CBSX Trader News Update CBSX to Add New Stocks for Trading

Transcription

1 July 21, 2009 IC CBSX Trader News Update CBSX to Add New Stocks for Trading TO: SUBJECT: Members BlackRock Exchange-Traded Funds Compliance and supervisory personnel should note that, among other things, this Information Bulletin discusses the need to deliver a prospectus to customers purchasing shares ( Shares ) of the thirty (30) exchange-traded funds ( Funds ) listed below issued by BlackRock. Please forward this Information Bulletin to other interested persons within your organization. The following securities have been approved for trading on CBSX: Exchange-Traded Funds Corporate High Yield Fund III Corporate High Yield Fund VI Corporate High Yield Fund Diversified Income Strategies Portfolio Floating Rate Income Strategies Fund Floating Rate Income Strategies Fund II BlackRock Global Opportunities Equity Trust BlackRock Defined Opportunity Credit Trust BlackRock High Income Shares BlackRock Limited Duration Income Trust Preferred Income Strategies Fund BlackRock High Yield Trust BlackRock Floating Rate Income Trust BlackRock Preferred Opportunity Trust BlackRock Broad Investment Grade 2009 Term Trust BlackRock Core Bond Trust Symbol CYE HYT COY DVF FRA FRB BOE BHL HIS BLW PSY BHY BGT BPP BCT BHK

2 EcoSolutions Investment Trust BQR BlackRock Strategic Bond Trust BHD BlackRock Enhanced Dividend Achievers Trust BDJ Enhanced Government Fund EGF Enhanced Capital and Income Fund CII BlackRock Income Opportunity Trust BNA Preferred and Corporate Income Strategies Fund PSW BlackRock Strategic Dividend Achievers Trust BDT BlackRock World Investment Trust BWC Corporate High Yield Fund V HYV BlackRock Insured Municipal Income Investment Trust BAF BlackRock Municipal Income Investment Trust BBF BlackRock Municipal Bond Trust BBK BlackRock California Insured Municipal Income Trust BCK Background Information on the Fund Blackrock (the Trust ) is a management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act ), consisting of several investment portfolios. This circular relates only to the Corporate High Yield Fund III, Corporate High Yield Fund VI, Corporate High Yield Fund, Diversified Income Strategies Portfolio, Floating Rate Income Strategies Fund, Floating Rate Income Strategies Fund II, BlackRock Global Opportunities Equity Trust, BlackRock Defined Opportunity Credit Trust,BlackRock High Income Shares, BlackRock Limited Duration Income Trust, Preferred Income Strategies Fund, BlackRock High Yield Trust, BlackRock Floating Rate Income Trust, BlackRock Preferred Opportunity Trust, BlackRock Broad Investment Grade 2009 Term Trust, BlackRock Core Bond Trust, EcoSolutions Investment Trust, BlackRock Strategic Bond Trust, BlackRock Enhanced Dividend Achievers Trust, Enhanced Government Fund, Enhanced Capital and Income Fund, BlackRock Income Opportunity Trust, Preferred and Corporate Income Strategies Fund, BlackRock Strategic Dividend Achievers Trust, BlackRock World Investment Trust, Corporate High Yield Fund V, BlackRock Insured Municipal Income Investment Trust, BlackRock Municipal Income Investment Trust, BlackRock Municipal Bond Trust, and BlackRock California Insured Municipal Income Trust (the Funds ). The shares of the Fund are referred to herein as Shares. BlackRock (the Adviser ) is the investment adviser to the Fund. The Corporate High Yield Fund III, Inc. seeks to provide shareholders with current income by investing primarily in a diversified portfolio of fixed income securities that are rated in the lower rating categories of the established rating services (Ba or lower by Moody's Investors Service, Inc., or BB or lower by Standard & Poor's Corporation) or are unrated securities of comparable quality.

