RSX / RSXJ Liquidation FAQ

As detailed in a prior Shareholder Notice, VanEck has commenced plans to liquidate the VanEck Russia ETF (RSX) and VanEck Russia Small-Cap ETF (RSXJ) (the “Funds”). This note attempts to answer some frequently asked questions.

• Why is VanEck liquidating the Funds?
• What does liquidation mean?
• What are the current holdings in the Fund?
• Why are the Russian stocks in the portfolio fair valued even though they are trading in the local market?
• Can I sell my shares?
• Can I receive my portion of the underlying positions instead of cash?
• How will you sell the Russian stocks that are still in the portfolios?
• When will the liquidation period end?
• Why didn’t the Funds distribute all of the cash holdings in the initial liquidating distribution?
• Was the Fund terminated on December 31, 2023?
• When will I receive my liquidating distribution?
• What liquidating distributions have been paid out?
• What will happen if market and regulatory conditions change so that the underlying stocks can be traded again?
• What Indexes do the Funds seek to track?
• What’s the impact of the Russian Presidential Decree 840?

Why is VanEck liquidating the Funds?

The Funds were delisted by Cboe BZX Exchange on January 12, 2023, following a prior halting from trading in March 2022.  Given that the Funds are no longer trading on an exchange and that there are ongoing restrictions relating to Russian securities, the Funds are not able to meet their investment objectives.

What does liquidation mean?

Liquidation means that the Funds are in the process of liquidating their assets and winding up their business pursuant to a plan of liquidation.

What are the current holdings in the Funds?

There are currently two types of assets in the Funds: cash and illiquid securities (liquid securities have been sold for cash pursuant to the plan of liquidation). Click here to see an up-to-date list of portfolio holdings for RSX. Click here to see an up-to-date list of portfolio holdings for RSXJ.

Cash. Cash has been estimated and reserved in an amount to allow the Funds to continue to operate through their final termination according to the plan of liquidation. Excess cash has been distributed through the liquidating distributions.  The cash reserve amount accounts for the possibility of an extended liquidation period.

Illiquid Securities. VanEck continues to manage all funds as a fiduciary, and we believe the plan of liquidation has been designed to provide shareholders the potential to realize future value of the underlying Russian investments, if market conditions change in the future. It is possible that the liquidation period may continue for an extended period of time. However, there can be no assurance that will occur or that any value will materialize.

Why are the Russian stocks in the portfolio fair valued even though they are trading in the local market?

Due to the inability to trade Russian securities, the Funds’ assets are valued using a fair value methodology.  The actual price received by the Funds for their assets may differ substantially from the fair value assigned to such assets.

Can I sell my shares?

No. Trading in shares of the Funds was halted by the Cboe BZX Exchange (Cboe) on March 4, 2022 and the Funds were subsequently delisted by Cboe.  No secondary market exists for the Funds.

Can I receive my portion of the underlying positions instead of cash?

No. There is currently no operational capability to transfer positions in-kind to individual shareholders.  Further, current government sanctions would currently prohibit such a transfer.

How will you sell the Russian stocks that are still in the portfolios?

Regulatory and market conditions do not currently permit the Funds to conduct transactions in the local Russian market.  The Funds are managed to seek to remain in compliance with all applicable sanctions.

It is possible that the Funds may be able to sell some or all of their positions in Russian securities and depositary receipts and to convert the proceeds of those sales to U.S. dollars. If, at any time prior to the Funds’ termination date, VanEck determines that legal, regulatory, or market developments have occurred so that the Funds may lawfully sell such securities, such securities may be sold as soon as reasonably practicable consistent with seeking best execution. The net proceeds of any sale are expected to be distributed in one or more additional liquidating distributions within 60 days after their receipt. However, such distribution may be delayed for up to an additional 90 days (or such longer period as VanEck may determine to be in the best interests of shareholders) if VanEck determines in its discretion that actual or potential legal, regulatory, or market developments are such that additional securities may be sold during that period, whose proceeds may be combined with those previously received and undistributed.

When will the liquidation period end?

The Funds will be terminated as soon as practicable after payment of the final liquidating distribution and redemption of all outstanding shares of the Funds. It is also possible that the Funds may be terminated if the Russian securities held by the Funds cease to represent valid interests in their issuers.

Why didn’t the Funds distribute all of the cash holdings in the initial liquidating distribution?

