iShares VII plc - Swiss Prospectus

The Directors of the Company whose names appear both on the Company’s directorship register and under the heading
“Management of the Company” accept responsibility for the information contained in this document. To the best of the
knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information
contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such
information.
iShares VII Public Limited Company
Prospectus for Switzerland
Dated 13 April 2017
(An umbrella investment company with variable capital and having segregated liability between its Funds
incorporated with limited liability in Ireland under registration number 469617 and authorised by the Central
Bank pursuant to the European Communities (Undertakings for Collective Investment in Transferable
Securities) Regulations 2011, as amended)
iShares
(Acc) B
iShares
iShares
(Acc)
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
$ Treasury Bond 1-3yr UCITS ETF USD
$ Treasury Bond 3-7yr UCITS ETF
$ Treasury Bond 7-10yr UCITS ETF USD
€ Govt Bond 1-3yr UCITS ETF EUR (Acc)
€ Govt Bond 3-7yr UCITS ETF
€ Govt Bond 7-10yr UCITS ETF EUR (Acc)
Core EURO STOXX 50 UCITS ETF
Core MSCI Pacific ex-Japan UCITS ETF
Core S&P 500 UCITS ETF
Dow Jones Industrial Average UCITS ETF
FTSE 100 UCITS ETF
FTSE MIB UCITS ETF EUR (Acc)
MSCI Brazil UCITS ETF USD (Acc)
MSCI Canada UCITS ETF
MSCI Chile UCITS ETF**
MSCI EM Asia UCITS ETF
MSCI EM Latin America UCITS ETF (Acc)**
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
MSCI EMU CHF Hedged UCITS ETF (Acc)
MSCI EMU Small Cap UCITS ETF
MSCI EMU UCITS ETF
MSCI EMU USD Hedged UCITS ETF (Acc)
MSCI Europe - B UCITS ETF (Acc)*
MSCI Japan UCITS ETF USD (Acc)
MSCI Korea UCITS ETF USD (Acc)
MSCI Mexico Capped UCITS ETF
MSCI Russia ADR/GDR UCITS ETF
MSCI UK Large Cap UCITS ETF
MSCI UK Small Cap UCITS ETF
MSCI UK UCITS ETF
MSCI USA Small Cap UCITS ETF
MSCI USA UCITS ETF
MSCI World - B UCITS ETF (Acc)*
NASDAQ 100 UCITS ETF
Nikkei 225 UCITS ETF
* These Funds were closed to new investment on 18 August 2014 and are in the process of being terminated.
** These Funds were closed to new investment on 4 December 2015 and are in the process of being terminated.
Distribution of this document is not authorised unless it is accompanied by a copy of the latest annual report and audited
financial statements and, if published thereafter, the latest semi-annual report and unaudited financial statements. Such
reports will form part of this Prospectus.
IMPORTANT INFORMATION
This document contains important information and should be read carefully before investing. If you
have any questions about the content of this Prospectus you should consult your broker,
intermediary, bank manager, legal adviser, financial accountant or other independent financial
adviser.
The value of the Shares and any income from them may go down as well as up and accordingly an
investor may not get back the full amount invested.
An investment in the Funds of the Company should not constitute a substantial proportion of an
investment portfolio and may not be suitable for all investors. Please refer to the “Risk Factors”
section for more information. As determined as at the date of this Prospectus, the Net Asset Value of
iShares Core EURO STOXX 50 UCITS ETF, iShares Core MSCI Pacific ex-Japan UCITS ETF, iShares
MSCI Brazil UCITS ETF USD (Acc), iShares MSCI Korea UCITS ETF USD (Acc), iShares MSCI Mexico
Capped UCITS ETF, iShares MSCI Russia ADR/GDR UCITS ETF and iShares MSCI USA Small Cap
UCITS ETF is likely to have a high volatility due to the nature of the investment policies of these
Funds as reflected in their risk and reward profiles as set out in the relevant KIID.
Capitalised terms used in this Prospectus are defined on pages 6 to 12.
The distribution of this Prospectus and the offering or purchase of the Shares of the Company may be restricted
in certain jurisdictions. No persons receiving a copy of this Prospectus or the accompanying Account Opening
Form and Dealing Form in any such jurisdiction may treat this Prospectus or such Account Opening Form and
Dealing Form as constituting an invitation to them to purchase or subscribe for Shares, nor should they in any
event use such Account Opening Form and Dealing Form, unless in the relevant jurisdiction such an invitation
could lawfully be made to them and such Account Opening Form and Dealing Form could lawfully be used.
Accordingly, this Prospectus does not constitute an offer or solicitation by anyone in any jurisdiction in which
such offer or solicitation is not lawful or in which the person making such offer or solicitation is not qualified to do
so or to anyone to whom it is unlawful to make such offer or solicitation. It is the responsibility of any persons in
possession of this Prospectus and any persons wishing to apply for Shares pursuant to this Prospectus to inform
themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Prospective
applicants for Shares should inform themselves as to the legal requirements of so applying and subscribing,
holding or disposing of such Shares and any applicable exchange control regulations and taxes in the countries of
their respective citizenship, residence, incorporation or domicile, including any requisite government or other
consents and the observing of any other formalities.
The Shares of each Fund will normally be primarily listed and admitted for trading on the SIX or the main market
of the LSE (but may be primarily listed on an alternative stock exchange). It is also intended that the Shares of
each Fund will be listed and admitted for trading on a number of other stock exchanges (including without
limitation, Frankfurt Stock Exchange (XTF Exchange Traded Fund platform), SIX Swiss Exchange, NYSE Euronext
Amsterdam, Borsa Italiana, Bolsa Mexicana de Valores (Mexican Stock Exchange) and BATS Chi-X) but the
Company does not warrant or guarantee that such listings will take place or continue to exist. In the event that
such listings do take place, the primary listing of the Shares of the Funds will normally be on the SIX or the
main market of the LSE (although a number of Funds may be primarily listed on an alternative stock exchange)
and any other listings shall be secondary to the primary listing.
For details of where Shares are listed or admitted for trading, please refer to the official iShares website
(www.ishares.com).
It is possible that in certain jurisdictions, parties entirely unaffiliated with the Company (and any Fund), the
Manager or the Investment Manager, may make the Shares of any Fund(s) available for investment by investors
in those jurisdictions through off market trading mechanisms. Neither the Company, nor the Manager, nor the
Investment Manager, endorse or promote such activities and are not in any way connected to such parties or
these activities and do not accept any liability in relation to their operation and trading.
The Shares have not been, and will not be registered under the 1933 Act or the securities laws of any
of the states of the United States. The Shares may not be offered or sold directly or indirectly in the
United States or for the account or benefit of any US Person. Any re-offer or resale of any of the
Shares in the United States or to US Persons may constitute a violation of US law.
Shares may not, except pursuant to a relevant exemption, be acquired or owned by, or acquired with
the assets of an ERISA Plan.
Additionally, Shares may not be acquired by a person who is deemed to be a US Person under the
1940 Act and regulations thereunder or a person who is deemed to be a US Person under the CEA and
regulations thereunder.
The Shares have not been, nor will they be, qualified for distribution to the public in Canada as no
prospectus for the Company has been filed with any securities commission or regulatory authority in
Canada or any province or territory thereof. This document is not, and under no circumstances is to
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be construed, as an advertisement or any other step in the furtherance of a public offering of Shares
in Canada. No Canadian Resident may purchase or accept a transfer of Shares unless he is eligible to
do so under applicable Canadian or provincial laws.
In order to ensure compliance with the restrictions referred to above, the Company is, accordingly,
not open for investment by any non-Qualified Holder except in exceptional circumstances and then
only with the prior consent of the Directors or Manager. A prospective investor may be required at
the time of acquiring Shares to represent that such investor is a Qualified Holder and is not acquiring
Shares for or on behalf of a non-Qualified Holder. The granting of prior consent by the Directors to an
investment does not confer on the investor a right to acquire Shares in respect of any future or
subsequent application.
Applicants for Shares will be required to declare if they are a US Person. Investors (whether they invested
through the Primary Market or the Secondary Market) are required to notify the Administrator immediately in the
event that they cease to be a Qualified Holder. Where the Company becomes aware that any Shares are directly
or beneficially owned by a non-Qualified Holder, it may redeem the Shares so held compulsorily and may also
impose a fee on each such person who is not a Qualified Holder to compensate the Company for any loss it has
suffered (or may suffer) in respect of such holding of Shares.
Each Fund which invests physically in Indian securities (“Fund with India Exposure”) is required to be registered
as a Foreign Portfolio Investor (“FPI”) under the Securities and Exchange Board of India (Foreign Portfolio
Investors) Regulations 2014. In order to be registered as a FPI, each Fund with India Exposure is required to
demonstrate that it satisfies the following broad based criteria: (i) The Fund must have a minimum of 20
investors including, both, direct investors and underlying investors in pooling vehicles. (ii) No investor shall hold
over 49% of the Shares (by number and value) of the Fund. (iii) No underlying beneficial owner shall hold over
25% of the Shares (by number and value) of the Fund. Institutional investors who hold over 49% of a Fund with
India Exposure must themselves comply with broad based criteria. Underlying beneficial owners who hold over
25% of the Fund are required to provide their consent to the FPI registration and, to that end, have their client
information disclosed to the relevant depository participant and Securities and Exchange Board of India. For the
reasons above, no investor in a Fund with India Exposure may hold over 49% of Shares (by number
and value) of the Fund (apart from Common Depositary’s Nominee). Any investor who holds more
than 25% of the Shares (by number and value) of a Fund with India Exposure hereby consents to the
FPI registration of the relevant Fund and consents to have their client information disclosed to the
Company and to the relevant depository participant and Securities and Exchange Board of India by
brokers, custodians, nominees, local Central Securities Depositaries, International Central Securities
Depositaries, and any other intermediary and by the Company and its service providers.
Shares are offered only on the basis of the information contained in the current Prospectus and the latest annual
report and audited financial statements and any subsequent semi-annual report and unaudited financial
statements. These reports will form part of this Prospectus.
Any further information or representation given or made by any dealer, salesman or other person should be
disregarded and, accordingly, should not be relied upon.
Statements made in this Prospectus are based on the Directors’ understanding of the law and practice currently
in force in Ireland and are subject to changes therein. Figures contained in this Prospectus are accurate as at the
date of this Prospectus only and are subject to changes therein.
This Prospectus may also be translated into other languages. Any such translation shall only contain the same
information and have the same meaning as the English language Prospectus. To the extent that there is any
inconsistency between the English language Prospectus and the Prospectus in another language, the English
language Prospectus will prevail, except to the extent (and only to the extent) that it is required by law of any
jurisdiction where the Shares are sold, that in an action based upon disclosure in a Prospectus in a language
other than English, the language of the Prospectus on which such action is based shall prevail. Any disputes as to
the terms of the Prospectus, regardless of the language of the Prospectus, shall be governed by and construed in
accordance with the laws of Ireland. Additionally, each investor irrevocably submits to the jurisdiction of the
courts of Ireland for resolution of any disputes arising out of or in connection with the offering of Shares in the
Company.
The Company may make application to register and distribute its Shares in jurisdictions outside Ireland. In the
event that such registrations take place, local regulations may require the appointment of paying/facilities agents
and the maintenance of accounts by such agents through which subscription and redemption monies may be
paid. Investors who choose or are obliged under local regulations to pay/receive subscription/redemption
monies via an intermediary rather than directly to the Depositary bear a credit risk against that intermediate
entity with respect to (a) subscription monies prior to the transmission of such monies to the Depositary and (b)
redemption monies payable by such intermediate entity to the relevant investor. The fees and expenses in
connection with the registration and distribution of Shares in such jurisdictions, including the appointment of
representatives, distributors or other agents in the relevant jurisdictions and the production of local country
information documents, will be at normal commercial rates and may be borne by the Company and/or the Funds.
This Prospectus, and the KIID for the relevant Fund and/or Share Class should each be read in its entirety before
making an application for Shares.
3
DIRECTORY
iShares VII public limited company
J.P. Morgan House
International Financial Services Centre
Dublin 1
Ireland
Board of Directors of the Company
Paul McNaughton
Paul McGowan
Barry O’Dwyer
Teresa O’Flynn
Karen Prooth
Manager
BlackRock Asset Management Ireland Limited
J.P. Morgan House
International Financial Services Centre
Dublin 1
Ireland
Investment Manager and Promoter
BlackRock Advisors (UK) Limited
12 Throgmorton Avenue
London EC2N 2DL
England
Depositary
State Street Custodial Services (Ireland) Limited
78 Sir John Rogerson’s Quay
Dublin 2
Ireland
Administrator and Registrar
State Street Fund Services (Ireland) Limited
78 Sir John Rogerson’s Quay
Dublin 2
Ireland
Secretary
Sanne
4th Floor
76 Baggot Street Lower
Dublin 2
Ireland
Auditors and Reporting Accountant
PricewaterhouseCoopers
Chartered Accountants
One Spencer Dock
North Wall Quay
Dublin 1
Ireland
Legal Advisors (as to Irish Law)
William Fry
2 Grand Canal Square
Dublin 2
Ireland
4
TABLE OF CONTENTS
IMPORTANT INFORMATION ...................................................................................... 2
DIRECTORY ............................................................................................................ 4
DEFINITIONS.......................................................................................................... 6
THE COMPANY ...................................................................................................... 13
INVESTMENT OBJECTIVES AND POLICIES ................................................................ 20
BENCHMARK INDICES............................................................................................ 21
FUND DESCRIPTIONS ............................................................................................ 22
METHODOLOGIES FOR CURRENCY HEDGING ............................................................ 34
INVESTMENT TECHNIQUES..................................................................................... 35
EFFICIENT PORTFOLIO MANAGEMENT ...................................................................... 39
RISK FACTORS ..................................................................................................... 40
VALUATION OF THE FUNDS .................................................................................... 58
INDICATIVE NET ASSET VALUE ............................................................................... 59
DEALINGS IN THE COMPANY .................................................................................. 60
PROCEDURE FOR DEALING ON THE PRIMARY MARKET ............................................... 61
PROCEDURE FOR DEALING ON THE SECONDARY MARKET .......................................... 67
SECONDARY MARKET REDEMPTIONS ....................................................................... 67
GENERAL INFORMATION ON DEALINGS IN THE COMPANY .......................................... 68
FUND EXPENSES ................................................................................................... 75
DIVIDEND POLICY ................................................................................................. 77
GENUINE DIVERSITY OF OWNERSHIP CONDITION .................................................... 78
MANAGEMENT OF THE COMPANY ............................................................................ 79
CONFLICTS OF INTEREST ....................................................................................... 86
STATUTORY AND GENERAL INFORMATION ............................................................... 90
TAXATION ............................................................................................................ 94
SCHEDULE I ........................................................................................................104
SCHEDULE II .......................................................................................................106
SCHEDULE III ......................................................................................................109
SCHEDULE IV ......................................................................................................113
SCHEDULE V .......................................................................................................119
SCHEDULE VI ......................................................................................................120
INFORMATION FOR INVESTORS IN SWITZERLAND ...................................................125
5
DEFINITIONS
“Account Opening Form”, such account opening form or application form (as the context requires) as the
Directors may prescribe, to be completed by the Authorised Participant for the purposes of opening a Primary
Market dealing account in relation to the Company and/or relevant Fund; or to be completed by the Common
Depositary’s Nominee for the purposes of applying for Shares of the Funds to be issued in its name and to
include authorisation for the Company to deal with Authorised Participants (as applicable).
“Accumulating Share Class”, a Share Class designated as being "Accumulating” in the list of Share Classes listed
under the heading "Classes of Share" in “The Company” section of this Prospectus or “Acc” in the "Current and
Launched Share Classes" table in “The Company” section of this Prospectus and in respect of which income and
other profits will be accumulated and reinvested.
“Act”, the Companies Act 2014 (of Ireland), as may be amended.
“Administrator”, State Street Fund Services (Ireland) Limited, and/or such other person as may be appointed,
with the prior approval of the Central Bank, to provide administration, transfer agency and registrar services to
the Company.
“Administration Agreement”, the agreement made between the Manager and the Administrator in respect of the
provision of administration, transfer agency and registrar services to the Company as may be amended from
time to time in accordance with the requirements of the Central Bank.
“ADR”, American Depository Receipt.
“Affiliate”, a company which has the ultimate parent of the Investment Manager as its ultimate parent, or a
company in which the ultimate parent of the Investment Manager has at least 50% direct or indirect ownership.
“Articles”, the Articles of Association of the Company, as amended from time to time.
“Australian Dollar” or “AUD”, the lawful currency of the Commonwealth of Australia.
“Authorised Participant”, a market maker or broker entity which is registered with the Company as an authorised
participant and therefore able to subscribe directly to, or redeem directly from, the Company for Shares in a
Fund (i.e. the Primary Market).
“Barclays Capital”, a division of Barclays PLC.
“Base Currency”, the base currency of a Fund.
“Benchmark Index”, in relation to a Fund, the index against which the return of the Fund will be compared.
(Where “Net USD” is used in the name of a benchmark index this indicates that dividends are reinvested (net)
after the deduction of withholding taxes, and that the benchmark index is denominated in US Dollar).
"Benefit Plan Investor" shall have the meaning contained in Section 3(42) of US Employee Retirement Income
Security Act of 1974 ("ERISA"), and includes (a) an ‘‘employee benefit plan’’ as defined in Section 3(3) of ERISA
that is subject to Part 4 of Title I of ERISA; (b) a ‘‘plan’’ described in Section 4975(e)(1) of the Code that is
subject to Section 4975 of the Code; and (c) an entity whose underlying assets include ‘‘plan assets’’ by reason
of an employee benefit plan’s or a plan’s investment in such entity. For purposes of the foregoing, a ‘‘Benefit Plan
Investor’’ does not include a governmental plan (as defined in Section 3(32) of ERISA), a non-US plan (as
defined in Section 4(b)(4) of ERISA) or a church plan (as defined in Section 3(33) of ERISA) that has not elected
to be subject to ERISA.
“BlackRock Group”, the BlackRock, Inc. group of companies and any of their affiliates and connected persons.
“Board of Directors”, the board of Directors of the Company.
“Business Day”, in relation to all Funds, a day on which markets are open for business in England (or such other
day as the Directors may from time to time determine subject to advance Shareholder notice).
“Canadian Dollar” or “CAD”, the lawful currency of Canada.
“Canadian Resident”, a person resident in Canada for the purposes of Canadian income tax legislation.
“Cash Component”, the cash component of the Portfolio Composition File. The Cash Component will be made up
of three elements, namely, (i) the accrued dividend attributable to Shares of the Fund (generally dividends and
interest earned less fees and expenses incurred since the previous distribution), (ii) cash amounts representing
amounts arising as a result of rounding the number of Shares to be delivered, capital cash held by the Fund or
amounts representing differences between the weightings of the Portfolio Composition File and the Fund and (iii)
any Duties and Charges which may be payable.
“CEA”, the Commodities Exchange Act (of the United States), as amended.
6
“Central Bank”, the Central Bank of Ireland or any successor thereof.
“Central Bank UCITS Regulations”, Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1))
(Undertakings for Collective Investment in Transferable Securities) Regulations 2015, as may be amended or
replaced.
“Central Securities Depositaries”, such Recognised Clearing Systems which are national settlement systems for
individual national markets. As the Funds issue Shares through the International Central Securities Depositary
settlement system, Central Securities Depositaries would be Participants in an International Central Securities
Depositary.
“China A Shares”, securities of companies that are incorporated in the PRC and denominated and traded in
Renminbi on the Shanghai and Shenzhen Stock Exchanges.
“Clearstream”, Clearstream Banking, Société Anonyme, Luxembourg and any successor in business thereto.
“Common Depositary”, the entity appointed as a depositary for the International Central Securities Depositaries,
currently Citibank Europe plc, having its registered office at 1 North Wall Quay, Dublin 1.
“Common Depositary’s Nominee”, the entity appointed as nominee for any Common Depositary and as such acts
as the registered holder of the Shares in the Funds, currently Citivic Nominees Limited.
“Company”, iShares VII plc.
“CSDCC”, China Securities Depository and Clearing Corporation Limited.
“CSRC”, China Securities Regulatory Commission.
“Currency Hedged Funds”, iShares MSCI EMU CHF Hedged UCITS ETF (Acc) and iShares MSCI EMU USD Hedged
UCITS ETF (Acc).
“Currency Hedging Agreement”, the agreement made between the Investment Manager and State Street Europe
Limited pursuant to which State Street Europe Limited has been appointed to provide currency hedging services
for Currency Hedged Funds and all Currency Hedged Share Classes, as may be amended from time to time in
accordance with the requirements of the Central Bank.
“Currency Hedged Share Class”, a Share Class of a Fund (other than the Currency Hedged Funds that have only
one Share Class) which allows the use of hedging transactions to reduce the effect of exchange rate fluctuations
as described under the heading “Currency Hedged Share Classes” in “The Company” section of this Prospectus.
“Current Funds”, the Funds in existence as at the date of this Prospectus as listed on page 1 of this Prospectus.
“Current Share Classes”, the Share Classes of the Current Funds available for launch at the discretion of the
Manager as at the date of this Prospectus as listed on pages 16 to 19 of this Prospectus.
“Danish Krone” or “DKK”, the lawful currency of the Kingdom of Denmark.
“Dealing Day”, in general, in relation to the Current Funds, each Business Day will be a Dealing Day. However,
some Business Days will not be Dealing Days where, for example, markets on which a Fund's Investments are
listed or traded or markets relevant to a Benchmark Index are suspended or closed or where there is a public
holiday in the relevant jurisdiction in which a delegate of the Investment Manager is based provided there is at
least one Dealing Day per fortnight, subject always to the Directors' discretion to temporarily suspend the
determination of the Net Asset Value and the sale, switching and/or redemption of Shares in the Company or any
Fund in accordance with the provisions of the Prospectus and the Articles. The Investment Manager produces
dealing calendars which detail in advance the Dealing Days for each Fund. The dealing calendar may be
amended from time to time by the Investment Manager where, for example, the relevant market operator,
regulator or exchange (as applicable) declares a relevant market closed for trading and/or settlement (such
closure may be made with little or no notice to the Investment Manager). The dealing calendar for each Fund
(and each Share Class within a Fund) is available from the Investment Manager.
“Dealing Form”, such dealing form as the Directors may prescribe for the purposes of dealing in Shares of the
Company and/or relevant Fund.
“Depositary”, State Street Custodial Services (Ireland) Limited or such other person as may be appointed, with
the prior approval of the Central Bank, to act as depositary to the Company.
“Depositary Agreement”, the agreement between the Company, the Manager and the Depositary as may be
amended from time to time in accordance with the requirements of the Central Bank.
“Directive”, Directive No. 2009/65/EC of the European Parliament and of the Council of 13 July 2009 as amended
by Directive No. 2014/91/EU of the European Parliament and of the Council of 23 July 2014 as may be amended
or replaced.
“Directors”, the directors of the Company or any duly authorised committee thereof.
7
“Distributing Share Class”, a Share Class designated as being "Distributing” in the list of Share Classes listed
under the heading "Classes of Share" in “The Company” section of this Prospectus or “Dist” in the "Current and
Launched Share Classes" table in “The Company” section of this Prospectus and in respect of which distributions
of income will be declared.
“Duties and Charges”, in relation to any Fund or Share Class, all stamp and other duties, taxes, governmental
charges, brokerage, bank charges, foreign exchange spreads, interest, Depositary or sub-custodian charges
(relating to sales and purchases), transfer fees, registration fees and other duties and charges (including
hedging-related costs, transaction costs) whether in connection with the original acquisition or increase of the
assets of the relevant Fund or Share Class or the creation, issue, sale, redemption, switching or repurchase of
Shares or the sale or purchase of Investments or in respect of certificates or otherwise which may have become
or may be payable in respect of or prior to or in connection with or arising out of or upon the occasion of the
transaction or dealing in respect of which such duties and charges are payable, which, for the avoidance of doubt,
includes, when calculating subscription and redemption prices, any provision for spreads (to take into account
the difference between the price at which assets were valued for the purpose of calculating the Net Asset Value
and the estimated price at which such assets shall be bought as a result of a subscription and sold as a result of
a redemption and to take into account unrealised gains or losses (and their crystallisation, reinvestment or
settlement) from currency forwards in connection with a sale, redemption, switching or repurchase of Shares in a
Currency Hedged Share Class or a Currency Hedged Fund), but shall not include any commission payable to
agents on sales and purchases of Shares or any commission, taxes, charges or costs which may have been taken
into account in ascertaining the Net Asset Value per Share of Shares in the relevant Fund or Share Class.
“DVP”, delivery versus payment settlement.
“Electronic Order Entry Facility”, the website facility which may be used by Authorised Participants to submit
dealing requests in respect of Shares in a Fund and to obtain information in relation to the dealing procedures.
“Equity Funds”, Funds of the Company which track or replicate the performance of a Benchmark Index, the
constituents of which are comprised of equities and which are, as at the date of the Prospectus, iShares Core
EURO STOXX 50 UCITS ETF, iShares Core MSCI Pacific ex-Japan UCITS ETF, iShares Core S&P 500 UCITS ETF,
iShares Dow Jones Industrial Average UCITS ETF, iShares FTSE 100 UCITS ETF, iShares FTSE MIB UCITS ETF
EUR (Acc), iShares MSCI Brazil UCITS ETF USD (Acc), iShares MSCI Canada UCITS ETF, iShares MSCI EM Asia
UCITS ETF, iShares MSCI EMU CHF Hedged UCITS ETF (Acc), iShares MSCI EMU Small Cap UCITS ETF, iShares
MSCI EMU UCITS ETF, iShares MSCI EMU USD Hedged UCITS ETF (Acc), iShares MSCI Japan UCITS ETF USD
(Acc), iShares MSCI Korea UCITS ETF USD (Acc), iShares MSCI Mexico Capped UCITS ETF, iShares MSCI Russia
ADR/GDR UCITS ETF, iShares MSCI UK Large Cap UCITS ETF, iShares MSCI UK Small Cap UCITS ETF, iShares
MSCI UK UCITS ETF, iShares MSCI USA Small Cap UCITS ETF, iShares MSCI USA UCITS ETF, iShares NASDAQ
100 UCITS ETF, iShares Nikkei 225 UCITS ETF.
“ERISA Plan”, (i) any retirement plan subject to Title I of the United States Employee Retirement Income
Security Act of 1974, as amended (“ERISA”); or (ii) any individual retirement account or plan subject to Section
4975 of the United States Internal Revenue Code of 1986, as amended.
“ESMA”, the European Securities and Markets Authority.
“Euro”, “EUR” or “€”, the single European currency unit referred to in Council Regulation (EC) No. 974/98 on 3
May 1998 on the introduction of the Euro, and, at the discretion of the Manager, the currencies of any countries
that at any time formed part of the Eurozone.
“Euroclear”, Euroclear Bank S.A./N.V. and any such successor in business thereto.
"EMU" or "Eurozone", the Member States that adopt or have adopted the Euro as its lawful currency, at the date
of this Prospectus being Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy,
Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
“European Economic Area” or “EEA”, the European Economic Area, the participating member states of which are
the Member States, Iceland, Liechtenstein and Norway
“FDI”, financial derivative instruments.
"Fitch", Fitch Ratings, a division of the Fitch Group.
“Fixed Income Funds”, Funds of the Company which track or replicate the performance of a Benchmark Index,
the constituents of which are comprised of fixed income securities and which are, as at the date of the
Prospectus, iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B, iShares $ Treasury Bond 3-7yr UCITS ETF,
iShares $ Treasury Bond 7-10yr UCITS ETF USD (Acc), iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc), iShares
€ Govt Bond 3-7yr UCITS ETF and iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc).
“FOP”, free of payment settlement.
"FTSE", FTSE Russell, a division of the London Stock Exchange Group plc.
8
“Fund”, a fund of assets established (with the prior approval of the Central Bank) for one or more classes of
Shares which is invested in accordance with the investment objectives applicable to such fund and which forms
part of the Company; a reference to a “Fund” shall, in the context where no particular Share Class is specified,
include all Share Classes attributable to that Fund.
“GDN”, Global Depository Note.
“GDR”, Global Depository Receipt.
“Global Share Certificate”, the certificate evidencing entitlement to Shares (as described in further detail under
the section of this Prospectus entitled “General Information on Dealings in the Company”).
“Hong Kong Dollar” or “HKD”, the lawful currency of the Hong Kong Special Administrative Region of the People's
Republic of China.
“HKSCC”, Hong Kong Securities Clearing Company Limited.
“Insolvency Event”, occurs in relation to a person where (i) an order has been made or an effective resolution
passed for the liquidation or bankruptcy of the person; (ii) a receiver or similar officer has been appointed in
respect of the person or of any of the person’s assets or the person becomes subject to an administration order,
(iii) the person enters into an arrangement with one or more of its creditors or is deemed to be unable to pay its
debts, (iv) the person ceases or threatens to cease to carry on its business or substantially the whole of its
business or makes or threatens to make any material alteration to the nature of its business, (v) an event occurs
in relation to the person in any jurisdiction that has an effect similar to that of any of the events referred to in (i)
to (iv) above or (vi) the Company in good faith believes that any of the above may occur.
“International Central Securities Depositaries”, such Recognised Clearing Systems used by the Funds in issuing
their Shares through the International Central Securities Depositary settlement system, which is an international
settlement system connected to multiple national markets, and which includes Euroclear and/or Clearstream.
“Investment”, any investment authorised by the Memorandum which is permitted by the Regulations and the
Articles.
“Investment Manager”, BlackRock Advisors (UK) Limited and/or such other person as may be appointed, in
accordance with the requirements of the Central Bank, to provide investment management services to the Funds.
“Investment Management Agreement”, the agreement between the Manager and the Investment Manager in
respect of the provision of investment management services to the Funds, as may be amended from time to time
in accordance with the requirements of the Central Bank.
“Israeli Shekel” or “ILS”, the lawful currency of the State of Israel.
“Japanese Yen” or “JPY”, the lawful currency of Japan.
“KIID”, the key investor information document issued in respect of each Fund pursuant to the Regulations, as
may be amended from time to time in accordance with the Central Bank UCITS Regulations.
“Launched Share Class”, a Share Class in existence and available for investment as at the date of this Prospectus
as listed on pages 16 to 19 of this Prospectus.
“LSE”, the London Stock Exchange, a division of the London Stock Exchange Group plc.
“Manager”, BlackRock Asset Management Ireland Limited, a limited liability company incorporated in Ireland.
“Management Agreement”, the agreement between the Company and the Manager as may be amended from
time to time in accordance with the requirements of the Central Bank.
“Member State”, a member state of the European Union; the member states at the date of this Prospectus being
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.
“Memorandum”, the Memorandum of Association of the Company, as amended from time to time.
“Moody’s”, Moody's Investors Service, a division of Moody’s Corporation.
“MSCI”, MSCI Inc.
“NASDAQ”, a division of NASDAQ OMX Group, Inc.
9
“Net Asset Value”, the net asset value of a Fund or Share Class (as appropriate) determined in accordance with
the Articles.
“New Zealand Dollar” or “NZD”, the lawful currency of New Zealand.
“Nikkei”, Nikkei Inc.
“Non-Significant Markets”, any market that is not a Significant Market.
“Norwegian Krone” or “NOK”, the lawful currency of the Kingdom of Norway.
“OECD”, the Organisation for Economic Co-operation and Development.
“OTC”, over the counter.
“Participants”, accountholders in an International Central Securities Depositary, which may include Authorised
Participants, their nominees or agents, and who hold their interest in Shares of the Funds settled and/or cleared
through the applicable International Central Securities Depositary.
“Paying Agent”, the entity appointed to act as paying agent to the Funds.
“PNC Group”, the PNC group of companies, the ultimate holding company of which is PNC Financial Services
Group, Inc..
“Portfolio Composition File”, the file setting out the Investments and Cash Component which may be transferred
to the Fund, in the case of subscriptions, and by the Company, in the case of redemptions, in satisfaction of the
price of Shares thereof. Each Share Class of a Fund will have a Portfolio Composition File, which may (but need
not) differ from the Portfolio Composition Files for other Share Classes within the same Fund.
“Primary Market”, the off exchange market whereon Shares of a Fund are created and redeemed directly with
the Company.
“PRC”, the People’s Republic of China.
“Prospectus”, this document as it may be amended from time to time in accordance with the Central Bank UCITS
Regulations together with, where the context requires or implies, any Supplement or addendum.
“Qualified Holder", any person, corporation or entity other than (i) a US Person as defined under Rule 902(k) of
the 1933 Act; (ii) an ERISA Plan; (iii) any other person, corporation or entity to whom a sale or transfer of
Shares, or in relation to whom the holding of Shares (whether directly or indirectly affecting such person, and
whether taken alone or in conjunction with other persons, connected or not, or any other circumstances
appearing to the Directors to be relevant) would (a) cause the Company to be required to register as an
‘‘investment company’’ under the 1940 Act, (b) would cause the Shares in the Company to be required to be
registered under the 1933 Act, (c) would cause the Company to become a ‘‘controlled foreign corporation’’ within
the meaning of the US Internal Revenue Code of 1986, (d) would cause the Company to have to file periodic
reports under section 13 of the US Exchange Act of 1934, (e) would cause the assets of the Company to be
deemed to be ‘‘plan assets’’ of a Benefit Plan Investor, or (f) would cause the Company otherwise not to be in
compliance with the 1940 Act, the 1933 Act, the US Employee Retirement Income Security Act of 1974, the US
Internal Revenue Code of 1986 or the US Exchange Act of 1934; or (iv) a custodian, nominee, trustee or the
estate of any person, corporation or entity described in (i) to (iii) above.
“Recognised Clearing System”, a “recognised clearing system”
Commissioners (e.g. CREST or Euroclear).
so designated by the Irish Revenue
“Regulated Markets”, the stock exchanges and/or regulated markets listed in Schedule I and in the relevant
Supplement, if any.
“Regulations”, European Communities (Undertakings for Collective Investment in Transferable Securities)
Regulations 2011 as amended by European Communities (Undertakings for Collective Investment in Transferable
Securities) (Amendment) Regulations 2016 as may be amended or replaced.
“Regulatory Information Service”, any of the news services set out in Schedule 12 to the Listing Rules of the
UKLA.
“Remuneration Policy”, the policy as described in the section entitled “The Manager” including, but not limited to,
a description as to how remuneration and benefits are calculated and identification of those individuals
responsible for awarding remuneration and benefits.
“RQFII”, Renminbi Qualified Foreign Institutional Investor.
“S&P”, Standard & Poor’s, a division of S&P Global Inc.
“SEC”, the US Securities and Exchange Commission.
10
“Secondary Market”, a market on which Shares of the Funds are traded between investors rather than with the
Company itself, which may either take place on a recognised stock exchange or OTC.
“SEHK”, the Stock Exchange of Hong Kong.
“Share”, a participating share of no par value in a Fund or any Share Class representing a participation in the
capital of the Company and carrying rights attributable to the relevant Fund or Share Class, issued in accordance
with the Articles and with the rights provided for under the Articles.
“Share Class”, any class of Share attributable to a particular Fund and carrying rights to participate in the assets
and liabilities of such Fund, as further described below under “Classes of Share", in “The Company” section of
this Prospectus.
“Shareholder”, the registered holder of a Share in a Fund of the Company.
“Significant Markets”, in respect of a Fund any market or combination of markets where the value of a Fund’s
Investments, or exposure in those markets exceeds 30% of that Fund’s Net Asset Value, calculated as at that
Fund’s most recent annual accounting date and recorded in the Company’s financial statements unless the
Investment Manager determines to apply a different percentage and/or date which it believes to be more
appropriate.
“Significant Markets Business Day”, in respect of each Fund, a Business Day on which Significant Markets are
open for trading and settlement.
“Singapore Dollar” or “SGD”, the lawful currency of the Republic of Singapore.
“SIX”, SIX Swiss Exchange.
“Sterling”, “GBP” or “Stg£”, the lawful currency of the United Kingdom.
“Stock Connect”, the Shanghai-Hong Kong Stock Connect.
“Stock Connect Funds”, Funds that invest in China A Shares on the Shanghai Stock Exchange via the Stock
Connect.
“STOXX”, STOXX Ltd, a division of Deutsche Börse AG.
“Structured Finance Securities”, eligible debt or equity securities or other financial instruments, including assetbacked securities and credit-linked securities, which may be issued by a member of the BlackRock Group.
“Subscriber Shares”, shares of €1.00 each in the capital of the Company designated as “Subscriber Shares” in
the Articles and subscribed by or on behalf of the Manager for the purposes of incorporating the Company.
“Supplement”, any document issued by the Company expressed to be a supplement to this Prospectus.
“Swedish Krona” or “SEK”, the lawful currency of the Kingdom of Sweden.
“Swiss Francs” or “CHF”, the lawful currency of the Swiss Confederation.
“Tel Aviv Stock Exchange”, Tel Aviv Stock Exchange Ltd.
“UCITS”, an Undertaking for Collective Investment in Transferable Securities established pursuant to the
Directive, as amended.
“UKLA”, the United Kingdom Listing Authority, part of the UK Financial Conduct Authority.
“Umbrella Cash Collection Account”, a collection account established by the Company at umbrella level in the
name of the Company.
“Unhedged Share Class”, a Share Class which is not a Currency Hedged Share Class.
“United Kingdom” and “UK”, the United Kingdom of Great Britain and Northern Ireland.
“United States” and “US”, the United States of America, its territories, possessions, any State of the United
States and the District of Columbia.
“US Dollar”, “USD”, “US$” or “$”, the lawful currency of the United States.
“US Person”, any person or entity deemed by the SEC from time to time to be a “US Person” under Rule 902(k)
of the 1933 Act or other person or entity as the Directors may determine. The Directors may amend the
definition of “US Person” without Shareholder notice as necessary in order best to reflect then-current applicable
US law and regulation. Further information regarding the meaning of “US Person” is set out in Schedule V.
11
“Valuation Currency”, in respect of a Share Class, the currency in which a class of Shares is priced by the
Administrator and in which such Shares are denominated.
“Valuation Point”, such time and day as the Directors may from time to time determine (with the consent of the
Administrator) in relation to the valuation of the assets and liabilities of a Fund and the Share Classes within that
Fund. Please see the Primary Market Dealing Timetable on pages 64 to 65 for further details of the Valuation
Point applicable to the Current Funds.
“1933 Act”, the Securities Act of 1933 (of the United States), as amended.
“1940 Act”, the Investment Company Act of 1940 (of the United States), as amended.
12
THE COMPANY
General
The Company is an umbrella open-ended investment company with variable capital and having segregated
liability between its Funds. The Company is organised under the laws of Ireland as a public limited company
pursuant to the Act. The Company has been authorised by the Central Bank as a UCITS pursuant to the
Regulations and is regulated under the Regulations. The Company is an exchange traded fund. It was
incorporated on 9 April 2009 under registration number 469617. Authorisation of the Company by the
Central Bank is not an endorsement or guarantee of the Company by the Central Bank nor is the
Central Bank responsible for the contents of the Prospectus. The authorisation of the Company shall
not constitute a warranty as to performance of the Company and the Central Bank shall not be liable
for the performance or default of the Company.
Clause 2 of the Memorandum provides that the Company’s sole objective is the collective investment in
transferable securities and/or other liquid financial assets referred to in the Regulations of capital raised from the
public and which operates on the principle of risk spreading.
The Company is a UCITS and accordingly each of the Funds are subject to the investment and borrowing
restrictions set out in the Regulations and the Central Bank UCITS Regulations. These are set out in detail in
Schedule III below.
Funds
This Prospectus relates to the following Funds:
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
$ Treasury Bond 1-3yr UCITS ETF USD (Acc) B
$ Treasury Bond 3-7yr UCITS ETF
$ Treasury Bond 7-10yr UCITS ETF USD (Acc)
€ Govt Bond 1-3yr UCITS ETF EUR (Acc)
€ Govt Bond 3-7yr UCITS ETF
€ Govt Bond 7-10yr UCITS ETF EUR (Acc)
Core EURO STOXX 50 UCITS ETF
Core MSCI Pacific ex-Japan UCITS ETF
Core S&P 500 UCITS ETF
Dow Jones Industrial Average UCITS ETF
FTSE 100 UCITS ETF
FTSE MIB UCITS ETF EUR (Acc)
MSCI Brazil UCITS ETF USD (Acc)
MSCI Canada UCITS ETF
MSCI Chile UCITS ETF**
MSCI EM Asia UCITS ETF
MSCI EM Latin America UCITS ETF (Acc)**
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
MSCI EMU CHF Hedged UCITS ETF (Acc)
MSCI EMU Small Cap UCITS ETF
MSCI EMU UCITS ETF
MSCI EMU USD Hedged UCITS ETF (Acc)
MSCI Europe - B UCITS ETF (Acc)*
MSCI Japan UCITS ETF USD (Acc)
MSCI Korea UCITS ETF USD (Acc)
MSCI Mexico Capped UCITS ETF
MSCI Russia ADR/GDR UCITS ETF
MSCI UK Large Cap UCITS ETF
MSCI UK Small Cap UCITS ETF
MSCI UK UCITS ETF
MSCI USA Small Cap UCITS ETF
MSCI USA UCITS ETF
MSCI World - B UCITS ETF (Acc)*
NASDAQ 100 UCITS ETF
Nikkei 225 UCITS ETF
* These Funds were closed to new investment on 18 August 2014 and are in the process of being terminated.
** These Funds were closed to new investment on 4 December 2015 and are in the process of being terminated.
The Company may, with the prior approval of the Central Bank, create additional Funds or Share Classes in
which case the Company will issue either a revised prospectus or a Supplement describing such Funds or Share
Classes. Details of any Share Classes available for subscription may from time to time be set out in separate
Supplements. In addition, a list of all Funds and Share Classes thereof and their fees will be set out in the
annual and semi-annual reports of the Company.
Profile of a Typical Investor
Investors in a Fund are expected to be informed investors who have taken professional advice, are able to bear
capital and income risk, and should view investment in a Fund as a medium to long term investment.
Supplements
Each Supplement should be read in the context of and together with this Prospectus.
Classes of Share
Each Fund of the Company comprises a distinct portfolio of Investments. The Shares of each Fund may be
issued with different rights, features and on different terms and conditions to those of the other Funds. Shares of
a Fund may be divided into different Share Classes with different dividend policies, currency hedging and
Valuation Currencies and may therefore have different fees and expenses.
13
The types of Share Classes that may be made available by the Company in its Funds, except Currency Hedged
Funds, are set out below, although not all types of Share Classes are available in every Current Fund. Only one
Share Class is available in each Currency Hedged Fund and, accordingly, it is not subject to the classification
below.
Currency(ies) of
the constituents of
the Benchmark
Index
Share Class
Valuation Currency
Hedged /
Unhedged
Currency into
which the Share
Class is Hedged
Income Treatment
All in Base Currency
Accumulating
Base Currency
Unhedged
N/A
All in Base Currency
Accumulating
Differs from the Base
Currency
Unhedged
N/A
All in Base Currency
Accumulating
Differs from the Base
Currency
Hedged
The same as the
Valuation Currency
All in Base Currency
Distributing
Base Currency
Unhedged
N/A
All in Base Currency
Distributing
Differs from the Base
Currency
Unhedged
N/A
All in Base Currency
Distributing
Differs from the Base
Currency
Hedged
The same as the
Valuation Currency
A single currency,
different from the
Base Currency
Accumulating
Base Currency
Unhedged
N/A
A single currency,
different from the
Base Currency
Accumulating
Base Currency
Hedged
The same as the
Valuation Currency
A single currency,
different from the
Base Currency
Accumulating
Differs from the Base
Currency
Unhedged
N/A
A single currency,
different from the
Base Currency
Accumulating
Differs from the Base
Currency and from
the currency of the
constituents of the
Benchmark Index
Hedged
The same as the
Valuation Currency
A single currency,
different from the
Base Currency
Distributing
Base Currency
Unhedged
N/A
A single currency,
different from the
Base Currency
Distributing
Base Currency
Hedged
The same as the
Valuation Currency
A single currency,
different from the
Base Currency
Distributing
Differs from the Base
Currency
Unhedged
N/A
A single currency,
different from the
Base Currency
Distributing
Differs from the Base
Currency and from
the currency of the
constituents of the
Benchmark Index
Hedged
The same as the
Valuation Currency
Multiple currencies
Accumulating
Base Currency
Unhedged
N/A
Multiple currencies
Accumulating
Base Currency
Hedged
The same as the
Valuation Currency
Multiple currencies
Accumulating
Differs from the Base
Currency
Unhedged
N/A
Multiple currencies
Accumulating
Differs from the Base
Currency
Hedged
The same as the
Valuation Currency
Multiple currencies
Distributing
Base Currency
Unhedged
N/A
Multiple currencies
Distributing
Base Currency
Hedged
The same as the
Valuation Currency
14
Currency(ies) of
the constituents of
the Benchmark
Index
Income Treatment
Share Class
Valuation Currency
Hedged /
Unhedged
Currency into
which the Share
Class is Hedged
Multiple currencies
Distributing
Differs from the Base
Currency
Unhedged
N/A
Multiple currencies
Distributing
Differs from the Base
Currency
Hedged
The same as the
Valuation Currency
For details of the Share Classes available in each of the Current Funds as at the date of this Prospectus please
refer to the tables below under the heading “Current and Launched Share Classes”. Additional classes of Shares,
including Share Classes of the type not currently listed above, may be added by the Company to any Fund in the
future, at its discretion, in accordance with the requirements of the Central Bank. The creation of additional
Share Classes will not result in any material prejudice to the rights attaching to existing Share Classes. Details of
the Share Classes available for subscription, and to which different fee structures may apply, may be set out in
separate Supplements. In addition a list of all Funds and issued Share Classes thereof will be set out in the
annual and semi-annual reports of the Company.
Please note that if you hold a Share Class and you wish to change your holding to a different Share Class of the
same Fund, any such change may be treated by tax authorities as a redemption and sale and may be a
realisation for the purposes of capital gains taxation.
Please refer to the “Risk Factors” section of this Prospectus for the specific risks associated with investment in a
Fund’s Share Class.
Currency Hedged Share Classes
The Company may issue Currency Hedged Share Classes in Funds that are not Currency Hedged Funds which
allow the use of hedging transactions to reduce the effect of currency exchange rate fluctuations. For details
regarding the hedging methodology please refer to the section below entitled “Currency Hedged Share Classes”.
The Investment Manager may use derivatives (for example, currency forwards, futures, options and swaps, or
such other instruments as are permitted under Schedule II of this Prospectus) to hedge the rate of exchange
between the currency of all or some of the currencies in which the assets of a Fund (including cash and income)
are denominated and the Share Class Valuation Currency.
For further information on the hedging methodology for Currency Hedged Share Classes, please refer to the
section titled “Methodologies for Currency Hedging”. The transactions, costs and related liabilities and benefits
arising from instruments entered into for the purposes of hedging the currency exposure for the benefit of any
particular Currency Hedged Share Classes shall be attributed only to the relevant Currency Hedged Share
Classes. Currency exposures of different Share Classes may not be combined or offset and currency exposures of
the assets of a Fund may not be allocated to separate Share Classes.
15
CURRENT AND LAUNCHED SHARE CLASSES
The Current Share Classes are indicated with a ‘Y’ and are available to launch at the discretion of the Manager. The Launched Share Classes as at the date of this Prospectus are
indicated with an ‘L’.
The table below does not contain information in respect of the Funds that have only one Share Class. As at the date of this Prospectus, the Funds that have only one Share Class:
iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B, iShares $ Treasury Bond 7-10 yr UCITS ETF USD (Acc), iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc), iShares € Govt
Bond 7-10yr UCITS ETF EUR (Acc), iShares FTSE MIB UCITS ETF EUR (Acc), iShares MSCI Brazil UCITS ETF USD (Acc), iShares MSCI EMU CHF Hedged UCITS ETF (Acc), iShares
MSCI EMU USD Hedged UCITS ETF (Acc), iShares MSCI Japan UCITS ETF USD (Acc) and iShares MSCI Korea UCITS ETF USD (Acc). Please refer to the "Fund Descriptions" section
for the Base Currency and the "Dividend Policy" section for the dividend policy of these Funds.
Current and Launched Unhedged Share Classes (Current Funds other than the Funds listed above that have only one Share Class)
Fund Name
Fund
Base
Ccy
Valuation Currency
DKK
Acc
EUR
Dist
Acc
GBP
JPY
Dist
Acc
Dist
Acc
SEK
Dist
Acc
USD
Dist
Acc
Dist
iShares $ Treasury Bond 3-7yr UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares € Govt Bond 3-7yr UCITS ETF
EUR
Y
Y
L
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares Core EURO STOXX 50 UCITS ETF
EUR
Y
Y
L
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares Core MSCI Pacific ex-Japan UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares Core S&P 500 UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares Dow Jones Industrial Average UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares FTSE 100 UCITS ETF
GBP
Y
Y
-
-
L
Y
Y
Y
Y
Y
Y
Y
iShares MSCI Canada UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares MSCI EM Asia UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares MSCI EMU Small Cap UCITS ETF
EUR
Y
Y
L
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI EMU UCITS ETF
EUR
Y
Y
L
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI Mexico Capped UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
iShares MSCI Russia ADR/GDR UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares MSCI UK Large Cap UCITS ETF
GBP
Y
Y
Y
Y
L
Y
Y
Y
Y
Y
Y
Y
iShares MSCI UK Small Cap UCITS ETF
GBP
Y
Y
Y
Y
L
Y
Y
Y
Y
Y
Y
Y
iShares MSCI UK UCITS ETF
GBP
Y
Y
Y
Y
L
Y
Y
Y
Y
Y
Y
Y
iShares MSCI USA Small Cap UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
iShares MSCI USA UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Y
16
Fund
Base
Ccy
Fund Name
Valuation Currency
DKK
EUR
GBP
JPY
SEK
USD
Acc
Dist
Acc
Dist
Acc
Dist
Acc
Dist
Acc
Dist
Acc
iShares NASDAQ 100 UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
L
Dist
Y
iShares Nikkei 225 UCITS ETF
JPY
Y
Y
Y
Y
Y
Y
L
Y
Y
Y
Y
Y
Current and Launched Currency Hedged Share Classes (Current Funds other than Funds listed above that have only one Share Class)
Fund Name
Fund
Base
Ccy
Currency into which the exposure is hedged and Valuation Currency
AUD
CAD
CHF
DKK
EUR
GBP
HKD
ILS
JPY
MXN
NOK
NZD
SEK
SGD
USD
ZAR
Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist
iShares
$ Treasury
Bond 3-7yr
UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
iShares € Govt
Bond 3-7yr
UCITS ETF
EUR
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares Core
EURO STOXX
50 UCITS ETF
EUR
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares Core
MSCI Pacific exJapan UCITS
ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares Core
S&P 500 UCITS
ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
iShares Dow
Jones Industrial
Average UCITS
ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
iShares FTSE
100 UCITS ETF
GBP
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
17
Fund Name
Fund
Base
Ccy
Currency into which the exposure is hedged and Valuation Currency
AUD
CAD
CHF
DKK
EUR
GBP
HKD
ILS
JPY
MXN
NOK
NZD
SEK
SGD
USD
ZAR
Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist
iShares MSCI
Canada UCITS
ETF
USD
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
EM Asia UCITS
ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
EMU Small Cap
UCITS ETF
EUR
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
EMU UCITS ETF
EUR
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
Mexico Capped
UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
Russia
ADR/GDR
UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
iShares MSCI
UK Large Cap
UCITS ETF
GBP
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
UK Small Cap
UCITS ETF
GBP
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
UK UCITS ETF
GBP
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
iShares MSCI
USA Small Cap
UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
iShares MSCI
USA UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
iShares
NASDAQ 100
UCITS ETF
USD
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
-
-
Y
Y
18
Fund Name
iShares Nikkei
225 UCITS ETF
Fund
Base
Ccy
JPY
Currency into which the exposure is hedged and Valuation Currency
AUD
CAD
CHF
DKK
EUR
GBP
HKD
ILS
JPY
MXN
NOK
NZD
SEK
SGD
USD
ZAR
Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist Acc Dist
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
19
Y
Y
Y
-
-
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
INVESTMENT OBJECTIVES AND POLICIES
The specific investment objectives and policies of each Fund will be formulated by the Directors at the time of the
creation of the Fund. Each Fund’s Investments will be limited to investments permitted by the Regulations which
are described in more detail in Schedule III and will, save in respect of its Investments in open-ended collective
investment schemes, normally be listed or traded on Regulated Markets set out in Schedule I. Each Fund may use
the techniques and instruments outlined in the section entitled “Investment Techniques” and so may invest in
collective investment schemes and FDI as described in that section.
The Company has been authorised by the Central Bank with the flexibility to invest up to 100% of each Fund’s
assets in transferable securities and money market instruments issued by a Member State, its local authorities, a
non-Member State, or public international bodies of which one or more Member States are members.
Each Fund’s aggregate investment in other collective investment schemes is not permitted to exceed 10% of the
relevant Fund’s assets in accordance with the Regulations and Schedule III. The investment policies of the Current
Funds do not permit the Funds to invest more than 10% of their assets in other collective investment schemes.
Any change to a Fund’s investment objective and/or material change to the investment policy of a Fund will be
subject to prior Shareholder approval. Please see the section entitled “General Information on Dealings in the
Company” for information on exercising voting rights by investors in the Funds. In the event of a change in the
investment objective and/or investment policy of a Fund a reasonable notification period will be provided by the
Company to enable Shares to be redeemed or sold prior to the implementation of the change.
The investment objective, investment policy and Benchmark Index description listed for a particular Fund applies to
all Share Classes (as applicable) offered in that Fund. Currency Hedged Share Classes, where offered in a Fund,
aim to reduce the impact of exchange rate fluctuations between the underlying portfolio currency exposures of the
Fund and the Valuation Currency of the Currency Hedged Share Class on returns of the relevant Benchmark Index
to investors in that Share Class, through entering into foreign exchange contracts for currency hedging.
