VANECK ETF TRUST
This
Statement of Additional Information (“SAI”) is not a prospectus. It should be
read in conjunction with the current prospectuses (each, a “Prospectus” and
together, the “Prospectuses”) of each fund (each, a “Fund” and together, the
“Funds”) listed below for the VanEck®
ETF Trust (the “Trust”), relating to each of the series of the Trust listed
below, as it may be revised from time to time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund |
Principal
U.S.
Listing
Exchange |
Ticker |
Fiscal
Year End* |
Prospectus
Date |
|
Statement
of Additional Information February 1, 2024, as revised on March 15,
2024, May 1, 2024, May 31, 2024, June 7, 2024, August 20, 2024 and
September 1, 2024 |
Biotech
ETF |
The
NASDAQ Stock Market LLC |
BBH |
September
30th |
February
1st |
Commodity
Strategy ETF |
Cboe
BZX Exchange, Inc. |
PIT |
September
30th |
February
1st |
Digital
Transformation ETF |
The
NASDAQ Stock Market LLC |
DAPP |
September
30th |
February
1st |
Durable
High Dividend ETF |
Cboe
BZX Exchange, Inc. |
DURA |
September
30th |
February
1st |
Energy
Income ETF |
NYSE
Arca, Inc. |
EINC |
September
30th |
February
1st |
Environmental
Services ETF |
NYSE
Arca, Inc. |
EVX |
September
30th |
February
1st |
Gaming
ETF |
The
NASDAQ Stock Market LLC |
BJK |
September
30th |
February
1st |
Green
Infrastructure ETF |
The
NASDAQ Stock Market LLC |
RNEW |
September
30th |
February
1st |
Inflation
Allocation ETF |
NYSE
Arca, Inc. |
RAAX |
September
30th |
February
1st |
Long/Flat
Trend ETF |
NYSE
Arca, Inc. |
LFEQ |
September
30th |
February
1st |
Morningstar
ESG Moat ETF |
Cboe
BZX Exchange, Inc. |
MOTE |
September
30th |
February
1st |
Morningstar
Global Wide Moat ETF |
Cboe
BZX Exchange, Inc. |
MOTG |
September
30th |
February
1st |
Morningstar
International Moat ETF |
Cboe
BZX Exchange, Inc. |
MOTI |
September
30th |
February
1st |
Morningstar
SMID Moat ETF |
Cboe
BZX Exchange, Inc. |
SMOT |
September
30th |
February
1st |
Morningstar
Wide Moat ETF |
Cboe
BZX Exchange, Inc. |
MOAT® |
September
30th |
February
1st |
Pharmaceutical
ETF |
The
NASDAQ Stock Market LLC |
PPH |
September
30th |
February
1st |
Retail
ETF |
The
NASDAQ Stock Market LLC |
RTH |
September
30th |
February
1st |
Robotics
ETF |
The
NASDAQ Stock Market LLC |
IBOT |
September
30th |
February
1st |
Semiconductor
ETF |
The
NASDAQ Stock Market LLC |
SMH |
September
30th |
February
1st |
Social
Sentiment ETF |
NYSE
Arca, Inc. |
BUZZ |
September
30th |
February
1st |
Video
Gaming and eSports ETF |
The
NASDAQ Stock Market LLC |
ESPO |
September
30th |
February
1st |
Statement
of Additional Information May 1, 2024, as revised on May 31, 2024,
June 7, 2024, August 20, 2024 and September 1, 2024 |
Africa
Index ETF |
NYSE
Arca, Inc. |
AFK |
December
31st |
May
1st |
Agribusiness
ETF |
NYSE
Arca, Inc. |
MOO® |
December
31st |
May
1st |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund |
Principal
U.S.
