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INVESTING FOR TODAY AND THE FUTURE BIOTECH AND BEYOND
BlackRock
US Head of iShares Megatrend and International ETFJeff Spiegel
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John Gagliardi, CMT ®Regional Brokerage ConsultantFidelity Investments
The modern world is changing at the speed of innovation
2
1 billion……hours ago
humanity emerged…seconds ago
IBM released the first PC…Google searches occurred this morning1
1 Source: All 3 “billion” stats: (2013) Hal Varian, “Beyond Big Data”. Information on non-iShares Fund securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material. For top ten holdings of iShares ETFs mentioned in this presentation, please see the end of this presentation.
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For illustrative purposes only.
3
Structural themes are long-term opportunities driven by powerful transformations in our economy and society
Structural > cyclical
Time
Cyclical themes
Gro
wth
Structural themes
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Structural theme:
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horsesvs. cars
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From 1905-1930, the number of horse-drawn carriages fell
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93%
Source: International Monetary Fund (IMF) Riding the Energy Transition, May 2017.
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Televisions in U.S. households
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1 "1920s-1960s Television", Elon University School of Communications.
19461
0.01%
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1 "Number of TV Households in America", Buffalo History Museum.
19581
Televisions in U.S. households
83%
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Years new technology takes to reach 1/4 of American population1
8
1 Source: Pew Research Chart of the Week: The ever-accelerating rate of technology adoption; Yahoo Finance for number of active users at Facebook over the years. References to specific companies are strictly for illustrative purposes only and should not be construed as investment advice or recommendations regarding those companies. For holdings information for the iShares funds, please visit www.iShares.com.
1876Telephone
35 years
1975PC
16 years
1991The Web
7 years
4 years2004 –
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The Goldilocks problem
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F
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Source: Pew Research Chart of the Week: The ever-accelerating rate of technology adoption; Yahoo Finance for number of active users at Facebook over the years. Information on non-iShares Fund securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material. For top ten holdings of iShares ETFs mentioned in this presentation, please see the end of this presentation.
A- A N G- - -
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Can you spot the FAANG?
5/99 6/99 7/99 8/99 9/99 10/99 11/99
Two “pure-play” e-commerce names had very different charts in 1999
Company A
up 213%
May 19, 1999 to November 30, 1999
Company B
up 22%
For illustrative purposes only. Source: Bloomberg, December 2019.
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Can you spot the FAANG?
Growth from May 19, 1999 to May 30, 2019
For illustrative purposes only. Source: Bloomberg, May 2020. 1 Amazon total return was 3,400% between 05/19/1999 and 05/31/2020. Includes dividends. 2 eToys filed for bankruptcy in February, 2001. Information on non-iShares Fund securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material. For top ten holdings of iShares ETFs mentioned in this presentation, please see the end of this presentation.
They’re even more different 20 years later
5/99 5/03 5/07 5/11 5/15 5/19
Amazon gave investors a
34x return1
eToys filed for
bankruptcy2
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13
What about a tech focused index?
NASDAQ Composite Index
3x returns1
For illustrative purposes only. Source: Bloomberg., May 2020. 1 Nasdaq returned 309% between 05/19/1999 and 05/31/2020. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
May-99 May-03 May-07 May-11 May-15 May-19
Nasdaq
Too broadBroad indexes may be too
diversified to offer targeted thematic exposure.
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Single stocksIncreased risk
Lack diversification
Broad indexLack targeted exposure
The Goldilocks scenario
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1 Reflects total returns, including dividends, from 09/15/99 through 05/31/20. Data from Bloomberg as of May 2020. The MSCI ACWI Internet & Direct Marketing Retail Index has returned 2,342% and the Nasdaq Composite Index has returned 326% over this time period. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transactions costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
Megatrend Index
Focused Exposure
MSCI ACWI Internet & Direct Marketing Retail Index
Targeted Index
23xreturns1 3x
returns1
Nasdaq Composite IndexBroad Tech Index??
returns1
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T R- E N D- - -
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It’s on the tip of your tongue
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Are self driving cars cool?
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And the top of your Twitter
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Will there be more of them on the road in 10 years?
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Megatrends are driving changeMegatrends are the long-term, transformational forces driving our global economy & society.
Technological breakthrough
Demographics & social change
Rapid urbanization
Climate change & resource scarcity
Emerging global wealth
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Technological breakthrough
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Which would you rather
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OR
sacrifice for one week?
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49%willing to give up dessert
74%willing to give up alcohol
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Source: Delvv, Digital Habits 2016 Survey Findings, June 2016.
