iShares Trust

Table of Contents

iShares Trust

Global Market Overview

Global equity markets advanced during the 12 months ended August 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 13.95% 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-coronavirus 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 several key commodities, including oil, natural gas, and wheat, either stabilized or 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 over the course of 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 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, increasing their spending in both nominal and inflation-adjusted terms. A strong labor market bolstered spending, as unemployment remained low, and the 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 half 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 modestly, as the resilient global economic environment reassured investors. The declining value of the U.S. dollar relative to many other currencies and the slowing pace of the Fed’s interest rate increases also supported emerging market stocks.

Investment Objective

The iShares Emergent Food and AgTech Multisector ETF (the “Fund”) seeks to track the investment results of an index composed of companies from U.S. and non-U.S. markets that are expected to benefit from creating or using agricultural technologies or innovative food products or services as representd by the Morningstar Global Food Innovation 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 April 25, 2022. The first day of secondary market trading was April 27, 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

Portfolio Management Commentary

Stocks that create or use agricultural technologies or innovative food products or services declined for the reporting period. Stocks in the U.S., which represented approximately 60% of the Index on average for the reporting period, detracted the most from the Index’s return. The chemicals industry in the materials sector faced headwinds, as the market for fertilizer continued to adjust to the disruption created by Russia’s invasion of Ukraine. As the reporting period began, stock prices of companies involved in the production of fertilizer and related materials were elevated, amid concerns about a global fertilizer shortage. However, markets adapted, and new production facilities and input sources improved supply, sending the price of fertilizer lower and pressuring the stocks of chemicals companies.

Similarly, the Canadian materials sector weighed on the Index’s return, as trends in the global fertilizer market led to contracting profit margins in the chemicals industry. Some farmers anticipated further declines in fertilizer prices and accordingly delayed some purchases, constraining the industry’s North American potash sales.

Norwegian stocks also detracted from the Index’s performance, particularly the food products industry in the consumer staples sector. Despite strong demand for seafood, a new tax on salmon farming implemented by the Norwegian government negatively impacted the industry. The declining value of the Norwegian krone relative to the U.S. dollar also reduced the value of Norwegian stocks in U.S. dollar terms.

On the upside, German stocks contributed to the Index’s return. Cost cutting benefited the chemicals industry in the materials sector, and the rising value of the euro relative to the U.S. dollar increased the value of Eurozone stocks in U.S. dollar terms. In the German industrials sector, strong demand for food and beverage production equipment drove higher earnings in the machinery industry. The Italian machinery industry also gained amid robust orders for tractors, as higher prices for agricultural commodities early in the reporting period drove farmers to invest in equipment.

Portfolio Information

Investment Objective

The iShares ESG Aware MSCI EAFE ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada that have positive environmental, social and governance characteristics, as identified by the index provider while exhibiting risk and return characteristics similar to those of the parent index, as represented by the MSCI EAFE Extended ESG Focus 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 28, 2016. The first day of secondary market trading was June 30, 2016.

Index performance through May 31, 2018 reflects the performance of the MSCI EAFE ESG Focus Index. Index performance beginning on June 1, 2018 reflects the performance of the MSCI EAFE Extended ESG Focus 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

Investor interest in the environmental, social, and governance (“ESG”) attributes of companies was mixed during the reporting period. In Europe, ESG investments continued to attract net inflows, although the rate of net purchases slowed in the first half of 2023.

During the reporting period, the Index of international developed stocks with a tilt towards favorable ESG characteristics in developed markets advanced significantly for the reporting period. Japanese stocks contributed the most to the Index’s return, helped by Japan’s improving economy and corporate reforms designed to reorient focus on corporate profits. The industrials sector and the financial sector contributed the most to the Index’s return.

European stocks, particularly from France and Germany, also gained for the reporting period. In France, the consumer discretionary sector was a source of strength, driven primarily by the textiles and apparel industry. Sales of luxury goods supported revenues in the industry, and European sales were particularly strong, helped by an increase in tourism from North America. In Germany, the information technology sector advanced, benefiting from strong sales of cloud-based enterprise software. U.K. stocks also contributed to the Index’s performance, as cost cutting and high interest rates benefited the banking industry in the financial sector.

In terms of relative performance, the Index slightly outperformed the broader market, as represented by the MSCI EAFE Index, while tracking it relatively closely. The Index balances seeking similar risk and return to the broad market while tilting towards companies with favorable ESG characteristics. Stock selection in the information technology sector and the real estate sector contributed notably to the Index’s relative return. However, stock selection in the materials and industrials sectors detracted from the Index’s performance relative to the broader market.

Portfolio Information

Investment Objective

The iShares ESG MSCI EM Leaders ETF (the “Fund”) seeks to track the investment results of an index composed of large and mid-capitalization stocks of emerging market companies with high environmental, social, and governance performance relative to their sector peers as determined by the index provider, as represented by the MSCI EM Extended ESG Leaders 5% Issuer 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 February 5, 2020. The first day of secondary market trading was February 7, 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

Portfolio Management Commentary

Investor interest in the environmental, social, and governance (“ESG”) attributes of companies was mixed during the reporting period. Globally, fund flows to ESG-focused investments slowed in the first half of 2023 while remaining net positive.

During the period, the Index of emerging market stocks with positive ESG characteristics relative to their sector peers posted a modest decline. Chinese stocks detracted the most from the Index’s performance, particularly in the consumer discretionary sector. Concerns about a slowdown in China’s consumer spending weighed on the stock of a major provider of food delivery services. The healthcare sector also declined, as news of a U.S. biotechnology and biomanufacturing initiative pressured the Chinese life sciences tools and services industry.

Stocks in India also faced headwinds. A large company in the utilities sector declined sharply following a high-profile report from a U.S.-based finance firm that accused the utility’s parent company of fraud and market manipulation.]