Listing
Exchange |
Ticker |
Fiscal
Year End* |
Prospectus
Date |
Brazil
Small-Cap ETF |
NYSE
Arca, Inc. |
BRF |
December
31st |
May
1st |
ChiNext
ETF |
NYSE
Arca, Inc. |
CNXT |
December
31st |
May
1st |
CLO
ETF |
NYSE
Arca, Inc. |
CLOI |
December
31st |
May
1st |
CMCI
Commodity Strategy ETF |
Cboe
BZX Exchange, Inc. |
CMCI |
December
31st |
May
1st |
Digital
India ETF |
NYSE
Arca, Inc. |
DGIN |
December
31st |
May
1st |
Ethereum
Strategy ETF |
Cboe
BZX Exchange, Inc. |
EFUT |
December
31st |
May
1st |
Gold
Miners ETF |
NYSE
Arca, Inc. |
GDX® |
December
31st |
May
1st |
Green
Metals ETF |
NYSE
Arca, Inc. |
GMET |
December
31st |
May
1st |
India
Growth Leaders ETF |
NYSE
Arca, Inc. |
GLIN |
December
31st |
May
1st |
Indonesia
Index ETF |
NYSE
Arca, Inc. |
IDX |
December
31st |
May
1st |
Israel
ETF |
NYSE
Arca, Inc. |
ISRA |
December
31st |
May
1st |
Junior
Gold Miners ETF |
NYSE
Arca, Inc. |
GDXJ® |
December
31st |
May
1st |
Low
Carbon Energy ETF |
NYSE
Arca, Inc. |
SMOG |
December
31st |
May
1st |
Natural
Resources ETF |
NYSE
Arca, Inc. |
HAP |
December
31st |
May
1st |
Office
and Commercial REIT ETF |
NYSE
Arca, Inc. |
DESK |
December
31st |
May
1st |
Oil
Refiners ETF |
NYSE
Arca, Inc. |
CRAK |
December
31st |
May
1st |
Oil
Services ETF |
NYSE
Arca, Inc. |
OIH |
December
31st |
May
1st |
Rare
Earth and Strategic Metals ETF |
NYSE
Arca, Inc. |
REMX |
December
31st |
May
1st |
Russia
ETF1 |
Not
Applicable |
RSX |
December
31st |
May
1st |
Russia
Small-Cap ETF1 |
Not
Applicable |
RSXJ |
December
31st |
May
1st |
Steel
ETF |
NYSE
Arca, Inc. |
SLX |
December
31st |
May
1st |
Uranium
and Nuclear ETF |
NYSE
Arca, Inc. |
NLR |
December
31st |
May
1st |
Vietnam
ETF |
Cboe
BZX Exchange, Inc. |
VNM |
December
31st |
May
1st |
Statement
of Additional Information September 1, 2024 |
BDC
Income ETF |
NYSE
Arca, Inc. |
BIZD |
April
30th |
September
1st |
CEF
Muni Income ETF |
Cboe
BZX Exchange, Inc. |
XMPT |
April
30th |
September
1st |
China
Bond ETF |
NYSE
Arca, Inc. |
CBON |
April
30th |
September
1st |
Dynamic
High Income ETF |
NYSE
Arca, Inc. |
INC |
April
30th |
September
1st |
Emerging
Markets High Yield Bond ETF |
NYSE
Arca, Inc. |
HYEM |
April
30th |
September
1st |
Fallen
Angel High Yield Bond ETF |
The
NASDAQ Stock Market LLC |
ANGL |
April
30th |
September
1st |
Green
Bond ETF |
NYSE
Arca, Inc. |
GRNB |
April
30th |
September
1st |
High
Yield Muni ETF |
Cboe
BZX Exchange, Inc. |
HYD |
April
30th |
September
1st |
HIP
Sustainable
Muni ETF |
Cboe
BZX Exchange, Inc. |
SMI |
April
30th |
September
1st |
IG
Floating Rate ETF |
NYSE
Arca, Inc. |
FLTR |
April
30th |
September
1st |
Intermediate
Muni ETF |
Cboe
BZX Exchange, Inc. |
ITM |
April
30th |
September
1st |
International
High Yield Bond ETF |
NYSE
Arca, Inc. |
IHY |
April
30th |
September
1st |
J.P.
Morgan EM Local Currency Bond ETF |
NYSE
Arca, Inc. |
EMLC |
April
30th |
September
1st |
Long
Muni ETF |
Cboe
BZX Exchange, Inc. |
MLN |
April
30th |
September
1st |
Moody's
Analytics BBB Corporate Bond ETF |
Cboe
BZX Exchange, Inc. |
MBBB |
April
30th |
September
1st |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund |
Principal
U.S.
