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iShares Trust

·  iShares Currency Hedged MSCI Canada ETF | HEWC | NYSE Arca

·  iShares Currency Hedged MSCI Eurozone ETF | HEZU | NYSE Arca

·  iShares Currency Hedged MSCI Germany ETF | HEWG | NASDAQ

·  iShares Currency Hedged MSCI Japan ETF | HEWJ | NYSE Arca

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Market Overview

iShares Trust

Global Market Overview

Global equity markets declined in U.S. dollar terms during the 12 months ended August 31, 2022 (“reporting period”). The MSCI ACWI, a broad global equity index that includes both developed and emerging markets, returned -15.88% in U.S. dollar terms for the reporting period.

For the first third of the reporting period, economic recovery supported stocks 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, substantial challenges emerged at the beginning of 2022 which negatively affected stock prices. 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 important commodities markets.

The U.S. economy grew briskly over the final half of 2021, powered primarily by consumer spending. Record-high personal savings rates allowed consumers to spend at an elevated level, releasing pent-up demand for goods and services. Growth subsequently stalled in the first half of 2022, and the economy contracted amid lower inventories and faltering business investment. Despite the economic downturn, unemployment declined substantially, falling to 3.7% in August 2022 while the number of long-term unemployed dropped below the pre-pandemic level. Although high inflation negatively impacted consumer sentiment, which declined significantly, consumer spending continued to grow.

Rising inflation led to a shift in policy from the U.S. Federal Reserve (“the 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 during the reporting period in an attempt to prevent runaway inflation. The Fed slowed and then ended its bond-buying activities, finally reversing course as it began to reduce its balance sheet in June 2022. In March 2022, the Fed began to raise short-term interest rates, followed by three more increases for a total increase of 225 basis points, the most rapid rise in decades. Interest rates rose significantly in response, leading to higher borrowing costs for businesses. In that environment, the U.S. dollar significantly appreciated relative to most foreign currencies.

Stocks declined in Europe in U.S. dollar terms as economic growth stalled and the euro declined sharply relative to the U.S. dollar. 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 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”) responded to elevated inflation by raising interest rates in July 2022, the first such increase in over a decade.

Despite relatively low inflation by global standards, Asia-Pacific stocks declined significantly in U.S. dollar terms. Chinese stocks faced significant headwinds amid regulatory interventions by the Chinese government and strict lockdowns following COVID-19 outbreaks. Japanese stocks also declined amid an economic contraction in the first quarter of 2022 and a sharp decline in the Japanese yen relative to the U.S. dollar. Emerging market stocks declined substantially, as higher interest rates and a strengthening U.S. dollar raised the cost of borrowing in many emerging economies.

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Investment Objective

The iShares Currency Hedged MSCI Canada ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization Canadian equities while mitigating exposure to fluctuations between the value of the Canadian dollar and the U.S. dollar, as represented by the MSCI Canada 100% Hedged to USD 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. The Fund currently seeks to achieve its investment objective by investing a substantial portion of its assets in one underlying fund, the iShares MSCI Canada ETF.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was June 29, 2015. The first day of secondary market trading was July 1, 2015.

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

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Portfolio Management Commentary

Stocks in Canada declined in U.S. dollar terms for the reporting period. The war in Ukraine disrupted supply chains, which contributed to soaring inflation as prices for commodities and oil climbed, sending stocks lower. Canada’s central bank raised interest rates four times during the second half of the reporting period to curb the highest inflation since 1983. The country’s economy grew steadily during the reporting period, boosted by stronger consumer consumption as coronavirus-related restrictions eased.

Stocks in the information technology sector detracted the most from the Index’s performance. The software and services industry declined as e-commerce dropped sharply amid easing restrictions and consumers returning to in-store shopping. Rising interest rates and supply chain shortages also weighed on the industry, in addition to investors’ concerns about the impact of inflation on consumer spending.

The financials sector also detracted from the Index’s performance as bank stocks dropped on concerns about the economy’s resilience amid rising interest rates. Some banks increased their expenses for loans expected to become delinquent, while revenues from services such as commercial and personal banking dropped. The capital markets industry declined despite continued growth in assets under management. In addition, stocks in the materials sector retreated, driven primarily by a decline in the metals and mining industry as costs for energy and raw materials rose.

On the upside, stocks in the energy sector contributed to the Index’s performance in U.S. dollar terms. Rising oil and natural gas prices strengthened the revenues and profits of Canadian energy companies. Strong cash flows allowed the oil, gas, and consumable fuels industry to reduce debt levels while also rewarding shareholders by buying back stock and increasing dividend payments.

