2019 Annual Report - Exchange-Traded Funds (ETFs)

[Pages:44]2021 Annual Report

iShares Trust

? iShares 1-3 Year International Treasury Bond ETF | ISHG | NASDAQ ? iShares International Treasury Bond ETF | IGOV | NASDAQ

OCTOBER 31, 2021

BNM1221U-1969639-6068205

The Markets in Review

Dear Shareholder,

The 12-month reporting period as of October 31, 2021 was a remarkable period of adaptation and recovery, as the global economy dealt with the implications of the coronavirus (or COVID-19) pandemic. The United States began the reporting period as the initial reopening-led economic rebound was beginning to slow. Nonetheless, the economy continued to grow at a solid pace for the reporting period, eventually regaining the output lost from the pandemic. However, a rapid rebound in consumer spending pushed up against supply constraints and led to elevated inflation.

Equity prices rose with the broader economy, as the implementation of mass vaccination campaigns and passage of two additional fiscal stimulus packages further boosted stocks, and many equity indices neared or surpassed all-time highs late in the reporting period. In the United States, returns of small-capitalization stocks, which benefited the most from the resumption of in-person activities, outpaced large-capitalization stocks. International equities also gained, as both developed and emerging markets continued to recover from the effects of the pandemic.

The 10-year U.S. Treasury yield (which is inversely related to bond prices) had fallen sharply prior to the beginning of the reporting period, which meant bonds were priced for extreme risk avoidance and economic disruption. Despite expectations of doom and gloom, the economy expanded rapidly, stoking inflation concerns in early 2021, which led to higher yields and a negative overall return for most U.S. Treasuries. In the corporate bond market, support from the U.S. Federal Reserve (the Fed) assuaged credit concerns and led to solid returns for high-yield corporate bonds, outpacing investmentgrade corporate bonds.

The Fed remained committed to accommodative monetary policy by maintaining near-zero interest rates and by reiterating that inflation could exceed its 2% target for a sustained period without triggering a rate increase. In response to rising inflation late in the period, the Fed changed its market guidance, raising the possibility of higher rates in 2022 and reducing bond purchasing beginning in late 2021.

Looking ahead, we believe that the global expansion will continue to broaden as Europe and other developed market economies gain momentum, although the Delta variant of the coronavirus remains a threat, particularly in emerging markets. While we expect inflation to remain elevated in the medium-term as the expansion continues, we believe the recent uptick owes more to temporary supply disruptions than a lasting change in fundamentals. The change in Fed policy also means that moderate inflation is less likely to be followed by interest rate hikes that could threaten the economic expansion.

Overall, we favor a moderately positive stance toward risk, with an overweight in equities. Sectors that are better poised to manage the transition to a lower-carbon world, such as technology and health care, are particularly attractive in the long-term. U.S. small-capitalization stocks and European equities are likely to benefit from the continuing vaccine-led restart, while Chinese equities stand to gain from a more accommodative monetary and fiscal environment as the Chinese economy slows. We are underweight long-term credit, but inflation-protected U.S. Treasuries, Asian fixed income, and emerging market local-currency bonds offer potential opportunities. We believe that international diversification and a focus on sustainability can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments.

In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit for further insight about investing in todays markets.

Sincerely,

Rob Kapito President, BlackRock, Inc.

Total Returns as of October 31, 2021

6-Month 12-Month

U.S. large cap equities (S&P 500 Index)

10.91% 42.91%

U.S. small cap equities (Russell 2000 Index)

1.85

50.80

International equities (MSCI Europe, Australasia, Far East Index)

4.14

34.18

Emerging market equities (MSCI Emerging Markets Index)

(4.87) 16.96

3-month Treasury bills (ICE BofA 3-Month U.S. Treasury Bill Index)

0.01

0.06

U.S. Treasury securities (ICE BofA 10-Year U.S. Treasury Index)

1.59

(4.77)

U.S. investment grade bonds

(Bloomberg U.S. Aggregate

1.06

(0.48)

Bond Index)

Tax-exempt municipal bonds (S&P Municipal Bond Index)

0.33

2.76

U.S. high yield bonds

(Bloomberg U.S. Corporate High Yield 2% Issuer Capped

2.36

10.53

Index)

Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

Rob Kapito President, BlackRock, Inc.

