iShares Trust

· iShares 0-5 Year High Yield Corporate Bond ETF | SHYG | NYSE Arca

· iShares Broad USD High Yield Corporate Bond ETF | USHY | Cboe BZX

· iShares ESG Advanced High Yield Corporate Bond ETF | HYXF | NASDAQ

· iShares Fallen Angels USD Bond ETF | FALN | NASDAQ

Table of Contents

Market Overview

iShares Trust

U.S. Bond Market Overview

The U.S. bond market experienced a considerable decline for the 12 months ended October 31, 2022 (the “reporting period”). The Bloomberg U.S. Aggregate Bond Index, a broad measure of U.S. fixed-income performance, returned -15.68%.

The U.S. Federal Reserve’s (Fed’s) shift toward tighter monetary policy was the primary factor driving the market downturn. Annualized consumer price inflation, which had been under 3.0% for over a decade, began to rise throughout 2021 and ultimately climbed above 6.0% in the year’s fourth calendar quarter. The inflation picture soon grew even more challenging following Russia’s invasion of Ukraine in early 2022, which—together with the resulting sanctions—further snarled global supply chains and contributed to a spike in energy prices. Inflation exceeded 8.0% in March 2022 and remained above that level through the end of the reporting period, with a peak of 9.1% in June.

The Fed moved aggressively in an effort to calm price pressures, ending its stimulative quantitative easing program and boosting interest rates from a range of 0.0%-0.25% to 3.0-3.25% in five separate increases from March to September 2022. This marked the largest move in such a short interval since 1980. In addition, the Fed appeared set to continue raising rates until inflation showed signs of returning closer to its longer-term target of 2%. Some evidence began to emerge later in the period that the Fed’s rate hikes had begun to reduce activity in certain segments of the economy, but there was still no sign that consumer price inflation had started to decline in a meaningful fashion. As a result, market prices at the end of October indicated that the central bank would not stop tightening until rates reached the 4.5-5.0% range.

These circumstances weighed heavily on bond market performance. The yield on the two-year U.S. Treasury note rose from 0.50% at the beginning of the period to 4.48% by the end of October 2022, while the 10-year yield climbed from 1.55% to 4.05%. The yield curve inverted significantly as result, meaning that short-term yields were higher those on longer-term debt. In late September, the yield curve moved to its largest inversion since 1982.

The surge in U.S. Treasury yields, together with investors’ increased aversion to risk, fueled weakness across all sectors of the bond market. Mortgage-backed securities, which were hurt by concerns about the housing market and the loss of demand stemming from Fed’s decision to end its quantitative easing policy, posted negative returns. Still, the category held up better than the broader index.

Investment-grade corporate bonds were among the worst-performing segments of the market. In addition to being adversely affected by rising Treasury yields, the asset class was pressured by a pronounced increase in yield spreads. The latter trend reflected concerns that weaker economic growth could lead to a slowdown in corporate earnings. Notably, the yield on corporate bonds—as gauged by the ICE BofA US Corporate Index—closed the period at the highest level since 2009.

High yield bonds also experienced sizable losses. As was the case with investment-grade corporates, a rise in both prevailing yields and yield spreads weighed heavily on performance. However, the category outperformed the investment-grade market due to its lower interest-rate sensitivity and higher weighting in the energy sector. Higher-rated issuers in the category—which are seen as having the least vulnerability to slowing growth—generally outperformed their lower-quality counterparts.

Investment Objective

The iShares 0-5 Year High Yield Corporate Bond ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. dollar-denominated, high yield corporate bonds with remaining maturities of less than five years, as represented by the Markit iBoxx^® USD Liquid High Yield 0-5 Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was October 15, 2013. The first day of secondary market trading was October 17, 2013.

