Pro Update Notice_C (HK).indd

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action to be taken you should consult your stockbroker, bank manager, solicitor, accountant, relationship manager or other professional adviser immediately. BLACKROCK GLOBAL FUNDS (the Company ) Registered office: 2-4, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg R.C.S. Luxembourg B BlackRock Global Funds Asian Tiger Bond Fund 2. BlackRock Global Funds Emerging Europe Fund 3. BlackRock Global Funds Emerging Markets Bond Fund 4. BlackRock Global Funds Emerging Markets Equity Income Fund 5. BlackRock Global Funds Emerging Markets Fund 6. BlackRock Global Funds Euro Reserve Fund 7. BlackRock Global Funds Global Equity Fund 8. BlackRock Global Funds Global Equity Income Fund 9. BlackRock Global Funds Global SmallCap Fund 10. BlackRock Global Funds India Fund 11. BlackRock Global Funds Local Emerging Markets Short Duration Bond Fund 12. BlackRock Global Funds US Dollar Reserve Fund 13. BlackRock Global Funds World Resources Equity Income Fund (each a Fund and together the Funds ) Dear Shareholder, 8 February 2013 The Board of Directors is writing to you to advise you of a number of changes that it proposes to make to the Funds. All changes set out in this letter will take effect on 21 March 2013 (the Effective Date ) and will be reflected in the new Hong Kong offering documents of the Company. This letter forms notice to Shareholders affected by these changes.

2 1. Notice of Important Fund-Specific Changes 1.1 Change relating to Emerging Europe Fund, Emerging Markets Bond Fund, Emerging Markets Equity Income Fund, Emerging Markets Fund, Global SmallCap Fund and Local Emerging Markets Short Duration Bond Fund Change to the definition of developing and emerging markets or countries The definition of developing and emerging markets or countries in the Investment Objectives & Policies section of the Prospectus will be clarified to better reflect how the emerging markets funds within the Company are managed. As developing or emerging markets and countries encompass a population which is constantly changing, the Directors have determined that a broader definition in the Prospectus, rather than a definition which makes reference to a specific index, would be more appropriate. This change will not affect the way the Funds are managed. The amended definition of developing and emerging markets or countries can be found in Appendix A attached. A brief description of the investment objective and policy of the Funds referred to in this section 1.1 can be found in Appendix B attached. 1.2 Change relating to Emerging Markets Equity Income Fund, Emerging Markets Fund, Global Equity Fund, Global Equity Income Fund and Global SmallCap Fund Change to the definition of developed markets and developed countries The definition of developed markets and developed countries in the Investment Objectives & Policies section of the Prospectus will be clarified to better reflect how the funds within the Company which invest in developed markets and countries are managed. As developed markets and countries encompass a population which is constantly changing, the Directors have determined that a broader definition in the Prospectus, rather than a definition which makes reference to a specific index, would be more appropriate. This change will not affect the way the Funds are managed. The amended definition of developed markets and developed countries can be found in Appendix A attached. A brief description of the investment objective and policy of the Funds referred to in this section 1.2 can be found in Appendix B attached. 1.3 Emerging Markets Bond Fund From the Effective Date, the Fund will adopt a revised investment approach in order to better position the strategy to provide a more balanced investment solution for Shareholders in respect of the extent to which the Fund may invest in any single country. 2