20
BENCHMARK INDICES
General
The capitalisation of the companies (for Equity Funds) or minimum amount of qualifying bonds (for Fixed Income
Funds) to which a Fund is exposed or invested is defined by the provider of the Fund’s Benchmark Index. The
constituents of a Fund’s Benchmark Index may change over time. Potential investors in a Fund may obtain a
breakdown of the constituents held by the Fund from the official iShares website (www.ishares.com) or from the
Investment Manager, subject to any applicable restrictions under the licence which the Investment Manager has in
place with the relevant Benchmark Index providers.
There is no assurance that a Fund’s Benchmark Index will continue to be calculated and published on the basis
described in this Prospectus or that it will not be amended significantly. The past performance of each Benchmark
Index is not a guide to future performance.
The Directors may, if they consider it in the interests of the Company or any Fund to do so and with the consent of
the Depositary, substitute another index for the Benchmark Index if:
•
the weightings of constituent securities of the Benchmark Index would cause the Fund (if it were to follow
the Benchmark Index closely) to be in breach of the Regulations and/or any tax law or tax regulations that
the Directors may consider to have a material impact on the Company and / or any Fund;
•
the particular Benchmark Index or index series ceases to exist;
•
a new index becomes available which supersedes the existing Benchmark Index;
•
a new index becomes available which is regarded as the market standard for investors in the particular
market and/or would be regarded as of greater benefit to investors than the existing Benchmark Index;
•
it becomes difficult to invest in securities comprised within the particular Benchmark Index;
•
the Benchmark Index provider increases its charges to a level which the Directors consider too high;
•
the quality (including accuracy and availability of data) of a particular Benchmark Index has, in the opinion
of the Directors, deteriorated;
•
a liquid futures market in which a particular Fund is investing ceases to be available; or
•
an index becomes available which more accurately represents the likely tax treatment of the investing
Fund in relation to the component securities in that index.
Where such a change would result in a material difference between the constituent securities of the Benchmark
Index and the proposed Benchmark Index, Shareholder approval will be sought in advance. In circumstances
where immediate action is required and it is not possible to obtain Shareholder approval in advance of a change in
a Fund’s Benchmark Index, Shareholder approval will be sought for either the change in the Benchmark Index or, if
not so approved, the winding up of the Fund as soon as practicable and reasonable.
Any change of a Benchmark Index will be cleared in advance with the Central Bank, reflected in revised Prospectus
documentation and will be noted in the annual and semi-annual reports of the relevant Fund issued after any such
change takes place. In addition, any material change in the description of a Benchmark Index will be noted in the
annual and semi-annual reports of the relevant Fund.
The Directors may change the name of a Fund, particularly if its Benchmark Index, or the name of its Benchmark
Index, is changed. Any change to the name of a Fund will be approved in advance by the Central Bank and the
relevant documentation pertaining to the relevant Fund will be updated to reflect the new name.
Any of the above changes may have an impact on the tax status of the Company and/or a Fund in a jurisdiction.
Therefore, it is recommended that investors should consult their professional tax adviser to understand any tax
implications of the change in their holdings in the jurisdiction in which they are resident.
21
FUND DESCRIPTIONS
Each Fund may invest in FDI for direct investment purposes. For details regarding investment in FDI please refer
to the section headed “Investment Techniques”.
Each Fund’s Investments, other than its Investments in open-ended collective investment schemes, will normally
be listed or traded on the Regulated Markets set out in Schedule I.
The following are the investment objectives and policies for each of the Current Funds. Investors should note that
the description of the Benchmark Index provided in relation to a Fund is subject to change.
The investment objective, investment policy and Benchmark Index description listed for a particular Fund applies to
all Share Classes (as applicable) offered in that Fund.
Currency Hedged Share Classes, where offered in a Fund, aim to reduce the impact of exchange rate fluctuations
between the underlying portfolio currency exposures of the Fund and the Valuation Currency of the Currency
Hedged Share Class on returns of the relevant Benchmark Index to investors in that Share Class, through entering
into foreign exchange contracts for currency hedging. Only Funds which track a Benchmark Index which does not
incorporate a currency hedging methodology may launch Currency Hedged Share Classes.
Share Classes, including Currency Hedged Share Classes may have different valuation currencies from the Base
Currency of their Funds.
iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the ICE U.S.
Treasury 1-3 Year Bond Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of fixed
income securities that, as far as possible and practicable, consists of the component securities of the ICE U.S.
Treasury 1-3 Year Bond Index, this Fund’s Benchmark Index. The Fund intends to use optimisation techniques in
order to achieve a similar return to the Benchmark Index and it is therefore not expected that the Fund will hold
each and every underlying constituent of the Benchmark Index at all times or hold them in the same proportion as
their weightings in the Benchmark Index. The Fund may hold some securities which are not underlying constituents
of the Benchmark Index where such securities provide similar performance (with matching risk profiles) to certain
securities that make up the Benchmark Index. However, from time to time the Fund may hold all constituents of
the Benchmark Index.
The Base Currency of iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B is US Dollar (US$).
Benchmark Index
The ICE U.S. Treasury 1-3 Year Bond Index measures the performance of US Dollar denominated fixed rate US
Treasury bonds that have a remaining maturity of between one and three years. The Benchmark Index includes
investment grade bonds issued by the US Treasury that have a minimum amount outstanding of $300 million. The
Benchmark Index rebalances on a monthly basis and is market capitalisation weighted. Further details regarding
the Benchmark Index (including its constituents) are available on the index provider’s website at
http://www.interactivedata.com/products-services/ice-indices/idcot1/
iShares $ Treasury Bond 3-7yr UCITS ETF
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the ICE U.S.
Treasury 3-7 Year Bond Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of fixed
income securities that, as far as possible and practicable, consists of the component securities of the ICE U.S.
Treasury 3-7 Year Bond Index, this Fund’s Benchmark Index. The Fund intends to use optimisation techniques in
order to achieve a similar return to the Benchmark Index and it is therefore not expected that the Fund will hold
each and every underlying constituent of the Benchmark Index at all times or hold them in the same proportion as
their weightings in the Benchmark Index. The Fund may hold some securities which are not underlying constituents
of the Benchmark Index where such securities provide similar performance (with matching risk profile) to certain
securities that make up the Benchmark Index. However, from time to time the Fund may hold all constituents of
the Benchmark Index.
The Base Currency of iShares $ Treasury Bond 3-7yr UCITS ETF is US Dollar (US$).
Benchmark Index
The ICE U.S. Treasury 3-7 Year Bond Index measures the performance of US Dollar denominated fixed rate US
Treasury bonds that have a remaining maturity of between three and seven years. The Benchmark Index includes
22
investment grade bonds issued by the US Treasury that have a minimum amount outstanding of $300 million. The
Benchmark Index rebalances on a monthly basis and is market capitalisation weighted. Further details regarding
the Benchmark Index (including its constituents) are available on the index provider’s website at
http://www.interactivedata.com/products-services/ice-indices/idcot3
iShares $ Treasury Bond 7-10yr UCITS ETF USD (Acc)
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the ICE U.S.
Treasury 7-10 Year Bond Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of fixed
income securities that, as far as possible and practicable, consists of the component securities of the ICE U.S.
Treasury 7-10 Year Bond Index, this Fund’s Benchmark Index. The Fund intends to use optimisation techniques in
order to achieve a similar return to the Benchmark Index and it is therefore not expected that the Fund will hold
each and every underlying constituent of the Benchmark Index at all times or hold them in the same proportion as
their weightings in the Benchmark Index. The Fund may hold some securities which are not underlying constituents
of the Benchmark Index where such securities provide similar performance (with matching risk profiles) to certain
securities that make up the Benchmark Index. However, from time to time the Fund may hold all constituents of
the Benchmark Index.
The Base Currency of iShares $ Treasury Bond 7-10yr UCITS ETF USD (Acc) is US Dollar (US$).
Benchmark Index
The ICE U.S. Treasury 7-10 Year Bond Index measures the performance of US Dollar denominated fixed rate US
Treasury bonds that have a remaining maturity of between seven and ten years. The Benchmark Index includes
investment grade bonds issued by the US Treasury that have a minimum amount outstanding of $300 million. The
Benchmark Index rebalances on a monthly basis and is market capitalisation weighted. Further details regarding
the Benchmark Index (including its constituents) are available on the index provider’s website at
http://www.interactivedata.com/products-services/ice-indices/idcot7
iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc)
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the Bloomberg
Barclays Euro Government Bond 1-3 Year Term Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of fixed
income securities that, as far as possible and practicable, consists of the component securities of the Bloomberg
Barclays Euro Government Bond 1-3 Year Term Index, this Fund’s Benchmark Index. The Fund intends to use
optimisation techniques in order to achieve a similar return to the Benchmark Index and it is therefore not
expected that the Fund will hold each and every underlying constituent of the Benchmark Index at all times or hold
them in the same proportion as their weightings in the Benchmark Index. The Fund may hold some securities
which are not underlying constituents of the Benchmark Index where such securities provide similar performance
(with matching risk profiles) to certain securities that make up the Benchmark Index. However, from time to time
the Fund may hold all constituents of the Benchmark Index.
The Base Currency of iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc) is Euro (€).
Benchmark Index
The Bloomberg Barclays Euro Government Bond 1-3 Year Term Index measures the performance of Euro
denominated fixed rate government bonds that have recently been issued and have a remaining maturity of
between one and three years. The Benchmark Index includes investment grade bonds issued by certain EMU
member states that have a minimum amount outstanding of €2 billion. The Benchmark Index rebalances on a
monthly basis and eligible bonds must have original term of between 1.25 and 3.25 years and have a calculated life
of 1.25 years or more on the rebalancing date. Further details regarding the Benchmark Index (including its
constituents) are available on the index provider’s website at http://index.barcap.com/index.dxml?pageId=4377
iShares € Govt Bond 3-7yr UCITS ETF
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the Bloomberg
Barclays Euro Government Bond 3-7 Year Term Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of fixed
income securities that, as far as possible and practicable, consists of the component securities of the Bloomberg
Barclays Euro Government Bond 3-7 Year Term Index, this Fund’s Benchmark Index. The Fund intends to use
optimisation techniques in order to achieve a similar return to the Benchmark Index and it is therefore not
expected that the Fund will hold each and every underlying constituent of the Benchmark Index at all times or hold
23
them in the same proportion as their weightings in the Benchmark Index. The Fund may hold some securities
which are not underlying constituents of the Benchmark Index where such securities provide similar performance
(with matching risk profiles) to certain securities that make up the Benchmark Index. However, from time to time
the Fund may hold all constituents of the Benchmark Index.
The Base Currency of iShares € Govt Bond 3-7yr UCITS ETF is Euro (€).
Benchmark Index
The Bloomberg Barclays Euro Government Bond 3-7 Year Term Index measures the performance of Euro
denominated fixed rate government bonds that have recently been issued and have a remaining maturity of
between three and seven years. The Benchmark Index includes investment grade bonds issued by certain EMU
member states that have a minimum amount outstanding of €2 billion. The Benchmark Index rebalances on a
monthly basis and eligible bonds must have original term of between 4.5 and 11 years and have a calculated time
to maturity greater than or equal to 3 and less than 7 years on the rebalancing date. Further details regarding the
Benchmark Index (including its constituents) are available on the index provider’s website at
http://index.barcap.com/index.dxml?pageId=4377
iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc)
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the Bloomberg
Barclays Euro Government Bond 10 Year Term Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of fixed
income securities that, as far as possible and practicable, consists of the component securities of the Bloomberg
Barclays Euro Government Bond 10 Year Term Index, this Fund’s Benchmark Index. The Fund intends to use
optimisation techniques in order to achieve a similar return to the Benchmark Index and it is therefore not
expected that the Fund will hold each and every underlying constituent of the Benchmark Index at all times or hold
them in the same proportion as their weightings in the Benchmark Index. The Fund may hold some securities
which are not underlying constituents of the Benchmark Index where such securities provide similar performance
(with matching risk profiles) to certain securities that make up the Benchmark Index. However, from time to time
the Fund may hold all constituents of the Benchmark Index.
The Base Currency of iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc) is Euro (€).
Benchmark Index
The Bloomberg Barclays Euro Government Bond 10 Year Term Index measures the performance of Euro
denominated fixed rate government bonds that have recently been issued and have a remaining maturity of
between seven and ten years. The Benchmark Index includes investment grade bonds issued by certain EMU
member states that have a minimum amount outstanding of €2 billion. The Benchmark Index rebalances on a
monthly basis and eligible bonds must have original term of between 9.75 and 11 years and have a calculated life
of 7 years or more on the rebalancing date. Further details regarding the Benchmark Index (including its
constituents) are available on the index provider’s website at http://index.barcap.com/index.dxml?pageId=4377
iShares Core EURO STOXX 50 UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the EURO STOXX 50), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of EURO STOXX 50, this
Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares Core EURO STOXX 50 UCITS ETF is Euro (€).
Benchmark Index
The EURO STOXX 50 measures the performance of 50 European company stocks with the objective of reflecting the
market sector leaders in the Eurozone. Stocks are selected from the largest companies of the EURO STOXX Index
that meet specific criteria according to the Benchmark Index methodology. As at 30 June 2016, the Benchmark
Index included eligible constituents from the following countries: Austria, Belgium, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. The list of countries may be subject to
change over time. The Benchmark Index is weighted by free-float market capitalisation, and each component's
weight is capped at 10% maximum. The Benchmark Index rebalances on a quarterly basis. Further details
regarding the Benchmark Index (including its constituents) are available on the index provider’s website at
www.stoxx.com
24
iShares Core MSCI Pacific ex-Japan UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI Pacific ex Japan), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI Pacific ex Japan,
this Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all
the securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index.
In order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in
shares issued by the same body. This limit may be raised to 35% for a single issuer when exceptional
market conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares Core MSCI Pacific ex-Japan UCITS ETF is US Dollar (US$).
Benchmark Index
The MSCI Pacific ex Japan measures the performance of large and mid capitalisation stocks across developed
markets countries in the Pacific region, excluding Japan, which comply with MSCI's size, liquidity and free-float
criteria.As at 30 June 2016, the Benchmark Index included eligible constituents from the following countries:
Australia, Hong Kong, New Zealand, and Singapore. The list of eligible countries may be subject to change over
time. The Benchmark Index is market capitalisation weighted and rebalances on a quarterly basis. Further details
regarding the Benchmark Index (including its constituents) are available on the index provider’s website at
https://www.msci.com/constituents
iShares Core S&P 500 UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the S&P 500), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the S&P 500, this Fund’s
Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares Core S&P 500 UCITS ETF is US Dollar (US$).
Benchmark Index
The S&P 500 measures the performance of 500 stocks from top US companies in leading industries of the US
economy which comply with S&P’s size, liquidity and free float criteria. The Benchmark Index is free float market
capitalisation weighted and rebalances on an as-needed basis. Further details regarding the Benchmark Index
(including
its
constituents)
are
available
on
the
index
provider’s
website
at
http://supplemental.spindices.com/supplemental-data/eu.
iShares Dow Jones Industrial Average UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the Dow Jones Industrial Average), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the Dow Jones Industrial
Average, this Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by
holding all the securities comprising the Benchmark Index in a similar proportion to their weightings in the
Benchmark Index. In order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net
Asset Value in shares issued by the same body. This limit may be raised to 35% for a single issuer
when exceptional market conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares Dow Jones Industrial Average UCITS ETF is US Dollar (US$).
Benchmark Index
The Dow Jones Industrial Average measures the equity performance of 30 large and well-known US companies on
a price-weighted basis. The Benchmark Index covers all industries with the exception of Transportation and Utilities
and is maintained by the Averages Committee. Index constituents are selected by the Averages Committee and
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stocks are typically added only if the company has an excellent reputation, demonstrates sustained growth and is
of interest to a large number of investors. Constituents are added and deleted from the Benchmark Index on an asneeded basis, with changes typically occurring following corporate acquisitions or other significant changes in a
component company's business. When one constituent is replaced, all of them are reviewed. The Benchmark Index
is price weighted meaning that its constituent weightings are affected only by changes in the stocks' prices. Further
details regarding the Benchmark Index (including its constituents) are available on the index provider’s website at
http://supplemental.spindices.com/supplemental-data/europe.
iShares FTSE 100 UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the FTSE 100), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the FTSE 100, this Fund’s
Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares FTSE 100 UCITS ETF is Sterling (Stg£).
Benchmark Index
The FTSE 100 measures the performance of the 100 largest capitalisation UK listed stocks, which pass screening
for size, liquidity and free-float criteria. The Benchmark Index is free float market capitalisation weighted and
rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at http://www.ftse.com/Indices/.
iShares FTSE MIB UCITS ETF EUR (Acc)
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the FTSE MIB), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the FTSE MIB, this Fund’s
Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares FTSE MIB UCITS ETF EUR (Acc) is Euro (€).
Benchmark Index
The FTSE MIB measures the performance of 40 of the most liquid and capitalised Italian stocks which comply with
FTSE's liquidity and free-float criteria. Benchmark Index components are selected by the FTSE Italia Index Policy
Committee with the objective to replicate broad sector weights of the Italian stock market. The Benchmark Index is
market capitalisation weighted with each constituent capped at a maximum of 15%. The Benchmark Index
rebalances on the quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at http://www.ftse.com/Indices/.
iShares MSCI Brazil UCITS ETF USD (Acc)
Investment Objective
The investment objective of the Fund is to deliver the performance of the Benchmark Index (being the MSCI Brazil
Index Net USD), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI Brazil Index Net
USD, this Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by
holding all the securities comprising the Benchmark Index in a similar proportion to their weightings in the
Benchmark Index. In order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net
Asset Value in shares issued by the same body. This limit may be raised to 35% for a single issuer
when exceptional market conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI Brazil UCITS ETF USD (Acc) is US Dollar (US$).
26
Benchmark Index
The MSCI Brazil Index Net USD measures the performance of large and mid capitalisation stocks of the Brazilian
equity market which comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market
capitalisation weighted and rebalances on a quarterly basis. Further details regarding the Benchmark Index
(including its constituents) are available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI Canada UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI Canada), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI Canada, this
Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI Canada UCITS ETF is US Dollar (US$).
Benchmark Index
The MSCI Canada measures the performance of large and mid capitalisation stocks of the Canadian equity market
which comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market capitalisation
weighted and rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its
constituents) are available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI EM Asia UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the performance of the Benchmark Index (being the MSCI EM
Asia Index Net USD), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that, as far as possible and practicable, consists of the component securities of the MSCI EM Asia Index
Net USD, this Fund’s Benchmark Index. The Fund intends to use optimisation techniques in order to achieve a
similar return to the Benchmark Index and it is therefore not expected that the Fund will hold each and every
underlying constituent of the Benchmark Index at all times or hold them in the same proportion as their weightings
in the Benchmark Index. The Fund may hold some securities which are not underlying constituents of the
Benchmark Index where such securities provide similar performance (with matching risk profile) to certain
securities that make up the Benchmark Index. However, from time to time the Fund may hold all constituents of
the Benchmark Index.
The Base Currency of iShares MSCI EM Asia UCITS ETF is US Dollar (US$).
Benchmark Index
The MSCI EM Asia Index Net USD measures the performance of large and mid capitalisation stocks of certain
emerging markets countries in Asia which comply with MSCI's size, liquidity, and free-float criteria. As at 30 June
2016, the Benchmark Index included eligible constituents from the following countries: China, India, Indonesia,
Malaysia, Philippines, South Korea, Taiwan and Thailand. The list of eligible countries may be subject to change
over time. The Benchmark Index is market capitalisation weighted and rebalances on a quarterly basis. Further
details regarding the Benchmark Index (including its constituents) are available on the index provider’s website at
https://www.msci.com/constituents
iShares MSCI EMU CHF Hedged UCITS ETF (Acc)
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI EMU 100% Hedged to CHF Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve its investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI EMU and foreign
exchange forward contracts that, as far as possible and practicable, track the hedging methodology of the MSCI
EMU 100% Hedged to CHF Index, this Fund’s Benchmark Index. The hedging methodology consists of entering into
foreign exchange forward contracts in order to hedge the underlying foreign currency exposure arising as a result
of the difference between the Base Currency and the currencies of the constituent securities in the Benchmark
Index. Currency hedging is carried out under a single hedging programme for the life of the Fund which is
27
implemented using rolling one-month forward contracts. The Fund intends to replicate the constituents of the
Benchmark Index by holding all the securities comprising the Benchmark Index in a similar proportion to their
weightings in the Benchmark Index. In order to replicate its Benchmark Index, this Fund may invest up to
20% of its Net Asset Value in shares issued by the same body. This limit may be raised to 35% for a
single issuer when exceptional market conditions apply (as set out in section 4 of Schedule III of the
Prospectus).
The Base Currency iShares MSCI EMU CHF Hedged UCITS ETF (Acc) is Swiss Francs (CHF).
Benchmark Index
The MSCI EMU 100% Hedged to CHF Index measures the performance of the MSCI EMU with currency exposures
hedged to Swiss Francs using one-month currency forwards according to the MSCI methodology. The Benchmark
Index contains both equity securities and foreign currency hedging components. The MSCI EMU measures the
performance of large and mid capitalisation stocks across developed markets countries in the European Economic
and Monetary Union (EMU) which comply with MSCI's size, liquidity, and free-float criteria. As at 30 June 2016, the
Benchmark Index consisted of the following countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Netherlands, Portugal and Spain. The list of eligible countries may be subject to change over time. The Benchmark
Index incorporates a monthly hedge, using a one month forward FX contract to reduce currency exposure. The
foreign currency hedging component comprises rolling one-month forward contracts that are reset at the end of
each month and hedge the non-Swiss Francs currency in the Benchmark Index back to the Fund’s Base Currency
(Swiss Francs). No adjustment is made to the hedge during the month to account for price movements of
constituent securities of the Benchmark Index, corporate events affecting such securities, additions, deletions or
any other changes to the Benchmark Index. The Benchmark Index is market capitalisation weighted and rebalances
on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are available on the
index provider’s website at https://www.msci.com/constituents
iShares MSCI EMU Small Cap UCITS ETF
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the MSCI EMU
Small Cap), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that, as far as possible and practicable, consists of the component securities of the MSCI EMU Small Cap,
this Fund’s Benchmark Index. The Fund intends to use optimisation techniques in order to achieve a similar return
to the Benchmark Index and it is therefore not expected that the Fund will hold each and every underlying
constituent of the Benchmark Index at all times or hold them in the same proportion as their weightings in the
Benchmark Index. The Fund may hold some securities which are not underlying constituents of the Benchmark
Index where such securities provide similar performance (with matching risk profile) to certain securities that make
up the Benchmark Index. However, from time to time the Fund may hold all constituents of the Benchmark Index.
The Base Currency of iShares MSCI EMU Small Cap UCITS ETF is Euro (€).
Benchmark Index
The MSCI EMU Small Cap measures the performance of small capitalisation stocks across developed markets
countries in the European Economic and Monetary Union (EMU) which comply with MSCI's size, liquidity, and freefloat criteria. As at 30 June 2016, the Benchmark Index included eligible constituents from the following countries:
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal and Spain. The list of eligible
countries may be subject to change over time. The Benchmark Index is market capitalisation weighted and
rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI EMU UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI EMU), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI EMU, this Fund’s
Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI EMU UCITS ETF is Euro (€).
Benchmark Index
28
The MSCI EMU measures the performance of large and mid capitalisation stocks across developed markets
countries in the European Economic and Monetary Union (EMU) which comply with MSCI's size, liquidity, and freefloat criteria. As at 30 June 2016, the Benchmark Index included eligible constituents from the following countries:
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal and Spain. The list of eligible
countries may be subject to change over time. The Benchmark Index is market capitalisation weighted and
rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI EMU USD Hedged UCITS ETF (Acc)
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI EMU 100% Hedged to USD Index), less the fees and expenses of the Fund.
Investment Policy
In order to achieve its investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI EMU and foreign
exchange forward contracts that, as far as possible and practicable, track the hedging methodology of the MSCI
EMU 100% Hedged to USD Index, this Fund’s Benchmark Index. The hedging methodology consists of entering into
foreign exchange forward contracts in order to hedge the underlying foreign currency exposure arising as a result
of the difference between the Base Currency and the currencies of the constituent securities in the Benchmark
Index. Currency hedging is carried out under a single hedging programme for the life of the Fund which is
implemented using rolling one-month forward contracts. The Fund intends to replicate the constituents of the
Benchmark Index by holding all the securities comprising the Benchmark Index in a similar proportion to their
weightings in the Benchmark Index. In order to replicate its Benchmark Index, this Fund may invest up to
20% of its Net Asset Value in shares issued by the same body. This limit may be raised to 35% for a
single issuer when exceptional market conditions apply (as set out in section 4 of Schedule III of the
Prospectus).
The Base Currency iShares MSCI EMU USD Hedged UCITS ETF (Acc) is US Dollar (US$).
Benchmark Index
The MSCI EMU 100% Hedged to USD Index measures the performance of the MSCI EMU with currency exposures
hedged to US Dollar using one-month currency forwards according to the MSCI methodology. The Benchmark
Index contains both equity securities and foreign currency hedging components. The MSCI EMU measures the
performance of large and mid capitalisation stocks across developed markets countries in the European Economic
and Monetary Union (EMU) which comply with MSCI's size, liquidity, and free-float criteria. As at 30 June 2016, the
Benchmark Index consisted of the following countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Netherlands, Portugal and Spain. The list of eligible countries may be subject to change over time. The Benchmark
Index incorporates a monthly hedge, using a one month forward FX contract to reduce currency exposure. The
foreign currency hedging component comprises rolling one-month forward contracts that are reset at the end of
each month and hedge the non-US Dollar currency in the Benchmark Index back to the Fund’s Base Currency (US
Dollar). No adjustment is made to the hedge during the month to account for price movements of constituent
securities of the Benchmark Index, corporate events affecting such securities, additions, deletions or any other
changes to the Benchmark Index. The Benchmark Index is free float-adjusted market capitalisation weighted and
rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI Japan UCITS ETF USD (Acc)
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI Japan), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI Japan, this
Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI Japan UCITS ETF USD (Acc) is US Dollar (US$).
Benchmark Index
The MSCI Japan measures the performance of large and mid capitalisation stocks of the Japanese equity market
which comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market capitalisation
weighted and rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its
constituents) are available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI Korea UCITS ETF USD (Acc)
29
Investment Objective
The investment objective of the Fund is to deliver the performance of the Benchmark Index (being the MSCI Korea
Index Net USD), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of MSCI Korea Index Net USD,
this Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all
the securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index.
In order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in
shares issued by the same body. This limit may be raised to 35% for a single issuer when exceptional
market conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI Korea UCITS ETF USD (Acc) is US Dollar (US$).
Benchmark Index
The MSCI Korea Index Net USD measures the performance of large and mid capitalisation stocks of the South
Korean equity market which comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is
market capitalisation weighted and rebalances on a quarterly basis. Further details regarding the Benchmark Index
(including its constituents) are available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI Mexico Capped UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the performance of the Benchmark Index (being the MSCI Mexico
Capped Index Net USD), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI Mexico Capped
Index Net USD, this Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark
Index by holding all the securities comprising the Benchmark Index in a similar proportion to their weightings in
the Benchmark Index. In order to replicate its Benchmark Index, this Fund may invest up to 20% of its
Net Asset Value in shares issued by the same body. This limit may be raised to 35% for a single issuer
when exceptional market conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI Mexico Capped UCITS ETF is US Dollar (US$).
Benchmark Index
The MSCI Mexico Capped Index Net USD measures the performance of large and mid capitalisation stocks of the
Mexican equity market which comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is
market capitalisation weighted and rebalances on a quarterly basis. The Benchmark Index also caps the weight of
the largest companies at each rebalance to help ensure index diversification. The weight of the largest group entity
in the Benchmark Index is capped at 30% and the weights of the remaining group entities are capped at 20%.
Further details regarding the Benchmark Index (including its constituents) are available on the index provider’s
website at https://www.msci.com/constituents
iShares MSCI Russia ADR/GDR UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the performance of the Benchmark Index (being the MSCI Russia
ADR/GDR Index Net USD), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI Russia ADR/GDR
Index Net USD, this Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark
Index by holding all the securities comprising the Benchmark Index in a similar proportion to their weightings in
the Benchmark Index. In order to replicate its Benchmark Index, this Fund may invest up to 20% of its
Net Asset Value in shares issued by the same body. This limit may be raised to 35% for a single issuer
when exceptional market conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI Russia ADR/GDR UCITS ETF is US Dollar (US$).
Benchmark Index
The MSCI Russia ADR/GDR Index Net USD measures the performance of Russian large and mid capitalisation
stocks through the use of liquid depositary receipts (DRs). The Benchmark Index includes American Depositary
Receipts (ADRs) listed on the New York Stock Exchange or the NASDAQ, and Global Depositary Receipts (GDRs)
and ADRs listed on the London Stock Exchange, which comply with MSCI's liquidity criteria. The Benchmark Index
30
does not include constituents of the MSCI Russia Index that are without DR listings. The Benchmark Index is
market capitalisation weighted and rebalances on a quarterly basis. Further details regarding the Benchmark Index
(including its constituents) are available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI UK Large Cap UCITS ETF
Investment Objective
The investment objective of the Fund is to replicate the Benchmark Index (being the MSCI UK Large Cap), less the
fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI UK Large Cap,
this Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all
the securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index.
In order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in
shares issued by the same body. This limit may be raised to 35% for a single issuer when exceptional
market conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI UK Large Cap UCITS ETF is Sterling (Stg£).
Benchmark Index
The MSCI UK Large Cap measures the performance of large capitalisation stocks of the UK equity market which
comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market capitalisation weighted
and rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI UK Small Cap UCITS ETF
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the MSCI UK
Small Cap), less the fees and expenses of the Fund
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that, as far as possible and practicable, consists of the component securities of the MSCI UK Small Cap,
this Fund’s Benchmark Index. The Fund intends to use optimisation techniques in order to achieve a similar return
to the Benchmark Index and it is therefore not expected that the Fund will hold each and every underlying
constituent of the Benchmark Index at all times or hold them in the same proportion as their weightings in the
Benchmark Index. The Fund may hold some securities which are not underlying constituents of the Benchmark
Index where such securities provide similar performance (with matching risk profile) to certain securities that make
up the Benchmark Index. However, from time to time the Fund may hold all constituents of the Benchmark Index.
The Base Currency of iShares MSCI UK Small Cap UCITS ETF is Sterling (Stg£).
Benchmark Index
The MSCI UK Small Cap measures the performance of small capitalisation stocks of the UK equity market which
comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market capitalisation weighted
and rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI UK UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI UK), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI UK, this Fund’s
Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI UK UCITS ETF is Sterling (Stg£).
Benchmark Index
The MSCI UK measures the performance of large and mid capitalisation stocks of the UK equity market which
comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market capitalisation weighted
31
and rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI USA Small Cap UCITS ETF
Investment Objective
The investment objective of the Fund is to replicate the performance of the Benchmark Index (being the MSCI USA
Small Cap), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that, as far as possible and practicable, consists of the component securities of MSCI USA Small Cap, this
Fund’s Benchmark Index. The Fund intends to use optimisation techniques in order to achieve a similar return to
the Benchmark Index and it is therefore not expected that the Fund will hold each and every underlying constituent
of the Benchmark Index at all times or hold them in the same proportion as their weightings in the Benchmark
Index. The Fund may hold some securities which are not underlying constituents of the Benchmark Index where
such securities provide similar performance (with matching risk profile) to certain securities that make up the
Benchmark Index. However, from time to time the Fund may hold all constituents of the Benchmark Index.
The Base Currency of iShares MSCI USA Small Cap UCITS ETF is US Dollar (US$).
Benchmark Index
The MSCI USA Small Cap measures the performance of small capitalisation stocks of the US equity market which
comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market capitalisation weighted
and rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares MSCI USA UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the MSCI USA), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the MSCI USA, this Fund’s
Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares MSCI USA UCITS ETF is US Dollar (US$).
Benchmark Index
The MSCI USA measures the performance of large and mid capitalisation stocks of the US equity market which
comply with MSCI's size, liquidity, and free-float criteria. The Benchmark Index is market capitalisation weighted
and rebalances on a quarterly basis. Further details regarding the Benchmark Index (including its constituents) are
available on the index provider’s website at https://www.msci.com/constituents
iShares NASDAQ 100 UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the NASDAQ 100), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the NASDAQ 100, this
Fund’s Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares NASDAQ 100 UCITS ETF is US Dollar (US$).
Benchmark Index
The NASDAQ 100 measures the performance of 100 of the largest US and international non-financial stocks listed
on the NASDAQ Stock Market which comply with size and liquidity criteria. The Benchmark Index includes
32
companies across major industry groups including technology, consumer goods & services, health care and
telecommunications. It does not contain stocks of financial companies including investment companies. The
Benchmark Index is market capitalisation weighted and rebalances on a quarterly basis. Further details regarding
the Benchmark Index (including its constituents) are available on the index provider’s website at
http://www.nasdaq.com/markets/indices/nasdaq-100.aspx
iShares Nikkei 225 UCITS ETF
Investment Objective
The investment objective of the Fund is to deliver the net total return performance of the Benchmark Index (being
the Nikkei 225), less the fees and expenses of the Fund.
Investment Policy
In order to achieve this investment objective, the investment policy of the Fund is to invest in a portfolio of equity
securities that as far as possible and practicable consists of the component securities of the Nikkei 225, this Fund’s
Benchmark Index. The Fund intends to replicate the constituents of the Benchmark Index by holding all the
securities comprising the Benchmark Index in a similar proportion to their weightings in the Benchmark Index. In
order to replicate its Benchmark Index, this Fund may invest up to 20% of its Net Asset Value in shares
issued by the same body. This limit may be raised to 35% for a single issuer when exceptional market
conditions apply (as set out in section 4 of Schedule III).
The Base Currency of iShares Nikkei 225 UCITS ETF is Japanese Yen (¥).
Benchmark Index
The Nikkei 225 measures the performance of 225 stocks listed on the First Section of the Tokyo Stock Exchange.
The Benchmark Index is price-weighted and constituents are selected based on liquidity screening and sector
representation. The Benchmark Index rebalances on an annual basis, or on a more frequent extraordinary basis
when required. Further details regarding the Benchmark Index (including its constituents) are available on the
index provider’s website at http://indexes.nikkei.co.jp/en/nkave/index.
33
METHODOLOGIES FOR CURRENCY HEDGING
The Company is a UCITS and accordingly the Funds are subject to the investment and borrowing restrictions set
out in the Regulations and the Central Bank UCITS Regulations. These are set out in detail in Schedule III below.
Currency Hedged Funds
Currency hedging is undertaken for the Currency Hedged Funds via such Funds tracking Benchmark Indices that
incorporate a foreign currency hedging methodology. The hedge positions may result in leverage being generated
within these Funds on an intra-month basis. In relation to the foreign currency hedging component of the Currency
Hedged Funds, in the event that there is a gain on the hedge, no leverage will result from such gain. In the event
that there is a loss on the hedge, leverage will result in the relevant Fund from such loss. Any leverage will be
removed or reduced when the relevant Benchmark Index is rebalanced each month. As the Currency Hedged Funds
track Benchmark Indices, they will seek to deliver an exposure similar to that generated by their respective
Benchmark Indices.
The Investment Manager does not intend to leverage the Currency Hedged Funds beyond that required to track
their respective Benchmark Indices.
Upon receipt of a subscription in the Currency Hedged Funds, the Investment Manager will allocate monies
representing the subscription in proportion to the weightings in the relevant Benchmark Index. The intra-month
foreign currency exchange position may mean that tracking the equity portion of the relevant Benchmark Index
requires the Investment Manager to acquire securities representing the relevant Benchmark Index directly and also
through a futures contract in proportion to the weightings of the securities comprising the relevant Benchmark
Index and the value of the hedge.
Currency Hedged Share Classes
Currency hedging is undertaken for each Currency Hedged Share Class by hedging its underlying portfolio currency
exposures that are different from its Valuation Currency to keep the difference between such underlying portfolio
currency exposures and the Valuation Currency within a pre-determined tolerance. The Investment Manager will
monitor the currency exposure of each Currency Hedged Share Class against the pre-determined tolerances daily
and will determine when a currency hedge should be reset and the gain or loss arising from the currency hedge
reinvested or settled, while taking into consideration the frequency and associated transaction and reinvestment
costs of resetting the currency hedge.
In the event that, the over-hedge or under-hedge position on any single underlying portfolio currency exposure of
a Currency Hedged Share Class exceeds the pre-determined tolerance as at the close of a Business Day (for
example, due to market movement), the hedge in respect of that underlying currency will be reset on the next
Business Day (on which the relevant currency markets are open). Any over-hedged position arising in a Currency
Hedged Share Class is not permitted to exceed 105% of the net asset value of that Share Class as prescribed by
the Central Bank UCITS Regulations. In addition, if the aggregate gain or loss arising from the currency forwards
for hedging all the underlying currencies of a Currency Hedged Share Class exceeds the pre-determined tolerance
as at the close of a Business Day, the Investment Manager will determine on the next Business Day (on which the
relevant currency markets are open) whether some or all of the currency hedges held by that Share Class are
required to be reset to reduce the gain or loss if the gain or loss remains outside the tolerance. Applying the above
tolerance thresholds will enable the Investment Manager to better manage the frequency and associated costs
arising from FX transactions to effect the hedge for Currency Hedged Share Classes. The pre-determined tolerance
threshold for each Currency Hedged Share Class is reviewed by BlackRock’s Risk and Quantitative Analysis team.
In relation to the foreign currency hedging component of the Currency Hedged Share Classes, in the event that
there is a gain on the foreign currency hedge, no leverage will result from such gain. In the event that there is a
loss on the foreign currency hedge, leverage will result in the relevant Currency Hedged Share Classes from such
loss. Any leverage will be removed or reduced when the relevant currency hedge is adjusted or reset as required
for the relevant Currency Hedged Share Class. The Investment Manager does not intend to leverage the Currency
Hedged Share Classes beyond the tolerance threshold at which point a reset of some or all of the currency hedges
for that Currency Hedged Share Class will be triggered. In extreme market circumstances the tolerance threshold
may be temporarily breached.
Upon receipt of a subscription in a Currency Hedged Share Class, the Investment Manager will allocate monies
representing the subscription in proportion to the weightings between the securities held by the Fund that are
attributable to that Share Class and the value of the hedge of that Share Class.
34
INVESTMENT TECHNIQUES
The Funds invest in transferable securities in accordance with the Regulations and/or other liquid financial assets
referred to in Regulation 68 of the Regulations with the aim of spreading investment risk. Each Fund’s Investments
will be limited to investments permitted by the Regulations which are described in more detail in Schedule III.
Each Fund’s Investments, other than its Investments in open-ended collective investment schemes, will normally
be listed or traded on Regulated Markets set out in Schedule I.
There are a number of circumstances in which achieving the investment objective and policy of a Fund may be
prohibited by regulation, may not be in the interests of holders of Shares or may require the use of strategies
which are ancillary to those set out in the Fund’s investment objective and policy. These circumstances include,
but are not limited to the following:(i)
Each Fund is subject to the Regulations which include, inter alia, certain restrictions on the proportion of
that Fund’s value which may be held in individual securities. Depending on the concentration of the
Benchmark Index, a Fund may be restricted from investing to the full concentration level of the
Benchmark Index. In addition, a Fund may hold synthetic securities within the limits set out in this
Prospectus, provided that the synthetic securities are securities which are correlated to, or the return on
which is based on securities which form part of the Benchmark Index.
(ii)
The constituent securities of the Benchmark Index change from time to time (a “rebalancing”). The
Investment Manager may adopt a variety of strategies when investing the assets of a Fund to bring it in
line with the rebalanced Benchmark Index. For example, (a) for Equity Funds, where a security which
forms part of the Benchmark Index is not available or is not available for the required value or a market
for such security does not exist or is restricted, or where acquiring or holding such security is not as cost
or tax efficient as acquiring or holding a depository receipt, a Fund may hold depository receipts relating
to such securities (e.g. ADRs and GDRs); (b) for Fixed Income Funds, where a fixed income security which
forms part of the Benchmark Index is not available or is not available for the required value or a market
for such security does not exist or is restricted, or where acquiring or holding such security is not as cost
or tax efficient as acquiring or holding a depository note or other fixed income securities, the Fund may
hold depository notes relating to such securities (e.g. GDNs) and/or hold some other fixed income
securities which have similar risk characteristics even if such fixed income securities are not themselves
constituents of the Benchmark Index.
(iii)
From time to time, securities in the Benchmark Index may be subject to corporate actions. The
Investment Manager may manage these events in its discretion.
(iv)
A Fund may hold ancillary liquid assets and will normally have dividend/income receivables. The
Investment Manager may purchase FDI (as outlined above), for direct investment purposes, to produce a
return similar to the return on the Benchmark Index.
(v)
Securities included in the Benchmark Index may, from time to time, become unavailable, illiquid or
unobtainable at fair value. In these circumstances, the Investment Manager may use a number of
techniques, including purchasing securities which are not constituents of the Benchmark Index, whose
returns, individually or collectively, are considered by the Investment Manager to be well-correlated to the
constituents of the Benchmark Index.
(vi)
The Investment Manager will have regard to the costs of any proposed portfolio transaction. It may not
necessarily be efficient to execute transactions which bring a Fund perfectly in line with the Benchmark
Index at all times.
Replicating Funds
Replicating index funds seek to replicate as closely as possible the constituents of the Benchmark Index by holding
all the securities comprising the Benchmark Index in similar proportion to their weightings in the Benchmark Index
and, in doing so, are permitted to avail of the higher investment limits set out in section 4 of Schedule III for
replicating index funds. It may not, however, always be possible or practicable to purchase each and every
constituent of the Benchmark Index in accordance with the weightings of the Benchmark Index, or doing so may be
detrimental to holders of Shares in the relevant Fund (for example, where there are considerable costs or practical
difficulties involved in compiling a portfolio of securities in order to replicate the Benchmark Index, or in
circumstances where a security in the Benchmark Index becomes temporarily illiquid, unavailable or less liquid, or
as a result of legal restrictions that apply to the Fund but not to the Benchmark Index). Replicating index Funds as
per the Regulations will state the intent to avail of the investment limits set out in section 4 of Schedule III in their
investment policy.
The following Funds use a replicating strategy: iShares Core EURO STOXX 50 UCITS ETF, iShares Core MSCI Pacific
ex-Japan UCITS ETF, iShares Core S&P 500 UCITS ETF, iShares Dow Jones Industrial Average UCITS ETF, iShares
FTSE 100 UCITS ETF, iShares FTSE MIB UCITS ETF EUR (Acc), iShares MSCI Brazil UCITS ETF USD (Acc), iShares
MSCI Canada UCITS ETF, iShares MSCI EMU CHF Hedged UCITS ETF (Acc), iShares MSCI EMU UCITS ETF, iShares
MSCI EMU USD Hedged UCITS ETF (Acc), iShares MSCI Japan UCITS ETF USD (Acc), iShares MSCI Korea UCITS
ETF USD (Acc), iShares MSCI Mexico Capped UCITS ETF, iShares MSCI Russia ADR/GDR UCITS ETF, iShares MSCI
UK Large Cap UCITS ETF, iShares MSCI UK UCITS ETF, iShares MSCI USA UCITS ETF, iShares NASDAQ 100
UCITS ETF and iShares Nikkei 225 UCITS ETF.
35
Non-replicating Funds
Certain Funds may not be replicating index funds for the purposes of the Regulations and therefore are not
permitted to avail of the higher investment limits set out in section 4 of Schedule III which apply to replicating
funds (instead, they may use optimisation techniques to achieve their investment objective). These Funds may, or
may not, hold every security or the exact concentration of a security in its Benchmark Index, but will aim to track
its Benchmark Index as closely as possible. The extent to which a Fund uses optimisation techniques will depend on
the nature of the constituents of its Benchmark Index, the practicalities and cost of tracking the relevant
Benchmark Index, and such use is at the discretion of the Investment Manager. For example, a Fund may use
optimisation techniques extensively and may be able to provide a return similar to that of its Benchmark Index by
investing only in a relatively small number of the constituents of its Benchmark Index. The Fund may also hold
some securities which provide similar performance (with matching risk profile) to certain securities that make up
the relevant Benchmark Index even if such securities are not themselves constituents of the Benchmark Index and
the Fund’s holdings may exceed the number of constituents of the Benchmark Index. The use of optimisation
techniques, implementation of which is subject to a number of constraints detailed in Schedule III, may not
produce the intended results.
The following Funds use a non-replicating strategy: iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B, iShares
$ Treasury Bond 3-7yr UCITS ETF iShares $ Treasury Bond 7-10yr UCITS ETF USD (Acc), iShares € Govt Bond 13yr UCITS ETF EUR (Acc), iShares € Govt Bond 3-7yr UCITS ETF, iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc),
iShares MSCI EM Asia UCITS ETF, iShares MSCI EMU Small Cap UCITS ETF, iShares MSCI UK Small Cap UCITS ETF
and iShares MSCI USA Small Cap UCITS ETF.
All Funds
Where consistent with its investment policy, each Fund may from time to time invest in convertible securities,
government bonds, liquidity instruments such as floating rate instruments and commercial paper (rated at least A3
by Moody’s or an equivalent rating from another agency), Structured Finance Securities, other transferable
securities (for example, medium term notes) and open-ended collective investment schemes. Subject to the
provisions of the Regulations and the conditions imposed by the Central Bank, each Fund may invest in other Funds
of the Company and/or in other collective investment schemes managed by the Manager. Funds which avail
themselves of the investment limits set out in section 4 of Schedule III (i.e. replicating index funds per the
Regulations), may only invest in these instruments to assist in gaining exposure to the component securities of
their Benchmark Indices. The Equity Funds and the Fixed Income Funds may, in accordance with the requirements
of the Central Bank in limited circumstances where direct investment in a constituent security of its Benchmark
Index is not possible or where acquiring or holding such security is not as cost or tax efficient as acquiring or
holding a depository receipt or a depository note, invest in depository receipts and depository notes respectively to
gain exposure to the relevant security. The Funds may hold small amounts of ancillary liquid assets (which will
normally have dividend/income receivables) and the Investment Manager, to produce a return similar to the return
on the Benchmark Index, may purchase FDI. The Funds may also hold small amounts of cash (“Cash Holdings”).
The Funds may, to preserve the value of such Cash Holdings, invest in one or more daily dealing money market
collective investment schemes as set out below under the heading “Management of Cash Holdings and FDI Cash
Holdings”.
In addition, a Fund may also engage in transactions in FDI including options and futures transactions, swaps,
forward contracts, non-deliverable forwards, credit derivatives (such as single name credit default swaps and credit
default swap indices), spot foreign exchange transactions, caps and floors, contracts for difference or other
derivative transactions for direct investment, to assist in achieving its objective and for reasons such as generating
efficiencies in gaining exposure to the constituents of the Benchmark Index or to the Benchmark Index itself, to
produce a return similar to the return of the Benchmark Index, to reduce transaction costs or taxes or allow
exposure in the case of illiquid securities or securities which are unavailable for market or regulatory reasons or to
minimise tracking errors or for such other reasons as the Directors deem of benefit to a Fund.
The maximum proportion of the Net Asset Value of the Funds that can be subject to total return swaps and
contracts for difference is 100%. The expected proportion of the Net Asset Value of the Funds that will be subject
to total return swaps is 0% and the expected proportion of the Net Asset Value of the Funds that will be subject to
contracts for difference is 0%. The expected proportions are not limits and the actual percentages may vary over
time depending on factors including, but not limited to, market conditions.
In the event that a Fund invests in non-fully funded FDI, the Fund may invest (i) cash representing up to the
notional amount of such FDI less margin payments (if any) in such FDI, and (ii) any variation margin cash
collateral received in respect of such FDI (together “FDI Cash Holdings”), in one or more daily dealing money
market collective investment schemes as set out below under the heading “Management of Cash Holdings and FDI
Cash Holdings”.
The Funds will not invest in fully funded FDI, including fully funded swaps.
Disclosure required by the competent authority of Mexico in respect of the Funds marketed in that jurisdiction
Although the percentage of a Fund’s net assets which must be invested in the component securities of its
Benchmark Index is not prescribed by this Prospectus the following Funds will each generally invest at least 80% of
their assets in securities of their respective Benchmark Indices and in depository receipts representing securities of
their respective Benchmark Indices: iShares Core EURO STOXX 50 UCITS ETF, iShares Core MSCI Pacific ex-Japan
36
UCITS ETF, iShares Core S&P 500 UCITS ETF and iShares FTSE 100 UCITS ETF. However, these Funds may at
times each invest up to 20% of their assets in certain FDI, cash and cash equivalents, including money market
funds managed by the Manager or Affiliates, as well as in securities not included in their respective Benchmark
Indices, but which the Investment Manager believes will help these Funds track their respective Benchmark Indices.
Risk Management Process
The Investment Manager employs a risk management process in respect of the Funds in accordance with the
requirements of the Central Bank to enable it to accurately monitor, measure and manage, the global exposure
from FDI (“global exposure”) which each Fund gains. Any FDI not included in the risk management process will not
be used until such time as a revised risk management process has been provided to the Central Bank. Information
regarding the risks associated with the use of FDI can be found in the section entitled “Risk Factors - FDI Risks”.
The Investment Manager uses the methodology known as the “Commitment Approach” in order to measure the
global exposure of the Current Funds and manage the potential loss to them due to market risk. The Commitment
Approach is a methodology that aggregates the underlying market or notional values of FDI to determine the
degree of global exposure of a Fund to FDI. Pursuant to the Regulations, in the event that a Fund uses leverage in
the future, the global exposure for a Fund must not exceed 100% of that Fund’s Net Asset Value.
The Funds may have small cash balances from time to time and may use FDI to produce a return on that cash
similar to the Benchmark Index. The Funds may also use FDI as set out in this Prospectus. In addition, for Funds
which invest in fixed income securities, in order to match the duration and risk profile of the relevant Benchmark
Index they may obtain a larger percentage weight exposure through FDI than the relevant cash balance. It is not
the Investment Manager’s intention to leverage the Funds. The Central Bank considers that any resulting leverage
below 5% of a Fund’s Net Asset Value is consistent with the statement that a Fund does not intend to be leveraged.
Management of Cash Holdings and FDI Cash Holdings
The Funds may invest Cash Holdings and / or FDI Cash Holdings in one or more daily dealing money market
collective investment schemes authorised as UCITS. Such collective investment schemes may be managed by the
Manager and / or an Affiliate and are subject to the limits set out in Schedule III. Such collective investment
schemes may comprise sub-funds in Institutional Cash Series plc which invest in money market instruments.
Institutional Cash Series plc is a BlackRock umbrella fund and open-ended investment company with variable
capital incorporated in Ireland and having segregated liability between its sub-funds. It is not anticipated that the
Fund’s Cash Holdings and / or FDI Cash Holdings will result in additional market exposure or capital erosion,
however, to the extent that additional market exposure or capital erosion occurs it is expected to be minimal.
ANTICIPATED TRACKING ERROR
Tracking error is the annualised standard deviation of the difference in monthly returns between a fund and its
benchmark index.
At BlackRock, we believe that this figure is important to a tactical investor who trades in and out of ETFs on a
regular basis, often holding shares in an ETF for the period of only a few days or weeks. For a buy-to-hold investor
with a longer investment time horizon, the tracking difference between the fund and the index over the target
investment period should be more important as a measure of performance against the index. Tracking difference
measures the actual difference between the returns of a Fund and the returns of the index (i.e. how closely a fund
tracks its index), while tracking error measures the increase and decrease in tracking difference (i.e. volatility of
tracking difference). We encourage investors to consider both metrics when evaluating an ETF.
Tracking error can be a function of the ETF replication methodology. Generally speaking, historical data provides
evidence that synthetic replication produces lower tracking error than physical replication; however, the same data
often also provides evidence that physical replication produces lower tracking difference than synthetic replication.
Anticipated tracking error is based on the expected volatility of differences between the returns of the relevant fund
and the returns of its benchmark index. For a physically replicating ETF, one of the primary drivers of tracking
error is the difference between a Fund’s holdings and index constituents. Cash management and trading costs from
rebalancing can also have an impact on tracking error as well as the return differential between the ETF and the
benchmark index. The impact can be either positive or negative depending on the underlying circumstances.
In addition to the above, the Company and/or a Fund may also have a tracking error due to withholding tax
suffered by the Company and/or a Fund on any income received from its Investments. The level and quantum of
tracking error arising due to withholding taxes depends on various factors such as any reclaims filed by the
Company and/or a Fund with various tax authorities, any benefits obtained by the Company and/or a Fund under a
tax treaty or any securities lending activities carried out by the Company and/or a Fund.
The table below displays the anticipated tracking error, in normal market conditions, of the Current Funds against
each Fund’s Benchmark Index, except that for Current Funds which have multiple Share Classes, the anticipated
tracking error displayed is for the Unhedged Share Classes against the corresponding Fund’s Benchmark Index
(which is also unhedged). The anticipated tracking error of a Fund is not a guide to its future performance. The
annual and semi-annual report and accounts will set out the actual realised tracking errors as at the end of the
period under review.
