How does the performance of iShares compare with the performance of their underlying indexes?
iShares are designed to provide investment results that generally correspond to the price and yield performance of their related indexes. One market mechanism that helps to keep iShares trading at a price close to the value of their underlying portfolios is arbitrage. Because iShares are both redeemable into the stocks of their related indexes and can be created from the stocks of the indexes on any day, arbitrage traders may move to profit from any price discrepancies between the index and iShares which in turn helps to close the price gap between the two. (iShares creations and redemptions are restricted to large transactions in multiples ranging from 50,000 to 600,000 Index Shares, usually carried out by institutional investors.) Of course, because of the forces of supply and demand and other market factors, there may be times when iShares trae at a premium or discount to fair value. In addition, iShares may use futures to simulate full investment in the respective underlying index,
