OCTOBER
31,
2023
2023
Annual
Report
iShares
Trust
iShares
Yield
Optimized
Bond
ETF
|
BYLD
|
NYSE
Arca
Dear
Shareholder,
The
combination
of
continued
economic
growth
and
cooling
inflation
provided
a
supportive
backdrop
for
investors
during
the
12-month
reporting
period
ended
October
31,
2023.
Significantly
tighter
monetary
policy
helped
to
rein
in
inflation,
as
the
annual
increase
in
the
Consumer
Price
Index
declined
to
its
long-term
average
of
approximately
3%
in
October
2023.
Meanwhile,
real
economic
growth
proved
more
resilient
than
many
investors
anticipated.
A
moderating
labor
market
also
helped
ease
inflationary
pressure,
although
wages
continued
to
grow
and
unemployment
rates
touched
the
lowest
levels
in
decades
before
rising
slightly.
This
robust
labor
market
powered
further
growth
in
consumer
spending,
backstopping
the
economy.
On
October
7,
2023,
Hamas
launched
a
horrific
attack
on
Israel.
The
ensuing
war
will
have
a
significant
humanitarian
impact
and
could
lead
to
heightened
economic
and
market
volatility.
We
see
geopolitics
as
a
structural
market
risk
going
forward.
See
our
geopolitical
risk
dashboard
at
blackrock.com
for
more
details.
Equity
returns
were
solid
during
the
period,
as
the
durability
of
consumer
spending
mitigated
investors’
concerns
about
the
economy’s
trajectory.
The
U.S.
economy
continued
to
show
strength,
and
growth
further
accelerated
in
the
third
quarter
of
2023.
However,
equity
returns
were
uneven,
as
the
performance
of
a
few
notable
technology
companies
supported
gains
among
large-capitalization
U.S.
stocks,
while
small-capitalization
U.S.
stocks
declined
overall.
Meanwhile,
international
developed
market
equities
advanced,
and
emerging
market
equities
posted
solid
gains.
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
benefited
from
improving
economic
sentiment,
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”),
attempting
to
manage
persistent
inflation,
raised
interest
rates
six
times
during
the
12-month
period,
but
slowed
and
then
paused
its
tightening
later
in
the
period.
The
Fed
also
wound
down
its
bond-buying
programs
and
incrementally
reduced
its
balance
sheet
by
not
replacing
securities
that
reach
maturity.  
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
several
pauses,
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.  
While
we
favor
an
overweight
position
in
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
Japanese
stocks
in
the
near
term
as
shareholder-friendly
policies
generate
increased
investor
interest.
We
also
believe
that
stocks
with
an
AI
tilt
should
benefit
from
an
investment
cycle
that
is
set
to
support
revenues
and
margins.
In
credit,
there
are
selective
opportunities
in
the
near
term
despite
tightening
credit
and
financial
conditions.
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,
euro
area
government
bonds
and
gilts,
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.
Sincerely,
Rob
Kapito
President,
BlackRock,
Inc.
The
Markets
in
Review
Rob
Kapito
President,
BlackRock,
Inc.
Past
performance
is
not
an
indication
of
future
results.
Index
performance
is
shown
for
illustrative
purposes
only.
You
cannot
invest
directly
in
an
index.
Total
Returns
as
of
October
31,
2023
6-Month
12-Month
U.S.
large
cap
equities
(S&P
500
®
Index)
1.39
%
10.14
%
U.S.
small
cap
equities
(Russell
2000
®
Index)
(5.29
)
(8.56
)
International
equities
(MSCI
Europe,
Australasia,
Far
East
Index)
(7.88
)
14.40
Emerging
market
equities
(MSCI
Emerging
Markets
Index)
(4.78
)
10.80
3-month
Treasury
bills
(ICE
BofA
3-Month
U.S.
Treasury
Bill
Index)
2.63
4.77
U.S.
Treasury
securities
(ICE
BofA
10-Year
U.S.
Treasury
Index)
(9.70
)
(3.25
)
U.S.
investment
grade
bonds
(Bloomberg
U.S.
Aggregate
Bond
Index)
(6.13
)
0.36
Tax-exempt
municipal
bonds
(Bloomberg
Municipal
Bond
Index)
(4.65
)
2.64
U.S.
high
yield
bonds
(Bloomberg
U.S.
