iShares are a family of exchange traded funds (ETFs) marketed and managed by BlackRock. iShares can be used by institutional and private investors. Each share represents a portfolio of stocks designed to reflect the returns of a specific index as closely as possible.

iShares funds are a flexible mechanism for achieving the market exposure you need, at the level you want, at the moment you need it. The remarkable growth of iShares in recent years is a testament to the diverse uses of these funds in securing returns, managing risk and controlling costs. There are various iShares funds listed on major stock exchanges around the world, and accounting for more than US$455.72 billion in assets under management. (BlackRock. 11/09)

Certain types of investor may not be able to invest freely in all the funds contained in the iShares range. The regulatory structures governing specific jurisdictions may prevent investors from investing in iShares listed on exchanges in those jurisdictions.

Exchange traded funds (ETFs) are open-ended collective investment schemes that are listed on stock exchanges. However, they differ from traditional collective investment schemes in some significant ways:  ETFs can be traded throughout the day and are bought and sold like ordinary stocks through brokers or financial advisers during normal trading hours.

The iShares fund family is one of the largest ranges of exchange traded funds, covering various indices and having listings on major stock exchanges around the world.  Unlike traditional collective investment schemes, First launched in 1993, ETFs are increasingly popular among institutional and private investors because of their diverse applications in building portfolios, implementing long and short investment strategies, controlling costs and risk, and pursuing trading strategies.

Yes. Each iShares fund is designed to reflect the return of a specific market index. For example, the iShares DJ Euro STOXX 50 fund aims to reflects the total return of the Dow Jones Euro STOXX 50 index.

• Simplicity: indexing is easily understood and indexed portions of portfolios are highly transparent in terms of their holdings and investment style.
• Low cost: index funds typically have low fees because index fund managers normally only trade when their benchmark indices change, and do not devote extensive resources to company research.
• Diversification: index funds aim to reflect the performance of all the securities in an index and can therefore be used to reduce concentration risk in a portfolio by providing exposure to entire regions, markets or sections of markets.
• Performance and risk: on average, investors expect to achieve performance before fees that is in line with the index. After fees, index investors are likely to outperform the average active manager over the long term while assuming less risk.

Please be aware that performance is not guaranteed.  Past performance may not necessarily be repeated and is no guide to future returns.

iShares funds are ideal tools for implementing a wide variety of long- and short-term investment objectives. For example, iShares funds can be employed as core building blocks for long-term asset allocation, or used to implement short-term trading ideas. To learn more about how investors use iShares, see Using iShares Funds .

iShares funds trade as stocks, so all the things you might do with a stock - such as buying on margin, placing limit and stop orders - you can do with iShares funds. If you can buy on margin and sell securities short through your stockbroker, you can apply these trading techniques to iShares funds.

Investors should be aware that the use of derivatives and short positions may involve the loss of all the money you invested and you may have to pay more later.

There are various iShares funds in existence around the world, covering equities, bonds and property. The majority of iShares funds trade on exchanges across North America, but the range of iShares available on other exchanges is growing rapidly. Any asset class that is liquid and for which there is a published index may be a suitable market in which to launch exchange traded funds. For a full listing of the iShares funds available to investors in your domicile please refer to the Funds Overview page.

Certain types of investor may not be able to invest freely in all the funds contained in the iShares range. The regulatory structures governing specific jurisdictions may prevent investors from investing in iShares listed on exchanges in those jurisdictions.

There are no front loads or redemption fees charged on the purchase or sale of iShares funds. However, customary brokerage charges do apply. By contrast, companies offering traditional collective investment schemes may apply load charges on the purchase or sale of shares/units in their vehicles, and may also operate short-term redemption policies under which additional fees are charged on redemption within a given time period after the purchase date.

iShares funds trade on stock exchanges in the same way as shares of publicly held companies. Investors can therefore buy and sell iShares funds through their brokers or financial advisers in the same way that they buy or sell stocks. There is no need to open a separate trading account. iShares funds can be traded at any time during normal trading hours, using all the trading techniques applicable to stocks, including market order, limit orders, stop orders, short sales and margin buying*. If you can already buy on margin and trade securities short through your stockbroker, you can apply these trading techniques to iShares funds.

*There are special risks associated with margin investing. As with margin investment of stocks, you may be called upon to deposit additional cash or securities if your account equity, including that which is attributable to iShares, declines. In making short sales, you risk paying more for a security than you received from its sale.

No. iShares funds cannot be purchased or redeemed through BlackRock. Instead, iShares funds are bought and sold through stockbrokers, financial intermediaries and other financial organisations that allow customers to trade stocks.

iShares funds' annual management fees are substantially lower than those of many comparable collective investment schemes. Investors who trade regularly or are investing for the short-term should take into account that the purchase or sale of iShares funds will involve payment of brokerage commissions. However, where iShares funds are used as part of a long-term buy-and-hold strategy, the savings provided by iShares' low annual fees may offset these brokerage costs.