37
Fund
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
Anticipated tracking
error
$ Treasury Bond 1-3yr UCITS ETF USD (Acc) B
$ Treasury Bond 3-7yr UCITS ETF
$ Treasury Bond 7-10yr UCITS ETF USD (Acc)
€ Govt Bond 1-3yr UCITS ETF EUR (Acc)
€ Govt Bond 3-7yr UCITS ETF
€ Govt Bond 7-10yr UCITS ETF EUR (Acc)
Core EURO STOXX 50 UCITS ETF
Core MSCI Pacific ex-Japan UCITS ETF
Core S&P 500 UCITS ETF
Dow Jones Industrial Average UCITS ETF
FTSE 100 UCITS ETF
FTSE MIB UCITS ETF EUR (Acc)
MSCI Brazil UCITS ETF USD (Acc)
MSCI Canada UCITS ETF
MSCI EM Asia UCITS ETF
MSCI EMU CHF Hedged UCITS ETF (Acc)
MSCI EMU Small Cap UCITS ETF
MSCI EMU UCITS ETF
MSCI EMU USD Hedged UCITS ETF (Acc)
MSCI Japan UCITS ETF USD (Acc)
MSCI Korea UCITS ETF USD (Acc)
MSCI Mexico Capped UCITS ETF
MSCI Russia ADR/GDR UCITS ETF
MSCI UK Large Cap UCITS ETF
MSCI UK Small Cap UCITS ETF
MSCI UK UCITS ETF
MSCI USA Small Cap UCITS ETF
MSCI USA UCITS ETF
NASDAQ 100 UCITS ETF
Nikkei 225 UCITS ETF
38
Up
Up
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to
to
to
to
to
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to
to
to
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to
to
to
to
to
to
to
to
to
to
to
to
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to
to
to
to
to
to
to
0.15%
0.15%
0.20%
0.05%
0.10%
0.10%
0.35%
0.15%
0.10%
0.15%
0.10%
0.30%
0.30%
0.10%
1.00%
0.35%
0.90%
0.25%
0.35%
0.15%
0.70%
0.10%
1.30%
0.10%
0.25%
0.10%
0.40%
0.10%
0.10%
0.80%
EFFICIENT PORTFOLIO MANAGEMENT
The Company may, on behalf of each Fund and subject to the conditions and within the limits laid down by the
Central Bank, employ techniques and instruments relating to transferable securities for efficient portfolio
management purposes. Transactions for the purposes of efficient portfolio management may be undertaken with a
view to achieving a reduction in risk, a reduction in costs or the generation of additional capital or income for the
Fund with an appropriate level of risk, taking into account the risk profile of the relevant Fund and the general
provisions of the Directive. These techniques and instruments may include Investments in FDI such as interest
rate and bond futures (which may be used to manage interest rate risk), index futures (which may be used to
manage cash flows on a short term basis), options (which may be used to achieve cost efficiencies, for example
where the acquisition of the option is more cost effective than purchasing of the underlying asset), swaps (which
may be used to manage currency risk) and Investments in money market instruments and/or money market
collective investment schemes. Such techniques and instruments are set out in Schedule II. New techniques and
instruments may be developed which may be suitable for use by the Company and the Company (subject to the
Central Bank’s requirements) may employ such techniques and instruments.
A Fund may enter into securities lending, repurchase and/or reverse repurchase agreements for the purposes of
efficient portfolio management subject to the conditions and limits set out in the Central Bank UCITS Regulations
and in accordance with the requirements of the Central Bank.
The maximum proportion of the Net Asset Value of the Funds that can be subject to repurchase and reverse
repurchase agreements is 100%. The expected proportion of the Net Asset Value of the Funds that will be subject
to repurchase and reverse repurchase agreements is 0%. The expected proportion is not a limit and the actual
percentage may vary over time depending on factors including, but not limited to, market conditions.
The maximum proportion of the Net Asset Value of the Funds that can be subject to securities lending is 100%.
The demand to borrow securities is a significant driver for the amount that is actually lent from a Fund at a given
time. Borrowing demand fluctuates over time and depends to a large extent on market factors that cannot be
forecasted precisely. Based on historical data, lending volumes for Funds invested in the following asset classes are
typically in the ranges set out below, though past levels are no guarantee of future levels.
Typical range of a Fund's Net
Asset Value subject to
securities lending (%)
Asset Class / Fund Name(s)
Developed Equity
0-87%
iShares Core EURO STOXX 50 UCITS ETF, iShares Core MSCI
Pacific ex-Japan UCITS ETF, iShares Core S&P 500 UCITS ETF,
iShares Dow Jones Industrial Average UCITS ETF, iShares FTSE
100 UCITS ETF, iShares FTSE MIB UCITS ETF EUR (Acc), iShares
MSCI Canada UCITS ETF, iShares MSCI EMU CHF Hedged UCITS
ETF (Acc), iShares MSCI EMU UCITS ETF, iShares MSCI EMU USD
Hedged UCITS ETF (Acc), iShares MSCI Japan UCITS ETF USD
(Acc), iShares MSCI UK Large Cap UCITS ETF, iShares MSCI UK
UCITS ETF, iShares MSCI USA UCITS ETF, iShares NASDAQ 100
UCITS ETF and iShares Nikkei 225 UCITS ETF.
Developed Government Bond
0-99%
iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B, iShares $
Treasury Bond 3-7yr UCITS ETF, iShares $ Treasury Bond 7-10yr
UCITS ETF USD (Acc), iShares € Govt Bond 1-3yr UCITS ETF EUR
(Acc), iShares € Govt Bond 3-7yr UCITS ETF and iShares € Govt
Bond 7-10yr UCITS ETF EUR (Acc).
Emerging Market Equity
0-99%
iShares MSCI EM Asia UCITS ETF, iShares MSCI Korea UCITS ETF
USD (Acc) and iShares MSCI Russia ADR/GDR UCITS ETF.
Mid/Small Cap Equity
0-94%
iShares MSCI EMU Small Cap UCITS ETF, iShares MSCI UK Small
Cap UCITS ETF and iShares MSCI USA Small Cap UCITS ETF.
As at the date of this Prospectus iShares MSCI Brazil UCITS ETF USD (Acc) and iShares MSCI Mexico Capped UCITS
ETF do not engage in securities lending.
39
RISK FACTORS
Investors’ attention is drawn to the following risk factors in relation to the Funds. This does not
purport to be an exhaustive list of the risk factors relating to investing in the Company or its Funds.
General investment risks
Investment Risks
Past performance is not a guide to the future. The prices of Shares and the income from them may fall as well as
rise and an investor may not recover the full amount invested. There can be no assurance that any Fund will
achieve its investment objective or that an investor will recover the full amount invested in a Fund. The capital
return and income of each Fund are based on the capital appreciation and income of the securities it holds, less
expenses incurred and any relevant Duties and Charges. Therefore, each Fund’s return may be expected to
fluctuate in response to changes in such capital appreciation or income.
Risks specific to investing in index-tracking exchange traded funds (ETFs)
Passive Investment Risk
The Funds are not actively managed and may be affected by a general decline in market segments related to their
respective Benchmark Indices. The Funds invest in securities included in, or representative of, their respective
Benchmark Indices, and the Funds do not attempt to take defensive positions under any market conditions,
including declining markets.
Index Tracking Risks
While the Funds seek to track the performance of their respective Benchmark Indices, whether through a
replication or optimising strategy, there is no guarantee that they will achieve perfect tracking and the Funds may
potentially be subject to tracking error risk, which is the risk that their returns may not track exactly those of their
respective Benchmark Indices, from time to time. This tracking error may result from an inability to hold the exact
constituents of the Benchmark Index (although this is not the expected cause of tracking error for non-replicating
Funds),, for example where there are local market trading restrictions, small illiquid components, a temporary
unavailability or interruption in trading of certain securities comprising the Benchmark Index and/or where the
Regulations limit exposure to the constituents of the Benchmark Index. For liquidity purposes, the Funds may hold
a portion of their net assets in cash and such cash holdings will not rise and fall in line with movements in their
respective Benchmark Indices. In addition, the Company relies on index licences granted by third party index
providers to use and track the Benchmark Indices for its Funds. In the event that an index provider terminates or
varies an index licence, it will affect the ability of the impacted Funds to continue to use and track their Benchmark
Indices and to meet their investment objectives. In such circumstances, the Directors may take such action as
described in the section entitled “Benchmark Indices”. Regardless of market conditions, the Funds aim to track the
performance of their respective Benchmark Indices and do not seek to outperform their respective Benchmark
Indices.
Optimising strategy
It may not be practical or cost efficient for certain Funds to replicate their respective Benchmark Indices. Where it
is not part of a Fund’s investment policy to replicate its Benchmark Index, such Funds may use optimisation
techniques to track the performance of their respective Benchmark Indices. Optimisation techniques may include
the strategic selection of some (rather than all) of the securities that make up the Benchmark Index, holding
securities in proportions that differ from the proportions of the Benchmark Index and/or the use of FDI to track the
performance of certain securities that make up the Benchmark Index. The Investment Manager may also select
securities which are not underlying constituents of the relevant Benchmark Index where such securities provide
similar performance (with matching risk profile) to certain securities that make up the relevant Benchmark Index.
Optimising Funds may potentially be subject to tracking error risk, which is the risk that their returns may not track
exactly those of their respective Benchmark Indices.
Index-Related Risks
As prescribed by this Prospectus, in order to meet its investment objective, each Fund seeks to achieve a return
which corresponds generally to the price and yield performance, before fees and expenses, of the relevant
Benchmark Index as published by the index provider. There is no assurance that the index provider will compile the
Benchmark Index accurately, or that the Benchmark Index will be determined, composed or calculated accurately.
While the index provider does provide descriptions of what the Benchmark Index is designed to achieve, the index
provider does not provide any warranty or accept any liability in relation to the quality, accuracy or completeness
of data in respect of the Benchmark Index, and does not guarantee that the Benchmark Index will be in line with
the described index methodology.
The Investment Manager’s mandate as described in this Prospectus is to manage the Funds consistently with the
relevant Benchmark Index provided to the Investment Manager. Consequently, the Investment Manager does not
provide any warranty or guarantee for index provider errors. Errors in respect of the quality, accuracy and
completeness of the data may occur from time to time and may not be identified and corrected for a period of time,
particularly where the indices are less commonly used. Therefore gains, losses or costs associated with index
provider errors will be borne by the Funds and their investors. For example, during a period where the Benchmark
Index contains incorrect constituents, a Fund tracking such published Benchmark Index would have market
40
exposure to such constituents and would be underexposed to the constituents that should have been included in
the Benchmark Index. As such, errors may result in a negative or positive performance impact to the Funds and
their investors. Investors should understand that any gains from index provider errors will be kept by the Funds
and their investors and any losses resulting from index provider errors will be borne by the Funds and their
investors.
Apart from scheduled rebalances, the index provider may carry out additional ad hoc rebalances to the Benchmark
Index in order, for example, to correct an error in the selection of index constituents. Where the Benchmark Index
of a Fund is rebalanced and the Fund in turn rebalances its portfolio to bring it in line with its Benchmark Index,
any transaction costs (including any capital gains tax and/or transaction taxes) and market exposure arising from
such portfolio rebalancing will be borne directly by the Fund and its investors. Unscheduled rebalances to the
Benchmark Indices may also expose the Funds to tracking error risk, which is the risk that its returns may not
track exactly those of the Benchmark Index. Therefore, errors and additional ad hoc rebalances carried out by the
index provider to a Benchmark Index may increase the costs and market exposure risk of the relevant Fund.
Authorised Participant Concentration Risk
Only an Authorised Participant may engage in creation or redemption transactions directly with the Funds. Certain
Funds have a limited number of institutions that act as Authorised Participants. To the extent that these institutions
exit the business or are unable to proceed with creation and/or redemption orders with respect to the Funds and no
other Authorised Participant is able to step forward to make creation and/or redemption orders, the Shares may
trade at a discount to the Funds’ Net Asset Value and possibly face delisting.
Secondary Trading Risk
The Shares will generally be traded on the main market of the SIX (or LSE) and may be listed or traded on one or
more other stock exchanges. There can be no certainty that there will be liquidity in the Shares on any one or more
of the stock exchanges or that the market price at which Shares may be traded on a stock exchange will be the
same as the Net Asset Value per Share. There can be no guarantee that once the Shares are listed or traded on a
stock exchange they will remain listed or traded on that stock exchange.
Suspension risk on local markets
In certain markets (including, without limitation, Taiwan), trading on the local exchange may be carried out by one
or a small number of local market account holders. If such account holder(s) fail(s) to deliver securities or monies
in relation to a trade, there is a risk of suspension in relation to all Funds which effect their trading on the local
market through such account holder(s). This risk may be increased where a Fund participates in a securities
lending programme. Suspension in either case may increase the costs of the Fund.
Counterparty and trading risks
Counterparty Risk
The Company will be exposed to the credit risk of the parties with which it transacts and may also bear the risk of
settlement default. Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an
obligation or commitment that it has entered into with the Company. This would include the counterparties to any
FDI that is entered into by a Fund. Trading in FDI which have not been collateralised gives rise to direct
counterparty exposure. The Company mitigates much of its credit risk to its FDI counterparties by receiving
collateral with a value at least equal to the exposure to each counterparty but, to the extent that any FDI is not
fully collateralised, a default by the counterparty may result in a reduction in the value of the Fund. Currency
forwards used by Currency Hedged Funds and Currency Hedged Share Classes to hedge their currency risks are not
collateralised and Currency Hedged Funds and Currency Hedged Share Classes will have uncollateralised
counterparty exposure to such foreign exchange counterparties in respect of such FDI, subject to the investment
limits in Schedules II & III and subject to Currency Hedged Share Classes not being permitted to have over-hedged
positions in excess of 105% of their net asset value. As at the date of this Prospectus, State Street is the sole
counterparty for currency forwards used by Currency Hedged Funds and State Street is also expected to be the
sole counterparty for currency forwards used by Currency Hedged Share Classes. A formal review of each new
counterparty is completed and all approved counterparties are monitored and reviewed on an ongoing basis. The
Company maintains an active oversight of counterparty exposure and the collateral management process.
Counterparty exposure is subject to the investment restrictions in Schedule III.
Counterparty Risk to the Depositary and other depositaries
The Company will be exposed to the credit risk of the Depositary or any depository used by the Depositary where
cash or other assets are held by the Depositary or other depositaries. Credit risk is the risk that the counterparty to
a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.
Cash held by the Depositary and other depositaries will not be segregated in practice but will be a debt owing from
the Depositary or other depositaries to the Company as a depositor. Such cash will be co-mingled with cash
belonging to other clients of the Depositary and/or other depositaries. In the event of the insolvency of the
Depositary or other depositaries, the Company will be treated as a general unsecured creditor of the Depositary or
other depositaries in relation to cash holdings of the Company. The Company may face difficulties and/or encounter
delays in recovering such debt, or may not be able to recover it in full or at all, in which case the relevant Fund(s)
will lose some or all of their cash. The Company’s securities are however maintained by the Depositary and subcustodians used by the Depositary in segregated accounts and should be protected in the event of insolvency of the
Depositary or sub-custodians. The Company may enter into additional arrangements (for example placing cash in
money market collective investment schemes) in order to mitigate credit exposure for its cash holdings but may be
exposed to other risks as a result.
41
To mitigate the Company’s exposure to the Depositary, the Investment Manager employs specific procedures to
ensure that the Depositary is a reputable institution and that the credit risk is acceptable to the Company. If there
is a change in Depositary then the new depositary will be a regulated entity subject to prudential supervision with a
high credit rating assigned by international credit rating agencies.
Liability of the Depositary and Responsibility of the Depositary for Sub-Custodians
The Depositary shall be liable to the Company and its shareholders for the loss by the Depositary or a subcustodian of financial instruments of the Company held in custody. In the case of such a loss, the Depositary is
required, pursuant to the Regulations, to return the financial instrument of an identical type or the corresponding
amount to the Company without undue delay, unless the Depositary can prove that the loss arose as a result of an
external event beyond its reasonable control, the consequences of which would have been unavoidable despite all
reasonable efforts to the contrary. This standard of liability only applies to assets capable of being registered or
held in a securities account in the name of the Depositary or a sub-custodian and assets capable of being physically
delivered to the Depositary.
The Depositary shall also be liable to the Company and its shareholders for all other losses suffered by the
Company and/or its shareholders as a result of the Depositary’s negligent or intentional failure to fully fulfil its
obligations pursuant to the Regulations. In the absence of the Depositary’s negligent or intentional failure to
properly fulfil its obligations pursuant to the Regulations, the Depositary may not be liable to the Company or its
shareholders for the loss of an asset of a Fund which is not capable of being registered or held in a securities
account in the name of the Depositary or a sub-custodian or being physically delivered to the Depositary.
The liability of the Depositary is not affected by the fact that it has entrusted the custody of the Company’s assets
to a third party. In the event that custody is delegated to local entities that are not subject to effective prudential
regulation, including minimum capital requirements, and supervision in the jurisdiction concerned, prior
Shareholder notice will be provided advising of the risks involved in such delegation. As noted above, in the
absence of the Depositary’s negligent or intentional failure to properly fulfil its obligations pursuant to the
Regulations, the Depositary may not be liable to the Company or its shareholders for the loss of an asset of a Fund
which is not capable of being registered or held in a securities account in the name of the Depositary or a subcustodian or being physically delivered to the Depositary. Accordingly, while the liability of the Depositary is not
affected by the fact that it has entrusted the custody of the Company’s assets to a third party, in markets where
custodial and/or settlement systems may not be fully developed, a Fund may be exposed to sub-custodial risk in
respect of the loss of such assets in circumstances whereby the Depositary may have no liability.
Counterparty risk to the Paying Agent - dividend monies
The Paying Agent for the Funds is responsible for making dividend payments to Participants on the relevant
dividend payment date. Shortly before the dividend payment date, monies for distribution to Participants as
dividends will be transferred from the Company’s cash accounts with the Depositary to the Paying Agent. During
the interim period, dividend monies are held with the Paying Agent (or its associated depositary bank) in the form
of cash and the Company will have credit risk exposure, in respect of such cash, to the Paying Agent and its
associated depositary bank. Cash held by the Paying Agent will not be segregated in practice but will be a debt
owing from the Paying Agent (or its associated depositary bank) to the Company as a depositor. In the event of the
insolvency of the Paying Agent (or its associated depositary bank) during the interim period, the Company will be
treated as a general unsecured creditor of the Paying Agent (or its associated depositary bank) in relation to the
cash. The Company may face difficulties and/or encounter delays in recovering such debt, or may not be able to
recover it in full or at all, in which case the Company may lose some or all of the dividend monies being distributed
by the Paying Agent resulting in a reduction in the value of a Fund.
On Exchange Trading
Where a counterparty to an on exchange trade in the Fund’s underlying securities suffers an Insolvency Event,
there are risks associated with the recognised investment exchanges and markets themselves set out in Schedule I.
There is a risk that the relevant recognised investment exchange or market on which the trade is being conducted
will not apply its rules fairly and consistently and that failed trades will be effected notwithstanding the insolvency
of one of the counterparties. There is also a risk that a failed trade will be pooled with other failed trades, which
may make it difficult to identify a failed trade to which the Fund has been a party. Either of these events may have
a negative impact on the value of the Fund.
Settlement through an International Central Securities Depositary
Inaction by the Common Depositary and/or an International Central Securities Depositary
Investors that settle or clear through an International Central Securities Depositary will not be a registered
Shareholder in the Company, they will hold an indirect beneficial interest in such Shares and the rights of such
investors, where Participants, shall be governed by their agreement with the applicable International Central
Securities Depositary and otherwise by the arrangement with a Participant of the International Central Securities
Depositary (for example, their nominee, broker or Central Securities Depositaries, as appropriate). The Company
will issue any notices and associated documentation to the registered holder of the Global Share Certificate, the
Common Depositary’s Nominee, with such notice as is given by the Company in the ordinary course when
convening general meetings. The Common Depositary’s Nominee has a contractual obligation to relay any such
notices received by the Common Depositary’s Nominee to the Common Depositary which, in turn, has a contractual
obligation to relay any such notices to the applicable International Central Securities Depositary, pursuant to the
terms of its appointment by the relevant International Central Securities Depositary. The applicable International
42
Central Securities Depositary will in turn relay notices received from the Common Depositary to its Participants in
accordance with its rules and procedures. The Directors understand that the Common Depositary is contractually
bound to collate all votes received from the applicable International Central Securities Depositaries (which reflects
votes received by the applicable International Central Securities Depositary from Participants) and that the
Common Depositary’s Nominee is obligated to vote in accordance with such instructions. The Company has no
power to ensure the Common Depositary relays notices of votes in accordance with their instructions. The
Company cannot accept voting instructions from any persons other than the Common Depositary’s Nominee.
Payments
With the authorisation of the Common Depositary’s Nominee, any dividends declared and any liquidation and
mandatory redemption proceeds are paid by the Company or its authorised agent (for example, the Paying Agent)
to the applicable International Central Securities Depositary. Investors, where they are Participants, must look
solely to the applicable International Central Securities Depositary for their share of each dividend payment or any
liquidation or mandatory redemption proceeds paid by the Company or, where they are not Participants, they must
look to their respective nominee, broker or Central Securities Depositary (as appropriate, which may be a
Participant or have an arrangement with a Participant of the applicable International Central Securities Depositary)
for any share of each dividend payment or any liquidation or mandatory redemption proceeds paid by the Company
that relates to their investment.
Investors shall have no claim directly against the Company in respect of dividend payments and any liquidation and
mandatory redemption proceeds due on Shares represented by the Global Share Certificate and the obligations of
the Company will be discharged by payment to the applicable International Central Securities Depositary with the
authorisation of the Common Depositary’s Nominee.
Specific investment risks for all Funds
Global Financial Market Crisis and Governmental Intervention
Since 2007, global financial markets have undergone pervasive and fundamental disruption and suffered significant
instability leading to extensive governmental intervention. Regulators in many jurisdictions have implemented or
proposed a number of emergency regulatory measures and may continue to do so. Government and regulatory
interventions have sometimes been unclear in scope and application, resulting in confusion and uncertainty which
in itself has been detrimental to the efficient functioning of financial markets. It is impossible to predict with
certainty what additional interim or permanent governmental restrictions may be imposed on the markets and/or
the effect of such restrictions on the Investment Manager’s ability to implement the Funds’ investment objectives.
Whether current undertakings by governing bodies of various jurisdictions or any future undertakings will help
stabilise the financial markets is unknown. The Investment Manager cannot predict how long the financial markets
will continue to be affected by these events and cannot predict the effects of these – or similar events in the future
– on the Funds, the European or global economy and the global securities markets. The Investment Manager is
monitoring the situation. Instability in the global financial markets or government intervention may increase the
volatility of the Funds and hence the risk of loss to the value of your investment.
Funds which invest in the European bond market are directly exposed to intervention by the European Central Bank
and governments of relevant European countries, particularly in relation to interest rates and the single European
currency. For example, the value of the bonds held by a Fund is likely to decrease if interest rates are increased,
and bond pricing complications could arise should a country leave the single European currency or that currency be
discontinued completely.
Issuer Risk
The performance of a Fund depends on the performance of individual securities to which the Fund has exposure.
Any issuer of these securities may perform poorly, causing the value of its securities to decline. Poor performance
may be caused by poor management decisions, competitive pressures, changes in technology, expiration of patent
protection, disruptions in supply, labour problems or shortages, corporate restructurings, fraudulent disclosures or
other factors. Issuers may, in times of distress or at their own discretion, decide to reduce or eliminate dividends,
which may also cause their stock prices to decline.
Money Market Risk
The Company, with a view to mitigating credit exposure to depositaries, may arrange for cash holdings of the
Company (including pending dividend payments) to be placed into money market collective investment schemes,
including other funds of the BlackRock Group. A money market collective investment scheme which invests a
significant amount of its assets in money market instruments may be considered as an alternative to investing in a
regular deposit account. However, a holding in such a scheme is subject to the risks associated with investing in a
collective investment scheme and, while a money market collective investment scheme is designed to be a
relatively low risk investment, it is not entirely free of risk. Despite the short maturities and high credit quality of
investments of such schemes, increases in interest rates and deteriorations in the credit quality can reduce the
scheme’s yield and the scheme is still subject to the risk that the value of such scheme’s investment can be eroded
and the principal sum invested will not be returned in full.
Securities Lending Risk
The Company engages in a securities lending programme through the Investment Manager. In order to mitigate
the credit risk exposure to the counterparties to any securities lending contract, the lending of a Fund's securities
must be covered by high quality and liquid collateral received by the Fund under a title transfer arrangement with a
43
market value at all times at least equivalent to the market value of the Fund's securities lent plus a premium. A
Fund's securities can be lent to counterparties over a period of time. The risks of securities lending include the risk
that a borrower may not provide additional collateral when required or may not return the securities when due. A
default by the counterparty combined with a fall in the value of the collateral below that of the value of the
securities lent may result in a reduction in the value of the Fund. To the extent that any securities lending is not
fully collateralised (for example due to timing issues arising from payment lags), the Company will have a credit
risk exposure to the counterparties to the securities lending contracts. To mitigate these risks, the Company
benefits from a borrower default indemnity provided by BlackRock, Inc. The indemnity allows for full replacement
of the securities lent if the collateral received does not cover the value of the securities loaned in the event of a
borrower default.
Currency Risk
The Base Currency of a Fund is usually chosen to match the base currency in which its Benchmark Index is valued
and this may differ from the currency of the underlying assets of the Benchmark Index. In addition, a Fund’s
Benchmark Index may comprise multiple-currency underlying assets. Consequently, the Investments of a Fund
may be acquired in currencies which are not the Base Currency of the Fund. In addition, certain Funds may have
Share Classes which have different Valuation Currencies from the Base Currency of the Fund. Consequently, the
Investments of a Share Class may be acquired in currencies which are not the Valuation Currency of the Share
Class.
Unless it is the stated intention of the Company to use hedging or other techniques and instruments in any Funds
in order to cover currency risk, the fact that Base Currencies, Valuation Currencies and the currencies of Funds’
Investments may differ may cause the cost of purchasing such Investments to be affected favourably or
unfavourably by fluctuations in the relative exchange rates of the different currencies. For emerging market
countries, volatility in currency markets can be heightened.
Risks specific to Funds focusing on specific markets
Concentration Risk
If the Benchmark Index of a Fund concentrates in a particular country, region, industry, group of industries, sector
or specific theme that Fund may be adversely affected by the performance of those securities and may be subject
to price volatility. In addition, a Fund that concentrates in a single country, region, industry or group of countries
or industries may be more susceptible to any single economic, market, political or regulatory occurrence affecting
that country, region, sector, industry or group of countries or industries. Such a Fund may be more susceptible to
greater price volatility when compared to a more diverse fund. This could lead to a greater risk of loss to the value
of your investment.
The Funds that are replicating index Funds per the Regulations may invest more than 10% and up to 20% of their
Net Asset Value in shares issued by the same body in order to replicate their respective Benchmark Indices. This
limit may be raised to 35% for a single issuer, where this is justified by exceptional market conditions, for example,
market dominance. Market dominance exists where a particular constituent of the Benchmark Index has a
dominant position in the particular market sector in which it operates and as such accounts for a large proportion of
the Benchmark Index. This means that such a Fund may have a high concentration of investment in one company,
or a relatively small number of companies, and may therefore be more susceptible to any single economic, market,
political or regulatory occurrence affecting that company or those companies
Emerging Markets- General
Emerging markets are subject to special risks associated with investment in an emerging market. The material
risks include: generally less liquid and less efficient securities markets; generally greater price volatility; exchange
rate fluctuations and exchange control; lack of available currency hedging instruments; abrupt imposition of
restrictions on foreign investment; imposition of restrictions on the expatriation of funds or other assets; less
publicly available information about issuers; the imposition of taxes; higher transaction and custody costs;
settlement delays and risk of loss; difficulties in enforcing contracts; less liquidity and smaller market
capitalisations; less well regulated markets resulting in more volatile stock prices; different accounting and
disclosure standards; governmental interference; risk of expropriation, nationalisation or confiscation of assets or
property; higher inflation; social, economic and political instability and uncertainties; the risk of expropriation of
assets and the risk of war. In the absence of the Depositary’s negligent or intentional failure to properly fulfil its
obligations pursuant to the Regulations, the Depositary may not be liable to the Company or its shareholders for
the loss of an asset of a Fund which is not capable of being registered or held in a securities account in the name of
the Depositary or a sub-custodian or being physically delivered to the Depositary. Accordingly, while the liability of
the Depositary is not affected by the fact that it has entrusted the custody of the Company’s assets to a third
party, in markets where custodial and/or settlement systems may not be fully developed, a Fund may be exposed
to sub-custodial risk in respect of the loss of such assets in circumstances whereby the Depositary will have no
liability. In the event that custody is delegated to local entities that are not subject to effective prudential
regulation, including minimum capital requirements and supervision in the jurisdiction concerned, prior Shareholder
notice will be provided advising of the risks involved in such delegation.
As a result of the above risks, a Fund’s investments can be adversely affected and the value of your investments
may go up or down.
Asia
The Asian emerging markets countries in which the Funds currently invest include, but are not limited to, the
44
People’s Republic of China (PRC), India, Indonesia, Korea, Malaysia, Philippines, Taiwan, and Thailand. These are
considered to be emerging markets and are therefore subject to special risks associated with investment in an
emerging market country. These include, but are not limited to: generally less liquid and less efficient securities
markets; generally greater price volatility; exchange rate fluctuations and exchange control; imposition of
restrictions on the expatriation of funds or other assets; less publicly available information about issuers; the
imposition of taxes; higher transaction and custody costs; settlement delays and risk of loss; difficulties in
enforcing contracts; less liquidity and smaller market capitalisations; less well regulated markets resulting in more
volatile stock prices; different accounting and disclosure standards; governmental interference; higher inflation;
social, economic and political uncertainties; custodial and/or settlement systems may not be fully developed which
may expose a Fund to sub-custodial risk in circumstances whereby the Depositary will have no liability; the risk of
expropriation of assets and the risk of war.
Latin America
The Latin American countries in which the Funds currently invest include, but are not limited to, Brazil, Chile,
Colombia, Mexico, and Peru. These are considered to be emerging markets and are therefore subject to special
risks associated with investment in an emerging market country. These include, but are not limited to: generally
less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and
exchange control; imposition of restrictions on the expatriation of funds or other assets; less publicly available
information about issuers; the imposition of taxes; higher transaction and custody costs; settlement delays and
risk of loss; difficulties in enforcing contracts; less liquidity and smaller market capitalisations; less well regulated
markets resulting in more volatile stock prices; different accounting and disclosure standards; governmental
interference; higher inflation; social, economic and political uncertainties; custodial and/or settlement systems may
not be fully developed which may expose a Fund to sub-custodial risk in circumstances whereby the Depositary will
have no liability; the risk of expropriation of assets and the risk of war.
Investments in the PRC
For Funds that invest in or are exposed to investment in the PRC, potential investors should also consider the
following risk warnings which are specific to investing in or exposure to the PRC:
•
The PRC is one of the world’s largest global emerging markets. The economy in the PRC, which has been in a
state of transition from a planned economy to a more market orientated economy, differs from the economies
of most developed countries and investing in the PRC may be subject to greater risk of loss than investments in
developed markets. This is due to, among other things, greater market volatility, lower trading volume, political
and economic instability, greater risk of market shut down, greater control of foreign exchange and more
limitations on foreign investment policy than those typically found in a developed market. There may be
substantial government intervention in the PRC economy, including restrictions on investment in companies or
industries deemed sensitive to relevant national interests. The PRC government and regulators may also
intervene in the financial markets, such as by the imposition of trading restrictions, which may affect the
trading of Chinese securities. The companies in which a Fund invests may be held to lower disclosure, corporate
governance, accounting and reporting standards than companies in more developed markets. In addition, some
of the securities held by a Fund may be subject to higher transaction and other costs, foreign ownership limits,
the imposition of withholding or other taxes, or may have liquidity issues which make such securities more
difficult to sell at reasonable prices. These factors may have an unpredictable impact on a Fund’s investments
and increase the volatility and hence the risk of a loss to the value of an investment in a Fund. Furthermore,
market interventions may have a negative impact on market sentiment which may in turn affect the
performance of the Benchmark Index and, by extension, the performance of a Fund.
•
The PRC economy has experienced significant and rapid growth in the past 20 years. However, such growth
may or may not continue, and may not apply evenly across different geographic locations and sectors of the
PRC economy. Economic growth has also been accompanied by periods of high inflation. The PRC government
has implemented various measures from time to time to control inflation and restrain the rate of economic
growth of the PRC economy. Furthermore, the PRC government has carried out economic reforms to achieve
decentralisation and utilisation of market forces to develop the economy of the PRC. These reforms have
resulted in significant economic growth and social progress. There can, however, be no assurance that the PRC
government will continue to pursue such economic policies or, if it does, that those policies will continue to be
successful. Any such adjustment and modification of those economic policies may have an adverse impact on
the securities markets in the PRC and therefore on the performance of a Fund. These factors may increase the
volatility of any such Fund (depending on its degree of investment in the PRC) and hence the risk of loss to the
value of your investment.
India
For Funds that invest in or are exposed to investment in India, potential investors should also consider the
following risk warnings which are specific to investing in or exposure to India:
•
•
India is located in a part of the world that has historically been prone to natural disasters such as earthquakes,
volcanoes and tsunamis and India is economically sensitive to environmental events. In addition, the
agricultural sector is an important component of the Indian economy and adverse weather may have a
significant negative effect on the Indian economy.
India has experienced a process of privatisation of certain entities and industries. If the newly privatised
companies are unable to adjust quickly to a competitive environment or to changing regulatory and legal
standards, investors in such newly privatised entities could suffer losses and this could adversely affect the
performance of the Indian market.
45
•
•
•
•
The Indian economy is dependent on commodity prices and the economies of Asia, mainly Japan and China,
and the United States as key trading partners. Reduction in spending on Indian products and services by any of
these trading partners or a slowdown or recession in any of these economies could adversely affect the Indian
economy.
India has experienced acts of terrorism and has strained international relations with Pakistan, Bangladesh,
China, Sri Lanka and other neighbours due to territorial disputes, historical animosities, terrorism and other
defence concerns. These situations may cause uncertainty in the Indian market and may adversely affect
performance of the Indian economy.
Disparities of wealth, the pace of economic liberalisation and ethnic, religious and racial disaffection may lead to
social turmoil, violence and labour unrest in India. In addition, India continues to experience religious and
border disputes as well as separatist movements in certain Indian states. Unanticipated political or social
developments may result in investment losses.
The Indian government has experienced chronic structural public sector deficits. High amounts of debt and
public spending may stifle Indian economic growth, cause prolonged periods of recession or lower India’s
sovereign debt rating.
Mexico
A Fund’s investments in Mexican issuers may subject the Fund to legal, regulatory, political, currency, security and
economic risk specific to Mexico. Among other things, Mexico’s economy is heavily dependent on trading
relationships with certain key trading partners, including the United States and certain Latin American countries.
Reduction in spending on Mexican products and services, or economic or other changes in the United States or
certain Latin American countries, trade regulations or currency exchange rates may have an adverse impact on the
Mexican economy.
Mexico is considered to be an emerging market and is therefore subject to special risks associated with investment
in an emerging market country including : generally less liquid and less efficient securities markets; generally
greater price volatility; imposition of restrictions on the expatriation of funds or other assets; less publicly available
information about issuers; the imposition of taxes; higher transaction and custody costs; settlement delays and
risk of loss; difficulties in enforcing contracts due to uncertainty of legal and judicial systems; less liquidity and
smaller market capitalisations; less well regulated markets resulting in more volatile stock prices; different
accounting and disclosure standards; governmental interference; higher inflation; social, economic and political
uncertainties; custodial and/or settlement systems are not fully developed which may expose a Fund to subcustodial risk in circumstances whereby the Depositary will have no liability; the risk of expropriation of assets i.e.
forceful confiscation and redistribution of private property outside of common law and the risk of war. In addition,
there may be a heightened risk of social, economic and political instability.
As a result of the above risks, a Fund’s investments can be adversely affected and the value of your investments
may go up or down.
Licensing in India
In order to invest physically in Indian securities, a Fund is required to be registered as a Foreign Portfolio Investor
(“FPI”) under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations 2014. In order
to be registered as a FPI, each Fund is required to demonstrate that it satisfies the following broad based criteria:
(i) The Fund must have a minimum of 20 investors including, both, direct investors and underlying investors in
pooling vehicles. (ii) No investor shall hold over 49% of the Shares or value of the Fund. (iii) No underlying
beneficial owner shall hold over 25% of the Shares or value of the Fund. Institutional investors who hold over 49%
of the Shares or value of the Fund must themselves comply with broad based criteria. Underlying beneficial
owners who hold over 25% of the Shares or value of the Fund are required to provide their consent to the FPI
registration, and to that end have their client information disclosed to the relevant depository participant and
Securities and Exchange Board of India. This criteria has been highlighted to investors To the extent that investors
in a Fund which invests physically in Indian securities under a FPI licence, do not meet the above criteria or
disclosure requirement, the Fund may lose its FPI licence and may no longer be able to invest physically in Indian
securities.
Investments in Russia
For Funds that invest in or are exposed to investment in Russia, potential investors should also consider the
following risk warnings which are specific to investing in or exposure to Russia:
•
The United States and the European Union have instituted additional sanctions against certain Russian issuers
which include prohibitions on transacting in or dealing in new debt of longer than 30 days maturity or new
equity of such issuers. Securities held by a Fund issued prior to the date of the sanctions being imposed are
not currently subject to any restrictions under the sanctions. However, compliance with each of these sanctions
may impair the ability of a Fund to buy, sell, hold, receive or deliver the affected securities or other securities of
such issuers. If it becomes impracticable or unlawful for a Fund to hold securities subject to, or otherwise
affected by, sanctions (collectively, “affected securities”), or if deemed appropriate by the Fund’s Investment
Manager, subscriptions in kind and directed cash subscriptions may not be available for such Fund in respect of
the affected securities.
Also, if an affected security is included in a Fund’s Benchmark Index, the Fund may, where practicable and
permissible, seek to eliminate its holdings of the affected security by using optimisation techniques to seek to
track the investment returns of its Benchmark Index. The use of (or increased use of) optimisation techniques
may increase the Fund’s tracking error risk. If the affected securities constitute a significant percentage of the
46
Benchmark Index, a Fund may not be able to effectively implement optimisation techniques, which may result
in significant tracking error between a Fund’s performance and the performance of its Benchmark Index.
Sanctions may now, or in the future, result in retaliatory measures by Russia, including the immediate freeze of
Russian assets held by a Fund. In the event of such a freeze of any Fund’s assets, a Fund may not be able to
pay out redemption proceeds in respect of the assets which are frozen or may need to liquidate non-restricted
assets in order to satisfy redemption orders. The liquidation of a Fund’s assets during this time may also result
in a Fund receiving substantially lower prices for its securities.
These sanctions may also lead to changes in a Fund’s Benchmark Index. An index provider may remove
securities from a Benchmark Index or implement caps on the securities of certain issuers that have been
subject to recent economic sanctions. In such an event, it is expected that a Fund will rebalance its portfolio to
bring it in line with the relevant Benchmark Index as a result of any such changes, which may result in
transaction costs and increased tracking error.
If any of the events above were to occur, the Directors may (at their discretion) take such action as they
consider to be in the interests of investors in Funds which have investment exposure to Russia, including (if
necessary) suspending trading in the Funds (see the section entitled “Temporary Suspension of Valuation of the
Shares and of Sales, Redemptions and Switching” for more details) and/or taking such action as described in
the section entitled “Benchmark Indices”.
•
The laws relating to securities investments and regulations in Russia have been created on an ad-hoc basis and
do not tend to keep pace with market developments leading to ambiguities in interpretation and inconsistent
and arbitrary application. Monitoring and enforcement of applicable regulations is rudimentary.
•
Rules regulating corporate governance either do not exist or are underdeveloped and offer little protection to
minority shareholders.
•
There are also counterparty risks in connection with the maintenance of portfolio securities and cash with local
sub-custodians and securities depositories in Russia.
These factors may increase the volatility of any such Fund (depending on its degree of investment in Russia) and
hence the risk of loss to the value of your investment.
Investments in Japan
Japan is located in a part of the world that has historically been prone to natural disasters, such as earthquakes,
volcanoes, and tsunamis, and is economically sensitive to environmental events. In addition, the nuclear power
plant catastrophe in March 2011 may have short-term and long-term effects on the nuclear energy industry, the
extent of which are currently unknown. As with other countries, Japan may be subject to political and economic
risks. Political developments may lead to changes in policy which might adversely affect a Fund’s investments. The
Japanese economy is heavily dependent on foreign trade and can be adversely affected by trade tariffs and other
protectionist measures. In addition, some Japanese reporting, accounting and auditing practices vary from the
accounting principles generally accepted in other developed countries. Any of these risks, individually or in the
aggregate, could result in a significant adverse impact on the Japanese economy and the securities to which a Fund
has exposure and, in turn, result in a loss to your investment.
Potential Implications of Brexit
In a referendum held on 23 June 2016, the electorate of the United Kingdom resolved to leave the European Union.
The result has led to political and economic instability, volatility in the financial markets of the United Kingdom and
more broadly across Europe. It may also lead to weakening in consumer, corporate and financial confidence in
such markets as the UK negotiates its exit from the EU. The longer term process to implement the political,
economic and legal framework between the UK and the EU is likely to lead to continuing uncertainty and periods of
exacerbated volatility in both the UK and in wider European markets. In particular, the decision made in the British
referendum may lead to a call for similar referendums in other European jurisdictions which may also cause
increased economic volatility in wider European and global markets.
Currency volatility resulting from this uncertainty may mean that the returns of a Fund and its investments are
adversely affected by market movements, potential decline in the value of the Sterling (Stg£) and/or Euro, and any
downgrading of UK sovereign credit rating. This may also make it more difficult, or more expensive, for a Fund to
execute prudent currency hedging policies.
This mid to long term uncertainty may have an adverse effect on the economy generally and on the ability of a
Fund and its investments to execute their respective strategies and to receive attractive returns, and may also
result in increased costs to a Fund.
Euro and Eurozone Risk
The deterioration of the sovereign debt of several countries, together with the risk of contagion to other, more
stable, countries, has exacerbated the global economic crisis. Concerns persist regarding the risk that other
Eurozone countries could be subject to an increase in borrowing costs and could face an economic crisis similar to
that of Cyprus, Greece, Italy, Ireland, Spain and Portugal. This situation as well as the United Kingdom’s
referendum have raised a number of uncertainties regarding the stability and overall standing of the European
Economic and Monetary Union and may result in changes to the composition of the Eurozone. The departure or risk
47
of departure from the Euro by one or more Eurozone countries could lead to the reintroduction of national
currencies in one or more Eurozone countries or, in more extreme circumstances, the possible dissolution of the
Euro entirely. These potential developments, or market perceptions concerning these and related issues, could
adversely affect the value of a Fund's investments. It is difficult to predict the final outcome of the Eurozone crisis.
Shareholders should carefully consider how changes to the Eurozone and European Union may affect their
investment in a Fund.
Investments in Mid Capitalisation and Smaller Companies
The securities of mid capitalisation and smaller companies tend to be more volatile and less liquid than the
securities of large companies. As securities of mid capitalisation and smaller companies may experience more
market price volatility than securities of larger companies, the Net Asset Value of any Funds which invest in smaller
companies or mid capitalisation companies may reflect this volatility. Mid capitalisation and smaller companies, as
compared with larger companies, may have a shorter history of operations, may not have as great an ability to
raise additional capital, may have a less diversified product line making them susceptible to market pressure and
may have a smaller public market for their securities.
Investment in mid capitalisation and smaller companies may involve relatively higher investment costs and
accordingly investment in Funds which invest in smaller companies should be viewed as a long-term investment.
Such Funds may however dispose of an investment made by it within a relatively short period of time, for example,
to meet requests for redemption of Shares.
As a result of the above risks, a Fund’s investments can be adversely affected and the value of your investments
may go up or down.
Energy Sector Investment Risks
There are a number of factors that could affect performance of the energy sector, including changes in commodity
prices. For example, many regions that produce fossil fuel or in which pipes for transporting fossil fuel are located
are politically volatile and conflicts in these regions could result in spikes in oil, gas and coal prices. A major
terrorist attack or threat could also increase market volatility. Increasing demand, whether from developing
countries or cold weather conditions, could have the effect of driving energy prices up. Other factors include (but
are not limited to) energy conservation efforts, advances in renewable energy and the costs of such technology,
costs of cleaning up accidents and civil liabilities, taxes, governmental regulation on privatisation, pricing and
supply and other intervention. Some of the securities in the energy sector may be less liquid than securities in
other sectors which may make it more difficult for a Fund to purchase or sell such securities.
Financial Sector Investment Risks
Companies in the financial sector are subject to increasing governmental regulation, government intervention and
taxes, which may adversely affect the scope of their activities, the amount of capital they must maintain and their
profitability. The financial services sector may also be adversely affected by increases in interest rates and
irrecoverable debt, decreases in the availability of funding or asset valuations and adverse conditions in other
related markets. The deterioration of the credit markets has caused an adverse impact in the credit and interbank
money markets generally, thereby affecting a wide range of financial services institutions and markets. Certain
financial services companies have had to accept or borrow significant amounts of money from their governments
and thereby face additional government imposed restrictions on their businesses which could have an impact on
their performance and value. Insurance companies in particular, may be subject to intense price competition, which
may have an adverse impact on their profitability. Companies that invest in real estate may be affected by adverse
changes to the conditions of the real estate markets, movements in interest rates, investor confidence, changes in
supply and demand for property, costs, availability of mortgage loans, taxes and the impact of environmental and
planning laws. The risks faced by companies within the financial sector may have a higher impact on companies
that employ substantial financial leverage within their businesses.
Investment in the PRC via the Stock Connect
In addition to the risk factors under the heading “Investment in the PRC” and other applicable risk factors, the
following risk factors apply to the Stock Connect Funds:
Stock Connect
Funds investing in the PRC may invest in China A Shares trading on the Shanghai Stock Exchange via Stock
Connect. The Stock Connect is a programme that links the Shanghai Stock Exchange and the SEHK. Under the
programme, investors can access the Shanghai Stock Exchange via the Hong Kong Central Clearing and Settlement
System (CCASS) maintained by the HKSCC as central securities depositary in Hong Kong. Investing in China A
Shares via Stock Connect bypasses the requirement to obtain RQFII status which is required for direct access to
the Shanghai Stock Exchange.
Quota Limitations
Investing in the PRC via Stock Connect is subject to quota limitations which apply to the Investment Manager. In
particular, once the remaining balance of the relevant quota drops to zero or the daily quota is exceeded, buy
orders will be rejected (although investors will be permitted to sell their cross-boundary securities regardless of the
quota balance). Therefore, quota limitations may restrict the relevant Stock Connect Fund’s ability to invest in
China A Shares through the Stock Connect on a timely basis, and therefore may impact on the ability of the
relevant Stock Connect Fund to track closely the performance of the Benchmark Index.
48
Legal / Beneficial Ownership
The China A Shares invested in via the Stock Connect will be held by the Depositary/sub-custodian in accounts in
the Hong Kong Central Clearing and Settlement System (CCASS) maintained by the HKSCC as central securities
depositary in Hong Kong. HKSCC in turn holds the China A Shares, as the nominee holder, through an omnibus
securities account in its name registered with CSDCC. The precise nature and rights of the Stock Connect Funds as
the beneficial owners of the China A Shares through HKSCC as nominee is not well defined under PRC law. There is
lack of a clear definition of, and distinction between, "legal ownership" and "beneficial ownership" under PRC law
and there have been few cases involving a nominee account structure in the PRC courts. Therefore the exact
nature and methods of enforcement of the rights and interests of the Stock Connect Funds under PRC law is
uncertain. Because of this uncertainty, in the unlikely event that HKSCC becomes subject to winding up
proceedings in Hong Kong it is not clear if the China A Shares will be regarded as held for the beneficial ownership
of the Stock Connect Funds or as part of the general assets of HKSCC available for general distribution to its
creditors.
Clearing and Settlement Risk
HKSCC and CSDCC will establish the clearing links and each will become a participant of each other to facilitate
clearing and settlement of cross-boundary trades. For cross-boundary trades initiated in a market, the clearing
house of that market will on one hand clear and settle with its own clearing participants, and on the other hand
undertake to fulfil the clearing and settlement obligations of its clearing participants with the counterparty clearing
house.
As the national central counterparty of the PRC’s securities market, CSDCC operates a comprehensive network of
clearing, settlement and stock holding infrastructure. CSDCC has established a risk management framework and
measures that are approved and supervised by the CSRC. The chances of CSDCC default are considered to be
remote. In the remote event of a CSDCC default, HKSCC’s liabilities in respect of China A Shares invested in via the
Stock Connect will be limited under its market contracts with clearing participants to assisting clearing participants
in pursuing their claims against CSDCC. HKSCC should in good faith, seek recovery of the outstanding stocks and
monies from CSDCC through available legal channels or through CSDCC’s liquidation. In that event, the relevant
Stock Connect Fund may suffer delay in the recovery process or may not fully recover its losses from CSDCC.
Suspension Risk
It is contemplated that both the SEHK and the Shanghai Stock Exchange would reserve the right to suspend
trading if necessary for ensuring an orderly and fair market and that risks are managed prudently. Consent from
the relevant regulator will be sought before a suspension is triggered. Where a suspension is effected, the relevant
Stock Connect Fund’s ability to access the PRC market will be adversely affected.
Differences in Trading Day
The Stock Connect will only operate on days when both the PRC and Hong Kong markets are open for trading and
when banks in both markets are open on the corresponding settlement days. So it is possible that there are
occasions when it is a normal trading day for the PRC market but the Stock Connect Funds cannot carry out any
China A Shares trading via the Stock Connect. The Stock Connect Funds may be subject to a risk of price
fluctuations in China A Shares during the time when the Stock Connect is not trading as a result.
Restrictions on Selling Imposed by Front-end Monitoring
PRC regulations require that before an investor sells any share, there should be sufficient shares in the account;
otherwise the Shanghai Stock Exchange will reject the sell order concerned. SEHK will carry out pre-trade checking
on China A Share sell orders of its participants (i.e. the stock brokers) to ensure there is no over-selling.
If a Stock Connect Fund intends to sell certain China A Shares it holds, it must transfer those China A Shares to the
respective accounts of its broker(s) before the market opens on the day of selling (“trading day”). If it fails to meet
this deadline, it will not be able to sell those shares on the trading day. Because of this requirement, a Stock
Connect Fund may not be able to dispose of its holdings of China A Shares in a timely manner.
Operational Risk
The Stock Connect is premised on the functioning of the operational systems of the relevant market participants.
Market participants are permitted to participate in this program subject to meeting certain information technology
capability, risk management and other requirements as may be specified by the relevant exchange and/or clearing
house.
The securities regimes and legal systems of the SEHK and the Shanghai Stock Exchange differ significantly and
market participants may need to address issues arising from the differences on an on-going basis. There is no
assurance that the systems of the SEHK and market participants will function properly or will continue to be
adapted to changes and developments in both markets. In the event that the relevant systems fail to function
properly, trading in both markets through the program could be disrupted. The relevant Stock Connect Fund’s
ability to access the China A Share market (and hence to pursue its investment strategy) may be adversely
affected.
Regulatory Risk
The Stock Connect is a novel concept. The current regulations are untested and there is no certainty as to how
they will be applied. In addition, the current regulations are subject to change and there can be no assurance that
the Stock Connect will not be abolished. New regulations may be issued from time to time by the regulators / stock
49
exchanges in the PRC and Hong Kong in connection with operations, legal enforcement and cross-border trades
under the Stock Connect. Stock Connect Funds may be adversely affected as a result of such changes.
Recalling of Eligible Stocks
When a stock is recalled from the scope of eligible stocks for trading via the Stock Connect, the stock can only be
sold but is restricted from being bought. This may restrict the ability of the relevant Stock Connect Fund to acquire
the shares of one or more constituents of its Benchmark Index and therefore may impact on the ability of the
relevant Stock Connect Fund to track closely the performance of the Benchmark Index.
No Protection by Investor Compensation Fund
Investment in China A Shares via the Stock Connect is conducted through brokers, and is subject to the risk of
default by such brokers on their obligations. Investments of Stock Connect Funds are not covered by the Hong
Kong’s investor compensation fund, which has been established to pay compensation to investors of any nationality
who suffer pecuniary losses as a result of default of a licensed intermediary or authorised financial institution in
relation to exchange-traded products in Hong Kong. Since default matters in respect of China A Shares invested in
via the Stock Connect do not involve products listed or traded on the SEHK or Hong Kong Futures Exchange
Limited, they will not be covered by the investor compensation fund. Therefore the Stock Connect Funds are
exposed to the risks of default of the broker(s) it engages in its trading in China A Shares through the Stock
Connect.
Risks related to investment in Equity Funds
Equity Securities
The value of equity securities fluctuates daily and a Fund investing in equities could incur significant losses. The
prices of equities can be influenced by factors affecting the performance of the individual companies issuing the
equities, as well as by daily stock market movements, and broader economic and political developments, including
trends in economic growth, inflation and interest rates, corporate earnings reports, demographic trends and natural
disasters.
Depository Receipts
ADRs and GDRs are designed to offer exposure to their underlying securities.
In certain situations, the Investment Manager may use ADRs and GDRs to provide exposure to underlying
securities within the Benchmark Index, for example where the underlying securities cannot be, or are unsuitable to
be, held directly, where direct access to the underlying securities is restricted or limited or where depository
receipts provide a more cost or tax efficient exposure. However, in such cases the Investment Manager is unable to
guarantee that a similar outcome will be achieved to that if it were possible to hold the securities directly, due to
the fact ADRs and GDRs do not always perform in line with the underlying security.
In the event of the suspension or closure of a market(s) on which the underlying securities are traded, there is a
risk that the value of the ADR or GDR will not closely reflect the value of the relevant underlying securities.
Additionally, there may be some circumstances where the Investment Manager cannot, or it is not appropriate to,
invest in an ADR or GDR, or the characteristics of the ADR or GDR do not exactly reflect the underlying security.
In the event that a Fund invests in ADRs or GDRs in the circumstances set out above, the Fund's tracking of the
Benchmark Index may be impacted, i.e. there is a risk that the Fund's return varies from the return of the
Benchmark Index.
Risks related to investment in Fixed Income Funds
Government Bonds
A Fund may invest in government bonds which pay a fixed rate of interest (also known as the ‘coupon’) and behave
similarly to a loan. These bonds are therefore exposed to changes in interest rates which will affect their value. In
addition, periods of low inflation will mean the positive growth of a government bond fund may be limited.