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

Expense Example

Portfolio Management Commentary

Short-term high yield corporate bonds experienced a sizable decline during the reporting period. The bond market, in general, came under pressure from the combination of rising inflation and the U.S. Federal Reserve’s (the Fed’s) aggressive tightening of monetary policy. The Fed wound down its stimulative quantitative easing program, and it raised interest rates by three full percentage points to a range of 3.0% to 3.25%. These developments fueled a sharp decline in U.S. Treasury yields, pressuring all segments of the bond market. High yield bonds were further pressured by an increase in spreads over U.S. Treasuries, which was brought about by both increasing investor risk aversion and concerns that tighter Fed policy could drive the economy into a recession.

While short-term high yield corporate issues lost ground, they outperformed the larger high yield category due to their lower duration (interest-rate sensitivity). In addition, the category outpaced the broader fixed-income market thanks to a greater contribution from income and its higher weighting in the strong-performing energy sector.

Of the three major sectors in the Index, Industrials posted the smallest decline as investors gravitated to issuers seen as having the most reliable cash flows. However, the performance impact on the larger asset class was still negative due to the sector’s large Index weighting. Utility and Financials experienced the largest decline. Within Industrials, Energy issues gained ground in the annual period and were one of only two industry groups to finish with a positive total return. Capital goods issues, while suffering losses in absolute terms, also outpaced the overall sector. The benefit was counterbalanced by underperformance for the basic industries, consumer non-cyclicals and technology industries. Although brokerages held up well in the downturn, finance companies and banks posted much weaker returns.

Portfolio Information

Investment Objective

The iShares Broad USD High Yield Corporate Bond ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. dollar-denominated, high yield corporate bonds, as represented by the ICE BofA U.S. High Yield Constrained Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSETVALUE)

The inception date of the Fund was October 25, 2017. The first day of secondary market trading was October 26, 2017.

On 3/1/2021 the Fund began to track the 4pm pricing variant of the ICE BofA US High Yield Constrained Index. Historical index data prior to 3/1/2021 is for the 3pm pricing variant of the ICE BofA US High Yield Constrained Index. Index data on and after 3/1/2021 is for the 4pm pricing variant of the ICE BofA US High Yield Constrained Index.

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

Expense Example

Portfolio Management Commentary

High-yield bonds lost considerable ground in the annual period. A surge in inflation prompted the U.S. Federal Reserve (Fed) to tighten monetary policy by winding down its stimulative quantitative easing program and beginning to raise interest rates. The Fed hiked rates by a total of three percentage points over the 12-month period, bringing the benchmark fed funds rate to a range of 3.0% to 3.25%.

High yield bonds were also pressured by rising yield spreads relative to U.S. Treasuries. At their peak in early July, spreads stood at their highest level in nearly two years. The spread widening was the result of an increase investor risk aversion that was driven, in part, by Russia’s invasion of Ukraine and elevated volatility in the equity market. In addition, investors became more cautious on corporate credit given the prospect of slowing economic growth and a concurrent downturn in corporate earnings in 2023. High yield bond funds experienced significant outflows as a result, further weighing on prices. Higher-rated bonds in the Index generally outpaced lower-rated securities amid investors’ search for relative “safe havens.”

Of the three major sectors in the Index, utilities posted the smallest decline as investors gravitated to issuers seen as having the most reliable cash flows. However, the performance impact on the larger asset class was relatively limited due to the sector’s small Index weighting. Industrials, the largest sector in the Index, finished behind utilities. Energy issues, while losing ground, outperformed in relative terms thanks to rising energy prices. Transportation and capital goods issues also outpaced the overall sector. The positive relative performance for these market segments was counterbalanced by a poor showing for basic industries, consumer non-cyclicals and communications. Financials were the worst performer of the three major sectors. While the insurance and real estate industries held up well in the downturn, banks posted much weaker returns.

Portfolio Information

Investment Objective

The iShares ESG Advanced HighYield Corporate Bond ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. dollar-denominated high yield corporate bonds from issuers with a favorable environmental, social and governance rating as identified by the index provider, while applying extensive screens for involvement in controversial activities, as represented by the Bloomberg MSCI US High Yield Choice ESG Screened Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSETVALUE)

The inception date of the Fund was June 14, 2016. The first day of secondary market trading was June 16, 2016.

