BlackRock Asset Management Canada Limited (iShares)

BlackRock Asset Management Canada Limited (iShares)

September 16, 2010 12:29 ET

Concerned by Changes to the Tax Rules on Income Trusts? BlackRock Canada has a Solution: The New iShares® Diversified Monthly Income Fund

TORONTO, ONTARIO--(Marketwire - Sept. 16, 2010) - BlackRock Asset Management Canada Limited (BlackRock Canada), an indirect, wholly-owned subsidiary of BlackRock, Inc., today announced that the iShares Exchange-Traded Funds (ETFs) business, the world's largest provider of ETFs, can now provide investors looking for a consistent monthly income stream, along with full liquidity and the potential for modest long-term capital growth with an appealing—and tax-friendlier—option: the iShares Diversified Monthly Income Fund, trading on the TSX under the symbol XTR (TSX:XTR)

Managed by BlackRock Canada, XTR offers all the benefits that investors have come to expect from iShares ETFs, including reasonable management fees, full intra-day tradability, and the power of the iShares ETFs' unique and trusted product engineering.

XTR replaces the former iShares S&P®/TSX® Income Trust Fund, which traded under the same symbol. The conversion, approved by a special meeting of unitholders on August 23, 2010, is designed to provide maximum investor benefit in advance of changes to the federal tax regulations governing income trusts that will come into effect in January 2011.

"The goal here is to ensure investors continue to receive a reliable monthly income stream while still enjoying the benefits they've come to associate with iShares ETFs," said Oliver McMahon, director of product management for iShares ETFs at BlackRock Canada. "The new XTR is an income product that has the ETF's inherent advantages, including diversification, transparency, low costs, tax efficiency and the ability to use value-adding trading strategies, such as limit and stop orders."

The New iShares XTR Advantage

XTR will invest primarily (though not exclusively) in other Canadian iShares ETFs. It will offer a diversified portfolio of income-bearing asset classes including, but not limited to, dividend-paying common equities, fixed-income securities (such as corporate bonds and long-maturity vehicles) and property investments, such as real-estate investment trusts. In addition to other Canadian iShares ETFs, XTR may also hold other income-bearing investments directly and/or through the use of derivatives.

BlackRock Canada will maintain a strategic asset allocation policy for XTR that emphasizes income generation while maintaining the potential for modest long-term capital growth.

The initial target asset allocation is expected, in aggregate, to be composed of approximately 50% equities (mostly Canadian, although foreign holdings may be included for diversification) and approximately 50% fixed-income investment vehicles. XTR will rebalance its strategic asset allocation on a quarterly basis, but will do so more frequently if market conditions dictate.

The aim of XTR is to distribute net income regularly to investors in a way that maximizes benefit while minimizing the sting of the new tax rules.

How XTR Will Continue to Deliver

XTR has been specially designed to be transparent and offers a methodology that provides a consistent income stream through monthly nominal distributions, to be determined annually.

The strategy will distribute the fund's net income to the extent that the fund will not be liable for ordinary income tax on the earnings. Net capital gains will be distributed so that they, too, are not subject to ordinary income taxes.

Should XTR's net income and net realized capital gains in any year not be sufficient to fund pre-determined monthly distributions, the balance of the monthly payouts will constitute a return of capital to unitholders. Returns of capital are generally non-taxable to unitholders, but ultimately reduce the adjusted cost base of their units for tax purposes.

XTR has a management fee of 0.55%. There are balanced mutual funds in Canada with similar characteristics, but higher fees—and investors are well advised to compare the numbers. XTR's assets under management totalled $207.9 million as of August 16, 2010.

About BlackRock

BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At June 30, 2010, BlackRock's AUM was $3.151 trillion. BlackRock offers products that span the risk spectrum to meet clients' needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares® (exchange traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions. Headquartered in New York City, as of June 30, 2010, the firm has approximately 8,500 employees in 24 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the company's website at

About iShares ETFs

The iShares business is a global product leader in ETFs with over 410 funds globally across equities, fixed income and commodities, which trade on 16 exchanges worldwide. The iShares funds are bought and sold like common stocks on securities exchanges. The iShares funds are attractive to many individual and institutional investors and financial intermediaries because of their relative low cost, tax efficiency and trading flexibility. Investors can purchase and sell securities through any brokerage firm, financial advisor, or online broker, and hold the funds in any type of brokerage account. The iShares customer base consists of the institutional segment of pension plans and fund managers, as well as the retail segment of financial advisors.

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