Investments in government bonds may be subject to liquidity constraints and periods of significantly lower liquidity
in difficult market conditions. Therefore it may be more difficult to achieve a fair value on purchase and sale
transactions which may cause the Manager not to proceed with such transactions. As a result, changes in the value
of the Fund's investments may be unpredictable.
Sovereign, Quasi-sovereign and Local Authority Debt
Sovereign debt includes securities issued by or guaranteed by a sovereign government. Quasi-sovereign debt
includes securities issued by or guaranteed by or sponsored by an entity affiliated with or backed by a sovereign
government. In some instances, the constituents of a Benchmark Index may include local authority debt securities
issued by or guaranteed by or sponsored by an entity which is either a local authority or affiliated with or backed
by a local authority entity. The entity that controls the repayment of sovereign, quasi-sovereign or local authority
debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of
such debt. The entity’s ability to repay the principal and/or interest due in a timely manner may be affected by,
among other factors, its cash flow, the extent of its foreign reserves (where relevant), the availability of sufficient
foreign exchange on the date a payment is due, the state of its country’s economy, the relative size of the debt
service burden to the economy as a whole, restrictions on its ability to raise more cash, the entity’s policy towards
the International Monetary Fund and the political constraints to which the entity may be subject. Such entities may
50
also be dependent on expected disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearage on their debt. The commitment on the part of these governments,
agencies and others to make such disbursements may be conditioned on such entities’ implementation of economic
reforms and/or economic performance and the timely service of such debtors’ obligations. Failure to implement
such reforms, achieve such levels of economic performance or repay the principal and/or interest when due may
result in the cancellation of such third parties’ commitments to lend funds to the entities, which may further impair
such debtors’ ability to service their debt on a timely basis. Consequently, such entities may default on their
sovereign, quasi-sovereign or local authority debt. Holders of sovereign, quasi-sovereign or local authority debt,
including a Fund, may be requested to participate in the rescheduling of such debt and to extend further loans to
such entities. Quasi-sovereign and local authority debt obligations are typically less liquid and less standardised
than sovereign debt obligations. There is no bankruptcy proceeding by which this debt may be collected in whole or
in part. Banks, Governments and companies (including within the EEA) invest in each other so if one member state
performs poorly, the other countries could be impacted. If one country defaults on its debt obligations, other
countries could be at risk.
Corporate Bonds
A corporate bond Fund may invest in corporate bonds issued by companies within a range of credit worthiness if
the relevant Fund’s Benchmark Index does not apply any minimum credit rating requirement to its constituents.
Corporate bonds may be upgraded or downgraded from time to time due to a perceived increase or reduction in
the credit worthiness of the companies issuing the bonds.
Where the Benchmark Index of a Fund imposes specific credit rating requirements for bonds to be included in the
Benchmark Index (e.g. investment grade bonds or non / sub investment grade bonds) and bonds that make up the
Benchmark Index are downgraded, upgraded or have their credit ratings withdrawn by the relevant credit rating
agencies such that they no longer meet the credit rating requirements of the Benchmark Index, the Fund may
continue to hold the relevant bonds until such time as these bonds cease to form part of the Fund’s Benchmark
Index and the Fund’s position in such bonds can be liquidated. Sub-investment grade bonds are generally riskier
investments, involving a higher risk of default by the issuer, than investment grade bonds. A default by the issuer
of a bond is likely to result in a reduction in the value of that Fund.
Although a Fund may invest in bonds that are traded on the secondary market, the secondary market for corporate
bonds can often be illiquid and therefore it may be difficult to achieve fair value on purchase and sale transactions.
Cash interest rates vary over time. The price of bonds will generally be affected by changing interest rates and
credit spread which in turn may affect the value of your investment. Bond prices move inversely to interest rates,
so generally speaking the market value of a bond will decrease as interest rates increase. The credit rating of an
issuing company will generally affect the yield that can be earned on a bond; the better the credit rating the
smaller the yield.
Floating Rate Notes Risk
Securities with floating or variable interest rates can be less sensitive to interest rate changes than securities with
fixed interest rates, but may decline in value if their coupon rates do not reset as high, or as quickly, as
comparable market interest rates. Although floating rate notes are less sensitive to interest rate risk than fixed rate
securities, they are subject to credit and default risk, which could impair their value.
Covered Bonds
Where a Fund invests in covered bonds, the Investment Manager will seek to invest in high quality bonds or as
otherwise required in accordance with the relevant benchmark index. There is, however, no guarantee that such
covered bonds will be free from counterparty default and the risks associated with counterparty default apply. Any
deterioration in the assets backing a bond may result in a reduction in the value of the bond and, therefore, the
relevant Fund. Additionally, a default by the issuer of a bond may result in a reduction in the value of the relevant
Fund.
The price of bonds will generally be affected by changing interest rates and credit spreads.
Illiquidity of Bonds Close to Maturity
In addition to the liquidity risks of bonds already described above, there is a risk that bonds which are nearing
maturity may become illiquid. In such cases, it may become more difficult to achieve fair value on the purchase
and sale thereof.
Depository Notes
GDNs are designed to offer exposure to their underlying securities.
In certain situations, the Investment Manager may use GDNs to provide exposure to underlying securities within
the Benchmark Index, for example where the underlying securities cannot be, or are unsuitable to be, held directly,
where direct access to the underlying securities is restricted or limited or where depository notes provide a more
cost or tax efficient exposure. However, in such cases the Investment Manager is unable to guarantee that a
similar outcome will be achieved to that if it were possible to hold the securities directly, due to the fact GDNs do
not always perform in line with the underlying security.
51
In the event of the suspension or closure of a market(s) on which the underlying securities are traded, there is a
risk that the value of the GDN will not closely reflect the value of the relevant underlying securities. Additionally,
there may be some circumstances where the Investment Manager cannot, or it is not appropriate to, invest in a
GDN, or the characteristics of the GDN do not exactly reflect the underlying security.
In the event that a Fund invests in GDNs in the circumstances set out above, the Fund's tracking of the Benchmark
Index may be impacted, i.e. there is a risk that the Fund's return varies from the return of the Benchmark Index.
Structured Finance and Other Securities
A Fund may be exposed directly or indirectly to Structured Finance Securities and other assets which involve
substantial financial risk, including distressed debt and low quality credit securities, asset-backed securities and
credit-linked securities. These securities may entail a higher liquidity risk than exposure to sovereign or corporate
bonds. The Fund’s primary credit risk would be to the issuer of the Structured Finance Security.
Fixed Income Transferable Securities
Debt securities are subject to both actual and perceived measures of creditworthiness. The amount of credit risk
may be assessed using the issuer's credit rating which is assigned by one or more independent rating agencies.
This does not amount to a guarantee of the issuer's creditworthiness but provides an indicator of the likelihood of
default. Securities which have a lower credit rating are generally considered to have a higher credit risk and a
greater possibility of default than more highly rated securities. Companies often issue securities which are ranked
in order of seniority which in the event of default would be reflected in the priority in which investors might be paid
back. The "downgrading" of an investment grade rated debt security or adverse publicity and investor perception,
which may not be based on fundamental analysis, could decrease the value and liquidity of the security,
particularly in a thinly traded market.
A Fund may be affected by changes in prevailing interest rates and by credit quality considerations. Changes in
market rates of interest will generally affect the Fund's asset values as the prices of fixed rate securities generally
increase when interest rates decline and decrease when interest rates rise. Prices of shorter-term securities
generally fluctuate less in response to interest rate changes than do longer-term securities. An economic recession
may adversely affect an issuer's financial condition and the market value of high yield debt securities issued by
such entity. The issuer's ability to service its debt obligations may be adversely affected by specific issuer
developments, or the issuer's inability to meet specific projected business forecasts, or the unavailability of
additional financing. In the event of bankruptcy of an issuer, a Fund may experience losses and incur costs.
Illiquidity and Quality of Mortgage-Backed Instruments
In addition to the risks associated with trading in FDI, there is a risk that mortgage-backed instruments may
become illiquid. Additionally, the quality of mortgage pools may change from time to time. It may therefore,
become more difficult to achieve fair value on the purchase and sale of such instruments.
Bank Corporate Bonds
Corporate bonds issued by a financial institution may be subject to the risk of a write down or conversion (i.e.
“bail-in”) by a relevant authority in circumstances where the financial institution is unable to meet its financial
obligations. This may result in bonds issued by such financial institution being written down (to zero), converted
into equity or alternative instrument of ownership, or the terms of the bond may be varied. ‘Bail-in’ risk refers to
the risk of relevant authorities exercising powers to rescue troubled banks by writing down or converting rights of
their bondholders in order to absorb losses of, or recapitalise, such banks. Investors should be alerted to the fact
that relevant authorities are more likely to use a “bail-in” tool to rescue troubled banks, instead of relying on public
financial support as they have in the past. Relevant authorities now consider that public financial support should
only be used as a last resort after having assessed and exploited, to the maximum extent practicable, other
resolution tools, including the “bail-in” tool. A bail-in of a financial institution is likely to result in a reduction in
value of some or all of its bonds (and possibly other securities) and a Fund holding such securities when a bail-in
occurs will also be similarly impacted.
Risks specific to investing in Currency Hedged Funds and Currency Hedged Share Classes
Currency Hedged Funds and Currency Hedged Share Classes
Currency Hedged Funds and Currency Hedged Share Classes use forward FX contracts and spot FX contracts to
reduce or minimise the risk of currency fluctuations between, in the case of a Currency Hedged Fund, the
currencies of the constituent securities of its Benchmark Index against its Base Currency and, in the case of a
Currency Hedged Share Class, its underlying portfolio currency exposures against its Valuation Currency. In
circumstances where the Base Currency of a Currency Hedged Fund or the Valuation Currency of a Currency
Hedged Share Class is generally strengthening against the currency exposures being hedged (i.e. the currencies of
the constituent securities of a Currency Hedged Fund’s Benchmark Index or the underlying portfolio currency
exposures of a Currency Hedged Share Class), currency hedging may protect investors in the relevant Currency
Hedged Fund or Share Class against such currency movements. However, where the Base Currency of a Currency
Hedged Fund or the Valuation Currency of a Currency Hedged Share Class is generally weakening against the
currency exposures being hedged, currency hedging may preclude investors from benefiting from such currency
movements. Investors should only invest in a Currency Hedged Fund or a Currency Hedged Share Class if they are
willing to forego potential gains from appreciations in the currencies of the constituent securities of a Currency
Hedged Fund’s Benchmark Index or the underlying portfolio currency exposures of a Currency Hedged Share Class
against the Currency Hedged Fund’s Base Currency or the Currency Hedged Share Class’ Valuation Currency
respectively.
52
While currency hedging is likely to reduce currency risk in the Currency Hedged Fund and Currency Hedged Share
classes, it is unlikely to completely eliminate currency risk.
Currency Hedged Share Classes in non-major currencies may be affected by the fact that capacity of the relevant
currency market may be limited, which could reduce the ability of the Currency Hedged Share Class to reduce its
currency risk and the volatility of such Currency Hedged Share Class.
Currency Hedged Funds Tracking Currency Hedged Benchmark Indices
In accordance with the hedging methodology of the Currency Hedged Funds’ Benchmark Indexes (see “Fund
Descriptions” above), the foreign currency hedge of each relevant Currency Hedged Fund is reset at the end of
each month using one-month forward contracts. Whilst the hedge is proportionately adjusted for net subscription
and redemptions in the relevant Currency Hedged Fund, no adjustment is made to the hedge during the month to
account for the price movements of underlying securities held by the relevant Currency Hedged Fund, corporate
events affecting such securities, or additions, deletions or any other changes to the constituents of the Fund’s
Benchmark Index. During the period between each foreign currency hedge reset at month-end, the nominal
amount of the hedge may not match exactly the foreign currency exposure of the relevant Currency Hedged Fund.
Depending on whether the assets in each currency in the Benchmark Index have appreciated or depreciated
between each hedge reset, the foreign currency exposure for that currency in the relevant Currency Hedged Fund
may be under-hedged or over-hedged respectively.
Gains or losses from the foreign currency hedge of the relevant Currency Hedged Fund will not be reinvested or
covered until the hedge is reset at month-end. In the event that there is a loss on the relevant Currency Hedged
Fund’s foreign currency hedge prior to a reset at month-end, the relevant Currency Hedged Fund (by virtue of the
hedging methodology used by its Benchmark Index) will have an exposure to securities which will exceed the Net
Asset Value of the relevant Currency Hedged Fund as the Fund’s Net Asset Value comprises both the value of the
Fund’s underlying securities plus the unrealised loss on the foreign currency hedge. Conversely, in the event that
there is a gain on the relevant Currency Hedged Fund’s foreign currency hedge prior to reset at month-end, the
relevant Currency Hedged Fund will have a lower exposure to securities than its Net Asset Value as, in this case,
the relevant Currency Hedged Fund’s Net Asset Value will include an unrealised gain on the foreign currency hedge.
When the foreign currency hedge is reset at month-end, any such difference will be materially addressed. The
Investment Manager is seeking to deliver to investors a return reflective of the return of the benchmark index
which incorporates a hedging methodology. Therefore the Investment Manager has no discretion to alter or vary
the hedging methodology used by the relevant Currency Hedged Fund.
Currency Hedged Share Classes
Currency Hedged Share Classes use a currency hedging approach whereby the hedge is proportionately adjusted
for net subscriptions and redemptions in the relevant Currency Hedged Share Class. An adjustment is made to the
hedge to account for the price movements of the underlying securities held for the relevant Currency Hedged Share
Class, corporate events affecting such securities, or additions, deletions or any other changes to the underlying
portfolio holdings for the Currency Hedged Share Class, however, the hedge will only be reset or adjusted on a
monthly basis and as and when a pre-determined tolerance is triggered intra-month, and not whenever there is
market movement in the underlying securities. In any event, any over-hedged position arising in a Currency
Hedged Share Class will be monitored daily and is not permitted to exceed 105% of the net asset value of that
Share Class as prescribed by the Central Bank UCITS Regulations.
The aggregate gain or loss arising from the hedging positions of a Currency Hedged Share Class will be reduced by
an adjustment to some or all of the currency hedges only on a monthly basis and as and when the aggregate
exceeds a pre-determined tolerance intra-month as determined by the Investment Manager, and not whenever
there is an aggregate gain or loss. When a gain or loss from a currency hedge is adjusted, either the gain will be
reinvested into underlying securities or the underlying securities will be sold to meet the loss. In the event that
there is a loss on the foreign currency hedge of the relevant Currency Hedged Share Class prior to an adjustment
or reset, the relevant Currency Hedged Share Class will have an exposure to securities which will exceed its Net
Asset Value as its Net Asset Value comprises both the value of its underlying securities plus the unrealised loss on
its foreign currency hedge. Conversely, in the event that there is a gain on the foreign currency hedge of the
relevant Currency Hedged Share Class prior to an adjustment or reset, the relevant Currency Hedged Share Class
will have a lower exposure to securities than its Net Asset Value as, in this case, its Net Asset Value will include an
unrealised gain on the foreign currency hedge. When the foreign currency hedge is adjusted or reset, any such
difference will be materially addressed.
The Investment Manager will monitor the currency exposure and gain or loss arising from hedge positions of each
Currency Hedged Share Class against the pre-determined tolerances daily and will determine when a currency
hedge should be reset and the gain or loss arising from the currency forwards reinvested or settled, while taking
into consideration the frequency and associated transaction and reinvestment costs of resetting the currency
forwards. When a pre-determined tolerance threshold for a Currency Hedged Share Class is triggered as at the
close of a Business Day, the relevant currency hedge will be reset or adjusted only on the next Business Day (on
which the relevant currency markets are open); therefore, there could be a Business Day’s lag prior to the hedge
position being reset or adjusted.
The triggers for resetting and adjusting the hedge are pre-determined by the Investment Manager and periodically
reviewed for appropriateness. Other than this periodic adjustment of the tolerance levels, the Investment Manager
has no discretion to alter or vary the hedging methodology used by the relevant Currency Hedged Share Class
53
(other than in exceptional market circumstances where the Investment Manager believes that it would be in
investors’ interests to reset or adjust the hedge before the trigger levels are exceeded, or not reset or adjust the
hedge if they are exceeded).
Risks specific to use of FDI
FDI Risks
Each Fund may use FDI for the purposes of efficient portfolio management or, where stated in the investment
policy of a Fund, for direct investment purposes. Such instruments involve certain special risks and may expose
investors to an increased risk of loss. These risks may include credit risk with regard to counterparties with whom
the Fund trades, the risk of settlement default, lack of liquidity of the FDI, imperfect tracking between the change
in value of the FDI and the change in value of the underlying asset that the Fund is seeking to track and greater
transaction costs than investing in the underlying assets directly.
In accordance with standard industry practice when entering into a FDI, a Fund may be required to secure its
obligations to its counterparty. For non-fully funded FDI, this may involve the placing of initial and/or variation
margin assets with the counterparty. For FDI which require a Fund to place initial margin assets with a
counterparty, such assets may not be segregated from the counterparty’s own assets and, being freely
exchangeable and replaceable, the Fund may have a right to the return of equivalent assets rather than the original
margin assets deposited with the counterparty. These deposits or assets may exceed the value of the relevant
Fund’s obligations to the counterparty in the event that the counterparty requires excess margin or collateral. In
addition, as the terms of an FDI may provide for one counterparty to provide collateral to the other counterparty to
cover the variation margin exposure arising under the FDI only if a minimum transfer amount is triggered, the
Fund may have an uncollateralised risk exposure to a counterparty under an FDI up to such minimum transfer
amount. A default by the counterparty in such circumstances will result in a reduction in the value of the Fund and
thereby a reduction in the value of an investment in the Fund.
Additional risks associated with investing in FDI may include a counterparty breaching its obligations to provide
collateral, or due to operational issues (such as time gaps between the calculation of risk exposure to a
counterparty’s provision of additional collateral or substitutions of collateral or the sale of collateral in the event of
a default by a counterparty), there may be instances where a Fund’s credit exposure to its counterparty under a
FDI is not fully collateralised but each Fund will continue to observe the limits set out in paragraph 2.8 of Schedule
III. The use of FDI may also expose a Fund to legal risk, which is the risk of loss due to the unexpected application
of a law or regulation, or because a court declares a contract not legally enforceable.
Uncollateralised FDI
In addition to the risks associated with trading in FDI, trading in FDI which have not been collateralised gives
rise to direct counterparty exposure. For FDI which are not collateralised (including, without limitation,
mortgage-backed forward instruments where the underlying is unknown (commonly known as “TBAs”)), such
counterparty exposure exists for the period during the trading and settlement dates. A default by the issuer of
such instrument may result in a reduction in the value of the Fund.
Other general risks
Fund Liability Risk
The Company is structured as an umbrella fund with segregated liability between its Funds. As a matter of Irish
law, the assets of one Fund will not be available to meet the liabilities of another. However, the Company is a
single legal entity that may operate or have assets held on its behalf or be subject to claims in other jurisdictions
that may not necessarily recognise such segregation of liability. As at the date of this Prospectus, the Directors are
not aware of any such existing or contingent liability.
Funds with Multiple Share Classes
While assets and liabilities that are specific to a Share Class within a Fund would be attributable to (and should be
borne by) only that Share Class, there is no segregation of liabilities between Share Classes as a matter of Irish
law. Due to the lack of segregation of liabilities as a matter of law, there is a risk that the creditors of a Share Class
may bring a claim against the assets of the Fund notionally allocated to other Share Classes.
In practice, cross liability between Share Classes is only likely to arise where the aggregate liabilities attributable to
a Share Class exceed the aggregate assets of the Fund notionally allocated to that Share Class. Such a situation
could arise if, for example, there is a default by a counterparty in respect of the relevant Fund’s investments. In
these circumstances, the remaining assets of the Fund notionally allocated to other Share Classes of the same Fund
may be available to meet such payments and may accordingly not be available to meet any amounts that
otherwise would have been payable to holders of Shares of such other Share Classes.
Funds with One or More Currency Hedged Share Classes
Currency Hedged Share Classes hedge their currency exposure using forward FX contracts and spot FX contracts.
All gains, losses and expenses arising from hedging transactions for a particular Currency Hedged Share Class are
attributed only to that Currency Hedged Share Class and should generally be borne only by the investors in that
Share Class. However, given that there is no segregation of liabilities between Share Classes under law, there is a
risk that, if the assets notionally allocated to a Currency Hedged Share Class are insufficient to meet the losses
arising from its hedging transactions (in addition to other fees and expenses attributable to such Share Class), the
54
losses arising from the hedging transactions for such Share Class could affect the Net Asset Value per Share of one
or more other Share Classes of the same Fund.
Insufficiency of Duties and Charges
The Fund levies Duties and Charges in order to defray the costs associated with the purchase and sale of
Investments. The level of Duties and Charges may be determined by the Manager in advance of the actual
purchase or sale of Investments or execution of associated foreign exchange. It may be estimated based on
historic information concerning the costs incurred in trading the relevant securities in the relevant markets. This
figure is reviewed periodically and adjusted as necessary. If the Fund levies Duties and Charges which are
insufficient to discharge all of the costs incurred in the purchase or sale of Investments, the difference will be paid
out of the assets of the Fund, which, pending the reimbursement of the shortfall by an Authorised Participant, will
result in a reduction in the value of the Fund (and a corresponding reduction in the value of each Share).
Failure to Settle
If an Authorised Participant submits a dealing request and subsequently fails or is unable to settle and complete
the dealing request, the Company will have no recourse to the Authorised Participant other than its contractual
right to recover such costs. In the event that no recovery can be made from the Authorised Participant and any
costs incurred as a result of the failure to settle will be borne by the Fund and its investors.
Taxation Risks
Potential investors’ attention is drawn to the taxation risks associated with investment in the Company.
section headed “Taxation”.
See
Changes in taxation legislation may adversely affect the Funds
The tax information provided in the “Taxation” section is based, to the best knowledge of the Company, upon tax
law and practice as at the date of this Prospectus. Tax legislation, the tax status of the Company and the Funds,
the taxation of investors and any tax relief, and the consequences of such tax status and tax relief, may change
from time to time. Any change in the taxation legislation in Ireland or in any jurisdiction where a Fund is registered,
cross-listed, marketed or invested could affect the tax status of the Company and the relevant Fund, affect the
value of the relevant Fund’s Investments in the affected jurisdiction, affect the relevant Fund’s ability to achieve its
investment objective, and/or alter the post tax returns on Shares held. Where a Fund invests in FDI the preceding
sentence may also extend to the jurisdiction of the governing law of the FDI contract and/or the FDI counterparty
and/or to the market(s) comprising the underlying exposure(s) of the FDI.
The Company may be subject to withholding or other taxes on income and/or gains arising from its investment
portfolio. Where the Company invests in securities that are not subject to withholding or other taxes at the time of
acquisition, there can be no assurance that tax may not be imposed in the future as a result of any change in
applicable laws, treaties, rules or regulations or the interpretation thereof. The Company may not be able to
recover such tax and so any such change could have an adverse effect on the Net Asset Value of the Fund.
The availability and value of any tax relief available to investors depend on the individual circumstances of
investors. The information in the “Taxation” section is not exhaustive and does not constitute legal or tax advice.
Prospective investors are urged to consult their tax advisors with respect to their particular tax situations and the
tax effects of an investment in the Funds.
Tax liability in new jurisdictions
Where a Fund invests in a jurisdiction where the tax regime is not fully developed or is not sufficiently certain, for
example the Middle East, the Company, the relevant Fund, the Manager, the Investment Manager, the Depositary
and the Administrator shall not be liable to account to any holder of Shares for any payment made or suffered by
the Company or the relevant Fund in good faith to a fiscal authority for taxes or other charges of the Company or
the relevant Fund notwithstanding that it is later found that such payments need not or ought not have been made
or suffered.
Conversely, where through fundamental uncertainty as to the tax liability, adherence to best or common market
practice (to the extent that there is no established best practice) that is subsequently challenged or the lack of a
developed mechanism for practical and timely payment of taxes, the relevant Fund pays taxes relating to previous
years, any related interest or late filing penalties will likewise be chargeable to the Fund. Such late paid taxes will
normally be debited to the fund at the point the decision to accrue the liability in the Fund accounts is made.
Treatment of tax by index providers
Investors should be aware that the performance of Funds, as compared to a Benchmark Index, may be adversely
affected in circumstances where the assumptions about tax made by the relevant index provider in their index
calculation methodology, differ to the actual tax treatment of the underlying securities in the Benchmark Index
held within Funds.
FATCA
Investors should also read the information set out under the heading "FATCA and other cross-border reporting
55
systems", particularly in relation to the consequences of the Company being unable to comply with the terms of
such reporting systems.
Liquidity Risk
A Fund’s investments may be subject to liquidity constraints, which means they may trade less frequently and in
small volumes. Securities of certain types, such as bonds and mortgage-backed instruments, may also be subject
to periods of significantly lower liquidity in difficult market conditions. As a result, changes in the value of
investments may be more unpredictable. In certain cases, it may not be possible to sell the security at the price at
which it has been valued for the purposes of calculating the Net Asset Value of the Fund or at a value considered to
be fairest. Reduced liquidity of a Fund’s investments may result in a loss to the value of your investment.
Dealing Day Risk
As foreign exchanges can be open on days when a Fund may have suspended calculation of its Net Asset Value and
the subscription and redemption of Shares and, therefore, Shares in the Fund are not priced, the value of the
securities in the Fund’s portfolio may change on days when a Fund’s Shares will not be able to be purchased or
sold.
Share Subscriptions and Redemptions
Provisions relating to the redemption of Shares grant the Company discretion to limit the amount of Shares
available for redemption on any Dealing Day to 10% of the Shares in issue in respect of any Fund and, in
conjunction with such limitations, to defer or pro rata such redemption. In addition, where requests for subscription
or redemption are received late, there will be a delay between the time of submission of the request and the actual
date of subscription or redemption. Such deferrals or delays may operate to decrease the number of Shares or the
redemption amount to be received.
Umbrella Cash Subscription and Redemption Account Risk
Subscriptions monies received in respect of a Fund in advance of the issue of Shares will be held in the Umbrella
Cash Collection Account. Investors will be unsecured creditors of such Fund with respect to the amount subscribed
until such Shares are issued, and will not benefit from any appreciation in the Net Asset Value of the Fund or any
other shareholder rights (including dividend entitlement) until such time as Shares are issued. In the event of an
insolvency of the Fund or the Company, there is no guarantee that the Fund or Company will have sufficient funds
to pay unsecured creditors in full.
Payment by the Fund of redemption proceeds and dividends is subject to receipt by the Administrator of original
subscription documents and compliance with all anti-money laundering procedures. Notwithstanding this, the
redeemed Shares will be cancelled from the relevant redemption date. Redeeming Authorised Participants and
Authorised Participants entitled to distributions will, from the redemption or distribution date, as appropriate, be
unsecured creditors of the Fund, and will not benefit from any appreciation in the Net Asset Value of the Fund or
any other rights (including further dividend entitlement), with respect to the redemption or distribution amount. In
the event of an insolvency of the Fund or the Company during this period, there is no guarantee that the Fund or
Company will have sufficient funds to pay unsecured creditors in full. Redeeming Authorised Participants and
Authorised Participants entitled to distributions should therefore ensure that any outstanding documentation and
information is provided to the Administrator promptly. Failure to do so is at such Authorised Participant’s own risk.
In respect of the Umbrella Cash Collection Account, in the event of the insolvency of another Fund of the Company,
recovery of any amounts to which a Fund is entitled, but which may have transferred to such other Fund as a result
of the operation of the Umbrella Cash Collection Account, will be subject to the principles of Irish insolvency and
trust law and the terms of the operational procedures for the Umbrella Cash Collection Account. There may be
delays in effecting and / or disputes as to the recovery of such amounts, and the insolvent Fund may have
insufficient funds to repay amounts due to the relevant Fund. Accordingly, there is no guarantee that such Fund or
the Company will recover such amounts. Furthermore, there is no guarantee that in such circumstances such Fund
or the Company would have sufficient funds to repay any unsecured creditors.
Trading Currency Exposure
Shares may be traded in various currencies on various stock exchanges. In addition, subscriptions and redemptions
of Shares in a Fund will ordinarily be made in the Valuation Currency of the Shares and may in some cases be
permitted in other currencies. The currencies in which the underlying investments of a Fund are denominated may
also differ from the Base Currency of the Fund (which may follow the base currency of the Fund’s Benchmark
Index) and from the Valuation Currency of the Shares. Depending on the currency in which an investor invests in a
Fund, foreign exchange fluctuations between the currency of investment, the Valuation Currency of the Shares and
the Base Currency of the Fund and/or the currencies in which the Fund’s underlying investments are denominated,
will have an impact on, and may adversely affect, the value of such investor’s investments.
Temporary Suspension
Investors are reminded that in certain circumstances their right to redeem or switch Shares may be temporarily
suspended. Please see ‘Temporary Suspension of Valuation of the Shares and of Sales, Redemptions and
Switching’.
Valuation Risk
Certain assets of the Fund may become illiquid and/or not publicly traded. Such securities and financial
instruments may not have readily available prices and may therefore be difficult to value. The Manager,
Investment Manager or Administrator may provide valuation services (to assist in calculating the Net Asset
56
Value of a Fund) in relation to such securities and financial instruments. Investors should be aware that in
these circumstances a possible conflict of interest may arise as the higher the estimated valuation of the
securities the higher the fees payable to the Manager, Investment Manager or Administrator. Please see
“Conflicts of Interest - General” on page 86 for details of how the Company deals with conflicts. In addition,
given the nature of such Investments, determinations as to their fair value may not represent the actual
amount that will be realised upon the eventual disposal of such Investments.
57
VALUATION OF THE FUNDS
General
The Net Asset Value per Share in each Fund shall be determined for each Dealing Day, in accordance with the
Articles, by dividing the assets of the Fund, less its liabilities, by the number of Shares in issue in respect of that
Fund, adjusted by rounding to such number of decimal places as the Directors may determine and agree with the
Administrator. Any liabilities of the Company which are not attributable to any Fund shall be allocated pro rata
amongst all of the Funds according to their respective Net Asset Values.
Each Fund will be valued for each Dealing Day as at the Valuation Point listed for the Fund in the Primary Market
Dealing Timetable using the index methodology of valuing securities. Depending on the nature of the underlying
security, this could be either at the last traded, closing mid-market or bid price on the relevant market.
A Fund may comprise more than one class of Shares and the Net Asset Value per Share may differ between classes
in a Fund. Where a Fund is made up of more than one class of Shares, the Net Asset Value of each class shall be
determined by calculating the amount of the Net Asset Value of the Fund attributable to each class. The Net Asset
Value per Share of a class shall be calculated by dividing the Net Asset Value of the class by the number of Shares
in issue in that class. The Net Asset Value of a Fund attributable to a class shall be determined by establishing the
value of Shares in issue in the class and by allocating relevant fees and expenses to the class and making
appropriate adjustments to take account of distributions paid out of the Fund, if applicable, and apportioning the
Net Asset Value of the Fund accordingly.
Assets listed or traded on a Regulated Market for which market quotations are readily available shall be priced at
the Valuation Point using the last traded price for equity securities or the closing mid-market price for bond
securities on the principal Regulated Market for such Investment (with the exception of iShares $ Treasury Bond 13yr UCITS ETF USD (Acc) B, iShares $ Treasury Bond 3-7yr UCITS ETF, and iShares $ Treasury Bond 7-10yr UCITS
ETF USD (Acc) in respect of which bond securities shall be valued in accordance with the methodology employed by
the Fund’s relevant Benchmark Index which values bond securities using a bid price). If the assets of a Fund are
listed or traded on several Regulated Markets, the last traded price, closing mid-market price and/or bid price, as
applicable, on the Regulated Market which, in the opinion of the Administrator, constitutes the main market for
such assets, will be used.
The value of an Investment listed on a Regulated Market but acquired or traded at a premium or at a discount
outside or off the relevant stock exchange or an OTC market may be valued taking into account the level of
premium or discount as at the date of valuation of the Investment with the approval of the Depositary, who must
ensure that the adoption of such a procedure is justifiable in the context of establishing the probable realisation
value of the Investment.
In the event that any of a Fund’s Investments on the relevant Dealing Day are not listed or traded on any
Regulated Market and for which market quotations are not readily available, such Investments shall be valued at
their probable realisation value determined by the Directors or such other competent person (which may be related
to but independent of the Fund) or firm appointed by the Directors and approved by the Depositary (as a
competent person for such purpose) with care and in good faith.
The Administrator may use such probable realisation value estimated with care and in good faith as may be
recommended by a competent professional appointed by the Directors and who is approved by the Depositary as a
competent person for such purpose. Cash and other liquid assets will be valued at their face value with interest
accrued, where applicable.
If for specific assets of a Fund the last traded price, the closing mid-market price and/or bid price, as applicable, do
not, in the opinion of the Manager, reflect their fair value or if prices are unavailable, the value shall be calculated
with care and in good faith by the Directors or a competent person or firm appointed by the Directors and approved
for that purpose by the Depositary, on the basis of the probable realisation value for such assets as at the
Valuation Point.
In the event of it being impossible or incorrect to carry out a valuation of a specific Investment in accordance with
the valuation rules set out above, or if such valuation is not representative of the fair market value in the context
of currency, marketability and such other considerations which are deemed relevant, the Directors are entitled to
use other generally recognised valuation methods in order to reach a fair market valuation of that specific
Investment, provided that such method of valuation has been approved by the Depositary.
Shares, units of or participations in open-ended collective investment schemes will be valued at the latest available
net asset value of such share, unit or participation as published by such open-ended collective investment scheme;
shares, units of or participations in closed-ended collective investment schemes will, if listed or traded on a
Regulated Market, be valued in accordance with the provisions above which apply to Investments listed or normally
dealt in on a Regulated Market.
Any value and borrowing expressed otherwise than in the Base Currency of a Fund (whether of an Investment or
cash) shall be converted into the Fund’s Base Currency at the rate (whether official or otherwise) which the
Administrator deems appropriate in the circumstances.
58
Exchange-traded FDI will be valued for each Dealing Day at the settlement price for such instruments as at the
Valuation Point. If such price is not available such value shall be the probable realisation value estimated with care
and in good faith by the Directors or a competent person or firm appointed by the Directors and approved for such
purpose by the Depositary.
The value of any OTC FDI contracts shall be (a) a quotation from the counterparty or (b) an alternative valuation,
such as model pricing, calculated by the Company or an independent pricing vendor (which may be a party related
to but independent of the counterparty which does not rely on the same pricing models employed by the
counterparty) provided that: (i) where a counterparty valuation is used, it must be provided on at least a daily
basis and approved or verified at least weekly by a party independent of the counterparty, which may be the
Investment Manager or the Administrator (approved for the purpose by the Depositary); (ii) where an alternative
valuation is used (i.e. a valuation that is provided by a competent person appointed by the Manager or Directors
and approved for that purpose by the Depositary (or a valuation by any other means provided that the value is
approved by the Depositary)), it must be provided on a daily basis and the valuation principles employed must
follow best international practice established by bodies such as IOSCO (International Organisation of Securities
Commission) and AIMA (the Alternative Investment Management Association) and any such valuation shall be
reconciled to that of the counterparty on a monthly basis. Where significant differences arise these must be
promptly investigated and explained.
Forward foreign exchange contracts for which market quotations are freely available may be valued in accordance
with the previous paragraph or by reference to market quotations (in which case there is no requirement to have
such prices independently verified or reconciled to the counterparty valuation).
Publication of Net Asset Value and Net Asset Value per Share
Except where the determination of the Net Asset Value has been suspended in the circumstances described under
“Temporary Suspension of Valuation of the Shares and of Sales, Redemptions and Switching” on page 72, the Net
Asset Value per Share for each Fund shall be made available at the registered office of the Administrator on or
before the close of business of each Dealing Day. The Net Asset Value per Share for each class of Shares in each
Fund shall also be published daily on the Business Day following the Valuation Point for the applicable Fund by
means of a Regulatory Information Service as well as the official iShares website (www.iShares.com), which shall
be kept up to date, and such other publications and with such frequency as the Directors may determine. The
publishing of the Net Asset Value per Share for each class of Shares in each Fund is for information purposes only,
and is not an invitation to apply for, redeem or switch Shares at the published Net Asset Value per Share.
Indicative Net Asset Value
The indicative net asset value (iNAV®) is the net asset value per share of each class of Shares in a Fund calculated
on a real time basis (every 15 seconds) during trading hours. The values are intended to provide investors and
market participants with a continuous indication of the value of each class of Shares. The values are usually
calculated based on a valuation of the actual Fund portfolio using real-time prices from all relevant exchanges.
The responsibility for the calculation and publication of the iNAV® values of each class of Shares has been
delegated by the Investment Manager to the Deutsche Börse Group. iNAV® values are disseminated via Deutsche
Börse’s CEF data feed and are displayed on major market data vendor terminals as well as on a wide range of
websites that display stock market data, including the Deutsche Börse website at www.deutsche-boerse.com
and/or http://www.reuters.com.
An iNAV® is not, and should not be taken to be or relied on as being, the value of a Share or the price at which
Shares may be subscribed for or redeemed or purchased or sold on any relevant stock exchange. In particular, any
iNAV® provided for a Fund where the constituents of the Benchmark Index or Investments are not actively traded
during the time of publication of such iNAV® may not reflect the true value of a Share, may be misleading and
should not be relied on. The inability of the Investment Manager or its designee to provide an iNAV®, on a realtime basis, or for any period of time, will not in itself result in a halt in the trading of the Shares on a relevant stock
exchange, which will be determined by the rules of the relevant stock exchange in the circumstances. Investors
should be aware that the calculation and reporting of any iNAV® may reflect time delays in the receipt of the prices
of the relevant constituent securities in comparison to other calculated values based upon the same constituent
securities including, for example, the Benchmark Index or Investments itself or the iNAV® of other exchange
traded funds based on the same Benchmark Index or Investments. Investors interested in dealing in Shares on a
relevant stock exchange should not rely solely on any iNAV® which is made available in making investment
decisions, but should also consider other market information and relevant economic and other factors (including,
where relevant, information regarding the Benchmark Index or Investments, the relevant constituent securities and
financial instruments based on the Benchmark Index or Investments corresponding to a Fund). None of the
Company, the Directors, the Investment Manager or its designee, the Depositary, the Administrator, any
Authorised Participant and the other service providers shall be liable to any person who relies on the iNAV®.
Income Equalisation
For tax and accounting purposes, the Manager may implement income equalisation arrangements with a view to
ensuring that the level of income derived from Investments is not affected by the issue, switching or redemption of
Shares during the relevant accounting period.
59
DEALINGS IN THE COMPANY
The Funds are exchange traded funds which means that the Shares of the Funds are listed on one or more stock
exchanges. Certain market makers and brokers are authorised by the Company to subscribe and redeem Shares of
the Funds directly with the Company in the Primary Market and they are referred to as “Authorised Participants”.
Such Authorised Participants generally have the capability to deliver the Shares of the Funds within the clearing
systems relevant to the stock exchanges on which the Shares are listed. Authorised Participants usually sell the
Shares they subscribe to on one or more stock exchanges, the Secondary Market, where such Shares become
freely tradable. Potential investors who are not Authorised Participants can purchase and sell the Shares of the
Funds on the Secondary Market through a broker/dealer on a recognised stock exchange or OTC. For further
details of such brokers please contact the Investment Manager.
The section titled “Procedure for Dealing on the Primary Market” relates to subscriptions and redemptions between
the Company and Authorised Participants. Investors who are not Authorised Participants should refer to the section
below titled “Procedure for Dealing on the Secondary Market”.
60
PROCEDURE FOR DEALING ON THE PRIMARY MARKET
The Primary Market is the market on which Shares of the Funds are issued or redeemed by the Company at the
request of Authorised Participants. Only Authorised Participants are able to effect subscriptions and redemptions of
Shares on the Primary Market.
Applicants wishing to deal on the Primary Market in respect of the Funds have to satisfy certain eligibility criteria,
and be registered with the Company, to become Authorised Participants. In addition, all applicants applying to
become Authorised Participants must first complete the Company’s Account Opening Form which may be obtained
from the Administrator and satisfy certain anti-money laundering checks. The signed original Account Opening
Form should be sent to the Administrator. Applicants wishing to become Authorised Participants should contact the
Investment Manager for further details. The Company has absolute discretion to accept or reject any Account
Opening Form and to revoke any authorisation to act as an Authorised Participant. The Common Depositary’s
Nominee, acting as the registered holder of Shares in the Funds, may not apply to become an Authorised
Participant.
Authorised Participants may submit dealing requests for subscriptions or redemptions of Shares in a Fund through
the Electronic Order Entry Facility. The use of the Electronic Order Entry Facility is subject to the prior consent of
the Investment Manager and the Administrator and must be in accordance with and comply with the requirements
of the Central Bank. Requests for subscriptions and redemptions placed electronically are subject to the dealing
request cut off times stated in the Primary Market Dealing Timetable. Alternative dealing methods are available
with the consent of the Investment Manager and in accordance with the requirements of the Central Bank.
All dealing applications are at the Authorised Participant’s own risk. Dealing requests, once submitted, shall (save
as determined by the Investment Manager at its discretion) be irrevocable. The Company, the Investment
Manager and the Administrator shall not be responsible for any losses arising in the transmission of Account
Opening Forms or for any losses arising in the transmission of any dealing request through the Electronic Order
Entry Facility or any alternative dealing method approved by the Investment Manager. Amendments to registration
details and payment instructions will only be effected upon receipt by the Company of the original documentation.
Authorised Participants are responsible for ensuring that they are able to satisfy their purchase and redemption
settlement obligations when submitting dealing requests on the Primary Market. Authorised Participants making
redemption requests must first ensure that they have a sufficient holding of Shares available for redemption (which
holding in the required number of Shares must be delivered to the Administrator for settlement in the relevant
International Central Securities Depositary by the relevant settlement date). Redemption requests will be
processed only where the payment is to be made to the Authorised Participant’s account of record.
Portfolio Composition File
The Company publishes a Portfolio Composition File for each Launched Share Class providing an indication of the
Investments of each Current Fund. In addition, the Portfolio Composition File also sets out the Cash Component to
be delivered (a) by Authorised Participants to the Company in the case of subscriptions; or (b) by the Company to
the Authorised Participants in the case of redemptions.
The Portfolio Composition File for each Launched Share Class of each of the Current Funds for each Dealing Day
may be requested by Authorised Participants from the Investment Manager.
Dealings in Kind, in Cash and Directed Cash Dealings
Shares may be subscribed for and redeemed on each Dealing Day.
The Company has absolute discretion to accept or reject in whole or in part any application for Shares without
assigning any reason therefor. The Company also has absolute discretion (but shall not be obliged) to reject or
cancel in whole or in part any subscription for Shares prior to the issue of Shares to an applicant (notwithstanding
the application having been accepted) and the registration of the same in the name of the Common Depositary’s
Nominee in the event that any of the following occurs to the Authorised Participant (or its parent company or
ultimate parent company): an Insolvency Event; a downgrading of credit rating; being placed on a watchlist (with
negative implications) by a credit rating agency; or where the Company (or its Manager or Investment Manager)
has reasonable grounds to conclude that the relevant Authorised Participant may be unable to honour its
settlement obligations or that the Authorised Participant poses a credit risk to the Funds. In addition, the Company
may impose such restrictions as it believes necessary to ensure that no Shares are acquired by persons who are
not Qualified Holders.
The Company may accept subscriptions and pay redemptions either in kind or in cash or in a combination of both.
The Company may determine whether to accept subscriptions in kind and/or in cash at its absolute discretion. The
Company has the right to determine whether it will only accept requests for redemptions from an Authorised
Participant in kind and/or in cash on a case by case basis in the event that any of the following occurs to the
Authorised Participant (or its parent company or ultimate parent company): an Insolvency Event; a downgrading of
credit rating; being placed on a watchlist (with negative implications) by a credit rating agency; or where the
Company (or its Manager or Investment Manager) has reasonable grounds to conclude that the relevant Authorised
Participant may be unable to honour its settlement obligations or that the Authorised Participant poses a credit risk.
61
Shares may be subscribed at the relevant Net Asset Value per Share together with associated Duties and Charges
which may be varied to reflect the cost of execution. Shares may be redeemed at the Net Asset Value per Share
less any associated Duties and Charges which may be varied to reflect the cost of execution. The Articles empower
the Company to charge such sum as the Manager considers represents an appropriate figure for Duties and
Charges. The level and basis of calculating Duties and Charges may also be varied depending on the size of the
relevant dealing request and the costs relating to, or associated with, the primary market transactions. Where
Authorised Participants subscribe for or redeem Shares in cash in a currency that is different from the currencies in
which the relevant Fund’s underlying investments are denominated, the foreign exchange transaction costs
associated with converting the subscription amount to the currencies needed to purchase the underlying
investments (in the case of a subscription) or converting the sale proceeds from selling the underlying investments
to the currency needed to pay redemption proceeds (in the case of a redemption) will be included in the Duties and
Charges which are applied to the relevant subscription or redemption amounts (respectively) paid or received (as
the case may be) by such Authorised Participants.
Where Authorised Participants subscribe for or redeem Shares in a Currency Hedged Fund or a Currency Hedged
Share Class, the transaction costs associated with increasing (in the case of a subscription) or decreasing (in the
case of a redemption) such hedge will be included in the Duties and Charges which are applied to the relevant
subscription or redemption amounts (respectively) paid or received (as the case may be) by such Authorised
Participants.
In some cases, the level of Duties and Charges has to be determined in advance of the completion of the actual
purchase or sale of Investments or execution of associated foreign exchange by or on behalf of the Company and
the subscription or redemption price may be based on estimated Duties and Charges (which could be based on
historic information concerning the costs incurred or expected costs in trading the relevant securities in the
relevant markets). Where the sum representing the subscription or redemption price is based on estimated Duties
and Charges which turn out to be different to the costs actually incurred by a Fund when acquiring or disposing of
Investments as a result of a subscription or redemption, the Authorised Participant shall reimburse the Fund for
any shortfall in the sum paid to the Fund (on a subscription) or any excess sum received from the Fund (on a
redemption), and the Fund shall reimburse the Authorised Participant for any excess received by the Fund (on a
subscription) or any shortfall paid by the Fund (on a redemption), as the case may be. Authorised Participants
should note that no interest will accrue or be payable on any amount reimbursed or to be reimbursed by a Fund. In
order to protect the Funds and holders of their Shares, the Company and the Manager reserve the right to factor
into the estimated Duties and Charges a buffer to protect the Fund from potential market and foreign exchange
exposure pending the payment of the actual Duties and Charges.
Dealing orders will normally be accepted in multiples of the minimum number of Shares. Such minima may be
reduced or increased in any case at the discretion of the Manager. Authorised Participants should refer to the
Electronic Order Entry Facility for details of minimum subscription and redemption orders for the Current Funds.
Details in relation to the Valuation Points and cut-off times for the Current Funds are also set out in the Primary
Market Dealing Timetable below. Details of the dealing cut-off times for subscription and redemption orders are
also available from the Administrator. There are no minimum holding requirements for the Funds as at the date of
this Prospectus.
Applications received after the times listed in the Primary Market Dealing Timetable will generally not be accepted
for dealing on the relevant Dealing Day. However, such applications may be accepted for dealing on the relevant
Dealing Day, at the discretion of the Company, Manager or the Investment Manager, in exceptional circumstances,
provided they are received prior to the Valuation Point. Settlement of the transfer of Investments and/or cash
payments in respect of subscriptions and redemptions must take place within a prescribed number of Business
Days after the Dealing Day (or such earlier time as the Manager may determine in consultation with the Authorised
Participant). Authorised Participants should refer to the Electronic Order Entry Facility for details of the maximum
and minimum settlement times (which can range from one to four Business Days) in respect of subscriptions and
redemptions. If a Significant Market is closed for trading or settlement on any Business Day during the period
between the relevant Dealing Day and the expected settlement date (inclusive), and/or settlement in the base
currency of the Fund is not available on the expected settlement date, there may be corresponding delays to the
settlement times (but such delays will not exceed the regulatory requirements for settlement).
If a redeeming Authorised Participant requests redemption of a number of Shares representing 5% or more of the
Net Asset Value of a Fund, the Directors may, in their sole discretion redeem the Shares by way of a redemption in
kind and in such circumstances the Directors will, if requested by the redeeming Authorised Participant, sell the
Investments on behalf of the Authorised Participant. (The cost of the sale can be charged to the Authorised
Participant).
If redemption requests on any Dealing Day amount to Shares representing 10% or more of the Net Asset Value of
a Fund, the Manager may, in its discretion, refuse to redeem any Shares representing in excess of 10% of the Net
Asset Value of the Fund (at any time including after the cut-off time on the Dealing Day). Any request for
redemption on such Dealing Day shall be reduced rateably and the redemption requests shall be treated as if they
were received on each subsequent Dealing Day until all Shares to which the original request related have been
redeemed.
Settlement for redemptions will normally be made within ten Business Days of the Dealing Day. Payment of
redemption proceeds to the account instructed by the Authorised Participant requesting the redemption will be in
62
full discharge of the Company’s obligations and liability.
The Investment Manager will carry out the underlying trades for any subscription or redemption request at its
absolute discretion and may vary the underlying trades (for example, by staggering the timing of the trades) to
take into account (amongst other things) the impact on other Shares in the relevant Fund and on the underlying
market, as well as acceptable industry practices.
Dealings in Kind
Shares in certain Funds may be subscribed for and/or redeemed in exchange for in kind assets. Authorised
Participants wishing to deal in kind should contact the Investment Manager for a list of Funds which accept dealing
requests in kind.
Subscriptions by Authorised Participants for Shares in exchange for in kind assets would need to deliver a basket of
underlying securities and a Cash Component (both as determined by the Investment Manager based on the
underlying portfolio held, and to be held, by the Fund) to the Fund as part of its settlement obligations.
In the event that an Authorised Participant fails to deliver, or delays in delivering, one or more of the specified
underlying securities by the relevant settlement date, the Company may (but shall not be obliged to) require the
Authorised Participant to pay to it a sum equal to the value of such underlying securities plus any Duties and
Charges associated with the purchase by the Company of such underlying securities, including any foreign
exchange costs and other fees, and/or costs incurred as a result of the delay.
Redemptions by Authorised Participants in exchange for in kind assets would receive their redemption proceeds in
the form of underlying securities and, if relevant, a Cash Component, as determined by the Investment Manager
based on the Fund’s underlying portfolio.
Directed Cash Dealings
If any request is made by an Authorised Participant to execute underlying security trades and/or foreign exchange
in a way that is different than normal and customary convention, the Investment Manager will use reasonable
endeavours to satisfy such request if possible but the Investment Manager will not accept any responsibility or
liability if the execution request is not achieved in the way requested for any reason whatsoever.
If any Authorised Participant initiating a cash subscription or redemption wishes to have the underlying securities
traded with a particular designated broker (i.e. a directed cash subscription or redemption), the Authorised
Participant would need to specify such instructions in its dealing request. The Investment Manager may at its sole
discretion (but shall not be obliged to) transact for the underlying securities with the designated broker. Authorised
Participants that wish to select a designated broker are required, prior to the Investment Manager transacting the
underlying securities, to contact the relevant portfolio trading desk of the designated broker to arrange the trade.
If an application resulting in a creation is accepted as a directed cash subscription, as part of the Authorised
Participant’s settlement obligations, the Authorised Participant would be responsible for (i) ensuring that the
designated broker transfers to the Fund (via the Depositary) the relevant underlying securities, and (ii) paying the
fees and costs charged by the designated broker for selling the relevant underlying securities to the Fund plus any
associated Duties and Charges, including foreign exchange costs, to reflect the cost of execution.
If a dealing request resulting in a redemption is accepted as a directed cash redemption, the Authorised Participant
is responsible for ensuring that the designated broker purchases the relevant underlying securities from the Fund.
The Authorised Participant will receive the price paid by the designated broker for purchasing the relevant
underlying securities from the Fund, less any associated Duties and Charges, including foreign exchange costs, to
reflect the cost of execution.
The Investment Manager will not be responsible, and shall have no liability, if the execution of the underlying
securities with a designated broker and, by extension, an Authorised Participant’s subscription or redemption order,
is not carried out due to an omission, error, failed or delayed trade or settlement on the part of the Authorised
Participant or the designated broker. Should an Authorised Participant or the designated broker to which the
Authorised Participant directed the underlying securities transaction default on, delay settlement of, or change the
terms of, any part of the underlying securities transaction, the Authorised Participant shall bear all associated risks
and costs, including costs incurred by the Company and/or the Investment Manager as a result of the delay to the
underlying securities transaction. In such circumstances, the Company and the Investment Manager have the right
to transact with another broker and to amend the terms of the Authorised Participant’s subscription or redemption
request, including the subscription price and/or redemption proceeds, to take into account the default, delay and/or
the change to the terms.
Clearing and Settlement
Authorised Participants’ title and rights relating to Shares in the Funds will be determined by the clearance system
through which they settle and/or clear their holdings. Shares in the Funds will settle through the relevant
International Central Securities Depositaries and the Common Depositary’s Nominee will act as the registered
holder of all such Shares. For further details, see the section “Global Clearing and Settlement” below.
