2021 Prospectus - iShares
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Table of Contents
JUNE 29, 2021
2021 Prospectus
iShares Trust
• iShares Core 10+ Year USD Bond ETF | ILTB | NYSE ARCA
The Securities and Exchange Commission (“SEC”) has not approved or disapproved
these securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.iShares®
iShares Trust
iShares U.S. ETF Trust
Supplement dated August 24, 2021 (the “Supplement”)
to the Summary Prospectus (the “Summary Prospectus”),
Prospectus (the “Prospectus”) and
Statement of Additional Information (“SAI”)
for each of the Funds listed in Appendix A (each, a “Fund”)
The information in this Supplement updates information in, and
should be read in conjunction with, each Fund’s Summary
Prospectus, Prospectus and SAI.
References to the name of the Underlying Index in the Summary
Prospectus, Prospectus, and SAI for each Fund except for the
BlackRock Short Maturity Bond ETF and BlackRock Short Maturity
Municipal Bond ETF are hereby revised as follows:
Former Underlying Index Name New Underlying Index Name
Bloomberg Barclays 2021 Term Bloomberg 2021 Term High
High Yield and Income Index Yield and Income Index
Bloomberg Barclays 2022 Term Bloomberg 2022 Term High
High Yield and Income Index Yield and Income Index
Bloomberg Barclays 2023 Maturity Bloomberg 2023 Maturity
Corporate Index Corporate Index
Bloomberg Barclays 2023 Maturity Bloomberg 2023 Maturity High
High Quality Corporate Index Quality Corporate Index
Bloomberg Barclays 2023 Term Bloomberg 2023 Term High
High Yield and Income Index Yield and Income Index
Bloomberg Barclays 2024 Term Bloomberg 2024 Term High
High Yield and Income Index Yield and Income Index
Bloomberg Barclays 2025 Term Bloomberg 2025 Term High
High Yield and Income Index Yield and Income Index
Bloomberg Barclays 2026 Term Bloomberg 2026 Term High
High Yield and Income Index Yield and Income Index
Bloomberg Barclays 2027 Term Bloomberg 2027 Term High
High Yield and Income Index Yield and Income Index
Bloomberg Barclays December Bloomberg December 2021
2021 Maturity Corporate Index Maturity Corporate Index
Bloomberg Barclays December Bloomberg December 2022
2022 Maturity Corporate Index Maturity Corporate IndexFormer Underlying Index Name New Underlying Index Name Bloomberg Barclays December Bloomberg December 2023 2023 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2024 2024 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2025 2025 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2026 2026 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2027 2027 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2028 2028 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2029 2029 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2030 2030 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays December Bloomberg December 2031 2031 Maturity Corporate Index Maturity Corporate Index Bloomberg Barclays Global Bloomberg Global Aggregate ex Aggregate ex USD 10% Issuer USD 10% Issuer Capped Capped (Hedged) Index (Hedged) Index Bloomberg Barclays MSCI Global Bloomberg MSCI Global Green Green Bond Select (USD Hedged) Bond Select (USD Hedged) Index Index Bloomberg Barclays MSCI US Bloomberg MSCI US Aggregate Aggregate ESG Focus Index ESG Focus Index Bloomberg Barclays MSCI US Bloomberg MSCI US Corporate Corporate 1-5 Year ESG Focus 1-5 Year ESG Focus Index Index Bloomberg Barclays MSCI US Bloomberg MSCI US Corporate Corporate ESG Focus Index ESG Focus Index Bloomberg Barclays MSCI US High Bloomberg MSCI US High Yield Yield Choice ESG Screened Index Choice ESG Screened Index Bloomberg Barclays MSCI US Bloomberg MSCI US Universal Universal Choice ESG Screened Choice ESG Screened Index Index Bloomberg Barclays U.S. Agency Bloomberg U.S. Agency Bond Bond Index Index
Former Underlying Index Name New Underlying Index Name Bloomberg Barclays U.S. CMBS Bloomberg U.S. CMBS (ERISA (ERISA Only) Index Only) Index Bloomberg Barclays U.S. Bloomberg U.S. Convertible Cash Convertible Cash Pay Bond > Pay Bond > $250MM Index $250MM Index Bloomberg Barclays U.S. Corporate Bloomberg U.S. Corporate Aaa - Aaa - A Capped Index A Capped Index Bloomberg Barclays U.S. Fixed Bloomberg U.S. Fixed Income Income Balanced Risk Index Balanced Risk Index Bloomberg Barclays U.S. GNMA Bloomberg U.S. GNMA Bond Bond Index Index Bloomberg Barclays U.S. Bloomberg U.S. Government/ Government/Credit Bond Index Credit Bond Index Bloomberg Barclays U.S. Bloomberg U.S. Intermediate Intermediate Government/Credit Government/Credit Bond Index Bond Index Bloomberg Barclays U.S. Treasury Bloomberg U.S. Treasury Inflation Protected Securities Inflation Protected Securities (TIPS) Index (Series-L) (TIPS) Index (Series-L) Bloomberg Barclays U.S. Treasury Bloomberg U.S. Treasury Inflation-Protected Securities Inflation-Protected Securities (TIPS) 0-5 Years Index (Series-L) (TIPS) 0-5 Years Index (Series-L) Bloomberg Barclays U.S. Universal Bloomberg U.S. Universal 10+ Year Index 10+ Year Index Bloomberg Barclays U.S. Universal Bloomberg U.S. Universal 1-5 Year Index 1-5 Year Index Bloomberg Barclays U.S. Universal Bloomberg U.S. Universal Index Index Bloomberg Barclays U.S. Aggregate Bloomberg U.S. Aggregate Bond Bond Index Index Bloomberg Barclays US Floating Bloomberg US Floating Rate Rate Note < 5 Years Index Note < 5 Years Index Bloomberg Barclays US High Yield Bloomberg US High Yield Fallen Fallen Angel 3% Capped Index Angel 3% Capped Index Bloomberg Barclays U.S. MBS Index Bloomberg U.S. MBS Index Bloomberg Barclays U.S. Treasury Bloomberg U.S. Treasury Floating Rate Bond Index Floating Rate Bond Index Bloomberg Barclays U.S. Universal Bloomberg U.S. Universal 5-10 Year Index 5-10 Year Index