3 As part of this repositioned strategy, the existing benchmark for the Fund, the JP Morgan Emerging Markets Bond Index Global, will be replaced by the JP Morgan Emerging Markets Bond Index Global Diversified Index. Both indices are emerging market sovereign/quasi-sovereign benchmarks with an approximate weighting of 60% in investment grade bonds and 40% in high yield bonds. However, the existing benchmark does not limit the weighting of a single country and therefore such index may be dominated by a few individual countries (which, for example, might be highly-indebted and/or debt-dependent countries). The Directors propose to move to a benchmark that caps the weight of a single country to ensure that the Fund s benchmark is sufficiently diversified. The new benchmark, the JP Morgan Emerging Markets Bond Index Global Diversified Index, caps the weight of exposure to any one index country to no more than 10% of the total index and this should result in the Fund having a more diversified benchmark. Further, the new benchmark index has become the industry standard benchmark for such funds, used by the majority of asset managers. There will be no change in the overall risk profile of the Fund as a result of this change of benchmark. This change may result in a more diversified portfolio. The change will take effect on the Effective Date. For the avoidance of doubt, the Directors consider that the repositioned strategy is consistent with the name, investment objective and policy of the Fund, as currently set out in the Hong Kong offering documents, and that accordingly only the change of benchmark will be reflected in the Hong Kong offering documents (where it is stated in the context of a risk management benchmark). A brief description of the investment objective and policy of the Fund can be found in Appendix B attached. 1.4 India Fund From the Effective Date, the Fund will adopt an alternative benchmark index. The existing benchmark, the S&P IFC Emerging Markets Investible India Index, will be replaced by the MSCI India Index. The benchmarks are very similar, however, the existing benchmark currently has over 200 constituents whilst the new benchmark currently has fewer than 100 constituents. The new benchmark also has a slightly higher percentage of holdings in large-cap companies. When the Fund was first launched, the existing benchmark was deemed appropriate when compared with competitor funds of that time. Today, there is a much broader competitor universe and the majority of India dedicated funds use the MSCI India Index as their benchmark. Accordingly, the MSCI India Index is, in the Director s opinion, a more appropriate benchmark for the Fund which will enable investors to better compare the performance of the Fund with other India dedicated funds. For the avoidance of doubt this change of benchmark will not affect the way in which the Fund is managed and Shareholders will be unaffected by the change. There will be no change to the investment strategy, portfolio or the overall risk profile of the Fund. The change of benchmark will take effect on the Effective Date and will be reflected in the updated Prospectus (where it is stated in the context of a risk management benchmark). A brief description of the investment objective and policy of the Fund can be found in Appendix B attached. 3

4 1.5 Local Emerging Markets Short Duration Bond Fund (to be renamed Emerging Markets Local Currency Bond Fund ) The investment policy of the Fund will be amended to remove the current restriction on the Fund to only invest in fixed income transferable securities with a duration of less than five years and to have an average duration across the portfolio of not more than two years. Duration is a measure of the average time it takes the Fund to get its return (both capital and income) on the investments it holds. This revised investment approach will allow the Fund to invest in fixed income transferable securities of all durations and the average duration of the Fund s portfolio will increase accordingly. This is also expected to have the effect of increasing the Fund s overall risk profile as longer-term bonds generally have a greater exposure to interest rate changes than shorter-term bonds. The Directors consider that the repositioned strategy will provide greater investment opportunities and potential for greater return. In conjunction with the changes being made to the investment policy of the Fund, the Directors consider that to reflect the repositioned strategy, the name of the Fund and the benchmark of the Fund should also be updated. The existing benchmark, the JP Morgan Emerging Local Markets Plus Index, will be replaced by the JP Morgan GBI-EM Global Diversified Index. The existing benchmark tracks total return for emerging market local currency money market instruments whilst the new benchmark tracks total return for emerging market local currency government bonds. With the growth of the local currency government bond market, which now accounts for well over half the emerging market debt universe, the Directors consider that the new benchmark provides a better reflection of the current emerging market debt universe and is therefore a more suitable benchmark for the Fund. These changes will take effect on the Effective Date. All changes being made in relation to this Fund will be reflected in the updated Hong Kong offering documents, including the change of benchmark (where it is stated in the context of a risk management benchmark). The amended name and investment policy for the Fund can be found in Appendix C attached. 1.6 World Resources Equity Income Fund (to be renamed Natural Resources Growth & Income Fund ) The wording of the investment objective of the Fund will be amended to better reflect the nature of returns from investment in the natural resources sector. The Fund s investment strategy has the potential to produce long term capital growth as well as an above average income from its investments. The proposed change to the wording of the investment objective for the Fund will make it clearer that the objective of the Fund is also to achieve capital growth. There will be no change to the investment policy of the Fund. In conjunction with the change being made to the investment objective of the Fund, the Directors consider that the name of the Fund should also be updated. For the avoidance of doubt these changes will not affect the way in which the Fund is managed and Shareholders will be unaffected by the changes. There will be no change to the investment strategy or the overall risk profile of the Fund and the benchmark will also remain unchanged. These changes will take effect on the Effective Date. The changes being made in relation to this Fund will be reflected in the updated Hong Kong offering documents. The amended name and investment objective wording for the Fund can be found in Appendix C attached. 4