3 The Corporate High Yield Fund VI, Inc. seeks to provide shareholders with current income by investing primarily in a diversified portfolio of fixed-income securities that are rated in the lower rating categories of the established rating services (Ba or lower by Moody's Investors Service, Inc. or BB or lower by Standard & Poor's Corporation) or are unrated securities of comparable quality. The Corporate High Yield Fund, Inc. primarily seeks to provide shareholders with current income, with a secondary objective of providing shareholders with capital appreciation. The fund seeks to achieve its objectives by investing primarily in a diversified portfolio of fixed-income securities that are rated below investment grade by the established rating services (Ba or lower by Moody's Investors Service, Inc., BB or lower by Standard & Poor's Ratings Services or BB or lower by Fitch, Inc.) or, if unrated, are considered to be of comparable quality. The Diversified Income Strategies Portfolio, Inc. seeks to provide investors with high current income by investing primarily in a diversified portfolio of floating rate debt securities and instruments, including floating or variable rate loans, bonds, preferred securities (including convertible preferred securities), notes or other debt securities or instruments that pay a floating rate of interest. The Floating Rate Income Strategies Fund, Inc. seeks a high current income and such preservation of capital as is consistent with investment in a diversified, leveraged portfolio consisting primarily of floating rate debt securities and instruments. The Floating Rate Income Strategies Fund II, Inc. seeks a high current income and such preservation of capital as is consistent with investment in a diversified, leveraged portfolio consisting primarily of floating rate debt securities and instruments. The BlackRock Global Opportunities Equity Trust, BOE, is a perpetual closed-end equity fund. BOE commenced operations in May 2005 with the investment objective of seeking current income and current gains, with a secondary objective of long-term capital appreciation. Under normal market conditions, the Trust will invest at least 80% of its total assets in equity securities or options on equity securities or indices or sectors of equity securities. Equity securities in which the Trust anticipates investing include common stocks, preferred stocks, convertible securities, warrants, depository receipts and equity interests in REITs. The Trust may invest in companies located anywhere in the world. The Trust may invest in companies of any size market capitalization and in companies conducting initial public offerings. The Trust may invest up to 25% of its total assets in equity securities of issuers in emerging countries. The Trust may invest up to 20% of its total assets in debt securities, including debt securities issued by

4 companies located in emerging markets. The Trust may invest up to 10% of its total assets in non-investment grade debt securities, commonly known as junk bonds. The BlackRock Defined Opportunity Credit Trust seeks high current income, with a secondary objective of long-term capital appreciation. Under normal market conditions, the Trust will invest at least 80% of its managed assets in any combination of the following credit securities: (i) senior secured floating rate and fixed rate loans, (ii) second lien or other subordinated or unsecured floating rate and fixed rate loans or debt, (iii) credit securities that are rated below investment grade by a nationally recognized credit rating organization or unrated credit securities that are deemed to be of comparable quality, which may include distressed and defaulted securities; and (iv) investment-grade corporate bonds. The Trust will terminate no later than December 31, Upon termination, the Trust will distribute substantially all of its net assets to shareholders. The Trust's investment objectives and policies are not designed to seek to return to investors that purchase shares in this offering their initial investment of $15.00 per common share on the termination date, and such investors and investors that purchase shares after the completion of this offering may receive more or less then their original investment upon termination. The BlackRock High Income Shares, HIS, is a perpetual closed-end taxable bond fund. HIS commenced operations in August 1988 with the investment objective of providing high current income and to a lesser extent capital appreciation, by investing in a diversified portfolio of below investment grade securities. The BlackRock Limited Duration Income Trust, BLW, is a taxable closed-end Trust. BLW commenced operations in July 2003 with the investment objective of providing current income and capital appreciation. BlackRock expects the Trust to maintain a duration of less than five years (including the effect of anticipated leverage), although the Trust's average duration may be longer at any time or from time to time depending on market conditions. The BlackRock Preferred Opportunity Trust, BPP, is a taxable closed-end Trust. BPP commenced operations in February 2003 with the investment objective of seeking high current income consistent with capital preservation through investment primarily in preferred securities. The Preferred Income Strategies Fund, Inc. seeks to provide shareholders with current income. The secondary objective of the fund is to seek to provide shareholders with capital appreciation. The fund seeks to achieve its objectives by investing primarily in a portfolio of preferred securities, including convertible preferred securities that may be converted into common stock or other securities of the same or a different issuer. The fund will also employ an active hedging

