,631       165,651  

MACOM Technology Solutions Holdings Inc., Class H(a)

    1,525       106,628  

MediaTek Inc.

    6,000       132,029  

NXP Semiconductors NV

    795       177,269  

Qorvo Inc.(a)

    1,369       150,617  

Qualcomm Inc.

    1,105       146,048  

SiTime Corp.(a)(b)

    368       47,476  

Skyworks Solutions Inc.

    1,418       162,177  

Taiwan Semiconductor Manufacturing Co. Ltd.

    8,000       144,461  

Wolfspeed Inc.(a)(b)

    1,597       105,242  
   

 

 

 
      2,030,828  
Software — 13.4%            

Confluent Inc., Class A(a)(b)

    4,561       157,537  

Datadog Inc., Class A(a)

    1,916       223,636  

New Relic Inc.(a)

    1,648       138,399  

Nutanix Inc., Class A(a)

    4,314       130,283  

Teradata Corp.(a)

    3,104       176,462  
   

 

 

 
      826,317  
Technology Hardware, Storage & Peripherals — 5.8%  

Inspur Electronic Information Industry Co. Ltd., Class A

    3,200       20,464  

Pure Storage Inc., Class A(a)

    4,545       168,120  

Wiwynn Corp.

    3,000       170,367  
   

 

 

 
      358,951  
   

 

 

 

Total Long-Term Investments — 99.9%
(Cost: $6,384,851)

      6,138,824  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 11.3%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(c)(d)(e)

    697,435       697,644  
   

 

 

 

Total Short-Term Securities — 11.3%
(Cost: $697,642)

 

    697,644  
   

 

 

 

Total Investments — 111.2%
(Cost: $7,082,493)

 

    6,836,468  

Liabilities in Excess of Other Assets — (11.2)%

 

    (688,914
   

 

 

 

Net Assets — 100.0%

 

  $  6,147,554  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Affiliate of the Fund.

(d) 

Annualized 7-day yield as of period end.

(e) 

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

 

 

34  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Future Cloud 5G and Tech ETF

 

Affiliates

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

 

Affiliated Issuer    
Value at
07/31/22
 
 
   
Purchases
at Cost
 
 
   
Proceeds
from Sale
 
 
   
Net Realized
Gain (Loss)
 
 
   


Change in
Unrealized
Appreciation
(Depreciation)
 
 
 
 
   
Value at
07/31/23
 
 
   

Shares
Held at
07/31/23
 
 
 
    Income      


Capital

Gain
Distributions

from

Underlying

Funds

 


 

 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 133,722     $ 563,844 (a)    $     $ 76     $ 2     $ 697,644       697,435     $ 631 (b)     $  

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

          0 (a)                                     60        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 76     $ 2     $ 697,644       $ 691     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

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

 
  (c) 

As of period end, the entity is no longer held.

 

Fair Value Hierarchy as of Period End

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

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

 

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 4,696,000        $ 1,442,824        $        $ 6,138,824  

Short-Term Securities

                 

Money Market Funds

     697,644                            697,644  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 5,393,644        $ 1,442,824        $        $ 6,836,468  
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

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

  35


Schedule of Investments

July 31, 2023

  

iShares® Genomics Immunology and Healthcare ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Canada — 0.7%            

Arbutus Biopharma Corp.(a)

    473,769     $ 1,028,079  
   

 

 

 
China — 3.9%            

BeiGene Ltd.(a)

    338,200       5,601,444  
   

 

 

 
Denmark — 4.2%            

Genmab A/S(a)

    14,938       6,157,437  
   

 

 

 
France — 6.3%            

Sanofi

    57,473       6,131,479  

Valneva SE(a)(b)

    398,508       2,992,606  
   

 

 

 
      9,124,085  
Germany — 4.8%            

BioNTech SE, ADR(a)

    54,146       5,894,875  

MorphoSys AG(a)

    36,182       1,059,241  
   

 

 

 
      6,954,116  
Japan — 3.9%            

Takeda Pharmaceutical Co. Ltd.

    183,000       5,595,196  
   

 

 

 
Netherlands — 2.3%            

CureVac NV(a)(b)

    357,680       3,319,270  
   

 

 

 
South Korea — 1.8%            

ABLBio Inc.(a)

    112,085       1,683,393  

Geneone Life Science Inc.(a)

    275,250       929,210  
   

 

 

 
      2,612,603  
Switzerland — 7.0%            

CRISPR Therapeutics AG(a)

    79,988       4,585,712  

Roche Holding AG, NVS

    18,142       5,624,951  
   

 

 

 
       10,210,663  
Taiwan — 2.2%            

Adimmune Corp.(a)

    1,358,000       1,516,083  

Medigen Vaccine Biologics Corp.(a)

    957,815       1,737,522  
   

 

 

 
      3,253,605  
United States — 62.6%            

Allogene Therapeutics Inc.(a)(b)

    295,036       1,463,379  

Arcturus Therapeutics Holdings Inc.(a)

    25,403       888,089  

Arcus Biosciences Inc.(a)(b)

    182,505       3,631,850  

Atea Pharmaceuticals Inc.(a)

    281,609       965,919  

Beam Therapeutics Inc.(a)(b)

    172,048       5,311,122  

BioCryst Pharmaceuticals Inc.(a)(b)

    701,169       5,181,639  

BioNano Genomics Inc.(a)

    1,156,157       679,473  

Blueprint Medicines Corp.(a)

    100,563       6,637,158  

Caribou Biosciences Inc.(a)(b)

    205,660       1,478,695  

Coherus Biosciences Inc.(a)(b)

    288,921       1,392,599  

Editas Medicine Inc.(a)

    262,162       2,301,782  
Security   Shares     Value  
United States (continued)            

Exelixis Inc.(a)

    305,095     $ 6,013,422  

Fate Therapeutics Inc.(a)

    354,386       1,463,614  

Ginkgo Bioworks Holdings Inc.(a)(b)

    3,614,048       9,071,260  

ImmunityBio Inc.(a)(b)

    418,787       921,331  

Intellia Therapeutics Inc.(a)(b)

    86,842       3,676,022  

Invitae Corp.(a)(b)

    971,080       1,378,934  

Iovance Biotherapeutics Inc.(a)

    665,314       4,830,180  

Karyopharm Therapeutics Inc.(a)

    398,310       716,958  

Ligand Pharmaceuticals Inc.(a)

    62,353       4,173,286  

MacroGenics Inc.(a)

    224,876       1,072,659  

Moderna Inc.(a)(b)

    44,861       5,278,345  

OmniAb Inc., 12.50 Earnout Shares(c)

    19,498        

OmniAb Inc., 15.00 Earnout Shares(c)

    19,498        

Prime Medicine Inc., NVS(a)

    30,180       454,813  

Regeneron Pharmaceuticals Inc.(a)(b)

    7,913       5,870,734  

Sana Biotechnology Inc.(a)

    88,593       519,155  

SpringWorks Therapeutics Inc.(a)

    182,097       5,714,204  

Twist Bioscience Corp.(a)(b)

    210,834       5,131,700  

Vir Biotechnology Inc.(a)

    214,539       3,020,709  

Xencor Inc.(a)(b)

    62,323       1,513,826  
   

 

 

 
      90,752,857  
   

 

 

 

Total Long-Term Investments — 99.7%
(Cost: $212,319,212)

 

    144,609,355  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 16.7%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(d)(e)(f)

    24,049,783       24,056,998  

BlackRock Cash Funds: Treasury, SL Agency Shares, 5.22%(d)(e)

    70,000       70,000  
   

 

 

 

Total Short-Term Securities — 16.7%
(Cost: $24,128,841)

 

    24,126,998  
   

 

 

 

Total Investments — 116.4%
(Cost: $236,448,053)

 

    168,736,353  

Liabilities in Excess of Other Assets — (16.4)%

 

    (23,742,022
   

 

 

 

Net Assets — 100.0%

 

  $  144,994,331  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

 

 

36  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Genomics Immunology and Healthcare ETF

 

Affiliates

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

 

                   
Affiliated Issuer   Value at
07/31/22
    Purchases
at Cost
    Proceeds
from Sale
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
07/31/23
    Shares
Held at
07/31/23
    Income    

Capital

Gain
Distributions
from
Underlying
Funds

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 29,522,610     $     $ (5,475,155 )(a)    $ 11,459     $ (1,916   $ 24,056,998       24,049,783     $ 422,031 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    210,000             (140,000 )(a)                  70,000       70,000       6,772        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 11,459     $ (1,916   $ 24,126,998       $ 428,803     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

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

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

         
Description    Number of
Contracts
     Expiration
Date
       Notional
Amount
(000)
    Value/
Unrealized
Appreciation
(Depreciation)
 

Long Contracts

              

E-Mini Health Care Sector Index

   2        09/15/23        $ 272     $ 7,450  
              

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

               
      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Unrealized appreciation on futures contracts(a)

   $      $      $ 7,450      $      $      $      $ 7,450  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the period ended July 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

               
      Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

Net Realized Gain (Loss) from

                    

Futures contracts

   $      $      $ 32,386      $      $      $      $ 32,386  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                    

Futures contracts

   $      $      $ (30,897    $      $      $      $ (30,897
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

   

Futures contracts:

  

Average notional value of contracts — long

   $ 372,073   

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

 

 

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

  37


Schedule of Investments (continued)

July 31, 2023

  

iShares® Genomics Immunology and Healthcare ETF

 

Fair Value Hierarchy as of Period End

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

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

 

         
      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 105,580,793        $ 39,028,562        $        $ 144,609,355  

Short-Term Securities

                 

Money Market Funds

     24,126,998                            24,126,998  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 129,707,791        $ 39,028,562        $    —        $ 168,736,353  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Assets

                 

Equity Contracts

   $ 7,450        $        $        $ 7,450  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

38  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments

July 31, 2023

  

iShares® Neuroscience and Healthcare ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Biotechnology — 57.0%            

ACADIA Pharmaceuticals Inc.(a)

    8,008     $ 234,154  

Alector Inc.(a)

    7,557       51,841  

Alkermes PLC(a)

    6,712       196,527  

Anavex Life Sciences Corp.(a)

    9,668       79,761  

Annexon Inc.(a)

    4,302       14,842  

BioArctic AB, Class B(a)(b)

    4,802       137,594  

Biogen Inc.(a)

    660       178,325  

Biohaven Ltd., NVS(a)

    7,182       142,778  

Bioxcel Therapeutics Inc.(a)

    2,477       22,640  

Catalyst Pharmaceuticals Inc.(a)(c)

    12,258       169,528  

Cerevel Therapeutics Holdings Inc.(a)

    5,907       180,695  

Design Therapeutics Inc.(a)

    4,013       32,666  

Dyne Therapeutics Inc.(a)(c)

    3,849       46,881  

Idorsia Ltd.(a)(c)

    14,827       117,599  

Karuna Therapeutics Inc.(a)

    844       168,606  

Neurocrine Biosciences Inc.(a)

    2,136       217,637  

Prothena Corp. PLC(a)

    2,858       196,830  

PTC Therapeutics Inc.(a)

    4,490       181,127  

Sarepta Therapeutics Inc.(a)(c)

    1,583       171,581  

Vanda Pharmaceuticals Inc.(a)

    6,801       39,310  

Voyager Therapeutics Inc.(a)

    4,243       39,545  

Xenon Pharmaceuticals Inc.(a)

    5,084       187,701  
   

 

 

 
      2,808,168  
Health Care Equipment & Supplies — 14.0%  

Axogen Inc.(a)

    5,003       43,226  

Axonics Inc.(a)

    4,076       246,068  

Integra LifeSciences Holdings Corp.(a)

    5,088       231,351  

Nevro Corp.(a)

    4,257       106,383  

Peijia Medical Ltd.(a)(b)

    54,000       61,264  
   

 

 

 
      688,292  
Life Sciences Tools & Services — 0.4%  

Cellivery Therapeutics Inc.(a)(d)

    3,565       16,815  
   

 

 

 
Pharmaceuticals — 28.5%  

Amylyx Pharmaceuticals Inc.(a)

    5,095       119,478  

Avadel Pharmaceuticals PLC, ADR(a)

    8,651       121,979  

Cassava Sciences Inc.(a)(c)

    4,836       106,295  
Security   Shares     Value  
Pharmaceuticals (continued)  

Edgewise Therapeutics Inc.(a)

    4,907     $ 35,772  

Harmony Biosciences Holdings Inc.(a)(c)

    4,135       146,255  

Intra-Cellular Therapies Inc.(a)

    3,216       198,878  

KemPharm Inc.(a)(c)

    3,689       18,002  

Marinus Pharmaceuticals Inc.(a)

    5,875       62,510  

Neuren Pharmaceuticals Ltd., NVS(a)

    13,475       117,858  

SK Biopharmaceuticals Co. Ltd.(a)

    3,420       218,388  

Supernus Pharmaceuticals Inc.(a)

    5,909       181,347  

WaVe Life Sciences Ltd.(a)

    8,533       37,289  

Xeris Biopharma Holdings Inc.(a)

    15,969       41,679  
   

 

 

 
      1,405,730  
   

 

 

 

Total Long-Term Investments — 99.9%
(Cost: $4,974,420)

 

    4,919,005  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 13.3%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(e)(f)(g)

    656,384       656,581  
   

 

 

 

Total Short-Term Securities — 13.3%
(Cost: $656,527)

 

    656,581  
   

 

 

 

Total Investments — 113.2%
(Cost: $5,630,947)

 

    5,575,586  

Liabilities in Excess of Other Assets — (13.2)%

 

    (650,258
   

 

 

 

Net Assets — 100.0%

 

  $  4,925,328  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

All or a portion of this security is on loan.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period end.

(g) 

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

Affiliates

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

 

                   
Affiliated Issuer    
Value at
08/24/22
 
(a) 
   
Purchases
at Cost
 
 
   
Proceeds
from Sale
 
 
   
Net Realized
Gain (Loss)
 
 
   


Change in
Unrealized
Appreciation
(Depreciation)
 
 
 
 
   
Value at
07/31/23
 
 
   

Shares
Held at
07/31/23
 
 
 
    Income      





Capital

Gain
Distributions
from
Underlying
Funds

 


 
 
 
 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $     $ 656,476 (b)    $     $ 51     $ 54     $ 656,581       656,384       $17,876 (c)    $  

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

          0 (b)                                     420        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 51     $ 54     $ 656,581         $18,296     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Commencement of operations.

 
  (b) 

Represents net amount purchased (sold).

 
  (c) 

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

 
  (d) 

As of period end, the entity is no longer held.

 

 

 

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

  39


Schedule of Investments (continued)

July 31, 2023

  

iShares® Neuroscience and Healthcare ETF

 

Fair Value Hierarchy as of Period End

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

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

 

         
      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 4,249,487        $ 652,703        $ 16,815        $ 4,919,005  

Short-Term Securities

                 

Money Market Funds

     656,581                            656,581  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 4,906,068        $ 652,703        $ 16,815        $ 5,575,586  
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

40  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments

July 31, 2023

  

iShares® Robotics and Artificial Intelligence Multisector ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Australia — 1.2%            

Megaport Ltd.(a)

    878,585     $  6,036,008  
   

 

 

 
Canada — 0.8%            

ATS Corp.(a)

    92,945       4,215,001  
   

 

 

 
China — 13.0%            

Alibaba Group Holding Ltd.(a)

    394,700       5,044,020  

Baidu Inc.(a)

    251,800       4,922,888  

Hello Group Inc., ADR

    468,510       4,989,632  

iQIYI Inc., ADR(a)

    934,918       5,927,380  

JOYY Inc., ADR

    144,186       5,011,905  

Kingsoft Cloud Holdings Ltd., ADR(a)(b)

    761,964       5,364,227  

Kuaishou Technology(a)(c)

    575,200       5,048,326  

Meitu Inc.(b)(c)

    15,922,500       5,812,924  

Meituan, Class B(a)(c)

    267,790       5,112,142  

NetEase Inc.

    239,000       5,205,497  

Tencent Holdings Ltd.

    97,300       4,472,017  

Xiaomi Corp., Class B(a)(c)

    3,035,600       4,829,279  

ZTE Corp., Class H

    1,326,400       4,854,394  
   

 

 

 
      66,594,631  
France — 1.3%  

Atos SE(a)

    267,044       2,773,902  

Dassault Systemes SE

    93,109       3,979,352  
   

 

 

 
      6,753,254  
Germany — 1.6%  

Duerr AG

    136,785       4,267,758  

Nemetschek SE

    51,848       3,772,927  
   

 

 

 
      8,040,685  
Guernsey — 1.1%  

Genius Sports Ltd.(a)

    734,230       5,756,363  
   

 

 

 
India — 1.0%            

PB Fintech Ltd.(a)

    575,476       5,129,224  
   

 

 

 
Israel — 2.9%            

Maytronics Ltd.

    354,777       4,832,183  

Nano Dimension Ltd., ADR(a)(b)

    1,718,850       5,328,435  

Stratasys Ltd.(a)(b)

    260,837       4,728,975  
   

 

 

 
      14,889,593  
Italy — 1.1%  

Stellantis NV

    262,339       5,382,641  
   

 

 

 
Japan — 9.8%            

FANUC Corp.

    121,000       3,701,683  

Harmonic Drive Systems Inc.

    121,800       3,354,598  

Kawasaki Heavy Industries Ltd.

    190,800       4,866,014  

Kyocera Corp.

    73,300       3,944,424  

MINEBEA MITSUMI Inc.

    216,400       4,008,329  

Nidec Corp.

    78,600       4,694,381  

Oracle Corp. Japan

    52,900       3,708,216  

Ricoh Co. Ltd.

    498,600       4,435,379  

Sharp Corp./Japan(a)

    765,000       4,548,812  

Sony Group Corp.

    42,100       3,943,348  

Yamaha Motor Co. Ltd.

    163,500       4,795,275  

Yaskawa Electric Corp.

    97,100       4,220,964  
   

 

 

 
      50,221,423  
Netherlands — 0.0%  

Yandex NV, Class A(a)(d)

    50,541       506  
   

 

 

 
Security   Shares     Value  
Norway — 0.9%            

AutoStore Holdings Ltd.(a)(b)(c)

    1,845,516     $ 4,602,497  
   

 

 

 
South Korea — 2.6%            

AfreecaTV Co. Ltd.

    79,111       4,532,680  

Samsung Electronics Co. Ltd.

    74,930       4,102,615  

Samsung SDS Co. Ltd.