5 1.7 BGF Euro Reserve Fund and BGF US Dollar Reserve Fund (collectively, BGF Reserve Funds ) Given the low interest rate environment currently experienced in the US, Europe and UK, the BGF Reserve Funds are producing comparatively low gross (before expenses) yields. The net (after expenses) yield for many of the Shares is now negative, or at risk of being negative if the low interest rate environment continues. BlackRock has therefore made a decision that, at its discretion, it may apply a management fee waiver to the BGF Reserve Funds in order to mitigate the risk of the BGF Reserve Funds experiencing negative net fund yields. Although the management fee waiver will aim to avoid a negative net fund yield on all Shares of the BGF Reserve Funds, investors should note that the management fee waiver applied may not always be sufficient to avoid a negative return to the investors. In order to achieve these aims, the amount of management fee waiver applied to a particular Share Class may fluctuate from day to day and may be discontinued at any time. 1.8 Enhanced disclosure relating to the Funds exposure to non-investment grade sovereign debt The Investment Objectives and Policies section of the Prospectus in place at the Effective Date will include enhanced disclosure relating to the Funds exposure to non-investment grade sovereign debt. The disclosure will set out which of the Funds, as at the date of the Prospectus, may invest more than 10% of their net asset value in debt securities issued and/or guaranteed by governments in each of the relevant countries which are rated non-investment grade. This amendment to the Hong Kong offering documents is for the purposes of enhanced disclosure only and will not affect the way the Funds are managed. The enhanced disclosure wording can be found in Appendix D attached. 2. Action to take If you are a Shareholder in any of the Funds listed above, you need take no action if you are content with the changes to be made to the Fund(s). Alternatively you may either convert your holding into another of the Company s Funds which is authorised by the SFC for sale to the public in Hong Kong* without charge or redeem your holding (in accordance with the procedure in the Prospectus and IRHK) without charge at any time up to the Effective Date as applicable (although you should note that any contingent deferred sales charge charged by distributors may apply) or any such other date when the specific change will become effective as per above. Your conversion will be effected no later than the Dealing Day following receipt of your instruction. Redemption proceeds will be sent to you on the third business day following your instruction provided that all necessary payment instructions have been received in writing and you have provided various identification documents. Details of the documents required are available from the local Investor Servicing team. * The SFC s authorisation is not a recommendation or endorsement of the Fund nor does it guarantee the commercial merits or performance of the Fund. It does not mean the Fund is suitable for all investors nor is it an endorsement of the Fund s suitability for any particular investor or class of investors. 5

6 Investors should, however, consult their financial or other professional advisers on the possible tax or other consequences of buying, holding, transferring, switching, converting, redeeming or otherwise dealing in the Company s Shares under the laws of their countries of residence, citizenship and domicile. 3. Directors responsibility The Board of Directors of the Company accepts responsibility for this letter and the information contained in it. To the best of the knowledge and belief of the Board of Directors (who have taken all reasonable care to ensure that this is the case) the information contained in this letter is in accordance with the facts and does not omit anything likely to affect the impact of such information. 4. New Hong Kong offering documents All of the changes set out above will be reflected in the updated Hong Kong offering documents which will be available from BlackRock (Hong Kong) Limited from the Effective Date. For the avoidance of doubt, capitalised terms used in this letter shall bear the meaning set out in the Hong Kong offering documents. If you would like any further information, please contact BlackRock (Hong Kong) Limited at 16/F Cheung Kong Center, 2 Queen s Road Central, Hong Kong or by telephone on Your faithfully, Nicholas C. D. Hall Chairman 6