The liquidity of an iShares fund does not depend upon its trading volume. Rather, an iShares fund's liquidity is determined by the liquidity of its underlying stocks. This is because of the way in which iShares are created and redeemed by market participants(large brokerage houses) in response to demand for iShares funds. As demand for iShares funds increases, the market participants create more iShares from the stocks featured in an iShares fund's benchmark index. As demand decreases, iShares are redeemed.

iShares funds therefore remain highly liquid provided that the underlying stocks required to build them are liquid. The range of iShares market participants and the extent of their presence in global markets ensures that iShares have continual access to some of the world's largest inventories of stocks.

Just like traditional stocks, most iShares funds distribute dividends as cash payments to the brokerage accounts holding iShares funds. The way in which the dividends you receive from iShares funds are treated will depend upon your existing agreement with your broker dealer. If your broker dealer offers a dividend reinvestment plan (DRIP), you may be able to reinvest dividends from iShares funds as part of that programme.

iShares funds do not offer guaranteed returns, and the value of investments in iShares funds may be worth more or less than the amount originally invested.

The market participants operating in the iShares primary market are well-capitalised institutions that are subject to close regulatory scrutiny.

As the world’s economies and markets become more developed and interconnected, it increasingly makes sense to invest a portion of a portfolio in international equities:

• Expanding investment opportunities: the fastest areas of economic growth and the highest returns won’t always be found in your home market. Expanding the scope of a portfolio to include international investments dramatically widens the investment opportunities available.
• Ease of access: vehicles such as exchange traded funds provide highly diversified access to international equities, so investors do not necessarily need to be experts in individual stocks before they venture into international investment.
• Cost: it is no longer prohibitively expensive to invest in many international equities. iShares funds provide some of the lowest-cost access to international equities available.

Many investors already invest internationally because they hold stocks that make a significant portion of their profits from exports to other countries. However, establishing international holdings through vehicles such as iShares funds makes it much easier for investors to keep track of the extent and diversification of their international holdings.

The uses of iShares funds are growing all the time as institutional and private investors discover how these flexible tools can be applied to their own investment needs. The most common uses of iShares funds are:

• Achieving diversified, cost-effective access to global markets.
• Putting short-term cash positions to work in the equity and bond markets.
• Implementing asset allocation views.
• Building core-satellite portfolios.
• Managing risks and costs.
• Implementing trading strategies.
• Hedging exposure and taking short positions.

Investors should be aware that the use of derivatives and short positions may involve the loss of all the money you invested and you may have to pay more later.

The following chart outlines the key differences between iShares funds and traditional collective investment schemes.

Investors should be aware that the use of derivatives may involve the loss of all the money you invested and you may have to pay more later.

Fixed income iShares funds are portfolios of bonds that trade on stock exchanges, can be bought and sold through a wide variety of brokers and are available to institutional and private investors.

In short, fixed income iShares funds are a flexible mechanism for achieving the market exposure you need, at the level you want, at the moment you need it. Fixed income iShares also provide investors with intra-day pricing of their bond portfolios. When compared with traditional bond funds, iShares funds allow investors to take a more active approach to managing the fixed income portion of their portfolio in a cost-effective way while maintaining broad diversification.

Fixed income iShares funds follow distribution schedules that are consistent with those of traditional bond collective investment schemes. For full details of specific fund distribution dates, please refer to the Fund Overview page

The arguments for using indexing apply equally to fixed income and equity investment:

• Simplicity: indexing is easily understood and indexed portions of portfolios are highly transparent in terms of their holdings and investment style.
• Low cost: index funds typically have lower transaction costs than active funds because index fund managers only trade when their benchmark indices change and do not devote extensive resources to market and stock research.
• Diversification: index funds aim to reflect the performance of all the securities in an index and can therefore be used to reduce concentration risk in a portfolio by providing exposure to entire regions, markets, and sectors.
• Performance and risk: on average, index investors will achieve performance before fees that is in line with the index. After fees, index investors are likely to outperform the average active manager over the long term while assuming less risk.

Performance is not guaranteed.  Past performance may not necessarily be repeated and is no guide to future returns.

