AN iSHARES ETF UPDATE ON THE RUSSIA-UKRAINE CRISIS

BlackRock notified shareholders on 20 May 2022 that the following iShares UCITS ETFs with Russian exposures would be terminated.

• iShares MSCI Eastern Europe Capped UCITS ETF | IEER
• iShares MSCI Russia ADR/GDR UCITS ETF | CSRU

Both of these funds had already been suspended from trading. A further notification to shareholders in relation to the closure process was made on 16 June 2022.

Due to Russia’s invasion of Ukraine, normal market trading conditions have remained materially impaired and a significant portion of Russian securities are not tradeable for investors outside Russia.

As a result, BlackRock considers it has acted in the interests of shareholders in closing IEER and CSRU.

In terminating the funds, BlackRock is seeking to protect the value of the funds’ Russian holdings by making disposals in an orderly way to try and return proceeds to shareholders if any value can be realised.

No; there are no elections or actions required of shareholders. BlackRock will endeavour to dispose of the funds’ remaining assets and return the proceeds (if any) to shareholders that were on the register (maintained by each fund’s registrar) when the closure was announced without any additional information or action required from or by investors.

As disclosed in the prospectuses of the funds, BlackRock may, in good faith and based on available information, determine an asset’s fair value using a variety of methodologies. This process is carried out according to formal pricing policies.

Given the continued market closure for non-local investors and current illiquidity of Russian securities held by non-local investors, BlackRock Pricing Committees are applying fair valuation approaches for those securities. It is important to note, however, that given the nature of those investments, determinations as to their fair value may not represent the actual amount that will be realised upon their eventual disposal. The Pricing Committees review market and trading data, including trading data on several government bonds, depositary receipts and ETFs on a daily and intra-day basis, and may use other sources of data and proxies as the situation changes.

BlackRock seeks to determine in good faith the price that might reasonably be expected to be received from the current sale of that asset in an orderly, arm's-length transaction, when determining the fair value of an asset. BlackRock’s Pricing Committees have been reviewing the valuation of Russian assets with restrictions for non-local investors and ADRs and GDRs listed on international Exchanges that are not trading, and these are currently priced at nominal values.

As a shareholder in either CSRU or IEER on 20 June 2022 (the Termination Start Date), shares entitled owners to a pro rata share of cash and readily realisable (that is, non-Russian) assets were held by either fund, net of expenses and estimated anticipated transaction-related expenses (including any duties and charges and costs of conversion of the depositary receipts).

The Russian securities will be liquidated at some point in the future, if this is possible, practicable and appropriate, in order to return any residual net proceeds to investors (the entitlement to which will be based on the shareholder register as at the Termination Start Date).

Shares of the two funds will be retained on the funds’ shareholder register and cancelled later; shareholders will be notified in advance of such cancellation date.

Given that the return of liquidation proceeds to shareholders may be over a prolonged period, retaining the shares of the funds on the shareholder registers until later in the termination process should be helpful to investors in evidencing their entitlement to potential future payments (if there are any) and may help intermediaries maintain their records of the beneficial owners of the shares of the funds for longer.

Shareholders were informed of the closure on 20 May 2022 and the funds have been in termination since 20 June 2022. The product pages on us ishares.com website have consequently been removed as the funds are no longer tradeable.

For IEER, net realisable proceeds from the non-Russian holdings have already been returned to investors however, the Russian securities will remain in the fund until such time as it is possible, practicable and appropriate (in the investment manager’s view) to liquidate each of the positions.

For CSRU, net realisable proceeds have already been returned to investors, however, the Russian securities will remain in the fund until such time as it is possible, practicable and appropriate (in the investment manager’s view) to liquidate each of the positions.

The funds are in the process of termination and shares in them can no longer be traded or redeemed.

BlackRock has informed shareholders that it may take a substantial amount of time before shareholders receive proceeds (if any) from the disposal of Russian securities.

Restrictions on trading of Russian securities by non-local investors as well as global sanctions on Russian entities will delay liquidation of that portion of IEER’s portfolio, and CSRU’s holdings.

Due to political and market uncertainties and the fact that it is not possible to predict the optimal time for selling the Russian securities or whether certain securities can be sold at all, there is no guarantee that optimal value, or any value at all, can be achieved from the Russian securities. An assessment will be made based on information available to the investment manager at the relevant time.

