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. fixed-income market, as measured by the Bloomberg U.S. Aggregate Bond Index, posted a return of 0.36% for the 12 months ended October 31, 2023 (the “reporting period”). The benefit of income outweighed the effect of falling prices, leading to a narrow gain.

Several factors played a role in the weak showing for bonds. When the reporting period began, the market was seeing support from a decline in inflation from the peak reached in the months following the outbreak of war in Ukraine. The easing of price pressures fueled expectations that the U.S. Federal Reserve (Fed) could be nearing the end of its long series of interest rate hikes, leading to positive market performance in late 2022. As 2023 progressed, however, the combination of persistent inflation and communications from Fed officials made it clear that although rate hikes were indeed winding down, interest rates were likely to remain “higher for longer.” Continued strength in economic growth, together with elevated housing prices and robust employment, reinforced the notion that the Fed would need to maintain high rates to prevent a reacceleration of inflation. The Fed ultimately raised rates six times over the course of the 12-month period, bringing the benchmark fed funds rate from a range of 3.0-3.25% to 5.25%-5.50%. More important, however, was the fact that the markets continued to push out expectations for the central bank’s first rate cut. At the beginning of the period, the futures markets were indicating the initial rate reduction would occur in the second half of 2023. In contrast, the expected timing had shifted to late 2024 by the end of October.

In this environment, U.S. Treasury yields moved higher across the maturity spectrum (as prices fell). The two-year note climbed 4.48% to 5.09% over the course of the 12-month period, while the 10-year yield rose from 4.05% to 4.93%. Both issues finished October 2023 near their highest levels since 2007. The government bond market, in addition to being affected by rising interest rates, was further pressured by worries that the need for increased Treasury issuance would create an imbalance of supply and demand in the market.

The volatility in U.S. Treasuries, together with lower mortgage pre-payments and the Fed’s efforts to reduce the fixed-income holdings on its balance sheet, caused mortgage-backed securities to finish with a negative return. Conversely, the other major segments of the securitized category—asset-backed securities and commercial mortgage-backed securities—posted gains. Investment-grade corporate bonds also produced positive returns and outpaced Treasuries. The asset class benefited from a larger contribution from income and a decline in its yield spreads versus government issues.

Bonds with maturities of ten years and above, which are most sensitive to rate movements, trailed the broader market. On the other hand, issues in the three- to- seven-year maturity range outperformed. Higher-rated investment-grade bonds, whose performance is dictated more by interest-rate trends than credit developments, generally lagged lower-rated securities.

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

(AT NET ASSET VALUE)

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

Expense Example

Portfolio Management Commentary

Short-term high yield bonds produced a solid gain in the 12-month period ended October 31, 2023. The category was helped by the contribution its above-average income provided to total returns. In addition, its lower interest-rate sensitivity in relation to the broader market was a positive attribute in an environment of rising yields.

Short-term high yield bonds slightly outperformed the larger high yield market. Although short-term issues held up slightly better than longer-term securities in a time of rising rates, the advantage was offset by the category’s slightly lower income.

Despite the short-lived regional banking crisis in March, financials were the strongest performer among the three major sectors in the Index. Finance companies performed particularly well, as did brokerage/asset management firms. The industrials sector also delivered healthy gain. Within industrials, energy issues—which were boosted by the positive impact rising oil prices had on the finances of companies in the industry—contributed to the sector’s strong showing. In addition, economically sensitive issues in the materials and consumer-related categories generated robust returns as the recession investors were anticipating in late 2022 failed to materialize. Utilities were the weakest of the three sectors, but the effect on overall Index returns was relatively limited due to the category’s small weighting.

Lower-rated bonds in the Index outperformed higher-rated issues, largely as a result of investors’ healthy appetite for risk and the fact that credit trends, more than interest-rate movements, are generally the key driver of returns in this area.

Portfolio Information

Investment Objective

The iShares Broad USD 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, 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 ASSET VALUE)

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 corporate bonds delivered a solid gain in the annual period, as gauged by the 5.11% return for the ICE BofA US High Yield Constrained Index. Expectations that central banks were nearing the end of their rate-hiking cycles helped fuel positive investor sentiment, as did mounting hopes that the U.S. economy would avoid a recession. These developments contributed to a decline in credit spreads over the course of the period. Together with the contribution from income, the compression in spreads outweighed the headwind from rising yields in the government bond market.

The Fund returned 7.97% at net asset value. The industrials sector, the largest sector in the Index, generated a robust gain. Consumer cyclicals were the top-performing industry in the category. On the other hand, the transportation and communications industries lagged. The financials sector also produced a positive return and outpaced industrials thanks to relative strength in the brokerage/asset management/exchanges and finance companies categories. Utilities logged a modest gain in the period, but the effect on the Index was minimal due to the sector’s small weighting.

Lower-rated bonds in the Index outperformed higher-rated issues, largely as a result of investors’ healthy appetite for risk and the fact that credit trends, more than interest-rate movements, are generally the key driver of returns in this area.

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 ASSET VALUE)

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 posted a solid gain and strongly outpaced the investment-grade market in the annual period. Income made a substantial contribution to total returns, and credit spreads relative to U.S. Treasuries experienced a modest tightening. Together, these factors outweighed the headwind from rising government bond yields. The general strength in investors’ appetite for risk, which was fueled in part by better-than-expected economic growth, also supported returns. High yield further benefited from its lower interest rate sensitivity at a time of rising rates.

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 ASSET VALUE)

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 registered a gain and outpaced the investment-grade market in the annual period. Several factors played a role in the category’s positive return, including its above-average yield, lower degree of interest rate sensitivity, and the positive sentiment associated with better-than-expected economic growth. The asset class was further helped by gains for both equities and crude oil, as well as the fact that the overall default rate—while ticking up—remained below the historical average. Fallen angel bonds (i.e., bonds of companies formerly rated as investment grade that have moved into high yield territory due to downgrades of their credit ratings) finished slightly ahead of the broader market.

Industrials, which make up the vast majority of the Index, were the strongest performer of the three major sectors. Within industrials, metals & mining issues delivered particularly robust returns, as did the transportation and energy industries. Capital goods and communications issues also contributed to the sector’s outperformance. The utilities sector, while performing well in absolute terms, trailed the Index. Financials also lagged, primarily as a result of weakness in the banking industry.

In terms of credit quality, the highest-rated category in the Index—bonds rated Baa by Moody’s—was the leading performer. This represented a contrast to the broader high yield market, where higher-rated issuers generally lagged their lower-quality counterparts.

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.