5 strategy to mitigate the risks of rising interest rates and rising costs of leverage. Over time, the hedge will vary from 0% to 100% of the portfolio. The BlackRock High Yield Trust, BHY, commenced operations in December 1998 with the investment objective to provide high current income and to a lesser extent capital appreciation, by investing in a diversified portfolio of below investment grade securities. The BlackRock Floating Rate Income Trust, BGT, is a perpetual closed-end taxable bond fund. BGT commenced operations in August 2004 with the investment objective of proving a high level of current income. As a secondary objective, BGT also seeks the preservation of capital to the extent consistent with its primary objective of high current income. The Trust pursues its investment objectives by investing in a global portfolio of primarily floating and variable rate securities. Under normal market conditions, BGT will invest at least 80% of its assets in floating and variable rate instruments of U.S. and non-u.s. issuers, including a substantial portion of its assets in senior, secured loans made to corporate and other business entities. The BlackRock Broad Investment Grade 2009 Term Trust, Inc., BCT, commenced operations in June 1993 with the investment objective to return $15 per share (the initial offering price) to investors on or about the end of December 2009 while providing high monthly income. The BlackRock Core Bond Trust, BHK, is a perpetual closed-end taxable investment grade bond fund. BHK commenced operations in November 2001 with the investment objective to provide high current income with the potential for capital appreciation. Under normal market conditions, the Trust will invest at least 75% of its total assets in bonds that are investment grade quality, or determined by the Adviser to be of equivalent credit quality at time of purchase. The Trust may invest up to 25% of its total assets in bonds that are rated, at the time of investment, Ba/BB or below by Moody's, S&P or Fitch or that are unrated but judged to be of comparable quality by BlackRock. The EcoSolutions Investment Trust's investment objective is to seek current income, current gains and long-term capital appreciation. The Trust seeks to achieve its investment objective by investing substantially all of its assets in equity securities issued by companies that are engaged in one or more of the new energy, water resources and agriculture business segments and utilizing an option strategy to enhance current gains. Under normal market conditions, the Trust will invest at least 80% of its total assets in equity securities issued by companies that are engaged in one or more of the new energy, water resources and agriculture business segments.

6 The BlackRock Strategic Bond Trust, BHD, is a perpetual closed-end taxable bond fund. BHD commenced operations in February 2002 with the investment objective to seek total return through high current income and capital appreciation. Under normal market conditions, the Trust will invest a significant portion of its total managed assets in bonds that are rated, at the time of investment, Ba/BB or below by Moody's, S&P or Fitch or that are unrated but judged to be of comparable quality by BlackRock. The BlackRock Enhanced Dividend Achievers Trust, BDJ, is a closed-end equity fund. BDJ commenced operations in August 2005 with the investment objective of seeking current income and current gains, with a secondary objective of longterm capital appreciation. Under normal market conditions, the Trust will invest at least 80% of its total assets in common stocks that are included in the universe of common stocks of issuers which Indxis has determined are Dividend Achievers and options with exposure to such stocks. From time to time, the Trust may invest up to 20% of its total assets in investments without exposure to the Dividend Achievers universe when, in the opinion of BlackRock, it is advantageous for the Trust to do so. As part of its investment strategy, the Trust intends to employ a strategy of writing (selling) covered call and put options on individual common stocks, indices of securities, sectors of securities and baskets of securities. This option strategy is intended to generate current gains from option premiums as a means to enhance distributions payable to the Trust's shareholders. The Enhanced Government Fund, Inc. seeks to provide shareholders with current income and gains. The fund seeks to achieve its investment objective by investing primarily in a portfolio of U.S. Government securities and U.S. Government Agency securities, including U.S. Government mortgage-backed securities, that pay interest in an attempt to generate current income, and by employing a strategy of writing (selling) call options on individual or baskets of U.S. Government securities, U.S. Government Agency securities or other debt securities held by the fund in an attempt to generate gains from option premiums. The Enhanced Capital and Income Fund, Inc. seeks to provide investors with a combination of current income and capital appreciation. The fund seeks to achieve its investment objective by investing primarily in a diversified portfolio of common stocks in an attempt to generate current income and by employing a strategy of writing (selling) call options on equity indexes in an attempt to generate gains from option premiums (the "Index Option Strategy"). Under the Index Option Strategy, the fund will write call options primarily on the S&P 500 Index but may from time to time write call options on other equity indexes as well.