    43,272       4,356,339  
   

 

 

 
      12,991,634  
Sweden — 1.0%  

Spotify Technology SA(a)

    27,637       4,129,244  

Viaplay Group AB, Class B(a)(b)

    198,825       863,201  
   

 

 

 
      4,992,445  
Switzerland — 1.8%  

ABB Ltd., Registered

    110,783       4,445,446  

STMicroelectronics NV

    91,963       4,918,766  
   

 

 

 
      9,364,212  
Taiwan — 8.5%  

Alchip Technologies Ltd.

    77,000       4,901,117  

Faraday Technology Corp.

    741,000       7,718,344  

Global Unichip Corp.

    89,000       4,655,105  

Hiwin Technologies Corp.

    540,392       3,637,555  

Holtek Semiconductor Inc.

    1,815,000       4,009,935  

HTC Corp.(a)

    2,022,000       3,601,325  

Nuvoton Technology Corp.

    997,000       4,460,511  

Via Technologies Inc.

    1,507,000       6,414,334  

Winbond Electronics Corp.(a)

    4,490,000       4,208,600  
   

 

 

 
      43,606,826  
United States — 51.2%  

3D Systems Corp.(a)(b)

    452,025       3,937,138  

Adobe Inc.(a)

    9,566       5,224,662  

Advanced Micro Devices Inc.(a)

    35,472       4,057,997  

Alphabet Inc., Class A(a)

    35,981       4,775,398  

Altair Engineering Inc., Class A(a)(b)

    56,213       4,212,602  

Alteryx Inc., Class A(a)

    98,733       4,093,470  

Amazon.com Inc.(a)

    33,753       4,512,101  

Ambarella Inc.(a)

    54,349       4,533,794  

AMETEK Inc.

    27,830       4,413,838  

Analog Devices Inc.

    23,131       4,615,328  

Ansys Inc.(a)(b)

    12,902       4,413,774  

Apple Inc.

    24,149       4,744,071  

Autodesk Inc.(a)

    20,367       4,317,600  

Bentley Systems Inc., Class B(b)

    88,730       4,780,772  

Bumble Inc., Class A(a)

    253,506       4,694,931  

CEVA Inc.(a)(b)

    166,609       4,525,100  

Cognex Corp.

    73,893       4,036,036  

Credo Technology Group Holdings Ltd.(a)

    253,979       4,310,024  

Desktop Metal Inc., Class A(a)(b)

    2,049,448       3,729,995  

Dropbox Inc., Class A(a)

    175,689       4,734,819  

Elastic NV(a)

    58,134       3,863,004  

Freshworks Inc., Class A(a)(b)

    265,668       4,957,365  

fuboTV Inc.(a)(b)

    2,493,853       8,404,285  

GoDaddy Inc., Class A(a)

    55,485       4,277,339  

HubSpot Inc.(a)

    8,015       4,653,108  

Informatica Inc. , Class A(a)(b)

    235,731       4,488,318  

Intel Corp.

    132,870       4,752,760  

Intuitive Surgical Inc.(a)

    13,445       4,361,558  

iRobot Corp.(a)

    104,059       4,162,360  

Lattice Semiconductor Corp.(a)(b)

    52,504       4,774,714  

Lumen Technologies Inc.

    2,069,834       3,705,003  

Marvell Technology Inc.

    69,691       4,538,975  

Matterport Inc., Class A(a)(b)

    1,599,962       5,423,871  

 

 

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

  41


Schedule of Investments (continued)

July 31, 2023

  

iShares® Robotics and Artificial Intelligence Multisector ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
United States (continued)  

MaxLinear Inc.(a)

    144,306     $ 3,560,029  

Meta Platforms Inc, Class A(a)

    15,521       4,944,991  

Microchip Technology Inc.

    54,112       5,083,281  

Microsoft Corp.

    12,616       4,237,967  

MicroStrategy Inc., Class A(a)(b)

    13,918       6,094,414  

MicroVision Inc.(a)(b)

    856,200       3,424,800  

Netflix Inc.(a)

    11,137       4,888,809  

Nvidia Corp.

    10,663       4,982,713  

Pegasystems Inc.(b)

    87,799       4,631,397  

Peloton Interactive Inc., Class A(a)(b)

    497,059       4,826,443  

Pinterest Inc., Class A(a)

    178,697       5,180,426  

Proto Labs Inc.(a)(b)

    126,730       4,201,099  

PTC Inc.(a)

    30,401       4,432,770  

Qualcomm Inc.

    35,980       4,755,477  

Regal Rexnord Corp.(b)

    29,715       4,640,889  

Rumble Inc.(a)(b)

    420,229       3,622,374  

Salesforce Inc.(a)

    19,871       4,471,174  

Silicon Laboratories Inc.(a)(b)

    28,644       4,271,966  

Snap Inc., Class A, NVS(a)

    403,683       4,585,839  

Snowflake Inc., Class A(a)

    24,154       4,292,407  

Splunk Inc.(a)(b)

    40,834       4,423,547  

Sprinklr Inc.(a)

    315,651       4,431,740  

Teradata Corp.(a)

    85,861       4,881,198  

Texas Instruments Inc.

    23,929       4,307,220  

Vimeo Inc.(a)

    268,642       1,106,805  
   

 

 

 
      261,305,885  
   

 

 

 

Total Long-Term Investments — 99.8%
(Cost: $472,075,469)

 

    509,882,828  
   

 

 

 

Security   Shares     Value  

Short-Term Securities

   
Money Market Funds — 9.6%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(e)(f)(g)

    49,075,660     $ 49,090,383  

BlackRock Cash Funds: Treasury, SL Agency Shares, 5.22%(e)(f)

    60,000       60,000  
   

 

 

 

Total Short-Term Securities — 9.6%
(Cost: $49,153,109)

 

    49,150,383  
   

 

 

 

Total Investments — 109.4%
(Cost: $521,228,578)

 

    559,033,211  

Liabilities in Excess of Other Assets — (9.4)%

 

    (48,013,539
   

 

 

 

Net Assets — 100.0%

 

  $  511,019,672  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period end.

(g) 

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

 

Affiliates

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

 

 

 
Affiliated Issuer   Value at
07/31/22
   

Purchases

at Cost

    Proceeds
from Sale
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
07/31/23
   

Shares

Held at
07/31/23

    Income    

Capital

Gain
Distributions
from
Underlying
Funds

 

 

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 20,896,442     $ 28,192,166 (a)    $     $ 4,705     $ (2,930   $ 49,090,383       49,075,660     $ 1,386,461 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    200,000             (140,000 )(a)                  60,000       60,000       10,645        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 4,705     $ (2,930   $ 49,150,383       $ 1,397,106     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

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

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

 

 
Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
  Value/
Unrealized
Appreciation
(Depreciation)
 

 

 
Long Contracts                             

E-Mini Technology Select Sector Index

     4          09/15/23        $ 723   $ 10,560  
              

 

 

 

 

 

 

42  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Robotics and Artificial Intelligence Multisector ETF

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

 

 
     Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

 

 

Assets — Derivative Financial Instruments

                    

Futures contracts

                    

Unrealized appreciation on futures contracts(a)

   $      $      $  10,560      $      $      $      $ 10,560  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

For the period ended July 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

 

 
     Commodity
Contracts
     Credit
Contracts
     Equity
Contracts
     Foreign
Currency
Exchange
Contracts
     Interest
Rate
Contracts
     Other
Contracts
     Total  

 

 

Net Realized Gain (Loss) from

                    

Futures contracts

   $      $      $ 337,965      $      $      $      $ 337,965  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                    

Futures contracts

   $      $      $ (43,071    $      $      $      $ (43,071
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

        

Average notional value of contracts — long

   $ 1,269,170  

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

Fair Value Hierarchy as of Period End

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

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

 

 

 
     Level 1        Level 2        Level 3        Total  

 

 

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 306,757,047        $ 203,125,275        $ 506        $ 509,882,828  

Short-Term Securities

                 

Money Market Funds

     49,150,383                            49,150,383  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 355,907,430        $ 203,125,275        $    506        $ 559,033,211  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Assets

                 

Equity Contracts

   $ 10,560        $        $        $ 10,560  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

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

  43


Schedule of Investments 

July 31, 2023

  

iShares® Self-Driving EV and Tech ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   
Australia — 7.6%            

Allkem Ltd.(a)

    1,658,526     $ 16,604,519  

ARB Corp. Ltd.

    55,082       1,156,383  

Pilbara Minerals Ltd.

    5,480,186       17,928,674  

Vulcan Energy Resources Ltd.(a)

    551,089       1,650,182  
   

 

 

 
      37,339,758  
China — 19.2%            

BYD Co. Ltd., Class H

    518,000       18,450,134  

Ganfeng Lithium Co. Ltd., Class H(b)

    1,847,280       11,900,935  

Li Auto Inc.(a)

    1,079,700       23,177,942  

XPeng Inc.(a)

    3,871,100       41,292,743  
   

 

 

 
      94,821,754  
France — 5.4%            

Faurecia SE(a)

    113,832       2,860,469  

Renault SA

    456,525       20,051,323  

Valeo

    163,696       3,700,213  
   

 

 

 
      26,612,005  
Germany — 1.5%            

Continental AG

    78,917       6,300,706  

Vitesco Technologies Group AG(a)

    12,477       1,067,082  
   

 

 

 
      7,367,788  
Israel — 0.1%            

Innoviz Technologies Ltd.(a)(c)

    94,814       388,737  
   

 

 

 
Japan — 1.5%            

GS Yuasa Corp.

    379,500       7,636,290  
   

 

 

 
Netherlands — 0.0%            

Yandex NV, Class A(a)(d)

    94,146       942  
   

 

 

 
South Korea — 11.0%            

Chunbo Co. Ltd.

    22,226       3,322,867  

Hyundai Mobis Co. Ltd.

    46,584       8,511,656  

LG Energy Solution(a)

    35,974       15,804,510  

Samsung SDI Co. Ltd.

    29,584       15,442,982  

SK IE Technology Co. Ltd.(a)(b)

    134,239       11,311,445  
   

 

 

 
      54,393,460  
Sweden — 2.7%            

Hexagon AB, Class B

    1,360,267       13,188,886  
   

 

 

 
Switzerland — 3.5%            

ABB Ltd., Registered

    433,061       17,377,662  
   

 

 

 
Taiwan — 0.6%            

Advanced Energy Solution Holding Co. Ltd.

    144,000       3,180,892  
   

 

 

 
United Kingdom — 1.1%            

Polestar Automotive Holding U.K. PLC, Class A(a)(c)

    1,222,061        5,474,833  
   

 

 

 
United States — 38.7%            

Adient PLC(a)

    66,996       2,851,350  

Aptiv PLC(a)

    172,918       18,932,792  

Aurora Innovation Inc., Class A(a)

    228,615       749,857  

Autoliv Inc.

    62,556       6,313,777  

Blink Charging Co.(a)(c)

    251,085       1,606,944  

Canoo Inc.(a)(c)

    2,148,197       1,386,017  

ChargePoint Holdings Inc., Class A(a)(c)

    1,300,965       11,266,357  

CTS Corp.

    22,651       1,010,914  

EVgo Inc.(a)(c)

    460,420       2,012,035  

Fisker Inc., Class A(a)(c)

    971,942       5,996,882  
Security   Shares      Value  
United States (continued)  

Gentex Corp.

    170,424      $ 5,722,838  

Gentherm Inc.(a)

    23,862        1,426,232  

Lear Corp.

    43,018        6,657,466  

Livent Corp.(a)

    646,678        15,921,212  

Lucid Group Inc.(a)(c)

    2,455,595        18,687,078  

Luminar Technologies Inc.(a)(c)

    166,768        1,234,083  

Methode Electronics Inc.

    24,647        829,125  

Microvast Holdings Inc.(a)(c)

    861,504        2,472,517  

Nikola Corp.(a)(c)

    2,678,667        7,152,041  

QuantumScape Corp.(a)(c)

    1,343,472        17,881,612  

Rivian Automotive Inc., Class A(a)(c)

    1,118,834        30,924,572  

Sensata Technologies Holding PLC(c)

    110,840        4,682,990  

Solid Power Inc.(a)(c)

    585,580        1,674,759  

Stoneridge Inc.(a)

    19,464        397,844  

Tesla Inc.(a)

    75,715        20,248,462  

Visteon Corp.(a)

    20,527        3,163,005  
    

 

 

 
       191,202,761  
    

 

 

 

Total Common Stocks — 92.9%
(Cost: $396,298,353)

       458,985,768  
    

 

 

 

Preferred Stocks

    
Germany — 6.6%             

Porsche Automobil Holding SE, Preference Shares, NVS

    278,893        16,456,330  

Volkswagen AG, Preference Shares, NVS

    124,279        16,463,931  
    

 

 

 
       32,920,261  
    

 

 

 

Total Preferred Stocks — 6.6%
(Cost: $35,371,957)

       32,920,261  
    

 

 

 

Total Long-Term Investments — 99.5%
(Cost: $431,670,310)

       491,906,029  
    

 

 

 

Short-Term Securities

    
Money Market Funds — 18.9%             

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(e)(f)(g)

    93,093,689        93,121,617  

BlackRock Cash Funds: Treasury, SL Agency Shares, 5.22%(e)(f)

    180,000        180,000  
    

 

 

 

Total Short-Term Securities — 18.9%
(Cost: $93,299,119)

 

     93,301,617  
    

 

 

 

Total Investments — 118.4%
(Cost: $524,969,429)

 

     585,207,646  

Liabilities in Excess of Other Assets — (18.4)%

 

     (91,000,328
    

 

 

 

Net Assets — 100.0%

 

   $  494,207,318  
    

 

 

 

 

(a) 

Non-income producing security.

(b) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) 

All or a portion of this security is on loan.

(d) 

Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) 

Affiliate of the Fund.

(f) 

Annualized 7-day yield as of period end.

(g) 

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

 

 

44  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments (continued)

July 31, 2023

  

iShares® Self-Driving EV and Tech ETF

 

Affiliates

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

 

Affiliated Issuer   Value at
07/31/22
    Purchases
at Cost
    Proceeds
from Sale
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
07/31/23
    Shares
Held at
07/31/23
    Income    

Capital

Gain
Distributions
from
Underlying
Funds

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 13,521,649     $ 79,594,454 (a)    $     $ 3,125     $ 2,389     $ 93,121,617       93,093,689     $ 3,991,654 (b)    $  

BlackRock Cash Funds: Treasury, SL Agency Shares

    160,000       20,000 (a)                         180,000       180,000       22,727       2  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ 3,125     $ 2,389     $ 93,301,617       $ 4,014,381     $ 2  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a) 

Represents net amount purchased (sold).

 
  (b) 

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

 

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

 

Description    Number of
Contracts
       Expiration
Date
       Notional
Amount
(000)
  Value/
Unrealized
Appreciation
(Depreciation)
 
Long Contracts                             

Euro STOXX 50 Index

     14          09/15/23        $  692   $ 17,365  

S&P 500 E-Mini Index

     6          09/15/23        1,384     36,532  
              

 

 

 
               $ 53,897  
              

 

 

 

Derivative Financial Instruments Categorized by Risk Exposure

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

 

     
Commodity
Contracts
 
 
    
Credit
Contracts
 
 
    
Equity
Contracts
 
 
    


Foreign
Currency
Exchange
Contracts
 
 
 
 
    

Interest
Rate
Contracts
 
 
 
    
Other
Contracts
 
 
     Total  
               

Assets — Derivative Financial Instruments

                   

Futures contracts

                   

Unrealized appreciation on futures contracts(a)

  $    —      $    —      $ 53,897      $    —      $    —      $    —      $ 53,897  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  (a) 

Net cumulative unrealized appreciation (depreciation) on futures contracts are reported in the Schedule of Investments. In the Statements of Assets and Liabilities, only current day’s variation margin is reported in receivables or payables and the net cumulative unrealized appreciation (depreciation) is included in accumulated earnings (loss).

 

 

     
Commodity
Contracts
 
 
    
Credit
Contracts
 
 
    
Equity
Contracts
 
 
    


Foreign
Currency
Exchange
Contracts
 
 
 
 
    

Interest
Rate
Contracts
 
 
 
    
Other
Contracts
 
 
     Total  
               

Net Realized Gain (Loss) from

                   

Futures contracts

  $    —      $    —      $ 363,492      $    —      $    —      $    —      $ 363,492  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Change in Unrealized Appreciation (Depreciation) on

                   

Futures contracts

  $    —      $    —      $ 9,082      $    —      $    —      $    —      $ 9,082  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Quarterly Balances of Outstanding Derivative Financial Instruments

 

Futures contracts:

   

Average notional value of contracts — long

  $1,371,437

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

 

 

 

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

  45


Schedule of Investments (continued)

July 31, 2023

  

iShares® Self-Driving EV and Tech ETF

 

Fair Value Hierarchy as of Period End

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

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

 

         
      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 197,066,331        $ 261,918,495        $ 942        $ 458,985,768  

Preferred Stocks

              32,920,261                   32,920,261  

Short-Term Securities

                 

Money Market Funds

     93,301,617                            93,301,617  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 290,367,948        $ 294,838,756        $ 942        $ 585,207,646  
  

 

 

      

 

 

      

 

 

      

 

 

 

Derivative Financial Instruments(a)

                 

Assets

                 

Equity Contracts

   $ 36,532        $ 17,365        $        $ 53,897  
  

 

 

      

 

 

      

 

 

      

 

 

 

 

  (a) 

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

 

See notes to financial statements.

 

 

46  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


Schedule of Investments 

July 31, 2023

  

iShares® Virtual Work and Life Multisector ETF

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  

Common Stocks

   

Communication Services — 31.9%

   

Activision Blizzard Inc.(a)

    926     $ 85,897  

Bandwidth Inc., Class A(a)

    816       12,362  

Bumble Inc., Class A(a)

    2,414       44,707  

Electronic Arts Inc.

    582       79,356  

fuboTV Inc.(a)

    6,964       23,469  

Hello Group Inc., ADR

    3,468       36,934  

HUYA Inc., ADR(a)

    2,204       7,560  

iQIYI Inc., ADR(a)

    12,842       81,418  

JOYY Inc., ADR

    1,116       38,792  

Kahoot! ASA(a)

    682       2,346  

Match Group Inc.(a)(b)

    1,908       88,741  

Meitu Inc.(c)

    7,000       2,556  

Netflix Inc.(a)

    184       80,770  

Paradox Interactive AB

    70       2,010  

Roku Inc.(a)

    1,234       118,797  

Rumble Inc.(a)(b)

    1,910       16,464  

Snap Inc., Class A, NVS(a)(b)

    7,138       81,088  

Spotify Technology SA(a)

    491       73,360  

Take-Two Interactive Software Inc.(a)

    542       82,894  

Tencent Holdings Ltd.