On the upside, Mexican stocks contributed slightly to the Index’s performance. The beverages industry in the consumer staples sector posted gains amid high consumer demand and effective digital initiatives to improve operations.

In terms of relative performance, the Index underperformed the broader market, as represented by the MSCI Emerging Markets Index. The Index seeks to achieve higher exposure to ESG Leaders relative to the broader market while excluding companies with an MSCI ESG Rating of ‘B’ and below. Compared to the broader market, the Index held overweight positions in the communication services and financials sectors and a significantly underweight position in the information technology sector. Positioning in the information technology sector and stock selection in the financials and materials sectors detracted from the Index’s relative performance.

Portfolio Information

Investment Objective

The iShares MSCI Global Sustainable Development Goals ETF (the “Fund”) (formerly the iShares MSCI Global Impact ETF) seeks to track the investment results of an index composed of companies that derive a majority of their revenue from products and services that address at least one of the world’s major social and environmental challenges as identified by the United Nations Sustainable Development Goals, as represented by the MSCIACWI Sustainable Impact 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 April 20, 2016. The first day of secondary market trading was April 22, 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

The COVID-19 pandemic substantially disrupted progress toward the U.N. sustainable development goals (“SDGs”), and approximately half of the SDGs are moderately or severely off track, with another 30 percent having either stalled or reversed. Despite the ongoing challenges, many countries continued to monitor their SDG implementation, with 39 nations presenting voluntary progress reviews to the U.N. in 2023, including two countries that presented for the first time.

In this environment, global stocks deriving revenue associated with addressing social and environmental challenges advanced modestly for the reporting period. Stocks in the U.S. contributed the most to the Index’s return, particularly stocks in the healthcare sector. The biotechnology industry gained, helped by approval of a treatment for several diseases. Development of a promising drug for treatment of obesity and diabetes buoyed the pharmaceuticals industry as well.

Japanese stocks also posted gains, led by the real estate sector. The Bank of Japan was one of the few central banks that declined to raise interest rates during the reporting period, leading to lower borrowing costs and benefiting the real estate industry. Low interest rates and the weakness of the Japanese yen relative to the U.S. dollar helped attract international investors to the Japanese real estate market.

Swiss stocks further contributed to the Index’s performance, also driven by strength in the healthcare sector. The pharmaceuticals industry gained amid strong sales for a drug for heart patients, a drug for treating breast cancer, and a multiple sclerosis treatment.

On the downside, Chinese stocks detracted from the Index’s performance, as softening exports pressured the industrials sector. The Belgian materials sector also declined amid higher costs and volatility in commodities markets.

In terms of relative performance, the Index significantly underperformed the broader market, as represented by the MSCIACWI Index. The index’s selection process seeks stocks that derive a majority of their revenue from products and services that address at least one of the world’s major social and environmental challenges as identified by the United Nations Sustainable Development Goals. The index held a significant underweight to the information technology sector which detracted from relative performance as the sector drove returns for the broader market. The Index’s overweight to the real estate sector also hurt relative performance. Additionally, security selection in the both the industrials and materials sectors detracted from the Index’s relative return.

Portfolio Information

Investment Objective

The iShares MSCI Water Management Multisector ETF(the “Fund”) seeks to track the investment results of an index composed of U.S. and non-U.S. companies that either 1) derive a proportion of their revenues from sustainable water products or services or 2) demonstrate relative efficiency in their water management, as represented by the MSCI ACWI IMI SustainableWater Transition Extended 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 September 20, 2022. The first day of secondary market trading was September 22, 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

Portfolio Management Commentary

Governments and businesses continued to invest in technologies to improve water access, quality, and management during the reporting period. Concerns about the sustainability of groundwater sources, which provide a significant portion of the world’s household and agricultural water, highlighted the importance of the management of and investment in securing access to clean water. Demand for water continued to grow globally, as population growth, urbanization, and increased agricultural and industrial use pressured water supplies.

In this environment, the stocks of companies that derive revenues from sustainable water products and services or demonstrate efficient water management advanced for the reporting period. U.S. stocks contributed the most to the Index’s performance, led by the industrials sector, particularly the industrial machinery, supplies, and components industry. Despite ongoing supply chain constraints, companies that manufacture products and equipment used for water conservation and treatment projects posted strong gains. Investments in networked water management equipment to improve product operation and process efficiency helped drive increased industry revenue. Stocks in the information technology sector also contributed to the Index’s return, led by the electronic equipment and instruments industry. Strong commercial and residential demand for advanced products used in water metering drove higher earnings in the industry, and the acquisition of a smart water technology company bolstered sales growth.

French stocks also advanced notably, led by the utilities sector. Robust organic revenue growth in the multiutilities industry drove gains, as increased sales from hazardous waste treatment in Europe and higher energy prices buoyed revenue.

In terms of relative performance, the Index underperformed the broader market, as represented by the MSCIACWI Investable Market Index. Relative to the broader market, the index’s selection process aims to provide exposure to companies that either derive a proportion of their revenues from sustainable water products or service or demonstrate relative efficiency in their water management. Consequently, the Index held underweight positions in the information technology sector which resulted in the largest detractor to relative performance at the sector level. Within the information technology sector, lack of exposure to the software and services industry hurt the Index’s relative performance as the industry boosted the performance of the broader market during the period. The Index’s lack of exposure to the communication services sector also detracted from relative performance. On the other side of the spectrum, the index’s overweight to the industrials sector helped boost relative performance in addition to security selection within the utilities sector.

Portfolio Information

About Fund Performance

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

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

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

Disclosure of Expenses

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

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

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

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

Affiliates

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

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

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:

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

Average Quarterly Balances of Outstanding Derivative Financial Instruments

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.