The key benefits of investing in iShares funds are:

• Ease of trading: iShares funds are bought and sold through a wide variety of brokers.
• Continuous real-time quotes and trading: iShares funds trade throughout regular market hours.
• No sales fees or redemption charges: iShares funds are bought and sold on exchange, so only customary exchange transaction charges, including brokerage commissions, apply.
• Low fund expenses: iShares funds typically have much lower total expense ratios than comparable collective investment schemes.
• Transparency: iShares funds disclose their fund holdings daily, so iShareholders know exactly what they own.
• Diversification: iShares funds reflect the performance of all the securities in an index and can therefore be used to reduce concentration risk in a portfolio by providing exposure to entire regions, markets and sectors.
• High liquidity: the liquidity of an iShares fund is determined by the liquidity of its underlying constituents, not the trading volume and market capitalisation of the iShares fund in the secondary market.

iShares funds are designed to produce total returns in line with the total returns of their benchmark indices (capital and income returns). However, all index funds tend to experience a degree of tracking error - the difference between the fund's return (and therefore price) and the index return. The main causes of tracking error in iShares are:

• Fees: iShares funds charge a low annual management fee which is drawn directly from the fund, thus reducing the value of the fund.
• Trading costs: index funds have low levels of trading relative to active funds, but they still need to trade - for example to reflect changes in indices - and this activity generates costs which affect the value of a fund.
• Withholding taxes suffered by the fund.

The market price of an iShares fund is approximately equal to the market value of the securities held in the fund plus any undistributed net income. An iShares fund's market price is therefore close to the fund's net asset value (NAV). Any divergence between the market price of an iShares fund and the NAV of its underlying constituents would normally trigger arbitrage activities by iShares market participants that moves the market price back towards NAV.

Fixed income products are often used as key components in diversified portfolios. For example, as part of a portfolio consisting primarily of equities, they can provide a measure of risk control because they are usually less volatile than equities and may be less likely to rise and fall in value at the same time as equity investments. Investors who require regular income from their portfolios often use fixed income products to produce a regular stream of dividends. Fixed income iShares funds enable investors to diversify their fixed income risk across a large group of bonds by purchasing an entire basket of bonds with the same ease as buying a single stock.

Investors should note investment in corporate bonds brings an increased risk of default on repayment which may affect the capital value of the Fund.

The following table outlines some of the key comparisons between index certificates and exchange traded funds (ETFs).

Both. Private and institutional investors are increasingly making use of iShares funds to:

• Implement investment strategies quickly and easily.
• Control risks in their portfolios.
• Reduce costs.

Private investors will find that iShares funds are as easy to trade as any other major share, while providing diversified exposure to a market or sector. One of the main uses of iShares funds for private and institutional investors is as low-cost building blocks for long-term core positions in their portfolios. To learn more about how iShares can be used, see Using iShares Funds.

No. Currency risk will constitute an element of portfolio returns

None.  iShares is the brand name of a family of exchange traded funds marketed by BlackRock.

All the iShares funds currently in use are designed to reflect the total returns of their benchmark indices. BlackRock has researched the feasibility of exchange traded funds that aim to outperform indices and may consider launching iShares funds of this kind if suitable opportunities arise.

Yes. Dividends are distributed to iShares holders directly or through their brokers on the payment dates relevant to each fund. Payment dates may be monthly, quarterly, half yearly, or annual. Full details of payment dates are given on the iShares fund fact sheets.

The underlying investments in iShares funds consist of stock representing the funds' benchmark indices. iShares funds may also use futures to help achieve market exposure, facilitate trading and reduce transaction costs. For the complete list of holdings in an iShares fund, please refer to the Fund Overview page on this site.

One of the key advantages of fixed income iShares funds over traditional bond funds is that iShares can be bought and sold whenever the stock exchanges on which they are listed are open. To make this possible, fixed income iShares funds use real-time intraday pricing. In the case of European-listed fixed income iShares funds, pricing is consensus pricing provided by a consortium of market makers through iBoxx, not the pricing of a single index provider. Other key advantages offered by fixed income ETFs include:

• Cost control through low annual fees.
• High transparency through disclosure of holdings.
• Ability to take long or short positions.
• Risk control through broad diversification.

You will own equity securities issues by iShares PLC or iShares II PLC. The return on these securities will reflect the return on a basket of securities owned by iShares PLC or iShares II PLC.

The costs involved in buying shares in an iShares fund are the same as those that apply when buying any other share or security. Broker commissions will therefore normally be paid and iShares funds will be subject to bid-ask spreads. There is no Stamp Duty payable on the purchase of iShares on the London Stock Exchange. Unlike some traditional collective investment schemes, iShares do not charge front-end loads or redeem payments. During ownership of shares in an iShares fund an annual management fee is charged, the value of which is deducted from the iShares fund on a daily basis.

iNAV, the indicative net asset value of an exchange traded fund, enables investors to compare the quotes they receive from brokers with an up-to-the-minute approximation of the net asset value of an iShares fund. iNAVs bring a level of transparency and comparability to iShares funds that is almost unknown among traditional collective investment schemes, which typically calculate their net asset value once per day. iNAVs are calculated at least once every minute using the market prices of the underlying constituents in a fund and other liquid assets accrued in the fund. iNAVs for European-listed iShares are available on Reuters and Bloomberg. For details of specific iNAV codes, please refer to the fund performance pages or fund fact sheets.