Listing
Exchange |
Ticker |
Fiscal
Year End* |
Prospectus
Date |
Moody's
Analytics IG Corporate Bond ETF |
Cboe
BZX Exchange, Inc. |
MIG |
April
30th |
September
1st |
Mortgage
REIT Income ETF |
NYSE
Arca, Inc. |
MORT |
April
30th |
September
1st |
Preferred
Securities ex Financials ETF |
NYSE
Arca, Inc. |
PFXF |
April
30th |
September
1st |
Short
High Yield Muni ETF |
Cboe
BZX Exchange, Inc. |
SHYD |
April
30th |
September
1st |
Short
Muni ETF |
Cboe
BZX Exchange, Inc. |
SMB |
April
30th |
September
1st |
Statement
of Additional Information November 16, 2023, as revised on February 1,
2024, March 15, 2024, May 1, 2024, May 31, 2024, June 7, 2024, August 20,
2024 and September 1, 2024 |
Morningstar
Wide Moat Growth ETF |
Cboe
BZX Exchange, Inc. |
MGRO |
September
30th |
November
16th |
Morningstar
Wide Moat Value ETF |
Cboe
BZX Exchange, Inc. |
MVAL |
September
30th |
November
16th |
Statement
of Additional Information August 20, 2024, as revised on September 1,
2024 |
Fabless
Semiconductor ETF |
The
NASDAQ Stock Market LLC |
SMHX |
September
30th |
August
20th |
*
Certain information provided in this SAI is indicated to be as of the end of a
Fund’s last fiscal year or during a Fund’s last fiscal year. The term “last
fiscal year” means the most recently completed fiscal year for each Fund.
1
On
September 29, 2022, the Board unanimously voted to approve a Plan of Liquidation
and Termination of each of VanEck Russia ETF and VanEck Russia Small-Cap ETF
(together, the “Russia Funds”), contingent on receiving any necessary relief
from the SEC. On December 28, 2022, the Securities and Exchange Commission (the
“SEC”) granted exemptive relief to the Russia Funds permitting the Russia Funds
to suspend the right of redemption with respect to their shares and, if
necessary, postpone the date of payment of redemption proceeds with respect to
redemption orders received but not yet paid until the Russia Funds complete the
liquidation of their portfolios and distribute all their assets to remaining
shareholders. The process of paying any proceeds of the liquidation was
initiated on January 12, 2023. The Russia Funds will make one or more
liquidating distributions. It is possible that the liquidation of the Russia
Funds will take an extended period of time if circumstances involving Russian
securities do not improve. While the Russia Funds are in the process of
liquidating their portfolios, each of the Russia Funds will hold cash and
securities that may not be consistent with their investment objectives and
strategies and are likely to incur higher tracking error than is typical for
each Russia Fund. Furthermore, because of the delisting of the Russia Funds from
Cboe BZX Exchange, Inc., and the liquidation of the Russia Funds, the Russia
Funds are no longer exchange-traded funds, and there will be no trading market
for your shares. Upon payment of the final liquidating distribution, it is
anticipated that the Russia Funds will be terminated. MarketVector™ Indexes GmbH
discontinued the MVIS®
Russia
Index and the MVIS®
Russia
Small-Cap Index on July 31, 2023.
A
copy of each Prospectus may be obtained without charge by writing to the Trust
or the Distributor (defined herein). The Trust’s address is 666 Third Avenue,
9th Floor, New York, New York 10017. Capitalized terms used herein that are not
defined have the same meaning as in the Prospectuses, unless otherwise noted.
The audited financial statements, including the financial highlights, appearing
in the Trust’s most recent Annual Report to shareholders for each Fund’s
corresponding fiscal year end and filed electronically with the SEC, are
incorporated by reference into the section of this SAI entitled “Financial
Statements.” No other portions of any of the Trust’s Annual Reports or
Semi-Annual Reports are incorporated by reference or made part of this SAI.
TABLE
OF CONTENTS
GENERAL
DESCRIPTION OF THE TRUST
The
Trust is an open-end management investment company. The Trust currently consists
of 69 investment portfolios. This SAI relates to all Funds of the Trust as set
forth on the cover page. The Trust was organized as a Delaware statutory trust
on March 15, 2001. The shares of each Fund are referred to herein as
“Shares.”