7 APPENDIX A AMENDMENT TO THE DEFINITION OF DEVELOPING AND EMERGING MARKETS AND COUNTRIES AND AMENDMENT TO THE DEFINITION OF DEVELOPED MARKETS AND DEVELOPED COUNTRIES AS REFERRED TO IN SECTIONS 1.1 and 1.2 CURRENT WORDING IN THE INVESTMENT OBJECTIVES AND POLICIES SECTION OF THE PROSPECTUS REVISED WORDING Where an individual investment policy of a Fund refers to investment in developed markets or developed countries the Fund may invest in markets or countries contained in the MSCI World Index for Equity Funds or the JP Morgan Government Bond Index Broad for Bond Funds. Accordingly any reference to developing or emerging markets or countries is to markets or countries not contained in the applicable index. Where reference is made to developed markets or countries these are typically markets or countries which, on the basis of criteria such as economic wealth, development, liquidity and market accessibility are considered as more advanced or mature markets or countries. The markets and countries which may be classified as developed for a Fund are subject to change and may include, though are not limited to, countries and regions such as Australia, Canada, Japan, New Zealand, United States of America and Western Europe. Where reference is made to developing or emerging markets or countries, these are typically markets of poorer or less developed countries which exhibit lower levels of economic and/or capital market development. The markets and countries which may be classified as developing or emerging for a Fund are subject to change and may include, though are not limited to, any country or region outside of Australia, Canada, Japan, New Zealand, United States of America and Western Europe. 7

8 APPENDIX B INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS Emerging Europe Fund The Emerging Europe Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, emerging European countries. It may also invest in companies domiciled in and around, or exercising the predominant part of their economic activity in and around, the Mediterranean region. Emerging Markets Bond Fund The Emerging Markets Bond Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in the fixed income transferable securities of governments and agencies of, and companies domiciled or exercising the predominant part of their economic activity in, emerging markets. The Fund may invest in the full spectrum of available securities, including non-investment grade. Currency exposure is flexibly managed. Emerging Markets Equity Income Fund The Emerging Markets Equity Income Fund seeks an above average income from its equity investments without sacrificing long term capital growth. The Fund invests globally at least 70% of its total assets in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, emerging markets. Investment may also be made in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, developed markets that have significant business operations in emerging markets. This Fund distributes income gross of expenses. Emerging Markets Fund The Emerging Markets Fund seeks to maximise total return. The Fund invests globally at least 70% of its total assets in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, emerging markets. Investment may also be made in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, developed markets that have significant business operations in emerging markets. Global SmallCap Fund The Global SmallCap Fund seeks to maximise total return. The Fund invests globally at least 70% of its total assets in the equity securities of smaller capitalisation companies. Smaller capitalisation companies are considered companies which, at the time of purchase, form the bottom 20% by market capitalisation of global stock markets. Although it is likely that most of the Fund s investments will be in companies located in developed markets globally, the Fund may also invest in the emerging markets of the world. Currency exposure is flexibly managed. Global Equity Fund The Global Equity Fund seeks to maximise total return. The Fund invests globally at least 70% of its total assets in equity securities. At least 51% of total assets will be invested in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, developed markets. 8

9 Global Equity Income Fund The Global Equity Income Fund seeks an above average income from its equity investments without sacrificing long term capital growth. The Fund invests globally at least 70% of its total assets in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, developed markets. This Fund distributes income gross of expenses. Currency exposure is flexibly managed. Local Emerging Markets Short Duration Bond Fund Please refer to Appendix C. India Fund The India Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in, India. (The Fund may invest through its Subsidiary). World Resources Equity Income Fund Please refer to Appendix C. 9