In terms of currency performance during the reporting period, the Canadian dollar depreciated by approximately 3% relative to the U.S. dollar. Sharply rising interest rates in the U.S. and a slowdown in Canada’s housing sector pressured the Canadian dollar.

The Canadian dollar’s negative performance meant hedging activity contributed to the Index’s return. A fully hedged investor seeks to bypass the currency fluctuations — both on the upside and on the downside — related to holding foreign-currency-denominated securities. The Index’s hedging activity offset the negative impact of the Canadian dollar’s performance relative to the U.S. dollar, resulting in an Index return that was relatively close to the return of Canadian equities measured in Canadian dollars.

Portfolio Information

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Investment Objective

The iShares Currency Hedged MSCI Eurozone ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization equities from developed market countries which use the euro as their official currency while mitigating exposure to fluctuations between the value of the euro and the U.S. dollar, as represented by the MSCI EMU 100% Hedged to USD 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. The Fund currently seeks to achieve its investment objective by investing a substantial portion of its assets in one underlying fund, the iShares MSCI Eurozone ETF.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was July 9, 2014. The first day of secondary market trading was July 10, 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

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Portfolio Management Commentary

Stocks in the eurozone declined sharply in U.S. dollar terms during the reporting period. Russia’s invasion of Ukraine disrupted supply chains and contributed to high inflation across the eurozone as commodities and energy prices soared. Many nations imposed sanctions against Russia while some companies halted Russian business operations. Rising inflation, which led the ECB to raise interest rates in July 2022 for the first time in 11 years, weakened business confidence and the economic outlook.

German equities detracted the most from the Index’s performance, led by the consumer discretionary sector. Textiles, apparel, and luxury goods companies reported weaker earnings due to the lingering effects of coronavirus-related shutdowns of shoe manufacturing plants in Vietnam. Slowing sales in China and growing competition from local brands also weakened the outlook for textiles, apparel, and luxury goods companies. Stocks in Germany’s industrials sector fell as supply chain disruptions and escalating input prices drove lower earnings outlooks. Information technology stocks also declined as many firms discontinued business operations in Russia and the economic outlook across Europe weakened.

Stocks in France also detracted from the Index’s return. Coronavirus-related lockdowns in China disrupted production of a French industrials company with Chinese operations and limited the supply of critical parts. The aerospace and defense industry was also negatively impacted by shortages in the supply of key parts, including engines and microchips. In the consumer discretionary sector, China’s lockdowns shuttered stores and led to declining sales of luxury brand products in the apparel, accessories, and luxury goods industry. The economic downturn in the U.S., where growth turned negative in the first two quarters of 2022, also weighed on sales of French luxury goods.

Stocks in the Netherlands also detracted from the Index’s performance. A global supply shortage of microprocessors slowed production for semiconductor equipment manufacturers, while the slowing worldwide economy diminished the sales outlook for many products that use microprocessors.

In terms of currency performance during the reporting period, the euro depreciated by approximately 15% relative to the U.S. dollar. Higher interest rates in the U.S. and geopolitical uncertainty due to the Eurozone’s proximity to the war in Ukraine pressured the euro.

The euro’s negative performance meant hedging activity contributed to the Index’s return. A fully hedged investor seeks to bypass the currency fluctuations — both on the upside and on the downside — related to holding foreign-currency-denominated securities. The Index’s hedging activity offset the negative impact of the euro’s performance relative to the U.S. dollar, resulting in an Index return that was relatively close to the return of European equities measured in euros.

Portfolio Information

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Investment Objective

The iShares Currency Hedged MSCI Germany ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization German equities while mitigating exposure to fluctuations between the value of the euro and the U.S. dollar, as represented by the MSCI Germany 100% Hedged to USD 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. The Fund currently seeks to achieve its investment objective by investing a substantial portion of its assets in one underlying fund, the iShares MSCI Germany ETF.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was January 31, 2014. The first day of secondary market trading was February 4, 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

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Portfolio Management Commentary

Stocks in Germany declined sharply in U.S. dollar terms during the reporting period. Russia’s invasion of Ukraine disrupted supply chains and contributed to record-high inflation as prices for commodities and energy soared. Many nations, including Germany, imposed sanctions against Russia while some companies suspended Russian business operations. Germany’s economic growth slowed despite the lifting of many coronavirus-related restrictions. Rising inflation rates led the ECB to raise interest rates in July 2022 for the first time in 11 years, further weakening business confidence and the economic outlook.

The consumer discretionary sector detracted the most from the Index’s performance. Sales in the apparel, accessories, and luxury goods industry weakened after coronavirus-related restrictions forced the shutdown of shoe manufacturing plants in Vietnam. Stocks of automobile manufacturers also declined, as a global shortage of microprocessors forced automakers to curtail vehicle production while rising commodities prices, stemming from the war in Ukraine, increased costs.

