iShares Semiconductor ETF (ISQ5)

Overview

The provided company description outlines a fund that primarily focuses on investing a considerable portion of its assets (at least 80%) in securities that compose its underlying index or in investments that bear economic characteristics nearly identical to those securities. The fund aims to mirror the performance of its index, leveraging a replication strategy that involves direct investments in the index's securities. This commitment ensures the fund's investment portfolio closely aligns with the performance and risk profile of the targeted index.

Additionally, the fund is granted the flexibility to invest up to 20% of its assets in derivatives (such as futures, options, and swap contracts), cash, and cash equivalents. This provision allows the fund to engage in strategies for managing risk, seeking additional returns, or efficiently adjusting its portfolio composition due to market changes or to leverage opportunities as they arise. The fund is classified as non-diversified, meaning it may concentrate its investments in a smaller number of issuers than a diversified fund. This concentration can lead to higher volatility and risk if the investments do not perform as expected.

Products and Services

• Index-Based Investments:

This core service involves investing at least 80% of fund assets in the securities comprising its underlying index. It aims to match or closely replicate the performance of the index, thereby providing investors with a return that mirrors the index's behavior over time. The selection of securities reflects a strategic commitment to the index's economic characteristics, ensuring the investment closely follows the index's performance trajectory.

• Derivative Investments:

The fund may allocate up to 20% of its assets in derivatives, including futures, options, and swap contracts. These financial instruments can be used to hedge risk, gain exposure to certain assets or markets with reduced capital, or speculate on the direction of market prices. This flexibility allows the fund managers to adapt to changing market conditions, manage the portfolio's risk exposure, and potentially enhance returns through strategic derivative positions.

• Cash and Cash Equivalents:

Investments in cash and cash equivalents are included within the fund's strategic allocation, providing liquidity and safety of principal. These holdings can be strategically increased to manage fund liquidity, protect against market downturns, or prepare for advantageous investment opportunities. Cash and cash equivalents offer a low-risk option for temporarily holding funds, ensuring the fund can meet its operational needs or rapidly respond to market events.