Drumroll please…
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2015
2017
2019
2021
2023
2025
22
Source: Statista, Internet of Things (IoT) Connected Devices Installed Base Worldwide from 2015 to 2025. For illustrative purposes only.
Internet-connected devices
15bn20bn28bn35bn50bn75bn
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# of Cybercriminals on the FBI’s most wanted list(in millions)
1 in 2014
71in 2020
Source: Norton: 10 Cybersecurity Facts and Stats for 2018, Cyber's Most Wanted - FBI For illustrative purposes only.
More data more problems
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Source: Bloomberg, data as of 01/01/2000 and 01/01/2020. Information on non-iShares Fund securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material. For top ten holdings of iShares ETFs mentioned in this presentation, please see the end of this presentation.
24
The top 5 companies in the S&P 500 has changed over time, with only Microsoft retaining its spot. What will the next 20 years look like?
2040
?
MegaRule #1: Weight for tomorrow
2000S&P 500 Top 5
2020S&P 500 Top 5
Amazon
Microsoft
AppleGeneral Electric
Cisco
Microsoft
FacebookWalmart
Berkshire HathawayIntel
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Demographics & social change
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2BIn 2025
Over 606TIn 2027
Spent on national healthcare in the U.S.
Sources: Left side: United Nations World Population Prospects: the 2017 Revision. Right side: Center for Medicare and Medicaid Services.
U.S. healthcare spending continues to rise The 60+ demographic is rapidly increasing
Longer, healthier lives
1BIn 2015
Over 604TIn 2017
Spent on national healthcare in the U.S.
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Seek to do well & do good
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GenomicsUsing an individual’s DNA to tailor medical treatment
Did you know? The first whole human genome sequencing cost ~2.7B in 2003. Today it costs $699.1
Novartis Moderna, Inc.Sangamo
Therapeutics, Inc.
ZIOPHARM Oncology, Inc.
ImmunologyUsing the body’s immune system to fight disease
Did you know? With over 32 FDA approvals and rising, immunotherapy is already boosting lung, renal, brain and skin cancer survival rates.2
Sources: 1 Dante Labs, March 2018, Andrea Riposati.2 https://www.cancerresearch.org. Information on non-iShares Fund securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material. For top ten holdings of iShares ETFs mentioned in this presentation, please see the end of this presentation.
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Rapid urbanization
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Rise of the megacities
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Population growth of the world’s megacities through 2030
Source: United Nations Department of Economic and Social Affairs, The World’s Cities in 2018.
Shanghai+7 million (28%)
Sao Paulo+2 million (10%)
Cairo+5 million (27%)
Dhaka+9 million (43%)
Delhi+9 million (37%)
New York+1 million (6%)
Los Angeles+1 million (6%)
13M
24M
26M39M
33M
28M
20M
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Climate change & resource scarcity
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$2T gap to meet gov’t renewable targets
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total investment needed by 2030 for the implementation of renewable energy targets.
U.S.
$16B
Latin America $218B
Africa$225B
Asia$1.1T
Middle East
$30B
Others$151B
2TAlmost
Source: International Renewable Energy Agency, Untapped potential for climate action: Renewable energy in Nationally Determined Contributions, November 2017.
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For illustrative purposes only.The specific companies identified and described above do not represent all of the companies purchased or sold, and no assumptions should be made that the companies identified and discussed were or will be profitable. Information on non-iShares Fund securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material. For top ten holdings of iShares ETFs mentioned in this presentation, please see the end of this presentation.
MegaRule #2: Connect the value chain
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ABB
infineon
Albemarie
Tesla Valeo
Emerging global wealth
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A billion people here, a billion people there…
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China mints billionaires per week.12
150M people enter the global middle class every year, of which
90%are from Asia.2
people escape extreme poverty in India every minute.344
Source: 1 Yahoo Finance, “Billionaires Insight” report from UBS and PWC. 2 Bank of America Merrill Lynch “10 things for the next 10 years.” 3 Washington Post, “India is no longer home to the largest number of poor people in the world. Nigeria is.”
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Online Population: 292M 772MOffline Population: 35M 628M
MegaRule #3: Think beyond borders
China’s vast digital potentialOnline vs. offline population in China compared to the United States in 2018
35
Source: Circle ID, July 2018.