7 The BlackRock Income Opportunity Trust, Inc., BNA, formerly The BlackRock North American Government Income Trust, Inc., commenced operations in December The Trust's investment objective is to provide current income and capital appreciation in a portfolio of primarily U.S. dollar-denominated securities. Prior to July 31, 2002, the Trust's objective was to provide high monthly income while preserve capital by investing in a portfolio of high quality Canadian and U.S. dollar-denominated securities. The Preferred and Corporate Income Strategies Fund, Inc. seeks to provide shareholders with high current income. The secondary objective of the fund is to seek to provide shareholders with capital appreciation. The fund seeks to achieve its objectives by investing primarily in a portfolio of preferred securities and debt securities, including convertible securities that may be converted into common stock or other securities of the same or a different issuer. The fund will also employ an active hedging strategy to mitigate the risks of rising interest rates and rising costs of leverage. Over time, the hedge will vary from 0% to 100% of the portfolio. The BlackRock Strategic Dividend Achievers Trust is a diversified closed-end management investment company. The Trust's investment objective is to provide total return through a combination of current income and capital appreciation by investing primarily in common stocks of small to mid-capitalization companies that pay above average dividends and have potential for capital appreciation. Under normal market conditions, the Trust will invest substantially all, but not less than 80%, of its total assets in common stocks that are included in Indxis's universe of "Dividend Achievers". To qualify as a "Dividend Achiever" an issuer must have raised its annual regular cash dividend, on a pre-tax basis, for at least each of the last ten consecutive calendar years. The BlackRock World Investment Trust, BWC, is a perpetual closed-end equity fund. BWC commenced operations in October 2005 with the investment objective of seeking current income, dividends and gains, with a secondary objective of long-term capital appreciation. Under normal market conditions, the Trust will invest at least 75% of its total assets in equity securities or options on equity securities or indices or sectors of equity securities. Equity securities in which the Trust anticipates investing include common stocks, preferred stocks, convertible securities, warrants, depository receipts and equity interests in REITs. The Trust may invest in preferred stocks and convertible securities of any rating. The Trust may invest up to 25% of its total assets in debt securities of issuers located anywhere in the world and including securities rated below investment grade. Debt securities in which the Trust anticipates investing include corporate bonds, U.S. government debt securities, non-u.s. government and supranational debt securities, mortgage-related securities and non-investment grade debt securities,