References to the name of the benchmark index in the Summary Prospectus, Prospectus and SAI for each of the BlackRock Short Maturity Bond ETF and BlackRock Short Maturity Municipal Bond ETF are revised as follows: Former Benchmark Index Name New Benchmark Index Name Bloomberg Barclays Short-Term Bloomberg Short-Term Government/Corporate Index Government/Corporate Index Bloomberg Barclays Municipal Bloomberg Municipal Bond: Bond: 1 Year (1-2) Index 1 Year (1-2) Index
Appendix A
iShares Trust Funds
Supplement to the Summary Prospectus, Prospectus and SAI each
dated as of March 1, 2021:
iShares Core Total USD Bond Market ETF
iShares iBonds Mar 2023 Term Corporate ex-Financials ETF
Supplement to the Summary Prospectus and Prospectus both dated
as of March 1, 2021, and to the SAI dated as of March 1, 2021 (as
revised April 1, 2021):
iShares 0-5 Year TIPS Bond ETF
iShares Aaa - A Rated Corporate Bond ETF
iShares CMBS ETF
iShares Convertible Bond ETF
iShares Core 1-5 Year USD Bond ETF
iShares Core International Aggregate Bond ETF
iShares ESG Advanced High Yield Corporate Bond ETF
iShares Fallen Angels USD Bond ETF
iShares Global Green Bond ETF
iShares GNMA Bond ETF
iShares iBonds Dec 2021 Term Corporate ETF
iShares iBonds Dec 2022 Term Corporate ETF
iShares iBonds Dec 2023 Term Corporate ETF
iShares iBonds Dec 2024 Term Corporate ETF
iShares iBonds Dec 2025 Term Corporate ETF
iShares iBonds Dec 2026 Term Corporate ETF
iShares iBonds Dec 2027 Term Corporate ETF
iShares iBonds Dec 2028 Term Corporate ETF
iShares iBonds Dec 2029 Term Corporate ETF
iShares iBonds Dec 2030 Term Corporate ETF
iShares iBonds Mar 2023 Term Corporate ETF
iShares TIPS Bond ETF
iShares Treasury Floating Rate Bond ETF
iShares U.S. Fixed Income Balanced Risk Factor ETF
Supplement to the Summary Prospectus, Prospectus and SAI each
dated as of March 1, 2021 (as revised April 1, 2021):
iShares iBonds 2021 Term High Yield and Income ETF
iShares iBonds 2022 Term High Yield and Income ETF
iShares iBonds 2023 Term High Yield and Income ETF
iShares iBonds 2024 Term High Yield and Income ETF
iShares iBonds 2025 Term High Yield and Income ETFiShares iBonds 2026 Term High Yield and Income ETF
iShares Floating Rate Bond ETF
Supplement to the Summary Prospectus, Prospectus and SAI each
dated as of June 29, 2021:
iShares Agency Bond ETF
iShares Core 5-10 Year USD Bond ETF
iShares Core 10+ Year USD Bond ETF
iShares Core U.S. Aggregate Bond ETF
iShares ESG Advanced Total USD Bond Market ETF
iShares ESG Aware 1-5 Year USD Corporate Bond ETF
iShares ESG Aware U.S. Aggregate Bond ETF
iShares ESG Aware USD Corporate Bond ETF
iShares Government/Credit Bond ETF
iShares Intermediate Government/Credit Bond ETF
iShares MBS ETF
Supplement to the Summary Prospectus dated as of June 23, 2021,
Prospectus and SAI each dated as of June 15, 2021:
iShares iBonds Dec 2031 Term Corporate ETF
Supplement to the Summary Prospectus dated as of July 1, 2021 (as
revised July 7, 2021), Prospectus dated as of June 23, 2021 (as
revised July 7, 2021) and SAI dated as of June 23, 2021:
iShares iBonds 2027 Term High Yield and Income ETF
iShares U.S. ETF Trust Funds
Supplement to the Summary Prospectus and Prospectus both dated
as of March 1, 2021, and to the SAI dated as of March 1, 2021 (as
revised April 27, 2021):
BlackRock Short Maturity Bond ETF
BlackRock Short Maturity Municipal Bond ETF
If you have any questions, please call 1-800-iShares (1-800-474-2737).
iShares® is a registered trademark of BlackRock Fund Advisors and its affiliates.
IS-A-BBG-0821
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE[THIS PAGE INTENTIONALLY LEFT BLANK]
Table of Contents
Table of Contents
Fund Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
More Information About the Fund . . . . . . . . . 1
A Further Discussion of Principal Risks . . 2
A Further Discussion of Other Risks . . . . . . 16
Portfolio Holdings Information . . . . . . . . . . . . . 24
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Shareholder Information . . . . . . . . . . . . . . . . . . . . 27
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Index Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
BLOOMBERG® is a trademark of Bloomberg Finance L.P. and its affiliates (collectively, “Bloomberg”).
BARCLAYS® is a trademark of Barclays Bank PLC (collectively with its affiliates, “Barclays”), used under license.
‘‘Bloomberg Barclays U.S. Long Government/Credit Bond Index” and “Bloomberg Barclays U.S. Universal 10+
Year Index” are trademarks of Bloomberg and its licensors and have been licensed for use for certain purposes
by BlackRock Fund Advisors or its affiliates. iShares® and BlackRock® are registered trademarks of BlackRock
Fund Advisors and its affiliates.
iTable of Contents
[THIS PAGE INTENTIONALLY LEFT BLANK]Table of Contents
iSHARES® CORE 10+ YEAR USD BOND ETF
Ticker: ILTB Stock Exchange: NYSE Arca
Investment Objective
The iShares Core 10+ Year USD Bond ETF (the “Fund”) seeks to track the investment
results of an index composed of U.S. dollar-denominated bonds that are rated either
investment grade or high-yield with remaining maturities greater than ten years.
Fees and Expenses
The following table describes the fees and expenses that you will incur if you buy, hold
and sell shares of the Fund. The investment advisory agreement between iShares Trust
(the “Trust”) and BlackRock Fund Advisors (“BFA”) (the “Investment Advisory
Agreement”) provides that BFA will pay all operating expenses of the Fund, except the
management fees, interest expenses, taxes, expenses incurred with respect to the
acquisition and disposition of portfolio securities and the execution of portfolio
transactions, including brokerage commissions, distribution fees or expenses, litigation
expenses and any extraordinary expenses.