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U.S. China
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Owning the futureEMERGING
GLOBAL WEALTHTECHNOLOGICAL BREAKTHROUGH
DEMOGRAPHICS & SOCIAL CHANGE
RAPID URBANIZATION
CLIMATE CHANGE & RESOURCE SCARCITY
IWFH
iShares Virtual Work and Life Multisector ETF
IHAK
IRBO
iShares Cybersecurity and Tech ETF
iShares Robotics and Artificial Intelligence
Multisector ETF
IDNA
iShares Genomics Immunology and Healthcare ETF
IGF
iShares Global Infrastructure ETF
IFRA
EMIF
iShares U.S. Infrastructure ETF
iShares Emerging Markets Infrastructure
ETF
ICLN
iShares Global Clean Energy ETF
IDRV
iShares Self-Driving EV and Tech ETF
CNYA
iShares MSCI China A ETF
MCHI
INDA
iShares MSCI China ETF
iShares MSCI India ETF
Illustrative purpose only
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MegaRules of the road
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1 Weight for tomorrow
2 Connect the value chain
3 Think beyond borders
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Put your money where your mind is…
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APPENDIX
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https://www.fidelity.com/trading/regional-brokerage-consultant/John-Gagliardi
Top 10 Constituents
40
ICLN Weight (%) IDNA Weight (%) IDRV Weight (%) IHAK Weight (%) IRBO Weight (%)
Xinyi Solar Holdings Ltd 5.59 Mirati
Therapeutics Inc 4.36 Tesla Inc 5.22 DocuSign Inc 4.87 Spotify Technology SA 1.37
Plug Power Inc 5.59 Genmab A/S 4.28 Apple Inc 4.50 Okta Inc A 4.38 Kingsoft Corp Ltd 1.34
SolarEdge Technologies Inc 5.53 Seattle Genetics
Inc 4.23 NVIDIA Corp 4.38 Zscaler Inc 4.36 Cloudera Inc 1.25
Enphase Energy Inc 4.81 Moderna Inc 4.07 Qualcomm Inc 4.17 Akamai
Technologies Inc 4.27 iQIYI Inc ADR 1.24
First Solar Inc 4.69 Sarepta Therapeutics Inc 4.02 Alphabet Inc A 4.06
CrowdStrike Holdings Inc
Class A4.22
DouYu International
Holdings Ltd ADR1.22
Energy Company of Minas Gerais
ADR4.43
Inovio Pharmaceuticals
Inc3.97 Schneider Electric
SE 4.04 Citrix Systems Inc 4.20 Mail.ru Group Ltd GDR 1.21
Contact Energy Ltd 4.23 Exelixis Inc 3.92 Toyota Motor
Corp 4.02 VMware Inc 4.09 Alteryx Inc Class A 1.16
Meridian Energy Ltd 4.22
Regeneron Pharmaceuticals
Inc3.89 Samsung
Electronics Co Ltd 3.92 Proofpoint Inc 4.02 Yandex NV Shs Class-A- 1.15
Siemens Gamesa Renewable Energy
SA4.21 Sanofi SA 3.76 Siemens AG 3.92 Palo Alto
Networks Inc 3.92 JOYY Inc ADR 1.14
Vestas Wind Systems A/S 4.17 Gilead Sciences
Inc 3.70 Intel Corp 3.76 Trend Micro Inc 3.92 Tencent Holdings Ltd 1.14
Source: BlackRock as of 6.30.20. Constituents subject to change.
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Top 10 Constituents
41
IGF Weight (%) EMIF Weight (%) IFRA Weight (%) TECB Weight (%) XT Weight (%)
NextEra Energy Inc 5.04 Airports Of
Thailand PLC DR 10.09 Argan Inc 0.92 MiratiTherapeutics Inc 4.36 Tesla Inc 1.45
Enbridge Inc 4.94Transneft PJSC
Participating Preferred
7.04 CenterPoint Energy Inc 0.85 Genmab A/S 4.28 Adyen NV 0.91
Transurban Group 4.76 Tenaga Nasional Bhd 6.21 The York Water Co 0.84 Seattle Genetics
Inc 4.23Chugai
Pharmaceutical Co Ltd
0.83
Aena SME SA 4.68Ultrapar
Participacoes SA ADR
6.17 Worthington Industries Inc 0.84 Moderna Inc 4.07 NVIDIA Corp 0.83
TC Energy Corp 3.79 China Gas Holdings Ltd 5.27 El Paso Electric
Co 0.82 Sarepta Therapeutics Inc 4.02 MercadoLibre Inc 0.81
Atlantia SpA 3.61 CCR SA 5.05 Pool Corp 0.82Inovio
Pharmaceuticals Inc
3.97Regeneron
Pharmaceuticals Inc
0.79
Usd Cash 3.47
Grupo Aeroportuario del Pacifico SAB de
CV ADR
4.50 Trex Co Inc 0.82 Exelixis Inc 3.92 PayPal Holdings Inc 0.78
Iberdrola SA 3.28 Enel Americas SA ADR 4.50 CMS Energy Corp 0.81
Regeneron Pharmaceuticals
Inc3.89 Square Inc A 0.76
Dominion Energy Inc 3.18 Guangdong
Investment Ltd 4.10 Consolidated Edison Inc 0.81 Sanofi SA 3.76 Amazon.com Inc 0.75
Enel SpA 3.10
Grupo Aeroportuario del
Sureste SAB de CV ADR
3.78 Commercial Metals Co 0.80 Gilead Sciences
Inc 3.70Biomarin
Pharmaceutical Inc
0.74
Source: BlackRock as of 6.30.20. Constituents subject to change.