8 commonly known as "junk bonds". The Trust may invest in companies of any size market capitalization and in companies conducting initial public offerings. The Corporate High Yield Fund V, Inc. seeks to provide shareholders with current income by investing primarily in a diversified portfolio of fixed-income securities that are rated in the lower rating categories of the established rating services (Ba or lower by Moody's Investors Service, Inc., or BB or lower by Standard & Poor's Corporation) or are unrated securities of comparable quality. The BlackRock Insured Municipal Income Investment Trust (BAF) is a nondiversified perpetual closed-end management investment company. The Trust's investment objective is to provide shareholders with current income exempt from regular Federal income tax, including the Alternative Minimum Tax, and Florida intangible personal property tax. Under normal circumstances, the Trust invests at least 80% of its managed assets in municipal bonds that are insured as to principal and interest. Such municipal bonds will be insured by insurers or other entities with claims-paying abilities rated at least investment grade at time of investment and the Trust may invest in municipal obligations regardless of geographic location. The BlackRock Municipal Income Investment Trust (BBF) is a non-diversified perpetual closed-end management investment company. The Trust's investment objective is to provide shareholders with current income exempt from regular Federal income tax and Florida intangible personal property tax. Under normal circumstances, the Trust invests at least 80% of its total assets in municipal bonds that are investment grade quality, or determined by its investment advisor to be of equivalent credit quality at time of purchase. The Trust may invest in municipal obligations regardless of geographic location. The Trust may invest up to 20% of its total assets in municipal bonds that are rated, at the time of purchase, Ba/BB or B by Moody's, S&P or Fitch or that are unrated but judged to be of comparable quality by BlackRock. The BlackRock Municipal Bond Trust, BBK, is a perpetual closed-end municipal bond fund. BBK commenced operations in April 2002 with the investment objective to provide current income exempt from regular Federal income taxes. Under normal market conditions, the Trust will invest at least 80% of its total assets in municipal bonds that are investment grade quality, or determined by the Adviser to be of equivalent credit quality at time of purchase. The Trust may invest up to 20% of its total assets in municipal bonds that are rated, at the time of investment, Ba/BB or B by Moody's, S&P or Fitch or that are unrated but judged to be of comparable quality by BlackRock. The BlackRock California Insured Municipal Income Trust, BCK, is a perpetual closed-end municipal bond fund. BCK commenced operations in October 2002

9 with the investment objective to provide high current income exempt from regular Federal income taxes and California income taxes. The Trust will invest at least 80% of its total assets in municipal obligations that are insured as to the timely payment of both principal and interest. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. The leverage strategy of the Fund assumes a positive slope to the yield curve (short-term interest rates lower than long-term rates). Otherwise, the benefits of leverage will be reduced or eliminated completely. Investments in non-investment grade securities (high-yield bonds or junk bonds) may be subject to greater market fluctuations and risk of default or loss of income and principal than securities in higher rating categories. The Fund may utilize leveraging to seek to enhance the yield and net asset value of its common stock, as described in the Fund's prospectus. These objectives will not necessarily be achieved in all interest rate environments. The use of leverage involves risk, including the potential for higher volatility and greater declines of the Fund's net asset value, fluctuations of dividends and other distributions paid by the Fund and the market price of the Fund's common stock, among others. Closed-end funds, unlike open-end funds, are not continuously offered. Shares, once issued, are traded in the open market through a stock exchange. Shares of closed-end funds frequently trade at a discount to net asset value. The price of the Fund s shares is determined by a number of factors, several of which are beyond the control of the Fund. Therefore, the Fund cannot predict whether its shares will trade at, below or above net asset value. The NAV per Share for the Fund is computed by dividing the value of the net assets of the Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding. Expenses and fees are accrued daily and taken into account for purposes of determining NAV. The NAV of each Fund is determined each business day after the close of trading (ordinarily 4:00 p.m., Eastern Time or ET ) of the New York Stock Exchange. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources. The registration statement for the Funds describes the various fees and expenses for the Funds Shares. For a more complete description of the Funds and the underlying indexes, visit the Funds website at