2

THIS PAGE IS NOT PART OF YOUR FUND REPORT

BNM1221U-1969639-6068205

Table of Contents

Page

The Markets in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

Fund Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

About Fund Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

Shareholder Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

Schedules of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Financial Statements

Statements of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Statements of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Important Tax Information (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Board Review and Approval of Investment Advisory Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Supplemental Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Trustee and Officer Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Glossary of Terms Used in this Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

BNM1221U-1969639-6068205

Market Overview

iShares Trust

Global Bond Market Overview

Global investment-grade bonds declined slightly for the 12 months ended October 31, 2021 (reporting period). The Bloomberg Global Aggregate Index, a broad measure of global bond market performance, returned -1.24% in U.S. dollar terms for the reporting period.

While the global economy continued its rebound from the impact of the coronavirus pandemic, the recovery was uneven and beset with challenges. The creation of multiple COVID-19 vaccines and the implementation of vaccination programs globally helped to mitigate the pandemics impact and led to the lifting of restrictions in many countries. However, while nearly half of the worlds population received at least one vaccine dose by the end of the reporting period, vaccine distribution varied substantially. The spread of the highly contagious Delta variant led to swift case increases in some areas, causing renewed restrictions and constraining global growth.

Bond performance differed by type, but in general corporate bonds gained more than government bonds, and lower-rated bonds gained more than higher-rated bonds. The improving economic environment and vaccination progress led to investor optimism about the lower-rated segments of the market. However, a notable rise in global inflation pressured bonds, which typically lose value in an inflationary environment.

Bonds in the U.S. established these global patterns, as corporate bonds, particularly high-yield bonds, posted solid returns, backed by strong investor demand for yield, while U.S. Treasuries declined, largely due to rising inflation. Bond issuance was high by historical standards, as corporations were eager to take advantage of low borrowing costs, while the federal government issued debt to finance stimulus and other spending. The U.S. Federal Reserve Bank (Fed) continued to keep short-term interest rates at near-zero levels and maintained a significant bond-buying program for U.S. Treasuries and mortgage-backed securities, although it discontinued its corporate bond purchase program. The Fed indicated that it would begin slowing its bond buying activities late in 2021, and their forecast showed that an interest rate increase is possible in 2022. However, the improving employment environment and a sharp rise in inflation led investors to anticipate a more accelerated tightening of monetary policy. Trading activity showed that investors view multiple interest rate increases as probable in 2022.

European bond prices declined overall, as supply chain frictions and increasing commodities prices, particularly for energy commodities, led to the highest Eurozone inflation rate in 13 years. In response, the European Central Bank (ECB) slowed the pace of its bond purchases, while keeping its benchmark interest rate at 0%. The E.U. issued 20 billion in common European bonds to partially finance its pandemic recovery fund, attracting high investor interest. Bond prices also declined in the U.K. amid a relatively early vaccination push and robust economic recovery. While the Bank of England kept interest rates at record lows, it signaled that it would soon raise interest rates to counter growing inflation.

In contrast, bonds in the Asia/Pacific region posted a solid gain overall, although gains were mostly concentrated in corporate bonds, particularly the lower-rated segment of the market. Japanese government bonds were nearly flat, as inflation concerns were much less prominent in Japan compared to other regions, and the Bank of Japan showed no signs of tightening monetary policy. Emerging market bonds also advanced, benefiting from higher yields compared with developed economies, as investors sought income in a low interest rate environment. However, concerns late in the reporting period surrounding Chinas highly indebted property companies weighed on returns of some emerging market bonds.

4

2021 I S H A R E S A N N U A L R E P O RT TO S H A R E H O L D E R S

BNM1221U-1969639-6068205

Fund Summary as of October 31, 2021

iShares 1-3 Year International Treasury Bond ETF

Investment Objective

The iShares 1-3 Year International Treasury Bond ETF (the Fund) seeks to track the investment results of an index composed of non-U.S. developed market government bonds with remaining maturities between one and three years, as represented by the FTSE World Government Bond Index Developed Markets 1-3 Years Capped Select 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

Fund NAV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fund Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average Annual Total Returns

1 Year 5 Years 10 Years

(1.27)% (1.27) (0.85)

0.35% 0.34 0.51

(1.94)% (1.93) (1.69)

Cumulative Total Returns

1 Year 5 Years 10 Years

(1.27)% (1.27) (0.85)