    200       9,192  

Ubisoft Entertainment SA(a)

    2,338       78,631  

Viaplay Group AB, Class B(a)(b)

    176       764  

XD Inc.(a)

    800       1,941  
   

 

 

 
       1,050,049  
Consumer Discretionary — 16.9%            

2U Inc.(a)

    1,862       8,900  

Chegg Inc.(a)

    2,850       28,870  

Deliveroo PLC, Class A(a)(c)

    27,854       46,971  

Delivery Hero SE(a)(c)

    2,030       92,141  

DoorDash Inc., Class A(a)

    1,090       98,961  

Duolingo Inc, Class A(a)(b)

    478       74,181  

GN Store Nord A/S(a)

    404       10,773  

Just Eat Takeaway.com NV(a)(c)

    5,318       95,405  

Meituan, Class B(a)(c)

    650       12,409  

New Oriental Education & Technology Group Inc.(a)

    2,200       12,532  

Peloton Interactive Inc., Class A(a)

    7,634       74,126  

Zomato Ltd.(a)

    1,380       1,413  
   

 

 

 
      556,682  
Consumer Staples — 3.9%            

Alibaba Health Information Technology Ltd.(a)

    16,000       11,488  

Dada Nexus Ltd., ADR(a)

    6,144       41,103  

DocMorris AG(a)

    310       18,972  

JD Health International Inc.(a)(c)

    1,500       10,966  

Ping An Healthcare and Technology Co. Ltd.(a)(b)(c)

    1,600       4,241  

Shop Apotheke Europe NV(a)(c)

    356       41,276  
   

 

 

 
      128,046  
Health Care — 2.7%            

Teladoc Health Inc.(a)

    3,036       90,382  
   

 

 

 
Information Technology — 44.5%            

8x8 Inc.(a)

    4,016       19,036  
Security   Shares     Value  
Information Technology (continued)            

Asana Inc., Class A(a)

    2,918     $ 70,849  

Box Inc., Class A(a)(b)

    2,562       80,062  

Braze Inc., Class A(a)(b)

    1,820       82,737  

Cerence Inc.(a)

    1,392       38,712  

Cloudflare Inc., Class A(a)(b)

    1,054       72,484  

Consensus Cloud Solutions Inc.(a)

    652       21,131  

Dropbox Inc., Class A(a)

    3,144       84,731  

Everbridge Inc.(a)

    1,428       44,039  

Five9 Inc.(a)

    1,058       92,839  

GB Group PLC

    10,862       34,891  

Gen Digital Inc.

    4,108       79,901  

Instructure Holdings Inc.(a)

    374       10,162  

Life360 Inc.(a)(c)

    2,914       15,182  

LivePerson Inc.(a)

    2,632       12,502  

Megaport Ltd.(a)

    3,530       24,252  

Microsoft Corp.

    220       73,902  

Mitek Systems Inc.(a)

    1,514       15,458  

Monday.com Ltd.(a)

    420       75,928  

Nice Ltd.(a)

    94       20,461  

PagerDuty Inc.(a)(b)

    3,124       80,974  

PowerSchool Holdings Inc., Class A(a)

    1,322       31,953  

RingCentral Inc., Class A(a)

    2,112       87,352  

Smartsheet Inc., Class A(a)

    1,520       67,488  

Tyler Technologies Inc.(a)

    184       72,980  

Verint Systems Inc.(a)

    1,986       74,217  

Zoom Video Communications Inc., Class A(a)

    1,110       81,418  
   

 

 

 
       1,465,641  
   

 

 

 

Total Long-Term Investments — 99.9%
(Cost: $4,958,098)

      3,290,800  
   

 

 

 

Short-Term Securities

   
Money Market Funds — 13.3%            

BlackRock Cash Funds: Institutional, SL Agency Shares, 5.42%(d)(e)(f)

    437,671       437,802  
   

 

 

 

Total Short-Term Securities — 13.3%
(Cost: $437,788)

      437,802  
   

 

 

 

Total Investments — 113.2%
(Cost: $5,395,886)

      3,728,602  

Liabilities in Excess of Other Assets — (13.2)%

      (433,384
   

 

 

 

Net Assets — 100.0%

    $ 3,295,218  
   

 

 

 

 

(a) 

Non-income producing security.

(b) 

All or a portion of this security is on loan.

(c) 

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) 

Affiliate of the Fund.

(e) 

Annualized 7-day yield as of period end.

(f) 

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

 

 

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

  47


Schedule of Investments (continued)

July 31, 2023

  

iShares® Virtual Work and Life Multisector ETF

 

Affiliates

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

 

Affiliated Issuer   Value at
07/31/22
    Purchases
at Cost
    Proceeds
from Sale
    Net Realized
Gain (Loss)
    Change in
Unrealized
Appreciation
(Depreciation)
    Value at
07/31/23
    Shares
Held at
07/31/23
    Income    

Capital

Gain
Distributions
from
Underlying
Funds

 

BlackRock Cash Funds: Institutional, SL Agency Shares

  $ 456,546     $     $ (18,734 )(a)    $ (7   $ (3   $ 437,802       437,671     $ 3,724 (b)    $  

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

          0 (a)                                     141        
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
        $ (7   $ (3   $ 437,802       $ 3,865     $  
       

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

  (a)

Represents net amount purchased (sold).

 
  (b) 

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

 
  (c) 

As of period end, the entity is no longer held.

 

Derivative Financial Instruments Categorized by Risk Exposure

For the period ended July 31, 2023, the effect of derivative financial instruments in the Statements of Operations was as follows:

 

     
Commodity
Contracts
 
 
    
Credit
Contracts
 
 
    
Equity
Contracts
 
 
   


Foreign
Currency
Exchange
Contracts
 
 
 
 
    

Interest
Rate
Contracts
 
 
 
    
Other
Contracts
 
 
     Total  
               

Net Realized Gain (Loss) from

                  

Futures contracts

  $    —      $  —      $ (46   $    —      $    —      $    —      $ (46
 

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Fair Value Hierarchy as of Period End

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

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

 

         
      Level 1        Level 2        Level 3        Total  

Assets

                 

Investments

                 

Long-Term Investments

                 

Common Stocks

   $ 2,788,968        $ 501,832        $        $ 3,290,800  

Short-Term Securities

                 

Money Market Funds

     437,802                            437,802  
  

 

 

      

 

 

      

 

 

      

 

 

 
   $ 3,226,770        $ 501,832        $    —        $ 3,728,602  
  

 

 

      

 

 

      

 

 

      

 

 

 

See notes to financial statements.

 

 

48  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


 

Statements of Assets and Liabilities

July 31, 2023

 

     iShares
Breakthrough
Environmental
Solutions
ETF
     iShares
Cybersecurity
and Tech
ETF
    iShares
Exponential
Technologies ETF
     iShares
Future Cloud
5G and Tech
ETF
 

ASSETS

         

Investments, at value — unaffiliated(a)(b)

  $ 4,339,467      $ 616,339,796     $ 3,454,903,806      $ 6,138,824  

Investments, at value — affiliated(c)

    130,372        29,194,894       229,963,109        697,644  

Cash

    5,265        9,849       2,697        2,354  

Cash pledged for futures contracts

    1,000        58,000       504,000         

Foreign currency collateral pledged for futures contracts(d)

                 74,766         

Foreign currency, at value(e)

    5,399        198,008       4,119,823        6,674  

Receivables:

         

Investments sold

                 46,844         

Securities lending income — affiliated

    32        6,566       234,221        111  

Dividends — unaffiliated

    4,005        426       1,836,526        1,426  

Dividends — affiliated

           4,890       26,933        7  

Tax reclaims

    1,525        2,835       1,559,500        549  

Variation margin on futures contracts

    110        2,400       16,154         
 

 

 

    

 

 

   

 

 

    

 

 

 

Total assets

    4,487,175        645,817,664       3,693,288,379        6,847,589  
 

 

 

    

 

 

   

 

 

    

 

 

 

LIABILITIES

         

Collateral on securities loaned, at value

    130,370        27,951,865       224,375,205        697,657  

Payables:

         

Investments purchased

    1,718                      

Investment advisory fees

    1,678        237,144       1,312,929        2,378  

Other liabilities

    2,000                      
 

 

 

    

 

 

   

 

 

    

 

 

 

Total liabilities

    135,766        28,189,009       225,688,134        700,035  
 

 

 

    

 

 

   

 

 

    

 

 

 

Commitments and contingent liabilities

         

NET ASSETS

  $ 4,351,409      $ 617,628,655     $ 3,467,600,245      $ 6,147,554  
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS CONSIST OF

         

Paid-in capital

  $ 4,025,360      $ 651,470,398     $ 2,909,953,806      $ 7,007,192  

Accumulated earnings (loss)

    326,049        (33,841,743     557,646,439        (859,638
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETS

  $ 4,351,409      $ 617,628,655     $ 3,467,600,245      $ 6,147,554  
 

 

 

    

 

 

   

 

 

    

 

 

 

NET ASSETVALUE

         

Shares outstanding

    160,000        15,650,000       59,300,000        240,000  
 

 

 

    

 

 

   

 

 

    

 

 

 

Net asset value

  $ 27.20      $ 39.47     $ 58.48      $ 25.61  
 

 

 

    

 

 

   

 

 

    

 

 

 

Shares authorized

    Unlimited        Unlimited       Unlimited        Unlimited  
 

 

 

    

 

 

   

 

 

    

 

 

 

Par value

    None        None       None        None  
 

 

 

    

 

 

   

 

 

    

 

 

 

(a) Investments, at cost — unaffiliated

  $ 4,070,081      $ 601,315,149     $ 2,853,761,487      $ 6,384,851  

(b) Securities loaned, at value

  $ 126,461      $ 27,767,971     $ 226,166,702      $ 676,762  

(c)  Investments, at cost — affiliated

  $ 130,370      $ 29,196,334     $ 229,893,594      $ 697,642  

(d) Foreign currency collateral pledged, at cost

  $      $     $ 75,278      $  

(e) Foreign currency, at cost

  $ 5,381      $ 198,159     $ 4,127,651      $ 6,718  

See notes to financial statements.

 

 

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

  49


 

Statements of Assets and Liabilities (continued)

July 31, 2023

 

     iShares
Genomics
Immunology
and
Healthcare
ETF
    iShares
Neuroscience
and
Healthcare
ETF
   

iShares

Robotics and
Artificial
Intelligence
Multisector
ETF

    iShares
Self-Driving
EV and Tech
ETF
 

ASSETS

       

Investments, at value — unaffiliated(a)(b)

  $ 144,609,355     $ 4,919,005     $ 509,882,828     $ 491,906,029  

Investments, at value — affiliated(c)

    24,126,998       656,581       49,150,383       93,301,617  

Cash

    5,704       2,850       758,822       5,627  

Cash pledged for futures contracts

    12,000             20,000       68,000  

Foreign currency collateral pledged for futures contracts(d)

                      49,477  

Foreign currency, at value(e)

    219,335       4,059       142,174       542,540  

Receivables:

       

Securities lending income — affiliated

    41,404       1,245       82,444       524,063  

Capital shares sold

                1,502,669        

Dividends — unaffiliated

                390,866       348,449  

Dividends — affiliated

    518             1,199       733  

Tax reclaims

    112,412             44,759       764,730  

Variation margin on futures contracts

                852       2,132  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    169,127,726       5,583,740       561,976,996       587,513,397  
 

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES

       

Collateral on securities loaned, at value

    24,066,095       656,476       49,104,542       93,119,069  

Payables:

       

Investments purchased

                1,421,946        

Deferred foreign capital gain tax

                241,923        

Investment advisory fees

    57,679       1,936       187,130       187,010  

Professional fees

    7,442             1,783        

Variation margin on futures contracts

    2,179                    
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    24,133,395       658,412       50,957,324       93,306,079  
 

 

 

   

 

 

   

 

 

   

 

 

 

Commitments and contingent liabilities

       

NET ASSETS

  $ 144,994,331     $ 4,925,328     $ 511,019,672     $ 494,207,318  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF

       

Paid-in capital

  $ 292,677,108     $ 5,044,932     $ 542,786,227     $ 526,355,062  

Accumulated loss

    (147,682,777     (119,604     (31,766,555     (32,147,744
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

  $ 144,994,331     $ 4,925,328     $ 511,019,672     $ 494,207,318  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETVALUE

       

Shares outstanding

    6,050,000       200,000       14,800,000       10,800,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value

  $ 23.97     $ 24.63     $ 34.53     $ 45.76  
 

 

 

   

 

 

   

 

 

   

 

 

 

Shares authorized

    Unlimited       Unlimited       Unlimited       Unlimited  
 

 

 

   

 

 

   

 

 

   

 

 

 

Par value

    None       None       None       None  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) Investments, at cost — unaffiliated

  $ 212,319,212     $ 4,974,420     $ 472,075,469     $ 431,670,310  

(b) Securities loaned, at value

  $ 23,346,364     $ 647,598     $ 46,548,580     $ 91,333,536  

(c)  Investments, at cost — affiliated

  $ 24,128,841     $ 656,527     $ 49,153,109     $ 93,299,119  

(d)  Foreign currency collateral pledged, at cost

  $     $     $     $ 49,215  

(e)  Foreign currency, at cost

  $ 217,165     $ 3,961     $ 141,340     $ 543,551  

See notes to financial statements.

 

 

50  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


 

Statements of Assets and Liabilities (continued)

July 31, 2023

 

      iShares
Virtual Work
and Life
Multisector
ETF
 

ASSETS

  

Investments, at value — unaffiliated(a)(b)

   $ 3,290,800  

Investments, at value — affiliated(c)

     437,802  

Cash

     2,356  

Foreign currency, at value(d)

     2,626  

Receivables:

  

Securities lending income — affiliated

     102  

Dividends — unaffiliated

     557  

Tax reclaims

     158  
  

 

 

 

Total assets

     3,734,401  
  

 

 

 

LIABILITIES

  

Collateral on securities loaned, at value

     437,943  

Payables:

  

Investment advisory fees

     1,240  
  

 

 

 

Total liabilities

     439,183  
  

 

 

 

Commitments and contingent liabilities

  

NET ASSETS

   $ 3,295,218  
  

 

 

 

NET ASSETS CONSIST OF

  

Paid-in capital

   $ 6,699,279  

Accumulated loss

     (3,404,061
  

 

 

 

NET ASSETS

   $ 3,295,218  
  

 

 

 

NET ASSET VALUE

  

Shares outstanding

     200,000  
  

 

 

 

Net asset value

   $ 16.48  
  

 

 

 

Shares authorized

     Unlimited  
  

 

 

 

Par value

     None  
  

 

 

 

(a) Investments, at cost — unaffiliated

   $ 4,958,098  

(b) Securities loaned, at value

   $ 441,742  

(c)  Investments, at cost — affiliated

   $ 437,788  

(d)  Foreign currency, at cost

   $ 2,561  

See notes to financial statements.

 

 

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

  51


 

Statements of Operations

Year Ended July 31, 2023

 

     



iShares
Breakthrough
Environmental
Solutions
ETF




(a)  
   


iShares
Cybersecurity
and Tech
ETF



 
   


iShares
Exponential
Technologies
ETF



 
   


iShares
Future Cloud
5G and Tech
ETF



 

INVESTMENT INCOME

       

Dividends — unaffiliated

  $ 34,000     $ 2,545,549     $ 33,388,770     $ 91,425  

Dividends — affiliated

    25       36,112       334,231       60  

Interest — unaffiliated

    66       2,754       32,068       103  

Securities lending income — affiliated — net

    32       92,846       1,825,929       631  

Other income — unaffiliated

                1,019        

Foreign taxes withheld

    (3,623     (125,377     (2,758,480     (7,853

Foreign withholding tax claims

                413,095        
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    30,500       2,551,884       33,236,632       84,366  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory

    6,554       2,455,446       14,188,759       29,614  

Commitment costs

          1,420       11,165       37  

Professional

                41,412        
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    6,554       2,456,866       14,241,336       29,651  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    23,946       95,018       18,995,296       54,715  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — unaffiliated(b)

    48,562       (16,821,154     (7,166,243     (455,241

Investments — affiliated

          24,358       5,086,514       76  

Capital gain distributions from underlying funds — affiliated

          1       1        

Foreign currency transactions

    (385     (23,848     (61,325     (286

Futures contracts

    405       64,187       629,369        

In-kind redemptions — unaffiliated(c)

          9,040,109       37,742,930       133,934  

In-kind redemptions — affiliated(c)

                123,194        
 

 

 

   

 

 

   

 

 

   

 

 

 
    48,582       (7,716,347     36,354,440       (321,517
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — unaffiliated(d)

    269,386       50,905,954       354,564,742       1,209,675  

Investments — affiliated

    2       (15,140     (4,451,965     2  

Foreign currency translations

    126       (3,775     109,989       (75

Futures contracts

    557       (32,713     204,841        
 

 

 

   

 

 

   

 

 

   

 

 

 
    270,071       50,854,326       350,427,607       1,209,602  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain

    318,653       43,137,979       386,782,047       888,085  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 342,599     $ 43,232,997     $ 405,777,343     $ 942,800  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) For the period from March 28, 2023 (commencement of operations) to July 31, 2023.

       

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

  $     $     $ (864,535   $  

(c)  See Note 2 of the Notes to Financial Statements.

       

(d)  Net of reduction in deferred foreign capital gain tax of

  $     $     $ 1,115,749     $  

See notes to financial statements.