You may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples below.
Annual Fund Operating Expenses
(ongoing expenses that you pay each year as a
percentage of the value of your investments)
Total Annual
Distribution and Fund
Management Service (12b-1) Other Operating
Fees Fees Expenses1 Expenses
0.06% None 0.00% 0.06%
1
The amount rounded to 0.00%.
Example. This Example is intended to help you compare the cost of owning shares of
the Fund with the cost of investing in other funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then sell all of your
shares at the end of those periods. The Example also assumes that your investment
has a 5% return each year and that the Fund’s operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions, your
costs would be:
1 Year 3 Years 5 Years 10 Years
$6 $19 $34 $77
S-1Table of Contents
Portfolio Turnover. The Fund may pay Bloomberg Barclays U.S. Universal
transaction costs, such as commissions, Index.
when it buys and sells securities (or As of February 28, 2021, a significant
“turns over” its portfolio). A higher portion of the Underlying Index is
portfolio turnover rate may indicate represented by U.S. Treasury securities.
higher transaction costs and may result The components of the Underlying Index
in higher taxes when Fund shares are are likely to change over time. The
held in a taxable account. These costs, securities in the Underlying Index must
which are not reflected in the Annual have at least 10 years remaining to
Fund Operating Expenses or in the maturity, or at least 10 years remaining
Example, affect the Fund’s to the first call date in the case of
performance. During the most recent callable perpetual securities. In
fiscal year, the Fund’s portfolio turnover addition, the securities in the Underlying
rate was 17% of the average value of its Index must be denominated in U.S.
portfolio. dollars and be non-convertible.
Excluded from the Underlying Index are
Principal Investment
tax-exempt municipal securities, coupon
Strategies issues that have been stripped from
The Fund seeks to track the investment bonds, structured notes and private
results of the Bloomberg Barclays U.S. placements (excluding Rule 144A
Universal 10+ Year Index (the Bonds). The Underlying Index is market
“Underlying Index”), which measures capitalization-weighted and is
the performance of U.S. dollar- rebalanced on the last day of the
denominated taxable bonds that are month.
rated either investment-grade or high BFA uses a “passive” or indexing
yield (as determined by Bloomberg approach to try to achieve the Fund’s
Index Services Limited (the “Index investment objective. Unlike many
Provider” or “Bloomberg”)) with investment companies, the Fund does
remaining maturities greater than ten not try to “beat” the index it tracks and
years. The Underlying Index includes does not seek temporary defensive
U.S. Treasury bonds, government- positions when markets decline or
related bonds (i.e., U.S. and non-U.S. appear overvalued.
agencies, sovereign, quasi-sovereign,
supranational and local authority debt), Indexing may eliminate the chance that
investment-grade and high yield U.S. the Fund will substantially outperform
corporate bonds, Eurodollar bonds (i.e., the Underlying Index but also may
U.S. dollar-denominated bonds issued reduce some of the risks of active
by foreign issuers outside the U.S.), management, such as poor security
bonds registered with the SEC or selection. Indexing seeks to achieve
exempt from registration at the time of lower costs and better after-tax
issuance, or offered pursuant to Rule performance by aiming to keep portfolio
144A under the Securities Act of 1933, turnover low in comparison to actively
as amended (the “1933 Act”) with or managed investment companies.
without registration rights (“Rule 144A BFA uses a representative sampling
Bonds”) and emerging market bonds. indexing strategy to manage the Fund.
The Underlying Index is a subset of the “Representative sampling” is an
S-2Table of Contents
indexing strategy that involves investing of the Fund’s total assets (including the
in a representative sample of securities value of any collateral received).
that collectively has an investment The Underlying Index is sponsored by
profile similar to that of an applicable Bloomberg, which is independent of the
underlying index. The securities Fund and BFA. The Index Provider
selected are expected to have, in the determines the composition and relative
aggregate, investment characteristics weightings of the securities in the
(based on factors such as market value Underlying Index and publishes
and industry weightings), fundamental information regarding the market value
characteristics (such as return of the Underlying Index.
variability, duration, maturity, credit
ratings and yield) and liquidity measures Industry Concentration Policy. The
similar to those of an applicable Fund will concentrate its investments
underlying index. The Fund may or may (i.e., hold 25% or more of its total
not hold all of the securities in the assets) in a particular industry or group
Underlying Index. of industries to approximately the same
extent that the Underlying Index is
The Fund generally will invest at least concentrated. For purposes of this
90% of its assets in the component limitation, securities of the U.S.
securities of the Underlying Index and government (including its agencies and
may invest up to 10% of its assets in instrumentalities), repurchase
certain futures, options and swap agreements collateralized by U.S.
contracts, cash and cash equivalents, government securities, and securities of
including shares of money market funds state or municipal governments and
advised by BFA or its affiliates their political subdivisions are not
(“BlackRock Cash Funds”), as well as in considered to be issued by members of
securities not included in the Underlying any industry.
Index, but which BFA believes will help
the Fund track the Underlying Index. Summary of Principal Risks
From time to time when conditions
As with any investment, you could lose
warrant, however, the Fund may invest
all or part of your investment in the
at least 80% of its assets in the
Fund, and the Fund’s performance could
component securities of the Underlying
trail that of other investments. The Fund
Index and may invest up to 20% of its
is subject to certain risks, including the
assets in certain futures, options and
principal risks noted below, any of
swap contracts, cash and cash
which may adversely affect the Fund’s
equivalents, including shares of
net asset value per share (“NAV”),
BlackRock Cash Funds, as well as in
trading price, yield, total return and
securities not included in the Underlying
ability to meet its investment objective.
Index, but which BFA believes will help
The order of the below risk factors does
the Fund track the Underlying Index. The
not indicate the significance of any
Fund seeks to track the investment
particular risk factor.
results of the Underlying Index before
fees and expenses of the Fund. Asset Class Risk. Securities and other
assets in the Underlying Index or in the
The Fund may lend securities
Fund’s portfolio may underperform in
representing up to one-third of the value
comparison to the general financial
S-3Table of Contents
markets, a particular financial market or industries, sector, market segment or
other asset classes. asset class.