Index performance through September 14, 2020 reflects the performance of the Markit iBoxx USD Liquid High Yield ex-Oil & Gas Index. Index performance beginning on September 15, 2020 reflects the performance of the Bloomberg MSCI US High Yield Choice ESG Screened Index.

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

Expense Example

Portfolio Management Commentary

High-yield corporate bonds experienced a sizable downturn in the annual period. A surge in inflation prompted the U.S. Federal Reserve (Fed) to tighten monetary policy by winding down its stimulative quantitative easing program and beginning to raise interest rates, which weighed on returns across the bond market. High yield bonds were also pressured by rising yield spreads relative to U.S. Treasuries. The spread widening was the result of an increase in investor risk aversion that was driven, in part, by Russia’s invasion of Ukraine and elevated volatility in the equity market. In addition, investors became more cautious on corporate credit given the prospect of slowing economic growth and a concurrent downturn in corporate earnings in 2023.

Higher-rated bonds in the Index generally outperformed lower-rated securities amid investors’ search for relatively better credit quality within the high yield sector. The energy industry was one of the top performing segments of the market in the past year due to the strong gains in the prices of oil and natural gas as a result of the Russia-Ukraine conflict.

Of the three major sectors by weight in the Index, utilities posted the smallest decline as investors gravitated to issuers seen as having the most reliable cash flows during periods of high inflation. However, the performance impact on the Index was relatively limited due to the sector’s small Index weighting. Industrials, the largest sector in the Index, finished behind utilities. Within Industrials, capital goods and transportation outperformed, while the consumer non-cyclical and communications industries lagged. Financials were the weakest performer of the three sectors, with banking and brokerage/asset management posting the largest declines.

Portfolio Information

Investment Objective

The iShares Fallen Angels USD Bond ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. dollar-denominated, high yield corporate bonds that were previously rated investment grade, as represented by the Bloomberg U.S. High Yield Fallen Angel 3% Capped Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSETVALUE)

The inception date of the Fund was June 14, 2016. The first day of secondary market trading was June 16, 2016.

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

Expense Example

Portfolio Management Commentary

High-yield corporate bonds experienced a sizable downturn in the annual period. A surge in inflation prompted the U.S. Federal Reserve (Fed) to tighten monetary policy by winding down its stimulative quantitative easing program and beginning to raise interest rates, which weighed on returns across the bond market. High yield bonds were also pressured by rising yield spreads relative to U.S. Treasuries. The spread widening was the result of an increase investor risk aversion that was driven, in part, by Russia’s invasion of Ukraine and elevated volatility in the equity market. In addition, investors became more cautious on corporate credit given the prospect of slowing economic growth and a concurrent downturn in corporate earnings in 2023.

Fallen angels; i.e., the high yield bonds of companies formerly rated as investment grade, underperformed in the annual period. The category tends to have more interest rate risk than traditional high yield bonds. Since they started out as investment-grade credits, fallen angels’ bonds tend to have longer maturities—and thus higher interest rate sensitivity— versus debt originally issued as high yield. That can be beneficial in an environment of falling rates, but it has hindered the performance of fallen angels since the Fed started raising rates in March 2022. On the positive side, the Index benefited from its relatively high weighting of over 20% in the strong-performing energy sector.

The universe of fallen angel bonds has decreased from the highs of late 2020. The shutdown of the economy following the emergence of COVID-19 led to a wave of downgrades that caused the dollar value of fallen angels to double from its pre-shutdown levels. More recently, rating agencies have been upgrading more issuers back to investment grade as the economy has recovered. In the first half of 2022, in fact, about $69 billion of high yield bonds were upgraded to investment grade.

Portfolio Information

About Fund Performance

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

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

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

Disclosure of Expenses

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

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

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

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