A method of manufacturing a semiconductor device comprising a n-channel MOSFET, the method comprising: forming a first layer over a silicon substrate, the first layer comprising silicon and germanium at a greater germanium concentration than the substrate and being formed to have compressive stress; forming a second layer over the first layer, the second layer being an epitaxial silicon layer without germanium; etching so as to form trenches through the first layer and the second layer and into the substrate, the trenches having walls that define a first lateral extent of the first and second layer and in part define a channel of the n-channel MOSFET, subsequently filling the trenches with insulating material so as to form a trench isolation structure (58, 60), the method further comprising after the etching: forming a gate dielectric layer and a gate electrode on the second layer; and forming source and drain regions (54, 56); wherein the first layer has a thickness smaller than a critical thickness at which misfit dislocations form in the first layer due to a lattice mismatch between the first layer and the substrate, wherein the etching extends into the substrate to a first depth, the first depth and the first lateral extent allowing the first layer to expand laterally to at least partially relax elastically the first layer over the first lateral extent of the of first layer, thereby inducing biaxially tensile strain in the second Layer across the first lateral extent of the second layer and transferring tensile strain to a substrate surface region, and the method is characterized in that the etching comprises forming a nitride hard mask layer over an intermediate boro-phospho-silicate glass layer on top of the second layer, using said nitride hard mask layer for etching the trenches, and after the trenches are etched, the nitride hard mask layer is left in place and the device is heated to a temperature of 850°C for a period of 2 hours, allowing the second layer to be strained and for the first layer allowing strain to be relaxed elastically, and then filling the trenches. forming a first layer over a silicon substrate, the first layer comprising silicon and germanium at a greater germanium concentration than the substrate and being formed to have compressive stress; forming a second layer over the first layer, the second layer being an epitaxial silicon layer without germanium; etching so as to form trenches through the first layer and the second layer and into the substrate, the trenches having walls that define a first lateral extent of the first and second layer and in part define a channel of the n-channel MOSFET, subsequently filling the trenches with insulating material so as to form a trench isolation structure (58, 60), the method further comprising after the etching: forming a gate dielectric layer and a gate electrode on the second layer; and forming source and drain regions (54, 56); wherein the first layer has a thickness smaller than a critical thickness at which misfit dislocations form in the first layer due to a lattice mismatch between the first layer and the substrate, wherein the etching extends into the substrate to a first depth, the first depth and the first lateral extent allowing the first layer to expand laterally to at least partially relax elastically the first layer over the first lateral extent of the of first layer, thereby inducing biaxially tensile strain in the second Layer across the first lateral extent of the second layer and transferring tensile strain to a substrate surface region, and the method is characterized in that the etching comprises forming a nitride hard mask layer over an intermediate boro-phospho-silicate glass layer on top of the second layer, using said nitride hard mask layer for etching the trenches, and after the trenches are etched, the nitride hard mask layer is left in place and the device is heated to a temperature of 850°C for a period of 2 hours, allowing the second layer to be strained and for the first layer allowing strain to be relaxed elastically, and then filling the trenches. forming a gate dielectric layer and a gate electrode on the second layer; and forming source and drain regions (54, 56); wherein the first layer has a thickness smaller than a critical thickness at which misfit dislocations form in the first layer due to a lattice mismatch between the first layer and the substrate, wherein the etching extends into the substrate to a first depth, the first depth and the first lateral extent allowing the first layer to expand laterally to at least partially relax elastically the first layer over the first lateral extent of the of first layer, thereby inducing biaxially tensile strain in the second Layer across the first lateral extent of the second layer and transferring tensile strain to a substrate surface region, and the method is characterized in that the etching comprises forming a nitride hard mask layer over an intermediate boro-phospho-silicate glass layer on top of the second layer, using said nitride hard mask layer for etching the trenches, and after the trenches are etched, the nitride hard mask layer is left in place and the device is heated to a temperature of 850°C for a period of 2 hours, allowing the second layer to be strained and for the first layer allowing strain to be relaxed elastically, and then filling the trenches.