iShares Trust

Table of Contents

Market Overview

iShares Trust

Global Market Overview

Global equity markets declined during the 12 months ended April 30, 2022 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned -5.44% in U.S. dollar terms for the reporting period.

In the first half of the reporting period, stocks were supported by economic recovery in most regions of the world. The global economy continued to rebound from the impact of restrictions imposed at the beginning of the coronavirus pandemic, as mitigation and adaptation allowed most economic activity to continue. However, significant challenges emerged in the second half of the reporting period, erasing earlier gains. Inflation rose significantly in many countries, reducing consumers’ purchasing power and leading many central banks to tighten monetary policy. Russia’s invasion of Ukraine presented a further challenge to the global economy, disrupting markets in important commodities such as oil, natural gas, and wheat.

The U.S. economy grew briskly over the final three quarters of 2021, powered primarily by consumers with strong household balance sheets. Record-high personal savings rates allowed consumers to spend at an elevated level throughout much of the reporting period, releasing pent-up demand for goods and services. Hiring increased as businesses restored capacity, and unemployment decreased substantially, falling to 3.6% in April 2022 — only marginally higher than the pre-pandemic rate of 3.5% in February 2020. However, the economy contracted in the first quarter of 2022 amid lower inventory investment and an inflation-driven decline in consumer sentiment.

Rising inflation led to a shift in policy from the U.S. Federal Reserve Bank (“Fed”). As the reporting period began, the Fed was using accommodative monetary policy to stimulate the economy. Short-term interest rates were kept at near zero levels, and the Fed used bond-buying programs to stabilize debt markets. However, rising prices led the Fed to tighten monetary policy in the second half of the reporting period in an attempt to prevent runaway inflation. The Fed slowed and then ended its bond-buying activities and discussed plans to begin reducing its balance sheet by selling bonds later in 2022. In March 2022, it raised short-term interest rates and indicated that further increases could be necessary. Interest rates rose significantly in anticipation of further tightening, leading to higher borrowing costs for businesses.

Stocks declined in Europe and economic growth stalled, with the Eurozone economy slowing substantially in the second half of the reporting period. Significantly higher inflation and Russia’s invasion of Ukraine negatively impacted equities. Russia is an important trading partner with many European countries, and new sanctions against Russia imposed limits on certain types of trade with Russia. Investors became concerned that the sharp rise in energy prices during the reporting period would constrain economic growth, as Europe relies on imported energy for much of its industrial and heating needs. The European Central Bank (“ECB”) maintained ultra-low interest rates but started to wind down its bond buying program.

Despite relatively low inflation by global standards, Asia-Pacific stocks declined significantly. Chinese stocks endured substantial declines, driving much of the negative performance in the region. Regulatory interventions by the Chinese government weighed on equity markets, particularly in the information technology sector. While China’s economy continued to expand at a solid pace, COVID-19 cases rose sharply late in the reporting period, and analysts became concerned that the subsequent lockdowns would constrain growth.

Investment Objective

The iShares Core Dividend Growth ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. equities with a history of consistently growing dividends, as represented by the Morningstar^® U.S. Dividend Growth 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)

Expense Example

Portfolio Management Commentary

Stocks of companies with a history of consistently growing dividends advanced modestly during the reporting period. In 2021, an improving economy and increased cash flow encouraged companies to increase dividend payouts. Volatile equity markets drove investors seeking less-risky investments into dividend-paying stocks in early 2022.

The healthcare sector contributed the most to the Index’s return, supported by the pharmaceuticals industry. During elevated periods of inflation, established drugs provide healthy margins and cash flows that sustain dividend payouts. Additionally, strong performance from COVID-19 therapeutics, including vaccines and oral antivirals, buoyed pharmaceuticals companies. For some pharmaceuticals firms, COVID-19-related products nearly doubled annual revenues. As new variants developed, new treatment opportunities arose, providing pharmaceuticals companies with ongoing prospects for drug sales. Solid earnings from more traditional healthcare medicines, including cancer treatments, animal health medications, and vaccines, further contributed, as did pipeline treatments addressing obesity and Alzheimer’s.