63
PRIMARY MARKET DEALING TIMETABLE*
Fund Name
Fund
Valuation Point on DD
Dealing request
cut off on DD
(Cash/Market Trade dealings and In Kind FOP/OTC
DVP dealings)
(or, in exceptional circumstances, such later time as
approved by the Manager in its absolute discretion)**
Authorised Participants should refer to the Electronic Order
Entry Facility for further details.
iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B 11.00 pm
iShares $ Treasury Bond 3-7yr UCITS ETF
8.00 pm
11.00 pm
8.00 pm
iShares $ Treasury Bond 7-10yr UCITS ETF USD (Acc) 11.00 pm
8.00 pm
iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc)
11.00 pm
4.00 pm
iShares € Govt Bond 3-7yr UCITS ETF
11.00 pm
4.00 pm
iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc)
11.00 pm
4.00 pm
iShares Core EURO STOXX 50 UCITS ETF
11.00 pm
3.30 pm
iShares Core MSCI Pacific ex-Japan UCITS ETF
11.00 pm
4.00 am***
iShares Core S&P 500 UCITS ETF
11.00 pm
8.00 pm
iShares Dow Jones Industrial Average UCITS ETF
11.00 pm
8.00 pm
iShares FTSE 100 UCITS ETF
11.00 pm
3.30 pm
iShares FTSE MIB UCITS ETF EUR (Acc)
11.00 pm
3.30 pm
iShares MSCI Brazil UCITS ETF USD (Acc)
11.00 pm
8.00 pm
iShares MSCI Canada UCITS ETF
iShares MSCI EM Asia UCITS ETF
11.00 pm
8.00 pm
11.00 pm
4.00 am***
iShares MSCI EMU CHF Hedged UCITS ETF (Acc)
11.00pm
3.30 pm
iShares MSCI EMU Small Cap UCITS ETF
11.00 pm
3.30 pm
iShares MSCI EMU UCITS ETF
iShares MSCI EMU USD Hedged UCITS ETF (Acc)
11.00 pm
3.30 pm
11.00pm
3.30 pm
iShares MSCI Japan UCITS ETF USD (Acc)
11.00 pm
iShares MSCI Korea UCITS ETF USD (Acc)
11.00 pm
iShares MSCI Mexico Capped UCITS ETF
11.00 pm
8.00 pm
iShares MSCI Russia ADR/GDR UCITS ETF
11.00 pm
4.00 pm
iShares MSCI UK Large Cap UCITS ETF
11.00 pm
3.30 pm
iShares MSCI UK Small Cap UCITS ETF
11.00 pm
4.00 am***
4.00 am***
3.30 pm
64
iShares MSCI UK UCITS ETF
11.00 pm
3.30 pm
iShares MSCI USA Small Cap UCITS ETF
iShares MSCI USA UCITS ETF
11.00 pm
8.00 pm
11.00 pm
8.00 pm
iShares NASDAQ 100 UCITS ETF
11.00 pm
8.00 pm
iShares Nikkei 225 UCITS ETF
11.00 pm
4.00 am***
*“DD” means Dealing Day
Where DD+1 is indicated in the “Fund Valuation Point” column for any Fund, the valuation for that Fund will take place as at the Significant Markets Business Day following
the DD.
** The dealing request cut off may be extended to a later time by the Manager or Investment Manager (at its discretion) for dealings which do not involve a Fund having to
carry out a market trade, foreign exchange or derivative transaction or currency hedge, provided always that the application is received before the Fund Valuation Point on
the relevant Dealing Day.
*** Dealing requests for this Fund submitted through the Electronic Order Entry Facility by Authorised Participants may be accepted in exceptional circumstances(at the
discretion of the Manager) after this cut off time, provided always that the application is received before the Fund Valuation Point on the relevant Dealing Day. Applications
received after the Fund Valuation Point on the relevant Dealing Day will be treated as applications for the next Dealing Day.
Subscriptions and redemptions are made in baskets of Shares or in cash at the discretion of the Manager or the Investment Manager. Subscription and redemption orders will
normally be accepted in multiples of the minimum number of Shares set at the discretion of the Manager or the Investment Manager. Authorised Participants should refer to
the Electronic Order Entry Facility for details of minimum subscription and redemption orders for the Launched Share Classes. Save as provided under the heading “Dealings
in Kind, in Cash and Directed Cash Dealings” where an Authorised Participant submits a subscription request in cash, the corresponding redemption will be satisfied in cash
unless otherwise agreed with the Authorised Participant (with relevant asset allocation being approved by the Depositary).
Earlier or later times may be determined by the Manager or the Investment Manager at their discretion with prior Shareholder notice.
On the Dealing Day prior to 25 December and 1 January, dealing requests for subscriptions or redemptions must be received by the earlier of the stated dealing request cutoff and 12.00 noon.
NOTE: ALL TIME REFERENCES IN THIS DEALING TIMETABLE ARE FOR GREENWICH MEAN TIME (GMT), OR BRITISH SUMMER TIME (BST), WHEN SUCH IS APPLICABLE - NOT
CENTRAL EUROPEAN TIME (CET).
65
Failure to Deliver
In the event that (i) in respect of an in kind dealing resulting in a creation, an Authorised Participant fails to
deliver the required Investments and Cash Component, or (ii) in relation to a cash creation, an Authorised
Participant fails to deliver the required cash, or (iii) in respect of a directed cash dealing resulting in a creation,
an Authorised Participant fails to deliver the required cash or its designated broker fails to deliver the underlying
Investments, within the stated settlement times for the Current Funds (available on the Electronic Order Entry
Facility) the Company and/or Investment Manager reserves the right (but shall not be obliged) to cancel the
relevant subscription request. The Authorised Participant shall indemnify the Company for any loss suffered by
the Company as a result of a failure or delay by the Authorised Participant to deliver the required Investments
and Cash Component or cash and, for directed cash dealings resulting in creations, any loss suffered by the
Company as a result of a failure by the designated broker to deliver the required underlying Investments, within
the stated settlement times, including (but not limited to) any market exposure, interest charges and other costs
suffered by the Fund. The Company reserves the right to cancel the provisional allotment of the relevant Shares
in those circumstances.
The Directors may, in their sole discretion where they believe it is in the best interests of a Fund, decide not to
cancel a subscription and provisional allotment of Shares where an Authorised Participant has failed to deliver the
required Investment and Cash Component or cash and/or, for directed cash subscriptions, the designated broker
has failed to deliver the required underlying Investments, within the stated settlement times. The Company may
temporarily borrow an amount equal to the subscription and invest the amount borrowed in accordance with the
investment objective and policies of the relevant Fund. Once the required Investments and Cash Component or
cash has been received, the Company will use this to repay the borrowings. The Company reserves the right to
charge the relevant Authorised Participant for any interest or other costs incurred by the Company as a result of
this borrowing. Where a designated broker under a directed cash subscription fails or delays in delivering the
required underlying securities, the Company and its Investment Manager has a right to transact with a different
broker and to charge the relevant Authorised Participant for any interest or other costs incurred by the Company
relating to the failed and new transactions. If the Authorised Participant fails to reimburse the Company for those
charges, the Company and/or Investment Manager will have the right to sell all or part of the applicant’s
holdings of Shares in the Fund or any other Fund of the Company in order to meet those charges.
A redemption request by an Authorised Participant will only be valid if the Authorised Participant satisfies its
settlement obligation to deliver holdings in the required number of Shares in that Fund to the Administrator for
settlement in the relevant International Central Securities Depositary by the relevant settlement date. In the
event an Authorised Participant fails to deliver the required Shares of the relevant Fund in relation to a
redemption within the stated settlement times for the Current Funds (available on the Electronic Order Entry
Facility), the Company and/or Investment Manager reserves the right (but shall not be obliged) to treat this as a
settlement failure by the Authorised Participant and to cancel the relevant redemption order, and the Authorised
Participant shall indemnify the Company for any loss suffered by the Company as a result of a failure by the
Authorised Participant to deliver the required Shares in a timely fashion, including (but not limited to) any
market exposure and costs suffered by the Fund.
In the event that an Authorised Participant is liable to reimburse a Fund in respect of Duties and Charges (e.g.
for any shortfall in the sum paid to the Fund on a subscription or any excess redemption proceeds received from
the Fund on a redemption), the Company reserves the right to charge the relevant Authorised Participant for any
interest or other costs incurred by the Company as a result of the Authorised Participant’s failure to reimburse
the Fund in a timely manner after receiving notice of the sum payable.
66
PROCEDURE FOR DEALING ON THE SECONDARY MARKET
Shares may be purchased or sold on the Secondary Market by all investors through a relevant recognised stock
exchange on which the Shares are admitted to trading, or OTC.
It is expected that the Shares of the Funds will be listed on one or more recognised stock exchanges. The
purpose of the listing of the Shares on recognised stock exchanges is to enable investors to purchase and sell
Shares on the Secondary Market, normally via a broker/dealer, in any quantity over a minimum of one Share. In
accordance with the requirements of the relevant recognised stock exchange, market-makers (which may or may
not be Authorised Participants) are expected to provide liquidity and bid and offer prices to facilitate the
Secondary Market trading of the Shares.
All investors wishing to purchase or sell Shares of a Fund on the Secondary Market should place their orders via
their broker. Orders to purchase Shares in the Secondary Market through the recognised stock exchanges, or
OTC, may incur brokerage and/or other costs which are not charged by the Company and over which the
Company and the Manager has no control. Such charges are publicly available on the recognised stock
exchanges on which the Shares are listed or can be obtained from stockbrokers.
Investors may redeem their Shares through an Authorised Participant by selling their Shares to the Authorised
Participant (directly or through a broker).
The price of any Shares traded on the Secondary Market will be determined by the market and prevailing
economic conditions which may affect the value of the underlying assets. The market price of a Share listed or
traded on a stock exchange may not reflect the Net Asset Value per Share of a Fund.
The Secondary Market dealing timetable depends upon the rules of the exchange upon which the Shares are
dealt or the terms of the OTC trade. Please contact your professional advisor or broker for details of the relevant
dealing timetable.
Secondary Market Redemptions
As a UCITS ETF, a Fund’s Shares purchased on the secondary market cannot usually be sold directly back to the
Fund by investors who are not Authorised Participants. Investors who are not Authorised Participants must buy
and sell shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur
fees and additional taxes in doing so. In addition, as the market price at which the Shares are traded on the
secondary market may differ from the Net Asset Value per Share, investors may pay more than the then current
Net Asset Value per Share when buying shares and may receive less than the current Net Asset Value per Share
when selling them.
An investor (that is not an Authorised Participant) shall have the right, subject to compliance with relevant laws
and regulations, to request that the Manager buys back its Shares in respect of a Fund in circumstances where
the Manager has determined in its sole discretion that the Net Asset Value per Share of the Fund differs
significantly to the value of a Share of the Fund traded on the Secondary Market, for example, where no
Authorised Participants are acting, or willing to act, in such capacity in respect of the Fund (a “Secondary Market
Disruption Event”).
If, in the view of the Manager, a Secondary Market Disruption Event exists, the Manager will issue a “Non-AP
Buy-Back Notice” and stock exchange announcement(s) containing the terms of acceptance, minimum
redemption amount and contact details for the buy-back of Shares.
The Manager’s agreement to buy back any Shares is conditional on the Shares being delivered back into the
account of the transfer agent at the relevant International Central Securities Depositary (or transfer agent at the
relevant Central Securities Depositary (CSD) depending on the settlement model for the relevant Shares) and
relevant confirmations given by the Common Depositary. The redemption request will be accepted only on
delivery of the Shares.
Shares bought back from an investor who is not an Authorised Participant will be redeemed in cash. Payment is
subject to the investor having first completed any required identification and anti-money laundering checks. In
kind redemptions may be available at an investor’s request at the Manager’s absolute discretion.
Redemption orders will be processed on the Dealing Day on which the Shares are received back into the account
of the transfer agent by the dealing cut-off time less any applicable Duties and Charges and other reasonable
administration costs, provided that the completed buy-back request has also been received.
The Manager may at its complete discretion determine that the Secondary Market Disruption Event is of a long
term nature and is unable to be remedied. In that case the Manager may resolve to compulsorily redeem
investors and may subsequently terminate the Fund.
Any investor requesting a buyback of its shares in case of a Secondary Market Disruption Event may be subject
to taxes as applicable, including any capital gains taxes or transaction taxes. Therefore, it is recommended that
prior to making such a request, the investor seeks professional tax advice in relation to the implications of the
buyback under the laws of the jurisdiction in which they may be subject to tax.
67
GENERAL INFORMATION ON DEALINGS IN THE COMPANY
(a) Initial Offer of Shares – Clearing and Settlement Structure
Account Opening Forms for first time applicants and dealing requests must be received during the initial offer
period to receive the initial offer price. Arrangements must also be made by that date for the settlement of the
transfer of Investments and cash payments within the settlement times available on the Electronic Order Entry
Facility (which can range from one to four Business Days).
Shares in the Current Share Classes which are not Launched Share Classes as at the date of this Prospectus
(please see pages 16 to 19) will initially be offered between 9.00a.m. (Irish time) on 17 November 2016 and
12.00 noon (Irish time) on 17 May 2017 (which period may be shortened, extended, changed to an earlier date,
or changed to a later date by the Directors) and at a fixed price per Share of 5 units of the relevant currency (e.g.
USD5) or such other amount determined by the Investment Manager at the relevant time and communicated to
investors prior to investment.
The Shares of the Funds comprising Current Share Classes are normally listed on the Official List of the UKLA.
Launched Share Classes may be listed on the Official List of the UKLA or an alternative stock exchange (please
refer to www.ishares.com for details).
Shares will be issued for a price to be satisfied in cash or in kind, together with any applicable Duties and
Charges. The initial Portfolio Composition File will be available upon request from the Administrator.
(b) Title to Shares
As with other Irish companies limited by shares, the Company is required to maintain a register of Shareholders.
Shares will be held by the Common Depositary’s Nominee (as registered holder) in registered form. Only persons
appearing on the register of Shareholders (i.e. the Common Depositary’s Nominee) will be a Shareholder.
Fractional Shares will not be issued. No temporary documents of title or Share certificates will be issued (save as
provided below). A trade confirmation will be sent by the Administrator to the Authorised Participants.
Shares in the Funds may be issued in or converted to dematerialised (or uncertificated) form. In such
circumstances, the relevant Funds will apply for admission for clearing and settlement through an appropriate
Recognised Clearing System. As the Company is an Irish company, the operation of a Recognised Clearing
System in respect of any dematerialised Shares would be governed by the Companies Act, 1990 (Uncertificated
Securities) Regulations, 1996.
(c) Global Clearing And Settlement
The Directors have resolved that Shares in the Funds will not currently be issued in dematerialised (or
uncertificated) form and no temporary documents of title or share certificates will be issued, other than the
Global Share Certificate required for the International Central Securities Depositaries (being the Recognised
Clearing Systems through which the Funds’ Shares will be settled). The Funds have applied for admission for
clearing and settlement through the applicable International Central Securities Depositary. The International
Central Securities Depositaries for the Funds currently are Euroclear and Clearstream and the applicable
International Central Securities Depositary for an investor is dependent on the market in which the Shares are
traded. All Shares in the Funds will ultimately settle in an International Central Securities Depositary but
interests could be held through Central Securities Depositaries. A Global Share Certificate in respect of each of
the Funds or, where applicable, each Share class thereof will be deposited with the Common Depositary (being
the entity nominated by the International Central Securities Depositaries to hold the Global Share Certificate)
and registered in the name of the Common Depositary’s Nominee (being the registered holder of the Shares of
the Funds, as nominated by the Common Depositary) on behalf of Euroclear and Clearstream and accepted for
clearing through Euroclear and Clearstream. Interests in the Shares represented by the Global Share Certificates
will be transferable in accordance with applicable laws and any rules and procedures issued by the International
Central Securities Depositaries. Legal title to the Shares of the Funds will be held by the Common Depositary’s
Nominee.
A purchaser of interests in Shares in the Funds will not be a registered Shareholder in the Company, but will hold
an indirect beneficial interest in such Shares and the rights of such investors, where they are Participants, shall
be governed by their agreement with their International Central Securities Depositary or, where they are not
Participants, shall be governed by their arrangement with their respective nominee, broker or Central Securities
Depositary (as appropriate) which may be a Participant or have an arrangement with a Participant. All references
herein to actions by holders of the Global Share Certificate will refer to actions taken by the Common
Depositary’s Nominee as registered Shareholder following instructions from the applicable International Central
Securities Depositary upon receipt of instructions from its Participants. All references herein to distributions,
notices, reports, and statements to such Shareholder, shall be distributed to the Participants in accordance with
such applicable International Central Securities Depositary’s procedures.
International Central Securities Depositaries
All Shares in issue in the Funds or, where applicable, each Share Class thereof are represented by a Global Share
Certificate and the Global Share Certificate is held by the Common Depositary and registered in the name of the
68
Common Depositary’s Nominee on behalf of an International Central Securities Depositary. Beneficial interests in
such Shares will only be transferable in accordance with the rules and procedures for the time being of the
relevant International Central Securities Depositary.
Each Participant must look solely to its International Central Securities Depositary for documentary evidence as
to the amount of its interests in any Shares. Any certificate or other document issued by the relevant
International Central Securities Depositary, as to the amount of interests in such Shares standing to the account
of any person shall be conclusive and binding as accurately representing such records.
Each Participant must look solely to its International Central Securities Depositary for such Participant’s share of
each payment or distribution made by the Company to or on the instructions of the Common Depositary’s
Nominee and in relation to all other rights arising under the Global Share Certificate. The extent to which, and
the manner in which, Participants may exercise any rights arising under the Global Share Certificate will be
determined by the respective rules and procedures of their International Central Securities Depositary.
Participants shall have no claim directly against the Company, the Paying Agent or any other person (other than
their International Central Securities Depositary) in respect of payments or distributions due under the Global
Share Certificate which are made by the Company to or on the instructions of the Common Depositary’s Nominee
and such obligations of the Company shall be discharged thereby. The International Central Securities Depositary
shall have no claim directly against the Company, Paying Agent or any other person (other than the Common
Depositary).
The Company or its duly authorised agent may from time to time require investors to provide them with
information relating to: (a) the capacity in which they hold an interest in Shares of the Funds; (b) the identity of
any other person or persons then or previously interested in such Shares; (c) the nature of any such interests;
and (d) any other matter where disclosure of such matter is required to enable compliance by the Company with
applicable laws or the constitutional documents of the Company.
The Company or its duly authorised agent may from time to time request the applicable International Central
Securities Depositary to provide the Company with certain details in relation to Participants that hold interests in
Shares in each Fund including (but not limited to): ISIN, ICSD Participant name, ICSD Participant type – e.g.
fund/bank/individual, residence of ICSD Participants, number of ETFs and holdings of the Participant within
Euroclear and Clearstream, as appropriate, including which Funds, types of Shares and the number of interests
in the Shares held by each such Participant, and details of any voting instructions given by each such Participant.
Euroclear and Clearstream Participants which are holders of interests in Shares or intermediaries acting on behalf
of such holders agree to Euroclear and Clearstream, pursuant to the respective rules and procedures of Euroclear
and Clearstream, disclosing such information to the Company or its duly authorised agent. Similarly, the
Company or its duly authorised agent may from time to time request any Central Securities Depositary to
provide the Company with details in relation to Shares in each Fund or interests in Shares in each Fund held in
each Central Securities Depositary and details in relation to the holders of those Shares or interests in Shares,
including (without limitation) holder types, residence, number and types of holdings and details of any voting
instructions given by each holder. Holders of Shares and interests in Shares in a Central Securities Depositary or
intermediaries acting on behalf of such holders agree to the Central Securities Depositary (including Euroclear UK
& Ireland (the CREST system), SIS SegaIntersettle AG and Monte Titoli), pursuant to the respective rules and
procedures of the relevant Central Securities Depositary, disclosing such information to the Company or its duly
authorised agent.
Investors may be required to provide promptly any information as required and requested by the Company or its
duly authorised agent, and agree to the applicable International Central Securities Depositary providing the
identity of such Participant or investor to the Company or its duly authorised agent upon request.
Notices of general meetings and associated documentation will be issued by the Company to the registered
holder of the Global Share Certificate, the Common Depositary’s Nominee. Each Participant must look solely to
its International Central Securities Depositary and the rules and procedures for the time being of the relevant
International Central Securities Depositary governing delivery of such notices and exercising voting rights. For
investors, other than Participants, delivery of notices and exercising voting rights shall be governed by the
arrangements with a Participant of the International Central Securities Depositary (for example, their nominee,
broker or Central Securities Depositories, as appropriate).
Exercise of Voting Rights through the International Central Securities Depositaries
The Common Depositary’s Nominee has a contractual obligation to promptly notify the Common Depositary of
any Shareholder meetings of the Company and to relay any associated documentation issued by the Company to
the Common Depositary, which, in turn, has a contractual obligation to relay any such notices and
documentation to the relevant International Central Securities Depositary. Each International Central Securities
Depositary will, in turn, relay notices received from the Common Depositary to its Participants in accordance with
its rules and procedures. The Directors understand that, in accordance with their respective rules and procedures,
each International Central Securities Depositary is contractually bound to collate and transfer all votes received
from its Participants to the Common Depositary and the Common Depositary is, in turn, contractually bound to
collate and transfer all votes received from each International Central Securities Depositary to the Common
Depositary’s Nominee, which is obligated to vote in accordance with the Common Depositary’s voting instructions.
Investors who are not Participants in a relevant International Central Securities Depositary would need to rely on
their broker, nominee, custodian bank or other intermediary which is a Participant, or which has an arrangement
69
with a Participant, in a relevant International Central Securities Depositary to receive any notices of Shareholder
meetings of the Company and to relay their voting instructions to the relevant International Central Securities
Depositary.
(d) Anti-money laundering identification
The Administrator and/ or Company reserves the right to request further details from Authorised Participant and
the Common Depositary’s Nominee in order to verify their respective identities. Any such party must notify the
Administrator of any change in their details and furnish the Company with whatever additional documents
relating to such change as it may request. Amendments to a party’s registration details and payment instructions
will only be effected upon receipt by the Administrator of original documentation. Failure to provide requested
information or notify the Administrator or the Company of any change in details may result in a request for
subscription or redemption of shares by such party not being accepted or processed until such time as
satisfactory verification of identity is received.
Measures aimed at the prevention of money laundering may require an applicant to provide verification of
identity to the Company. This obligation arises unless (i) the application is being made through a recognised
financial intermediary; or (ii) payment is made through a banking institution, which in either case is in a country
with money laundering regulations equivalent to those in Ireland.
The Company will specify what proof of identity is required, including but not limited to a passport or
identification card duly certified by a public authority such as a notary public, the police or the ambassador in
their country of residence, together with evidence of the applicant’s address, such as a utility bill or bank
statement. In the case of corporate applicants, this may require production of a certified copy of the certificate of
incorporation (and any change of name), by-laws, memorandum and articles of association (or equivalent), and
the names and addresses of all directors and beneficial owners.
It is further acknowledged that the Company, the Investment Manager and the Administrator shall be
indemnified by the Authorised Participant applicant against any loss arising as a result of a failure to process the
subscription if information that has been requested by the Company has not been provided by the applicant.
(e) Switching
Switching of Shares from one Fund to another Fund is not available to investors trading on the Secondary
Market.
Authorised Participants wishing to switch from one Fund to another Fund on the Primary Market would generally
need to redeem or sell their Shares in the Fund and subscribe or purchase Shares in the other Fund.
Where permitted by the Articles, and subject to the prior approval of the Manager, a holder of Shares in a Share
Class of a Fund may switch all or some of their Shares of a Share Class of a Fund (the "Original Shares") for
Shares of another Share Class in the same Fund (the "New Shares"). Such switching requests may be submitted
by Authorised Participants through the Electronic Order Entry Facility, in accordance with the provisions of the
“Procedure for Dealing on the Primary Market” section above. Investors which are not Authorised Participants
may only submit switching requests via Authorised Participants.
The number of New Shares issued will be determined by reference to the respective prices of New Shares and
Original Shares at the Valuation Points applicable at the time the Original Shares are repurchased and the New
Shares are issued, after deducting the costs of undertaking the switch.
No switches will be made during any period in which the rights of Shareholders to deal in the Shares of the
relevant Fund are suspended. Switching requests may be submitted by Authorised Participants through the
Electronic Order Entry Facility before the cut off time for the Original Shares and the New Shares (see the
dealing timetable above for dealing request cut off times). Any applications received after the applicable time
will normally be held over until the next Dealing Day but may be accepted in exceptional circumstances for
dealing on the relevant Dealing Day at the discretion of the Manager provided they are received prior to the
Valuation Point.
The number of New Shares to be issued will be calculated in accordance with the following formula:
A + B = C x (D-E)
F
Where:
A=
number of New Shares to be allocated
B=
balancing cash amount
C=
number of Original Shares switched
D=
redemption price per Original Share on the relevant Dealing Day
70
E=
the transaction costs incurred as a result of the switching trade, as calculated at the Manager’s
absolute discretion
F=
subscription price per New Share on the relevant Dealing Day
As a result of a switch, an Authorised Participant will in almost all circumstances be entitled to a fraction of a
New Share. As Shares cannot be issued in fractional amounts, the value of the fraction of the New Share will be
paid to / received from (as appropriate) the Authorised Participant by the Company.
(f) Transfer of Shares
All transfers of Shares shall be effected by transfer in writing in any usual or common form and every form of
transfer shall state the full name and address of the transferor (i.e. the seller of Shares) and the transferee (i.e.
the purchaser of Shares). The instrument of transfer of a Share shall be signed by or on behalf of the transferor.
The transferor shall be deemed to remain the holder of the Share until the name of the transferee is entered in
the share register in respect thereof.
To the extent Shares are issued in dematerialised form, such Shares may also be transferred in accordance with
the rules of the relevant Recognised Clearing System. Persons dealing in Recognised Clearing Systems may be
required to provide a representation that any transferee is a Qualified Holder. The Directors may decline to
register any transfer of Shares to any person or entity that is not a Qualified Holder.
If in consequence of a transfer the transferor or transferee would hold less than the relevant minimum holding, if
there is such a minimum holding, or would otherwise infringe the restrictions on holding Shares outlined above
or if the transfer might result in the Company incurring any liability to taxation or suffering pecuniary
disadvantages which the Company might not otherwise have incurred or suffered, or the Company being
required to register under the 1940 Act (or similar successor statute), or to register any class of Shares under
the 1933 Act (or similar successor statute), the Directors may decline to register the transfer of a Share to such
person. The registration of transfers may be suspended at such times and for such periods as the Directors may
from time to time determine, provided always that such registration shall not be suspended for more than thirty
days in any year. The Directors may decline to register any transfer of Shares unless the instrument of transfer
is deposited at the registered office of the Company or at such other place as the Directors may reasonably
require together with such other evidence as the Directors may reasonably require to show the right of the
transferor to make the transfer. The transferee will be required to complete an Account Opening Form which
includes a declaration that the proposed transferee is not a US Person or is acquiring Shares on behalf of a US
Person.
(g) Confirmations
A written confirmation of trade will be sent to the Authorised Participant following the Dealing Day. Shares will
not normally be issued until such time as the Company is satisfied with all the information and documentation
required to identify the applicant and is satisfied that the relevant Investments and Cash Component for in kind
subscriptions or cash for cash subscriptions (including directed cash subscriptions) have been received by it.
(h) Mandatory Redemption of Shares
Investors are required to notify the Company immediately in the event that they cease to be Qualified Holders.
Investors who cease to be Qualified Holders will be required to dispose of their Shares to Qualified Holders on the
next Dealing Day thereafter unless the Shares are held pursuant to an exemption which would allow them to
hold the Shares. The Company reserves the right to redeem or require the transfer of any Shares which are or
become owned, directly or indirectly, by a non Qualified Holder. If any investor or beneficial owner of any
Shares fails to disclose information requested by the Company regarding such investor or beneficial owner and,
due to such non-disclosure or inadequate disclosure, the Directors believe that there is an issue regarding such
person being a non-Qualified Holder, the Company shall have the right to redeem or require the transfer (in
accordance with the provisions of the Articles) of the Shares held by or for the benefit of such person.
If the Company becomes aware that any Shares are or might be held by a person who is not a Qualified Holder it
may redeem such Shares on notice in writing to the investor concerned. The Investments which would otherwise
have been transferred to the investor will be liquidated and the investor will receive the proceeds less any costs
incurred. In addition, the Company may impose a penalty to compensate or indemnify the Company, the
Manager and the Investment Manager for any loss the Company has suffered (or may suffer) in respect of the
holding of Shares by or on behalf of such non-Qualified Holder. The Company shall also have the right to require
any person breaching the provisions of the Prospectus to indemnify the Company, the Manager and the
Investment Manager from any losses or claims suffered or incurred by any of them in connection with such
breach. Such amount may be deducted from the redemption proceeds.
In circumstances where a Fund is unable to replicate the relevant Benchmark Index and unable to substitute
another index for the Benchmark Index, the Directors may resolve to compulsorily redeem investors and may
subsequently terminate a Fund.
In circumstances where it is or becomes impossible or impractical, for example from a cost, risk or operational
perspective, to enter into, continue with or maintain FDI relating to the Benchmark Index for the relevant Fund
71
or to invest in securities comprised within the particular Benchmark Index, the Directors may resolve to
compulsorily redeem investors and may subsequently terminate the Fund.
In circumstances where the Directors consider compulsory redemption to be in the interests of the Company, a
Fund or the investors of a Fund, the Directors may resolve to compulsorily redeem investors and may
subsequently terminate the Fund.
The Company shall have the right to redeem, without the imposition of any penalty on the Company, Shares of a
particular Share Class:
(i)
where the holders of Shares approve of the redemption of the Shares of the relevant class by way of
written resolution or where not less than 75% of the votes cast approve of the redemption of the Shares
at a general meeting of the relevant Share Class, of which not more than twelve and not less than four
weeks notice has been given;
at the discretion of the Directors, after the first anniversary of the first issue of Shares of the relevant
Share Class if the Net Asset Value of the relevant Share Class falls below Stg£100,000,000 or, in the case
of a Currency Hedged Share Class, below Stg£2,000,000;
at the discretion of the Directors, if the Share Class ceases to be listed on a recognised stock exchange;
at the discretion of the Directors provided that Shareholder notice of not less than four and not more than
six weeks has been given that all of the Shares in that Share Class shall be redeemed by the Company.
(ii)
(iii)
(iv)
If within 90 days from the date of the Depositary serving notice of termination of the Depositary Agreement
another depositary acceptable to the Company and the Central Bank has not been appointed to act as
depositary, the Company shall serve notice on all holders of its intention to redeem all Shares then in issue on
the date specified in such notice, which date shall not be less than one month nor more than three months after
the date of service of such notice.
(i)
Temporary Suspension of Valuation of the Shares and of Sales, Redemptions and Switching
The Company may temporarily suspend the determination of the Net Asset Value and the issue, switching and/or
redemption of Shares in the Company or any Fund during:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
any period (other than ordinary holiday or customary weekend closings) when any of the principal
markets on which any significant portion of the Investments of the relevant Fund from time to time are
quoted, listed, traded or dealt in is closed (otherwise than for customary weekend or ordinary holidays)
or during which dealings therein are restricted or suspended or trading on any relevant futures
exchange or market is restricted or suspended;
any period when circumstances exist as a result of which any disposal or valuation of Investments of the
Company or the relevant Fund is not, in the opinion of the Directors, reasonably practicable without this
being seriously detrimental to the interests of owners of Shares in general or owners of Shares of the
relevant Fund or if, in the opinion of the Directors, the Net Asset Value cannot fairly be calculated or
such disposal would be materially prejudicial to the owners of Shares in general or owners of Shares of
the relevant Fund;
any period when there is any breakdown in the means of communication normally employed in
determining the price of any of the Company’s or a Fund’s Investments or when for any other reason
the value of any of the Investments or other assets of the relevant Fund cannot be reasonably,
promptly or accurately ascertained;
any period during which the Company is unable to repatriate funds required for the purpose of making
redemption payments due or when such payments or the acquisition or realisation of Investments
cannot, in the opinion of the Directors, be effected at normal prices or normal rates of exchange or
during which there are difficulties or it is envisaged that there will be difficulties, in the transfer of
monies or assets required for subscriptions, redemptions or trading;
any period when the proceeds of the sale or redemption of Shares cannot be transmitted to or from the
Company or the Fund’s account;
upon the publication of a notice convening a general meeting of the Company for the purposes of
resolving to wind up the Company or terminate a Fund or Share Class;
any period when it is or becomes impossible or impractical, for example from a cost, risk or operational
perspective, to enter into, continue with or maintain FDI relating to the Benchmark Index for the
relevant Fund or to invest in securities comprised within the particular Benchmark Index;
any period in which a counterparty with which the Company has entered into a swap transaction is
unable to make any payment due or owing under the swap, including where it is unable to repatriate or
exchange at a reasonable rate the proceeds of its underlying hedge;
any period when the Directors, in their discretion, consider suspension to be in the interests of the
Company, a Fund or the Shareholders of a Fund; or
any period during which the Directors, in their discretion, consider suspension to be required for the
purposes of effecting a merger, amalgamation or restructuring of a Fund or of the Company.
Any such suspension shall be published by the Company in such manner as it may deem appropriate to the
persons likely to be affected thereby, and shall be notified immediately (and in any event during the Business
Day on which the suspension took place) to the Central Bank and to the competent authorities in the Member
States in which the Shares are marketed. Where practicable, the Company shall take all reasonable steps to
bring such a suspension to an end as soon as possible.
72
No Shares of a Fund will be issued or allotted during a period when the determination of the Net Asset Value of
that Fund is suspended.
(j) Termination of a Fund
Any Fund may be terminated by the Directors, in their sole and absolute discretion, by notice in writing to the
Depositary in any of the following events:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
if at any time the Net Asset Value of the relevant Fund falls below Stg£100,000,000;
if any Fund shall cease to be authorised or otherwise officially approved; or
if any law shall be passed which renders it illegal or in the opinion of the Directors impracticable or
inadvisable to continue the relevant Fund; or
if there is a change in material aspects of the business, in the economic or political situation relating to
a Fund which the Directors consider would have material adverse consequences on the investments of
the Fund; or
if the Directors shall have resolved that it is impracticable or inadvisable for a Fund to continue to
operate having regard to prevailing market conditions (including a Secondary Market Disruption Event)
and the best interests of the Shareholders; or
if the Directors shall have resolved that it is or becomes impossible or impractical, for example from a
cost, risk or operational perspective, to enter into, continue with or maintain FDI relating to the
Benchmark Index for the relevant Fund or to invest in securities comprised within the particular
Benchmark Index; or
if the Directors shall have resolved that it is or becomes impossible or impractical, for example from a
cost, risk or operational perspective, for a Fund to track or replicate the relevant Benchmark Index and
/ or to substitute another index for the Benchmark Index.
The Directors shall give notice of termination of a Fund or a Share Class to the Common Depositary’s Nominee,
and by such notice fix the date at which such termination is to take effect, which date shall be for such period
after the service of such notice as the Directors shall in their sole and absolute discretion determine.
With effect on and from the date as at which any Fund is to terminate or in the case of (i) below such other date
as the Directors may determine:
(i)
(ii)
(iii)
(iv)
no Shares of the relevant Fund may be issued or sold by the Company;
the Investment Manager or sub-investment manager shall, on the instructions of the Directors, realise
all the assets then comprised in the relevant Fund (which realisation shall be carried out and completed
in such manner and within such period after the termination of the relevant Fund as the Directors think
advisable);
the Depositary shall, on the instructions of the Directors from time to time, distribute to the
Shareholders in proportion to their respective interests in the relevant Fund all net cash proceeds
derived from the realisation of the relevant Fund and available for the purpose of such distribution,
provided that the Depositary shall be entitled to retain out of any monies in its hands as part of the
relevant Fund full provision for all costs, charges, expenses, claims and demands incurred, made or
apprehended by the Depositary or the Directors in connection with or arising out of the termination of
the relevant Fund and out of the monies so retained to be indemnified and saved harmless against any
such costs, charges, expenses, claims and demands; and
Every such distribution referred to at (iii) above shall be made in such manner as the Directors shall, in
their sole and absolute discretion, determine upon delivery to the Depositary of such form of request for
payment as the Depositary shall in its absolute discretion require. Any payment of unclaimed proceeds
or other cash will be made in accordance with the requirements of the Central Bank.
The Directors shall have the power to propose and implement a reconstruction and/or amalgamation of the
Company or any Fund(s) on such terms and conditions as are approved by the Directors subject to the following
conditions namely:
(i)
(ii)
that the prior approval of the Central Bank has been obtained; and
that the holders of Shares in the relevant Fund or Funds have been circulated with particulars of the
scheme of reconstruction and/or amalgamation in a form approved by the Directors and a special
resolution of the holders of Shares in the relevant Fund or Funds has been passed approving the said
scheme.
The relevant scheme of reconstruction and/or amalgamation shall take effect upon such conditions being
satisfied or upon such later date as the scheme may provide or as the Directors may determine whereupon the
terms of such scheme shall be binding upon all the Shareholders and the Directors shall have the power to and
shall do all such acts and things as may be necessary for the implementation thereof.
(k) Seeding Arrangements
The Investment Manager may place a Fund that is below scale into a seeding programme. Under such
programme, the Investment Manager and the Affiliates may pay a seeding fee to investors and market
participants who commit to invest a minimum amount of investment capital, and to hold such investment for an
73
agreed time period, to grow or regrow such Fund to scale. Any seeding fees paid by the Investment Manager and
the Affiliates will be borne by the Investment Manager and the Affiliates respectively and will not be charged to
the relevant Fund or to the Company as an extra cost. The Investment Manager believes that putting in place
such a programme to grow small-sized Funds will give rise to benefits for other investors in such Funds.
Companies of the BlackRock Group and/or other collective investment schemes or segregated mandates
managed by them may also provide seeding services to the Funds under the seeding programme.
Operation of the Subscription and Redemption Collection Account
All subscriptions into and redemptions and distributions due from the Funds will be paid into the Umbrella Cash
Collection Account. Monies in the Umbrella Cash Collection Account, including early subscription monies received
in respect of a Fund, do not qualify for the protections afforded by the Central Bank (Supervision and
Enforcement) Act 2013 (Section 48(1)) Investor Money Regulations 2015 for Fund Service Providers.
Pending issue of the Shares and / or payment of subscription proceeds to an account in the name of the relevant
Fund, and pending payment of redemption proceeds or distributions, the relevant Authorised Participant will be
an unsecured creditor of the relevant Fund in respect of amounts paid by or due to it.
All subscriptions (including subscriptions received in advance of the issue of Shares) attributable to, and all
redemptions, dividends or cash distributions payable from, a Fund will be channelled and managed through the
Umbrella Cash Collection Account. Subscriptions amounts paid into the Umbrella Cash Collection Account, will be
paid into an account in the name of the relevant Fund on the contractual settlement date. Where subscription
monies are received in the Umbrella Cash Collection Account, without sufficient documentation to identify the
Authorised Participant or the relevant Fund, such monies shall be returned to the relevant Authorised Participant
within five (5) Business Days and as specified in the operating procedure in respect of the Umbrella Cash
Collection Account.
Redemptions and distributions, including blocked redemptions or distributions, will be held in the Umbrella Cash
Collection Account, until payment due date (or such later date as blocked payments are permitted to be paid),
and will then be paid to the relevant or redeeming Authorised Participants.
Failure to provide the necessary complete and accurate documentation in respect of subscriptions, redemptions
or dividends, and / or to make payment into the Umbrella Cash Collection Account, is at the Authorised
Participant’s risk.
The Umbrella Cash Collection Account has been opened in the name of the Company. The Depositary will be
responsible for safe-keeping and oversight of the monies in the Umbrella Cash Collection Account, and for
ensuring that relevant amounts in the Umbrella Cash Collection Account are attributable to the appropriate Funds.
The Company and the Depositary have agreed an operating procedure in respect of the Umbrella Cash Collection
Account which identifies the participating Funds, the procedures and protocols to be followed in order to transfer
monies from the Umbrella Cash Collection Accounts, the daily reconciliation processes, and the procedures to be
followed where there are shortfalls in respect of a Fund due to late payment of subscriptions, and / or transfers
to a Fund of monies attributable to another Fund due to timing differences.
74
FUND EXPENSES
The Company employs an “all in one” fee structure for its Funds (and Share Classes). Each Fund pays all of its
fees, operating costs and expenses (and its due proportion of any costs and expenses of the Company allocated
to it) as a single flat fee (the “Total Expense Ratio” or “TER”). Where a Fund has multiple Share Classes, any
fees, operating costs and expenses which are attributable to a particular Share Class (rather than the entire
Fund) will be deducted from the assets notionally allocated by the Fund to that Share Class. Expenses paid out
of the TER include, but are not limited to, fees and expenses paid to the Manager, regulators and auditors and
certain legal expenses of the Company, but exclude transaction costs and extraordinary legal costs. The Total
Expense Ratio for a Fund or Share Class is calculated and accrued daily from the current Net Asset Value of the
relevant Fund or Share Class as follows and shall be payable monthly in arrears:
Fund
Fund / Share Classes
iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B
Unhedged Fund
Shares $ Treasury Bond 3-7yr UCITS ETF
TER
0.20%
Unhedged Share Classes
0.20%
Currency Hedged Share Classes
Up to 1.00%*
iShares $ Treasury Bond 7-10yr UCITS ETF USD (Acc)
Unhedged Fund
0.20%
iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc)
Unhedged Fund
0.20%
iShares € Govt Bond 3-7yr UCITS ETF
iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc)
iShares Core EURO STOXX 50 UCITS ETF
iShares Core MSCI Pacific ex-Japan UCITS ETF
iShares Core S&P 500 UCITS ETF
iShares Dow Jones Industrial Average UCITS ETF
iShares FTSE 100 UCITS ETF
iShares FTSE MIB UCITS ETF EUR (Acc)
iShares MSCI Brazil UCITS ETF USD (Acc)
iShares MSCI Canada UCITS ETF
iShares MSCI EM Asia UCITS ETF
iShares MSCI EMU CHF Hedged UCITS ETF (Acc)
iShares MSCI EMU Small Cap UCITS ETF
iShares MSCI EMU UCITS ETF
iShares MSCI EMU USD Hedged UCITS ETF (Acc)
iShares MSCI Japan UCITS ETF USD (Acc)
iShares MSCI Korea UCITS ETF USD (Acc)
iShares MSCI Mexico Capped UCITS ETF
iShares MSCI Russia ADR/GDR UCITS ETF
iShares MSCI UK Large Cap UCITS ETF
iShares MSCI UK Small Cap UCITS ETF
75
Unhedged Share Classes
0.20%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Fund
0.20%
Unhedged Share Classes
0.10%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.20%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.07%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.33%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.07%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.33%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.65%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.48%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.65%
Currency Hedged Share Classes
Up to 1.00%*
Currency Hedged Fund
0.38%
Unhedged Share Classes
0.58%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.33%
Currency Hedged Share Classes
Up to 1.00%*
Currency Hedged Fund
0.38%
Unhedged Share Classes
0.48%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.65%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.65%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.65%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.48%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.58%
Fund
Fund / Share Classes
Currency Hedged Share Classes
iShares MSCI UK UCITS ETF
iShares MSCI USA Small Cap UCITS ETF
iShares MSCI USA UCITS ETF
iShares NASDAQ 100 UCITS ETF
iShares Nikkei 225 UCITS ETF
TER
Up to 1.00%*
Unhedged Share Classes
0.33%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.43%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.33%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.33%
Currency Hedged Share Classes
Up to 1.00%*
Unhedged Share Classes
0.48%
Currency Hedged Share Classes
Up to 1.00%*
* For the current TER charged on each Share Class please refer to its KIID and/or the product pages of the
website at www.ishares.com.
The Manager is responsible for discharging all operational expenses, including but not limited to, fees and
expenses of the Directors, Investment Manager, Depositary and Administrator from the amounts received by the
Manager from the Total Expense Ratio. Such operational expenses include regulatory and audit fees but exclude
transaction costs and extraordinary legal costs. Directors’ fees will not exceed the sum of €40,000 per annum
per Director without the approval of the Board of Directors. The BlackRock Group employees serving as Directors
of the Company or the Manager are not entitled to receive Directors' fees.
In the event the costs and expenses of a Fund that are intended to be covered within the TER exceed the stated
TER, the Manager will discharge any excess amounts out of its own assets. The establishment costs of the
Company have been, and the establishment costs of the Current Funds and Share Classes have been and will be,
paid by the Manager.
Whilst it is anticipated that the TER borne by a Fund or Share Class shall not exceed the amounts set out above
during the life of the Fund or Share Class (respectively) such amounts may need to be increased. Any such
increase will be subject to the prior Shareholder approval of the relevant Fund or Share Class. Please see the
section entitled “General Information on Dealings in the Company” for information on exercising voting rights by
investors in the Funds, including their Share Classes.
To the extent a Fund undertakes securities lending to reduce costs, the Fund will receive 62.5% of the associated
revenue generated from securities lending activities and the remaining 37.5% will be received by the securities
lending agent which will pay for any securities lending costs out of its portion of the revenue.
Save as disclosed above, no commissions, discounts, brokerages or other special terms have been granted or are
payable by the Company in connection with the issue or sale of any Shares of the Company.
76
DIVIDEND POLICY
The Company intends to declare dividends pursuant to this Prospectus on the Shares of the Distributing Share
Classes. Dividends may be paid out of the total income of the applicable Distributing Share Class net of any
relevant expenses in respect of each financial year. Dividends will normally be declared with a view to being
paid either monthly, quarterly or semi-annually. No smoothing of dividends will be applied across the dividend
payments in a calendar year. The dividend payment frequency for each Distributing Share Class is as follows
(please refer to www.ishares.com for further information on the dividend payment dates).
Distributions will not be made in respect of Accumulating Share Classes and income and other profits will be
accumulated and reinvested.
Fund
Frequency of
Distributions for
Months of Distributions
Distributing Funds
/ Share Classes
iShares $ Treasury Bond 1-3yr UCITS ETF USD (Acc) B
Non-Distributing
N/A
iShares $ Treasury Bond 3-7yr UCITS ETF
Semi-Annually
August, February
iShares $ Treasury Bond 7-10yr UCITS ETF USD (Acc)
Non-Distributing
N/A
iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc)
Non-Distributing
N/A
iShares € Govt Bond 3-7yr UCITS ETF
Semi-Annually
August, February
iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc)
Non-Distributing
N/A
iShares Core EURO STOXX 50 UCITS ETF
Semi-Annually
August, February
iShares Core MSCI Pacific ex-Japan UCITS ETF
Semi-Annually
August, February
iShares Core S&P 500 UCITS ETF
Semi-Annually
August, February
iShares Dow Jones Industrial Average UCITS ETF
Semi-Annually
August, February
iShares FTSE 100 UCITS ETF
Non-Distributing
N/A
iShares FTSE MIB UCITS ETF EUR (Acc)
Non-Distributing
N/A
iShares MSCI Brazil UCITS ETF USD (Acc)
Non-Distributing
N/A
iShares MSCI Canada UCITS ETF
Semi-Annually
August, February
iShares MSCI EM Asia UCITS ETF
Semi-Annually
August, February
iShares MSCI EMU CHF Hedged UCITS ETF (Acc)
Non-Distributing
N/A
iShares MSCI EMU Small Cap UCITS ETF
Semi-Annually
August, February
iShares MSCI EMU UCITS ETF
Semi-Annually
August, February
iShares MSCI EMU USD Hedged UCITS ETF (Acc)
Non-Distributing
N/A
iShares MSCI Japan UCITS ETF USD (Acc)
Non-Distributing
N/A
iShares MSCI Korea UCITS ETF USD (Acc)
Non-Distributing
N/A
iShares MSCI Mexico Capped UCITS ETF
Semi-Annually
August, February
iShares MSCI Russia ADR/GDR UCITS ETF
Semi-Annually
August, February
iShares MSCI UK Large Cap UCITS ETF
Semi-Annually
August, February
iShares MSCI UK Small Cap UCITS ETF
Semi-Annually
August, February
iShares MSCI UK UCITS ETF
Semi-Annually
August, February
iShares MSCI USA Small Cap UCITS ETF
Semi-Annually
August, February
iShares MSCI USA UCITS ETF
Semi-Annually
August, February
iShares NASDAQ 100 UCITS ETF
Semi-Annually
August, February
iShares Nikkei 225 UCITS ETF
Semi-Annually
August, February
Full details of any change to the dividend policy will be provided in an updated Prospectus or Supplement and a
Shareholder notice will be issued in advance.
Any dividend which has remained unclaimed for twelve years from the date of its declaration shall be forfeited
and cease to remain owing by the Company and become the property of the relevant Fund.
Dividends for Distributing Share Classes will be declared in the Valuation Currency of the relevant Share Class.
Investors who wish to receive dividend payments in a currency other than the Base Currency or Valuation
Currency should arrange this with the relevant International Central Securities Depositary (subject to this option
being made available by the relevant International Central Securities Depositary). Any foreign exchange
conversions of dividend payments are not the responsibility of the Company and are at the cost and risk of the
investors.
77
GENUINE DIVERSITY OF OWNERSHIP CONDITION
Shares in each of the Funds shall be widely available. The intended categories of investors for the Funds are
those directly investing through the Primary Market creation mechanism as set out in this Prospectus or
indirectly by investment through recognised exchanges on which the Funds' Shares are listed or through OTC
transactions. Shares in the Funds shall be marketed and made available sufficiently widely to reach the intended
categories of investors, and in a manner appropriate to attract those categories of investors.
78
MANAGEMENT OF THE COMPANY
The Board of Directors
The Directors control the affairs of the Company and are responsible for the overall investment policy which will
be determined by them and provided to the Manager. The Directors have delegated certain duties and
responsibilities to the Manager with regards to the day-to-day management of the Company. The Manager has
delegated certain of these responsibilities to the Investment Manager and the Administrator.
The Directors are all non-executive directors of the Company and their address is the registered office of the
Company. The Board of Directors of the Company is as follows:
Paul McNaughton (Chairman) (Irish): Mr McNaughton has over 25 years’ experience in the Banking/Finance,
Fund Management & Securities Processing Industries. In addition Mr McNaughton spent 10 years with IDA
(Ireland) both in Dublin and in the USA marketing Ireland as a location for multinational investment. He went on
to establish Bank of Ireland’s IFSC Fund’s business before joining Deutsche Bank to establish their funds
business in Ireland. He was overall Head of Deutsche Bank’s Offshore Funds business, including their hedge fund
administration businesses primarily based in Dublin and the Cayman Islands, before assuming the role of Global
Head of Deutsche’s Fund Servicing business worldwide with operations in Dublin, London, Edinburgh, Jersey,
Frankfurt, Singapore, New York, and Baltimore. Mr McNaughton left Deutsche Bank in August 2004 after leading
the sale of Deutsche’s Global Custody and Funds businesses to State Street Bank and now acts as an advisor and
non-executive director for several investment companies and other financial entities in Ireland including several
alternative/hedge fund entities. Mr McNaughton holds an Honours Economics Degree from Trinity College Dublin.
He was the founding Chairman of the Irish Funds Industry Association (“IFIA”) and a member of the Irish
Government Task Force on Mutual Fund Administration. He was instrumental in the growth of the funds business
in Ireland both for traditional and alternative asset classes.
Paul McGowan (Irish): Mr McGowan was a financial services tax partner in KPMG (Ireland) for more than 25
years and was Global Head of Financial Services Tax for KPMG (International). He is a former Chairman of the
Irish Funds Industry Association and the IFSC Funds Working Group. He currently holds a number of nonexecutive directorships including Chairman of AEGON Ireland Plc and Coronation Capital Ltd and is a Director of
[The names of collective investments schemes which are not approved for distribution to non-qualified investors
in or from Switzerland have been deleted].. He was appointed to the EU Arbitration Panel on transfer pricing by
the Irish Government. Mr McGowan is a Fellow of the Institute of Chartered Accountants in Ireland and holds a
business studies degree from Trinity College Dublin and a Diploma in Corporate Financial Management from
Harvard Business School.
Barry O’Dwyer (Irish): Mr O’Dwyer is a managing director of BlackRock and is responsible for oversight of
Corporate Governance for BlackRock’s European open-ended fund range. He is the Chief Operating Officer for
BlackRock’s Irish business and serves as a Director on a number of BlackRock corporate, fund, and management
companies in Ireland, Luxembourg, and Germany and on BlackRock’s UK Life company. He is a governing council
member of the Irish Funds Industry Association and a Board Director of Financial Services Ireland. He joined
BlackRock Advisors (UK) Limited in 1999 as head of risk management and moved to his present role in 2006.
Prior to joining BlackRock Advisors (UK) Limited, Mr O’Dwyer worked as risk manager at Gartmore Investment
Management and at HypoVereinsbank and National Westminster Bank. Mr O’Dwyer graduated from Trinity
College Dublin with a degree in Business Studies and Economics in 1991. He holds a Chartered Association of
Certified Accountants qualification and an MBA from City University Business School.
Teresa O’Flynn (Irish): Ms O’Flynn is a managing director who joined BlackRock in 2011 to establish the
Renewable Power Infrastructure business, playing a leading role in the successful integration, fundraising for and
overall development of the platform. As a senior director on the EMEA investment team, she is responsible for
originating and executing investment opportunities in addition to ongoing portfolio management of fund
investments. Ms. O’Flynn sits on the Global Renewable Power Group's Management and Leadership committees
and is involved in setting and implementing the strategy for Renewable Power and Infrastructure more broadly.
Prior to joining BlackRock in 2011, Ms. O'Flynn spent eight years as a senior transaction executive both at NTR
and its subsidiary companies, where she led over $2.5billion in US and European renewable energy transactions.
Ms. O'Flynn worked extensively with NTR's wind portfolio companies and her responsibilities included business
and strategic planning, corporate equity fundraising, turbine procurement, power purchase agreement
negotiation and power project acquisition. Ms. O'Flynn was also a senior member of the Airtricity North American
Management Team, leading the Project Finance team in originating, structuring and negotiating over $1.5 billion
of debt and tax equity transactions. Prior to joining Airtricity in 2004, Ms. O'Flynn was a tax manager with KPMG,
Dublin where she advised domestic and multinational clients across a range of industries including manufacturing,
pharmaceuticals, petroleum and gas, aircraft leasing, and bloodstock. Ms. O'Flynn began her career at Arthur
Andersen in 1998. Ms. O'Flynn earned a BComm Degree, with first class honors and distinction, from University
College Galway, Ireland in 1998. She is also a qualified Chartered Accountant (ACA), Tax Consultant (AITI) and a
member of the Irish Taxation Institute.