10 APPENDIX C AMENDMENT TO THE NAME, INVESTMENT OBJECTIVE AND POLICY OF THE LOCAL EMERGING MARKETS SHORT DURATION BOND FUND, AS REFERRED TO IN SECTION 1.5 CURRENT WORDING IN THE INVESTMENT OBJECTIVES AND POLICIES SECTION OF THE PROSPECTUS The Local Emerging Markets Short Duration Bond Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in local currencydenominated fixed income transferable securities with a duration of less than five years issued by governments and agencies of, and companies domiciled or exercising the predominant part of their economic activity in, emerging markets. The average duration is not more than two years. The full spectrum of available securities, including non-investment grade, may be utilised. Currency exposure is flexibly managed. REVISED WORDING The Emerging Markets Local Currency Bond Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in local currency-denominated fixed income transferable securities with a duration of less than five years issued by governments and agencies of, and companies domiciled or exercising the predominant part of their economic activity in, emerging markets. The average duration is not more than two years. The full spectrum of available securities, including non-investment grade, may be utilised. Currency exposure is flexibly managed. AMENDMENT TO THE NAME AND INVESTMENT OBJECTIVE OF THE WORLD RESOURCES EQUITY INCOME FUND, AS REFERRED TO IN SECTION 1.6 CURRENT WORDING IN THE INVESTMENT OBJECTIVES AND POLICIES SECTION OF THE PROSPECTUS REVISED WORDING The World Resources Equity Income Fund seeks an above average income from its equity investments. The Fund invests at least 70% of its total assets in the equity securities of companies whose predominant economic activity is in the natural resources sector, such as, but not limited to, companies engaged in mining, energy and agriculture. The Fund makes use of derivatives in a way that may be significant to its investment objective in order to generate additional income. The Fund distributes income gross of expenses. The Natural Resources Growth & Income Fund seeks to achieve capital growth and an above average income from its equity investments. The Fund invests at least 70% of its total assets in the equity securities of companies whose predominant economic activity is in the natural resources sector, such as, but not limited to, companies engaged in mining, energy and agriculture. The Fund makes use of derivatives in a way that may be significant to its investment objective in order to generate additional income. The Fund distributes income gross of expenses. 10

11 APPENDIX D ENHANCED DISCLOSURE RELATING TO THE FUNDS INVESTMENT IN NON-INVESTMENT GRADE SOVEREIGN DEBT, AS REFERRED TO IN SECTION 1.8 It is anticipated that the following Funds, as set out in the table below, may invest more than 10% of their Net Asset Value in debt securities issued and/or guaranteed by governments in each of the relevant countries which, as at the date of the Prospectus, are rated non-investment grade. Investors should note that whilst this table sets out the expected maximum exposure to these countries, these figures are not indicative of the Funds current holdings in these countries which may fluctuate. Asian Tiger Bond Fund The objective of the Fund is to gain exposure to the debt securities of issuers within the Asian Tiger countries. This includes exposure to debt securities issued by governments, public or local authorities of Asian Tiger countries, some of which may be rated non-investment grade. Applicable to: Indonesia and the Philippines only The Fund is expected to invest more than 10% (but no more than 35%) of its Net Asset Value in debt securities issued by and/or guaranteed by governments in each of the above countries, which are, as at the date of this Prospectus, rated noninvestment grade. Due to market movements, as well as credit/investment rating changes, the exposure may change over time. The above countries are for reference only and may change without prior notice to the investors. As at the date of this Prospectus, the government bond markets of the above countries each account for a significant weight of the emerging market bond universe within the Fund s benchmark, the JP Morgan Asian Credit Index. Although this Fund is not an index-tracking fund, the investment manager will take into account the constituent weighting of the benchmark when making investment decisions, and hence may invest more than 10% of the Fund s Net Asset Value in each of these countries. Emerging Markets Bond Fund The objective of the Fund is to gain exposure to debt securities issued by governments, public or local authorities of emerging market countries which, by their nature, are more likely to be rated non-investment grade than developed market countries. Applicable to: Indonesia, the Philippines, Turkey, Ukraine, and Venezuela only The Fund is expected to invest more than 10% (but no more than 20%) of its Net Asset Value in debt securities issued by and/or guaranteed by governments in each of the above countries, which are, as at the date of this Prospectus, rated noninvestment grade. Due to market movements, as well as credit/investment rating changes, the exposures may change over time. The above countries are for reference only and may change without prior notice to the investors. 11