The consumer staples sector, traditionally viewed as offering steady investments during turbulent markets, also contributed meaningfully to the Index’s return. As input costs rose, several industries benefited from passing on price increases to the consumer. The beverages industry advanced as consumers purchased more beverages away from home due to reopening economies. Demand for healthier drinks also buoyed the beverages industry. Strong earnings, despite rising commodities prices, aided companies in the household and personal products industry.

On the downside, the largest detractor was the financials sector as leading banking institutions reported weaker-than-expected first-quarter 2022 earnings and revenue. In Spring 2022, rising interest rates weighed on loan origination at many major banks, and in a reversal from the third quarter of 2021, investment banking fees were lower. The war in Ukraine also negatively affected banks with exposure to Russia or exposure to commodities impacted by the war.

Portfolio Information

Investment Objective

The iShares Core High Dividend ETF (the “Fund”) seeks to track the investment results of an index composed of relatively high dividend paying U.S. equities, as represented by the Morningstar^® Dividend Yield Focus 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

(AT NET ASSET VALUE)

Expense Example

Portfolio Management Commentary

Stocks with histories of high dividend yields advanced solidly during the reporting period. During the height of the coronavirus pandemic, dividend payouts were suspended, reduced, or left unchanged by many companies, but strong economic growth led many firms to resume or increase payouts starting in mid-2021. Volatile markets late in the reporting period drove investors to seek less-risky investments in dividend-paying stocks, as many other areas of the equity market declined.

The energy sector was the leading contributor to the Index’s return, as oil prices rose sharply due to increased consumer demand, limited supply from oil-producing countries, and the Russian invasion of Ukraine. The oil, gas, and consumable fuels industry was the primary contributor within the sector. Investors pressured large oil and gas multinationals to pay out billions in stock repurchases and dividends after oil stock prices declined materially during the pandemic. To entice investors to return to the sector, leading oil and gas companies reported intentions to double and triple their stock buyback programs after posting strong profits in the first quarter of 2022.

The healthcare sector further contributed to the Index’s return, led by pharmaceuticals and biotechnology companies. Strong sales of medical devices, Covid-19 treatments, and cancer therapies supported pharmaceuticals companies. Demographic trends also benefited the healthcare sector, as the needs of an aging population added to demand for health services and pharmaceuticals. A top biotechnology firm raised its dividend due to increased sales of immunology drugs and injectable medicines.

In contrast, the financials and communication services sectors were notable detractors from the Index’s performance. In the banking industry, higher interest rates led to lower loan origination, and revenue from investment banking fees also dropped. Diversified telecommunication services companies declined due to concerns about subscriber growth and inflationary pressures.

Portfolio Information

Investment Objective

The iShares International Select Dividend ETF (the “Fund”) seeks to track the investment results of an index composed of relatively high dividend paying equities in non-U.S. developed markets, as represented by the Dow Jones EPAC Select Dividend Index^TM (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)

Expense Example

Portfolio Management Commentary

International dividend stocks declined marginally for the reporting period. As equities markets rose in the first half of the reporting period, dividend payments increased sharply amid robust corporate earnings, dividend yields declined to historic lows, and investors favored growth stocks over dividend stocks. In the second half of the reporting period, inflation advanced briskly in many countries and central banks tightened monetary policy. In this environment, international dividend stocks rebounded, nearly offsetting their earlier decline.

The Japanese industrials sector detracted the most from the Index’s return, led by the transportation industry. While shipping rates initially increased as economies reopened and demand for marine transportation rose, shipping rates subsequently declined sharply amid reduced demand for iron ore in China. In addition, Russia’s invasion of Ukraine disrupted routes to ports in the region and shipping demand declined due to economic sanctions imposed on Russia by world governments.

The Hong Kong real estate sector also detracted from the Index’s return, as housing prices fell amid rising interest rates and the departure of many residents in response to unpopular coronavirus pandemic-related restrictions. In Australia, the financials sector detracted marginally, as concerns rose that additional outbreaks of the coronavirus would disrupt global economic activity. Additionally, a financial services company lost a major client, which constrained revenues.

On the upside, stocks of dividend-paying companies from the U.K. advanced notably. The consumer staples and utilities sectors were the primary contributors to the Index’s performance. Dividends rose modestly as rising demand for alternatives to traditional smoking products drove revenue growth for tobacco companies. U.K. utilities stocks also contributed due to increasing energy prices.