Authorized Participant Concentration Credit Risk. Debt issuers and other
Risk. Only an Authorized Participant (as counterparties may be unable or
defined in the Creations and unwilling to make timely interest and/or
Redemptions section of this prospectus principal payments when due or
(the “Prospectus”)) may engage in otherwise honor their obligations.
creation or redemption transactions Changes in an issuer’s credit rating or
directly with the Fund, and none of the market’s perception of an issuer’s
those Authorized Participants is creditworthiness may also adversely
obligated to engage in creation and/or affect the value of the Fund’s
redemption transactions. The Fund has investment in that issuer. The degree of
a limited number of institutions that credit risk depends on an issuer’s or
may act as Authorized Participants on counterparty’s financial condition and
an agency basis (i.e., on behalf of other on the terms of an obligation.
market participants). To the extent that Cybersecurity Risk. Failures or
Authorized Participants exit the breaches of the electronic systems of
business or are unable to proceed with the Fund, the Fund’s adviser, distributor,
creation or redemption orders with the Index Provider and other service
respect to the Fund and no other providers, market makers, Authorized
Authorized Participant is able to step Participants or the issuers of securities
forward to create or redeem, Fund in which the Fund invests have the
shares may be more likely to trade at a ability to cause disruptions, negatively
premium or discount to NAV and impact the Fund’s business operations
possibly face trading halts or delisting. and/or potentially result in financial
Call Risk. During periods of falling losses to the Fund and its shareholders.
interest rates, an issuer of a callable While the Fund has established business
bond held by the Fund may “call” or continuity plans and risk management
repay the security before its stated systems seeking to address system
maturity, and the Fund may have to breaches or failures, there are inherent
reinvest the proceeds in securities with limitations in such plans and systems.
lower yields, which would result in a Furthermore, the Fund cannot control
decline in the Fund’s income, or in the cybersecurity plans and systems of
securities with greater risks or with the Fund’s Index Provider and other
other less favorable features. service providers, market makers,
Concentration Risk. The Fund may be Authorized Participants or issuers of
susceptible to an increased risk of loss, securities in which the Fund invests.
including losses due to adverse events Geographic Risk. A natural disaster
that affect the Fund’s investments more could occur in a geographic region in
than the market as a whole, to the which the Fund invests, which could
extent that the Fund’s investments are adversely affect the economy or the
concentrated in the securities and/or business operations of companies in the
other assets of a particular issuer or specific geographic region, causing an
issuers, country, group of countries, adverse impact on the Fund’s
region, market, industry, group of
S-4Table of Contents
investments in, or which are exposed to, Provider to postpone a scheduled
the affected region. rebalance, which could cause the
High Yield Securities Risk. Securities Underlying Index to vary from its normal
that are rated below investment-grade or expected composition.
(commonly referred to as “junk bonds,” Infectious Illness Risk. An outbreak of
which may include those bonds rated an infectious respiratory illness, COVID-
below “BBB-” by Standard & Poor’s® 19, caused by a novel coronavirus has
Global Ratings, a subsidiary of S&P resulted in travel restrictions, disruption
Global (“S&P Global Ratings”) and Fitch of healthcare systems, prolonged
Ratings, Inc. (“Fitch”) or below “Baa3” quarantines, cancellations, supply chain
by Moody’s Investors Service, Inc. disruptions, lower consumer demand,
(“Moody’s”)), or are unrated, may be layoffs, ratings downgrades, defaults
deemed speculative, may involve and other significant economic impacts.
greater levels of risk than higher-rated Certain markets have experienced
securities of similar maturity and may temporary closures, extreme volatility,
be more likely to default. severe losses, reduced liquidity and
Income Risk. The Fund’s income may increased trading costs. These events
decline if interest rates fall. This decline will have an impact on the Fund and its
in income can occur because the Fund investments and could impact the
may subsequently invest in lower- Fund’s ability to purchase or sell
yielding bonds as bonds in its portfolio securities or cause elevated tracking
mature, are near maturity or are called, error and increased premiums or
bonds in the Underlying Index are discounts to the Fund’s NAV. Other
substituted, or the Fund otherwise infectious illness outbreaks in the future
needs to purchase additional bonds. may result in similar impacts.
Index-Related Risk. There is no Interest Rate Risk. During periods of
guarantee that the Fund’s investment very low or negative interest rates, the
results will have a high degree of Fund may be unable to maintain positive
correlation to those of the Underlying returns or pay dividends to Fund
Index or that the Fund will achieve its shareholders. Very low or negative
investment objective. Market interest rates may magnify interest rate
disruptions and regulatory restrictions risk. Changing interest rates, including
could have an adverse effect on the rates that fall below zero, may have
Fund’s ability to adjust its exposure to unpredictable effects on markets, result
the required levels in order to track the in heightened market volatility and
Underlying Index. Errors in index data, detract from the Fund’s performance to
index computations or the construction the extent the Fund is exposed to such
of the Underlying Index in accordance interest rates. Additionally, under
with its methodology may occur from certain market conditions in which
time to time and may not be identified interest rates are low and the market
and corrected by the Index Provider for prices for portfolio securities have
a period of time or at all, which may increased, the Fund may have a very low
have an adverse impact on the Fund and or even negative yield. A low or negative
its shareholders. Unusual market yield would cause the Fund to lose
conditions may cause the Index money in certain conditions and over
certain time periods. An increase in
S-5Table of Contents
interest rates will generally cause the creation/redemption process. ANY OF
value of securities held by the Fund to THESE FACTORS, AMONG OTHERS,
decline, may lead to heightened MAY LEAD TO THE FUND’S SHARES
volatility in the fixed-income markets TRADING AT A PREMIUM OR DISCOUNT
and may adversely affect the liquidity of TO NAV.
certain fixed-income investments, Operational Risk. The Fund is exposed
including those held by the Fund. The to operational risks arising from a
historically low interest rate number of factors, including, but not
environment heightens the risks limited to, human error, processing and
associated with rising interest rates. communication errors, errors of the
Issuer Risk. The performance of the Fund’s service providers, counterparties
Fund depends on the performance of or other third-parties, failed or
individual securities to which the Fund inadequate processes and technology
has exposure. The Fund may be or systems failures. The Fund and BFA
adversely affected if an issuer of seek to reduce these operational risks
underlying securities held by the Fund is through controls and procedures.
unable or unwilling to repay principal or However, these measures do not
interest when due. Changes in the address every possible risk and may be
financial condition or credit rating of an inadequate to address significant
issuer of those securities may cause the operational risks.