Karen Prooth (British): Ms Prooth is a managing director at BlackRock and is the Chief Operating Officer
(“COO”) of iShares in EMEA, BlackRock’s Exchange Traded Funds (ETF) business. She has over twenty years’
experience in the asset management industry. Ms Prooth joined Barclays Global Investors (“BGI” now Blackrock)
in 2007. Prior to joining BGI, Ms Prooth spent 17 years at JP Morgan Asset Management (“JP Morgan”) where
she was a managing director in a number of roles including COO of the International Equity and Balanced
business and Head of Risk for EMEA. She was also a Trustee Director of the JP Morgan Chase Pension Plan and a
79
member of the Pension Plan Investment Committee. Prior to her time at JP Morgan, she was a quantitative
analyst at Prudential Portfolio Managers. Ms Prooth graduated from the University of Leeds with first class
honours in Mathematics and Operational Research in 1986.
The Manager
The Company has appointed BlackRock Asset Management Ireland Limited as its manager pursuant to the
Management Agreement. Under the terms of the Management Agreement, the Manager has responsibility for
the management and administration of the Company’s affairs and the distribution of the Shares, subject to the
overall supervision and control of the Directors.
The Remuneration Policy of the Manager sets out the policies and practices that are consistent with and promote
sound and effective risk management. It includes a description as to how remuneration and benefits are
calculated and identifies those individuals responsible for awarding remuneration and benefits including the
composition of the remuneration committee, should one be established. It does not encourage risk-taking which
is inconsistent with the risk profiles, rules or instruments of incorporation of the Company and does not impair
compliance with the Manager's duty to act in the best interest of the investors of the Company. The
Remuneration Policy includes fixed and variable components of salaries and discretionary pension benefits. The
Remuneration Policy applies to those categories of staff, including senior management, risk takers, control
functions and any employee receiving total remuneration that falls within the remuneration bracket of senior
management and risk takers whose professional activities have a material impact on the risk profile of the
Company. The Remuneration Policy is available on the individual Fund pages at www.blackrock.com (select the
relevant Fund in the “Product” section and then select “All Documents”) or a paper copy is available upon request
and free of charge from the registered office of the Manager.
The board of directors of the Manager is as follows:
William Roberts (Chairman), (British nationality, Irish resident): Mr Roberts was admitted as a lawyer in
Scotland, Hong Kong, Bermuda and the Cayman Islands. From 1990 to 1999, he was Senior Assistant (19901994) and then Partner (1994-1999) with W.S. Walker & Company where he concentrated on collective
investment vehicle formation and provided ongoing vehicle advice with particular focus on hedge and private
equity funds. From 1996 to 1999 he served as a director of the Cayman Islands Stock Exchange. Between 1998
and 2000, he was Secretary to the International Bar Associations' sub-committee on specialised investment
funds. Currently Mr Roberts serves as a director to a number of investment companies and investment
management companies domiciled in Ireland and the Cayman Islands.
Graham Bamping (British): Mr Bamping currently serves as Non-Executive Director on the boards of BlackRock
UCITS/Non-UCITS and AIF management companies, with more than 13 years’ experience in such roles. Until the
end of 2015, Mr Bamping was a Managing Director of BlackRock and a member of its EMEA Regional Executive
team. In addition to his role as a Director on management company boards, he served as chairman / member of
several BlackRock internal governance committees. Until June 2012, he served as the Retail Investment Director
for Blackrock EMEA, establishing and monitoring investment expectations for all BlackRock's Retail Funds in the
EMEA region. Mr Bamping serves as Chairman of the BlackRock Fund Managers Ltd board in the UK and as a
Director of BlackRock Investment Management Ireland Ltd, BlackRock (Luxembourg) SA, BlackRock Fund
Management Company SA and BlackRock Channel Islands Ltd, each of which has responsibility as management
company for either UCITS/Non-UCITS/AIFM mutual funds, or a combination of such fund types. Mr Bamping has
over 37 years’ investment experience. His service with BlackRock dated back to 1999, including his years with
Merrill Lynch Investment Managers (MLIM), which merged with BlackRock in 2006. He joined MLIM as Director of
Investment Communications, and assumed the role of Retail Investment Director in December 2001. Prior to
joining MLIM, his career spanned more than 20 years at Morgan Grenfell Asset Management (Deutsche Asset
Management). Over this period, his responsibilities covered a number of areas, including equity portfolio
management, client relationship development, sales, marketing and product development. Mr Bamping has
extensive experience of international mutual funds, not only as a portfolio manager, but also in various business
management, product development and marketing/sales roles. Mr Bamping holds an MA in Economics from
Cambridge University.
Paul Freeman (British): Mr Freeman currently serves as a director on the boards of a number of BlackRock
Group companies and investment funds. He was until December 2015 a Managing Director of BlackRock, which
he had joined in August 2005 (which then was Merrill Lynch Investment Managers). Up until July 2011 Mr
Freeman was the Head of Product Development and Range Management for the EMEA region with responsibility
for the development and ongoing product management of all funds domiciled in EMEA and distributed on a crossborder basis by BlackRock. Between July 2011 and December 2015 Mr Freeman worked closely with BlackRock’s
Government affairs team and served on various internal governance committees and on the boards of a number
of group subsidiaries and managed funds. Mr Freeman has worked in the financial services industry for over 35
years and, prior to BlackRock, has held senior management positions at Schroders, Rothschild Asset
Management, Henderson Investors and GT Management (now part of Invesco). Mr Freeman is a Chartered
Accountant.
Justin Mealy (Irish): Mr. Mealy is the Investment Director for the Manager with responsibility for the day-to-day
oversight, monitoring and control of investment policy, strategies and performance of funds domiciled within
Ireland. Before joining BlackRock, Mr. Mealy was Managing Director at Geneva Trading in Dublin for 8 years
where, as Global Head of Risk and Head of European Offices, he was responsible for the risk and performance
80
management of the firm’s trading groups at locations in Europe, North America and Asia, engaged in a variety of
strategies across major asset classes. Mr. Mealy is a graduate of Business & Law at University College Dublin,
1997.
Desmond Murray (Irish): Mr Murray is a company Director and business consultant based in Dublin. Mr Murray
was educated at University College, Dublin, graduating with a Bachelor of Commerce degree in 1976. He is a
Fellow of the Irish Institute of Chartered Accountants and the Hong Kong Society of Accountants. Mr Murray was
an Audit Partner in PricewaterhouseCoopers Hong Kong from 1987 until June 2000, initially specialising in
Financial Services, and he was the lead Partner of the firm's Internal Audit and Corporate Governance practice
until the same date. Mr Murray previously worked with Price Waterhouse in Dublin from 1976 to 1984. Mr Murray
is a Director of a number of other investment funds domiciled in Ireland and the Cayman Islands. He is also a
Director of a number of Irish domiciled companies and one Hong Kong listed company in which he acts as
chairman of their audit committees and as an independent non-executive Director.
Barry O’Dwyer (Irish): Mr O’Dwyer is a managing director of BlackRock and is responsible for oversight of
Corporate Governance for BlackRock’s European open-ended fund range. He is the Chief Operating Officer for
BlackRock’s Irish business and serves as a Director on a number of BlackRock corporate, fund, and management
companies in Ireland, Luxembourg, and Germany and on BlackRock’s UK Life company. He is a governing council
member of the Irish Funds Industry Association and a Board Director of Financial Services Ireland. He joined
BlackRock Advisors (UK) Limited in 1999 as head of risk management and moved to his present role in 2006.
Prior to joining BlackRock Advisors (UK) Limited, Mr O’Dwyer worked as risk manager at Gartmore Investment
Management and at HypoVereinsbank and National Westminster Bank. Mr O’Dwyer graduated from Trinity
College Dublin with a degree in Business Studies and Economics in 1991. He holds a Chartered Association of
Certified Accountants qualification and an MBA from City University Business School.
Adele Spillane (Irish): Ms Spillane is a Managing Director at BlackRock. She is a member of BlackRock's
Institutional Client Business and is Head of BlackRock's Irish Institutional business. Ms. Spillane's service with
the firm dates back to 1995, including her years with Barclays Global Investors (BGI), which merged with
BlackRock in 2009. Prior to her current role she worked as a senior client director in the Strategic Accounts team
for the UK Institutional Business, where she had overall responsibility for 20 large institutional UK Pension
Schemes with total scheme assets ranging from £500 million to £5 billion. Before that, she was in the Large
Institutional Client team, also as a client director, which she joined in 2004. Prior to her client director role, Ms.
Spillane was the head of the Pooled Funds Group in the UK. Ms. Spillane worked within the Client Relationship
Group in BGI's San Francisco office. In 1999 she formed and headed up the BGI US ClientConnect Team. Ms.
Spillane earned a degree, with honours, in commerce from University College Dublin in 1993. She is a CFA
charterholder and holds the Investment Management Certificate.
The Manager has delegated the performance of the investment management functions in respect of the Company
to BlackRock Advisors (UK) Limited, the administrative functions, transfer agency and registrar services to State
Street Fund Services (Ireland) Limited.
The Manager is a private company limited by shares and was incorporated in Ireland on 19 January 1995. It is
ultimately a wholly owned subsidiary of BlackRock, Inc.. The Manager has an authorised share capital of Stg£1
million and an issued and fully paid up share capital of Stg£125,000. The Manager's main business is the
provision of fund management and administration services to collective investment schemes such as the
Company. The Manager is also the manager of a number of other funds including: iShares plc, iShares II plc,
iShares III plc, iShares IV plc, iShares V plc, iShares VI plc, Institutional Cash Series plc, BlackRock Index
Selection Fund, BlackRock Fixed Income Dublin Funds plc, [The names of collective investments schemes which
are not approved for distribution to non-qualified investors in or from Switzerland have been deleted].
Under the terms of the Management Agreement between the Company and the Manager, in the absence of
breach of contract, fraud, bad faith, wilful misconduct or negligence in the performance by the Manager of its
obligations, the Manager will not be under any liability to the Company or any investor in the Company on
account of anything done or suffered by the Manager in pursuance of rendering the services under the
agreement or any request or advice of the Company. The Management Agreement may be terminated by either
party giving to the other not less than one hundred and eighty days’ notice in writing, although in certain
circumstances, the agreement can be terminated forthwith by notice in writing by the Company or the Manager
to the other.
The secretary of the Manager is Sanne.
The Investment Manager
The Manager has delegated responsibility for the investment and re-investment of the Company’s assets to
BlackRock Advisors (UK) Limited pursuant to the Investment Management Agreement. The Investment Manager
is also the promoter and sponsor of the Company.
The Investment Manager will be responsible to the Manager and the Company with regard to the investment
management of the assets of the Funds in accordance with the investment objectives and policies described in
the Prospectus (as it may be amended or supplemented from time to time) subject always to the supervision and
direction of the Directors. The Investment Manager may delegate responsibility for all or part of the day-to-day
conduct of its trading activity in respect of any Fund to an Affiliate. The Investment Manager (subject to prior
consent of the Manager and the Central Bank) also has the discretion to delegate the investment decision
81
making to other investment managers (which may be Affiliates) provided such investments are made in
accordance with the investment objectives and policies described in this Prospectus. The Investment Manager
will discharge the fees and expenses of any such investment managers. Information relating to any other
investment managers to whom the investment decision making may be delegated will be provided to holders of
Shares on request and details of any such investment managers will be disclosed in the Company’s annual
reports and audited financial statements and semi-annual reports and unaudited financial statements.
The Investment Manager is a subsidiary of BlackRock, Inc. The Investment Manager as investment manager is
regulated by the Financial Conduct Authority to carry on regulated activities in the UK and is subject to the rules
of the Financial Conduct Authority. The Investment Manager was incorporated under the laws of England and
Wales on 18 March 1964. As of 30 June 2016, the BlackRock Group had US$4.89 trillion of assets under
management and is represented in 27 countries.
Under the terms of the Investment Management Agreement, in the absence of fraud, bad faith, wilful default or
negligence on the part of the Investment Manager, the Investment Manager will not be liable for any loss
sustained by reason of the adoption of any investment policy as set out in the Prospectus or the purchase, sale
or retention of any security on the recommendation of the Investment Manager. The Investment Management
Agreement may be terminated by either party giving to the other not less than one hundred and eighty days’
notice in writing or immediately by either party for the following reasons:
•
•
•
•
in the event that the other party goes into liquidation (except voluntary liquidation for the purpose of
reconstruction or amalgamation upon terms previously approved in writing by the first mentioned party)
or is unable to pay its debts or commits an act of bankruptcy or a receiver is appointed over the assets of
the other party or some event having equivalent effect occurs;
an examiner, administrator or similar person is appointed to the other party;
the other party commits a material breach of the agreement and fails to remedy a breach of the
agreement (if capable of remedy) within thirty days of being requested to do so; or
the Investment Manager ceases to be permitted to act as such under any applicable laws or regulations.
The Securities Lending Agent
The Investment Manager may be appointed as the lending agent of the Funds of the Company under the terms
of a written agreement. Under the terms of such an agreement, the lending agent is appointed to manage the
Funds' securities lending activities and is entitled to receive a fee which is in addition to its fee as investment
manager. The income earned from securities lending will be allocated between the Funds of the Company and
the Investment Manager and paid on a percentage basis to the Investment Manager at normal commercial rates.
Full financial details of the amounts earned and expenses incurred with respect to securities lending for the
Funds of the Company, including fees paid, will be included in the Company’s annual reports and audited
financial statements and semi-annual reports and unaudited financial statements. The Manager will, at least
annually, review the securities lending arrangements and associated costs.
The Administrator
The Manager has delegated its responsibilities as administrator, registrar and transfer agent to State Street Fund
Services (Ireland) Limited pursuant to the Administration Agreement.
The Administrator will have the
responsibility for the administration of the Company’s affairs including the calculation of the Net Asset Value,
processing Account Opening Forms and dealing requests from the Primary Market and preparation of the
accounts of the Company, subject to the overall supervision of the Directors and the Manager.
The Administrator is a limited liability company incorporated in Ireland on 23 March, 1992 and is ultimately a
wholly-owned subsidiary of the State Street Corporation. The authorised share capital of the Administrator is
Stg£5,000,000 with an issued and paid up capital of Stg£350,000.
State Street Corporation is a leading world-wide specialist in providing sophisticated global investors with
investment servicing and investment management. State Street Corporation is headquartered in Boston,
Massachusetts, USA, and trades on the New York Stock Exchange under the symbol "STT".
The Administration Agreement provides that the appointment of the Administrator will continue unless and until
terminated by the Manager, giving to the Administrator not less than 6 months’ written notice or the
Administrator giving to the Manager not less than 12 months’ notice (which shall not take effect until 7 years
following such commencement date as agreed between the parties), although in certain circumstances the
agreement may be terminated forthwith by notice in writing by either party to the other. The agreement also
provides for certain indemnities in favour of the Administrator otherwise than due to the fraud, bad faith, breach
of contract, breach of applicable law, negligence, recklessness or wilful default of the Administrator or its
directors, officers, employees, delegates, agents or subcontractors, in the performance of its obligations under
the agreement.
The Paying Agent
The Manager has appointed a Paying Agent for Shares in the Funds. In such capacity, the Paying Agent will be
responsible for, among other things, ensuring that payments received by the Paying Agent from the Company
are duly paid; maintaining independent records of securities, dividend payment amounts; and communicating
information to the relevant International Central Securities Depositary. Payment in respect of the Shares will be
made through the relevant International Central Securities Depositary in accordance with the standard practices
of the applicable International Central Securities Depositary. The Manager may vary or terminate the
82
appointment of the Paying Agent or appoint additional or other registrars or paying agents or approve any
change in the office through which any registrar or paying agent acts. Citibank N.A., London Branch is currently
appointed by the Manager as Paying Agent.
The Depositary
The Company has appointed State Street Custodial Services (Ireland) Limited as depositary of its assets
pursuant to the Depositary Agreement. The Depositary provides safe custody of the Company’s assets pursuant
to the Regulations.
The Depositary is a limited liability company incorporated in Ireland on 22 May 1991 and is, like the
Administrator, ultimately owned by the State Street Corporation. Its authorised share capital is Stg£5,000,000
and its issued and paid up capital is Stg£200,000. As at 30 June 2012 the Depositary held funds under custody
in excess of US$384 billion. The Depositary is a subsidiary of State Street Bank and Trust Company (“SSBT”) and
the liabilities of the Depositary are guaranteed by SSBT. The Depositary, SSBT and the Administrator are
ultimately owned by State Street Corporation. The Depositary’s principal business is the provision of custodial
and trustee services for collective investment schemes and other portfolios.
State Street Corporation is a leading world-wide specialist in providing sophisticated global investors with
investment servicing and investment management. State Street Corporation is headquartered in Boston,
Massachusetts, USA, and trades on the New York Stock Exchange under the symbol "STT".
The Duties of the Depositary
The Depositary acts as the depositary of the Funds for the purposes of the Regulations and, in doing so, shall
comply with the provisions of the Regulations. In this capacity, the Depositary's duties include, amongst others,
the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
ensuring that each Fund’s cash flows are properly monitored, and that all payments made by or on behalf
of investors upon the subscription of Shares of the Funds have been received;
safekeeping the assets of the Funds, which includes (a) holding in custody all financial instruments that
can be registered in a financial instrument account opened in the Depositary’s books and all financial
instruments that can be physically delivered to the Depositary; and (b) for other assets, verifying the
ownership by the Company of such assets and the maintenance of a record accordingly (the "Safekeeping
Function");
ensuring that the sale, issue, re-purchase, redemption and cancellation of Shares of each Fund are carried
out in accordance with the Regulations and the Articles;
ensuring that the value of the Shares of each Fund is calculated in accordance with the Regulations and
the Articles;
carrying out the instructions of the Manager and the Company unless such instructions conflict with the
Regulations or the Articles;
ensuring that in transactions involving each Fund’s assets any consideration is remitted to the relevant
Fund within the usual time limits; and
ensuring that the Funds' income is applied in accordance with the Regulations and the Articles.
Apart from cash (which shall be held and maintained in accordance with the terms of the Regulations), all other
assets of the Funds shall be segregated from the assets of the Depositary, its sub-custodians and from assets
held as a fiduciary, custodian or otherwise by the Depositary or sub-custodians or both for other customers. The
Depositary shall maintain its records which relate to the assets attributable to each Fund so as to ensure that it is
readily apparent that the assets are held solely on behalf of and belong to the Fund and do not belong to the
Depositary or any of its affiliates, sub-custodians or delegates or any of their affiliates.
The Depositary has appointed its parent company, SSBT, as its global sub-custodian (“Global Depositary”) in
respect of the performance of its Safekeeping Function. The Global Depositary has in turn entered into subcustody agreements delegating the performance of its Safekeeping Function in certain agreed markets to the
sub-custodians as set out in Schedule VI. The liability of the Depositary will not be affected by the fact that it has
entrusted the Safekeeping Function to a third party.
The Depositary must ensure that the sub-custodians:
(i)
(ii)
(iii)
(iv)
(v)
have adequate structures and expertise;
in circumstances where custody of financial instruments is delegated to them, are subject to effective
prudential regulation, including minimum capital requirements, and supervision in the jurisdiction
concerned, as well as an external periodic audit to ensure that the financial instruments are in their
possession;
segregate the assets of the Depositary’s clients from their own assets and assets of the Depositary in such
a way that such assets can, at any time, be clearly identified as belonging to the Depositary’s clients;
ensure that in the event of their insolvency, assets of the Company held by the sub-custodians are
unavailable for distribution among, or realisation for the benefit of, creditors of the sub-custodians;
are appointed by way of a written contract and comply with the general obligations and prohibitions in
relation to the Safekeeping Function, reuse of assets and conflicts of interest.
Where the law of a third country requires that certain financial instruments be held in custody by a local entity
and no local entities are subject to effective prudential regulation, including minimum capital requirements and
83
supervision in the jurisdiction concerned, the Company may instruct the Depositary to delegate its functions to
such a local entity only to the extent required by the law of the third country and only for as long as there are no
local entities that satisfy the aforementioned regulation, capital and supervision requirements. In the event that
custody is delegated to such local entities, prior Shareholder notice will be provided advising of the risks involved
in such delegation.
Please refer to the section of this Prospectus entitled ‘Conflicts of Interest’ for details of potential conflicts that
may arise involving the Depositary.
The Depositary must ensure that the assets of the Funds held in custody by the Depositary shall not be reused
by the Depositary, or by any third party to whom the custody function has been delegated, for their own account.
Reuse comprises any transaction of assets of the Funds held in custody including, but not limited to, transferring,
pledging, selling and lending. Reuse of the assets of a Fund held in custody is only allowed where:
(a)
(b)
(c)
(d)
the reuse of the assets is carried out for the account of the Fund;
the Depositary is carrying out the instructions of the Manager on behalf of the Fund;
the reuse is for the benefit of the Fund and the interest of the investors in the Fund; and
the transaction is covered by high quality and liquid collateral received by the Fund under a title transfer
arrangement with a market value at all times at least equivalent to the market value of the reused assets
plus a premium.
The Depositary is liable to the Funds for the loss of financial instruments of the Funds which are held in custody
as part of the Depositary’s Safekeeping Function (irrespective of whether or not the Depositary has delegated its
Safekeeping Function in respect of such financial instruments) unless it can prove that the loss of financial
instruments held in custody has arisen as a result of an external event beyond its reasonable control, the
consequences of which would have been unavoidable despite all reasonable efforts to the contrary. This standard
of liability only applies to assets capable of being registered or held in a securities account in the name of the
Depositary or a sub-custodian and assets capable of being physically delivered to the Depositary. The
Depositary shall also be liable to the Funds for all other losses suffered as a result of the Depositary’s negligent
or intentional failure to properly fulfil its obligations pursuant to the Regulations.
The Depositary Agreement provides that the Company will be liable to the Depositary for any losses that may
imposed on, suffered by or asserted against the Depositary in connection with or arising out of the Depositary’s
proper performance of its obligations and that the Company will indemnify the Depositary against, and hold it
harmless from, any losses arising from third party claims that may be suffered by or asserted against the
Depositary in connection with or arising out of the Depositary’s proper performance of its obligations.
Under the Depositary Agreement, the Company has also provided a power of sale under relevant Irish legislation
to the Depositary in the event that the Company fails to pay or discharge any of its obligations to repay the
Depositary and its affiliates for credit facilities, including contractual settlement, made available to the Company
by the Depositary or its affiliates. Prior to exercising such security interest, the Depositary must provide at least
3 working days’ prior notice to the Company and the Manager, save that the Depositary shall not be required to
provide the notice detailed above or delay exercising its power of sale if the Depositary in its discretion (acting
reasonably) considers that to do so would materially prejudice its ability to obtain payment in full. In such
circumstances, the Depositary shall only be required to give such prior notice as is reasonably practicable. The
Depositary Agreement also provides that the Depositary has a contractual right of set-off to cover any
outstanding fees which may be owed to the Depositary. This right may be exercised by the Depositary only
against the property of the relevant Fund in relation to which the default on the payment obligation occurred.
The Depositary Agreement provides that the appointment of the Depositary may be terminated by the Company
giving to the Depositary 6 months’ notice (or such shorter period as the Depositary may agree to accept) or the
Depositary giving to the Company 12 months’ notice (or such shorter period as the Company may agree to
accept) (which shall not take effect until 7 years following such commencement date as agreed between the
parties), although in certain circumstances, the agreement can be terminated forthwith by notice in writing by
the Company or Depositary to the other parties.
Up-to-date information regarding the Depositary including the duties of the Depositary, the delegation
arrangements and any conflicts of interest that may arise shall be made available to investors upon request to
the Manager.
Currency Hedging
State Street Europe Limited has been appointed by the Investment Manager to provide currency hedging
services for the Currency Hedged Funds and all the Currency Hedged Share Classes pursuant to the Currency
Hedging Agreement. State Street Europe Limited will be responsible for carrying out foreign exchange
transactions for the Currency Hedged Funds and the Currency Hedged Share Classes according to guidelines
determined by the Investment Manager. State Street Europe Limited will employ a hedging methodology which
reflects the methodology of the relevant Funds and Share Classes (see “The Benchmark Indices” and
“Investment Techniques” above).
State Street Europe Limited is a limited liability company incorporated in England on 1 August 1997 and is
ultimately a wholly-owned subsidiary of the State Street Corporation.
84
State Street Corporation is a leading world-wide specialist in providing sophisticated global investors with
investment servicing and investment management. State Street Corporation is headquartered in Boston,
Massachusetts, USA, and trades on the New York Stock Exchange under the symbol "STT".
85
CONFLICTS OF INTEREST
General
Due to the widespread operations undertaken by the Directors, the Manager, the Depositary and the delegates or
sub-delegates of the Manager or the Depositary (excluding any non-group company sub-custodians appointed by
the Depositary) and the associated or group companies of the Manager, the Depositary or such delegates or subdelegates (each an "Interested Party") conflicts of interest may arise. Subject to the provisions below the
Interested Parties may effect transactions where those conflicts arise and shall not (subject as below) be liable to
account for any profit, commission or other remuneration arising.
In the event that a conflict of interest does arise, the Directors will endeavour, so far as they are reasonably
able, to ensure that it is resolved fairly and that investment opportunities are allocated on a
fair and equitable basis.
In addition, the following conflicts of interest may arise.
(i)
An Interested Party may acquire or dispose of any Investment notwithstanding that the same or similar
investments may be owned by or for the account of or otherwise connected with the Company.
(ii)
An Interested Party may acquire, hold or dispose of Investments notwithstanding that such Investments
had been acquired or disposed of by or on behalf of the Company by virtue of a transaction effected by
the Company in which the Interested Party was concerned provided that the acquisition by an
Interested Party of such Investments is effected on normal commercial terms negotiated on an arm’s
length basis and such Investments held by the Company are acquired on the best terms reasonably
obtainable having regard to the interests of the holders of Shares.
(iii)
An Interested Party may deal with the Company as principal or as agent, provided that:
A.
there is obtained a certified valuation of the transaction by a person approved by the
Depositary (or the Directors in the case of a transaction with the Depositary) as independent
and competent; or
B.
the transaction is executed on best terms on an organised investment exchange in accordance
with the rules of such exchange; or
C.
where A and B are not practical, execution is on terms which the Depositary (or the Directors
in the case of a transaction with the Depositary) is satisfied conforms with the principle that
the transaction is in the best interest of the holders of Shares and is carried out as if effected
on normal commercial terms negotiated at arm’s length.
(iv)
Certain of the Directors of the Company are or may in the future be connected with BlackRock Inc. and
its affiliates. For the avoidance of doubt, the Directors shall not be liable to account to the Company in
respect of such conflict for example as a result of receiving remuneration as directors or employees of
the Investment Manager.
(v)
The Investment Manager’s fee is based on a percentage of the Net Asset Value of each Fund. The
Investment Manager may provide valuation services to the Administrator (to assist in calculating the
Net Asset Value of a Fund) in relation to a Fund’s Investments. This may result in a conflict of interest
as the Investment Manager’s fee will increase as the value of the Funds increase.
(vi)
The Administrator’s fee is based on a percentage of the Net Asset Value of each Fund. The Administrator
may provide valuation services to the Company in relation to Investments. This may result in a conflict
of interest as the Administrator’s fee will increase as the Net Asset Value of a Fund increases.
(vii)
The Company may invest in other collective investment schemes (which may be operated and/or
managed by an Interested Party). Where a commission is received by the Investment Manager by virtue
of an investment by the Company in the units/shares of any collective investment scheme, such
commission will be paid into the property of the relevant Fund.
(viii)
The Company may purchase or hold an Investment the issuer of which is an Interested Party or where
an Interested Party is its adviser or banker.
(ix)
The Investment Manager may earn additional fees for acting as lending agent in the form of a
percentage of gross lending revenue (commonly referred to as a "fee split"). The Investment Manager
is responsible for all transactional costs related to securities lending. The net lending fee income is
detailed in the Company’s financial statements.
Depositary
The Depositary is part of an international group of companies and businesses that, in the ordinary course of their
86
business, act simultaneously for a large number of clients, as well as for their own account, which may result in
actual or potential conflicts. Conflicts of interest arise where the Depositary or its affiliates engage in activities
under the Depositary Agreement or under separate contractual or other arrangements. Such activities may
include:
(i)
(ii)
providing nominee, administration, registrar and transfer agency, research, agent securities lending,
investment management, financial advice and/or other advisory services to the Company;
engaging in banking, sales and trading transactions including foreign exchange, derivative, principal
lending, broking, market making or other financial transactions with a Fund either as principal and in the
interests of itself, or for other clients.
In connection with the above activities the Depositary or its affiliates:
(i)
(ii)
(iii)
(iv)
(v)
will seek to profit from such activities and are entitled to receive and retain any profits or compensation in
any form and are not bound to disclose to the Company, the nature or amount of any such profits or
compensation including any fee, charge, commission, revenue share, spread, mark-up, mark-down,
interest, rebate, discount, or other benefit received in connection with any such activities;
may buy, sell, issue, deal with or hold, securities or other financial products or instruments as principal
acting in its own interests, the interests of its affiliates or for its other clients;
may trade in the same or opposite direction to the transactions undertaken, including based upon
information in its possession that is not available to the Company;
may provide the same or similar services to other clients including competitors of the Company;
may be granted creditors’ rights by the Company which it may exercise.
The Company may use an affiliate of the Depositary to execute foreign exchange, spot or swap transactions for
the account of the Company. In such instances the affiliate shall be acting in a principal capacity and not as a
broker, agent or fiduciary of the Company. The affiliate will seek to profit from these transactions and is entitled
to retain and not disclose any profit to the Company. The affiliate shall enter into such transactions on the terms
and conditions agreed with the Company.
Where cash belonging to the Company is deposited with an affiliate of the Depositary being a bank, a potential
conflict arises in relation to the interest (if any) which the affiliate may pay or charge to such account and the
fees or other benefits which it may derive from holding such cash as banker and not as trustee.
The Manager may also be a client or counterparty of the Depositary or its affiliates.
Up-to-date information on the Depositary, its duties, any conflicts that may arise, the safe-keeping functions
delegated by the Depositary, the list of delegates and sub-delegates and any conflicts of interest that may arise
from such a delegation will be made available to investors on request.
Relationships within the BlackRock Group and with the PNC Group
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company
incorporated in Delaware, USA. PNC Bank N.A. is a substantial shareholder in BlackRock, Inc.. Subject to any
policies established by the Manager, when arranging investment transactions for the Funds, the Investment
Manager will seek to obtain the best net results for the Funds, taking into account such factors as price (including
the applicable brokerage commission or dealer spread), size of order, difficulty of execution and operational
facilities of the firm involved and the firm’s risk in positioning a block of securities. Therefore, whilst the
Investment Manager generally seeks reasonably competitive commission rates, the Funds do not necessarily pay
the lowest commission or spread available. In a number of developing markets, commissions are fixed pursuant
to local law or regulation and, therefore, are not subject to negotiation.
When arranging transactions in securities for the Funds, companies in the PNC Group may provide securities
brokerage, foreign exchange, banking and other services, or may act as principal, on their usual terms and may
benefit therefrom. Commissions will be paid to brokers and agents in accordance with the relevant market
practice and the benefit of any bulk or other commission discounts or cash commissions rebates provided by
brokers or agents will be passed on to the Funds. The services of the PNC Group companies may be used by the
Investment Manager where it is considered appropriate to do so provided that (a) their commissions and other
terms of business are generally comparable with those available from unassociated brokers and agents in the
markets concerned, and (b) this is consistent with the above policy of obtaining best net results. Consistent with
the above policies, it is anticipated that a proportion of the Funds’ investment transactions will be executed
through the PNC Group broker dealers and that they will be amongst a relatively small group of global firms
which may each be assigned a larger proportion of transactions than the proportion assigned to any other firm.
Subject to the foregoing, and to any restrictions adopted by the Manager or set forth in the Memorandum and
Articles, the Investment Manager and any other BlackRock Group company or PNC Group company , and any
directors of the foregoing, may (a) have an interest in the Company or in any transaction effected with or for it,
or a relationship of any description with any other person, which may involve a potential conflict with their
respective duties to the Manager, and (b) deal with or otherwise use the services of the PNC Group companies,
the Investment Manager or any other BlackRock Group company in connection with the performance of such
duties; and none of them will be liable to account for any profit or remuneration derived from so doing.
87
For example, such potential conflicts may arise because the relevant BlackRock Group company or PNC Group
company:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
undertakes business for other clients;
has directors or employees who are directors of, hold or deal in securities of, or are otherwise
interested in, any company the securities of which are held by or dealt in on behalf of a Fund;
may benefit from a commission, fee, mark-up or mark-down payable otherwise than by a Fund in
relation to a transaction in investment;
may act as agent for a Fund in relation to transactions in which it is also acting as agent for the
account of other clients of itself;
may deal in Investments and/or currencies as principal with a Fund or any of a Fund’s holders of
Shares;
transacts in units or shares of a collective investment scheme or any company of which any BlackRock
Group company or PNC Group company is the manager, operator, banker, adviser or trustee; and/or
may effect transactions for a Fund involving placings and/or new issues with another of its group
companies which may be acting as principal or receiving agent’s commission.
As described above, securities may be held by, or be an appropriate Investment for, a Fund as well as by or for
other clients of the Investment Manager or other BlackRock Group companies. Because of different objectives or
other factors, a particular security may be bought for one or more such clients, when other clients are selling the
same security. If purchases or sales of securities for a Fund or such clients arise for consideration at or about the
same time, such transactions will be made, insofar as feasible, for the relevant clients in a manner deemed
equitable to all. There may be circumstances when purchases or sales of securities for one or more BlackRock
Group clients have an adverse effect on other BlackRock Group clients.
Establishing, holding or unwinding opposite positions (i.e. long and short) in the same security at the same time
for different clients may prejudice the interests of clients on one side or the other and may pose a conflict of
interest for BlackRock Group as well, particularly if BlackRock Group or the portfolio managers involved may earn
higher compensation from one activity than from the other. This activity may occur as a result of different
portfolio management teams taking different views of a particular security or in the course of implementing risk
management strategies, and special policies and procedures are not generally utilised in these situations.
This activity may also occur within the same portfolio management team as a result of the team having both
long only mandates and long-short or short only mandates or in the course of implementing risk management
strategies. Where the same portfolio management team has such mandates, shorting a security in some
portfolios that is held long in other portfolios or establishing a long position in a security in some portfolios that is
held short in other portfolios may be done only in accordance with established policies and procedures designed
to ensure the presence of an appropriate fiduciary rationale and to achieve execution of opposing transactions in
a manner that does not systematically advantage or disadvantage any particular set of clients. BlackRock
Group's compliance group monitors compliance with these policies and procedures and may require modification
or termination of certain activities to minimise conflicts. Exceptions to these policies and procedures must be
approved by the compliance group.
Among the fiduciary rationales that may justify taking opposite positions in the same security at the same time
would be differing views as to the short-term and long-term performance of a security, as a result of which it
may be inappropriate for long only accounts to sell the security but may be appropriate for short-term oriented
accounts that have a shorting mandate to short the security over the near term. Another rationale may be to
seek to neutralise the effect of the performance of a particular segment of one company's business by taking the
opposite position in another company whose business is substantially similar to that of the segment in question.
In certain cases BlackRock Group’s efforts to effectively manage these conflicts may result in a loss of
investment opportunity for its clients or may cause it to trade in a manner that is different from how it would
trade if these conflicts were not present, which may negatively impact investment performance.
With respect to the Funds (or portion of a Fund) for which they provide investment management and advice,
companies within the BlackRock Group may select brokers (including, without limitation, brokers who are
affiliated with BlackRock Group) that furnish the BlackRock Group, directly or through third-party or
correspondent relationships, with research or execution services which provide, in BlackRock Group's view, lawful
and appropriate assistance to each applicable BlackRock Group company in the investment decision-making or
trade execution processes and the nature of which is such that their provision can reasonably be expected to
benefit the Company as a whole and may contribute to an improvement in the Funds’ performance. Such
research or execution services may include, without limitation and to the extent permitted by applicable law:
research reports on companies, industries and securities; economic and financial information and analysis; and
quantitative analytical software. Research or execution services obtained in this manner may be used in
servicing not only the account from which commissions where used to pay for the services, but also other
BlackRock Group client accounts. For the avoidance of doubt, such goods and services do not include travel,
accommodation, entertainment, general administrative goods or services, general office equipment, computer
hardware or premises, membership fees, employee salaries or direct money payments. To the extent that the
BlackRock Group uses its clients' commission dollars to obtain research or execution services, BlackRock Group
companies will not have to pay for those products and services themselves. BlackRock Group companies may
receive research or execution services that are bundled with the trade execution, clearing and/or settlement
services provided by a particular broker-dealer. To the extent that each BlackRock Group company receives
research or execution services on this basis, many of the same potential conflicts related to receipt of these
88
services through third party arrangements exist. For example, the research effectively will be paid by client
commissions that also will be used to pay for the execution, clearing and settlement services provided by the
broker-dealer and will not be paid by that BlackRock Group company.
Each BlackRock Group company may endeavour, subject to best execution, to execute trades through brokers
who, pursuant to such arrangements, provide research or execution services in order to ensure the continued
receipt of research or execution services that BlackRock Group company believes are useful in their investment
decision-making or trade execution process. Each BlackRock Group company may pay, or be deemed to have
paid, commission rates higher than it could have otherwise paid in order to obtain research or execution services
if that BlackRock Group company determines in good faith that the commission paid is reasonable in relation to
the value of the research or execution services provided. BlackRock Group believes that using commission
dollars to obtain the research or execution services enhances its investment research and trading processes,
thereby increasing the prospect for higher investment returns.
The investment activities of the BlackRock Group for its own account and for other accounts managed by it or by
a PNC Group company may limit the investment strategies that can be conducted on behalf of the Funds by the
Manager and/or Investment Manager as a result of aggregation limits. For example, the definition of corporate and
regulatory ownership of regulated industries in certain markets may impose limits on the aggregate amount of
investment by affiliated investors that may not be exceeded. Exceeding these limits without the grant of a license or
other regulatory or corporate consent may cause the BlackRock Group and the Funds to suffer disadvantages or
business restrictions. If such aggregate ownership limits are reached, the ability of the Funds to purchase or
dispose of Investments or exercise rights may be restricted by regulation or otherwise impaired. As a result the
Manager and/or Investment Manager on behalf of the Funds may limit purchases, sell existing Investments or
otherwise restrict or limit the exercise of rights (including voting rights) in light of potential regulatory
restrictions on ownership or other restriction resulting from reaching investment thresholds. As a consequence, a
Fund’s ability to provide returns which reflect the performance of the relevant Benchmark Index may be affected.
BlackRock or its Affiliates own or have an ownership interest in certain trading, portfolio management, operations
and/or information systems used by Fund service providers. These systems are, or may be, used by a Fund
service provider in connection with the provision of services to accounts managed by BlackRock and funds
managed and sponsored by BlackRock, including the Funds, that engage the service provider (typically the
Depositary). A Fund’s service provider remunerates BlackRock or its Affiliates for the use of the systems. A
Fund service provider’s payments to BlackRock or its Affiliates for the use of these systems may enhance the
profitability of BlackRock and its Affiliates. BlackRock’s or its Affiliates’ receipt of fees from a service provider in
connection with the use of systems provided by BlackRock or its Affiliates may create an incentive for BlackRock
to recommend that a Fund enter into or renew an arrangement with the service provider.
BlackRock Group may from time to time choose to alter or choose not to engage in the above described
arrangements to varying degrees, without notice to BlackRock Group clients, to the extent permitted by
applicable law.
In the event that a conflict of interest does arise, the Directors will endeavour, so far as they are reasonably
able, to ensure that it is resolved fairly and that investment opportunities are allocated on a fair and equitable
basis.
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STATUTORY AND GENERAL INFORMATION
1.
Authorised share capital
On incorporation the authorised share capital of the Company was €2.00 divided into 2 Subscriber Shares
of a par value of €1.00 each and 1,000,000,000,000 Shares of no par value. The 2 Subscriber Shares are
currently in issue and are held by the Manager or nominees of the Manager. The Subscriber Shares were
issued for cash at par value. The Subscriber Shares do not form part of the share capital of any Fund of
the Company.
2.
(a)
To the best of the Directors’ knowledge and belief, as of the date of this Prospectus, no capital of
the Company is under option or is agreed, conditionally or unconditionally to be put under option.
(b)
Neither the Subscriber Shares nor the Shares carry pre-emption rights.
Share Rights
(a)
Subscriber Shares
The holders of the Subscriber Shares shall:-
(b)
(i)
on a poll, be entitled to one vote per Subscriber Share;
(ii)
not be entitled to any dividends whatsoever in respect of their holding of Subscriber Shares;
and
(iii)
in the event of a winding up or dissolution of the Company, have the entitlements referred
to under “Distribution of Assets on a Liquidation” below.
Shares
The holders of Shares shall:(i)
on a poll, be entitled to one vote per whole Share;
(ii)
be entitled to such dividends as the Directors may from time to time declare; and
(iii)
in the event of a winding up or dissolution of the Company, have the entitlements referred
to under “Distribution of Assets on a Liquidation” below.
Please see the section entitled “General Information on Dealings in the Company” for information on
exercising voting rights by investors in the Funds.
3.
Voting Rights
This is dealt with under the rights attaching to the Subscriber Shares and Shares respectively referred to
at 2 above. Shareholders (i.e. investors who have their names entered on the share register) who are
individuals may attend and vote at general meetings in person or by proxy. Shareholders (i.e. investors
who have their names entered on the share register) who are corporations may attend and vote at
general meetings by appointing a representative or by proxy. Investors who hold Shares through a
broker/dealer/other intermediary, who are not entered on the register, for example for clearing purposes,
may not be entitled to vote at general meetings. This will depend upon the arrangements agreed with the
relevant broker/dealer/other intermediary.
Subject to any special terms as to voting upon which any Shares may be issued or may for the time being
be held, at any general meeting on a poll every such holder of Shares present in person or by proxy shall
have one vote for every Share held.
To be passed, ordinary resolutions of the Company in general meeting will require a simple majority of
the votes cast by the holders of Shares voting in person or by proxy at the meeting at which the
resolution is proposed.
A majority of not less than 75% of the holders of Shares present in person or by proxy and (being entitled
to vote) voting in general meetings is required in order to pass a special resolution including a resolution
to (i) rescind, alter or amend an Article or make a new Article and (ii) wind up the Company.
Please see the section entitled “General Information on Dealings in the Company” for information on
exercising voting rights by investors in the Funds.
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4.
Meetings and Votes of Shareholders
Shareholders (i.e. investors who have their names entered on the share register of the Company) will be
entitled to attend and vote at general meetings of the Company. The annual general meeting of the
Company will be held in Ireland normally within six months of the end of each financial year of the
Company. Notices convening each annual general meeting will be sent to registered shareholders
together with the annual report and audited financial statements not less than twenty-one days before the
date fixed for the meeting.
Please see the section entitled “General Information on Dealings in the Company” for information on
delivery of notices and exercising voting rights by investors in the Funds.
5.
Accounts and Information
The Company’s accounting period will end on 31 July in each year.
The Company will prepare an annual report and audited financial statements for the year ending 31 July
in each year. The annual report and audited financial statements will be published within four months
following the year end date. In addition, the Company will prepare a semi-annual report and unaudited
financial statements (made up to 31 January) and this will be published within two months following this
period end. The Company will supply copies of the annual and semi-annual reports to holders of Shares
free of charge on request.
Copies of this Prospectus, the Supplements (if any) and annual and semi-annual reports of the Company
may be obtained from the Administrator at the address given under “Directory”.
6.
Distribution of assets on a liquidation
If the Company shall be wound up, the liquidator shall, subject to the provisions of the Act, apply the
assets of the Company on the basis that any liability incurred or attributable to a Fund shall be
discharged solely out of the assets of that Fund.
(b)
The assets available for distribution among the members shall then be applied in the following
priority:(i)
firstly, in the payment to the holders of the Shares of each class of each Fund a sum in the
currency in which that class is designated or in any other currency selected by the liquidator
as nearly as possible equal (at a rate of exchange determined by the liquidator) to the Net
Asset Value of the Shares held by such holders respectively as at the date of
commencement to wind up provided that there are sufficient assets available in the relevant
Fund to enable such payment to be made. In the event that, as regards any class of
Shares, there are insufficient assets available in the relevant Fund to enable such payment
to be made, recourse shall be had to the assets of the Company (if any) not comprised
within any of the Funds and not (save as provided in the Act) to the assets comprised within
any of the Funds;
(ii)
secondly, in the payment to the holders of the Subscriber Shares of sums up to the nominal
amount paid thereon out of the assets of the Company not comprised within any Funds
remaining after any recourse thereto under sub-paragraph (b)(i) above. In the event that
there are insufficient assets aforesaid to enable such payment to be made, no recourse shall
be had to the assets comprised within any of the Funds;
(iii)
thirdly, in the payment to the holders of each class of Shares of any asset remaining in the
relevant Fund of any balance being made in proportion to the number of Shares held; and
(iv)
fourthly, in the payment to the holders of the Shares of any balance then remaining and not
comprised within any of the Funds such payment being made in proportion to the value of
each Fund and within each Fund to the value of each class and in proportion to the number
of Shares held in each class.
(c)
The Company will sell the assets if requested by a Shareholder and the cost of such sale shall be
charged to the redeeming Shareholder.
(d)
A Fund may be wound up in accordance with the Act and in such event the provisions of paragraph
(b)(i) and Article 129 of the Articles will apply with the relevant changes being applied in respect of
that Fund.
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7.
Circumstances of a Winding Up
The Company shall be wound up in the following circumstances:
8.
(a)
by the passing of a special resolution for a winding-up;
(b)
where the Company does not commence business within a year of being incorporated or where it
suspends its business for a year;
(c)
where the number of members falls below the statutory minimum (currently 2);
(d)
where the Company is unable to pay its debts and a liquidator has been appointed;
(e)
where the appropriate court in Ireland is of the opinion that the Company’s affairs and the powers
of the Directors have been exercised in a manner oppressive to members;
(f)
the appropriate court in Ireland is of the opinion that it is just and equitable that the Company
should be wound up.
Directors’ and Other Interests
(a)
As at the date of this Prospectus, none of the Directors nor any other connected person has any
material interest in the Shares of the Company or any options in respect of such Shares.
(b)
For the purposes of this paragraph “connected person” means in respect of any Director:
(i)
his spouse, child or step-child;
(ii)
a person acting in his capacity as the trustee of any trust, the principal beneficiaries of
which are the Director, his spouse or any of his children or step-children or any body
corporate which he controls;
(iii)
a partner of the Director; or
(iv)
a company controlled by that Director.
The Directors are entitled to such annual fees as may be agreed. The BlackRock Group employees
serving as Directors are not entitled to receive Directors' fees. The Articles provide that each
Director shall be entitled to such remuneration for his services as the Directors shall from time to
time resolve, provided that no Director may be paid in excess of a figure set out in the Prospectus
without the approval of the Board of Directors. These fees are paid out of the Total Expense Ratio.
(c)
Save for the contracts listed in section entitled “Management of the Company”, no Director is
materially interested in any contract or arrangement subsisting at the date hereof which is unusual
in its nature and conditions or significant in relation to the business of the Company.
(d)
Mr O’Dwyer, Ms O'Flynn and Ms Prooth are employees of the BlackRock Group (of which the
Manager and Investment Manager are part). Mr O’Dwyer is also a director of the Manager.
(e)
No loan or guarantee has been provided by the Company to any Director.
(f)
Members of the BlackRock Group (i.e. BlackRock, Inc. and its subsidiaries and affiliates) may hold
Shares for their own account and on behalf of discretionary clients. The Directors are satisfied that
in the nature of the Company’s business such holdings will not prejudice its independent operation.
All relations between the Company and members of the BlackRock Group will be conducted at
arms’ length on a normal commercial basis.
(g)
No Director:
(i)
has any unspent convictions;
(ii)
has become bankrupt or entered into any voluntary arrangement;
(iii)
has been a director of any company or a partner of any firm which, at that time or within
twelve months after his ceasing to become a director or a partner (as the case may be),
had a receiver appointed or went into compulsory liquidation, or creditors voluntary
liquidation or went into administration, or entered into company or partnership voluntary
arrangements or made any composition or arrangement with its creditors;
(iv)
has owned an asset or been a partner of a partnership owning an asset over which a
receiver has been appointed at that time or within twelve months after his ceasing to be a
partner; or
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(v)
9.
has had any public criticism against him by any statutory or regulatory authority (including
recognised professional bodies) or has been disqualified by a court from acting as a director
or acting in the management or conduct of the affairs of any company.
Litigation
Save as disclosed in the Company’s annual report and audited financial statements, the Company is not
and has not been engaged in any litigation or arbitration proceedings as a defendant and the Directors are
not aware of any litigation or claim pending or threatened by or against the Company since its
incorporation, where such litigation, arbitration proceedings or claim may have a significant effect on the
Company’s financial position or profitability.
10.
11.
Miscellaneous
(a)
The Company does not have as at the date of this Prospectus any loan capital (including term
loans) outstanding or created but unissued, or any outstanding mortgages, charges, debentures or
other borrowings or indebtedness in the nature of borrowings, including bank overdraft, liabilities
under acceptances or acceptance credits, obligations under finance leases, hire purchase,
commitments, guarantees or other contingent liabilities.
(b)
The Company does not have, nor has it had since its incorporation, any employees.
(c)
Save as disclosed in paragraph 8 above, no Director has any interest direct or indirect in the
promotion of the Company or in any assets which have been acquired or disposed of by or leased
to the Company or are proposed to be acquired by, disposed of or leased to the Company, nor is
there any contract or arrangement subsisting at the date of this document in which a Director is
materially interested and which is unusual in its nature and conditions or significant in relation to
the business of the Company.
(d)
The Company has not and does not intend to purchase or acquire nor agree to purchase or acquire
any real property.
(e)
The name “iShares” is a trademark of BlackRock, Inc. or its subsidiaries. On termination of the
Management Agreement, the Company has undertaken (inter alia) to call a general meeting of the
Company to change the name of the Company to a name not resembling or including “iShares”.
Inspection of Documents
Copies of the following documents will be available for inspection at any time during normal business
hours on any day (excluding Saturdays, Sundays and public holidays), free of charge, at the registered
offices of the Company in Dublin and at the offices of the Investment Manager in London and may be
obtained, on request free of charge, from the Administrator:
12.
(a)
this Prospectus, any Supplement and any KIID;
(b)
the Memorandum and Articles;
(c)
the latest annual and semi-annual reports of the Company.
UK Facilities Agent
UK investors can contact the UK facilities agent (the Investment Manager) at BlackRock Advisors (UK)
Limited, 12 Throgmorton Avenue, London EC2N 2DL for details regarding pricing and redemption, making
a complaint and for the inspection (free of charge) and for the obtaining of copies in English of scheme
documentation listed in paragraph 11 (a) and (b) above (free of charge) and documentation listed at
paragraph 11 (c) above (at no more than a reasonable charge).
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TAXATION
General
The information given is not exhaustive and does not constitute legal or tax advice. Prospective
investors should consult their own professional advisers as to the implications of their subscribing
for, purchasing, holding, switching or disposing of Shares under the laws of the jurisdictions in which
they may be subject to tax.
The following is a brief summary of certain aspects of Irish and United Kingdom taxation law and practice
relevant to the transactions contemplated in this Prospectus. It is based on the law and practice and official
interpretation currently in effect as at the date of this Prospectus, all of which are subject to change.
Dividends, interest and capital gains (if any) which the Company receives with respect to its Investments (other
than securities of Irish issuers) may be subject to taxes, including withholding taxes, in the countries in which
the issuers of Investments are located. It is anticipated that the Company may not be able to benefit from
reduced rates of withholding tax in double taxation agreements between Ireland and such countries. Therefore,
such withholding taxes may be considered as generally irrecoverable as the Company itself is exempt from
income tax. If this position changes in the future and the application of a lower rate results in a repayment to the
Company, the Net Asset Value will not be re-stated and the benefit will be allocated to the existing holders of
Shares rateably at the time of the repayment.
This section does not cover the tax implications for anyone other than those who have a beneficial interest in the
Shares. This section does not cover tax implications for UK resident individual investors that are not domiciled in
the UK or any financial traders or any other investors that may hold Shares in the Company in the course of their
trade or profession. It also does not cover taxation implications in respect of life companies and UK authorised
investment funds investing in the Company.
Irish Taxation
The Directors have been advised that on the basis that the Company is resident in Ireland for taxation purposes
the taxation position of the Company and its holders of Shares is as set out below.
Definitions
For the purposes of this section, the following definitions shall apply.
"Courts Service"
The Courts Service is responsible for the administration of moneys under the control or subject to the order of
the Courts.
"Equivalent Measures"
apply to an investment undertaking where the Irish Revenue have given the investment undertaking notice of
approval in accordance with Section 739D (7B) of the Taxes Act and the approval has not been withdrawn.
