On 1 July 2013 BlackRock completed the acquisition of the Credit Suisse ETF business (‘CS ETF’). With the purchase complete, BlackRock is working on integrating CS ETF into the iShares business. A key component of this is a review and integration of the product ranges…
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What is changing?
As a result of the strategic review and planning for the integration process to be conducted following this acquisition, iShares is making the following three changes to its product range in Europe:
iShares will be closing 15 equity and commodity ETFs as of 24 October 2013 due to a variety of factors, principally low investor demand for the funds. The funds concerned include eight iShares funds and seven legacy Credit Suisse ETFs.
The combination of the two fund lines has resulted in 10 identical exposures; iShares has harmonised the pricing for these to ensure holders in each range are treated equally.
Repositioning the accumulating versions of the iShares FTSE 100 UCITS ETF, iShares S&P 500 UCITS ETF and the iShares S&P 500 – B UCITS ETF at a TER of 15 basis points to meet the growing needs of long term investors turning to low cost and transparent ETFs at the core of their portfolios. Note there are no changes to the distributing versions of these exposures that continue to meet the needs of investors who put a premium on greater liquidity and capital markets
depth for their shorter-term needs.
TER changes – ‘like for like’
iShares has always been committed to offering investors high quality and efficient solutions to meet their investment needs. As a result of the Credit Suisse acquisition, ten equity funds from the legacy Credit Suisse ETF range currently offer identical exposure and income treatment to existing iShares products. Where we have duplicate funds, iShares will reduce the TER to at least the lower of the two funds’ in each instance. This ensures that all investors are treated consistently and fairly regardless of which of the two identical funds they are invested in. These TER reductions will be effective from 23 September 2013.
FTSE 100 and S&P 500 reductions
The “buy and hold” segment of the market is a group of investors increasingly turning to ETFs as a cost efficient and transparent means of accessing key portfolio exposures. Accumulating funds reinvest their dividends in line with the benchmark, and hence provide greater efficiency for buy and hold investors. These investors also require funds that provide access to markets at an attractive TER so they keep more of what they earn.
To respond to these needs, iShares has decided to position the TER of the accumulating versions of the iShares FTSE 100 UCITS ETF, iShares S&P 500 UCITS ETF and the iShares S&P 500 – B UCITS ETF at 15 basis points. By offering a lower expense ratio for our accumulating funds on two of the most in-demand exposures in Europe, offering access to leading UK and US exposures at a lower price, we are providing clients with choice to match their individual investment objectives and strategy.
Note there are no changes to the distributing versions of these exposures that continue to meet the needs of investors who put a premium on greater liquidity and capital markets depth for their shorter-term needs
Fund closures
We continually review our product range to ensure that the investment characteristics and positioning of our funds remain relevant to and consistent with the current investment environment and evolving needs of our clients. Due to a variety of factors, principally low investor demand in the funds in question, the following 15 sub-funds will be closed as of 24 October 2013.
What happens now?
The funds will continue to trade until 23 October 2013. If you are still a shareholder in the Sub-fund on the Compulsory Redemption/ Termination Date, your shares will be automatically redeemed. The assets of the Sub-funds will be liquidated in order to return the proceeds of your investment to you.
If you do not wish to be automatically redeemed on the Compulsory Redemption/ Termination Date, you can redeem your shares in the Sub-funds at any time up to and including the Final Dealing Date in accordance with the normal fund redemption procedures as set out in the Prospectus. You may also wish to acquire an alternative iShares or other BlackRock fund. If you would like further information, please contact iShares using the details below. Shareholders should seek their own advice as to the suitability of any alternative investment option.
Costs of closure
The costs of closing the Sub-funds will be paid by BlackRock. The Sub-funds’ normal operating costs and transaction costs (including redemption costs on the Sub-funds’ investments) will continue to be borne by the Sub-funds and their respective shareholders.
Tax consequences
Please be aware that all of the above options will be deemed to be a disposal for capital gains tax purposes and may give rise to a capital gains tax liability. This will depend on your individual circumstances. If you are in any doubt as to the tax consequences of your actions you should contact your financial or tax adviser. If you have any questions please contact your iShares Relationship Manager.