1.77% 1.73 2.57

(17.83)% (17.71) (15.68)

GROWTH OF $10,000 INVESTMENT (AT NET ASSET VALUE)

$10,000

9,500

9,000

8,500 8,000

$8,432 $8,217

7,500

Oct 12 Oct 13 Oct 14 Oct 15 Oct 16 Oct 17 Oct 18 Oct 19 Oct 20 Oct 21

Fund

Index

Index performance through August 31, 2020 reflects the performance of the S&P International Sovereign Ex-U.S. 1-3 Year Bond Index. Index performance beginning on September 1, 2020 reflects the performance of the FTSE World Government Bond Index Developed Markets 1-3 Years Capped Select Index.

Past performance is no guarantee 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 on page 9 for more information.

Expense Example

Beginning Account Value

(05/01/21) $ 1,000.00

Actual

Ending Account Value

(10/31/21)

$ 962.90

Expenses Paid During the Period (a)

$ 1.73

Beginning Account Value

(05/01/21)

$ 1,000.00

Hypothetical 5% Return

Ending Account Value

(10/31/21)

$ 1,023.40

Expenses Paid During the Period (a)

$ 1.79

Annualized Expense Ratio

0.35%

(a) Expenses are calculated using the Funds annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days). 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 Shareholder Expenses on page 9 for more information.

FUND SUMMARY

5

BNM1221U-1969639-6068205

Fund Summary as of October 31, 2021 (continued)

iShares 1-3 Year International Treasury Bond ETF

Portfolio Management Commentary

International short-term government bonds declined for the reporting period, pressured by rising yields and declining prices. Concerns about the possibility of longer-term inflation led several central banks to indicate an openness to increasing interest rates sooner than the market anticipated. Inflation was driven by ongoing, widespread supply-chain disruptions, rising energy prices (especially in the U.K.), and a rapid increase in demand for consumer goods.

Japanese bonds detracted the most from the Indexs performance. The Japanese yen depreciated 8% against the U.S. dollar during the reporting period on expectations that Japan will keep interest rates low while the Fed begins to move toward a tightening policy in the new year. Eurozone bonds, particularly German bonds, detracted more modestly from the Indexs return. Inflation in the Eurozone reached a 13-year high amid labor shortages and the return of tourism, as well as highly stimulative monetary policy, including bond purchases, by the ECB.

On the upside, Canadian, Israeli, and Australian bonds contributed to the Indexs performance, largely due to currency performance. The Canadian dollar and Israeli shekel both appreciated 8% against the U.S. dollar. The Canadian dollar benefited from rising oil prices during the reporting period, and the Israeli shekel appreciated following the Bank of Israels announcement that it plans to end quantitative easing. The Australian dollar appreciated 7% against the U.S. dollar, benefiting from rising commodity prices linked to the global economic recovery.

In terms of bond maturity, three- to five-year, short-term government bonds detracted the most from the Indexs return, followed by longer maturities. In contrast, zero to three-year bonds contributed to the Indexs performance.

Portfolio Information

ALLOCATION BY CREDIT QUALITY

Moody's Credit Rating* Aaa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A .......................................................... Baa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Percent of Total Investments(a)

34.2% 29.7 21.1 15.0

TEN LARGEST GEOGRAPHIC ALLOCATION

Country/Geographic Region

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Israel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Percent of Total Investments(a)

15.0% 10.1 8.7 8.0 5.4 4.7 4.6 4.6 4.6 4.6

* Credit quality ratings shown reflect the ratings assigned by Moodys Investors Service (Moodys), a widely used independent, nationally recognized statistical rating organization. Moodys credit ratings are opinions of the credit quality of individual obligations or of an issuers general creditworthiness. Investment grade ratings are credit ratings of Baa or higher. Below investment grade ratings are credit ratings of Ba or lower. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

(a) Excludes money market funds.