 

 

52  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


 

Statements of Operations (continued)

Year Ended July 31, 2023

 

     




iShares
Genomics
Immunology
and
Healthcare
ETF





 
   



iShares
Neuroscience
and
Healthcare
ETF




(a)  
   




iShares
Robotics and
Artificial
Intelligence
Multisector
ETF





 
   


iShares
Self-Driving
EV and Tech
ETF



 

INVESTMENT INCOME

       

Dividends — unaffiliated

  $ 1,067,234     $     $ 3,192,232     $ 9,786,346 (b) 

Dividends — affiliated

    6,772       420       10,645       22,727  

Interest — unaffiliated

    856       65       5,084       2,757  

Securities lending income — affiliated — net

    422,031       17,876       1,386,461       3,991,654  

Other income — unaffiliated

    3,853                    

Foreign taxes withheld

    (136,890           (304,846     (1,117,428

Foreign withholding tax claims

    69,992             17,604        

Other foreign taxes

    (15,348                  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    1,418,500       18,361       4,307,180       12,686,056  
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Investment advisory

    770,296       22,026       1,354,621       2,020,766  

Professional

    7,390             1,760        

Commitment costs

    290             1,849       4,340  

Interest expense

                1,260       516  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    777,976       22,026       1,359,490       2,025,622  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income (loss)

    640,524       (3,665     2,947,690       10,660,434  
 

 

 

   

 

 

   

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) from:

       

Investments — unaffiliated(c)

    (54,445,684     (64,390     (24,597,954     (79,547,087

Investments — affiliated

    11,459       51       4,705       3,125  

Capital gain distributions from underlying funds — affiliated

                      2  

Foreign currency transactions

    8,957       197       (56,499     70,776  

Futures contracts

    32,386             337,965       363,492  

In-kind redemptions — unaffiliated(d)

    2,349,472             910,999       3,245,569  
 

 

 

   

 

 

   

 

 

   

 

 

 
    (52,043,410     (64,142     (23,400,784     (75,864,123
 

 

 

   

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — unaffiliated(e)

    2,540,149       (55,415     90,511,607       122,494,186  

Investments — affiliated

    (1,916     54       (2,930     2,389  

Foreign currency translations

    15,855       97       1,187       26,623  

Futures contracts

    (30,897           (43,071     9,082  
 

 

 

   

 

 

   

 

 

   

 

 

 
    2,523,191       (55,264     90,466,793       122,532,280  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss)

    (49,520,219     (119,406     67,066,009       46,668,157  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

  $ (48,879,695   $ (123,071   $ 70,013,699     $ 57,328,591  
 

 

 

   

 

 

   

 

 

   

 

 

 

(a) For the period from August 24, 2022 (commencement of operations) to July 31, 2023.

       

(b) Includes $2,513,953 related to a special distribution from Volkswagen AG.

       

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

  $     $     $ (6,976   $ (34,499

(d)  See Note 2 of the Notes to Financial Statements.

       

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

  $     $     $ (241,923   $  

See notes to financial statements.

 

 

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

  53


 

Statements of Operations (continued)

Year Ended July 31, 2023

 

      



iShares
Virtual Work
and Life
Multisector
ETF




 

INVESTMENT INCOME

  

Dividends — unaffiliated

   $ 9,808  

Dividends — affiliated

     141  

Interest — unaffiliated

     61  

Securities lending income — affiliated — net

     3,724  

Foreign taxes withheld

     (293
  

 

 

 

Total investment income

     13,441  
  

 

 

 

EXPENSES

  

Investment advisory

     14,369  

Commitment costs

     3  
  

 

 

 

Total expenses

     14,372  
  

 

 

 

Net investment loss

     (931
  

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

  

Net realized gain (loss) from:

  

Investments — unaffiliated

     (982,471

Investments — affiliated

     (7

Foreign currency transactions

     (604

Futures contracts

     (46

In-kind redemptions — unaffiliated(a)

     (389,200
  

 

 

 
     (1,372,328
  

 

 

 

Net change in unrealized appreciation (depreciation) on:

  

Investments — unaffiliated

     1,512,928  

Investments — affiliated

     (3

Foreign currency translations

     115  
  

 

 

 
     1,513,040  
  

 

 

 

Net realized and unrealized gain

     140,712  
  

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 139,781  
  

 

 

 

 

(a)

See Note 2 of the Notes to Financial Statements.

See notes to financial statements.

 

 

54  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


 

Statements of Changes in Net Assets

 

    iShares
Breakthrough
Environmental
Solutions ETF
    iShares
Cybersecurity and Tech ETF
 
   

Period From

03/28/23

to 07/31/23

 

(a) 

 

   
Year Ended
07/31/23

 
   
Year Ended
07/31/22

 

 

 

INCREASE (DECREASE) IN NET ASSETS

     

OPERATIONS

     

Net investment income

  $ 23,946     $ 95,018     $ 3,801,354  

Net realized gain (loss)

    48,582       (7,716,347     12,489,986  

Net change in unrealized appreciation (depreciation)

    270,071       50,854,326       (123,288,836
 

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    342,599       43,232,997       (106,997,496
 

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(b)

     

Decrease in net assets resulting from distributions to shareholders

    (16,550     (566,608     (4,167,125
 

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

     

Net increase in net assets derived from capital share transactions

    4,025,360       35,073,669       34,658,872  
 

 

 

   

 

 

   

 

 

 

NET ASSETS

     

Total increase (decrease) in net assets

    4,351,409       77,740,058       (76,505,749

Beginning of period

          539,888,597       616,394,346  
 

 

 

   

 

 

   

 

 

 

End of period

  $ 4,351,409     $ 617,628,655     $ 539,888,597  
 

 

 

   

 

 

   

 

 

 

 

(a)

Commencement of operations.

(b) 

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

See notes to financial statements.

 

 

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

  55


 

Statements of Changes in Net Assets (continued)

 

    iShares
Exponential Technologies ETF
    iShares
Future Cloud 5G and Tech ETF
 
   

Year Ended

07/31/23

 

 

   
Year Ended
07/31/22
 
 
   
Year Ended
07/31/23
 
 
   
Year Ended
07/31/22
 
 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 18,995,296     $ 27,596,886     $ 54,715     $ 65,871  

Net realized gain (loss)

    36,354,440       89,057,717       (321,517     548,409  

Net change in unrealized appreciation (depreciation)

    350,427,607       (850,719,765     1,209,602       (1,781,418
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    405,777,343       (734,065,162     942,800       (1,167,138
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (17,634,859     (31,230,965     (50,307     (63,758
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

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

    (80,184,166     10,360,369       (1,935,326     51,010  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    307,958,318       (754,935,758     (1,042,833     (1,179,886

Beginning of year

    3,159,641,927       3,914,577,685       7,190,387       8,370,273  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 3,467,600,245     $ 3,159,641,927     $ 6,147,554     $ 7,190,387  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

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

See notes to financial statements.

 

 

56  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


 

Statements of Changes in Net Assets (continued)

 

    iShares
Genomics Immunology and Healthcare
ETF
    iShares
Neuroscience
and Healthcare
ETF
 
   

Year Ended

07/31/23

 

 

   

Year Ended

07/31/22

 

 

   

Period From

08/24/22

to 07/31/23

 

(a) 

 

 

 

INCREASE (DECREASE) IN NET ASSETS

     

OPERATIONS

     

Net investment income (loss)

  $ 640,524     $ 966,416     $ (3,665

Net realized loss

    (52,043,410     (17,729,834     (64,142

Net change in unrealized appreciation (depreciation)

    2,523,191       (117,898,157     (55,264
 

 

 

   

 

 

   

 

 

 

Net decrease in net assets resulting from operations

    (48,879,695     (134,661,575     (123,071
 

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(b)

     

From net investment income

    (435,229     (2,812,804      

Return of capital

                (1,648
 

 

 

   

 

 

   

 

 

 

Decrease in net assets resulting from distributions to shareholders

    (435,229     (2,812,804     (1,648
 

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

     

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

    (5,024,984     8,990,520       5,050,047  
 

 

 

   

 

 

   

 

 

 

NET ASSETS

     

Total increase (decrease) in net assets

    (54,339,908     (128,483,859     4,925,328  

Beginning of period

    199,334,239       327,818,098        
 

 

 

   

 

 

   

 

 

 

End of period

  $ 144,994,331     $ 199,334,239     $ 4,925,328  
 

 

 

   

 

 

   

 

 

 

 

(a)

Commencement of operations.

(b)

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

See notes to financial statements.

 

 

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

  57


 

Statements of Changes in Net Assets (continued)

 

    iShares
Robotics and Artificial Intelligence
Multisector ETF
    iShares
Self-Driving EV and Tech ETF
 
   

Year Ended

07/31/23

 

 

   

Year Ended

07/31/22

 

 

   

Year Ended

07/31/23

 

 

   

Year Ended

07/31/22

 

 

 

 

INCREASE (DECREASE) IN NET ASSETS

       

OPERATIONS

       

Net investment income

  $ 2,947,690     $ 1,042,005     $ 10,660,434     $ 5,946,133  

Net realized loss

    (23,400,784     (15,447,483     (75,864,123     (407,070

Net change in unrealized appreciation (depreciation)

    90,466,793       (127,618,290     122,532,280       (123,993,144
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    70,013,699       (142,023,768     57,328,591       (118,454,081
 

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

       

Decrease in net assets resulting from distributions to shareholders

    (2,261,595     (10,540,562     (8,577,251     (9,781,417
 

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

       

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

    182,260,510       (19,873,283     (20,839,481     165,346,390  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET ASSETS

       

Total increase (decrease) in net assets

    250,012,614       (172,437,613     27,911,859       37,110,892  

Beginning of year

    261,007,058       433,444,671       466,295,459       429,184,567  
 

 

 

   

 

 

   

 

 

   

 

 

 

End of year

  $ 511,019,672     $ 261,007,058     $ 494,207,318     $ 466,295,459  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

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

See notes to financial statements.

 

 

58  

2 0 2 3I S H A R E S  A N N U A L  R E P O R TT O  S H A R E H O L D E R S


 

Statements of Changes in Net Assets (continued)

 

    iShares
Virtual Work and Life Multisector
ETF
 
   
Year Ended
07/31/23
 
 
   
Year Ended
07/31/22
 
 

 

 

INCREASE (DECREASE) IN NET ASSETS

   

OPERATIONS

   

Net investment loss

  $ (931   $ (4,780

Net realized loss

    (1,372,328     (321,143

Net change in unrealized appreciation (depreciation)

    1,513,040       (3,180,036
 

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

    139,781       (3,505,959
 

 

 

   

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS(a)

   

Decrease in net assets resulting from distributions to shareholders

    (9,849     (6,350
 

 

 

   

 

 

 

CAPITAL SHARE TRANSACTIONS

   

Net decrease in net assets derived from capital share transactions

    (1,240,169     (548,572
 

 

 

   

 

 

 

NET ASSETS

   

Total decrease in net assets

    (1,110,237     (4,060,881

Beginning of year

    4,405,455       8,466,336  
 

 

 

   

 

 

 

End of year

  $ 3,295,218     $ 4,405,455  
 

 

 

   

 

 

 

 

(a)

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

See notes to financial statements.

 

 

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

  59


Financial Highlights

(For a share outstanding throughout the period)

 

    iShares
Breakthrough
Environmental
Solutions
ETF
 
   

Period From

03/28/23

to 07/31/23

 

(a)  

 

 

 

Net asset value, beginning of period

  $ 25.16  
 

 

 

 

Net investment income(b)

    0.15  

Net realized and unrealized gain(c)

    1.99  
 

 

 

 

Net increase from investment operations

    2.14  
 

 

 

 

Distributions from net investment income(d)

    (0.10
 

 

 

 

Net asset value, end of period

  $ 27.20  
 

 

 

 

Total Return(e)

 

Based on net asset value

    8.54 %(f)  
 

 

 

 

Ratios to Average Net Assets(g)

 

Total expenses

    0.47 %(h)  
 

 

 

 

Net investment income

    1.72 %(h)  
 

 

 

 

Supplemental Data

 

Net assets, end of period (000)

  $ 4,351  
 

 

 

 

Portfolio turnover rate(i)

    9
 

 

 

 

 

(a)

Commencement of operations.

(b)

Based on average shares outstanding.

(c)

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

(d)

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

(e) 

Where applicable, assumes the reinvestment of distributions.

(f)

Not annualized.

(g)

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

(h)

Annualized.

(i)

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

60   2 0 2 3I S H A R E S A N N U A L R E P O R T T O  S H A R E H O L D E R S


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares Cybersecurity and Tech ETF  
 

 

 

 
   
Year Ended
07/31/23
 
 
     
Year Ended
07/31/22
 
 
     
Year Ended
07/31/21
 
 
     
Year Ended
07/31/20
 
 
     

Period From
06/11/19

to 07/31/19

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 36.73       $ 43.87       $ 33.69       $ 26.58       $ 24.94  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(b)

    0.01         0.26         0.02         0.33 (c)         0.00 (d) 

Net realized and unrealized gain (loss)(e)

    2.77         (7.13       10.22         7.02         1.64  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

    2.78         (6.87       10.24         7.35         1.64  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(f)

                 

From net investment income

    (0.04       (0.27       (0.06       (0.15        

From net realized gain

                            (0.09        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

    (0.04       (0.27       (0.06       (0.24        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of period

  $ 39.47       $ 36.73       $ 43.87       $ 33.69       $ 26.58  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return(g)

                 

Based on net asset value

    7.57       (15.73 )%        30.42       27.85       6.58 %(h) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(i)

                 

Total expenses

    0.47       0.47       0.47       0.47       0.47 %(j) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

    0.02       0.62       0.04       1.12 %(c)         0.06 %(j) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                 

Net assets, end of period (000)

  $ 617,629       $ 539,889       $ 616,394       $ 109,489       $ 3,987  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(k)

    39       44       38       29       8
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Commencement of operations.

 

(b) 

Based on average shares outstanding.

 

(c) 

Includes a one-time special distribution from NortonLifeLock Inc. Excluding such special distribution, the net investment income would have been $0.08 per share and 0.26% of average net assets.

 

(d) 

Rounds to less than $0.01.

 

(e) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(f) 

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

 

(g) 

Where applicable, assumes the reinvestment of distributions.

 

(h) 

Not annualized.

 

(i) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(j) 

Annualized.

 

(k) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

F I N A N C I A L H I G H L I G H T S

  61


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares Exponential Technologies ETF  
 

 

 

 
    Year Ended
07/31/23
          Year Ended
07/31/22
          Year Ended
07/31/21
          Year Ended
07/31/20
          Year Ended
07/31/19
 

 

 

Net asset value, beginning of year

  $ 52.01       $ 63.91       $ 47.25       $ 38.89       $ 37.73  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

    0.32 (b)         0.44         0.52         0.44         0.55  

Net realized and unrealized gain (loss)(c)

    6.44         (11.84       16.61         8.47         1.16  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

    6.76         (11.40       17.13         8.91         1.71  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions from net investment income(d)

    (0.29       (0.50       (0.47       (0.55       (0.55
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

  $ 58.48       $ 52.01       $ 63.91       $ 47.25       $ 38.89  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return(e)

                 

Based on net asset value

    13.05 %(b)         (17.91 )%        36.33       23.05       4.67
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(f)

                 

Total expenses

    0.46       0.46       0.46       0.47       0.47
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    0.46       0.46       N/A         N/A         N/A  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

    0.62 %(b)         0.74       0.91       1.07       1.47
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                 

Net assets, end of year (000)

  $ 3,467,600       $ 3,159,642       $ 3,914,578       $ 2,657,627       $ 2,562,819  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(g)

    45       69       23       23       21
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

 

(b) 

Reflects the one-time, positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the year ended July 31, 2023:

   

Net investment income per share by $0.01.

   

Total return by 0.01%.

   

Ratio of net investment income to average net assets by 0.01%.

 

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(d) 

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

 

(e) 

Where applicable, assumes the reinvestment of distributions.

 

(f) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(g) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

62  

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Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares Future Cloud 5G and Tech ETF  
 

 

 

 
   
Year Ended
07/31/23
 
 
     
Year Ended
07/31/22
 
 
     

Period From
06/08/21

to 07/31/21

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 22.47       $ 26.16       $ 25.07  
 

 

 

     

 

 

     

 

 

 

Net investment income(b)

    0.19         0.21         0.04  

Net realized and unrealized gain (loss)(c)

    3.12         (3.70       1.05  
 

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

    3.31         (3.49       1.09  
 

 

 

     

 

 

     

 

 

 

Distributions from net investment income(d)

    (0.17       (0.20        
 

 

 

     

 

 

     

 

 

 

Net asset value, end of period

  $ 25.61       $ 22.47       $ 26.16  
 

 

 

     

 

 

     

 

 

 

Total Return(e)

         

Based on net asset value

    14.84       (13.46 )%        4.35 %(f) 
 

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(g)

         

Total expenses

    0.47       0.47       0.47 %(h) 
 

 

 

     

 

 

     

 

 

 

Net investment income

    0.87       0.80       1.09 %(h) 
 

 

 

     

 

 

     

 

 

 

Supplemental Data

         

Net assets, end of period (000)

  $ 6,148       $ 7,190       $ 8,370  
 

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(i)

    45       51       0
 

 

 

     

 

 

     

 

 

 

 

(a) 

Commencement of operations.

 

(b) 

Based on average shares outstanding.

 

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(d) 

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

 

(e) 

Where applicable, assumes the reinvestment of distributions.

 

(f) 

Not annualized.

 

(g) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(h) 

Annualized.

 

(i) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

F I N A N C I A L H I G H L I G H T S

  63


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares Genomics Immunology and Healthcare ETF  
 

 

 

 
   
Year Ended
07/31/23
 
 
     
Year Ended
07/31/22
 
 
     
Year Ended
07/31/21
 
 
     
Year Ended
07/31/20
 
 
     

Period From
06/11/19

to 07/31/19

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 31.64       $ 50.05       $ 37.28       $ 27.61       $ 24.46  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income (loss)(b)

    0.10 (c)         0.14         0.08         0.17         (0.01

Net realized and unrealized gain (loss)(d)

    (7.70       (18.16       12.78         9.82         3.16  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

    (7.60       (18.02       12.86         9.99         3.15  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions(e)

                 

From net investment income

    (0.07       (0.39       (0.09       (0.08        

From net realized gain

                            (0.24        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total distributions

    (0.07       (0.39       (0.09       (0.32        
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of period

  $ 23.97       $ 31.64       $ 50.05       $ 37.28       $ 27.61  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return(f)

                 

Based on net asset value

    (24.04 )%(c)         (36.11 )%        34.49       36.42       12.88 %(g) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(h)

                 

Total expenses

    0.47       0.47       0.47       0.47       0.47 %(i) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    0.47       N/A         N/A         N/A         N/A  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income (loss)

    0.39 %(c)         0.35       0.16       0.54       (0.35 )%(i) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                 

Net assets, end of period (000)

  $ 144,994       $ 199,334       $ 327,818       $ 141,675       $ 24,851  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(j)

    45       59       52       38       19
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Commencement of operations.

 

(b) 

Based on average shares outstanding.

 

(c) 

Reflects the one-time, positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the year ended July 31, 2023:

   

Net investment income per share by $0.01.

   

Total return by 0.03%.

   

Ratio of net investment income to average net assets by 0.04%.

 

(d) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(e) 

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

 

(f) 

Where applicable, assumes the reinvestment of distributions.