value of the securities to decline. Passive Investment Risk. The Fund is
Management Risk. As the Fund will not not actively managed, and BFA generally
fully replicate the Underlying Index, it is does not attempt to take defensive
subject to the risk that BFA’s positions under any market conditions,
investment strategy may not produce including declining markets.
the intended results. Risk of Investing in Russia. Investing
Market Risk. The Fund could lose in Russian securities involves significant
money over short periods due to short- risks, including legal, regulatory,
term market movements and over currency and economic risks that are
longer periods during more prolonged specific to Russia. In addition, investing
market downturns. Local, regional or in Russian securities involves risks
global events such as war, acts of associated with the settlement of
terrorism, the spread of infectious portfolio transactions and loss of the
illness or other public health issues, Fund’s ownership rights in its portfolio
recessions, or other events could have a securities as a result of the system of
significant impact on the Fund and its share registration and custody in
investments and could result in Russia. A number of jurisdictions,
increased premiums or discounts to the including the U.S., Canada and the
Fund’s NAV. European Union (the “EU”), have
Market Trading Risk. The Fund faces imposed economic sanctions on certain
numerous market trading risks, Russian individuals and Russian
including the potential lack of an active corporate entities. Additionally, Russia
market for Fund shares, losses from is alleged to have participated in state-
trading in secondary markets, periods of sponsored cyberattacks against foreign
high volatility and disruptions in the companies and foreign governments.
S-6Table of Contents
Actual and threatened responses to when its financial markets decline, may
such activity, including purchasing have an adverse effect on the securities
restrictions, sanctions, tariffs or to which the Fund has exposure.
cyberattacks on the Russian Securities Lending Risk. The Fund may
government or Russian companies, may engage in securities lending. Securities
impact Russia’s economy and Russian lending involves the risk that the Fund
issuers of securities in which the Fund may lose money because the borrower
invests. of the loaned securities fails to return
Risk of Investing in Saudi Arabia. The the securities in a timely manner or at
ability of foreign investors (such as the all. The Fund could also lose money in
Fund) to invest in the securities of Saudi the event of a decline in the value of
Arabian issuers is relatively new. Such collateral provided for loaned securities
ability could be restricted by the Saudi or a decline in the value of any
Arabian government at any time, and investments made with cash collateral.
unforeseen risks could materialize with These events could also trigger adverse
respect to foreign ownership in such tax consequences for the Fund.
securities. The economy of Saudi Arabia Security Risk. Some countries and
is dominated by petroleum exports. A regions in which the Fund invests have
sustained decrease in petroleum prices experienced security concerns, such as
could have a negative impact on all terrorism and strained international
aspects of the economy. Investments in relations. Incidents involving a country’s
the securities of Saudi Arabian issuers or region’s security may cause
involve risks not typically associated uncertainty in its markets and may
with investments in securities of issuers adversely affect its economy and the
in more developed countries that may Fund’s investments.
negatively affect the value of the Fund’s
investments. Such heightened risks may Tracking Error Risk. The Fund may be
include, among others, expropriation subject to tracking error, which is the
and/or nationalization of assets, divergence of the Fund’s performance
restrictions on and government from that of the Underlying Index.
intervention in international trade, Tracking error may occur because of
confiscatory taxation, political differences between the securities and
instability, including authoritarian and/ other instruments held in the Fund’s
or military involvement in governmental portfolio and those included in the
decision making, armed conflict, crime Underlying Index, pricing
and instability as a result of religious, differences (including, as applicable,
ethnic and/or socioeconomic unrest. differences between a security’s price
There remains the possibility that at the local market close and the Fund’s
instability in the larger Middle East valuation of a security at the time of
region could adversely impact the calculation of the Fund’s NAV),
economy of Saudi Arabia, and there is transaction costs incurred by the Fund,
no assurance of political stability in the Fund’s holding of uninvested cash,
Saudi Arabia. differences in timing of the accrual of or
the valuation of distributions, the
Risk of Investing in the U.S. Certain requirements to maintain pass-through
changes in the U.S. economy, such as tax treatment, portfolio transactions
when the U.S. economy weakens or
S-7Table of Contents
carried out to minimize the distribution government or one of its agencies or
of capital gains to shareholders, sponsored entities, some of which may
acceptance of custom baskets, changes not be backed by the full faith and credit
to the Underlying Index or the costs to of the U.S. government. MBS represent
the Fund of complying with various new interests in “pools” of mortgages and
or existing regulatory requirements. This are subject to interest rate,
risk may be heightened during times of prepayment, and extension risk. MBS
increased market volatility or other react differently to changes in interest
unusual market conditions. Tracking rates than other bonds, and the prices
error also may result because the Fund of MBS may reflect adverse economic
incurs fees and expenses, while the and market conditions. Small
Underlying Index does not. movements in interest rates (both
U.S. Agency Debt Risk. The Fund increases and decreases) may quickly
invests in unsecured bonds or and significantly reduce the value of
debentures issued or guaranteed by the certain MBS. MBS are also subject to
U.S. government or one of its agencies the risk of default on the underlying
or sponsored entities. Certain debt mortgage loans, particularly during
issuances by U.S. government agencies periods of economic downturn. Default
or sponsored entities, including, among or bankruptcy of a counterparty to a
others, the Federal National Mortgage to-be-announced (“TBA”) transaction
Association (“Fannie Mae”) the Federal would expose the Fund to possible
Home Loan Mortgage Corporation losses.
(“Freddie Mac”), the Federal Home Loan U.S. Treasury Obligations Risk. U.S.