Each
Fund that is classified as a “diversified” fund under the Investment Company Act
of 1940, as amended (the “1940 Act”) is required to meet certain diversification
requirements under the 1940 Act. Each Fund that is classified as a
“non-diversified” fund under the 1940 Act may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. The following chart indicates the
diversification classification for each Fund:
|
|
|
|
|
|
Fund |
Classification
as Diversified or Non-Diversified |
|
|
Municipal
ETFs |
CEF
Muni Income ETF* |
Diversified |
High
Yield Muni ETF |
Diversified |
HIP
Sustainable Muni ETF |
Non-Diversified |
Intermediate
Muni ETF |
Diversified |
Long
Muni ETF |
Diversified |
Short
High Yield Muni ETF |
Diversified |
Short
Muni ETF |
Diversified |
CLO/Equity/Fixed
Income ETFs |
BDC
Income ETF |
Diversified |
China
Bond ETF |
Non-Diversified |
CLO
ETF |
Non-Diversified |
Durable
High Dividend ETF* |
Diversified |
Dynamic
High Income ETF |
Non-Diversified |
Emerging
Markets High Yield Bond ETF |
Diversified |
Energy
Income ETF |
Non-Diversified |
Fallen
Angel High Yield Bond ETF* |
Diversified
|
Green
Bond ETF |
Diversified |
IG
Floating Rate ETF |
Non-Diversified |
International
High Yield Bond ETF |
Diversified |
J.P.
Morgan EM Local Currency Bond ETF |
Non-Diversified |
Moody's
Analytics BBB Corporate Bond ETF |
Non-Diversified |
Moody's
Analytics IG Corporate Bond ETF |
Diversified |
Mortgage
REIT Income ETF |
Non-Diversified |
Preferred
Securities ex Financials ETF |
Non-Diversified |
Thematic/Strategic
Equity ETFs |
Biotech
ETF |
Non-Diversified |
Digital
Transformation ETF |
Non-Diversified |
Environmental
Services ETF |
Non-Diversified |
Fabless
Semiconductor ETF |
Non-Diversified |
Gaming
ETF |
Non-Diversified |
Green
Infrastructure ETF |
Non-Diversified |
Inflation
Allocation ETF |
Diversified |
Long/Flat
Trend ETF* |
Diversified |
|
|
|
|
|
|
Fund |
Classification
as Diversified or Non-Diversified |
Morningstar
ESG Moat ETF |
Non-Diversified |
Morningstar
Global Wide Moat ETF* |
Diversified |
Morningstar
International Moat ETF* |
Diversified |
Morningstar
SMID Moat ETF |
Non-Diversified |
Morningstar
Wide Moat ETF* |
Diversified |
Morningstar
Wide Moat Growth ETF |
Non-Diversified |
Morningstar
Wide Moat Value ETF |
Non-Diversified |
Pharmaceutical
ETF |
Non-Diversified |
Retail
ETF |
Non-Diversified |
Robotics
ETF |
Non-Diversified |
Semiconductor
ETF |
Non-Diversified |
Social
Sentiment ETF |
Non-Diversified |
Video
Gaming and eSports ETF |
Non-Diversified |
Ethereum
Strategy/Commodity Strategy/Natural Resources ETFs |
Agribusiness
ETF |
Non-Diversified |
CMCI
Commodity Strategy ETF |
Non-Diversified |
Commodity
Strategy ETF |
Non-Diversified |
Ethereum
Strategy ETF |
Non-Diversified |
Gold
Miners ETF |
Non-Diversified |
Green
Metals ETF |
Non-Diversified |
Junior
Gold Miners ETF |
Non-Diversified |
Low
Carbon Energy ETF |
Non-Diversified |
Natural
Resources ETF |
Diversified |
Office
and Commercial REIT ETF |
Non-Diversified |
Oil
Refiners ETF |
Non-Diversified |
Oil
Services ETF |
Non-Diversified |
Rare
Earth and Strategic Metals ETF |
Non-Diversified |
Steel
ETF |
Non-Diversified |
Uranium
and Nuclear ETF |
Non-Diversified |
Country/Regional
ETFs |
Africa
Index ETF |
Diversified |
Brazil
Small-Cap ETF |
Diversified |
ChiNext
ETF* |
Diversified |
Digital
India ETF |
Non-Diversified |
India
Growth Leaders ETF* |
Diversified |
Indonesia
Index ETF |
Non-Diversified |
Israel
ETF |
Non-Diversified |
Russia
ETF |
Non-Diversified |
Russia
Small-Cap ETF |
Non-Diversified |
Vietnam
ETF |
Non-Diversified |
*Each
of VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend
ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck India Growth Leaders ETF,
VanEck Long/Flat Trend ETF, VanEck Morningstar Global Wide Moat ETF, VanEck
Morningstar International Moat ETF and VanEck Morningstar Wide Moat ETF intends
to be diversified in approximately the same proportion as its underlying index
is diversified. Each of VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck
Durable High Dividend ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck India
Growth Leaders ETF, VanEck Long/Flat Trend ETF, VanEck Morningstar Global Wide
Moat ETF, VanEck Morningstar International Moat ETF and VanEck Morningstar Wide
Moat ETF may become
non-diversified,
as defined in the 1940 Act, solely as a result of a change in relative market
capitalization or index weighting of one or more constituents of its underlying
index.