Regulatory Information
BlackRock Advisors (UK) Limited, which is authorised and regulated by the Financial Conduct Authority (‘FCA’), having its registered office at 12 Throgmorton Avenue, London, EC2N 2DL, England, Tel +44 (0)20 7743 3000, has issued this document for access by Professional Clients only and no other person should rely upon the information contained within it. iShares plc, iShares II plc, iShares III plc, iShares IV plc, iShares V plc, iShares VI plc and iShares VII (together ’the Companies’) are open-ended investment companies with variable capital having segregated liability between their funds organised under the laws of Ireland and authorised by the Financial Regulator.
For investors in Belgium
Unless indicated otherwise, any decision to invest must be based solely on the information contained in the Company’s Prospectus, Key Investor Information Document and the latest half-yearly report and unaudited accounts and/or annual report and audited accounts copies of which can be obtained free of charge form the Fund’s Belgian Paying Agent (J.P.Morgan Europe Ltd, 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium). Investors should read the fund specific risks in the Key Investor Information Document and the
Company’s Prospectus.
For investors in Italy
Any application for shares in the funds is on the terms of the prospectus, Key Investor Information Document, for the Companies. The Shares of certain sub-funds in the Companies have been admitted to listing in Italy and are currently listed on the Mercato Telematico Fondi of Borsa Italiana S.p.A. The list of the sub-funds listed in Italy, the Prospectus, of the Companies, the Documento di quotazione of the iShares funds, the latest annual and semi annual report of the Companies are published (i) on the Companies’ internet website at the address www.iShares.com (ii) on the Irish Stock Exchange internet website at the address www.ise.ie and (iii) on Borsa Italiana S.p.A’s website at the address www.borsaitalia.it. These documents are available for the public in Italian version with certification that such documents are a faithful translation of the original documents. Investors are entitled to receive free of charge, even at home, a copy of the above documents, upon written request forwarded to the Companies. Investors should read the fund specific risks in the Key Investor Information Document and the Company’s Prospectus. For comprehensive information on the expenses charged to a fund and fees applicable to investors, see the Documento di quotazione and the Prospectus.
For investors in Israel
BlackRock Advisors (UK) Limited is not licensed under Israel’s Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995. No action has been or will be taken in Israel that would permit a public offering or distribution of the Funds mentioned in this document to the public in Israel. The Funds mentioned in this document have not been approved by the Israeli Securities Authority. In addition, the Funds mentioned in this document are not regulated under the provisions of Israel’s Joint Investment Trusts law, 5754-1994 (the “Joint Investment Trusts Law”). This document has not been approved by the Israel Securities Authority and will only be distributed to Israeli residents in a manner that will not constitute “an offer to the public” under sections 15 and 15a of the Israel Securities Law, 5728-1968 (the “Securities Law”) or section 25 of the Joint Investment Trusts Law, as applicable.
The document is being offered to those categories of investors listed in the First Addendum (the “Addendum”) to the Securities Law, (“Institutional Investors”); in all cases under circumstances that will fall within the private placement or other exemptions of the Joint Investment Trusts Law, the Securities Law and any applicable guidelines, pronouncements or rulings issued from time to time by the Israel Securities Authority. This document may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have been sent. Nothing in this document should be considered investment advice or investment marketing as defined in the Regulation of Investment Counselling, Investment Marketing and Portfolio Management Law, 5755-1995. This document does not constitute an offer to sell or solicitation of an offer to buy any securities, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person or persons to whom it is unlawful to make such offer or solicitation.
For investors in Spain
The funds mentioned are registered for public distribution in Spain the sales prospectus has been registered with the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores (‘CNMV’)). The funds which are registered in the official registry of the Spanish Securities and Exchange Commission (CNMV) are iShares plc (registration number 801), iShares II plc (registration number 802) and iShares III plc (registration number 806). In order to check which subfunds pertaining to the aforementioned funds are registered for public distribution in Spain, the official registry CNMV must be always previously checked. Any decision to invest must be based solely on the information contained in the Company’s Prospectus, Key Investor Information Document and the latest half-yearly report and unaudited accounts and/or annual report and audited accounts, copies of which can be obtained free of charge on the Companies’ internet website at the address www.iShares.es. Investors should read the fund specific risks in the Key Investor Information Document and the Company’s Prospectus.