Corporate
High
Yield
2%
Issuer
Capped
Index)
0.02
6.23
This
Page
is
not
Part
of
Your
Fund
Report
2
Table
of
Contents
Page
3
The
Markets
in
Review
...................................................................................................
2
Annual
Report:
Market
Overview
.......................................................................................................
4
Fund
Summary
........................................................................................................
5
About
Fund
Performance
..................................................................................................
7
Disclosure
of Expenses
...................................................................................................
7
Schedule
of
Investments
..................................................................................................
8
Financial
Statements:
Statement
of
Assets
and
Liabilities
..........................................................................................
10
Statement
of
Operations
................................................................................................
11
Statements
of
Changes
in
Net
Assets
........................................................................................
12
Financial
Highlights
.....................................................................................................
13
Notes
to
Financial
Statements
...............................................................................................
14
Report
of
Independent
Registered
Public
Accounting
Firm
..............................................................................
19
Important
Tax
Information
.................................................................................................
20
Board
Review
and
Approval
of
Investment
Advisory
Contract
............................................................................
21
Supplemental
Information
.................................................................................................
23
Trustee
and
Officer
Information
..............................................................................................
24
General
Information
.....................................................................................................
26
Glossary
of
Terms
Used
in
this
Report
..........................................................................................
27
Market
Overview
2023
iShares
Annual
Report
To
Shareholders
4
iShares
U.S.
ETF
Trust
Domestic
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.
Fund
Summary
as
of
October
31,
2023
5
Fund
Summary
iShares
®
Yield
Optimized
Bond
ETF
Investment
Objective
The
iShares
Yield
Optimized
Bond
ETF
(the
“Fund”)
seeks
to
track
the
investment
results
of
an
index
composed
of
underlying
fixed
income
funds
that
collectively
seek
to
deliver
current
income,
as
represented
by
the
Morningstar
®
U.S.
Bond
Market
Yield-Optimized
Index
SM
(the
Index
).
The
Fund
invests
in
a
representative
sample
of
securities
included
in
the
Index
that
collectively
has
an
investment
profile
similar
to
the
Index.
Due
to
the
use
of
representative
sampling,
the
Fund
may
or
may
not
hold
all
of
the
securities
that
are
included
in
the
Index.
Performance
GROWTH
OF
$10,000
INVESTMENT
(SINCE
INCEPTION
AT
NET
ASSET
VALUE)
The
inception
date
of
the
Fund
was
April
22,
2014.
The
first
day
of
secondary
market
trading
was
April
24,
2014.
Past
performance
is
not
an indication
of
future
results.
Performance
results
do
not
reflect
the
deduction
of
taxes
that
a
shareholder
would
pay
on
fund
distributions
or
on
the
redemption
or
sale
of
fund
shares.
See
“About
Fund
Performance” for
more
information.
Expense
Example
Average
Annual
Total
Returns
Cumulative
Total
Returns
1
Year
5
Years
Since
Inception
1
Year
5
Years
Since
Inception
Fund
NAV
.
.
.
.
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.
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.
.
.
.
.
.
.
3.19‌%
1.06‌%
1.57‌%
3.19‌%
5.40‌%
15.97‌%
Fund
Market
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
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.
.
.
.
.
.
.
.
.
.
3.19‌
1.06‌
1.56‌
3.19‌
5.40‌
15.91‌
Index
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
2.93‌
0.88‌
1.41‌
2.93‌
4.49‌
14.23‌
Actual
Hypothetical
5%
Return
Beginning
Account
Value
(05/01/23)
Ending
Account
Value
(10/31/23)
Expenses
Paid
During
the
Period
(a)
Beginning
Account
Value
(05/01/23)
Ending
Account
Value
(10/31/23)
Expenses
Paid
During
the
Period
(a)
Annualized
Expense
Ratio
$
1,000.00‌
$
977.20‌
$
0.00‌
$
1,000.00‌
$
1,025.21‌
$
0.00‌
0.00‌%
(a)
Expenses
are
equal
to
the
annualized
expense
ratio,
multiplied
by
the
average
account
value
over
the
period,
multiplied
by
184/365
(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.
The
fees
and
expenses
of
the
underlying
funds
in
which
the
Fund
invests
are
not
included
in
the
Fund's
annualized
expense
ratio.
Fund
Summary
as
of
October
31,
2023
(continued)
2023
iShares
Annual
Report
To
Shareholders
6
iShares
®
Yield
Optimized
Bond
ETF