 

(g) 

Not annualized.

 

(h) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(i) 

Annualized.

 

(j) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

64  

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Financial Highlights (continued)

(For a share outstanding throughout the period)

 

    iShares
Neuroscience
and
Healthcare
ETF
 
 

 

 

 
   

Period From
08/24/22

to 07/31/23

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 25.25  
 

 

 

 

Net investment loss(b)

    (0.02

Net realized and unrealized loss(c)

    (0.59
 

 

 

 

Net decrease from investment operations

    (0.61
 

 

 

 

Distributions(d)

 

From net investment income

     

Return of capital

    (0.01
 

 

 

 

Total distributions

    (0.01
 

 

 

 

Net asset value, end of period

  $ 24.63  
 

 

 

 

Total Return(e)

 

Based on net asset value

    (2.45 )%(f) 
 

 

 

 

Ratios to Average Net Assets(g)

 

Total expenses

    0.47 %(h) 
 

 

 

 

Net investment loss

    (0.08 )%(h) 
 

 

 

 

Supplemental Data

 

Net assets, end of period (000)

  $ 4,925  
 

 

 

 

Portfolio turnover rate(i)

    61
 

 

 

 

 

(a) 

Commencement of operations.

 

(b) 

Based on average shares outstanding.

 

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(d) 

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

 

(e) 

Where applicable, assumes the reinvestment of distributions.

 

(f) 

Not annualized.

 

(g) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(h) 

Annualized.

 

(i) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

F I N A N C I A L H I G H L I G H T S

  65


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares Robotics and Artificial Intelligence Multisector ETF  
 

 

 

 
    Year Ended
07/31/23
          Year Ended
07/31/22
          Year Ended
07/31/21
          Year Ended
07/31/20
          Year Ended
07/31/19
 

 

 

Net asset value, beginning of year

  $ 28.37       $ 43.34       $ 31.43       $ 24.99       $ 23.63  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(a)

    0.30         0.11         0.17         0.11         0.24  

Net realized and unrealized gain (loss)(b)

    6.07         (14.03       12.00         6.44         1.30  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

    6.37         (13.92       12.17         6.55         1.54  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions from net investment income(c)

    (0.21       (1.05       (0.26       (0.11       (0.18
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of year

  $ 34.53       $ 28.37       $ 43.34       $ 31.43       $ 24.99  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return(d)

                 

Based on net asset value

    22.55 %(e)        (32.79 )%        38.79       26.27       6.60
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(f)

                 

Total expenses

    0.47       0.47       0.47       0.47       0.47
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total expenses excluding professional fees for foreign withholding tax claims

    0.47       N/A         N/A         N/A         N/A  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

    1.02 %(e)         0.29       0.42       0.40       1.02
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                 

Net assets, end of year (000)

  $ 511,020       $ 261,007       $ 433,445       $ 157,172       $ 44,978  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(g)

    35       58       42       34       35
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Based on average shares outstanding.

 

(b) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(c) 

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

 

(d) 

Where applicable, assumes the reinvestment of distributions.

 

(e) 

Reflects the one-time, positive effect of foreign withholding tax claims, net of the associated professional fees, which resulted in the following increases for the year ended July 31, 2023:

   

Total return by 0.01%.

   

Ratio of net investment income to average net assets by 0.01%.

 

(f) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(g) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

66  

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Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares Self-Driving EV and Tech ETF  
 

 

 

 
   
Year Ended
07/31/23
 
 
     
Year Ended
07/31/22
 
 
     
Year Ended
07/31/21
 
 
     
Year Ended
07/31/20
 
 
     

Period From
04/16/19

to 07/31/19

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 40.90       $ 49.91       $ 29.69       $ 24.08       $ 25.39  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income(b)

    0.95 (c)         0.54         0.50         0.37         0.17  

Net realized and unrealized gain (loss)(d)

    4.68         (8.71       20.04         5.59         (1.30
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

    5.63         (8.17       20.54         5.96         (1.13
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Distributions from net investment income(e)

    (0.77       (0.84       (0.32       (0.35       (0.18
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net asset value, end of period

  $ 45.76       $ 40.90       $ 49.91       $ 29.69       $ 24.08  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Return(f)

                 

Based on net asset value

    14.17       (16.54 )%        69.28       24.91 %(g)        (4.40 )%(h) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(i)

                 

Total expenses

    0.47       0.47       0.47       0.47       0.47 %(j) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Net investment income

    2.48 %(c)         1.16       1.10       1.44       2.43 %(j) 
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Supplemental Data

                 

Net assets, end of period (000)

  $ 494,207       $ 466,295       $ 429,185       $ 32,660       $ 26,493  
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(k)

    85       41       24       19       2
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(a) 

Commencement of operations.

 

(b) 

Based on average shares outstanding.

 

(c) 

Includes a special distribution from Volkswagen AG. Excluding such special distribution, the net investment income would have been $0.72 per share and 1.89% of average net assets.

 

(d) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(e) 

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

 

(f) 

Where applicable, assumes the reinvestment of distributions.

 

(g) 

Includes payment received from an affiliate, which had no impact on the Fund’s total return.

 

(h) 

Not annualized.

 

(i) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(j) 

Annualized.

 

(k) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

F I N A N C I A L H I G H L I G H T S

  67


Financial Highlights (continued)

(For a share outstanding throughout each period)

 

    iShares Virtual Work and Life Multisector ETF  
 

 

 

 
   
Year Ended
07/31/23
 
 
     
Year Ended
07/31/22
 
 
     

Period From
09/29/20

to 07/31/21

 
(a)  

 

 

 

Net asset value, beginning of period

  $ 14.68       $ 28.22       $ 25.22  
 

 

 

     

 

 

     

 

 

 

Net investment loss(b)

    (0.00       (0.02       (0.04

Net realized and unrealized gain (loss)(c)

    1.85         (13.50       3.09  
 

 

 

     

 

 

     

 

 

 

Net increase (decrease) from investment operations

    1.85         (13.52       3.05  
 

 

 

     

 

 

     

 

 

 

Distributions from net investment income(d)

    (0.05       (0.02       (0.05
 

 

 

     

 

 

     

 

 

 

Net asset value, end of period

  $ 16.48       $ 14.68       $ 28.22  
 

 

 

     

 

 

     

 

 

 

Total Return(e)

         

Based on net asset value

    12.58       (47.89 )%        12.11 %(f) 
 

 

 

     

 

 

     

 

 

 

Ratios to Average Net Assets(g)

         

Total expenses

    0.47       0.47       0.47 %(h) 
 

 

 

     

 

 

     

 

 

 

Net investment loss

    (0.03 )%        (0.08 )%        (0.16 )%(h) 
 

 

 

     

 

 

     

 

 

 

Supplemental Data

         

Net assets, end of period (000)

  $ 3,295       $ 4,405       $ 8,466  
 

 

 

     

 

 

     

 

 

 

Portfolio turnover rate(i)

    47       46       27
 

 

 

     

 

 

     

 

 

 

 

(a) 

Commencement of operations.

 

(b) 

Based on average shares outstanding.

 

(c) 

The amounts reported for a share outstanding may not accord with the change in aggregate gains and losses in securities for the fiscal period due to the timing of capital share transactions in relation to the fluctuating market values of the Fund’s underlying securities.

 

(d) 

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

 

(e) 

Where applicable, assumes the reinvestment of distributions.

 

(f) 

Not annualized.

 

(g) 

Excludes fees and expenses incurred indirectly as a result of investments in underlying funds.

 

(h) 

Annualized.

 

(i) 

Portfolio turnover rate excludes in-kind transactions.

See notes to financial statements.

 

 

68  

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Notes to Financial Statements

 

1. ORGANIZATION

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

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

 

   
iShares ETF    Diversification
Classification

Breakthrough Environmental Solutions(a)

   Non-diversified

Cybersecurity and Tech

   Non-diversified

Exponential Technologies

   Diversified

Future Cloud 5G and Tech(b)

   Non-diversified

Genomics Immunology and Healthcare

   Non-diversified

Neuroscience and Healthcare(c)

   Non-diversified

Robotics and Artificial Intelligence Multisector

   Diversified

Self-Driving EV and Tech

   Non-diversified

Virtual Work and Life Multisector(d)

   Diversified

 

  (a) 

The Fund commenced operations on March 28, 2023.

 
  (b) 

Formerly the iShares Cloud 5G and Tech ETF.

 
  (c) 

The Fund commenced operations on August 24, 2022.

 
  (d) 

The Fund’s classification changed from non-diversified to diversified during the reporting period.

 

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Each Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recorded on the ex-dividend date. Non-cash dividends, if any, are recorded on the ex-dividend date at fair value. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Funds are informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers or as estimated by management, a portion of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis.

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

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

Foreign Taxes: The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, stock dividends, capital gains on investments, or certain foreign currency transactions. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which each Fund invests. These foreign taxes, if any, are paid by each Fund and are reflected in its Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on securities lending income are presented as a reduction of securities lending income, foreign taxes on stock dividends are presented as “Other foreign taxes”, and foreign taxes on capital gains from sales of investments and foreign taxes on foreign currency transactions are included in their respective net realized gain (loss) categories. Foreign taxes payable or deferred as of July 31, 2023, if any, are disclosed in the Statements of Assets and Liabilities.

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

Collateralization: If required by an exchange or counterparty agreement, the Funds may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments.

 

 

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

  69


Notes to Financial Statements(continued)

 

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

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

The portion of distributions that exceeds each Fund’s current and accumulated earning and profits will constitute a non-taxable return of capital. Distributions in excess of each Fund’s minimum distribution requirements, but not in excess of the Fund’s earnings and profits, will be taxable to the Fund’s shareholders and will not constitute non-taxable returns of capital. Return of capital distributions will reduce a shareholder’s cost basis and will result in higher capital gains or lower capital losses when each Fund’s shares on which distributions were received are sold. Once a shareholder’s cost basis is reduced to zero, further distributions will be treated as capital gains.

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

3. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: Each Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund’s listing exchange is open and, for financial reporting purposes, as of the report date. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Board of Trustees of the Trust (the “Board”) of each Fund has approved the designation of BlackRock Fund Advisors (“BFA”), the Funds’ investment adviser, as the valuation designee for each Fund. Each Fund determines the fair values of its financial instruments using various independent dealers or pricing services under BFA’s policies. If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with BFA’s policies and procedures as reflecting fair value. BFA has formed a committee (the “Valuation Committee”) to develop pricing policies and procedures and to oversee the pricing function for all financial instruments, with assistance from other BlackRock pricing committees.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of each Fund’s assets and liabilities:

 

   

Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last traded price.

 

   

Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV.

 

   

Futures contracts are valued based on that day’s last reported settlement or trade price on the exchange where the contract is traded.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the New York Stock Exchange (“NYSE”). Each business day, the Funds use current market factors supplied by independent pricing services to value certain foreign instruments (“Systematic Fair Value Price”). The Systematic Fair Value Price is designed to value such foreign securities at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

If events (e.g., market volatility, company announcement or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Valuation Committee, in accordance with BFA’s policies and procedures as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Valuation Committee include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Valuation Committee seeks to determine the price that each Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Valuation Committee deems relevant and consistent with the principles of fair value measurement.

Fair value pricing could result in a difference between the prices used to calculate a fund’s NAV and the prices used by the fund’s underlying index, which in turn could result in a difference between the fund’s performance and the performance of the fund’s underlying index.

Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

 

   

Level 1 – Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that each Fund has the ability to access;

 

   

Level 2 – Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs); and

 

   

Level 3 – Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, (including the Valuation Committee’s assumptions used in determining the fair value of financial instruments).

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is

 

 

70  

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Notes to Financial Statements(continued)   

 

determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds that may not have a secondary market and/or may have a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

 

4.

SECURITIES AND OTHER INVESTMENTS

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

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

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

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

 

 

 
iShares ETF and Counterparty    
Securities Loaned
at Value
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received, at Fair Value
 
(a) 
    Net Amount  

 

 

Breakthrough Environmental Solutions

        

BofA Securities, Inc.

  $ 21,545      $ (21,545   $     $  

UBS AG

    91,098        (91,098            

UBS Securities LLC

    13,818        (13,299           519  
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 126,461      $ (125,942   $     $ 519  
 

 

 

    

 

 

   

 

 

   

 

 

 

Cybersecurity and Tech

        

BofA Securities, Inc.

  $ 16,411,041      $ (16,411,041   $     $  

Citigroup Global Markets, Inc.

    4,927,797        (4,927,797            

Goldman Sachs & Co. LLC

    1,272,910        (1,269,913           2,997 (b)  

HSBC Bank PLC

    15,853        (15,205           648  

J.P. Morgan Securities LLC

    1,089,712        (1,089,712            

RBC Capital Markets LLC

    83,280        (83,192           88 (b)  

UBS AG

    863,506        (817,869           45,637 (b)  

Virtu Americas LLC

    3,103,872        (3,045,872           58,000 (b)  
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 27,767,971      $ (27,660,601   $     $ 107,370  
 

 

 

    

 

 

   

 

 

   

 

 

 

 

 

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

  71


Notes to Financial Statements(continued)   

 

 

 
iShares ETF and Counterparty    
Securities Loaned
at Value
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received, at Fair Value
 
(a) 
    Net Amount  

 

 

Exponential Technologies

        

Barclays Bank PLC

  $ 9,430,607      $ (9,365,622   $     $ 64,985  

Barclays Capital, Inc.

    10,071,418        (9,890,267           181,151 (b)  

BNP Paribas SA

    19,148,806        (17,884,727           1,264,079  

BofA Securities, Inc.

    33,955,090        (33,955,090            

Citadel Clearing LLC

    3,856,698        (3,856,698            

Citigroup Global Markets, Inc.

    5,916,851        (5,858,826           58,025 (b)  

Goldman Sachs & Co. LLC

    32,576,583        (31,514,789           1,061,794  

HSBC Bank PLC

    5,362,297        (5,362,297            

J.P. Morgan Securities LLC

    46,752,228        (46,537,233           214,995 (b)  

Jefferies LLC

    4,682,192        (4,682,192            

Natixis SA

    1,934,238        (1,922,353           11,885  

SG Americas Securities LLC

    460,394        (460,356           38 (b)  

State Street Bank & Trust Co.

    914,531        (914,531            

Toronto-Dominion Bank

    21,836,756        (21,836,756            

UBS AG

    1,717,656        (1,640,820           76,836 (b)  

Wells Fargo Bank N.A.

    218,715        (218,715            

Wells Fargo Securities LLC

    27,331,642        (26,815,196           516,446  
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 226,166,702      $ (222,716,468   $     $ 3,450,234  
 

 

 

    

 

 

   

 

 

   

 

 

 

Future Cloud 5G and Tech

        

Barclays Bank PLC

  $ 45,283      $ (44,747   $     $ 536 (b)  

BNP Paribas SA

    377,440        (375,155           2,285 (b)  

HSBC Bank PLC

    150,905        (150,905            

Toronto-Dominion Bank

    103,134        (102,495           639  
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 676,762      $ (673,302   $     $ 3,460  
 

 

 

    

 

 

   

 

 

   

 

 

 

Genomics Immunology and Healthcare

        

Barclays Capital, Inc.

  $ 1,407,194      $ (1,407,194   $     $  

BNP Paribas SA

    568,174        (565,636           2,538 (b)  

Citadel Clearing LLC

    890,292        (890,292            

Citigroup Global Markets, Inc.

    206,725        (206,725            

J.P. Morgan Securities LLC

    15,702,323        (15,702,323            

Jefferies LLC

    2,008,827        (1,967,020           41,807 (b)  

State Street Bank & Trust Co.

    108,007        (108,007            

Toronto-Dominion Bank

    104,185        (104,185            

UBS AG

    1,621,145        (1,621,145            

Virtu Americas LLC

    729,492        (729,492            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 23,346,364      $ (23,302,019   $     $ 44,345  
 

 

 

    

 

 

   

 

 

   

 

 

 

Neuroscience and Healthcare

        

Barclays Capital, Inc.

  $ 8,558      $ (8,558   $     $  

BofA Securities, Inc.

    2,054        (2,054            

Goldman Sachs & Co. LLC

    325,054        (325,054            

HSBC Bank PLC

    21,096        (21,096            

J.P. Morgan Securities LLC

    37,430        (37,430            

UBS AG

    253,406        (253,406            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 647,598      $ (647,598   $     $  
 

 

 

    

 

 

   

 

 

   

 

 

 

 

 

72  

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Notes to Financial Statements(continued)   

 

 

 
iShares ETF and Counterparty    
Securities Loaned
at Value
 
 
    
Cash Collateral
Received
 
(a)  
   
Non-Cash Collateral
Received, at Fair Value
 
(a) 
    Net Amount  

 

 

Robotics and Artificial Intelligence Multisector

        

Barclays Capital, Inc.

  $ 2,758,428      $ (2,758,428   $     $  

BNP Paribas SA

    526,031        (526,031            

BofA Securities, Inc.

    2,150,064        (2,150,064            

Citadel Clearing LLC

    4,628,557        (4,587,016           41,541  

Citigroup Global Markets, Inc.

    5,175,614        (5,069,059           106,555 (b)  

Credit Suisse Securities (USA) LLC

    300        (289           11 (b)  

Goldman Sachs & Co. LLC

    13,789,352        (13,595,026           194,326 (b)  

HSBC Bank PLC

    102,630        (98,962           3,668  

J.P. Morgan Securities LLC

    8,170,049        (8,170,049            

Jefferies LLC

    132,123        (132,123            

Morgan Stanley

    3,714,420        (3,714,420            

Nomura Securities International, Inc.

    179,435        (179,435            

State Street Bank & Trust Co.

    1,045,195        (1,045,195            

Toronto-Dominion Bank

    2,364,788        (2,364,788            

UBS AG

    655,208        (655,208            

UBS Securities LLC

    1,156,386        (1,156,386            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 46,548,580      $ (46,202,479   $     $ 346,101  
 

 

 

    

 

 

   

 

 

   

 

 

 

Self-Driving EV and Tech

        

Barclays Capital, Inc.

  $ 6,428,476      $ (6,428,476   $     $  

BNP Paribas SA

    38,160,197        (38,160,197            

Citigroup Global Markets, Inc.

    5,778,421        (5,500,528           277,893 (b)  

ING Financial Markets LLC

    72,982        (68,330           4,652 (b)  

J.P. Morgan Securities LLC

    31,746,603        (31,746,603            

Jefferies LLC

    1,877,712        (1,877,712            

National Financial Services LLC

    3,440,542        (3,440,542            

UBS AG

    3,828,603        (3,828,603            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 91,333,536      $ (91,050,991   $     $ 282,545  
 

 

 

    

 

 

   

 

 

   

 

 

 

Virtual Work and Life Multisector

        

Barclays Bank PLC

  $ 54,315      $ (54,047   $     $ 268  

BofA Securities, Inc.