Banks (“FHLB”), and the Tennessee Treasury obligations may differ from
Valley Authority (“TVA”), are backed only other securities in their interest rates,
by the general creditworthiness and maturities, times of issuance and other
reputation of the U.S. government characteristics and may provide
agency or sponsored entity and not the relatively lower returns than those of
full faith and credit of the U.S. other securities. Similar to other
government and, as a result, are subject issuers, changes to the financial
to additional credit risk. To the extent condition or credit rating of the U.S.
that the U.S. government has provided government may cause the value of the
support to a U.S. agency or sponsored Fund’s U.S. Treasury obligations to
entity in the past, there can be no decline.
assurance that the U.S. government will Valuation Risk. The price the Fund
provide support in the future if it is not could receive upon the sale of a security
obligated to do so. Government or other asset may differ from the
National Mortgage Association (“Ginnie Fund’s valuation of the security or other
Mae”) securities and certain foreign asset and from the value used by the
government debt issuances guaranteed Underlying Index, particularly for
by the U.S. government are backed by securities or other assets that trade in
the full faith and credit of the U.S. low volume or volatile markets or that
government. are valued using a fair value
U.S. Agency Mortgage-Backed methodology as a result of trade
Securities Risk. The Fund invests in suspensions or for other reasons. In
MBS issued or guaranteed by the U.S. addition, the value of the securities or
S-8Table of Contents
other assets in the Fund’s portfolio may lower or higher redemption proceeds,
change on days or during time periods than they would have received had the
when shareholders will not be able to Fund not fair-valued securities or used a
purchase or sell the Fund’s shares. different valuation methodology. The
Authorized Participants who purchase or Fund’s ability to value investments may
redeem Fund shares on days when the be impacted by technological issues or
Fund is holding fair-valued securities errors by pricing services or other third-
may receive fewer or more shares, or party service providers.
Performance Information
The bar chart and table that follow show how the Fund has performed on a calendar
year basis and provide an indication of the risks of investing in the Fund. Both assume
that all dividends and distributions have been reinvested in the Fund. Past performance
(before and after taxes) does not necessarily indicate how the Fund will perform in the
future.
Year by Year Returns1 (Years Ended December 31)
30%
21.68% 19.91%
17.83%
20% 15.95%
10.97%
8.32% 7.64%
10%
0%
-2.97% -5.00%
-10% -8.72%
-20%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1
The Fund’s year-to-date return as of March 31, 2021 was -9.88%
The best calendar quarter return during the periods shown above was 15.37% in the
3rd quarter of 2011; the worst was -7.38% in the 4th quarter of 2016.
Updated performance information, including the Fund’s current NAV, may be obtained
by visiting our website at www.iShares.com or by calling 1-800-iShares (1-800-474-
2737) (toll free).
S-9Table of Contents
Average Annual Total Returns
(for the periods ended December 31, 2020)
One Year Five Years Ten Years
(Inception Date: 12/8/2009)
Return Before Taxes 15.95% 9.55% 8.06%
Return After Taxes on Distributions1 14.42% 7.83% 6.33%
Return After Taxes on Distributions and Sale of Fund
Shares1 9.48% 6.65% 5.58%
Bloomberg Barclays U.S. Universal 10+ Year Index2
(Index returns do not reflect deductions for fees,
expenses, or taxes) 15.99% 9.62% 8.16%
1
After-tax returns in the table above are calculated using the historical highest individual
U.S. federal marginal income tax rates and do not reflect the impact of state or local taxes.
Actual after-tax returns depend on an investor’s tax situation and may differ from those
shown, and after-tax returns shown are not relevant to tax-exempt investors or investors
who hold shares through tax-deferred arrangements, such as 401(k) plans or individual
retirement accounts (“IRAs”). Fund returns after taxes on distributions and sales of Fund
shares are calculated assuming that an investor has sufficient capital gains of the same
character from other investments to offset any capital losses from the sale of Fund shares.
As a result, Fund returns after taxes on distributions and sales of Fund shares may exceed
Fund returns before taxes and/or returns after taxes on distributions.
2
Index returns through October 22, 2012 reflect the performance of The ICE® BofAML 10+
Year US Corporate & Government IndexSM. Index returns beginning on October 23, 2012
through June 2, 2014 reflect the performance of the Bloomberg Barclays U.S. Long
Government/Credit Bond Index. Index returns beginning on June 3, 2014 reflect the
performance of the Bloomberg Barclays U.S. Universal 10+ Year Index.
S-10Table of Contents
Management Tax Information
Investment Adviser. BlackRock Fund The Fund intends to make distributions
Advisors. that may be taxable to you as ordinary
Portfolio Managers. James Mauro and income or capital gains, unless you are
Karen Uyehara (the “Portfolio investing through a tax-deferred
Managers”) are primarily responsible for arrangement such as a 401(k) plan or
the day-to-day management of the an IRA, in which case, your distributions
Fund. Each Portfolio Manager generally will be taxed when withdrawn.
supervises a portfolio management Payments to Broker-Dealers
team. Mr. Mauro and Ms. Uyehara have
been Portfolio Managers of the Fund
and Other Financial
since 2011 and 2021, respectively. Intermediaries
If you purchase shares of the Fund
Purchase and Sale of Fund through a broker-dealer or other
Shares financial intermediary (such as a bank),
The Fund is an exchange-traded fund BFA or other related companies may
(commonly referred to as an “ETF”). pay the intermediary for marketing
Individual shares of the Fund may only activities and presentations, educational
be bought and sold in the secondary training programs, conferences, the
market through a broker-dealer. development of technology platforms
Because ETF shares trade at market and reporting systems or other services
prices rather than at NAV, shares may related to the sale or promotion of the
trade at a price greater than NAV (a Fund. These payments may create a
premium) or less than NAV (a discount). conflict of interest by influencing the
An investor may incur costs attributable broker-dealer or other intermediary and
to the difference between the highest your salesperson to recommend the
price a buyer is willing to pay to Fund over another investment. Ask your
purchase shares of the Fund (bid) and salesperson or visit your financial
the lowest price a seller is willing to intermediary’s website for more
accept for shares of the Fund (ask) information.
when buying or selling shares in the
secondary market (the “bid-ask
spread”).
S-11Table of Contents
[THIS PAGE INTENTIONALLY LEFT BLANK]Table of Contents
More Information About the Fund
This Prospectus contains important information about investing in the Fund. Please
read this Prospectus carefully before you make any investment decisions. Additional
information regarding the Fund is available at www.iShares.com.
BFA is the investment adviser to the Fund. Shares of the Fund are listed for trading on
NYSE Arca, Inc. (“NYSE Arca”). The market price for a share of the Fund may be
different from the Fund’s most recent NAV.
ETFs are funds that trade like other publicly-traded securities. The Fund is designed to
track an index. Similar to shares of an index mutual fund, each share of the Fund
represents an ownership interest in an underlying portfolio of securities and other
instruments intended to track a market index. Unlike shares of a mutual fund, which
can be bought and redeemed from the issuing fund by all shareholders at a price based
on NAV, shares of the Fund may be purchased or redeemed directly from the Fund at
NAV solely by Authorized Participants and only in aggregations of a specified number of
shares (“Creation Units”). Also unlike shares of a mutual fund, shares of the Fund are
listed on a national securities exchange and trade in the secondary market at market
prices that change throughout the day.