The industrials sector also detracted notably from the Index’s return. Germany’s industrial production contracted over most of the reporting period, particularly in the second half. Supply chain disruptions and escalating input prices negatively affected the earnings outlook for the industrial conglomerates industry. In addition, sanctions against Russia forced a production halt in the country while also negatively affecting business operations in other areas.

The information technology sector further detracted from the Index’s performance, as many firms in the sector discontinued business operations in Russia and as the economic outlook across Europe weakened. The cost of investments in infrastructure to support cloud computing, such as computer servers and data centers, led to lower profit margins.

In terms of currency performance during the reporting period, the euro depreciated by approximately 15% relative to the U.S. dollar. Higher interest rates in the U.S. and geopolitical uncertainty due to the Eurozone’s proximity to the war in Ukraine pressured the euro.

The euro’s negative performance meant hedging activity contributed to the Index’s return. A fully hedged investor seeks to bypass the currency fluctuations — both on the upside and on the downside — related to holding foreign-currency-denominated securities. The Index’s hedging activity offset the negative impact of the euro’s performance relative to the U.S. dollar, resulting in an Index return that was relatively close to the return of German equities measured in euros.

Portfolio Information

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Investment Objective

The iShares Currency Hedged MSCI Japan ETF (the “Fund”) seeks to track the investment results of an index composed of large- and mid-capitalization Japanese equities while mitigating exposure to fluctuations between the value of the Japanese yen and the U.S. dollar, as represented by the MSCI Japan 100% Hedged to USD 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. The Fund currently seeks to achieve its investment objective by investing a substantial portion of its assets in one underlying fund, the iShares MSCI Japan ETF.

Performance

GROWTH OF $10,000 INVESTMENT

(SINCE INCEPTION AT NET ASSET VALUE)

The inception date of the Fund was January 31, 2014. The first day of secondary market trading was February 4, 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

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Portfolio Management Commentary

Stocks in Japan declined in U.S. dollar terms during the reporting period, as supply chain disruptions, rising energy costs, and slowing exports restricted growth. The industrials sector detracted the most from the Index’s performance amid a notable slowdown in industrial production. Although currency weakness has historically aided industrial exporters, recent increases in offshore production limited the benefits. Japanese exports to China, the country’s largest export market, slowed amid China’s coronavirus pandemic-related restrictions, which idled factories and warehouses and slowed deliveries of goods. Industrial machinery stocks detracted notably as Japan’s industrial production fell significantly amid ongoing parts and labor shortages. Professional services companies that rely heavily on internet technology also declined, despite strong earnings growth, as their close identification with the information technology sector made them vulnerable to its stock price volatility.

The information technology sector detracted meaningfully from the Index’s return, most notably the technology hardware and equipment industry. A decline in demand for sensors and smart technology among retailers and automobile manufacturers amid changes in consumer purchasing behavior and reduced automobile production negatively affected makers of electronic equipment and instruments.

Consumer discretionary stocks also detracted notably from performance. Consumer electronics companies declined as production slowed amid the global semiconductor shortage and investor concerns about the risk of recession and the outlook for profits. Automobile manufacturers also declined as cost pressures outweighed strong vehicle sales.

In terms of currency performance during the reporting period, the Japanese yen depreciated by approximately 21% against the U.S. dollar. The widening gap between U.S. and Japanese interest rates pressured the Japanese yen, as some U.S. dollar-denominated investments became more attractive to investors.

The Japanese yen’s negative performance meant hedging activity contributed to the Index’s return. A fully hedged investor seeks to bypass the currency fluctuations — both on the upside and on the downside — related to holding foreign-currency-denominated securities. The Index’s hedging activity offset the negative impact of the Japanese yen’s performance relative to the U.S. dollar, resulting in an Index return that was relatively close to the return of Japanese equities measured in Japanese yen.

Portfolio Information

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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.

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Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2022 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

Forward Foreign Currency Exchange 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:

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Derivative Financial Instruments Categorized by Risk Exposure (continued)

For the period ended August 31, 2022, 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.

Derivative Financial Instruments - Offsetting as of Period End

The Fund’s derivative assets and liabilities (by type) were as follows:

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

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Derivative Financial Instruments - Offsetting as of Period End (continued)

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.

See notes to financial statements.

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Affiliates

Investments in issuers considered to be affiliate(s) of the Fund during the year ended August 31, 2022 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

Forward Foreign Currency Exchange Contracts

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Forward Foreign Currency Exchange Contracts (continued)