The Canadian financials sector also contributed to the Index’s return, as the government lifted a pandemic-imposed regulation limiting capital distributions by banks. Banks increased their dividends amid strong earnings due to growth in loans and fees.

Portfolio Information

Investment Objective

The iShares Select Dividend ETF (the “Fund”) seeks to track the investment results of an index composed of relatively high dividend paying U.S. equities, as represented by the Dow Jones U.S. Select Dividend 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

GROWTH OF $10,000 INVESTMENT

(AT NET ASSET VALUE)

Expense Example

Portfolio Management Commentary

Stocks of companies with a history of paying relatively high dividends advanced for the reporting period. Many companies suspended or decreased dividend payouts as the coronavirus pandemic continued. However, as economic conditions improved, numerous firms resumed or increased dividends. A volatile stock market also drove investors to dividend-paying companies late in the reporting period, as these companies are considered by some to be relatively stable businesses.

Energy stocks were the leading source of strength for the Index’s return. Oil prices increased due to higher consumer demand, limited supply from oil-producing countries, and the Russian invasion of Ukraine. Exposure to Russia negatively affected several leading oil companies, although profits remained significant. During COVID-19 outbreaks, weak stock prices, low energy demand, and surging demand for technology and healthcare reduced investor interest in the energy sector; to entice investors, companies returned cash to shareholders. Major oil, gas, and consumable fuels companies announced doubling and even tripling their existing stock buyback programs after posting strong profits in the first quarter of 2022. U.S. oil and gas refining and marketing firms also contributed; oil refining capacity decreased after less-profitable refiners closed, leading to higher profits for the surviving companies.

The utilities sector also contributed to the Index’s performance. The Fed’s efforts to tame inflation by increasing interest rates and reducing asset purchases, together with geopolitical unrest, drove investors to the relatively steady revenues and dividends of the utilities sector. In both the electric utilities and the multi-utilities industries, demand for electricity and other utility services increased, as global economies began to emerge from pandemic-related shutdowns.

In contrast, the financials and communication services sectors detracted from the Index’s return.

The capital markets industry detracted as assets under management declined in early 2022, weighing on asset managers. Bank stocks also declined, due in part to lower trading revenue. In the communication services sector, concerns about subscriber growth and inflationary pressures weighed on diversified telecommunication services companies.

Portfolio Information

Investment Objective

The iShares U.S. Dividend and Buyback ETF (the “Fund”) seeks to track the investment results of an index composed of U.S. stocks with a history of dividend payments and/or share buybacks, as represented by the Morningstar^® US Dividend and Buyback 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)

Expense Example

Portfolio Management Commentary

Stocks with histories of paying dividends or making buybacks advanced for the reporting period as continued economic recovery drove higher cash flows, which enabled companies to issue dividends and repurchase stocks. Companies generally demonstrated a strong preference for stock buybacks over dividends as the companies in the S&P 500 bought back U.S. $881 billion of their stock while paying out U.S. $511 billion in dividends in 2021. Stock buybacks set an annual record in 2021 and continued at a rapid pace in 2022, while companies increased their dividend payouts.

Energy stocks were the largest contributors to the Index’s return, led by oil, gas, and consumable fuels companies. Climbing prices for both oil and natural gas supported gains and share buybacks for integrated oil and gas companies. The war in Ukraine led to sanctions and eventual bans on Russian oil, exacerbating shortages that, coupled with increased demand from reopening economies, drove prices even higher. Oil and gas companies announced increased buybacks as cost cutting also supported both free cash flow and expanded investment in renewable energy.

The healthcare sector also contributed to the Index’s return as pharmaceuticals companies continued to benefit from broad vaccine distribution amid more contagious COVID-19 variants and breakthrough cases. Governments authorized vaccine boosters in countries spanning the Americas, Europe, and the Middle East, which bolstered pharmaceuticals firms’ profits. Manufacturers were able to set prices as the market for COVID-19 vaccine boosters evolved to resemble the flu vaccine market, but the government’s role as sole purchaser altered that power dynamic slightly.

On the downside, the communication services sector detracted from the Index’s return, as structural changes like increased competition among connectivity providers and cord-cutting challenged interactive media and services companies. Social media companies also detracted from performance after reporting significantly lower earnings. Cable and satellite companies also declined, reporting slowing subscriber growth amid lower consumer spending and competition from telephone companies.

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.

Shareholder 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 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 a 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.