TORONTO, Dec. 07, 2018 (GLOBE NEWSWIRE) — BlackRock Asset Management Canada Limited (“BlackRock Canada”), an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”) (NYSE:BLK) and manager of the iShares Balanced Income CorePortfolio™ Index ETF (“CBD”) and iShares Balanced Growth CorePortfolio™ Index ETF (“CBN”, and together with CBD, the “iShares Funds”), is pleased to announce that, at special meetings held today, unitholders of each iShares Fund approved the proposed changes to the fundamental investment objective of each iShares Fund and certain related matters which were previously announced on September 28, 2018 (the “Proposals”).
Given that all necessary approvals have been obtained, on or about December 11, 2018 (the “Effective Date”), BlackRock Canada will change the name and fundamental investment objectives of each iShares Fund as set out below.
|Current Name (and TSX Ticker)||New Name (and TSX Ticker1)||Current Fundamental Investment Objective||New Fundamental Investment Objective|
|iShares Balanced Income CorePortfolio™ Index ETF (CBD)||iShares Core Balanced ETF Portfolio (XBAL)||The iShares Fund has been designed to replicate, to the extent possible, the performance of the Sabrient Global Balanced Income Index, net of expenses.||The iShares Fund seeks to provide long-term capital growth and income by investing primarily in one or more exchange-traded funds managed by BlackRock Canada or an affiliate (“iShares ETFs”) that provide exposure to equity and/or fixed income securities.|
|iShares Balanced Growth CorePortfolio™ Index ETF (CBN)||iShares Core Growth ETF Portfolio (XGRO)||The iShares Fund has been designed to replicate, to the extent possible, the performance of the Sabrient Global Balanced Growth Index, net of expenses.||The iShares Fund seeks to provide long-term capital growth by investing primarily in one or more iShares ETFs that provide exposure to equity and/or fixed income securities.|
1 The TSX ticker for each iShares Fund is expected to change on or about December 18, 2018. The CUSIPs of the iShares Funds will not change as a result of the implementation of the Proposals.
Further, on or about the Effective Date, each iShares Fund’s investment strategy will change from investing primarily in the exchange-traded funds included from time to time in its index to a long-term strategic asset allocation strategy, whereby each iShares Fund will invest in a portfolio of iShares ETFs managed to specified target allocations. Under the new investment strategy, the iShares Funds will be permitted to invest in iShares ETFs that are listed on a Canadian or U.S. stock exchange, as well as on the London Stock Exchange.
In addition, on or about the Effective Date, BlackRock Canada will implement a reduction in the management fees and changes to the fee structure of each iShares Fund as set out below. In addition to the reduction of BlackRock Canada’s current annual management fee as set out in the table below, the fee structure for each iShares Fund will change from its current management fee structure to a total annual fee structure. Under the new total annual fee structure, BlackRock Canada or an affiliate will be entitled to receive a fee for acting as manager of each iShares ETF in which each iShares Fund may invest (an “underlying product fee” and together with the management fee payable to BlackRock Canada, the “total annual fee”). As the underlying product fees will be embedded in the market value of the iShares ETFs in which the iShares Funds may invest, any underlying product fees will be borne indirectly by the iShares Fund. Under the new fee structure, BlackRock Canada will adjust the management fee payable to it by each iShares Fund to ensure that the total annual fees paid directly or indirectly to BlackRock Canada and its affiliates by each iShares Fund will not exceed the percentage of net asset value set out in the table below. These changes are expected to significantly reduce each iShares Fund’s management expense ratio.
|Current Name (and TSX Ticker)||Current Annual Management Fee2||New Total Annual Fee|
|iShares Balanced Income CorePortfolio™ Index ETF (CBD)||0.25%||0.18%|
|iShares Balanced Growth CorePortfolio™ Index ETF (CBN)||0.25%||0.18%|
2 Under each iShares Fund’s current fee structure, in addition to the “Current Annual Management Fee” set out in the table above, BlackRock Canada or an affiliate is entitled to receive a fee for acting as trustee or manager of each underlying iShares ETF in which the iShares Funds invest. The weighted average of such underlying product fees does not exceed 0.55% for CBD and 0.65% for CBN.
The distribution frequencies of the iShares Funds will also change from monthly to quarterly, effective on or about the Effective Date.