The initial liquidating distribution amount to shareholders was based on a pro-rata share of then current liquid assets less a reserve to cover operating and liquidation expenses for an extended period.  The reserve was set at an amount intended to provide substantial flexibility for the Funds’ to remain in liquidation for an extended period of time. If, at any time prior to the Funds’ termination date, VanEck determines that legal, regulatory, or market developments have occurred so that the Funds may lawfully sell such securities and to convert the proceeds of those sales to U.S. dollars in certain types of transactions, such securities may be sold as soon as reasonably practicable consistent with seeking best execution.

Was the Fund terminated on December 31, 2023?

No. The plan of liquidation provides that the Funds will terminate (a) after payment of a final liquidating distribution and redemption of all shares outstanding, (b) after the Russian securities held by the Funds cease to represent valid interests in their issuers, or if earlier than (a) or (b) on a date after December 31, 2023 as determined by the Funds’ Board of Trustees upon recommendation of the Funds’ investment adviser.  It is possible that the liquidation period could extend well beyond December 31, 2023. Due to the uncertainty involved, there can be no assurance that shareholders would receive any liquidating distribution relating to the Russian securities and depositary receipts after the initial distribution, described above. The distribution to shareholders of sale proceeds of Russian securities and depositary receipts, if any, will be reduced by expenses related to the sale and the distribution; other Fund operating and liquidation expenses will be paid out of the reserve.

When will I receive my liquidating distribution?

The Funds made an initial liquidating distribution to shareholders of a pro-rata share of current liquid assets, less a reserve to cover operating and liquidation expenses for an extended period. The initial distribution occurred on January 12, 2023. In addition, RSX made additional liquidating distributions on July 27, 2023 and September 29, 2023. The Funds may make additional liquidating distributions, although additional distributions may not occur.

What liquidating distributions have been paid out?

Both RSX and RSXJ have paid liquidating distributions to shareholders. Further details can be found here. A summary of these distributions is below:

• January 12, 2023 – RSX and RSXJ made an initial liquidating distribution to shareholders of a pro-rata share of current liquid assets held by the Funds on the date the distribution was declared, less a reserve to cover operating and liquidation expenses for an extended period.
• July 27, 2023 – As a result of subsequent transactions, RSX made an additional liquidating distribution on this date. 
• September 29, 2023 - As a result of subsequent transactions, RSX made an additional liquidating distribution on this date. 
• April 19, 2024 - As a result of subsequent transactions, RSX made an additional liquidating distribution on this date. 
• October 07, 2024 - As a result of subsequent transactions, RSX and RSXJ made an additional liquidating distribution on this date. 

What will happen if market and regulatory conditions change so that the underlying stocks can be traded again?

It is possible that the Funds may be able to sell some or all of their positions in Russian securities and depositary receipts and to convert the proceeds of those sales to U.S. dollars, although there can be no assurance that will occur. If it should become possible for the Funds to sell any Russian securities and depositary receipts and to convert the proceeds to U.S. dollars, the Funds will sell the securities and receipts when it is reasonable and practicable to do so. If VanEck determines that legal, regulatory, or market developments have occurred so that the Funds may lawfully sell such securities, the Funds may sell such securities as soon as reasonably practicable consistent with seeking best execution. The net proceeds of any sale will be distributed in one or more additional liquidating distributions within 60 days after their receipt (however, such distribution may be delayed if additional securities can be sold in that period, and such net proceeds combined into one distribution).

The liquidation plan may also be amended or terminated by the Board of Trustees in certain circumstances.

What Indexes do the Funds seek to track?

VanEck Russia ETF’s (RSX) stated investment objective is to seek to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Russia Index. VanEck Russia Small-Cap ETF’s (RSXJ) stated investment objective is to seek to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Russia Small-Cap Index.

However, both indexes have been discontinued by the index provider.  Due to the discontinuation of the MVIS Russia Index and MVIS Russia Small-Cap Index, in addition to the ongoing restrictions relating to Russian securities, the Funds have been unable to meet their investment objectives.

What’s the impact of the Russian Presidential Decree 840?

On October 2, 2024 the president of Russia issued Decree 840, requiring that all Russian custodians transfer shares of Russian joint-stock companies held in Type S custody accounts from the National Settlement Depository (“NSD”) to the local Russian registrars of such companies. The Funds’ global custodian has informed us that equity securities held by the Funds that were previously at the NSD have been transferred to the local registrars. The Office of Foreign Assets Control (“OFAC”) has cautioned that such transfers may be considered null and void pursuant to OFAC’s regulations.