6

2021 I S H A R E S A N N U A L R E P O RT TO S H A R E H O L D E R S

BNM1221U-1969639-6068205

Fund Summary as of October 31, 2021

iShares International Treasury Bond ETF

Investment Objective

The iShares InternationalTreasury Bond ETF (the Fund) seeks to track the investment results of an index composed of non-U.S. developed market government bonds, as represented by the FTSE World Government Bond Index - Developed Markets Capped Select 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

Fund NAV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fund Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average Annual Total Returns

1 Year 5 Years 10 Years

(3.68)% (3.51) (3.29)

1.47% 1.50 1.85

0.55% 0.52 0.93

Cumulative Total Returns

1 Year 5 Years 10 Years

(3.68)% (3.51) (3.29)

7.56% 7.71 9.61

5.66% 5.33 9.69

GROWTH OF $10,000 INVESTMENT (AT NET ASSET VALUE)

$12,000

11,500

11,000 10,500

$10,969 $10,566

10,000

9,500

9,000

8,500

Oct 12 Oct 13 Oct 14 Oct 15 Oct 16 Oct 17 Oct 18 Oct 19 Oct 20 Oct 21

Fund

Index

Index performance through August 31, 2020 reflects the performance of the S&P International Sovereign Ex-U.S. Bond Index. Index performance beginning on September 1, 2020 reflects the performance of the FTSE World Government Bond Index Developed Markets Capped Select Index.

Past performance is no guarantee 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 on page 9 for more information.

Expense Example

Beginning Account Value

(05/01/21) $ 1,000.00

Actual

Ending Account Value

(10/31/21)

$ 965.50

Expenses Paid During the Period (a)

$ 1.73

Beginning Account Value

(05/01/21)

$ 1,000.00

Hypothetical 5% Return

Ending Account Value

(10/31/21)

$ 1,023.40

Expenses Paid During the Period (a)

$ 1.79

Annualized Expense Ratio

0.35%

(a) Expenses are calculated using the Funds annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days). 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 Shareholder Expenses on page 9 for more information.

FUND SUMMARY

7

BNM1221U-1969639-6068205

Fund Summary as of October 31, 2021 (continued)

iShares International Treasury Bond ETF

Portfolio Management Commentary

International short-term government bonds declined for the reporting period, as bond yields rose worldwide amid growth-oriented monetary policy and rising inflation in many countries. Bond yields, which move inversely to bond prices, rose from relatively low levels, as investors sought additional yield to compensate for rising inflation. The U.S. dollar declined overall relative to the currencies of some of its largest trading partners, which benefited U.S. investors in foreign currency-denominated international bonds, but rising inflation ultimately drove international bond prices lower.

Asian bonds detracted the most from the Indexs return, led by Japan. The U.S. dollar strengthened relative to the Japanese yen, as the Bank of Japan, which has been challenged by deflation for two decades, continued to purchase both stocks and bonds to try to stimulate the economy. The Japanese 10-year government bond yield began the reporting period close to zero but rose slightly, further detracting from the Indexs return, as extremely low bond yields are especially sensitive to changes in interest rates. Bonds in Singapore also detracted from the Indexs return, as inflation rose to its highest level since 2014.

European bonds also detracted from the Indexs return, particularly in France, Austria, Belgium, Denmark, and Germany. Eurozone inflation reached a 13-year high amid labor shortages and the return of tourism, as well as highly stimulative monetary policy, including bond purchases by the ECB. However, inflation varied widely throughout Europe, with lower inflation in Portugal and Greece and relatively high inflation in Belgium, Germany, and the Netherlands.

In terms of bond maturity, bonds with maturities greater than 10 years, which are highly sensitive to changes in long-term interest rates, detracted the most from the Indexs return. Intermediate-term bonds also detracted from the Indexs return as investors increasingly anticipated higher interest rates.

Portfolio Information

ALLOCATION BY CREDIT QUALITY

Moody's Credit Rating* Aaa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A .......................................................... Baa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Percent of Total Investments(a)

35.7% 26.8 25.3 12.2

TEN LARGEST GEOGRAPHIC ALLOCATION

Country/Geographic Region

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Israel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Percent of Total Investments(a)

16.1% 8.1 7.4 5.9 4.9 4.8 4.6 4.6 4.6 4.6

* Credit quality ratings shown reflect the ratings assigned by Moodys Investors Service (Moodys), a widely used independent, nationally recognized statistical rating organization. Moodys credit ratings are opinions of the credit quality of individual obligations or of an issuers general creditworthiness. Investment grade ratings are credit ratings of Baa or higher. Below investment grade ratings are credit ratings of Ba or lower. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

(a) Excludes money market funds.

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2021 I S H A R E S A N N U A L R E P O RT TO S H A R E H O L D E R S

BNM1221U-1969639-6068205

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