    15,000        (15,000            

Citadel Clearing LLC

    62,076        (61,574           502 (b)  

Goldman Sachs & Co. LLC

    144,037        (141,499           2,538 (b)  

J.P. Morgan Securities LLC

    81,789        (80,661           1,128 (b)  

UBS AG

    807        (807            

UBS Securities LLC

    83,718        (83,718            
 

 

 

    

 

 

   

 

 

   

 

 

 
  $ 441,742      $ (437,306   $     $ 4,436  
 

 

 

    

 

 

   

 

 

   

 

 

 

 

  (a) 

Collateral received, if any, in excess of the market value of securities on loan is not presented in this table. The total cash collateral received by each Fund is disclosed in the Fund’s Statements of Assets and Liabilities.

 
  (b) 

The market value of the loaned securities is determined as of July 31, 2023. Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by a counterparty.

 

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

 

5.

DERIVATIVE FINANCIAL INSTRUMENTS

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

Futures contracts are exchange-traded agreements between the Funds and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Funds are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statements of Assets and Liabilities.

 

 

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  73


Notes to Financial Statements(continued)   

 

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

 

6.

INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

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

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

 

iShares ETF   Investment Advisory Fees  

Breakthrough Environmental Solutions

    0.47

Cybersecurity and Tech

    0.47  

Future Cloud 5G and Tech

    0.47  

Genomics Immunology and Healthcare

    0.47  

Neuroscience and Healthcare

    0.47  

Robotics and Artificial Intelligence Multisector

    0.47  

Self-Driving EV and Tech

    0.47  

Virtual Work and Life Multisector

    0.47  

For its investment advisory services to the iShares Exponential Technologies ETF, BFA is entitled to an annual investment advisory fee, accrued daily and paid monthly by the Fund, based on the Fund’s allocable portion of the aggregate of the average daily net assets of the Fund and certain other iShares funds, as follows:

 

Aggregate Average Net Assets   Investment Advisory Fees  

First $2 billion

    0.4700

Over $2 billion, up to and including $3 billion

    0.4465  

Over $3 billion, up to and including $4 billion

    0.4242  

Over $4 billion

    0.4030  

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

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

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

Pursuant to the current securities lending agreement, each of iShares Cybersecurity and Tech ETF and iShares Neuroscience and Healthcare ETF (the “Group 1 Funds”), retains 81% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

Pursuant to the current securities lending agreement, each of iShares Breakthrough Environmental Solutions ETF, iShares Exponential Technologies ETF, iShares Future Cloud 5G and Tech ETF, iShares Genomics Immunology and Healthcare ETF, iShares Robotics and Artificial Intelligence Multisector ETF, iShares Self-Driving EV and Tech ETF and iShares Virtual Work and Life Multisector ETF (the “Group 2 Funds”), retains 82% of securities lending income (which excludes collateral investment fees) and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

In addition, commencing the business day following the date that the aggregate securities lending income plus the collateral investment fees generated across all 1940 Act iShares exchange-traded funds (the “iShares ETF Complex”) in a given calendar year exceeds a specified threshold: (1) each Group 1 Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year 81% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees, and (2) each Group 2 Fund will retain for the remainder of that

 

 

74  

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Notes to Financial Statements(continued)   

 

calendar year 85% of securities lending income (which excludes collateral investment fees), and the amount retained can never be less than 70% of the total of securities lending income plus the collateral investment fees.

The share of securities lending income earned by each Fund is shown as securities lending income – affiliated – net in its Statements of Operations. For the year ended July 31, 2023, the Funds paid BTC the following amounts for securities lending agent services:

 

iShares ETF   Amounts  

Breakthrough Environmental Solutions

  $ 10  

Cybersecurity and Tech

    34,644  

Exponential Technologies

    470,235  

Future Cloud 5G and Tech

    231  

Genomics Immunology and Healthcare

    100,939  

Neuroscience and Healthcare

    4,226  

Robotics and Artificial Intelligence Multisector

    310,850  

Self-Driving EV and Tech

    880,007  

Virtual Work and Life Multisector

    933  

Officers and Trustees: Certain officers and/or trustees of the Trust are officers and/or trustees of BlackRock or its affiliates.

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

For the year ended July 31, 2023, transactions executed by the Funds pursuant to Rule 17a-7 under the 1940 Act were as follows:

 

iShares ETF   Purchases              Sales              Net Realized
Gain (Loss)
 

Cybersecurity and Tech

  $ 13,038,440         $ 47,438,466         $ (23,636,745

Exponential Technologies

    128,718,372           189,831,990           38,376,409  

Future Cloud 5G and Tech

    705,728           272,102           (37,265

Genomics Immunology and Healthcare

    6,256,675           25,278,918           (4,629,069

Robotics and Artificial Intelligence Multisector

    18,621,444           17,791,380           (2,635,272

Self-Driving EV and Tech

    29,803,869           113,792,431           (11,130,182

Virtual Work and Life Multisector

    304,984                 161,554                 (224,701

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

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

 

7.

PURCHASES AND SALES

For the year ended July 31, 2023, purchases and sales of investments, excluding short-term securities and in-kind transactions, were as follows:

 

iShares ETF   Purchases      Sales  

Breakthrough Environmental Solutions

  $ 884,531      $ 370,491  

Cybersecurity and Tech

    207,631,475        206,741,091  

Exponential Technologies

    1,416,032,465        1,385,719,086  

Future Cloud 5G and Tech

    2,855,850        3,007,831  

Genomics Immunology and Healthcare

    72,294,006        73,628,928  

Neuroscience and Healthcare

    3,150,123        3,049,206  

Robotics and Artificial Intelligence Multisector

    144,433,004        103,054,276  

Self-Driving EV and Tech

    364,955,147        366,664,028  

Virtual Work and Life Multisector

    1,429,022        1,461,532  

 

 

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

  75


Notes to Financial Statements(continued)   

 

For the year ended July 31, 2023, in-kind transactions were as follows:

 

iShares ETF   In-kind
Purchases
    

In-kind

Sales

 

Breakthrough Environmental Solutions

  $ 3,507,534      $  

Cybersecurity and Tech

    83,877,528        50,784,454  

Exponential Technologies

    61,059,443        153,256,869  

Future Cloud 5G and Tech

           1,759,050  

Genomics Immunology and Healthcare

    12,855,976        16,171,661  

Neuroscience and Healthcare

    4,937,895         

Robotics and Artificial Intelligence Multisector

    156,430,824        13,229,277  

Self-Driving EV and Tech

    13,753,786        31,924,490  

Virtual Work and Life Multisector

           1,213,273  

 

8.

INCOME TAX INFORMATION

Each Fund is treated as an entity separate from the Trust’s other funds for federal income tax purposes. It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

Management has analyzed tax laws and regulations and their application to the Funds as of July 31, 2023, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Funds’ financial statements.

U.S. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or NAV per share. As of July 31, 2023, permanent differences attributable to net investment loss, distributions paid in excess of taxable income and realized gains (losses) from in-kind redemptions were reclassified to the following accounts:

 

iShares ETF   Paid-in
Capital
    Accumulated
Earnings (Loss)
 

Cybersecurity and Tech

  $ 8,328,729     $ (8,328,729

Exponential Technologies

    35,458,405       (35,458,405

Future Cloud 5G and Tech

    127,463       (127,463

Genomics Immunology and Healthcare

    1,925,033       (1,925,033

Neuroscience and Healthcare

    (3,467     3,467  

Robotics and Artificial Intelligence Multisector

    817,056       (817,056

Self-Driving EV and Tech

    2,400,122       (2,400,122

Virtual Work and Life Multisector

    (405,812     405,812  

The tax character of distributions paid was as follows:

 

iShares ETF    Period Ended
07/31/23
 

Breakthrough Environmental Solutions

  

Ordinary income

   $ 16,550  
  

 

 

 

 

iShares ETF   Year Ended
07/31/23
     Year Ended
07/31/22
 

Cybersecurity and Tech

    

Ordinary income

  $ 566,608      $ 4,167,125  
 

 

 

    

 

 

 

Exponential Technologies

    

Ordinary income

  $ 17,634,859      $ 31,230,965  
 

 

 

    

 

 

 

Future Cloud 5G and Tech

    

Ordinary income

  $ 50,307      $ 63,758  
 

 

 

    

 

 

 

Genomics Immunology and Healthcare

    

Ordinary income

  $ 435,229      $ 2,812,804  
 

 

 

    

 

 

 

 

iShares ETF    Period Ended
07/31/23
 

Neuroscience and Healthcare

  

Return of capital

   $ 1,648  
  

 

 

 

 

 

76  

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Notes to Financial Statements(continued)   

 

iShares ETF   Year Ended
07/31/23
     Year Ended
07/31/22
 

Robotics and Artificial Intelligence Multisector

    

Ordinary income

  $ 2,261,595      $ 10,540,562  
 

 

 

    

 

 

 

Self-Driving EV and Tech

    

Ordinary income

  $ 8,577,251      $ 9,781,417  
 

 

 

    

 

 

 

Virtual Work and Life Multisector

    

Ordinary income

  $ 9,849      $ 6,350  
 

 

 

    

 

 

 

As of July 31, 2023, the tax components of accumulated net earnings (losses) were as follows:

 

iShares ETF    
Undistributed
Ordinary Income
 
 
    
Undistributed
Long-Term Capital Gains
 
 
    

Non-expiring
Capital Loss
Carryforwards
 
 
(a) 
    
Net Unrealized
Gains (Losses)
 
(b) 
    
Qualified
Late-Year Losses
 
(c) 
     Total  

Breakthrough Environmental Solutions

  $ 57,049      $ 577      $      $ 268,423      $      $ 326,049  

Cybersecurity and Tech

                  (46,277,332      12,454,929        (19,340      (33,841,743

Exponential Technologies

    1,903,814               (34,675,999      590,418,624               557,646,439  

Future Cloud 5G and Tech

    17,505               (613,248      (263,895             (859,638

Genomics Immunology and Healthcare

    973,171               (74,880,768      (73,775,180             (147,682,777

Neuroscience and Healthcare

                  (59,252      (60,352             (119,604

Robotics and Artificial Intelligence Multisector

    1,928,437               (62,816,894      29,121,902               (31,766,555

Self-Driving EV and Tech

    2,667,354               (88,412,872      53,597,774               (32,147,744

Virtual Work and Life Multisector

    51,062               (1,676,647      (1,778,476             (3,404,061

 

  (a) 

Amounts available to offset future realized capital gains.

 
  (b) 

The difference between book-basis and tax-basis unrealized gains (losses) was attributable primarily to tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains (losses) on certain futures contracts, the realization for tax purposes of unrealized gains on investments in passive foreign investment companies and the characterization of corporate actions.

 
  (c) 

The Funds have elected to defer certain qualified late-year losses and recognize such losses in the next taxable year.

 

A fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” Such fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

As of July 31, 2023, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:

 

iShares ETF   Tax Cost      Gross Unrealized
Appreciation
     Gross Unrealized
Depreciation
     Net Unrealized
Appreciation
(Depreciation)
 

Breakthrough Environmental Solutions

  $ 4,201,542      $ 493,218      $ (224,921)      $ 268,297  

Cybersecurity and Tech

    633,079,681        78,384,938        (65,929,929      12,455,009  

Exponential Technologies

    3,094,417,499        845,263,125        (254,813,709      590,449,416  

Future Cloud 5G and Tech

    7,100,322        870,549        (1,134,403      (263,854

Genomics Immunology and Healthcare

    242,518,180        10,765,045        (84,546,872      (73,781,827

Neuroscience and Healthcare

    5,636,035        538,504        (598,953      (60,449

Robotics and Artificial Intelligence Multisector

    529,670,905        77,052,977        (47,690,671      29,362,306  

Self-Driving EV and Tech

    531,632,550        83,631,690        (30,056,594      53,575,096  

Virtual Work and Life Multisector

    5,507,101        184,988        (1,963,487      (1,778,499

 

9.

LINE OF CREDIT

The iShares Cybersecurity and Tech ETF, iShares Exponential Technologies ETF, iShares Future Cloud 5G and Tech ETF, iShares Genomics Immunology and Healthcare ETF, iShares Robotics andArtificial Intelligence Multisector ETF, iShares Self-Driving EV and Tech ETF and iShares Virtual Work and Life Multisector ETF, along with certain other iShares funds (“Participating Funds”), are parties to a $800 million credit agreement (“Syndicated Credit Agreement”) with a group of lenders, which expires on August 11, 2023. The line of credit may be used for temporary or emergency purposes, including redemptions, settlement of trades and rebalancing of portfolio holdings in certain target markets. The Funds may borrow up to the aggregate commitment amount subject to asset coverage and other limitations as specified in the Syndicated Credit Agreement. The Syndicated Credit Agreement has the following terms: a commitment fee of 0.15% per annum on the unused portion of the credit agreement and interest at a rate equal to the higher of (a) Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 0.10% and 1.00% per annum or (b) the U.S. Federal Funds rate plus 1.00% per annum on amounts borrowed. The commitment fee is generally allocated to each Participating Fund based on the lesser of a Participating Fund’s relative exposure to certain target markets or a Participating Fund’s maximum borrowing amount as set forth by the terms of the Syndicated Credit Agreement.

 

 

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

  77


Notes to Financial Statements(continued)   

 

During the year ended July 31, 2023, the iShares Cybersecurity and Tech ETF, iShares Exponential Technologies ETF, iShares Future Cloud 5G and Tech ETF, iShares Genomics Immunology and Healthcare ETF and iShares Virtual Work and Life Multisector ETF did not borrow under the Syndicated Credit Agreement.

For the year ended July 31, 2023, the maximum amount borrowed, the average daily borrowing and the weighted average interest rate, if any, under the Syndicated Credit Agreement were as follows:

 

iShares ETF   Maximum
Amount
Borrowed
     Average
Borrowing
     Weighted
Average
Interest Rates
 

Robotics and Artificial Intelligence Multisector

  $ 2,100,000      $ 23,014        5.40

Self-Driving EV and Tech

    860,000        9,425        5.40  

 

10.

PRINCIPAL RISKS

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

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

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

Infectious Illness Risk: An outbreak of an infectious illness, such as the COVID-19 pandemic, may adversely impact the economies of many nations and the global economy, and may impact individual issuers and capital markets in ways that cannot be foreseen. An infectious illness outbreak may result in, among other things, closed international borders, prolonged quarantines, supply chain disruptions, market volatility or disruptions and other significant economic, social and political impacts.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. A fund may invest in illiquid investments. An illiquid investment is any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. A fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause a fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of a fund may lose value, regardless of the individual results of the securities and other instruments in which a fund invests.

The price each Fund could receive upon the sale of any particular portfolio investment may differ from each Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs.

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

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

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

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

 

 

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Notes to Financial Statements(continued)   

 

The Funds invest a significant portion of their assets in securities of issuers located in the United States. A decrease in imports or exports, changes in trade regulations, inflation and/or an economic recession in the United States may have a material adverse effect on the U.S. economy and the securities listed on U.S. exchanges. Proposed and adopted policy and legislative changes in the United States may also have a significant effect on U.S. markets generally, as well as on the value of certain securities. Governmental agencies project that the United States will continue to maintain elevated public debt levels for the foreseeable future which may constrain future economic growth. Circumstances could arise that could prevent the timely payment of interest or principal on U.S. government debt, such as reaching the legislative “debt ceiling.” Such non-payment would result in substantial negative consequences for the U.S. economy and the global financial system. If U.S. relations with certain countries deteriorate, it could adversely affect issuers that rely on the United States for trade. The United States has also experienced increased internal unrest and discord. If these trends were to continue, they may have an adverse impact on the U.S. economy and the issuers in which the the Funds invest.

Certain Funds invest a significant portion of their assets in securities of issuers located in Asia or with significant exposure to Asian issuers or countries. The Asian financial markets have recently experienced volatility and adverse trends due to concerns in several Asian countries regarding monetary policy, government intervention in the markets, rising government debt levels or economic downturns. These events may spread to other countries in Asia and may affect the value and liquidity of certain of the Funds’ investments.

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

Significant Shareholder Redemption Risk: Certain shareholders may own or manage a substantial amount of fund shares and/or hold their fund investments for a limited period of time. Large redemptions of fund shares by these shareholders may force a fund to sell portfolio securities, which may negatively impact the fund’s NAV, increase the fund’s brokerage costs, and/or accelerate the realization of taxable income/gains and cause the fund to make additional taxable distributions to shareholders.

 

11.

CAPITAL SHARE TRANSACTIONS

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

Transactions in capital shares were as follows:

 

 

 
     Period Ended
07/31/23(a)
 
iShares ETF    Shares      Amount  

 

 

Breakthrough Environmental Solutions

     

Shares sold

     160,000      $ 4,025,360  
  

 

 

    

 

 

 

 

  (a) 

The Fund commenced operations on March 28, 2023.

 

 

 

 
    Year Ended
07/31/23
    Year Ended
07/31/22
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

Cybersecurity and Tech

       

Shares sold

    2,500,000     $ 89,024,383       4,600,000     $ 198,682,832  

Shares redeemed

    (1,550,000     (53,950,714     (3,950,000     (164,023,960
 

 

 

   

 

 

   

 

 

   

 

 

 
    950,000     $ 35,073,669       650,000     $ 34,658,872  
 

 

 

   

 

 

   

 

 

   

 

 

 

Exponential Technologies

       

Shares sold

    1,750,000     $ 85,761,417       3,700,000     $ 234,079,077  

Shares redeemed

    (3,200,000     (165,945,583     (4,200,000     (223,718,708
 

 

 

   

 

 

   

 

 

   

 

 

 
    (1,450,000   $ (80,184,166     (500,000   $ 10,360,369  
 

 

 

   

 

 

   

 

 

   

 

 

 

Future Cloud 5G and Tech

       

Shares sold

        $       80,000     $ 2,360,993  

Shares redeemed

    (80,000     (1,935,326     (80,000     (2,309,983
 

 

 

   

 

 

   

 

 

   

 

 

 
    (80,000   $ (1,935,326         $ 51,010  
 

 

 

   

 

 

   

 

 

   

 

 

 

Genomics Immunology and Healthcare

       

Shares sold

    450,000     $ 13,403,128       1,150,000     $ 54,981,603  

Shares redeemed

    (700,000     (18,428,112     (1,400,000     (45,991,083
 

 

 

   

 

 

   

 

 

   

 

 

 
    (250,000   $ (5,024,984     (250,000   $ 8,990,520  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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

  79


Notes to Financial Statements(continued)   

 

 

 
     Period Ended
07/31/23(a)
 
iShares ETF    Shares      Amount  

Neuroscience and Healthcare

     

Shares sold

     200,000      $ 5,050,047  
  

 

 

    

 

 

 

 

  (a) 

The Fund commenced operations on August 24, 2022.

