BlackRock Asset Management Canada Limited (iShares)

BlackRock Asset Management Canada Limited (iShares)

April 03, 2013 18:47 ET

iShares® Canada Updates on Impact of Federal Budget Tax Proposal

TORONTO, ONTARIO--(Marketwired - April 3, 2013) - The iShares business (iShares Canada) of BlackRock Asset Management Canada Limited, an indirect, wholly-owned subsidiary of BlackRock, Inc., is confirming that the iShares funds listed below are not accepting subscription orders and are not issuing new units for the time being. This decision has been prompted by the proposal in the 2013 Federal Budget to change the tax rules related to certain investment structures utilizing certain forward agreements that are entered into on or after March 21, 2013, or any extension of existing forward contracts on or after March 21, 2013. Where they apply, the proposed changes are intended to eliminate the use of such investment structures to generate returns in the form of capital gains. Although new units of these funds are currently not being issued, units of these funds are available for purchase and sale and continue to trade in the secondary market.

A small subset of the iShares Canada ETF fund family, 7 funds of the 80-plus line-up or about 3% of assets under management, is impacted by the proposed changes. Those ETFs are: iShares Advantaged Canadian Bond Index Fund (TSX:CAB), iShares Advantaged Convertible Bond Index Fund (TSX:CVD), iShares Advantaged U.S. High Yield Bond Index Fund (CAD-Hedged) (TSX:CHB), iShares Advantaged Short Duration High Income Fund (TSX:CSD and TSX:CSD.U), iShares Global Monthly Advantaged Dividend Index Fund (TSX:CYH), iShares Broad Commodity Index Fund (CAD-Hedged) (TSX:CBR), and iShares Managed Futures Index Fund (TSX:CMF and TSX:CMF.A).

Although the final tax rules may differ in some details from the current proposals, iShares Canada has determined that there is no immediate impact on any of the above-mentioned funds or their investors since the proposed tax changes do not affect the use of forward agreements that were already in place as of the budget date, provided generally that the notional size of the forward agreements does not increase after the budget date, or any additional forward agreements with a total term of up to 180 days from the expiry of such pre-budget day agreements. To preserve the tax treatment of the existing forward arrangements, iShares Canada has not permitted and plans not to permit such increases after the budget date. Accordingly, it is expected that investors in these funds will continue to benefit from the capital gains treatment of returns until the expiry of the forward agreements (or any additional agreements described above), including upon final settlement of such agreements.

The affected funds' forward agreements have the following expiration dates:

ETF Name Ticker Expiration Date
iShares Advantaged Canadian Bond Index Fund CAB 19-Nov-14
iShares Advantaged Convertible Bond Index Fund CVD 10-Jun-16
iShares Advantaged Short Duration High Income Fund CSD, CSD.U 24-Feb-16
iShares Advantaged U.S. High Yield Bond Index Fund (CAD-Hedged) CHB 9-Jan-15
iShares Broad Commodity Index Fund (CAD-Hedged) CBR 12-Oct-15
iShares Global Monthly Advantaged Dividend Index Fund CYH 15-May-13
iShares Managed Futures Index Fund CMF, CMF.A 10-Feb-17

The precise impact of the rule change is still being assessed and it is understood that the Canadian Government is continuing, in consultation with relevant stakeholders, to modify and refine some of the new rules. iShares Canada is working diligently with industry participants to obtain greater clarity on the proposals in order to develop appropriate, responsible solutions, including any necessary changes to these funds. We continually review the range of funds that we offer to investors and look to ensure they continue to provide transparency, liquidity and cost efficiency.

About BlackRock

BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At December 31, 2012, BlackRock's AUM was $3.792 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 December 31, 2012, the firm has approximately 10,500 employees in 30 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

iShares is the global product leader in exchange traded funds with over 600 funds globally across equities, fixed income and commodities, which trade on 20 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 shares 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 and high net worth individuals.

iShares® Funds are managed by BlackRock Asset Management Canada Limited. Commissions, management fees and expenses all may be associated with investing in iShares Funds. Please read the relevant prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or operational charges or income taxes payable by any security holder that would have reduced returns. The ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.

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