The Fund invests in a particular segment of the securities markets and seeks to track
the performance of a securities index that is not representative of the market as a
whole. The Fund is designed to be used as part of broader asset allocation strategies.
Accordingly, an investment in the Fund should not constitute a complete investment
program.
An index is a financial calculation, based on a grouping of financial instruments, and is
not an investment product, while the Fund is an actual investment portfolio. The
performance of the Fund and the Underlying Index may vary for a number of reasons,
including transaction costs, non-U.S. currency valuations, asset valuations, corporate
actions (such as mergers and spin-offs), timing variances and differences between the
Fund’s portfolio and the Underlying Index resulting from the Fund’s use of
representative sampling or from legal restrictions (such as diversification
requirements) that apply to the Fund but not to the Underlying Index. From time to
time, the Index Provider may make changes to the methodology or other adjustments
to the Underlying Index. Unless otherwise determined by BFA, any such change or
adjustment will be reflected in the calculation of the Underlying Index performance on
a going-forward basis after the effective date of such change or adjustment. Therefore,
the Underlying Index performance shown for periods prior to the effective date of any
such change or adjustment will generally not be recalculated or restated to reflect
such change or adjustment.
“Tracking error” is the divergence of the Fund’s performance from that of the
Underlying Index. Because the Fund uses a representative sampling indexing strategy,
it can be expected to have a larger tracking error than if it used a replication indexing
strategy. “Replication” is an indexing strategy in which a fund invests in substantially all
1Table of Contents
of the securities in its underlying index in approximately the same proportions as in the
underlying index.
An investment in the Fund is not a bank deposit and it is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency, BFA or
any of its affiliates.
The Fund’s investment objective and the Underlying Index may be changed without
shareholder approval.
A Further Discussion of Principal Risks
The Fund is subject to various risks, including the principal risks noted below, any of
which may adversely affect the Fund’s NAV, trading price, yield, total return and ability
to meet its investment objective. You could lose all or part of your investment in the
Fund, and the Fund could underperform other investments. The order of the below risk
factors does not indicate the significance of any particular risk factor.
Asset Class Risk. The securities and other assets in the Underlying Index or in the
Fund’s portfolio may underperform in comparison to other securities or indexes that
track other countries, groups of countries, regions, industries, groups of industries,
markets, market segments, asset classes or sectors. Various types of securities,
currencies and indexes may experience cycles of outperformance and
underperformance in comparison to the general financial markets depending upon a
number of factors including, among other things, inflation, interest rates, productivity,
global demand for local products or resources, and regulation and governmental
controls. This may cause the Fund to underperform other investment vehicles that
invest in different asset classes.
Authorized Participant Concentration Risk. Only an Authorized Participant may
engage in creation or redemption transactions directly with the Fund, and none of
those Authorized Participants is obligated to engage in creation and/or redemption
transactions. The Fund has a limited number of institutions that may act as Authorized
Participants on an agency basis (i.e., on behalf of other market participants). To the
extent that Authorized Participants exit the business or are unable to proceed with
creation or redemption orders with respect to the Fund and no other Authorized
Participant is able to step forward to create or redeem Creation Units, Fund shares
may be more likely to trade at a premium or discount to NAV and possibly face trading
halts or delisting. Authorized Participant concentration risk may be heightened
because ETFs, such as the Fund, that invest in securities issued by non-U.S. issuers or
other securities or instruments that are less widely traded often involve greater
settlement and operational issues and capital costs for Authorized Participants, which
may limit the availability of Authorized Participants.
Call Risk. During periods of falling interest rates, an issuer of a callable bond held by
the Fund may “call” or repay the security before its stated maturity, and the Fund may
have to reinvest the proceeds in securities with lower yields, which would result in a
decline in the Fund’s income, or in securities with greater risks or with other less
favorable features.
2Table of Contents
Concentration Risk. The Fund may be susceptible to an increased risk of loss,
including losses due to adverse events that affect the Fund’s investments more than
the market as a whole, to the extent that the Fund’s investments are concentrated in
the securities and/or other assets of a particular sovereign or quasi-sovereign entity or
entities, country, group of countries, region, market, industry, group of industries,
sector, market segment or asset class. The Fund may be more adversely affected by
the underperformance of those securities and/or other assets, may experience
increased price volatility and may be more susceptible to adverse economic, market,
political or regulatory occurrences affecting those securities and/or other assets than
a fund that does not concentrate its investments.
Credit Risk. Credit risk is the risk that the issuer or guarantor of a debt instrument or
the counterparty to a derivatives contract, repurchase agreement or loan of portfolio
securities will be unable or unwilling to make its timely interest and/or principal
payments when due or otherwise honor its obligations. There are varying degrees of
credit risk, depending on an issuer’s or counterparty’s financial condition and on the
terms of an obligation, which may be reflected in the issuer’s or counterparty’s credit
rating. There is the chance that the Fund’s portfolio holdings will have their credit
ratings downgraded or will default (i.e., fail to make scheduled interest or principal
payments), or that the market’s perception of an issuer’s creditworthiness may
worsen, potentially reducing the Fund’s income level or share price.
Cybersecurity Risk. With the increased use of technologies such as the internet to
conduct business, the Fund, Authorized Participants, service providers and the relevant
listing exchange are susceptible to operational, information security and related
“cyber” risks both directly and through their service providers. Similar types of
cybersecurity risks are also present for issuers of securities in which the Fund invests,
which could result in material adverse consequences for such issuers and may cause
the Fund’s investment in such issuers to lose value. Unlike many other types of risks
faced by the Fund, these risks typically are not covered by insurance. In general, cyber
incidents can result from deliberate attacks or unintentional events. Cyber incidents
include, but are not limited to, gaining unauthorized access to digital systems (e.g.,
through “hacking” or malicious software coding) for purposes of misappropriating
assets or sensitive information, corrupting data, or causing operational disruption.
Cyberattacks may also be carried out in a manner that does not require gaining
unauthorized access, such as causing denial-of-service attacks on websites (i.e.,
efforts to make network services unavailable to intended users). Recently, geopolitical
tensions may have increased the scale and sophistication of deliberate attacks,
particularly those from nation-states or from entities with nation-state backing.