"Exempted Irish Investor" means:
(i)
an Intermediary (within the meaning of Section 739B of the Taxes Act;
(ii)
a pension scheme which is an exempt approved scheme within the meaning of Section 774 of the Taxes
Act or a retirement annuity contract or a trust scheme to which Section 784 or 785 of the Taxes Act
applies;
(iii)
a company carrying on life assurance business within the meaning of Section 706 of the Taxes Act;
(iv)
an investment undertaking within the meaning of Section 739(B)(1) of the Taxes Act;
(v)
an investment limited partnership within the meaning of Section 739J of the Taxes Act;
(vi)
a special investment scheme within the meaning of Section 737 of the Taxes Act;
(vii) a unit trust to which Section 731(5)(a) of the Taxes Act applies;
(viii) a charity being a person referred to in Section 739D(6)(f)(i) of the Taxes Act;
(ix)
a person who is entitled to exemption from income tax and capital gains tax under Section 784A(2) of the
Taxes Act where the shares held are assets of an approved retirement fund or an approved minimum
retirement fund;
(x)
a credit union within the meaning of Section 2 of the Credit Union Act;
(xi)
a person who is entitled to exemption from income tax and capital gains tax by virtue of Section 787I of
the Taxes Act and the shares are assets of a PRSA;
(xii) the National Pension Reserve Fund Commission or a Commission investment vehicle;
(xiii) a company that is within the charge to corporation tax in accordance with Section 739D(6)(k) of the Taxes
Act, in respect of payments made to it by the Company, that has made a declaration to that effect and
that has provided the Company with its tax reference;
(xiv) a company that is or will be within the charge to corporation tax in accordance with Section 110(2) of the
Taxes Act in respect of payments made to it by the Fund;
(xv) a qualifying management company within the meaning of Section 739B(1) of the Taxes Act;
(xvi) a specified company being a person referred to in Section 739D(6)(g) of the Taxes Act;
(xvii) the National Asset Management Agency being a person referred to in Section 739D(ka) of the Taxes Act;
94
(xviii) the National Treasury Management Agency or a Fund investment vehicle (within the meaning of section 37
of the National Treasury Management Agency (Amendment) Act 2014) of which the Minister for Finance is
the sole beneficial owner, or the State acting through the National Treasury Management Agency; or
(xix) any other Irish Resident or Irish Ordinary Resident who may be permitted to own shares under taxation
legislation or by written practice or concession of the Irish Revenue Commissioners without giving rise to a
charge to tax in the Company or jeopardising tax exemptions associated with the Company giving rise to a
charge to tax in the Company.
provided that a Relevant Declaration is in place.
"Intermediary" means a person who:(i)
carries on a business which consists of, or includes, the receipt of payments from an investment
undertaking on behalf of other persons; or
(ii)
holds shares in an investment undertaking on behalf of other persons.
"Ireland" means the Republic of Ireland/ the State.
"Irish Ordinary Resident"
(i)
in the case of an individual, means an individual who is ordinarily resident in Ireland for tax purposes.
(ii)
in the case of a trust, means a trust that is ordinarily resident in Ireland for tax purposes.
The following definition has been issued by the Irish Revenue in relation to the ordinary residence of individuals:
The term "ordinary residence" as distinct from "residence", relates to a person's normal pattern of life and
denotes residence in a place with some degree of continuity.
An individual who has been resident in Ireland for three consecutive tax years becomes ordinarily resident with
effect from the commencement of the fourth tax year.
For example, an individual who is resident in Ireland for the tax years:- 1 January 2010 to 31 December 2010;
- 1 January 2011 to 31 December 2011; and
- 1 January 2012 to 31 December 2012
will become Irish Ordinary Resident with effect from 1 January 2013.
An individual who has been ordinarily resident in Ireland ceases to be ordinarily resident at the end of the third
consecutive tax year in which s/he is not resident. Thus, an individual who is resident and ordinarily resident in
Ireland in the tax year 1 January 2010 to 31 December 2010 and departs from Ireland in that tax year will
remain ordinarily resident up to the end of the tax year 1 January 2013 to 31 December 2013.
"Irish Resident"
(i)
in the case of an individual, means an individual who is resident in Ireland for tax purposes.
(ii)
in the case of a trust, means a trust that is resident in Ireland for tax purposes.
(iii)
in the case of a company, means a company that is resident in Ireland for tax purposes.
Residence – Individual
An individual will be regarded as being resident in Ireland for a particular twelve month tax year if s/he:
-
spends 183 days or more in Ireland in that twelve month tax year; or
has a combined presence of 280 days in Ireland, taking into account the number of days spent in
Ireland in that twelve month tax year together with the number of days spent in Ireland in the
preceding twelve month tax year.
Presence in a twelve month tax year by an individual of not more than 30 days in Ireland will not be reckoned for
the purpose of applying the two year test. Presence in Ireland for a day means the personal presence of an
individual at any time during that day.
Residence – Company
It should be noted that the determination of a company’s residence for tax purposes can be complex in certain
cases and declarants are referred to the specific legislative provisions that are contained in Section 23A of the
Taxes Act.
Companies incorporated on or after 1 January 2015
Finance Act 2014 introduced changes to the above residency rules. From 1 January 2015, a company
incorporated in Ireland will be automatically considered resident in Ireland for tax purposes, unless it is
considered resident in a jurisdiction with which Ireland has a double tax agreement. A company incorporated in a
foreign jurisdiction that is centrally managed and controlled in Ireland will continue to be treated as resident in
Ireland for tax purposes, unless otherwise resident by virtue of a double tax agreement.
95
Companies incorporated prior to 1 January 2015 have until 1 January 2021 before the new corporate residency
provisions take effect.
Companies incorporated prior to 1 January 2015
The Irish tax rules for companies incorporated prior to 1 January 2015 provides that a company incorporated in
Ireland will be regarded for all tax purposes as being resident in Ireland. Irrespective of where a company is
incorporated a company which has its central management and control in Ireland is resident in Ireland. A
company which does not have its central management and control in Ireland but which is incorporated in Ireland
is resident in Ireland except where:-
the company or a related company carried on a trade in Ireland, and either the company is ultimately
controlled by persons resident in EU Member States or in countries with which Ireland has a double
taxation treaty, or the company or a related company are quoted companies on a recognised Stock
Exchange in the EU or in a taxation treaty country;
or
-
the company is regarded as not resident in Ireland under a double taxation treaty between Ireland and
another country.
Residence – Trust
Determining the tax residence of a trust can be complex. A trust will generally be regarded as resident in Ireland
for tax purposes if a majority of its trustees are resident for tax purposes in Ireland. Where some, but not all, of
the trustees are resident in Ireland, the residency of the trust will depend on where the general administration of
the trust is carried on. In addition, the provisions of any relevant double tax agreement would need to be
considered. As a result, each trust must be assessed on a case by case basis.
"Personal Portfolio Investment Undertaking" means an investment undertaking, under the terms of which
some or all of the property of the undertaking may be, or was, selected by, or the selection of some or all of the
property may be, or was, influenced by –
(i)
(ii)
(iii)
(iv)
(v)
(vi)
the investor,
a person acting on behalf of the investor,
a person connected with the investor,
a person connected with a person acting on behalf of the investor,
the investor and a person connected with the investor, or
a person acting on behalf of both the investor and a person connected with the investor.
An investment undertaking is not a Personal Portfolio Investment Undertaking if the only property which may or
has been selected was available to the public at the time that the property is available for selection by an
investor and is clearly identified in the investment undertaking's marketing or other promotional material. The
investment undertaking must also deal with all investors on a non-discriminatory basis. In the case of
investments deriving 50% or more of their value from land, any investment made by an individual is limited to
1% of the total capital required.
"Relevant Declaration" means the declaration relevant to the holder of Shares as set out in Schedule 2B of the
Taxes Act.
"Relevant Period" means a period of 8 years beginning with the acquisition of a Share by a holder of Shares
and each subsequent period of 8 years beginning immediately after the preceding Relevant Period.
"Taxes Act", The Taxes Consolidation Act, 1997 (of Ireland) as amended.
The Company
The Company shall be regarded as resident in Ireland for tax purposes if the central management and control of
its business is exercised in Ireland and the Company is not regarded as resident elsewhere. It is the intention of
the Directors that the business of the Company will be conducted in such a manner as to ensure that it is Irish
resident for tax purposes.
The Directors have been advised that the Company qualifies as an investment undertaking as defined in Section
739B of the Taxes Act. Under current Irish law and practice, on that basis, it is not chargeable to Irish tax on its
income and gains.
However, tax can arise on the happening of a "chargeable event" in the Company. A chargeable event includes
any distribution payments to holders of Shares or any encashment, redemption, cancellation or transfer of
Shares or appropriation or cancellation of Shares by the Company for the purposes of meeting the amount of tax
payable on a gain arising on a transfer. It also includes the ending of a Relevant Period.
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No tax will arise on the Company in respect of chargeable events in respect of a holder of Shares who is neither
Irish Resident nor Irish Ordinary Resident at the time of the chargeable event provided that a Relevant
Declaration is in place and the Company is not in possession of any information which would reasonably suggest
that the information contained therein is no longer materially correct.
A chargeable event will not be deemed to arise if at the time of the chargeable event Equivalent Measures have
been formally agreed with the Revenue Commissioners and the approval has not been withdrawn. In the absence
of a Relevant Declaration or Equivalent Measures there is a presumption that the investor is Irish Resident or
Irish Ordinary Resident.
Where a Relevant Declaration is required but is not provided to the Company by a holder of Shares or where
approval is required in relation to appropriate Equivalent Measures but has not been received from the Irish
Revenue Commissioners and tax is subsequently deducted by the Company on the occurrence of a chargeable
event, Irish legislation provides for a refund of such tax only to companies within the charge to Irish corporation
tax, to certain incapacitated persons and in certain other limited circumstances.
A chargeable event does not include:
•
an exchange by a holder of Shares, effected by way of an arm's length bargain where no payment is made
to the holder of Shares, of Shares in the Company for other Shares in the Company;
•
any transactions (which might otherwise be a chargeable event) in relation to Shares held in a Recognised
Clearing System;
•
a transfer by a holder of Shares of the entitlement to a Share where the transfer is between spouses,
former spouses, civil partners or former civil partners, subject to certain conditions;
•
an exchange of Shares arising on a qualifying amalgamation or reconstruction (within the meaning of
Section 739H of the Taxes Act) of the Company with another investment undertaking.
Where the chargeable event is the ending of a Relevant Period, to the extent that any tax arises on such a
deemed disposal, such tax will be allowed as a credit against any tax payable on the subsequent encashment,
redemption, cancellation or transfer of the relevant Shares.
In the case of Shares held in a Recognised Clearing System, the holder of Shares will have to account for the
appropriate tax arising on the end of a Relevant Period on a self-assessment basis.
If the Company becomes liable to account for tax if a chargeable event occurs, the Company shall be entitled to
deduct from the payment arising on a chargeable event an amount equal to the appropriate tax and/or where
applicable, to appropriate or cancel such number of Shares held by the holder of Shares or such beneficial owner
of the Shares as are required to meet the amount of tax. The relevant holder of Shares and beneficial owner of
Shares shall indemnify and keep the Company indemnified against loss arising to the Company by reason of the
Company becoming liable to account for tax on the happening of a chargeable event if no such deduction,
appropriation or cancellation has been made.
Please see the section below dealing with the tax consequences for the Company and the holders of Shares of
chargeable events in respect of: (i)
(ii)
(iii)
holders of Shares whose Shares are held in a Recognised Clearing System;
holders of Shares who are neither Irish Residents nor Irish Ordinary Residents and their Shares are not
held in a Recognised Clearing System; and
holders of Shares who are either Irish Residents or Irish Ordinary Residents and their Shares are not held
in a Recognised Clearing System.
Dividends received by the Company from investment in Irish equities may be subject to Irish dividend
withholding tax at the standard rate of income tax (currently 20%). However, the Company can make a
declaration to the payer that it is a collective investment scheme beneficially entitled to the dividends which will
entitle the Company to receive such dividends without deduction of Irish dividend withholding tax.
(i)
Holders of Shares whose Shares are held in a Recognised Clearing System
Where Shares are held in a Recognised Clearing System, the obligation falls on the holder of Shares (rather than
the Company) to self-account for any tax arising on a taxable event. In the case of an individual, tax currently
at the rate of 41% should be accounted for by the holder of Shares in respect of any distributions and gains
arising to the individual holder of Shares on an encashment, redemption or transfer of Shares by a holder of
Shares. Where the investment constitutes a personal portfolio investment undertaking ("PPIU"), tax at a rate of
60% should be accounted for by the holder of Shares. This rate applies where the individual holder of Shares has
correctly included details of the income in a timely tax return.
Where the holder of Shares is a company, any payment will be treated as income chargeable to tax under Case
IV of Schedule D of the Taxes Act.
The holder of Shares will not have to self-account for tax on the occasion of a taxable event if (a) the holder of
Shares is neither Irish Resident nor Irish Ordinary Resident, or (b) the holder of Shares is an Exempted Irish
Investor (as defined above).
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It should be noted that a Relevant Declaration or approval in relation to appropriate equivalent measures is not
required to be made where the Shares, the subject of the application for subscription or registration of transfer
on a transfer of Shares, are held in a Recognised Clearing System. It is the current intention of the Directors
that all of the Shares will be held in a Recognised Clearing System.
If in the future, the Directors permit Shares to be held in certificated form outside a Recognised Clearing System,
prospective investors for Shares on subscription and proposed transferees of Shares will be required to complete
a Relevant Declaration as a pre-requisite to being issued Shares in the Company or being registered as a
transferee of the Shares (as the case may be). A Relevant Declaration will not be required to be completed in
this regard where the Company has received approval from the Irish Revenue Commissioners where appropriate
equivalent measures have been put in place.
To the extent that any Shares are not held in a Recognised Clearing System, the following tax consequences will
arise on a chargeable event.
(ii)
Holders of Shares who are neither Irish Residents nor Irish Ordinary Residents and their
Shares are not held in a Recognised Clearing System
The Company will not have to deduct tax on the occasion of a chargeable event in respect of a holder of Shares if
(a) the holder of Shares is neither Irish Resident nor Irish Ordinary Resident, and the holders of Shares has
made a Relevant Declaration and the Company has no reason to believe that the Relevant Declaration is
incorrect or (b) the Company has put in place appropriate Equivalent Measures to ensure that holders of Shares
in the Company are neither Irish Resident nor Irish Ordinary Resident. In the absence of a Relevant Declaration
or the approval from the Irish Revenue Commissioners referred to above tax will arise on the happening of a
chargeable event in the Company regardless of the fact that a holder of Shares is neither Irish Resident nor Irish
Ordinary Resident. The appropriate tax that will be deducted is as described in paragraph (iii) below.
To the extent that a holder of Shares is acting as an Intermediary on behalf of persons who are neither Irish
Residents nor Irish Ordinary Residents no tax will have to be deducted by the Company on the occasion of a
chargeable event provided that the Intermediary has made a Relevant Declaration that they are acting on behalf
of such persons and the Company is not in possession of any information which would reasonably suggest that
the information contained therein is no longer materially correct or if the Company has received approval from
the Irish Revenue Commissioners that appropriate Equivalent Measures are in place.
Holders of Shares who are neither Irish Residents nor Irish Ordinary Residents and who have made Relevant
Declarations in respect of which the Company is not in possession of any information which would reasonably
suggest that the information contained therein is no longer materially correct will not be liable to Irish tax in
respect of income from their Shares and gains made on the disposal of their Shares. However, any corporate
holder of Shares which is not Irish Resident and which holds Shares directly or indirectly by or for a trading
branch or agency in Ireland will be liable to Irish tax on income from the Shares or gains made on disposal of the
Shares.
Where tax is withheld by the Company on the basis that no Relevant Declaration has been filed with the
Company by the holder of Shares, Irish legislation generally does not provide for a refund of tax. Refunds of tax
will only be permitted in limited circumstances.
(iii)
Holders of Shares who are Irish Residents or Irish Ordinary Residents and their Shares are
not held in a Recognised Clearing System
Unless (a) a holder of Shares is an Exempted Irish Investor (as defined above), makes a Relevant Declaration to
that effect and the Company is not in possession of any information which would reasonably suggest that the
information contained therein is no longer materially correct, or (b) if the Company has obtained approval from
the Irish Revenue Commissioners that appropriate Equivalent Measures are in place, tax will be required to be
deducted by the Company from any distributions and other chargeable events in relation to a holder of Shares
who is Irish Resident or Irish Ordinary Resident.
Tax at the rate of 41% will have to be deducted by the Company on any distribution or gain arising to the holder
of Shares (other than a company which has made the required declaration) on an encashment, redemption, or
transfer of Shares by a holder of Shares who is Irish Resident or Irish Ordinary Resident. Tax will also have to be
deducted at the rate of 41% in respect of Shares held at the end of a Relevant Period (in respect of any excess
in value of the cost of the relevant Shares) to the extent that the holder of Shares (other than a company which
has made the required declaration) is Irish Resident or Ordinary Resident and is not an Exempted Irish Investor
who has made a Relevant Declaration or in respect of whom the Irish Revenue Commissioners have given
approval that appropriate Equivalent Measures are in place. Tax at a rate of 25% will have to be deducted by the
Company where the holder of Shares is a company which has made the required declaration.
However, the Company will be exempt from making tax deductions in respect of distributions and gains on
redemptions, cancellations, transfers or encashments of Shares held by Irish Residents and Irish Ordinary
Residents where the relevant Shares are held in a Recognised Clearing System.
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In certain circumstances the Company may elect not to deduct tax on the happening of a chargeable event.
Should the Company make this election the holder of Shares will be liable to account for the tax payable under
the self assessment system of taxation.
Anti avoidance provisions apply where an investment undertaking is regarded as a PPIU and the holder of Shares
is an individual. In such circumstances any payment to a holder of Shares will be taxed at a rate of 60%. It is a
matter of fact whether or not the investor or a connected person has a right of selection as envisaged in the anti
avoidance measures. Individual holders of Shares should seek independent legal advice to ascertain whether the
investment undertaking, as a result of their personal circumstances, could be regarded as a PPIU.
Irish Resident corporate holders of Shares who receive distributions (where payments are made annually or at
more frequent intervals) from which tax has been deducted will be treated as having received an annual
payment chargeable to tax under Case IV of Schedule D of the Taxes Act from which tax at the 25% rate has
been deducted. An Irish Resident corporate holder of Shares whose Shares are held in connection with a trade
will be taxable on any income or gains as part of that trade with a set-off against corporation tax payable for any
tax deducted by the Company.
In general, non-corporate holders of Shares who are Irish Resident or Irish Ordinary Resident will not be subject
to further Irish tax on income from their Shares or gains made on disposal of the Shares where tax has been
deducted by the Company on payments received. Where a currency gain is made by a holder of Shares on the
disposal of his/her Shares, such holder of Shares may be liable to Irish capital gains tax in the year of
assessment in which the Shares are disposed of.
Any holder of Shares who is Irish Resident or Irish Ordinary Resident and receives a distribution or receives a
gain on an encashment, redemption, cancellation or transfer of Shares from which tax has not been deducted by
the Company may be liable to income tax or corporation tax on the amount of such distribution or gain.
There is an obligation on the Company to periodically report information to the Irish Revenue Commissioners in
relation to certain holders of Shares and the value of their investments in the Company. The obligation arises in
relation to holders of Shares who are either Irish Resident or Irish Ordinary Resident (other than Exempted Irish
Investors).
(iv)
Irish Courts Service
Where Shares are held by the Courts Service no tax is deducted by the Company on payments made to the
Courts Service. Where money under the control or subject to the order of the Court Service is applied to acquire
Shares in the Company, the Courts Service assumes, in respect of those Shares acquired, the responsibilities of
the Company with regard to, inter alia, deduction of tax in respect of chargeable events, filing returns and
collection of the tax.
In addition, the Courts Service must make, in respect of each year of assessment, on or before 28 February in
the year following the year of assessment, a return to the Revenue Commissioners which:i)
ii)
specifies the total amount of gains arising to the investment undertaking in respect of the units acquired
and
specifies in respect of each person who is or was beneficially entitled to those unitsa.
where available, the name and address of the person,
b.
the amount of total gains to which the person has beneficial entitlement, and
c.
such other information as the Revenue Commissioners may require.
Stamp Duty
No stamp duty is payable in Ireland on the issue, transfer, repurchase or redemption of Shares in the Company.
Where any subscription for or redemption of Shares is satisfied by the in kind transfer of Irish securities or other
Irish property, Irish stamp duty might arise on the transfer of such securities or property.
No Irish stamp duty will be payable by the Company on the conveyance or transfer of stocks or marketable
securities provided that the stocks or marketable securities in question have not been issued by a company
registered in Ireland and provided that the conveyance or transfer does not relate to any immovable property
situated in Ireland or any right over or interest in such property or to any stocks or marketable securities of a
company (other than a company which is a collective investment scheme within the meaning of Section 739B of
the Taxes Act) which is registered in Ireland.
No Stamp Duty will arise on reconstructions or amalgamations of investment undertakings under Section 739H of
the Taxes Act, provided the reconstructions or amalgamations are undertaken for bona fide commercial purposes
and not for the avoidance of tax.
Capital Acquisitions Tax
The disposal of Shares will not be subject to Irish gift or inheritance tax (Capital Acquisitions Tax) provided that
the Company falls within the definition of investment undertaking (within the meaning of Section 739B of the
Taxes Act), and that: (a) at the date of the gift or inheritance, the donee or successor is neither domiciled nor
99
ordinarily resident in Ireland; (b) at the date of the disposition, the holder of Shares disposing of the Shares is
neither domiciled nor ordinarily resident in Ireland; and (c) the Shares are comprised in the gift or inheritance at
the date of such gift or inheritance and at the “valuation date” (as defined for Irish Capital Acquisitions Tax
purposes).
FATCA and other cross-border reporting systems
The US-Ireland Agreement to Improve International Tax Compliance and to Implement FATCA (the "US-Ireland
IGA") was entered into with the intention of enabling the Irish implementation of the Foreign Account Tax
Compliance Act provisions of the U.S. Hiring Incentives to Restore Employment Act (“FATCA”), which impose a
new reporting regime and potentially a 30% withholding tax on certain payments made from (or attributable to)
US sources or in respect of US assets to certain categories of recipient including a non-US financial institution (a
“foreign financial institution” or “FFI”) that does not comply with the terms of FATCA and is not otherwise
exempt. Certain financial institutions ("reporting financial institutions") are required to provide certain
information about their US accountholders to the Irish Revenue Commissioners (which information will in turn be
provided to the US tax authority) pursuant to the US-Ireland IGA. It is expected that the Company will constitute
a reporting financial institution for these purposes. The Company will not, however generally need to report any
information to the Irish Revenue Commissioners in respect of US holders of Shares, on the basis that the Shares
are expected to be treated as being regularly traded on an established securities market and should not,
therefore, constitute financial accounts for FATCA purposes for so long as the Shares are listed on the London
Stock Exchange or any other recognised stock exchange for Irish tax purposes. It may, however, still need to file
a nil return with the Irish Revenue Commissioners. It is the intention of the Company and the Manager to
procure that the Company is treated as complying with the terms of FATCA by complying with the terms of the
reporting system contemplated by the US-Ireland IGA. No assurance can, however, be provided that the
Company will be able to comply with FATCA and, in the event that it is not able to do so, a 30% withholding tax
may be imposed on payments it receives from (or which are attributable to) US sources or in respect of US
assets, which may reduce the amounts available to it to make payments to its holders of Shares.
The Common Reporting Standard (“CRS”) is a new, single global standard on Automatic Exchange Of Information
(“AEOI”). It was approved by the Organisation for Economic Co-operation and Development (“OECD”) in
February 2014 and draws on earlier work of the OECD and the EU, global anti-money laundering standards and,
in particular, the Model FATCA Intergovernmental Agreement. Under the CRS, participating jurisdictions will be
required to exchange certain information held by financial institutions regarding their non resident investors. The
CRS was effective in Ireland from 1 January 2016. The Company will be required to provide certain information
to the Irish Revenue Commissioners about non-Irish tax resident holders of Shares (which information will in
turn be provided to the relevant tax authorities). It should also be noted the CRS replaces the EU Taxation on
Savings Directive.
In light of the above, holders of Shares in the Company will be required to provide certain information to the
Company (and/or broker, custodian or nominee though which an investor holds its shares in the Company) to
comply with the terms of the reporting systems. Please note that the Manager has determined that US Persons
are not permitted to own Shares in the Funds.
United Kingdom Taxation
It is the intention of the Directors to conduct the affairs of the Company so that it does not become resident in
the United Kingdom for taxation purposes. Accordingly, and provided that the Company does not carry on a
trade in the United Kingdom through a permanent establishment situated there, the Company will not be subject
to United Kingdom corporation tax on its income or chargeable gains.
Subject to their personal circumstances, holders of Shares resident in the United Kingdom for taxation purposes
may be liable to United Kingdom income tax or corporation tax in respect of any dividends or other income
distributions of any Share Class of the Company (including any dividends funded out of realised capital profits of
the Company). In addition, UK holders of Shares holding Shares at the end of each ‘reporting period’ (as defined
for United Kingdom tax purposes) will potentially be subject to United Kingdom income tax or corporation tax on
their portion of a Share Class’s ‘reported income’, to the extent that this amount exceeds dividends received. The
terms ‘reported income’, ‘reporting period’ and their implications are discussed in further detail below. Both
dividends and reported income will be treated as dividends received from a foreign corporation, subject to any
re-characterisation as interest, as described below. There is no withholding by the Company for Irish tax on
dividends payable to United Kingdom investors on the basis that it is the current intention that all Shares will be
held in a Recognised Clearing System (see previous section headed “Irish Taxation” for further details).
Where the Fund holds more than 60% of its assets in interest bearing (or similar) form, any distribution will be
treated as interest in the hands of the UK individual investor. From 6 April 2016, there is no longer a notional
10% tax credit on dividend distributions. Instead, a £5,000 (2016/2017) tax free dividend allowance has been
introduced for UK individuals. Dividends received in excess of this threshold will be subject to tax.
From 1 July 2009, following the enactment of Finance Act 2009, dividend distributions received by UK resident
companies, including the Company, are likely to fall within one of a number of exemptions from United Kingdom
corporation tax. In addition, distributions to non-UK companies carrying on a trade in the United Kingdom
through a permanent establishment in the United Kingdom should also fall within the exemption from United
Kingdom corporation tax on dividends to the extent that the Shares held by that company are used by, or held
for, that permanent establishment. Reported income will be treated in the same way as a dividend distribution
for these purposes.
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Shareholdings in the Company are likely to constitute interests in offshore funds, as defined in section 355 of the
Taxation (International & other provisions) Act 2010 TIOPA 2010 for the purposes of the United Kingdom Finance
Act 2008, with each Share Class of the Fund treated as a separate ‘offshore fund’ for these purposes.
The Offshore Funds (Tax) Regulations 2009 (SI2009/3001) provide that if an investor resident or ordinarily
resident in the United Kingdom for taxation purposes holds an interest in an offshore fund and that offshore fund
is a ‘non-reporting fund’, any gain accruing to that investor upon the sale or other disposal of that interest will be
charged to United Kingdom tax as income rather than a capital gain. Alternatively, where an investor resident or
ordinarily resident in the United Kingdom holds an interest in an offshore fund that has been a ‘reporting fund’
for all periods of account for which they hold their interest, any gain accruing upon sale or other disposal of the
interest will be subject to tax as a capital gain rather than income; with relief for any accumulated or reinvested
profits which have already been subject to United Kingdom income tax or corporation tax on income (even where
such profits are exempt from United Kingdom corporation tax).
Where an offshore fund may have been a non-reporting fund for part of the time during which the United
Kingdom holders of Shares held their interest and a reporting fund for the remainder of that time, there are
elections which can potentially be made by the holder of Shares in order to pro-rate any gain made upon
disposal; the impact is that the portion of the gain made during the time when the offshore fund was a reporting
fund would be taxed as a capital gain. Such elections have specified time limits from the date of change in
status of the fund in which they can be made.
It should be noted that a “disposal” for United Kingdom taxation purposes includes a switching between Funds
and may include a switching between Share Classes of a Fund.
In broad terms, a ‘reporting fund’ is an offshore fund that meets certain upfront and annual reporting
requirements to HM Revenue & Customs and its holders of Shares. The Directors intend to manage the affairs of
the Company and the Funds so that these upfront and annual duties are met and continue to be met on an
ongoing basis for each Share Class within the Fund that intends to seek United Kingdom reporting fund status
with effect from inception. Such annual duties will include calculating and reporting the income returns of the
offshore fund for each reporting period (as defined for United Kingdom tax purposes) on a per-Share basis to all
relevant holders of Shares. UK holders of Shares who hold their interests at the end of the reporting period to
which the reported income relates, will be subject to income tax or corporation tax on the excess (if any) of the
reported income over any distributions paid in respect of the reporting period. The excess reported income will
be deemed to arise to UK holders of Shares six months following the last day of the reporting period.
Once reporting fund status is obtained from HM Revenue & Customs for the relevant Share Classes the status
should continue to apply on an ongoing basis, provided the annual requirements are undertaken. It is also the
intention of the Company to maintain UK Reporting Fund status for these Share Classes for each accounting
period thereafter.
Investors should refer to their tax advisors in relation to the implications of the Company obtaining such status.
In accordance with Regulation 90 of the Offshore Funds (Tax) Regulations 2009, Shareholder reports are made
available within six months of the end of the reporting period at www.ishares.com/en/pc/about/tax. The
intention of the Offshore Fund Reporting regulations is that reportable income data shall principally be made
available on a website accessible to UK investors. Alternatively, the holders of Shares may if they so require,
request a hard copy of the reporting fund data for any given year. Such requests must be made in writing to the
following address:
Head of Product Tax, BlackRock Investment Management (UK) Limited, 12 Throgmorton Avenue, London EC2N
2DL.
Each such request must be received within three months of the end of the reporting period. Unless the
Investment Manager is notified to the contrary in the manner described above, it is understood that investors do
not require their report to be made available other than by accessing the appropriate website.
UK resident but non- UK domiciled investors who are subject to tax in the UK on the remittance basis should
note that an investment in the ‘reporting fund’ unit classes is likely to constitute a mixed fund for their purposes.
Further, there is no guarantee that the excess of reportable income over distributions paid in any given period
will always be nil. Investors are encouraged to seek their own professional tax advice in this regard.
An individual holder of Shares domiciled or deemed for United Kingdom tax purposes domiciled in the United
Kingdom may be liable to United Kingdom Inheritance Tax on their Shares in the event of death or on making
certain categories of lifetime transfer.
The attention of individual holders of Shares ordinarily resident in the United Kingdom is drawn to the provisions
of Chapter 2 of Part 13 of the Income Tax Act 2007. These provisions are aimed at preventing the avoidance of
income tax by individuals through transactions resulting in the transfer of assets or income to persons (including
companies) resident or domiciled outside the United Kingdom and may render them liable to income tax in
respect of undistributed income of the Company on an annual basis. The legislation is not directed towards the
taxation of capital gains.
101
Corporate holders of Shares resident in the UK for taxation purposes should note that the “controlled foreign
companies” legislation contained in Part 9A of TIOPA 2010 could apply to any UK resident company which is,
either alone or together with persons connected or associated with it for taxation purposes, deemed to be
interested in 25 per cent or more of any chargeable profits of a non-UK resident company, where that non-UK
resident company is controlled by residents of the UK and meets certain other criteria (broadly that it is resident
in a low tax jurisdiction). “Control” is defined in Chapter 18, Part 9A of TIOPA 2010. A non-UK resident company
is controlled by persons (whether companies, individuals or others) who are resident in the UK for taxation
purposes or is controlled by two persons taken together, one of whom is resident in the UK for tax purposes and
has at least 40 per cent of the interests, rights and powers by which those persons control the non-UK resident
company, and the other of whom has at least 40 per cent and not more than 55 per cent of such interests, rights
and powers. The effect of these provisions could be to render such holders of Shares liable to UK corporation tax
in respect of the income of the Company.
The attention of persons resident or ordinarily resident in the United Kingdom for taxation purposes (and who, if
individuals, are also domiciled in the United Kingdom for those purposes) is drawn to the fact that the provisions
of section 13 of the Taxation of Chargeable Gains Act 1992 could be material to any such person whose
proportionate interest in the Company (whether as a holder of Shares or otherwise as a “participator” for United
Kingdom taxation purposes) when aggregated with that of persons connected with that person is 10%, or
greater, if, at the same time, the Company is itself controlled in such matter that it would, were it to be resident
in the United Kingdom for taxation purposes, be a “close” company for those purposes. Section 13 could, if
applied, result in a person with such an interest in the Company being treated for the purposes of United
Kingdom taxation of chargeable gains as if a part of any capital gain accruing to the Company (such as on a
disposal of any of its Investments) had accrued to that person directly, that part being equal to the proportion of
the gain that corresponds to that person’s proportionate interest in the Company (determined as mentioned
above).
The attention of investors is drawn to anti-avoidance legislation in Chapter 1, Part 13 of the Income Tax Act
2007 and Part 15 of the Corporation Tax Act 2010 that could apply if investors are seeking to obtain tax
advantages in prescribed conditions.
Under the corporate debt tax regime in the United Kingdom any corporate investor subject to United Kingdom
corporation tax will be taxed on the increase in value of its holding on a fair value basis (rather than on disposal)
or will obtain tax relief on any equivalent decrease in value, if the Investments held by the offshore fund within
which the investor invests, consist of more than 60% (by value) of “qualifying investments”. Qualifying
investments are broadly those, which yield a return directly or indirectly in the form of interest.
Transfer taxes may be payable by the Company in the United Kingdom and elsewhere in relation to the
acquisition and/or disposal of Investments. In particular, stamp duty reserve tax at the rate of 0.5% (or, if the
transfer takes place in dematerialised form, stamp duty reserve tax at an equivalent rate) will be payable by the
Company in the United Kingdom on the acquisition of shares in companies incorporated in the United Kingdom or
which maintain a share register in the United Kingdom. This liability will arise in the course of the Company’s
normal investment activity and on the acquisition of Investments from subscribers on subscription for Shares.
The Shares in the Company can be held in Individual Savings Accounts or Self-invested Personal Pensions or
personalised portfolio bonds.
In the absence of an exemption applicable to a prospective holder of Shares (such as that available to
intermediaries under section 88A of the Finance Act 1986) stamp duty reserve tax (or stamp duty) at the same
rate as above will also be payable by prospective holders of Shares on the acquisition of shares in companies
incorporated in the United Kingdom or which maintain a share register in the United Kingdom for the purpose of
subsequent subscription for Shares, and may arise on the transfer of Investments to holders of Shares on
redemption.
Because the Company is not incorporated in the United Kingdom and the register of holders of Shares will be
kept outside the United Kingdom, no liability to stamp duty reserve tax will arise by reason of the transfer,
subscription for or redemption of Shares except as stated above. Liability to stamp duty will not arise provided
that any instrument in writing transferring Shares in the Company is executed and retained at all times outside
the United Kingdom.
It is the intention of the Company that assets held by the Funds will generally be held for investment purposes
and not for the purposes of trading. Even if Her Majesty’s Revenue & Customs (“HMRC”) successfully argued that
a Fund is trading for UK tax purposes, it is expected that the conditions of the Investment Management
Exemption (“IME”) should be met, although no guarantee is given in this respect. Assuming that the
requirements of the IME are satisfied, the Fund should not be subject to UK tax in respect of the profits / gains
earned on its investments (except in respect of income for which every investor is inherently subject to UK tax).
This is on the basis that the investments held by the Funds meet the definition of a “specified transaction” as
defined in The Investment Manager (Specified Transactions) Regulations 2009. It is expected that the assets
held by the Company should meet the definition of a “specified transaction”, although no guarantee is given in
this respect.
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If the Company failed to satisfy the conditions of the IME or if any investments held are not considered to be a
“specified transaction”, this may lead to tax leakage within the Funds.
In addition to the above, if HMRC successfully argue that a Fund is trading for UK tax purposes, the returns
earned by the Fund from its interest in the underlying assets may need to be included in the Fund’s calculation of
“income” for the purposes of computing the relevant amount to report to investors in order to meet the
requirements for UK Reporting Fund status. However, it is considered that the investments held by the Funds
should meet the definition of an “investment transaction” as defined by The Offshore Funds (Tax) Regulations
2009 (“the regulations”) which came into force on 1 December 2009. Therefore, it is considered that these
investments should be considered as “non-trading transactions” as outlined in the regulations. This assumption is
on the basis that the Company meets both the “equivalence condition” and the “genuine diversity of ownership”
condition as outlined in the regulations.
Investors who are insurance companies subject to United Kingdom taxation holding their Shares in a Fund for
the purposes of their long-term business (other than their pensions business) will be deemed to dispose of and
immediately reacquire those Shares at the end of each accounting period. In general terms, the chargeable gains
and allowable losses arising under the annual deemed disposal rules are aggregated and one-seventh of the net
amount thus emerging is chargeable (where there are net gains) or allowable (where there are net losses) at the
end of the accounting period in which the deemed disposals have taken place.
Other jurisdictions
The following sets out a summary of the tax status that Shares have obtained in various jurisdictions. Please
note that this summary does not set out the tax implications for investors resident in such jurisdictions and the
investors should refer to their tax advisors in relation to tax implications on investing in a Share Class.
German Taxation
It is the intention of the Company to seek German Tax Transparent status for all Share Classes.
Investors should refer to their tax advisors in relation to the implications of the Company obtaining such status.
Austrian Taxation
It is the intention of the Company to seek Austrian Reporting Fund status for all Share Classes.
Investors should refer to their tax advisors in relation to the implications of the Company obtaining such status.
Up to date listings of the various tax reporting statuses obtained by the Company are available on the “Tax
Information” section of the iShares website at www.ishares.com.
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SCHEDULE I
The Regulated Markets
With the exception of permitted investment in unlisted securities and off-exchange FDI, investment in securities
or FDI will be made only in securities or FDI which are listed or traded on stock exchanges and markets listed
below in this Prospectus or any Supplement thereto or revision thereof. The list is currently as follows:
Recognised Investment Exchanges
1.
Recognised investment exchanges in any Member State, Australia, Canada, Hong Kong, Iceland, Japan,
Norway, New Zealand, Switzerland or the United States.
2.
The following recognised investment exchanges:Argentina
Bahrain
Bangladesh
Brazil
Chile
China
Colombia
Egypt
India
Indonesia
Israel
Jordan
The Republic of Korea
Kenya
Kuwait
Malaysia
Mauritius
Mexico
Morocco
Nigeria
Oman
Pakistan
Peru
Philippines
Qatar
Russia
Saudi Arabia
Singapore
South Africa
Sri Lanka
Taiwan
Thailand
Turkey
UAE – Abu Dhabi
UAE - Dubai
Vietnam
Bolsa de Comercio de Buenos Aires
Mercado Abierto Electronico S.A.
Bahrain Bourse
Dhaka Stock Exchange
BM&F BOVESPA S.A.
Bolsa de Comercio de Santiago
Bolsa Electronica de Chile
Shanghai Stock Exchange
Shenzhen Stock Exchange
Bolsa de Valores de Colombia
Egyptian Stock Exchange
Bombay Stock Exchange, Ltd.
National Stock Exchange
Indonesian Stock Exchange
Tel Aviv Stock Exchange
Amman Stock Exchange
Korea Exchange (Stock Market)
Korea Exchange (KOSDAQ)
Nairobi Securities Exchange
Kuwait Stock Exchange
Bursa Malaysia Securities Berhad
Bursa Malaysia Derivatives Berhad
Stock Exchange of Mauritius
Bolsa Mexicana de Valores
Casablanca Stock Exchange
Nigeria Stock Exchange
Muscat Securities Market
Karachi Stock Exchange
Bolsa de Valores de Lima
Philippines Stock Exchange
Qatar Exchange
Open Joint Stock Company
Moscow Exchange MICEX-RTS
(Moscow Exchange)
Tadawul Stock Exchange
Singapore Exchange Limited
JSE Limited
Colombo Stock Exchange
Taiwan Stock Exchange
Stock Exchange of Thailand
Istanbul Stock Exchange
Abu Dhabi Securities Exchange
Dubai Financial Market
NASDAQ Dubai Limited
Ho Chi Minh Stock Exchange
Markets
3.
The following regulated markets including regulated markets on which FDI may be traded:(a)
the markets organised by the International Capital Market Association;
(b)
the market conducted by “listed money market institutions” as described in the Bank of England
publication “The Regulation of the Wholesale Cash and OTC Derivatives Markets (in Sterling,
foreign currency and bullion)”;
(c)
AIM – the Alternative Investment Market in the UK, regulated and operated by the LSE;
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(d)
NASDAQ in the United States;
(e)
the market in US government securities conducted by primary dealers regulated by the Federal
Reserve Bank of New York;
(f)
the over-the-counter market in the United States regulated by the Financial Industry Regulatory
Authority;
(g)
the over-the-counter market in the United States regulated by MarketAxess;
(h)
the over-the-counter market in the United States regulated by National Association Of Securities
Dealers (NASD);
(i)
the French market for “Titres de Creance Negotiable” (over-the-counter market in negotiable debt
instruments);
(j)
The Korea Exchange (Futures Market);
(k)
the over-the-counter market in Canadian Government Bonds, regulated by the Investment
Industry Regulatory Organisation of Canada;
(l)
the China Interbank Bond Market;
(m)
any approved derivative market within the European Economic Area on which FDI are traded;
(n)
EUROTLX (Multilateral Trading Facility);
(o)
HI_MTF (Multilateral Trading Facility);
(p)
NASDAQ OMX Europe (NEURO) (Multilateral Trading Facility);
(q)
EURO MTF for securities (Multilateral Trading Facility);
(r)
MTS Austria (Multilateral Trading Facility);
(s)
MTS Belgium (Multilateral Trading Facility);
(t)
MTS France (Multilateral Trading Facility);
(u)
MTS Ireland (Multilateral Trading Facility);
(v)
NYSE Bondmatch (Multilateral Trading Facility);
(w)
POWERNEXT (Multilateral Trading Facility);
(x)
Tradegate AG (Multilateral Trading Facility).
The above markets are listed in accordance with the requirements of the Central Bank, it being noted the Central
Bank does not issue a list of approved markets or stock exchanges.
105
SCHEDULE II
Investment Techniques and Instruments for Efficient Portfolio Management/Direct Investment
Purposes
A.
Investment in FDI
The following provisions apply whenever a Fund proposes to engage in transactions in FDI including, but not
limited to, futures, forwards, swaps, inflation swaps (which may be used to manage inflation risk), options,
swaptions and warrants, where the transactions are for the purposes of the efficient portfolio management of any
Fund or for direct investment purposes (and such intention is disclosed in the Fund’s investment policy). Where it
does intend to engage in transactions in relation to FDI, the Manager will employ a risk management process to
enable it to manage, monitor and measure, on a continuous basis, the various risks associated with FDI and their
contribution to the overall risk profile of a Fund’s portfolio. Only FDI which have been included in the risk
management process will be used. The Company will, on request, provide supplemental information to holders of
Shares relating to the risk management methods employed, including the quantitative limits that are applied and
any recent developments in the risk and yield characteristics of the main categories of investment.
The conditions and limits for the use of such techniques and instruments in relation to each Fund are as follows:
1.
Position exposure to the underlying assets of FDI, including embedded FDI in transferable securities or
money market instruments, when combined where relevant with positions resulting from direct
investments, may not exceed the investment limits set out in the Central Bank UCITS Regulations. (This
provision does not apply in the case of index based FDI provided the underlying index is one which meets
with the criteria set out in the Central Bank UCITS Regulations).
2.
A Fund may invest in FDI dealt OTC provided that the counterparties to OTC transactions are institutions
subject to prudential supervision and belonging to categories approved by the Central Bank.
3.
Investment in FDI is subject to the conditions and limits laid down by the Central Bank.
B.
Efficient Portfolio Management - other techniques and instruments
1.
In addition to the investments in FDI noted above in Section A of this Schedule II, the Company may
employ other techniques and instruments relating to transferable securities and money market
instruments for efficient portfolio management purposes subject to the conditions imposed by the Central
Bank such as repurchase/ reverse repurchase agreements, (“repo contracts”) and securities lending.
Techniques and instruments which relate to transferable securities and money market instruments and
which are used for the purpose of efficient portfolio management, including FDI which are not used for
direct investment purposes, shall be understood as a reference to techniques and instruments which fulfil
the following criteria:
(a) they are economically appropriate in that they are realised in a cost-effective way;
(b) they are entered into for one or more of the following specific aims:
(i)
reduction of risk;
(ii)
reduction of cost;
(iii)
generation of additional capital or income for a Fund with a level of risk which is consistent
with the risk profile of a Fund and the risk diversification rules set out in the Central Bank
UCITS Regulations;
(c)
their risks are adequately captured by the risk management process of a Fund; and
(d)
they cannot result in a change to a Fund’s declared investment objectives or add substantial
supplementary risks in comparison to the general risk policy as described in the sales documents.
Techniques and instruments (other than FDI) may be used for efficient portfolio management purposes
subject to the conditions set out below.
2.
The following applies to repo contracts and securities lending arrangements, in particular, and reflects the
requirements of the Central Bank:
(a)
Repo contracts and securities lending may only be effected in accordance with normal market
practice.
(b)
The Company must have the right to terminate any securities lending arrangement which it has
entered into at any time or demand the return of any or all of the securities loaned.
(c)
Repo contracts or securities lending do not constitute borrowing or lending for the purposes of
106
Regulation 103 and Regulation 111 respectively.
C.
(d)
Where the Company enters into repurchase agreements, it must be able at any time to recall any
securities subject to the repurchase agreement or to terminate the repurchase agreement into
which it has entered. Fixed-term repurchase agreements that do not exceed seven days should be
considered as arrangements on terms that allow the assets to be recalled at any time by the
Company.
(e)
Where the Company enters into reverse repurchase agreements, it must be able at any time to
recall the full amount of cash or to terminate the reverse repurchase agreement on either an
accrued basis or a mark-to-market basis. When the cash is recallable at any time on a mark-tomarket basis, the mark-to-market value of the reverse repurchase agreement should be used for
the calculation of a Fund’s Net Asset Value. Fixed-term reverse repurchase agreements that do not
exceed seven days should be considered as arrangements on terms that allow the assets to be
recalled at any time by the Company.
(f)
The Manager conducts credit assessments of counterparties to a repurchase/reverse repurchase
agreement or securities lending arrangement. Where a counterparty is subject to a credit rating by
an agency registered and supervised by ESMA that rating shall be taken into account in the credit
assessment process and where the counterparty is downgraded by the credit rating agency to A-2
or below (or comparable rating), a new credit assessment of the counterparty is conducted by the
Manager without delay.
Risks and potential conflicts of interest involved in efficient portfolio management techniques.
There are certain risks involved in efficient portfolio management activities and the management of collateral in
relation to such activities (see further below). Please refer to the section of this Prospectus entitled “Conflicts of
Interest” and “Risk Factors” and, in particular but without limitation, the risk factors relating to FDI risks,
counterparty risk and counterparty risk to the Depositary and other depositaries. These risks may expose
investors to an increased risk of loss.
D.
Management of collateral for OTC financial derivative transactions and efficient portfolio
management techniques
For the purposes of this section, “Relevant Institutions” refers to those institutions which are credit institutions
authorised in the EEA or credit institutions authorised within a signatory state (other than an EEA Member State)
to the Basle Capital Convergence Agreement of July 1988 or credit institutions authorised in Jersey, Guernsey,
the Isle of Man, Australia or New Zealand.
(a)
Collateral obtained in respect of OTC financial derivative transactions and efficient portfolio management
techniques (“Collateral”), such as repo contracts or securities lending arrangements, must comply with
the following criteria:
(i)
liquidity: Collateral (other than cash) should be highly liquid and traded on a Regulated Market or
multi-lateral trading facility with transparent pricing in order that it can be sold quickly at a price
that is close to its pre-sale valuation. Collateral should also comply with the provisions of
Regulation 74 of the Regulations;
(ii)
valuation: Collateral should be valued on at least a daily basis and assets that exhibit high price
volatility should not be accepted as collateral unless suitably conservative haircuts are in place;
(iii)
issuer credit quality: Collateral should be of high quality. The Manager shall ensure that:
A.
where the issuer was subject to a credit rating by an agency registered and
supervised by ESMA that rating shall be taken into account by the Manager in the
credit assessment process; and
B.
where an issuer is downgraded below the two highest short-term credit ratings by
the credit rating agency referred to in (A) this shall result in a new credit assessment
being conducted of the issuer by the Manager without delay;
(iv)
correlation: Collateral should be issued by an entity that is independent from the counterparty.
There should be a reasonable ground for the Manager to expect that such Collateral would not
display a high correlation with the performance of the counterparty;
(v)
diversification: Collateral should be sufficiently diversified in terms of country, markets and issuers
with a maximum exposure to a given issuer of 20% of a Fund’s Net Asset Value. When a Fund is
exposed to different counterparties the different baskets of collateral should be aggregated to
calculate the 20% limit of exposure to a single issuer. A Fund may be fully collateralised in
different transferable securities and money market instruments issued or guaranteed by a Member
State, its local authorities, as well as non-Member States and public international bodies set out in
Schedule III, paragraph 2.12. Such a Fund should receive securities from at least six different
107
issues, but securities from any single issue should not account for more than 30% of the Fund’s
Net Asset Value; and
(vi)
(b)
(c)
immediately available: Collateral should be capable of being fully enforced by the Company at any
time without reference to or approval from the counterparty.
Subject to the above criteria, Collateral must be in the form of one of the following:
(i)
cash;
(ii)
government or other public securities;
(iii)
certificates of deposit issued by Relevant Institutions;
(iv)
bonds/commercial paper issued by Relevant Institutions or by non-bank issuers where the issue or
the issuer are rated A1 or equivalent;
(v)
letters of credit with a residual maturity of three months or less, which are unconditional and
irrevocable and which are issued by Relevant Institutions; and
(vi)
equity securities traded on a stock exchange in the EEA, Switzerland, Canada, Japan, the United
States, Jersey, Guernsey, the Isle of Man, Australia, New Zealand, Taiwan, Singapore and Hong
Kong.
Until the expiry of the repo contract or securities lending arrangement, collateral obtained under such
contracts or arrangements:
(i)
must be marked to market daily; and
(ii)
is intended to equal or exceed the value of the amount invested or securities loaned plus a
premium.
(d)
Collateral must be held by the Depositary, or its agent (where there is title transfer). This is not
applicable in the event that there is no title transfer in which case the Collateral can be held by a third
party custodian which is subject to prudential supervision, and which is unrelated to the provider of the
Collateral.
(e)
Non-cash Collateral:
Non- cash Collateral cannot be sold, re-invested or pledged.
(f)
Cash Collateral:
Cash as Collateral may only be:
(i)
placed on deposit with Relevant Institutions;
(ii)
invested in high quality government bonds;
(iii)
used for the purpose of reverse repurchase agreements provided the transactions are with credit
institutions subject to prudential supervision and the Company can recall at any time the full
amount of the cash on an accrued basis; and
(iv)
invested in short term money market funds.
Re-invested Cash collateral should be diversified in accordance with the diversification requirements
applicable to non-cash Collateral.
(g)
The Company has implemented a haircut policy in respect of each class of assets received as Collateral. A
haircut is a discount applied to the value of a Collateral asset to account for the fact that its valuation, or
liquidity profile, may deteriorate over time. The haircut policy takes account of the characteristics of the
relevant asset class, including the credit standing of the issuer of the Collateral, the price volatility of the
Collateral and the results of any stress tests which may be performed in accordance with the collateral
management policy. Subject to the framework of agreements in place with the relevant counterparty,
which may or may not include minimum transfer amounts, it is the intention of the Company that any
Collateral received shall have a value, adjusted in light of the haircut policy, which equals or exceeds the
relevant counterparty exposure where appropriate.
(h)
The risk exposures to a counterparty arising from OTC financial derivative transactions and efficient
portfolio management techniques should be combined when calculating the counterparty risk limits set
out in Schedule III, paragraph 2.8.
108
SCHEDULE III
Investment Restrictions
Investment of the assets of the relevant Fund must comply with the Regulations. The Regulations provide:
1
Permitted Investments
Investments of a Fund are confined to:
1.1
Transferable securities and money market instruments, as prescribed in the Central Bank UCITS
Regulations, which are either admitted to official listing on a stock exchange in a Member State or nonMember State or which are dealt on a market which is regulated, operates regularly, is recognised and
open to the public in a Member State or non-Member State.
1.2
Recently issued transferable securities which will be admitted to official listing on a stock exchange or
other market (as described above) within a year.
1.3
Money market instruments other than those dealt on a regulated market.
1.4
Units of UCITS.
1.5
Units of non-UCITS as set out in the Central Bank’s guidance entitled “UCITS Acceptable Investment in
other Investment Funds”.
1.6
Deposits with credit institutions as prescribed in the Central Bank UCITS Regulations.
1.7
FDI as prescribed in the Central Bank UCITS Regulations.
2
2.1
Investment Restrictions
Each Fund may invest no more than 10% of its Net Asset Value in transferable securities and money
market instruments other than those referred to in paragraph 1.
2.2
Each Fund may invest no more than 10% of its Net Asset Value in recently issued transferable
securities which will be admitted to official listing on a stock exchange or other market (as described in
paragraph 1.1) within a year. This restriction will not apply in relation to investment by a Fund in
certain US securities known as Rule 144A securities provided that:
-
the securities are issued with an undertaking to register with the US Securities and Exchanges
Commission within one year of issue; and
the securities are not illiquid securities i.e. they may be realised by the Fund within seven days at
the price, or approximately at the price, at which they are valued by the Fund.
2.3
Subject to paragraph 2.4, each Fund may invest no more than 10% of its Net Asset Value in
transferable securities or money market instruments issued by the same body provided that the total
value of transferable securities and money market instruments held in the issuing bodies in each of
which it invests more than 5% is less than 40%.
2.4
The limit of 10% (in 2.3) is raised to 25% in the case of bonds that are issued by a credit institution
which has its registered office in a Member State and is subject by law to special public supervision
designed to protect bond-holders. If a Fund invests more than 5% of its Net Asset Value in these bonds
issued by one issuer, the total value of these investments may not exceed 80% of the Net Asset Value
of the Fund.
2.5
The limit of 10% (in 2.3) is raised to 35% if the transferable securities or money market instruments
are issued or guaranteed by a Member State or its local authorities or by a non-Member State or public
international body of which one or more Member States are members.
2.6
The transferable securities and money market instruments referred to in 2.4 and 2.5 shall not be taken
into account for the purpose of applying the limit of 40% referred to in 2.3.
2.7
Each Fund may not invest more than 20% of its Net Asset Value in deposits made with the same credit
institution.
Deposits with any one credit institution, other than
•
•
a credit institution authorised in the EEA (a Member State, Norway, Iceland, Liechtenstein);
a credit institution authorised within a signatory state (other than an EEA member state) to the
Basle Capital Convergence Agreement of July 1988 (Switzerland, Canada, Japan, United States);
109
•
or
a credit institution authorised in Jersey, Guernsey, the Isle of Man, Australia or New Zealand;
held as ancillary liquidity, must not exceed 10% of its Net Asset Value.