10 Exchange Rules Applicable to Trading the Shares The Shares are considered equity securities, thus rendering trading in the Shares subject to the Exchange s existing rules governing the trading of equity securities. Principal Risks Interested persons are referred to the discussion in the prospectus for the Fund of the principal risks of an investment in the Fund. These include tracking error risk (factors causing the Fund s performance to not match the performance of the underlying index), market trading risk (for example, trading halts, trading above or below net asset value), investment style risk, sector risk, investment approach risk, non-diversification risk, issuer-specific risk, management risk, credit risk, interest rate risk, liquidity risk, derivatives risk and leveraging risk. Trading Hours The values of each index underlying the Shares are disseminated to data vendors every 15 seconds. The Shares will trade on the CBSX from 8:15 a.m. CT until 3:00 p.m. CT. The trading increment for the Fund s Shares will be $0.01. Extended Hours Trading Members are reminded that trading in the Fund s Shares prior to 8:30 a.m. may result in additional trading risks which include: (1) that the current underlying index value may not be updated, (2) the intraday indicative value may not be updated, (3) lower liquidity may impact pricing, (4) higher volatility may impact pricing, (5) wider spreads may occur, and (6), since the intraday indicative value is not calculated or widely disseminated, an investor who is unable calculate an implied value for an ETF in those sessions may be at a disadvantage to market professionals. Trading Halts The Exchange will halt trading in the Shares based on Rule 52.3 and/or because dissemination of the intraday indicative value of the Shares and/or the underlying value of the index has ceased. Suitability Members are reminded of their obligation under Rule 53.6 whereby the Member shall use due diligence to learn the essential facts relative to every customer prior to trading the Shares or recommending a transaction in the Shares that an

11 investment I the Shares is suitable for the customer. Members should adopt appropriate procedures for the opening and maintaining of accounts, including the maintaining of records prescribed by any applicable regulatory organization and by the rules and regulations of the Commission. Delivery of a Prospectus Consistent with the requirements of the Securities Act and the rules thereunder, investors purchasing Shares in the initial public offering and anyone purchasing Shares directly from a Fund (by delivery of the designated securities) must receive a Prospectus. In addition, Members are required to deliver a Prospectus to all purchasers of newly-issued Shares (i.e. during the initial public offering). Members purchasing shares from a Fund for resale to investors will deliver a Prospectus to such investors. Prospectuses may be obtained through the Fund s website. The Prospectus does not contain all of the information set forth in the Registration Statement (including the exhibits to the Registration Statement), parts of which have been omitted in accordance with the rules and regulations of the Commission. For further information about a Fund, please refer to the Registration Statement. In the event that a Fund relies upon an order by the Commission exempting the Shares from certain Prospectus delivery requirements under Section 24(d) of the 1940 Act and makes available a written product description, the Exchange requires that Members provide to all purchasers of Shares a written description of the terms and characteristics of such securities, in a form prepared by the Trust, no later than the time a confirmation of the first transaction in the Shares, is delivered to such purchaser. In addition, ETP Holders shall include such a written description with any sales material relating to the Shares that is provided to customers or the public. Any other written materials provided by a Member to customers or the public making specific reference to the Shares as an investment vehicle must include a statement in substantially the following form: A circular describing the terms and characteristics of Shares of the Fund has been prepared by the Trust and is available from your broker. It is recommended that you obtain and review such circular before purchasing Shares of the Fund. In addition, upon request you may obtain from your broker a prospectus for Shares of the Fund. An Member carrying an omnibus account for a non-member is required to inform such non-member that execution of an order to purchase Shares for such omnibus account will be deemed to constitute agreement by the non-member to make such written description available to its customers on the same terms as are directly applicable to Members under this rule.

12 Upon request of a customer, Members shall also provide a copy of the Prospectus. This Information Bulletin is not a statutory Prospectus. Members should consult the Trust s Registration Statement, SAI, Prospectus and the Fund s website for relevant information. Inquiries regarding this Information Bulletin should be directed to David Reed, CBOE Stock Exchange and CBSX are registered trademarks of CBOE Stock Exchange, LLC. CBOE and Chicago Board Options Exchange are registered trademarks of Chicago Board Options Exchange, Incorporated.

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