12 Applicable to: Indonesia, the Philippines, Turkey, and Venezuela only As at the date of this Prospectus, the government bond markets of the above countries each account for a significant weight of the emerging market bond universe within the Fund s benchmark, the JP Morgan Emerging Markets Bond Index Global.* Although this Fund is not an index-tracking fund, the investment manager will take into account the constituent weighting of the benchmark when making investment decisions, and hence may invest more than 10% of the Fund s Net Asset Value in each of these countries. Applicable to: Ukraine The investment manager may deem that it is in the interests of investors to hold more than 10% in debt securities issued by the Ukraine government should the economics of the Ukrainian bond market prove compelling, for example, due to increased expected demand for Ukraine government bonds as a result of positive re-ratings. Local Emerging Markets Short Duration Bond Fund^ The objective of the Fund is to gain exposure to debt securities issued by governments, public or local authorities of emerging market countries which, by their nature, are more likely to be rated non-investment grade than developed market countries. Applicable to: Hungary, Indonesia and Turkey only The Fund is expected to invest more than 10% (but no more than 20%) of its Net Asset Value in debt securities issued by and/or guaranteed by governments in each of the above countries, which are, as at the date of this Prospectus, rated noninvestment grade. Due to market movements, as well as credit/investment rating changes, the exposure may change over time. The above countries are for reference only and may change without prior notice to the investors. As at the date of this Prospectus, the government bond markets of the above countries each account for a significant weight of the emerging market bond universe within the Fund s benchmark, the JP Morgan Emerging Local Markets Plus Index. # Although this Fund is not an index-tracking fund, the investment manager will take into account the constituent weighting of the benchmark when making investment decisions, and hence may invest more than 10% of the Fund s Net Asset Value in each of these countries. It is not anticipated that any of the Funds, other than those set out in the table above, will invest more than 10% of their Net Asset Value in debt securities issued and/or guaranteed by governments of any single country which are rated non-investment grade at the date of the Hong Kong offering documents. In the event that the debt securities issued and/or guaranteed by the government of a country which any of the Funds invest in are downgraded to non-investment grade following the date of the Prospectus, the relevant Fund may, subject to its investment objective and policy, invest more than 10% of its Net Asset Value in those securities and the table set out above will be updated accordingly in the next update to the Hong Kong offering documents. * From the Effective Date the benchmark of the Fund will be JP Morgan Emerging Markets Bond Index Global Diversified Index. References in this section to the benchmark are relevant for both benchmarks. ^ From the Effective Date the name of the Fund will be Emerging Markets Local Currency Bond Fund. # From the Effective Date, the benchmark of the Fund will be JP Morgan GBI-EM Global Diversified Index. References in this section to the benchmark are relevant for both benchmarks. 12

13 2-4, rue Eugène Ruppert, L-2453 Luxembourg, Grand Duchy of Luxembourg R.C.S. Luxembourg B

14 A 1.1B 1.2 A 1.2B 1.3 2

15 60%40% 10% B 1.4 IFC B 3

16 1.5 Plus C 1.6 C 4

17 % D 2. * * 5

18 Nicholas C. D. Hall 6

19 A MSCI 7

20 B 70% 70% 70% 70% 70% 20% 70% 51% 8

21 70% C 70% C 9

22 C % 70% % 70% 10

23 D % 10%35% 10% 10%20% 11

24 * 10% 10% ^ 10%20% Plus # 10% 10% 10% * ^ # 12