 

 

 

 
    Year Ended
07/31/23
    Year Ended
07/31/22
 
iShares ETF   Shares     Amount     Shares     Amount  

 

 

Robotics and Artificial Intelligence Multisector

       

Shares sold

    6,200,000     $ 197,528,251       1,000,000     $ 39,951,403  

Shares redeemed

    (600,000     (15,267,741     (1,800,000     (59,824,686
 

 

 

   

 

 

   

 

 

   

 

 

 
    5,600,000     $ 182,260,510       (800,000   $ (19,873,283
 

 

 

   

 

 

   

 

 

   

 

 

 

Self-Driving EV and Tech

       

Shares sold

    400,000     $ 15,998,969       3,800,000     $ 206,676,608  

Shares redeemed

    (1,000,000     (36,838,450     (1,000,000     (41,330,218
 

 

 

   

 

 

   

 

 

   

 

 

 
    (600,000   $ (20,839,481     2,800,000     $ 165,346,390  
 

 

 

   

 

 

   

 

 

   

 

 

 

Virtual Work and Life Multisector

       

Shares sold

        $       100,000     $ 2,213,935  

Shares redeemed

    (100,000     (1,240,169     (100,000     (2,762,507
 

 

 

   

 

 

   

 

 

   

 

 

 
    (100,000   $ (1,240,169         $ (548,572
 

 

 

   

 

 

   

 

 

   

 

 

 

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

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

 

12.

FOREIGN WITHHOLDING TAX CLAIMS

The Internal Revenue Service (“IRS”) has issued guidance to address U.S. income tax liabilities attributable to fund shareholders resulting from the recovery of foreign taxes withheld in prior calendar years. These withheld foreign taxes were passed through to shareholders in the form of foreign tax credits in the year the taxes were withheld. Assuming there are sufficient foreign taxes paid which the iShares Exponential Technologies ETF is able to pass through to shareholders as a foreign tax credit in the current year, the Fund will be able to offset the prior years’ withholding taxes recovered against the foreign taxes paid in the current year. Accordingly, no federal income tax liability is recorded by the Fund.

 

13.

SUBSEQUENT EVENTS

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were available to be issued and the following items were noted:

Effective August 11, 2023, the Syndicated Credit Agreement to which the Participating Funds are party was extended until August 2024 under the same terms. As part of the Syndicated Credit Agreement renewal, iShares Breakthrough Environmental Solutions ETF was added as a Participating Fund.

 

 

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Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of

iShares Trust and Shareholders of each of the nine funds listed in the table below

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of each of the funds listed in the table below (nine of the funds constituting iShares Trust, hereafter collectively referred to as the “Funds”) as of July 31, 2023, the related statements of operations and of changes in net assets for each of the periods indicated below, including the related notes, and the financial highlights for each of the periods included therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of July 31, 2023, the results of each of their operations and the changes in each of their net assets for the periods indicated in the table below, and each of the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America.

 

 

 iShares Breakthrough Environmental Solutions ETF(1)

 

 iShares Cybersecurity and Tech ETF

 

 iShares Exponential Technologies ETF

 

 iShares Future Cloud 5G and Tech ETF

 

 iShares Genomics Immunology and Healthcare ETF

 

 iShares Neuroscience and Healthcare ETF(2)

 

 iShares Robotics and Artificial Intelligence Multisector ETF

 

 iShares Self-Driving EV and Tech ETF

 

 iShares Virtual Work and Life Multisector ETF

 

(1) 

Statement of operations and statement of changes in net assets for the period March 28, 2023 (commencement of operations) to July 31, 2023.

(2) 

Statement of operations and statement of changes in net assets for the period August 24, 2022 (commencement of operations) to July 31, 2023.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of July 31, 2023 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

 

/s/PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

September 22, 2023

We have served as the auditor of one or more BlackRock investment companies since 2000.

 

 

R E P O R T O F I N D E P E N D E N T  R E G I S T E R E D P U B L I C A C C O U N T I N G  F I R M

  81


Important Tax Information (unaudited)

 

The following amounts, or maximum amounts allowable by law, are hereby designated as qualified dividend income for individuals for the fiscal year ended July 31, 2023:

 

iShares ETF   Qualified Dividend
Income
 

Breakthrough Environmental Solutions

  $ 30,922  

Cybersecurity and Tech

    2,165,824  

Exponential Technologies

     27,281,164  

Future Cloud 5G and Tech

    56,363  

Genomics Immunology and Healthcare

    1,065,995  

Robotics and Artificial Intelligence Multisector

    1,700,366  

Self-Driving EV and Tech

    9,251,376  

Virtual Work and Life Multisector

    5,160  

The Funds intend to pass through to their shareholders the following amounts, or maximum amounts allowable by law, of foreign source income earned and foreign taxes paid for the fiscal year ended July 31, 2023:

 

iShares ETF   Foreign Source
Income Earned
     Foreign
Taxes Paid
 

Breakthrough Environmental Solutions

  $ 32,835      $ 3,377  

Self-Driving EV and Tech

     8,377,711         1,132,337  

The following percentage, or maximum percentage allowable by law, of ordinary income distributions paid during the fiscal year ended July 31, 2023 qualified for the dividends-received deduction for corporate shareholders:

 

iShares ETF   Dividends-Received
Deduction
 

Breakthrough Environmental Solutions

    1.51

Exponential Technologies

    62.78

Future Cloud 5G and Tech

    57.22

Genomics Immunology and Healthcare

    11.92

Robotics and Artificial Intelligence Multisector

    14.58

Self-Driving EV and Tech

    11.37

Virtual Work and Life Multisector

    3.06

 

 

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Board Review and Approval of Investment Advisory Contract

 

iShares Breakthrough Environmental Solutions ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Board Members who are not “interested persons” of the Trust (as that term is defined in the 1940 Act) (the “Independent Board Members”), is required to consider and approve the proposed Investment Advisory Agreement between the Trust and BFA (the “Advisory Agreement”) on behalf of the Fund. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the terms of the proposed Advisory Agreement. At a meeting held on December 12-14, 2022, the Board, including the Independent Board Members, approved the selection of BFA as investment adviser and approved the proposed Advisory Agreement for the Fund, based on a review of qualitative and quantitative information provided by BFA. The Board also considered information previously provided by BFA, BlackRock Institutional Trust Company, N.A. (“BTC”), and BlackRock, Inc. (“BlackRock”), as applicable, at prior Board meetings. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the Advisory Agreement for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses of the Fund; (ii) the nature, extent and quality of the services to be provided by BFA; (iii) the costs of services to be provided to the Fund and the availability of information related to profits to be realized by BFA and its affiliates; (iv) potential economies of scale; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, no one of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the Advisory Agreement are discussed below.

Expenses of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components of the Fund in comparison with the same information for other ETFs, objectively selected by Broadridge as comprising the Fund’s applicable expense peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances.

The Board also noted that the investment advisory fee rate and overall expenses (net of waivers and reimbursements) for the Fund were lower than the median of the investment advisory fee rates and overall expenses (net of waivers and reimbursements) of the funds in its Peer Group, excluding iShares funds.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level of the Fund supported the Board’s approval of the Advisory Agreement.

Nature, Extent and Quality of Services to be Provided by BFA: The Board reviewed the scope of services to be provided by BFA under the Advisory Agreement. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time and have made significant investments into the iShares business to support the iShares funds and their shareholders. The Board considered representations by BFA, BTC, and BlackRock that the scope and quality of services to be provided to the Fund would be similar to the scope and quality of services provided to other iShares funds. The Board also considered BFA’s compliance program and its compliance record with respect to other iShares funds. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons who will be responsible for the day-to-day management of the Fund, as well as the resources that will be available to them in managing the Fund. The Board also considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies, which were provided throughout the year with respect to other iShares funds, and other matters related to BFA’s portfolio compliance program.

Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided to the Fund under the Advisory Agreement supported the Board’s approval of the Advisory Agreement.

Costs of Services to be Provided to the Fund and Profits to be Realized by BFA and Affiliates: The Board did not consider the profitability of the Fund to BFA based on the fees payable under the Advisory Agreement or revenue to be received by BFAor its affiliates in connection with services to be provided to the Fund since the proposed relationship had not yet commenced. The Board noted that it expects to receive profitability information from BFA periodically following the Fund’s launch and will thus be in a position to evaluate whether any new or additional breakpoints or other adjustments in Fund fees would be appropriate.

Economies of Scale: The Board considered information that it had previously received regarding potential economies of scale, efficiencies and scale benefits shared with the iShares funds through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Agreement for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board noted that it would continue to assess the appropriateness of adding breakpoints in the future.

This consideration of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the Advisory Agreement.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds, and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and strategy as the Fund and that track the same index

 

 

B O A R D R E V I E W A N D A P P R O V A L O F  I N V E S T M E N T A D V I S O R Y C O N T R A C T

  83


Board Review and Approval of Investment Advisory Contract (continued)

 

as the Fund. The Board further noted that BFA previously provided the Board with detailed information regarding how the Other Accounts (particularly institutional clients) generally differ from the iShares funds, including in terms of the different and generally more extensive services provided to the iShares funds, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement.

Other Benefits to BFA and/or its Affiliates: Except as noted below, the Board did not consider the “fallout” benefits or ancillary revenue to be received by BFA and/or its affiliates in connection with the services to be provided to the Fund by BFA since the proposed relationship had not yet commenced. However, the Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board considered the potential payment of advisory fees and/or administration fees to BFA(or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services and/or administration services. The Board also noted the potential revenue to be received by BFA and/or its affiliates pursuant to an agreement that would permit a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board also considered the potential for revenue to BTC, the Fund’s securities lending agent, and its affiliates in the event of any loaning of portfolio securities of the Fund. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the Advisory Agreement.

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

iShares Cybersecurity and Tech ETF, iShares Future Cloud 5G and Tech ETF, iShares Genomics Immunology and Healthcare ETF, iShares Neuroscience and Healthcare ETF, iShares Robotics and Artificial Intelligence Multisector ETF, iShares Self-Driving EVandTech ETF, iShares Virtual Work and Life Multisector ETF (each the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Board Members who are not “interested persons” of the Trust (as that term is defined in the 1940 Act) (the “Independent Board Members”), is required annually to consider the approval of the Investment Advisory Agreement between the Trust and BFA (the “Advisory Agreement”) on behalf of the Fund. The Board’s consideration entails a year-long process whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Agreement. At meetings on May 2, 2023 and May 15, 2023, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide.At a meeting held on June 7-8, 2023, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Agreement for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Agreement for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Agreement are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of other fund(s) in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs, objectively selected by Broadridge as comprising the Fund’s applicable expense peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the investment advisory fee rate and overall expenses (net of any waivers and reimbursements) for the Fund were lower than the median of the investment advisory fee rates and overall expenses (net of any waivers and reimbursements) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2022, to that of such relevant comparison fund(s) for the same periods. The Board noted that the Fund seeks to track its specified underlying index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic

 

 

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Board Review and Approval of Investment Advisory Contract (continued)

 

comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about ongoing enhancements and initiatives with respect to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Agreement for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund, including related programs implemented pursuant to regulatory requirements. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies provided at the May 2, 2023 meeting and throughout the year, and matters related to BFA’s portfolio compliance program and other compliance programs and services.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Agreement supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Agreement), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the information considered with respect to the profits realized by BFA and its affiliates under the Advisory Agreement and from other relationships between the Fund and BFA and/or its affiliates, if any, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability (as discussed above), including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Agreement for the Fund did not provide for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund increase. However, the Board noted that it would continue to assess the appropriateness of adding breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts.

The Board received detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and

 

 

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Board Review and Approval of Investment Advisory Contract (continued)

 

strategy as the Fund and that track the same index as the Fund. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate.

The Board considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement and noted that the investment advisory fee rate under the Advisory Agreement for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, including, but not limited to, payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities, as applicable (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services, and BlackRock’s profile in the investment community. The Board further considered other direct benefits that might accrue to BFA, including the potential for reduction in the Fund’s expenses that are borne by BFA under the “all-inclusive” management fee arrangement, due in part to the size and scope of BFA’s investment operations servicing the Fund (and other funds in the iShares complex) as well as in response to a changing market environment. The Board also reviewed and considered information provided by BFA concerning authorized participant primary market order processing services that are provided by BlackRock Investments, LLC (“BRIL”), an affiliate of BFA, and paid for by authorized participants under the ETF Servicing Platform. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Agreement for the coming year.

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

iShares Exponential Technologies ETF (the “Fund”)

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Board Members who are not “interested persons” of the Trust (as that term is defined in the 1940 Act) (the “Independent Board Members”), is required annually to consider the approval of the Investment Advisory Agreement between the Trust and BFA (the “Advisory Agreement”) on behalf of the Fund. The Board’s consideration entails a year-long process whereby the Board and its committees (composed solely of Independent Board Members) assess BlackRock’s services to the Fund, including investment management; fund accounting; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements. The Independent Board Members requested, and BFA provided, such information as the Independent Board Members, with advice from independent counsel, deemed reasonably necessary to evaluate the Advisory Agreement. At meetings on May 2, 2023 and May 15, 2023, a committee composed of all of the Independent Board Members (the “15(c) Committee”), with independent counsel, met with management and reviewed and discussed information provided in response to initial requests of the 15(c) Committee and/or its independent counsel, and requested certain additional information, which management agreed to provide.At a meeting held on June 7-8, 2023, the Board, including the Independent Board Members, reviewed the additional information provided by management in response to these requests.

After extensive discussions and deliberations, the Board, including all of the Independent Board Members, approved the continuance of the Advisory Agreement for the Fund, based on a review of qualitative and quantitative information provided by BFA and their cumulative experience as Board Members. The Board noted its satisfaction with the extent and quality of information provided and its frequent interactions with management, as well as the detailed responses and other information provided by BFA. The Independent Board Members were advised by their independent counsel throughout the process, including about the legal standards applicable to their review. In approving the continuance of the Advisory Agreement for the Fund, the Board, including the Independent Board Members, considered various factors, including: (i) the expenses and performance of the Fund; (ii) the nature, extent and quality of the services provided by BFA; (iii) the costs of services provided to the Fund and profits realized by BFA and its affiliates; (iv) potential economies of scale and the sharing of related benefits; (v) the fees and services provided for other comparable funds/accounts managed by BFA and its affiliates; and (vi) other benefits to BFA and/or its affiliates. The material factors, none of which was controlling, and conclusions that formed the basis for the Board, including the Independent Board Members, to approve the continuance of the Advisory Agreement are discussed below.

Expenses and Performance of the Fund: The Board reviewed statistical information prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, regarding the expense ratio components, including gross and net total expenses, fees and expenses of other fund(s) in which the Fund invests (if applicable), and waivers/reimbursements (if applicable) of the Fund in comparison with the same information for other ETFs, objectively selected by Broadridge as comprising the Fund’s applicable expense peer group pursuant to Broadridge’s proprietary ETF methodology (the “Peer Group”). The Board was provided with a detailed description of the proprietary ETF methodology used by Broadridge to determine the Fund’s Peer Group. The Board noted that, due to the limitations in providing comparable funds in the Peer Group, the statistical information provided in Broadridge’s report may or may not provide meaningful direct comparisons to the Fund in all instances. The Board also noted that the investment advisory fee rate and overall expenses (net of any waivers and reimbursements) for the Fund were lower than the median of the investment advisory fee rates and overall expenses (net of any waivers and reimbursements) of the funds in its Peer Group, excluding iShares funds.

In addition, to the extent that any of the comparison funds included in the Peer Group, excluding iShares funds, track the same index as the Fund, Broadridge also provided, and the Board reviewed, a comparison of the Fund’s performance for the one-year, three-year, five-year, ten-year, and since inception periods, as applicable, and for the quarter ended December 31, 2022, to that of such relevant comparison fund(s) for the same periods. The Board noted that the Fund seeks to track its specified underlying

 

 

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Board Review and Approval of Investment Advisory Contract (continued)

 

index and that, during the year, the Board received periodic reports on the Fund’s short- and longer-term performance in comparison with its underlying index. Such periodic comparative performance information, including additional detailed information as requested by the Board, was also considered. The Board noted that the Fund generally performed in line with its underlying index over the relevant periods.

Based on this review, the other factors considered at the meeting, and their general knowledge of ETF pricing, the Board concluded that the investment advisory fee rate and expense level and the historical performance of the Fund supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Nature, Extent and Quality of Services Provided: Based on management’s representations, including information about ongoing enhancements and initiatives with respect to the iShares business, including with respect to capital markets support and analysis, technology, portfolio management, product design and quality, compliance and risk management, global public policy and other services, the Board expected that there would be no diminution in the scope of services required of or provided by BFA under the Advisory Agreement for the coming year as compared with the scope of services provided by BFA during prior years. In reviewing the scope of these services, the Board considered BFA’s investment philosophy and experience, noting that BFA and its affiliates have committed significant resources over time, including during the past year, to support the iShares funds and their shareholders and have made significant investments into the iShares business. The Board also considered BFA’s compliance program and its compliance record with respect to the Fund, including related programs implemented pursuant to regulatory requirements. In that regard, the Board noted that BFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and on other occasions as necessary and appropriate, and has provided information and made relevant officers and other employees of BFA (and its affiliates) available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund, as well as the resources available to them in managing the Fund. In addition to the above considerations, the Board reviewed and considered detailed presentations regarding BFA’s investment performance, investment and risk management processes and strategies provided at the May 2, 2023 meeting and throughout the year, and matters related to BFA’s portfolio compliance program and other compliance programs and services.