Shareholders will be sent their share of net proceeds (if there are any) from the sale of any remaining assets on subsequent settlement dates, as and when the Russian securities can be realised and the proceeds, to the extent there are any, can be repatriated and distributed.

BlackRock has discretion in facilitating the disposal of the Russian securities, which will be assessed based on multiple factors including, but not limited to, legal restrictions, liquidity, spreads, international investor access, volume and volatility.

Shareholders will be sent their share of the net proceeds (if any) from the sale of any remaining assets on subsequent settlement dates, as and when the Russian securities can be realised and the proceeds, to the extent there are any, can be repatriated and distributed.

Shares of the funds will be retained on the fund's shareholder register and cancelled later of which shareholders will be notified in advance.

Given that the return of liquidation proceeds to shareholders may be over a prolonged period, retaining the shares of the funds on the shareholder registers until later in the termination process should be helpful to investors in evidencing their entitlement to potential future payments (if there are any).

In compliance with applicable law and under appropriate market conditions, BlackRock will implement an orderly disposal of Russian securities in line with our fiduciary duties and respective fund investment objectives. BlackRock will assess market conditions based on multiple factors including, but not limited to, legal restrictions, liquidity, spreads, international investor access, volume and volatility.

BlackRock will continue to monitor the market situation and shareholders will be notified of any material updates.

Shareholders should continue receiving shareholder letters ahead of any future payments that will inform them of any proceeds ahead of receipt.

BlackRock will also endeavour to publish any future shareholder letters and notifications on this website.

As the funds are in termination, NAVs will not be published for these funds.

We continue to engage with market participants and issuers on the conversion of ADRs and GDRs to local Russian shares and are making progress.  Conversion of some ADRs / GDRs may be prevented by factors such as sanctions, corporate actions and lot sizes.  Due to political and market uncertainties there is no guarantee that optimal value, or any value at all, can be achieved from the resulting Russian securities. 

BlackRock  will aim, where possible, practicable and appropriate, to update the holdings of both funds iShares MSCI Russia ADR/GDR UCITS ETF and the iShares MSCI Eastern Europe Capped UCITS ETF on a quarterly basis and publish on this webpage going forward.   

Shareholders will be sent their share of net proceeds (if there are any) from the sale of any remaining assets on subsequent settlement dates, as and when the Russian securities can be realised and the proceeds, to the extent there are any, can be repatriated and distributed. 

BlackRock  will aim, where possible, practicable and appropriate, to update the holdings of both funds iShares MSCI Russia ADR/GDR UCITS ETF and the iShares MSCI Eastern Europe Capped UCITS ETF on a quarterly basis and publish on this webpage going forward.  

Investment vehicles in jurisdictions classified by Russia as “unfriendly”, e, g. Irish domiciled funds, will have any dividends paid into restricted RUB (Type S) cash accounts. Currently, these accounts are not accessible to non-local  investors. 

BlackRock will continue to monitor the market situation and shareholders will be notified of any material updates to market conditions pertaining to the Russian securities or the relevant holding accounts and cash accounts.  

Shareholders should not expect to receive dividends from this fund as the fund is in termination. Shareholders will be sent their share of net proceeds (if there are any) from the sale of any remaining assets on subsequent settlement dates, as and when the Russian securities can be realised and the proceeds, to the extent there are any, can be repatriated and distributed. 

The annual reports are publicly available on the UK website and can be found here for iShares MSCI Russia ADR/GDR UCITS ETF and here for iShares MSCI Eastern Europe Capped UCITS ETF.

At this time, Russian securities that cannot be divested continue to be held in the ETFs with Russian exposure. 

As and when non-local investors are allowed to trade and settle in the Russian Stock market and in compliance with applicable law and regulations, including relevant sanctions laws, and under appropriate market conditions, BlackRock will seek to implement an orderly and managed disposal of Russian securities in line with our fiduciary duties and respective fund investment objectives and policies. BlackRock will assess market conditions based on multiple factors including, but not limited to, legal restrictions, liquidity, spreads, international investor access, volume and volatility. 

BlackRock will continue to monitor the market situation and shareholders will be notified of any material updates.