For investors in Switzerland
This document is directed at ‘qualified investors’ only, as defined by Clause 10 (3) of the Swiss Act on Collective Investment Schemes (‘CISA’) and Clause 6 of the Swiss Ordinance on Collective Investment Schemes (‘CISO’). Certain of the funds are not registered with the Swiss Financial Supervisory Authority FINMA which acts as supervisory authority in investment fund matters. In respect of these funds, the shares or units of these funds may not be offered or distributed in or from Switzerland unless they are placed without ‘public solicitation’ as such term is defined under the practice of the FINMA from time to time. With respect to those funds that are registered, the FINMA has authorised The Swiss Financial Market Supervisory Authority FINMA has authorised BlackRock Asset Management Schweiz AG, Bahnhofstrasse 39, P.O. Box 2118, 8022 Zurich, to act as Swiss Representative and JPMorgan Chase Bank, National Association, Columbus, Zurich branch, Dreikönigstrasse 21, 8002 Zurich, to act as Swiss Paying Agent of the Company. The prospectus, Key Investor Information Document, the Articles of Incorporation, the latest and any previous annual and semi-annual reports of the Company are available free of charge from the Swiss representative. Investors should read the fund specific risks in the Key Investor Information Document and the Company’s Prospectus.
For investors in the UK Most of the protections provided by the UK regulatory system do not apply to the operation of the Companies, and compensation will not be available under the UK Financial Services Compensation Scheme on its default. The Companies are recognised schemes for the purposes of the Financial Services and Markets Act 2000. Any decision to invest must be based solely on the information contained in the Company’s Prospectus, Key Investor Information Document and the latest half-yearly report and unaudited accounts and/or annual report and audited accounts. Investors should read the fund specific risks in the Key Investor Information Document and the Company’s Prospectus.
Restricted Investors
This document is not, and under no circumstances is to be construed as an advertisement or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof, where the companies/securities are not authorised or registered for distribution and where no prospectus has been filed with any securities commission or regulatory authority. The companies/securities may not be acquired or owned by, or acquired with the assets of, an ERISA Plan.
Risk Warnings
Investment in the products mentioned in this document may not be suitable for all investors. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. The price of the investments may go up or down and the investor may not get back the amount invested. Your income is not fixed and may fluctuate. The value of investments involving exposure to foreign currencies can be affected by exchange rate movements. We remind you that the levels and bases of, and reliefs from, taxation can change.
BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. The data displayed provides summary information, investment should be made on the basis of the relevant Prospectus which is available from BlackRock Advisors (UK) Limited. In respect of the products mentioned this document is intended for information purposes only and does not constitute investment advice or an offer to sell or a solicitation of an offer to buy the securities described within. This document may not be distributed without authorisation from BlackRock Advisors (UK) Limited. The Dublin domiciled funds which include the term ‘swap’ in their names are swap based funds. Some of these funds enter into fully funded swap agreements with counterparties to obtain the performance of the funds’ respective benchmarks. Swap transactions are subject to the risk that counterparties may default on their obligations. If this were to occur, the relevant fund may sustain a loss. The funds intend to mitigate much of their credit risk exposure to each counterparty by obtaining collateral from the counterparty which will be held by a third party collateral agent. In the event of a default by a counterparty or collateral agent, the swap funds may still have some counterparty risk exposure to the defaulting counterparty or collateral agent respectively. In some circumstances, counterparties can terminate the swap agreements early which may impact the returns of the funds. In addition, the counterparties may seek to pass on any additional costs relating to the hedging of their risk exposure under the swaps to the relevant fund. In the event that a swap fund is unable to enter into suitable swap arrangements or maintain swap arrangements on acceptable terms, the fund may not be able to achieve its investment objective and policy unless it is able to track its benchmark by other means.
Source: ETFWorld.co.uk – iShares
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