BlackRock Canada expects that the realignment of each iShares Fund’s portfolio to meet its new fundamental investment objective and investment strategy will be fully implemented no later than December 31, 2018. BlackRock Canada expects that the portfolio realignment may result in the realization of net capital gains for each iShares Fund, and that each iShares Fund will pay such realized net capital gains, if any, to unitholders in cash as a special distribution on or before December 31, 2018. This special capital gains cash distribution will be incremental to the normal year-end distributions of each iShares Fund as described in the prospectus of the iShares Funds under “Distribution Policy—Year-end Distributions”. Based on BlackRock Canada’s estimates as of November 23, 2018, such special capital gains cash distribution by CBN will be approximately 5.25% of its net asset value per unit and no such special capital gains cash distribution is currently expected for CBD. These estimates are subject to change, including based on market conditions and fluctuations, and an iShares Fund’s portfolio activity, up to the date of distribution. If you hold the iShares Funds through a registered plan or tax-free saving account, you will not pay tax on these distributions. Unitholders that have elected to participate in the iShares Funds’ distribution reinvestment plan should note that these distributions will not be eligible for the plan. Further details regarding the special capital gains cash distribution for each iShares Fund will be provided in a subsequent press release.
As a result of the implementation of the Proposals, the iShares Funds will no longer be “index participation units” under National Instrument 81-102 – Investment Funds (“NI 81-102”) as the iShares Funds will no longer seek to invest in a manner that causes them to replicate the performance of an index.
Further details regarding the iShares Funds and these changes can be found in the updated disclosure documents for the iShares Funds, which are expected to be filed on or about the Effective Date, and which will be subsequently available on www.sedar.com.
Update to Risk Ratings
In connection with the implementation of the Proposals, BlackRock Canada re-applied the investment risk classification methodology set out in NI 81-102, to determine the risk rating of each iShares Fund. As the iShares Funds will have less than 10 years of performance history under their new investment objectives, each iShares Fund’s risk classification must be determined based on the iShares Fund’s returns following the implementation of the changes and the return of a reference index. As a result of the application of the investment risk classification methodology, including the use of a blended reference index for each iShares Fund that reasonably approximates the standard deviation of the iShares Fund, BlackRock Canada today also announces an update to the risk rating of one of the iShares Funds, effective on or about the Effective Date, as set out below.
|Current Name (and TSX Ticker)||Current Risk Rating||New Risk Rating|
|iShares Balanced Growth CorePortfolio™ Index ETF (CBN)||Medium||Low to Medium|
A copy of the standardized risk classification methodology used by BlackRock Canada to identify the risk ratings of the iShares Funds is available on request, at no cost, by calling us at 1-855-255-5951 or by writing to BlackRock Canada at 161 Bay Street, Suite 2500, Toronto, Ontario M5J 2S1.
BlackRock helps investors build better financial futures. As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. As of September 30, 2018, the firm managed approximately US$6.44 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com/ca | Twitter: @blackrockCA | Blog: www.blackrockblog.com/can
iShares® unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 800+ exchange traded funds (ETFs) and US$1.8 trillion in assets under management as of September 30, 2018, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock, trusted to manage more money than any other investment firm.1
1 Based on US$6.44 trillion in AUM as of 9/30/18.
iShares® ETFs are managed by BlackRock Asset Management Canada Limited. Commissions, trailing commissions, management fees and expenses all may be associated with investing in iShares® ETFs. Please read the relevant prospectus before investing. The funds 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.
©2018 BlackRock Asset Management Canada Limited. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. Used with permission.
Certain statements in this press release are forward-looking statements, including those identified by the expressions “estimate”, “expect” and similar expressions to the extent they relate to the iShares Funds or BlackRock Canada. Forward-looking statements are not historical facts but reflect the current expectations of the iShares Funds or BlackRock Canada regarding future results or events. Such forward-looking statements reflect an iShares Fund’s or BlackRock Canada’s current beliefs and are based on information currently available to them. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results or events to differ materially from current expectations. Although the forward-looking statements contained in this press release are based upon assumptions that the iShares Funds or BlackRock Canada believe to be reasonable, neither the iShares Funds nor BlackRock Canada can assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein were prepared for the purpose of providing unitholders of the iShares Funds with information about the iShares Funds and may not be appropriate for other purposes. Neither the iShares Funds nor BlackRock Canada assumes any obligation to update or revise them to reflect new events or circumstances, except as required by law.
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