Based on review of this information, and the performance information discussed above, the Board concluded that the nature, extent and quality of services provided to the Fund under the Advisory Agreement supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Costs of Services Provided to the Fund and Profits Realized by BFA and its Affiliates: The Board reviewed information about the estimated profitability to BlackRock in managing the Fund, based on the fees payable to BFA and its affiliates (including fees under the Advisory Agreement), and other sources of revenue and expense to BFA and its affiliates from the Fund’s operations for the last calendar year. The Board reviewed BlackRock’s methodology for calculating estimated profitability of the iShares funds, noting that the 15(c) Committee and the Board had focused on the methodology and profitability presentation. The Board recognized that profitability may be affected by numerous factors, including, among other things, fee waivers by BFA, the types of funds managed, expense allocations and business mix. The Board thus recognized that calculating and comparing profitability at individual fund levels is challenging. The Board discussed with management the sources of direct and ancillary revenue, including the revenues to BTC, a BlackRock affiliate, from securities lending by the Fund. The Board also discussed BFA’s estimated profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding potential economies of scale (as discussed below).

Based on this review, the Board concluded that the information considered with respect to the profits realized by BFA and its affiliates under the Advisory Agreement and from other relationships between the Fund and BFA and/or its affiliates, if any, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Economies of Scale: The Board reviewed information and considered the extent to which economies of scale might be realized as the assets of the Fund increase, noting that the issue of potential economies of scale had been focused on by the 15(c) Committee and the Board during their meetings and addressed by management. The 15(c) Committee and the Board received information regarding BlackRock’s historical estimated profitability (as discussed above), including BFA’s and its affiliates’ estimated costs in providing services. The estimated cost information distinguished, among other things, between fixed and variable costs, and showed how the level and nature of fixed and variable costs may impact the existence or size of scale benefits, with the Board recognizing that potential economies of scale are difficult to measure. The 15(c) Committee and the Board reviewed information provided by BFA regarding the sharing of scale benefits with the iShares funds through various means, including, as applicable, through relatively low fee rates established at inception, breakpoints, waivers, or other fee reductions, as well as through additional investment in the iShares business and the provision of improved or additional infrastructure and services to the iShares funds and their shareholders. The Board noted that the Advisory Agreement for the Fund already provided for breakpoints in the Fund’s investment advisory fee rate as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board noted that it would continue to assess the appropriateness of adding new or revised breakpoints in the future.

The Board concluded that this review of potential economies of scale and the sharing of related benefits, as well as the other factors considered at the meeting, supported the Board’s approval of the continuance of the Advisory Agreement for the coming year.

Fees and Services Provided for Other Comparable Funds/Accounts Managed by BFA and its Affiliates: The Board received and considered information regarding the investment advisory/management fee rates for other funds/accounts in the U.S. for which BFA (or its affiliates) provides investment advisory/management services, including open-end funds registered under the 1940 Act (including sub-advised funds), collective trust funds and institutional separate accounts (collectively, the “Other Accounts”). The Board acknowledged BFA’s representation that the iShares funds are fundamentally different investment vehicles from the Other Accounts.

The Board received detailed information regarding how the Other Accounts generally differ from the Fund, including in terms of the types of services and generally more extensive services provided to the Fund, as well as other significant differences. In that regard, the Board considered that the pricing of services to institutional clients is typically based on a number of factors beyond the nature and extent of the specific services to be provided and often depends on the overall relationship between the client and its affiliates and the adviser and its affiliates. In addition, the Board considered the relative complexity and inherent risks and challenges of managing and providing other services to the Fund, as a publicly traded investment vehicle, as compared to the Other Accounts, particularly those that are institutional clients, in light of differing regulatory requirements and client-imposed mandates. The Board noted that BFA and its affiliates do not manage Other Accounts with substantially the same investment objective and

 

 

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Board Review and Approval of Investment Advisory Contract (continued)

 

strategy as the Fund and that track the same index as the Fund. The Board also acknowledged management’s assertion that, for certain iShares funds, and for client segmentation purposes, BlackRock has launched an iShares fund that may provide a similar investment exposure at a lower investment advisory fee rate.

The Board considered the “all-inclusive” nature of the Fund’s advisory fee structure, and the Fund’s expenses borne by BFA under this arrangement and noted that the investment advisory fee rate under the Advisory Agreement for the Fund was generally higher than the investment advisory/management fee rates for certain of the Other Accounts (particularly institutional clients) and concluded that the differences appeared to be consistent with the factors discussed.

Other Benefits to BFA and/or its Affiliates: The Board reviewed other benefits or ancillary revenue received by BFA and/or its affiliates in connection with the services provided to the Fund by BFA, both direct and indirect, including, but not limited to, payment of revenue to BTC, the Fund’s securities lending agent, for loaning portfolio securities, as applicable (which was included in the profit margins reviewed by the Board pursuant to BFA’s estimated profitability methodology), payment of advisory fees or other fees to BFA (or its affiliates) in connection with any investments by the Fund in other funds for which BFA (or its affiliates) provides investment advisory services or other services, and BlackRock’s profile in the investment community. The Board further considered other direct benefits that might accrue to BFA, including the potential for reduction in the Fund’s expenses that are borne by BFA under the “all-inclusive” management fee arrangement, due in part to the size and scope of BFA’s investment operations servicing the Fund (and other funds in the iShares complex) as well as in response to a changing market environment. The Board also reviewed and considered information provided by BFA concerning authorized participant primary market order processing services that are provided by BlackRock Investments, LLC (“BRIL”), an affiliate of BFA, and paid for by authorized participants under the ETF Servicing Platform. The Board also noted the revenue received by BFA and/or its affiliates pursuant to an agreement that permits a service provider to use certain portions of BlackRock’s technology platform to service accounts managed by BFA and/or its affiliates, including the iShares funds. The Board noted that BFA generally does not use soft dollars or consider the value of research or other services that may be provided to BFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund and thus would not alter the Board’s conclusion with respect to the appropriateness of approving the continuance of the Advisory Agreement for the coming year.

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

 

 

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Supplemental Information (unaudited)

 

Section 19(a) Notices

The amounts and sources of distributions reported are estimates and are being provided pursuant to regulatory requirements and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on tax regulations. Shareholders will receive a Form 1099-DIV each calendar year that will inform them how to report these distributions for federal income tax purposes.

July 31, 2023

 

     Total Cumulative Distributions
for the Fiscal Year
    % Breakdown of the Total Cumulative
Distributions for the Fiscal Year
 
iShares ETF   Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
    Net
Investment
Income
    Net Realized
Capital Gains
    Return of
Capital
    Total Per
Share
 

Breakthrough Environmental Solutions(a)

  $  0.103423     $    —     $  0.000014     $  0.103437       100             100

Cybersecurity and Tech(a)

    0.023100             0.014712       0.037812       61             39       100  

Exponential Technologies(a)

    0.281035             0.011283       0.292318       96             4       100  

Neuroscience and Healthcare(a)

                0.008241       0.008241                   100       100  

Virtual Work and Life Multisector(a)

    0.016890             0.032357       0.049247       34             66       100  

 

  (a) 

The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of the distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”. When distributions exceed total return performance, the difference will incrementally reduce the Fund’s net asset value per share.

 

Tailored Shareholder Reports for Open-End Mutual Funds and ETFs

Effective January 24, 2023, the SEC adopted rule and form amendments to require open-end mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Funds.

Premium/Discount Information

Information on the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads can be found at iShares.com.

 

 

S U P P L E M E N T A L   I N F O R M A T I O N

  89


Trustee and Officer Information (unaudited)

 

The Board of Trustees has responsibility for the overall management and operations of the Funds, including general supervision of the duties performed by BFA and other service providers. Each Trustee serves until he or she resigns, is removed, dies, retires or becomes incapacitated. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, resignation or removal. Trustees who are not “interested persons” (as defined in the 1940 Act) of the Trust are referred to as independent trustees (“Independent Trustees”).

The registered investment companies advised by BFA or its affiliates (the “BlackRock-advised Funds”) are organized into one complex of open-end equity, multi-asset, index and money market funds and ETFs (the “BlackRock Multi-Asset Complex”), one complex of closed-end funds and open-end non-index fixed-income funds (including ETFs) (the “BlackRock Fixed-Income Complex”) and one complex of ETFs (“Exchange-Traded Fund Complex”) (each, a “BlackRock Fund Complex”). Each Fundis included in the Exchange-Traded Fund Complex. Each Trustee also serves as a Director of iShares, Inc. and a Trustee of iShares U.S. ETF Trust and, as a result, oversees all of the funds within the Exchange-Traded Fund Complex, which consists of 387 funds as of July 31, 2023. With the exception of Robert S. Kapito, Salim Ramji and Aaron Wasserman, the address of each Trustee and officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The address of Mr. Kapito, Mr. Ramji and Mr. Wasserman is c/o BlackRock, Inc., 50 Hudson Yards, New York, NY 10001. The Board has designated John E. Kerrigan as its Independent Board Chair. Additional information about the Funds’ Trustees and officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-iShares (1-800-474-2737).

 

Interested Trustees
       

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

   Other Directorships Held by Trustee

Robert S. Kapito(a)

(1957)

   Trustee (since 2009).    President, BlackRock, Inc. (since 2006); Vice Chairman of BlackRock, Inc. and Head of BlackRock’s Portfolio Management Group (since its formation in 1998) and BlackRock, Inc.’s predecessor entities (since 1988); Trustee, University of Pennsylvania (since 2009); President of Board of Directors, Hope & Heroes Children’s Cancer Fund (since 2002).    Director of BlackRock, Inc. (since 2006); Director of iShares, Inc. (since 2009); Trustee of iShares U.S. ETF Trust (since 2011).

Salim Ramji(b)

(1970)

   Trustee (since 2019).    Senior Managing Director, BlackRock, Inc. (since 2014); Global Head of BlackRock’s ETF and Index Investments Business (since 2019); Head of BlackRock’s U.S. Wealth Advisory Business (2015-2019); Global Head of Corporate Strategy, BlackRock, Inc. (2014-2015); Senior Partner, McKinsey & Company (2010-2014).    Director of iShares, Inc. (since 2019); Trustee of iShares U.S. ETF Trust (since 2019).

(a) Robert S. Kapito is deemed to be an “interested person” (as defined in the 1940 Act) of the Trust due to his affiliations with BlackRock, Inc. and its affiliates.

(b) Salim Ramji is deemed to be an “interested person” (as defined in the 1940 Act) of the Trust due to his affiliations with BlackRock, Inc. and its affiliates.

Independent Trustees
       

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

   Other Directorships Held by Trustee

John E. Kerrigan

(1955)

   Trustee (since 2005); Independent Board Chair (since 2022).    Chief Investment Officer, Santa Clara University (since 2002).    Director of iShares, Inc. (since 2005); Trustee of iShares U.S. ETF Trust (since 2011); Independent Board Chair of iShares, Inc. and iShares U.S. ETF Trust (since 2022).

Jane D. Carlin

(1956)

   Trustee (since 2015); Risk Committee Chair (since 2016).    Consultant (since 2012); Member of the Audit Committee (2012-2018), Chair of the Nominating and Governance Committee (2017-2018) and Director of PHH Corporation (mortgage solutions) (2012-2018); Managing Director and Global Head of Financial Holding Company Governance & Assurance and the Global Head of Operational Risk Management of Morgan Stanley (2006-2012).    Director of iShares, Inc. (since 2015); Trustee of iShares U.S. ETF Trust (since 2015); Member of the Audit Committee (since 2016), Chair of the Audit Committee (since 2020) and Director of The Hanover Insurance Group, Inc. (since 2016).

Richard L. Fagnani

(1954)

   Trustee (since 2017); Audit Committee Chair (since 2019).    Partner, KPMG LLP (2002-2016); Director of One Generation Away (since 2021).    Director of iShares, Inc. (since 2017); Trustee of iShares U.S. ETF Trust (since 2017).

 

 

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Trustee and Officer Information (unaudited) (continued)

 

Independent Trustees (continued)
       

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

   Other Directorships Held by Trustee

Cecilia H. Herbert

(1949)

   Trustee (since 2005); Nominating and Governance and Equity Plus Committee Chairs (since 2022).    Chair of the Finance Committee (since 2019) and Trustee and Member of the Finance, Audit and Quality Committees of Stanford Health Care (since 2016); Trustee of WNET, New York’s public media company (since 2011) and Member of the Audit Committee (since 2018), Investment Committee (since 2011) and Personnel Committee (since 2022); Member of the Wyoming State Investment Funds Committee (since 2022); Director of the Jackson Hole Center for the Arts (since 2021); Trustee of Forward Funds (14 portfolios) (2009-2018); Trustee of Salient MF Trust (4 portfolios) (2015-2018).    Director of iShares, Inc. (since 2005); Trustee of iShares U.S. ETF Trust (since 2011).

Drew E. Lawton

(1959)

   Trustee (since 2017); 15(c) Committee Chair (since 2017).    Senior Managing Director of New York Life Insurance Company (2010-2015).    Director of iShares, Inc. (since 2017); Trustee of iShares U.S. ETF Trust (since 2017); Director of Jackson Financial Inc. (since 2021).

John E. Martinez

(1961)

   Trustee (since 2003); Securities Lending Committee Chair (since 2019).    Director of Real Estate Equity Exchange, Inc. (since 2005); Director of Cloudera Foundation (2017-2020); and Director of Reading Partners (2012-2016).    Director of iShares, Inc. (since 2003); Trustee of iShares U.S. ETF Trust (since 2011).

Madhav V. Rajan

(1964)

   Trustee (since 2011); Fixed-Income Plus Committee Chair (since 2019).    Dean, and George Pratt Shultz Professor of Accounting, University of Chicago Booth School of Business (since 2017); Advisory Board Member (since 2016) and Director (since 2020) of C.M. Capital Corporation; Chair of the Board for the Center for Research in Security Prices, LLC (since 2020); Robert K. Jaedicke Professor of Accounting, Stanford University Graduate School of Business (2001-2017); Professor of Law (by courtesy), Stanford Law School (2005-2017); Senior Associate Dean for Academic Affairs and Head of MBA Program, Stanford University Graduate School of Business (2010-2016).    Director of iShares, Inc. (since 2011); Trustee of iShares U.S. ETF Trust (since 2011).
Officers
     

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

Dominik Rohé

(1973)

   President (since 2023).    Managing Director, BlackRock, Inc. (since 2005); Head of Americas ETF and Index Investments (since 2023); Head of Latin America (2019-2023).

Trent Walker

(1974)

   Treasurer and Chief Financial Officer (since 2020).    Managing Director, BlackRock, Inc. (since September 2019); Chief Financial Officer of iShares Delaware Trust Sponsor LLC, BlackRock Funds, BlackRock Funds II, BlackRock Funds IV, BlackRock Funds V and BlackRock Funds VI (since 2021); Executive Vice President of PIMCO (2016-2019); Senior Vice President of PIMCO (2008-2015); Treasurer (2013-2019) and Assistant Treasurer (2007-2017) of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds.

Aaron Wasserman

(1974)

   Chief Compliance Officer (iShares, Inc. and iShares Trust, since 2023; iShares U.S. ETF Trust, since 2023).    Managing Director of BlackRock, Inc. (since 2018); Chief Compliance Officer of the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the Exchange-Traded Fund Complex (since 2023); Deputy Chief Compliance Officer for the BlackRock Multi-Asset Complex, the BlackRock Fixed-Income Complex and the Exchange-Traded Fund Complex (2014-2023).

Marisa Rolland

(1980)

   Secretary (since 2022).    Managing Director, BlackRock, Inc. (since 2023); Director, BlackRock, Inc. (2018-2022); Vice President, BlackRock, Inc. (2010-2017).

Rachel Aguirre

(1982)

   Executive Vice President (since 2022).    Managing Director, BlackRock, Inc. (since 2018); Director, BlackRock, Inc. (2009-2018); Head of U.S. iShares Product (since 2022); Head of EII U.S. Product Engineering (since 2021); Co-Head of EII’s Americas Portfolio Engineering (2020-2021); Head of Developed Markets Portfolio Engineering (2016-2019).

 

 

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  91


Trustee and Officer Information (unaudited) (continued)

 

Officers (continued)
     

Name

(Year of

Birth)

   Position(s)   

Principal Occupation(s)

During Past 5 Years

Jennifer Hsui

(1976)

   Executive Vice President (since 2022).    Managing Director, BlackRock, Inc. (since 2009); Co-Head of Index Equity (since 2022).

James Mauro

(1970)

   Executive Vice President (since 2022).    Managing Director, BlackRock, Inc. (since 2010); Head of Fixed Income Index Investments in the Americas and Head of San Francisco Core Portfolio Management (since 2020).

 

 

Effective March 30, 2023, Dominik Rohé replaced Armando Senra as President.

 

Effective July 1, 2023, Aaron Wasserman replaced Charles Park as Chief Compliance Officer.

 

 

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General Information

 

Electronic Delivery

Shareholders can sign up for e-mail notifications announcing that the shareholder report or prospectus has been posted on the iShares website at iShares.com. Once you have enrolled, you will no longer receive prospectuses and shareholder reports in the mail.

To enroll in electronic delivery:

 

   

Go to icsdelivery.com.

   

If your brokerage firm is not listed, electronic delivery may not be available. Please contact your broker-dealer or financial advisor.

Householding

Householding is an option available to certain fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents and Rule 30e-3 notices can be delivered to investors who share the same address, even if their accounts are registered under different names. Please contact your broker-dealer if you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, or if you are currently enrolled in householding and wish to change your householding status.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Funds’ Forms N-PORT are available on the SEC’s website at sec.gov. Additionally, each Fund makes its portfolio holdings for the first and third quarters of each fiscal year available at iShares.com/fundreports.

Availability of Proxy Voting Policies and Proxy Voting Records

A description of the policies and procedures that the iShares Funds use to determine how to vote proxies relating to portfolio securities and information about how the iShares Funds voted proxies relating to portfolio securities during the most recent twelve-month period ending June 30 is available without charge, upon request (1) by calling toll-free 1-800-474-2737; (2) on the iShares website at iShares.com; and (3) on the SEC website at sec.gov.

A description of the Trust’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund Prospectus. The Fund discloses its portfolio holdings daily and provides information regarding its top holdings in Fund fact sheets at iShares.com.

 

 

G E N E R A L  I N F O R M A T I O N 

  93


Glossary of Terms Used in this Report

 

Portfolio Abbreviation

 

ADR   American Depositary Receipt
NVDR   Non-Voting Depositary Receipt
NVS   Non-Voting Shares

 

Portfolio Abbreviation

S&P   Standard & Poor’s

 

 

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Want to know more?

iShares.com | 1-800-474-2737

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

Investing involves risk, including possible loss of principal.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by ICE Data Indices, LLC or Morningstar Inc., nor do these companies make any representation regarding the advisability of investing in the iShares Funds. BlackRock is not affiliated with the companies listed above.

©2023 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.

iS-AR-701-0723

 

 

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