This limit may be raised to 20% in the case of deposits made with the trustee/custodian.
2.8
The risk exposure of a Fund to a counterparty to an OTC FDI may not exceed 5% of its Net Asset Value.
This limit is raised to 10% in the case of a credit institution authorised in the EEA; a credit institution
authorised within a signatory state (other than an EEA member state) to the Basle Capital Convergence
Agreement of July 1988; or a credit institution authorised in Jersey, Guernsey, the Isle of Man,
Australia or New Zealand
2.9
Notwithstanding paragraphs 2.3, 2.7 and 2.8 above, a combination of two or more of the following
issued by, or made or undertaken with, the same body may not exceed 20% of a Fund’s Net Asset
Value:
investments in transferable securities or money market instruments;
deposits, and/or
counterparty risk exposures arising from OTC FDI transactions.
2.10
The limits referred to in 2.3, 2.4, 2.5, 2.7, 2.8 and 2.9 above may not be combined, so that exposure
to a single body shall not exceed 35% of a Fund’s Net Asset Value.
2.11
Group companies are regarded as a single issuer for the purposes of 2.3, 2.4, 2.5, 2.7, 2.8 and 2.9.
However, a limit of 20% of a Fund’s Net Asset Value may be applied to investment in transferable
securities and money market instruments within the same group.
2.12
Each Fund may invest up to 100% of its Net Asset Value in different transferable securities and money
market instruments issued or guaranteed by any Member State, its local authorities, non-Member
States or public international body of which one or more Member States are members.
The individual issuers must be drawn from the following list: OECD Governments (provided the relevant
issues are investment grade), Government of Brazil (provided the issues are of investment grade),
Government of the People’s Republic of China, Government of India (provided the issues are of
investment grade), Government of Singapore, European Investment Bank, European Bank for
Reconstruction and Development, International Finance Corporation, International Monetary Fund,
Euratom, The Asian Development Bank, European Central Bank, Council of Europe, Eurofima, African
Development Bank, International Bank for Reconstruction and Development (The World Bank), The
Inter American Development Bank, European Union, Federal National Mortgage Association (Fannie
Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Government National Mortgage
Association (Ginnie Mae), Student Loan Marketing Association (Sallie Mae), Federal Home Loan Bank,
Federal Farm Credit Bank , Tennessee Valley Authority and Straight-A Funding LLC.
Each Fund must hold securities from at least 6 different issues, with securities from any one issue not
exceeding 30% of net assets.
3
Investment in Collective Investment Schemes (“CIS”)
3.1
Subject to section 3.2, investments made by a Fund in units of other CIS may not exceed, in aggregate,
10% of the assets of the Fund.
3.2
Notwithstanding the provisions of section 3.1, where the investment policy of a Fund states in the
Prospectus or a Supplement that it may invest more than 10% of its assets in other UCITS or collective
investment schemes, the following restrictions shall apply instead of the restrictions set out at section
3.1 above:
(a)
(b)
Each Fund may not invest more than 20% of its Net Asset Value in any one CIS.
Investments in non-UCITS CIS may not, in aggregate, exceed 30% of its Net Asset Value.
3.3
The CIS are prohibited from investing more than 10% of net assets in other CIS.
3.4
When a Fund invests in the units of other CIS that are managed, directly or by delegation, by the
Manager or by any other company with which the Manager is linked by common management or
control, or by a substantial direct or indirect holding, that management company or other company may
not charge subscription, switching or redemption fees on account of the Fund’s investment in the units
of such other CIS.
110
3.5
Where a commission (including a rebated commission) is received by the Fund’s manager/investment
adviser by virtue of an investment in the units of another CIS, this commission must be paid into the
property of the Fund.
3.6
Where the investment policy of a Fund states that it may invest in other Funds of the Company, the
following restrictions will apply:
•
a Fund will not invest in another Fund of the Company which itself holds Shares in other Funds
within the Company;
•
a Fund which invests in another Fund of the Company will not be subject to subscription, switching
or redemption fees; and
•
the Manager will not charge a management fee to a Fund in respect of that portion of the Fund’s
assets invested in another Fund of the Company (this provision also applies to the annual fee
charged by the Investment Manager where this fee is paid directly out of the assets of the
Company).
4
Index Tracking UCITS
4.1
A Fund may invest up to 20% of its Net Asset Value in shares and/or debt securities issued by the same
body where the investment policy of the Fund is to replicate an index which satisfies the criteria set out
in the Central Bank UCITS Regulations and is recognised by the Central Bank
4.2
The limit in 4.1 may be raised to 35%, and applied to a single issuer, where this is justified by
exceptional market conditions, for example, market dominance. Market dominance exists where a
particular constituent of a Benchmark Index has a dominant position in the particular market sector in
which it operates and as such accounts for a large proportion of a Benchmark Index.
5
General Provisions
5.1
An investment company, or management company acting in connection with all of the CIS it manages,
may not acquire any shares carrying voting rights which would enable it to exercise significant influence
over the management of an issuing body.
5.2
A UCITS
(i)
(ii)
(iii)
(iv)
may acquire no more than:
10% of the non-voting shares of any single issuing body;
10% of the debt securities of any single issuing body;
25% of the units of any single CIS;
10% of the money market instruments of any single issuing body.
NOTE: The limits laid down in (ii), (iii) and (iv) above may be disregarded at the time of acquisition if at
that time the gross amount of the debt securities or of the money market instruments, or the net
amount of the securities in issue cannot be calculated.
5.3
5.1 and 5.2 shall not be applicable to:
(i) transferable securities and money market instruments issued or guaranteed by a Member State or
its local authorities;
(ii) transferable securities and money market instruments issued or guaranteed by a non-Member
State;
(iii) transferable securities and money market instruments issued by public international bodies of which
one or more Member States are members;
(iv) shares held by a Fund in the capital of a company incorporated in a non-Member State which
invests its assets mainly in the securities of issuing bodies having their registered offices in that State,
where under the legislation of that State such a holding represents the only way in which the Fund can
invest in the securities of issuing bodies of that State. This waiver is applicable only if in its investment
policies the company from the non-Member State complies with the limits laid down in 2.3 to 2.11, 3.1,
3.2, 5.1, 5.2, 5.4, 5.5 and 5.6, and provided that where these limits are exceeded, paragraphs 5.5 and
5.6 below are observed.
(v) shares held by an investment company or investment companies in the capital of subsidiary
companies carrying on only the business of management, advice or marketing in the country where the
subsidiary is located, in regard to the repurchase of units at unit-holders’ request exclusively on their
behalf.
5.4
A Fund need not comply with the investment restrictions herein when exercising subscription rights
attaching to transferable securities or money market instruments which form part of their assets.
5.5
The Central Bank may allow recently authorised Funds to derogate from the provisions of 2.3 to 2.11,
111
3.1, 3.2, 4.1 and 4.2 for six months following the date of their authorisation, provided they observe the
principle of risk spreading.
5.6
If the limits laid down herein are exceeded for reasons beyond the control of a Fund, or as a result of
the exercise of subscription rights, the Fund must adopt as a priority objective for its sales transactions
the remedying of that situation, taking due account of the interests of its holders of Shares.
5.7
A Fund
-
-
may not carry out uncovered sales of:
transferable securities;
money market instruments•;
units of CIS; or
FDI.
5.8
A Fund may hold ancillary liquid assets.
6
FDI
6.1
Any Fund’s global exposure (as prescribed in the Central Bank UCITS Regulations) relating to FDI must
not exceed its total Net Asset Value.
6.2
Position exposure to the underlying assets of FDI, including embedded FDI in transferable securities or
money market instruments, when combined where relevant with positions resulting from direct
investments, may not exceed the investment limits set out in the Central Bank UCITS Regulations.
(This provision does not apply in the case of index based FDI provided the underlying index is one
which meets with the criteria set out in the Central Bank UCITS Regulations.)
6.3
Any Fund may invest in FDI dealt OTC provided that
- The counterparties to OTC transactions are institutions subject to prudential supervision and
belonging to categories approved by the Central Bank.
6.4
Investment in FDI are subject to the conditions and limits laid down by the Central Bank.
Borrowing Restrictions
The Regulations provide that the Company in respect of each Fund:
(a)
may not borrow, other than borrowings which in the aggregate do not exceed 10% of the Net Asset Value
of the Fund and provided that this borrowing is on a temporary basis. The Depositary may give a charge
on the assets of the Fund in order to secure borrowings. Credit balances (e.g. cash) may not be offset
against borrowings when determining the percentage of borrowings outstanding;
(b)
may acquire foreign currency by means of a back-to-back loan. Foreign currency obtained in this manner
is not classed as borrowings for the purpose of the borrowing restriction in paragraph (a), provided that
the offsetting deposit: (i) is denominated in the Base Currency of the Fund and (ii) equals or exceeds the
value of the foreign currency loan outstanding. However, where foreign currency borrowings exceed the
value of the back-to-back deposit, any excess is regarded as borrowing for the purposes of paragraph (a)
above.
•
Any short selling of money market instruments by UCITS is prohibited.
112
SCHEDULE IV
Disclaimer for Benchmark Indices
The past performance of a Benchmark Index is not a guide to future performance. The Investment Manager,
the Manager, Affiliates and the Company do not guarantee the accuracy or the completeness of the Benchmark
Indices or any data included therein and the Investment Manager, the Manager, Affiliates and the Company
shall have no liability for any errors, omissions or interruptions therein. The Investment Manager, the Manager,
Affiliates and the Company make no warranty, express or implied, to the owners of shares of the Funds or to
any other person or entity, as to results to be obtained by the Funds from the use of the Benchmark Indices or
any data included therein. Without limiting any of the foregoing, in no event shall the Investment Manager, the
Manager, Affiliates and the Company have any liability for any special, punitive, direct, indirect or consequential
damages (including lost profits) arising from inaccuracies, omissions or other errors in or as a result of the
Benchmark Index, even if notified of the possibility of such damages. The Investment Manager, the Manager,
Affiliates and the Company are not responsible for screening the constituents of the Benchmark Index or
verifying the ratings assigned to each issuer in accordance with the relevant rating methodology.
Disclaimer for Reference to Index Provider Website
In accordance with Central Bank requirements, the Company and the Funds are required to provide details of the
relevant index provider’s website (“Website”) to enable investors to obtain further details of the relevant Fund’s
Benchmark Index (including the index constituents). The Company and the Funds have no responsibility for
each Website and are not involved in any way in sponsoring, endorsing or otherwise involved in the
establishment or maintenance of each Website or the contents thereof.
iNAV disclaimer
In order to ensure the highest quality of each of its products, Deutsche Börse Group exercises the greatest care
when calculating indicative net asset values (iNAV®) on the basis of the rules set out on its website.
However, Deutsche Börse Group cannot guarantee that the various iNAV®, as set out on its website, are always
calculated free of errors. Deutsche Börse Group accepts no liability for any direct or indirect losses arising from
any incorrect calculation of such iNAV®.
Decisions concerning the way of its iNAV® calculation are always taken by Deutsche Börse Group to the best of
its knowledge and belief. Deutsche Börse Group shall not be liable for any losses arising from such decisions.
The iNAV® of Deutsche Börse Group do not represent a recommendation for investment of whatever nature. In
particular, the compilation and calculation of the various iNAV® shall not be construed as a recommendation of
Deutsche Börse Group to buy or sell individual securities, ETFs underlying these iNAV® or the basket of
securities underlying a given iNAV®.
Reuters
The Company and the Funds have no responsibility for the Reuters website or the dissemination of the various
iNAV on such website and are not involved in any way in sponsoring, endorsing or otherwise involved in the
establishment or maintenance of such website or the contents thereof.
Benchmark Index disclaimers
ICE U.S. Treasury 1-3 Year Bond Index, ICE U.S. Treasury 3-7 Year Bond Index, and ICE U.S. Treasury 7-10
Year Bond Index are service marks of Interactive Data Pricing and Reference Data, LLC or its affiliates
(“Interactive Data”) and have been licensed for use by BlackRock, Inc. in connection with iShares $ Treasury
Bond 1-3yr UCITS ETF USD (Acc) B, iShares $ Treasury Bond 3-7yr UCITS ETF, and iShares $ Treasury Bond 710yr UCITS ETF USD (Acc) respectively (together the “Funds”). Neither BlackRock, Inc. nor the Funds are
sponsored, endorsed, sold or promoted by Interactive Data. Interactive Data makes no representations or
warranties regarding BlackRock, Inc. or the Funds or the ability of the Funds to track the applicable Index.
INTERACTIVE DATA MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE ICE U.S.
TREASURY 1-3 YEAR BOND INDEX, ICE U.S. TREASURY 3-7 YEAR BOND INDEX, AND ICE U.S. TREASURY 7-10
YEAR BOND INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL INTERACTIVE DATA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Neither Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”)
(collectively, “Bloomberg”) nor Barclays Bank PLC, Barclays Capital Inc., or any affiliate (collectively “Barclays”)
is the issuer or producer of iShares € Govt Bond 1-3yr UCITS ETF EUR (Acc), iShares € Govt Bond 3-7yr UCITS
ETF and iShares € Govt Bond 7-10yr UCITS ETF EUR (Acc) (the "Funds") and neither Bloomberg nor Barclays has
any responsibilities, obligations or duties to investors in the Funds. Bloomberg and Barclays only relationship
113
with the issuer in respect of Bloomberg Barclays Euro Government Bond 1-3 Year Term Index, the Bloomberg
Barclays Euro Government Bond 3-7 Year Term Index and the Bloomberg Barclays Euro Government Bond 10
Year Term Index (the "Indices") is the licensing of the Indices, which is determined, composed and calculated by
BISL, or any successor thereto, without regard to the Issuer or the Funds or the owners of the Funds.
Additionally, BlackRock may for itself execute transaction(s) with Barclays in or relating to the Indices in
connection with the Funds. The Funds are not sponsored, endorsed, sold or promoted by Bloomberg or Barclays.
Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the
advisability of investing in the Funds or the advisability of investing in securities generally or the ability of the
Indices to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on
the legality or suitability of the Funds with respect to any person or entity. Neither Bloomberg nor Barclays is
responsible for and has not participated in the determination of the timing of, prices at, or quantities of the
Funds to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the issuer or the
owners of the Funds or any other third party into consideration in determining, composing or calculating the
Indices. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration,
marketing or trading of the Funds.
NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
USE WITH RESPECT TO THE INDICES OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS
SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED
PUBLICATION WITH RESPECT TO ANY OF THE INDICES. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE
FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE
USE OF THE INDICES OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE FUNDS.
ISHARES CORE MSCI PACIFIC EX-JAPAN UCITS ETF, ISHARES MSCI BRAZIL UCITS ETF USD (ACC), ISHARES
MSCI CANADA UCITS ETF, ISHARES MSCI EM ASIA UCITS ETF, ISHARES MSCI EMU CHF HEDGED UCITS ETF
(ACC), ISHARES MSCI EMU SMALL CAP UCITS ETF, ISHARES MSCI EMU UCITS ETF, ISHARES MSCI EMU USD
HEDGED UCITS ETF (ACC), ISHARES MSCI JAPAN UCITS ETF USD (ACC), ISHARES MSCI KOREA UCITS ETF USD
(ACC), ISHARES MSCI MEXICO CAPPED UCITS ETF, ISHARES MSCI RUSSIA ADR/GDR UCITS ETF, ISHARES
MSCI UK LARGE CAP UCITS ETF, ISHARES MSCI UK SMALL CAP UCITS ETF, ISHARES MSCI UK UCITS ETF,
ISHARES MSCI USA SMALL CAP UCITS ETF AND ISHARES MSCI USA UCITS ETF (THE “FUNDS”) ARE NOT
SPONSORED, ENDORSED, SOLD OR PROMOTED BY MORGAN STANLEY CAPITAL INTERNATIONAL INC. ("MSCI"),
ANY OF ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED IN, OR
RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI INDEX (COLLECTIVELY, THE "MSCI PARTIES").
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE
MARK(S) OF MSCI OR ITS AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY
BLACKROCK ADVISORS (UK) LIMITED AND ITS AFFILIATES. NONE OF THE MSCI PARTIES MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE ISSUER OR SHAREHOLDERS OF THE FUNDS
OR ANY OTHER PERSON OR ENTITY REGARDING THE ADVISABILITY OF INVESTING IN FUNDS GENERALLY OR IN
THE FUNDS PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK MARKET
PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN TRADEMARKS, SERVICE MARKS
AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE DETERMINED, COMPOSED AND CALCULATED BY
MSCI WITHOUT REGARD TO THE FUNDS OR THE ISSUER OR SHAREHOLDERS OF THE FUNDS OR ANY OTHER
PERSON OR ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO TAKE THE NEEDS OF THE ISSUER
OR SHAREHOLDERS OF THE FUNDS OR ANY OTHER PERSON OR ENTITY INTO CONSIDERATION IN
DETERMINING, COMPOSING OR CALCULATING THE MSCI INDEXES. NONE OF THE MSCI PARTIES IS
RESPONSIBLE FOR OR HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR
QUANTITIES OF THE FUNDS TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION
BY OR THE CONSIDERATION INTO WHICH THE FUNDS IS REDEEMABLE. FURTHER, NONE OF THE MSCI PARTIES
HAS ANY OBLIGATION OR LIABILITY TO THE ISSUER OR SHAREHOLDERS OF THE FUNDS OR ANY OTHER
PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR OFFERING OF THE FUNDS.
ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE
MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR
GUARANTEES THE ORIGINALITY, ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA
INCLUDED THEREIN. NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE ISSUER OF THE FUNDS, SHAREHOLDERS OF THE FUNDS, OR ANY OTHER
PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE
MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS OF OR IN
CONNECTION WITH ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. FURTHER, NONE OF THE MSCI
PARTIES MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND, AND THE MSCI PARTIES HEREBY
EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
WITH RESPECT TO EACH MSCI INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT,
SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED
OF THE POSSIBILITY OF SUCH DAMAGES.
No purchaser, seller, owner or holder of this security, account, product or fund, or any other person or entity,
should use or refer to any MSCI trade name, trademark or service mark to sponsor, endorse, market or promote
this security, account, product or fund without first contacting MSCI to determine whether MSCI's permission is
114
required. Under no circumstances may any person or entity claim any affiliation with MSCI without the prior
written permission of MSCI.
THE DIRECTORS OF THE COMPANY, THE MANAGER AND THE INVESTMENT MANAGER TOGETHER THE
“RESPONSIBLE PARTIES” DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY
DESCRIPTION RELATING TO THE REFERENCE INDEX OR ANY DATA INCLUDED THEREIN AND THE RESPONSIBLE
PARTIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS HEREIN. THE
APPROVED RESPONSIBLE PARTIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE FUNDS, ANY
SHAREHOLDER IN THE FUNDS, OR TO ANY OTHER PERSON OR ENTITY IN RESPECT OF THE INDEX DESCRIBED
HEREIN.
THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
REFERENCE INDEX OR STRATEGY OR ANY DATA INCLUDED HEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES OR FOR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
iShares FTSE MIB UCITS ETF EUR (Acc) is not in any way sponsored, endorsed, sold or promoted by FTSE
International Limited ("FTSE"), the London Stock Exchange Plc (the "Exchange"), The Financial Times Limited
("FT") or Borsa Italiana SpA (“Borsa Italiana”) (collectively the “Licensor Parties”) and none of the Licensor
Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be
obtained from the use of the FTSE MIB Index (the “Index") and/or the figure at which the said Index stands at
any particular time on any particular day or otherwise. The Index is calculated by FTSE with the assistance of
Borsa Italiana. None of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for
any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any
error therein.
“FTSE®” is a trademark of the Exchange and the FT, “MIB®” is a trademark of Borsa Italiana and both are used
by FTSE under licence.
iShares FTSE 100 UCITS ETF is not in any way sponsored, endorsed, sold or promoted by FTSE or by the
Exchange or by the FT (together the “Licensor Parties”) and none of the Licensor Parties make any warranty or
representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the
FTSE 100 (the “Index") and/or the figure at which the said Index stands at any particular time on any particular
day or otherwise. The Index is compiled and calculated by FTSE. None of the Licensor Parties shall be liable
(whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties
shall be under any obligation to advise any person of any error therein.
“FTSE®”, "FT-SE®”, “Footsie®” , “FTSE4Good®” and “techMARK®” are trademarks of the Exchange and the FT
and are used by FTSE under licence. “All-World®”, “All- Share®” and “All-Small®” are trademarks of FTSE.
THE DIRECTORS OF THE COMPANY, THE MANAGER AND THE INVESTMENT MANAGER TOGETHER THE
“RESPONSIBLE PARTIES” DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY
DESCRIPTION RELATING TO THE INDICES OR ANY DATA INCLUDED THEREIN AND THE RESPONSIBLE PARTIES
SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS HEREIN. THE APPROVED
RESPONSIBLE PARTIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE FUNDS, ANY SHAREHOLDER
IN THE FUNDS, OR TO ANY OTHER PERSON OR ENTITY IN RESPECT OF THE INDICES DESCRIBED HEREIN.
THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
INDICES OR STRATEGY OR ANY DATA INCLUDED HEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES OR FOR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
The Dow Jones Industrial Average is a product of Dow Jones Indexes, a licensed trademark of CME Group Index
Services LLC ("CME"), and has been licensed for use. "Dow Jones", "Dow Jones Industrial Average", "DJIA" and
"Dow Jones Indexes" are service marks of Dow Jones Trademark Holdings, LLC ("Dow Jones") and have been
licensed to CME and have been sublicensed for use for certain purposes by the Manager. Dow Jones, CME and
their respective affiliates have no relationship to the Manager, other than the licensing of the Dow Jones
Industrial Average (DJIA) and their respective service marks for use in connection with iShares Dow Jones
Industrial Average UCITS ETF (the “Fund”).
Dow Jones, CME and their respective affiliates do not:
•
•
•
•
•
Sponsor, endorse, sell or promote the Fund.
Recommend that any person invest in the Fund.
Have any responsibility or liability for or make any decisions about the timing, amount or pricing of the Fund.
Have any responsibility or liability for the administration, management or marketing of the Fund.
Consider the needs of the Fund or the owners of the Fund in determining, composing or calculating the DJIA
or have any obligation to do so.
115
•
Notwithstanding the foregoing, CME Group Inc. and its affiliates may independently issue and/or sponsor
financial products unrelated to the Fund currently being issued by Company, but which may be similar to
and competitive with the Fund. In addition, CME Group Inc. and its affiliates actively trade financial
products which are linked to the performance of the DJIA. It is possible that this trading activity will affect
the value of the DJIA and the Fund.
Dow Jones, CME and their respective affiliates will not have any liability in connection with the Fund. Specifically,
•
•
•
•
•
•
Dow Jones, CME and their respective affiliates do not make any warranty, express or implied, and Dow
Jones, CME and their respective affiliates disclaim any warranty about:
The results to be obtained by the Fund, the owner of the Fund or any other person in connection with the
use of the DJIA and the data included in the DJIA;
The accuracy or completeness of the DJIA or its data;
The merchantability and the fitness for a particular purpose or use of the DJIA or its data;
Dow Jones, CME and/or their respective affiliates will have no liability for any errors, omissions or
interruptions in the DJIA or its data;
Under no circumstances will Dow Jones, CME and/or their respective affiliates be liable for any lost
profits or indirect, punitive, special or consequential damages or losses, even if they know that they
might occur.
The licensing relating to the use of the indexes and trademarks referred to above by Manager is solely for the
benefit of the Manager, and not for any other third parties.
THE DIRECTORS OF THE COMPANY, THE MANAGER AND THE INVESTMENT MANAGER TOGETHER THE
“RESPONSIBLE PARTIES” DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY
DESCRIPTION RELATING TO THE REFERENCE INDEX OR ANY DATA INCLUDED THEREIN AND THE RESPONSIBLE
PARTIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS HEREIN. THE
APPROVED RESPONSIBLE PARTIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE FUND, ANY
SHAREHOLDER IN THE FUND, OR TO ANY OTHER PERSON OR ENTITY IN RESPECT OF THE INDEX DESCRIBED
HEREIN.
THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
REFERENCE INDEX OR STRATEGY OR ANY DATA INCLUDED HEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES OR FOR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
iShares NASDAQ 100 UCITS ETF (the “Product”) is not sponsored, endorsed, sold or promoted by The NASDAQ
OMX Group, Inc. or its affiliates (NASDAQ OMX, with its affiliates, are referred to as the “Corporations”). The
Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and
disclosures relating to, the Product(s). The Corporations make no representation or warranty, express or implied
to the owners of the Product(s) or any member of the public regarding the advisability of investing in securities
generally or in the Product(s) particularly, or the ability of the Nasdaq-100 Index® to track general stock market
performance. The Corporations' only relationship to the Manager (“Licensee”) is in the licensing of the Nasdaq®,
OMX®, Nasdaq-100®, and Nasdaq-100 Index® registered trademarks, and certain trade names of the
Corporations and the use of the Nasdaq-100 Index® which is determined, composed and calculated by NASDAQ
OMX without regard to Licensee or the Product(s). NASDAQ OMX has no obligation to take the needs of the
Licensee or the owners of the Product(s) into consideration in determining, composing or calculating the Nasdaq100 Index®. The Corporations are not responsible for and have not participated in the determination of the
timing of, prices at, or quantities of the Product(s) to be issued or in the determination or calculation of the
equation by which the Product(s) is to be converted into cash. The Corporations have no liability in connection
with the administration, marketing or trading of the Product(s).
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE
NASDAQ-100 INDEX® OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT(S), OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX® OR ANY DATA INCLUDED THEREIN. THE
CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100
INDEX® OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL
THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
THE DIRECTORS OF THE COMPANY, THE MANAGER AND THE INVESTMENT MANAGER TOGETHER THE
“RESPONSIBLE PARTIES” DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY
DESCRIPTION RELATING TO THE REFERENCE INDEX OR ANY DATA INCLUDED THEREIN AND THE RESPONSIBLE
PARTIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS HEREIN. THE
APPROVED RESPONSIBLE PARTIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE FUND, ANY
SHAREHOLDER IN THE FUND, OR TO ANY OTHER PERSON OR ENTITY IN RESPECT OF THE INDEX DESCRIBED
HEREIN.
116
THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
REFERENCE INDEX OR STRATEGY OR ANY DATA INCLUDED HEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES OR FOR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
The Nikkei 225 is a copyrighted material calculated in a methodology independently developed and created by
Nikkei Inc., and Nikkei Inc., is the sole exclusive owner of the copyright and other intellectual property rights in
the Nikkei 225 itself and the methodology to calculate the Nikkei 225.
Nikkei Digital Media Inc. as authorised by Nikkei Inc. granted a license to the Licensee to use the Nikkei 225 as
basis for the Fund.
The intellectual property and any other rights in the marks to indicate Nikkei and the Nikkei 225 shall be vested
in Nikkei Inc.
Nikkei Inc. and/or Nikkei Digital Media, Inc. does not sponsor, support, sell or market iShares Nikkei 225 UCITS
ETF (the “Fund”). Nikkei Inc. and/or Nikkei Digital Media, Inc. has - besides granting the license to the Licensee
to use certain trademarks and to use the Nikkei 225 for the Fund – no connection with the Fund. The license
agreement between Nikkei Digital Media, Inc. and the Licensee does not provide any rights to any third parties.
The Fund is managed exclusively at the risk of the Licensee and Nikkei Inc. and/or Nikkei Digital Media, Inc. shall
assume no obligation or responsibility for its management and transactions of the Fund. Nikkei Inc. and/or Nikkei
Digital Media, Inc. is not responsible for the accuracy and the calculation of the Fund or the data contained
therein.
Nikkei Inc. and/or Nikkei Digital Media, Inc. shall not have the obligation to continuously announce the Nikkei
225 and shall not be liable for any error, delay, interruption, suspension or cessation of announcement thereof;
and Nikkei Inc. and Nikkei Digital Media, Inc. shall have the right to change the description of the stocks included
in the Nikkei 225, the calculation methodology of the Nikkei 225 or any other details of the Nikkei 225 and shall
have the right to suspend or cease the announcement of the Nikkei 225 without owning any liability to the
Licensor or any other third party.
THE DIRECTORS OF THE COMPANY, THE MANAGER AND THE INVESTMENT MANAGER TOGETHER THE
“RESPONSIBLE PARTIES” DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY
DESCRIPTION RELATING TO THE REFERENCE INDEX OR ANY DATA INCLUDED THEREIN AND THE RESPONSIBLE
PARTIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS HEREIN. THE
APPROVED RESPONSIBLE PARTIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE FUND, ANY
SHAREHOLDER IN THE FUND, OR TO ANY OTHER PERSON OR ENTITY IN RESPECT OF THE INDEX DESCRIBED
HEREIN.
THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
REFERENCE INDEX OR STRATEGY OR ANY DATA INCLUDED HEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES OR FOR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”)
and have been licensed for use by the Manager. The Fund is not sponsored, endorsed, sold or promoted by S&P
or its Affiliates, and S&P and its Affiliates make no representation, warranty or condition regarding the
advisability of buying, selling or holding shares in the Fund.
ISHARES CORE S&P 500 UCITS ETF (THE “FUND”) IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY
STANDARD & POOR'S AND ITS AFFILIATES ("S&P"). S&P MAKES NO REPRESENTATION, CONDITION OR
WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE FUND OR ANY MEMBER OF THE PUBLIC
REGARDING THE ADVISABILITY OF INVESTING IN SECURITIES GENERALLY OR IN THE FUND PARTICULARLY OR
THE ABILITY OF THE S&P 500 TO TRACK THE PERFORMANCE OF CERTAIN FINANCIAL MARKETS AND/OR
SECTIONS THEREOF AND/OR OF GROUPS OF ASSETS OR ASSET CLASSES. S&P'S ONLY RELATIONSHIP TO THE
MANAGER IS THE LICENSING OF CERTAIN TRADEMARKS AND TRADE NAMES AND OF THE S&P 500 WHICH IS
DETERMINED, COMPOSED AND CALCULATED BY S&P WITHOUT REGARD TO THE MANAGER OR THE FUND. S&P
HAS NO OBLIGATION TO TAKE THE NEEDS OF THE MANAGER OR THE OWNERS OF THE FUND INTO
CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE S&P 500. S&P IS NOT RESPONSIBLE
FOR AND HAS NOT PARTICIPATED IN THE DETERMINATION OF THE PRICES AND AMOUNT OF THE FUND OR THE
TIMING OF THE ISSUANCE OR SALE OF THE FUND OR IN THE DETERMINATION OR CALCULATION OF THE
EQUATION BY WHICH THE FUND SHARES ARE TO BE CONVERTED INTO CASH. S&P HAS NO OBLIGATION OR
LIABILITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING, OR TRADING OF THE FUND.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 OR ANY DATA
INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS
THEREIN. S&P MAKES NO WARRANTY, CONDITION OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO
117
RESULTS TO BE OBTAINED BY THE MANAGER, OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE S&P 500 OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED
WARRANTIES, REPRESENTATIONS OR CONDITIONS, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OR
CONDITIONS OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE AND ANY OTHER
EXPRESS OR IMPLIED WARRANTY OR CONDITION WITH RESPECT TO THE S&P 500 OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) RESULTING FROM
THE USE OF THE S&P 500 OR ANY DATA INCLUDED THEREIN, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
THE DIRECTORS OF THE COMPANY, THE MANAGER AND THE INVESTMENT MANAGER TOGETHER THE
“RESPONSIBLE PARTIES” DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY
DESCRIPTION RELATING TO THE REFERENCE INDEX OR ANY DATA INCLUDED THEREIN AND THE RESPONSIBLE
PARTIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS HEREIN. THE
APPROVED RESPONSIBLE PARTIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE FUND, ANY
SHAREHOLDER IN THE FUND, OR TO ANY OTHER PERSON OR ENTITY IN RESPECT OF THE INDEX DESCRIBED
HEREIN.
THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
REFERENCE INDEX OR STRATEGY OR ANY DATA INCLUDED HEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES OR FOR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
STOXX and its licensors (the “Licensors”) have no relationship to the Company, other than the licensing of the
Reference Index and the related trademarks for use in connection with iShares Core EURO STOXX 50 UCITS ETF
(the “Fund”).
STOXX and its Licensors do not:
Sponsor, endorse, sell or promote the Fund.
Recommend that any person invest in the Fund or any other securities.
Have any responsibility or liability for or make any decisions about the timing, amount or pricing of Fund.
Have any responsibility or liability for the administration, management or marketing of the Fund.
Consider the needs of the Fund or the owners of the Fund in determining, composing or calculating the
Reference Index or have any obligation to do so.
STOXX and its Licensors will not have any liability in connection with the Company or the Fund.
Specifically,
STOXX and its Licensors do not make any warranty, express or implied and disclaim any and all
warranty about:
The results to be obtained by the Fund, the owner of the Fund or any other person in connection
with the use of the Reference Index and the data included in the Reference Index;
The accuracy or completeness of the Reference Index and its data;
The merchantability and the fitness for a particular purpose or use of Reference Index and its data;
STOXX and its Licensors will have no liability for any errors, omissions or interruptions in the
Reference Index or its data;
Under no circumstances will STOXX or its Licensors be liable for any lost profits or indirect,
punitive, special or consequential damages or losses, even if STOXX or its Licensors knows that they
might occur.
The licensing agreement between the Company and STOXX is solely for their benefit and not for the
benefit of the owners of the Fund or any other third parties.
THE DIRECTORS OF THE COMPANY, THE MANAGER AND THE INVESTMENT MANAGER TOGETHER THE
“RESPONSIBLE PARTIES” DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY
DESCRIPTION RELATING TO THE REFERENCE INDEX OR ANY DATA INCLUDED THEREIN AND THE RESPONSIBLE
PARTIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS HEREIN. THE
APPROVED RESPONSIBLE PARTIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE FUND, ANY
SHAREHOLDER IN THE FUND, OR TO ANY OTHER PERSON OR ENTITY IN RESPECT OF THE INDEX DESCRIBED
HEREIN.
THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
REFERENCE INDEX OR STRATEGY OR ANY DATA INCLUDED HEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES OR FOR ANY LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
118
SCHEDULE V
US Persons
1.
Pursuant to Regulation S of the 1933 Act, “US Person” means:
1.1
any natural person resident in the United States;
1.2
any partnership or corporation organised or incorporated under the laws of the United States;
1.3
any estate of which any executor or administrator is a US person;
1.4
any trust of which any trustee is a US person;
1.5
any agency or branch of a foreign entity located in the United States;
1.6
any non-discretionary account or similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a US Person;
1.7
any discretionary account or similar account (other than an estate or trust) held by a dealer or
other fiduciary organised, incorporated, or (if an individual) resident in the United States; or
1.8
any partnership or corporation if:
(a)
organised or incorporated under the laws of any non-US jurisdiction; and
(b)
formed by a US Person principally for the purpose of investing in securities not
registered under the 1933 Act, unless it is organised or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) under the Act) who are not natural
persons, estates or trusts.
2.
Notwithstanding (1) above, any discretionary account or similar account (other than an estate or trust)
held for the benefit or account of a non-US Person by a dealer or other professional fiduciary organised,
incorporated, or (if an individual) resident in the United States shall not be deemed a “US Person.”
3.
Notwithstanding (1) above, any estate of which any professional fiduciary acting as executor or
administrator is a US Person shall not be deemed a US Person if:
3.1
an executor or administrator of the estate who is not a US Person has sole or shared
investment discretion with respect to the assets of the estate; and
3.2
the estate is governed by non-US law.
4.
Notwithstanding (1) above, any trust of which any professional fiduciary acting as trustee is a US Person
shall not be deemed a US Person if a trustee who is not a US Person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is
revocable) is a US Person.
5.
Notwithstanding (1) above, an employee benefit plan established and administered in accordance with
the law of a country other than the United States and customary practices and documentation of such
country shall not be deemed a US Person.
6.
Notwithstanding (1) above, any agency or branch of a US Person located outside the United States shall
not be deemed a “US Person” if:
6.1
the agency or branch operates for valid business reasons; and
6.2
the agency or branch is engaged in the business of insurance or banking and is subject to
substantive insurance or banking regulation, respectively, in the jurisdiction where located.
7.
The International Monetary Fund, the International Bank for Reconstruction and Development, the
Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the
United Nations, and their agencies, affiliates and pension plans, and any other similar international
organisations, their agencies, affiliates and pension plans shall not be deemed “US Persons.”
The Directors may amend the above listed meanings without Shareholder notice as necessary in order to best
reflect then-current application US law and regulation.
119
SCHEDULE VI
The following third-party delegates have been appointed by the State Street Bank and Trust Company (the
Depositary’s global sub-custodian) in the referenced markets as sub-custodians. The list of markets below
represents the global custody network of the Depositary’s global sub-custodian whereas the assets of the
Company will normally be listed or traded on Regulated Markets set out in Schedule I.
Market
Sub-Custodian
Albania
Raiffeisen Bank sh.a.
Australia
The Hongkong and Shanghai Banking Corporation Limited
Austria
Deutsche Bank AG
UniCredit Bank Austria AG
Bahrain
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh
Standard Chartered Bank
Belgium
Deutsche Bank AG, Netherlands (operating through its Amsterdam branch
with support from its Brussels branch)
Benin
via Standard Chartered Bank Côte d’Ivoire S.A., Abidjan, Ivory Coast
Bermuda
HSBC Bank Bermuda Limited
Federation of
Bosnia and
Herzegovina
UniCredit Bank d.d.
Botswana
Standard Chartered Bank Botswana Limited
Brazil
Citibank, N.A.
Bulgaria
Citibank Europe plc, Bulgaria Branch
UniCredit Bulbank AD
Burkina Faso
via Standard Chartered Bank Côte d’Ivoire S.A., Abidjan, Ivory Coast
Canada
State Street Trust Company Canada
Chile
Banco Itaú Chile S.A.
People’s Republic
of China
HSBC Bank (China) Company Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
China Construction Bank Corporation (for A-share market only)
Citibank N.A. (for Shanghai – Hong Kong Stock Connect market only)
The Hongkong and Shanghai Banking Corporation Limited (for Shanghai –
Hong Kong Stock Connect market only)
Standard Chartered Bank (Hong Kong) Limited (for Shanghai – Hong Kong
Stock Connect market)
Colombia
Cititrust Colombia S.A. Sociedad Fiduciaria
Costa Rica
Banco BCT S.A.
Croatia
Privredna Banka Zagreb d.d.
Zagrebacka Banka d.d.
Cyprus
BNP Paribas Securities Services, S.C.A., Greece (operating through its
Athens branch)
Czech Republic
Československá obchodní banka, a.s.
120
Market
Sub-Custodian
UniCredit Bank Czech Republic and Slovakia, a.s.
Denmark
Nordea Bank AB (publ), Sweden (operating through its subsidiary, Nordea
Bank Danmark A/S)
Skandinaviska Enskilda Banken AB (publ), Sweden (operating through its
Copenhagen branch)
Egypt
HSBC Bank Egypt S.A.E. (as delegate of The Hongkong and Shanghai
Banking Corporation Limited)
Estonia
AS SEB Pank
Finland
Nordea Bank AB (publ), Sweden (operating through its subsidiary, Nordea
Bank Finland Plc.)
Skandinaviska Enskilda Banken AB (publ), Sweden (operating through its
Helsinki branch)
France
Deutsche Bank AG, Netherlands (operating through its Amsterdam branch
with support from its Paris branch)
Republic of Georgia
JSC Bank of Georgia
Germany
State Street Bank GmbH
Deutsche Bank AG
Ghana
Standard Chartered Bank Ghana Limited
Greece
BNP Paribas Securities Services, S.C.A.
Guinea-Bissau
via Standard Chartered Bank Côte d’Ivoire S.A., Abidjan, Ivory Coast
Hong Kong
Standard Chartered Bank (Hong Kong) Limited
Hungary
Citibank Europe plc Magyarországi Fióktelepe
UniCredit Bank Hungary Zrt.
Iceland
Landsbankinn hf.
India
Deutsche Bank AG
The Hongkong and Shanghai Banking Corporation Limited
Indonesia
Deutsche Bank AG
Ireland
State Street Bank and Trust Company, United Kingdom branch
Israel
Bank Hapoalim B.M.
Italy
Deutsche Bank S.p.A.
Intesa Sanpaolo S.p.A.
Ivory Coast
Standard Chartered Bank Côte d’Ivoire S.A.
Jamaica
Scotia Investments Jamaica Limited
Japan
Mizuho Bank, Limited
The Hongkong and Shanghai Banking Corporation Limited
Jordan
Standard Chartered Bank
Kazakhstan
JSC Citibank Kazakhstan
Kenya
Standard Chartered Bank Kenya Limited
Republic of Korea
Deutsche Bank AG
The Hongkong and Shanghai Banking Corporation Limited
121
Market
Sub-Custodian
Kuwait
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Latvia
AS SEB banka
Lebanon
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Lithuania
AB SEB bankas
Luxembourg
via the international central securities depository, Clearstream Banking S.A.,
Luxembourg
Malawi
Standard Bank Limited
Malaysia
Deutsche Bank (Malaysia) Berhad
Standard Chartered Bank Malaysia Berhad
Mali
via Standard Chartered Bank Côte d’Ivoire S.A., Abidjan, Ivory Coast
Mexico
Banco Nacional de México, S.A.
Morocco
Citibank Maghreb
Namibia
Standard Bank Namibia Limited
Netherlands
Deutsche Bank AG
New Zealand
The Hongkong and Shanghai Banking Corporation Limited
Niger
via Standard Chartered Bank Côte d’Ivoire S.A., Abidjan, Ivory Coast
Nigeria
Stanbic IBTC Bank Plc.
Norway
Nordea Bank AB (publ), Sweden (operating through its subsidiary, Nordea
Bank Norge ASA)
Skandinaviska Enskilda Banken AB (publ), Sweden (operating through its
Oslo branch)
Oman
HSBC Bank Oman S.A.O.G. (as delegate of The Hongkong and Shanghai
Banking Corporation Limited)
Pakistan
Deutsche Bank AG
Panama
Citibank, N.A.
Peru
Citibank del Perú, S.A.
Philippines
Deutsche Bank AG
Poland
Bank Handlowy w Warszawie S.A.
Bank Polska Kasa Opieki S.A.
Portugal
Deutsche Bank AG, Netherlands (operating through its Amsterdam branch
with support from its Lisbon branch)
Puerto Rico
Citibank N.A.
Qatar
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Romania
Citibank Europe plc, Dublin – Romania Branch
Russia
AO Citibank
Saudi Arabia
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Senegal
via Standard Chartered Bank Côte d’Ivoire S.A., Abidjan, Ivory Coast
122
Market
Sub-Custodian
Serbia
UniCredit Bank Serbia JSC
Singapore
Citibank N.A.
United Overseas Bank Limited
Slovak Republic
UniCredit Bank Czech Republic and Slovakia, a.s.
Slovenia
UniCredit Banka Slovenija d.d.
South Africa
FirstRand Bank Limited
Standard Bank of South Africa Limited
Spain
Deutsche Bank S.A.E.
Sri Lanka
The Hongkong and Shanghai Banking Corporation Limited
Republic of Srpska
UniCredit Bank d.d.
Swaziland
Standard Bank Swaziland Limited
Sweden
Nordea Bank AB (publ)
Skandinaviska Enskilda Banken AB (publ)
Switzerland
Credit Suisse AG
UBS Switzerland AG
Taiwan - R.O.C.
Deutsche Bank AG
Standard Chartered Bank (Taiwan) Limited
Tanzania
Standard Chartered Bank (Tanzania) Limited
Thailand
Standard Chartered Bank (Thai) Public Company Limited
Togo
via Standard Chartered Bank Côte d’Ivoire S.A., Abidjan, Ivory Coast
Tunisia
Union Internationale de Banques
Turkey
Citibank, A.Ş.
Deutsche Bank A.Ş.
Uganda
Standard Chartered Bank Uganda Limited
Ukraine
PJSC Citibank
United Arab
Emirate – Abu
Dhabi
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
United Arab
Emirates Dubai
Financial
Market
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
United Arab
Emirates Dubai
International
Financial Center
HSBC Bank Middle East Limited (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
United Kingdom
State Street Bank and Trust Company, United Kingdom branch
United States
State Street Bank and Trust Company
Uruguay
Banco Itaú Uruguay S.A.
Venezuela
Citibank, N.A.
123
Market
Sub-Custodian
Vietnam
HSBC Bank (Vietnam) Limited (as delegate of The Hongkong and Shanghai
Banking Corporation Limited)
Zambia
Standard Chartered Bank Zambia Plc.
Zimbabwe
Stanbic Bank Zimbabwe Limited (as delegate of Standard Bank of South
Africa Limited)
124
INFORMATION FOR INVESTORS IN SWITZERLAND
DATED 10 MAY 2017
THIS INFORMATION FORMS PART OF AND SHOULD BE READ IN CONJUNCTION WITH THE
PROSPECTUS FOR ISHARES VII PLC (THE “COMPANY”) AS MAY BE AMENDED AND SUPPLEMENTED
FROM TIME TO TIME.
I.
INFORMATION FOR INVESTORS IN SWITZERLAND
1.
Representative
The representative in Switzerland is BlackRock Asset Management Schweiz AG, Bahnhofstrasse 39, 8001 Zurich.
2.
Paying Agent
The paying agent in Switzerland is State Street Bank International GmbH, Munich, Zurich branch,
Beethovenstrasse 19, CH-8027 Zurich.
3.
Place where the relevant Documents may be obtained
The prospectus, the key investor information documents, articles of association as well as the annual and semiannual reports may be obtained free of charge from the representative in Switzerland.
4.
Publications
a)
Publications concerning the foreign collective investment scheme are made in Switzerland on the
electronic platform www.fundinfo.com.
b)
The issue and the redemption prices or the Net Asset Value per Share together with a reference stating
„excluding commissions“ are published daily on the electronic platform www.fundinfo.com.
5.
Payment of Retrocessions and Rebates
a)
The Company and its agents do not pay any retrocessions to third parties as remuneration for
distribution activity in respect of fund shares in Switzerland or from Switzerland.
b)
In respect of distribution in Switzerland or from Switzerland, the Company and its agents do not pay
any rebates to reduce the fees or costs incurred by the investor and charged to the fund.
6.
Place of Performance and Jurisdiction
In respect of the shares distributed in Switzerland and from Switzerland, the place of performance and
jurisdiction is the registered office of the representative.
125
II.
ADDITIONAL INFORMATION RELATING TO THE LISTING ON SIX SWISS EXCHANGE
The financial situation of the Company is presented in the most recent annual report and accounts and the most
recent interim report and accounts. These two reports are incorporated by reference and form an integral part of
the prospectus.
The present additional information relates to the listing of Shares of the Company on the SIX Swiss Exchange
("SIX"). Information provided by the Company in this additional listing information is limited to information not
provided elsewhere in the Prospectus.
1.
Listing in Switzerland
The Shares of the Funds authorised in Switzerland by the Swiss Financial Market Supervisory Authority
(hereafter “FINMA”) are listed on the SIX. The SIX Board of Admission has approved the Company’s listing
request.
2.
Valoren Numbers, ISINs and SIX Trading Currency
Fund/Share Class
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
iShares
3.
MSCI UK Small Cap UCITS ETF GBP (Acc)
MSCI USA Small Cap UCITS ETF USD (Acc)
MSCI EMU Small Cap UCITS ETF EUR (Acc)
$ Treasury Bond 1-3yr UCITS ETF USD (Acc) B
$ Treasury Bond 3-7yr UCITS ETF USD (Acc)
$ Treasury Bond 7-10yr UCITS ETF USD (Acc)
€ Govt Bond 1-3yr UCITS ETF EUR (Acc)
€ Govt Bond 3-7yr UCITS ETF EUR (Acc)
€ Govt Bond 7-10yr UCITS ETF EUR (Acc)
Core S&P 500 UCITS ETF USD (Acc)
Core EURO STOXX 50 UCITS ETF EUR (Acc)
Dow Jones Industrial Average UCITS ETF USD (Acc)
NASDAQ 100 UCITS ETF USD (Acc)
FTSE 100 UCITS ETF GBP (Acc)
FTSE MIB UCITS ETF (Acc) EUR (Acc)
Nikkei 225 UCITS ETF JPY (Acc)
Core MSCI Pacific ex Japan UCITS ETF USD (Acc)
MSCI Canada UCITS ETF USD (Acc)
MSCI UK UCITS ETF GBP (Acc)
MSCI USA UCITS ETF USD (Acc)
MSCI Japan UCITS ETF USD (Acc)
MSCI EMU UCITS ETF EUR (Acc)
MSCI EMU UCITS ETF EUR (Dist)
MSCI Russia ADR/GDR UCITS ETF USD (Acc)
MSCI Brazil UCITS ETF USD (Acc)
MSCI Mexico Capped UCITS ETF USD (Acc)
MSCI Korea UCITS ETF USD (Acc)
MSCI EM Asia UCITS ETF USD (Acc)
MSCI EMU CHF Hedged UCITS ETF (Acc)
MSCI EMU USD Hedged UCITS ETF (Acc)
Valoren
No.
ISIN
10191675
10191868
10192176
10200789
10200795
10200800
10200506
10200620
10200633
10737041
10737573
10737611
10737617
10737489
10737596
10737065
10737120
10737503
10737561
10737015
10737498
10737587
36329190
11476335
11476338
11476341
11476344
11476346
27741453
28270844
IE00B3VWLG82
IE00B3VWM098
IE00B3VWMM18
IE00B3VWN179
IE00B3VWN393
IE00B3VWN518
IE00B3VTMJ91
IE00B3VTML14
IE00B3VTN290
IE00B5BMR087
IE00B53L3W79
IE00B53L4350
IE00B53SZB19
IE00B53HP851
IE00B53L4X51
IE00B52MJD48
IE00B52MJY50
IE00B52SF786
IE00B539F030
IE00B52SFT06
IE00B53QDK08
IE00B53QG562
IE00BYXZ2585
IE00B5V87390
IE00B59L7C92
IE00B5WHFQ43
IE00B5W4TY14
IE00B5L8K969
IE00BWK1SP74
IE00BWZN1T31
SIX
Trading
Currency
GBP
USD
EUR
USD
USD
USD
EUR
EUR
EUR
USD
EUR
USD
USD
GBP
EUR
JPY
USD
CAD
GBP
USD
JPY
EUR
CHF
USD
USD
USD
USD
USD
CHF
USD
Market Makers
The listing on the SIX of the Shares in the Funds authorized in Switzerland allows investors not only to subscribe
for or request repurchase of Shares directly with the Company, but also to purchase or sell the Shares of the
Funds authorized in Switzerland on a liquid and regulated secondary market, i.e. via the SIX. The procedures
relating to the subscription or repurchase of the Company’s Shares are set out in the Prospectus.
The complete and up-to-date list of the banking institution/s nominated by the Company in order to assume the
functions as Market Maker for the trading of the Shares of the Funds listed on the SIX is available and free
accessible on the website of the SIX: www.six-swiss-exchange.com.
The role of the Market Makers is to maintain a market for the Shares of the Funds listed on the SIX for which
they have been appointed as Market Makers, and in this context, to introduce purchase and sale prices for the
relevant Funds on the SIX trading system.
In accordance with the practice of the FINMA, each Market Maker is required to ensure that the difference
between (i) the Intraday Net Asset Value per Share (calculated on the basis of the Net Asset Value per Share and
adjusted to reflect price variations resulting from the trading of the underlying securities contained in the index
126
of the relevant Fund (the “Intraday Net Asset Value” also referred to as “indicative NAV”)) and (ii) the price at
which investors may purchase and sell the Shares on the SIX is reduced to a reasonable level.
Under the terms of the Market Making Agreements between the SIX and each Market Maker, the Market Makers
are required, subject to specific rules and under normal market conditions, to make a market on the SIX for
Shares of Funds authorized in Switzerland and, as part of this obligation, to publish purchase and sale prices for
these Shares on the SIX trading system with a spread as follows:
For Funds on underlying stocks, the spread may not exceed 2% (being 1% on either side of the indicative NAV)
in cases where at least 50% of the constituent stocks can be traded on the primary market during the official SIX
trading hours, and a spread of not more than 5% in cases where more than 50% of the constituent stocks
cannot be traded on the primary market during the official SIX trading hours.
For Funds on underlying bonds of the category government bonds, "supranationals" and similar bonds with a
maturity of less than 3 years, the spread may not exceed 0.5 % (+/- 0.25 % on either side of the indicative NAV
where available).
For Funds on underlying bonds of the category government bonds, "supranationals" and similar bonds with a
maturity of more than 3 years, as well as for investment-grade corporate bonds, the spread may not exceed
1.0 % (+/- 0.5 % on either side of the indicative NAV where available).
For Funds on underlying bonds of the category emerging market bonds and non-investment grade corporate
bonds, the spread may not exceed 2% (+/-1% on either side of the indicative NAV where available).
This condition only applies in normal market conditions.
4.
Materialization
In Switzerland, Shares are traded via the SIX. Investors who trade the Shares on the SIX will have their
interests in Shares settled via SIX Securities Services. No certificates are issued specifically for interests in
Shares that settle via SIX Securities Services.
The Funds use the International Central Securities Depositaries (“ICSD”) model. SIX Securities Services will be a
participant in the ICSD. Please refer to the section titled “Global Clearing and Settlement” for more information.
Shares traded in Switzerland are held in a SIX Securities Services account in the ICSD structure. SIX Securities
Services will maintain a sub-register for Shares traded on SIX.
5.
Responsibility for the listing prospectus
The Company, iShares VII plc with registered offices in Dublin, Ireland, and its Directors accept responsibility for
the information contained in this Prospectus. To the best of their knowledge and belief, the information contained
in this Prospectus is correct and no material fact or circumstances have been omitted.
127
©2016 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc. or its subsidiaries. All other marks
are the property of their respective owners.
WF-18906558-6
128
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