Cybersecurity failures by, or breaches of, the systems of the Fund’s adviser, distributor
and other service providers (including, but not limited to, index and benchmark
providers, fund accountants, custodians, transfer agents and administrators), market
makers, Authorized Participants or the issuers of securities in which the Fund invests,
have the ability to cause disruptions and impact business operations, potentially
resulting in: financial losses, interference with the Fund’s ability to calculate its NAV,
disclosure of confidential trading information, impediments to trading, submission of
erroneous trades or erroneous creation or redemption orders, the inability of the Fund
or its service providers to transact business, violations of applicable privacy and other
3Table of Contents
laws, regulatory fines, penalties, reputational damage, reimbursement or other
compensation costs, or additional compliance costs. In addition, cyberattacks may
render records of Fund assets and transactions, shareholder ownership of Fund shares,
and other data integral to the functioning of the Fund inaccessible or inaccurate or
incomplete. Substantial costs may be incurred by the Fund in order to resolve or
prevent cyber incidents in the future. While the Fund has established business
continuity plans in the event of, and risk management systems to prevent, such cyber
incidents, there are inherent limitations in such plans and systems, including the
possibility that certain risks have not been identified and that prevention and
remediation efforts will not be successful or that cyberattacks will go undetected.
Furthermore, the Fund cannot control the cybersecurity plans and systems put in place
by service providers to the Fund, issuers in which the Fund invests, the Index Provider,
market makers or Authorized Participants. The Fund and its shareholders could be
negatively impacted as a result.
Geographic Risk. Some of the companies in which the Fund invests are located in
parts of the world that have historically been prone to natural disasters, such as
earthquakes, tornadoes, volcanic eruptions, droughts, floods, hurricanes or tsunamis,
and are economically sensitive to environmental events. Any such event may adversely
impact the economies of these geographic areas or business operations of companies
in these geographic areas, causing an adverse impact on the value of the Fund.
High Yield Securities Risk. Securities that are rated below investment-grade
(commonly referred to as “junk bonds,” which may include those bonds rated below
“BBB-” by S&P Global Ratings and Fitch, or below “Baa3” by Moody’s), or are unrated,
may be deemed speculative, may involve greater levels of risk than higher-rated
securities of similar maturity and may be more likely to default.
The major risks of high yield securities investments include:
䡲 High yield securities may be issued by less creditworthy issuers. Issuers of high yield
securities may have a larger amount of outstanding debt relative to their assets than
issuers of investment-grade bonds. In the event of an issuer’s bankruptcy, claims of
other creditors may have priority over the claims of high yield securities holders,
leaving few or no assets available to repay high yield securities holders.
䡲 Prices of high yield securities are subject to extreme price fluctuations. Adverse
changes in an issuer’s industry and general economic conditions may have a greater
impact on the prices of high yield securities than on other higher rated fixed-income
securities. The credit rating of a high yield security does not necessarily address its
market value risk. Ratings and market value may change from time to time,
positively or negatively, to reflect new developments regarding the issuer.
䡲 Issuers of high yield securities may be unable to meet their interest or principal
payment obligations because of an economic downturn, specific issuer
developments, or the unavailability of additional financing.
䡲 High yield securities frequently have redemption features that permit an issuer to
repurchase the security from the Fund before it matures. If the issuer redeems high
yield securities held by the Fund, the Fund may have to invest the proceeds in bonds
with lower yields and may lose income.
4Table of Contents
䡲 High yield securities may be less liquid than higher rated fixed-income securities,
even under normal economic conditions. There are fewer dealers in the high yield
securities market, and there may be significant differences in the prices quoted for
high yield securities by the dealers. Because high yield securities may be less liquid
than higher rated fixed-income securities, judgment may play a greater role in
valuing certain of the Fund’s securities than is the case with securities trading in a
more liquid market.
䡲 The Fund may incur expenses to the extent necessary to seek recovery upon default
or to negotiate new terms with a defaulting issuer.
Income Risk. The Fund’s income may decline if interest rates fall. This decline in
income can occur because the Fund may subsequently invest in lower-yielding bonds
as bonds in its portfolio mature, are near maturity or are called, bonds in the
Underlying Index are substituted, or the Fund otherwise needs to purchase additional
bonds. The Index Provider’s substitution of bonds in the Underlying Index may occur,
for example, when the time to maturity for the bond no longer matches the Underlying
Index’s stated maturity guidelines.
Index-Related Risk. The Fund seeks to achieve a return that corresponds generally to
the price and yield performance, before fees and expenses, of the Underlying Index as
published by the Index Provider. There is no assurance that the Index Provider or any
agents that may act on its behalf will compile the Underlying Index accurately, or that
the Underlying Index will be determined, composed or calculated accurately. While the
Index Provider provides descriptions of what the Underlying Index is designed to
achieve, neither the Index Provider nor its agents provide any warranty or accept any
liability in relation to the quality, accuracy or completeness of the Underlying Index or
its related data, and they do not guarantee that the Underlying Index will be in line with
the Index Provider’s methodology. BFA’s mandate as described in this Prospectus is to
manage the Fund consistently with the Underlying Index provided by the Index Provider
to BFA. BFA does not provide any warranty or guarantee against the Index Provider’s or
any agent’s errors. Errors in respect of the quality, accuracy and completeness of the
data used to compile the Underlying Index may occur from time to time and may not
be identified and corrected by the Index Provider for a period of time or at all,
particularly where the indices are less commonly used as benchmarks by funds or
managers. In addition, there may be heightened risks associated with the adequacy
and reliability of the information the Index Provider uses given the Fund’s exposure to
emerging markets, as certain emerging markets may have less information available or
less regulatory oversight. Such errors may negatively or positively impact the Fund and
its shareholders. For example, during a period where the Underlying Index contains
incorrect constituents, the Fund would have market exposure to such constituents and
would be underexposed to the Underlying Index’s other constituents. Shareholders
should understand that any gains from Index Provider errors will be kept by the Fund
and its shareholders and any losses or costs resulting from Index Provider errors will
be borne by the Fund and its shareholders.
Unusual market conditions may cause the Index Provider to postpone a scheduled
rebalance to the Underlying Index, which could cause the Underlying Index to vary
from its normal or expected composition. The postponement of a scheduled rebalance
5You can also read