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Top 10 Constituents
42
CNYA Weight (%) MCHI Weight (%) INDA Weight (%) CNYA Weight (%) MCHI Weight (%)
Kweichow Moutai Co Ltd 5.70 Alibaba Group
Holding Ltd ADR 16.95 Reliance Industries Ltd 13.82 Kweichow Moutai
Co Ltd 5.70 Alibaba Group Holding Ltd ADR 16.95
Ping An Insurance (Group) Co. of
China Ltd2.42 Tencent Holdings
Ltd 15.41Housing
Development Finance Corp Ltd
8.21Ping An Insurance
(Group) Co. of China Ltd
2.42 Tencent Holdings Ltd 15.41
China Merchants Bank Co Ltd 2.14 Meituan Dianping 3.31 Infosys Ltd 7.13 China Merchants
Bank Co Ltd 2.14 Meituan Dianping 3.31
Wuliangye Yibin Co Ltd 2.05
China Construction
Bank Corp Class H
3.25 Tata Consultancy Services Ltd 5.33 Wuliangye Yibin
Co Ltd 2.05
China Construction
Bank Corp Class H
3.25
Jiangsu Hengrui Medicine Co Ltd 1.50
Ping An Insurance (Group) Co. of
China Ltd Class H2.51 Hindustan
Unilever Ltd 5.10 Jiangsu Hengrui Medicine Co Ltd 1.50
Ping An Insurance (Group) Co. of
China Ltd Class H2.51
China Yangtze Power Co Ltd 1.29 JD.com Inc ADR 2.14 ICICI Bank Ltd 4.79 China Yangtze
Power Co Ltd 1.29 JD.com Inc ADR 2.14
Contemporary Amperex
Technology Co Ltd Class A
1.18 China Mobile Ltd 1.74 Bharti Airtel Ltd 3.91
Contemporary Amperex
Technology Co Ltd Class A
1.18 China Mobile Ltd 1.74
Luxshare Precision Industry
Co Ltd1.13
Industrial And Commercial Bank
Of China Ltd Class H
1.53 Axis Bank Ltd 2.41Luxshare
Precision Industry Co Ltd
1.13
Industrial And Commercial Bank
Of China Ltd Class H
1.53
Foshan Haitian Flavouring and
Food Co Ltd Class A
1.06 NetEase Inc ADR 1.46 Maruti Suzuki India Ltd 2.01
Foshan Haitian Flavouring and
Food Co Ltd Class A
1.06 NetEase Inc ADR 1.46
Industrial Bank Co Ltd 1.02 Baidu Inc ADR 1.37 ITC Ltd 1.91 Industrial Bank Co
Ltd 1.02 Baidu Inc ADR 1.37
Source: BlackRock as of 6.30.20. Constituents subject to change.
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43
Important InformationCarefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visitingwww.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets and in concentrations of single countries.
Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes than the general securities market.
Technology companies may be subject to severe competition and product obsolescence. Technologies perceived to displace older technologies or create new markets may not in fact do so. Companies that initially develop a novel technology may not be able to capitalize on the technology.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change. The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.
The information included in this material has been taken from trade and other sources considered to be reliable. We do not represent that this information is accurate and complete, and it should not be relied upon as such. Any opinions expressed in this material reflect our analysis at this date and are subject to change. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, but are not guaranteed as to accuracy.
Transactions in shares of ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Morningstar, Inc., nor does this company make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with Morningstar, Inc.
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The information provided in this communication is solely for educational purposes and should not be construed as advice or an investment recommendation. Fidelity Investments is a separate company, unaffiliated with BlackRock, Inc.. There is no form of partnership, agency affiliation, or similar relationship between BlackRock, Inc. and Fidelity Investments, nor is such a relationship created or implied by the information herein. Fidelity Investments has not been involved with the preparation of the content supplied by BlackRock, Inc. and does not guarantee or assume any responsibility for its accuracy or completeness.
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