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FREQUENTLY ASKED QUESTIONS
Answers to some of the most commonly asked questions about iShares products and our website.
YOUR QUESTIONS ANSWERED
WEBSITE
Q. When is performance data available on BlackRock.com/CA?
A. Performance data is generally released on the 2nd business day of each month.
Q. Why does an external data provider have different performance numbers than what's listed on BlackRock.com/CA?
A. External data provider data may differ because external sources may be using a different return time period or return type (price return vs. total return).
BlackRock uses the NAV to calculate the fund performance on BlackRock.com/ca. Fund performance is calculated on a total return basis, which means that the calculation assumes that cash distributions made by the fund are reinvested.
Q. Where is the closing price on the fund overview page derived from?
A. The closing price listed on the overview page is the most recent official closing price from the exchange on which the ETF is listed.
DISTRIBUTIONS AND TAX
Q. Do iShares ETFs pay distributions?
A. As with most mutual funds, iShares ETFs distribute income and capital gains to unitholders. These distributions are taxable to investors, whether they are paid in cash or reinvested in the fund. Please check the individual fund product page on BlackRock.com/CA for specific distribution dates and tax information.
Your broker is responsible for determining whether to withhold tax on any distribution paid to you. Your broker is also responsible for providing all required tax reporting, including T3 tax slips. In Canada, BlackRock Canada provides brokerage firms with the information that they need to prepare your T3 tax slips (such as the proportionate share of distributions attributable to dividends, income, capital gains, return of capital or foreign tax withheld) through the facilities of CDS Clearing and Depository Services Inc. (CDS). This is different from a typical mutual fund, where the mutual fund company maintains investor accounts and provides tax reporting directly to unitholders. Any questions related to a T3 tax slips should be directed to your broker.
Q. What is the difference between cash distributions and reinvested distributions?
A. iShares ETFs may pay distributions to unitholders in cash or may reinvest the distribution amount in the fund. Generally, net income and dividends received by the iShares ETFs are distributed to unitholders in cash and net realized capital gains are reinvested in the ETF.
Similar to mutual funds, reinvested distributions are reinvested on the unitholder's behalf in additional units of the fund. With mutual funds, this results in an increase in the number of units held by each unitholder and a corresponding drop in net asset value (NAV) per unit, such that there is no change in the total value of the holdings resulting from the distribution. With iShares ETFs, immediately following a reinvested distribution, the number of units outstanding is consolidated so that the number of units held by investors is the same as before the capital gains distribution. For iShares funds, unitholders will not see an increase in the number of units held, and will NOT see a change in the NAV per unit. Therefore, like mutual funds, a reinvested distribution for an iShares ETF results in no change in the total value of the holdings resulting from the distribution.
For reinvested distributions for an iShares ETF, an investor can increase the adjusted cost base (ACB) of the iShares ETF by the amount of the reinvested distribution. This adjustment means that any gain realized on a subsequent sale of units will, in effect, be reduced by the amount of the distribution. In this way, you do not pay tax twice on the distribution. In many cases, your brokerage firm will automatically change the ACB to reflect reinvested distributions on iShares ETFs. However, not all brokerage firms provide this service. Please contact your broker for more information on their practices.
Note: From the above illustration, you can see the net effect is the same for both the iShares ETF and mutual fund for the book value, market value, unrealized gain and taxable amount of distribution although the end result is reached through a different process.
Q. Are iShares ETFs RSP eligible?
A. All iShares ETFs listed in Canada are eligible for RSPs, TFSAs, and other registered plans.
Q. What are the tax implications for non-resident investors in iShares ETFs?
A. The iShares ETFs were established for the benefit of Canadian resident investors. Therefore, BlackRock Canada does not determine the tax implications for non-resident investors in iShares funds. Non-resident investors should consult their broker or tax advisor to determine the implications of investing in iShares funds for their specific tax situation.
FIXED INCOME
Q. What is weighted average coupon?
A. The mean of the coupon rates of the underlying bonds in a portfolio.
Q. What is weighted average maturity?
A. The mean of the remaining term to maturity of the underlying bonds in a portfolio.
Q. What is the average yield to maturity?
A. Yield to Maturity (YTM) is the discount rate that equates the present value of a bond's cash flows with its market price (including accrued interest). The Fund Average YTM is the weighted average of the fund's individual bonds holdings' YTMs based upon Net Asset Value ("NAV"). The measure does not include fees and expenses.
Q. What is duration?
A. Duration measures the approximate sensitivity of a bond's price to a change in interest rates. A duration of 2, for example, means that the price of the bond would decrease/increase by approximately 2% if the interest rate increased/decreased by 1%.
OTHER
Q. What is the difference between iShares ETFs traded on the Toronto Stock Exchange and iShares Funds traded on other stock exchanges?
A. Various companies which form part of BlackRock, Inc. manage iShares funds that are traded on different exchanges in many countries around the world including Canada, the United States, Mexico, the United Kingdom, France, Italy, Germany, Spain and Hong Kong. The iShares funds which trade on the Toronto Stock Exchange and the Neo Exchange are managed by BlackRock Asset Management Canada Limited and are issued pursuant to a prospectus filed with Canadian regulators. iShares ETFs that trade on foreign exchanges are not issued under a prospectus filed in Canada but are registered and regulated according to the securities regulations in their own jurisdiction. BlackRock Asset Management Canada Limited does not promote the iShares funds traded on exchanges other than the Toronto Stock Exchange and the Neo Exchange.
Q. How are iShares funds different from mutual funds?
A. iShares ETFs offer many of the advantages of mutual funds, such as the ability to obtain exposure to broadly diversified asset classes through a single trade, combined with additional advantages that come from a fund that trades like a stock on an exchange. These additional advantages include the ability to trade iShares ETFs on an exchange throughout the day, utilizing trading strategies such as limit or stop orders or trading on margin, low costs and transparency.
The following chart illustrates the difference between iShares ETFs and traditional mutual funds:
Q. Do iShares ETFs charge redemption fees?
A. There are no redemption fees when iShares ETFs are sold on the exchange. Only customary brokerage fees and other transactional fees apply. When iShares ETFs are redeemed directly from a fund certain discounts or fees apply. See the individual iShares ETFs fund prospectuses for details. Because investors will generally be able to sell iShares ETFs at the market price on the exchange through a registered broker or dealer, subject only to customary brokerage commissions, investors are advised to consult their brokers, dealers or investment advisors before redeeming iShares ETFs.