The
Funds offer and issue Shares at their net asset value (“NAV”) only in
aggregations of a specified number of Shares (each, a “Creation Unit”).
Similarly, Shares are redeemable by the Funds only in Creation Units, as further
described in the chart below. The Shares of the Funds are listed on either NYSE
Arca, Inc. (“NYSE Arca”), The NASDAQ Stock Market LLC (“NASDAQ”) or the Cboe BZX
Exchange, Inc. (“Cboe”) as set forth on the cover page of this SAI, and Shares
of each Fund trade in the secondary market at market prices that may differ from
the Shares’ NAV. NYSE Arca, NASDAQ and Cboe are each referred to as an
“Exchange” and collectively, the “Exchanges.” The Trust reserves the right to
permit or require a “cash” option for creations and redemptions of Shares
(subject to applicable legal requirements) to the extent Shares are not created
or redeemed wholly in cash.
Creation
and Redemption Features
The
chart below sets forth certain relevant information regarding the creation and
redemption features pertaining to each Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
Name |
In Kind |
In Cash |
Partially
In Cash/Partially In Kind |
Primarily
in Cash/Partially In Kind |
Primarily
In Kind/Partially in Cash |
Standard
Transaction
Fee* |
|
Municipal
ETFs |
CEF
Muni Income ETF |
X |
|
|
|
|
$250 |
High
Yield Muni ETF |
X |
|
|
|
|
$250 |
HIP
Sustainable Muni ETF |
X |
|
|
|
|
$250 |
Intermediate
Muni ETF |
X |
|
|
|
|
$250 |
Long
Muni ETF |
X |
|
|
|
|
$250 |
Short
High Yield Muni ETF |
X |
|
|
|
|
$250 |
Short
Muni ETF |
X |
|
|
|
|
$250 |
CLO/Equity/Fixed
Income ETFs |
BDC
Income ETF |
X |
|
|
|
|
$250 |
China
Bond ETF |
|
X |
|
|
|
$100 |
CLO
ETF |
|
|
|
X |
|
$250 |
Durable
High Dividend ETF |
X |
|
|
|
|
$250 |
Dynamic
High Income ETF |
X |
|
|
|
|
$250 |
Emerging
Markets High Yield Bond ETF |
X |
|
|
|
|
$800 |
Energy
Income ETF |
X |
|
|
|
|
$250 |
Fallen
Angel High Yield Bond ETF |
X |
|
|
|
|
$450 |
Green
Bond ETF |
X |
|
|
|
|
$500 |
IG
Floating Rate ETF |
X |
|
|
|
|
$200 |
International
High Yield Bond ETF |
X |
|
|
|
|
$800 |
J.P.
Morgan EM Local Currency Bond ETF |
|
|
|
|
X |
$1,000 |
Moody's
Analytics BBB Corporate Bond ETF |
X |
|
|
|
|
$250 |
Moody's
Analytics IG Corporate Bond ETF |
X |
|
|
|
|
$250 |
Mortgage
REIT Income ETF |
X |
|
|
|
|
$250 |
Preferred
Securities ex Financials ETF |
X |
|
|
|
|
$250 |
Thematic/Strategic
Equity ETFs |
Biotech
ETF |
X |
|
|
|
|
$250 |
Digital
Transformation ETF |
X |
|
|
|
|
$400 |
Environmental
Services ETF |
X |
|
|
|
|
$250 |
Fabless
Semiconductor ETF |
X |
|
|
|
|
$250 |
Gaming
ETF |
|
|
|
|
X |
$500 |
Green
Infrastructure ETF |
X |
|
|
|
|
$250 |
Inflation
Allocation ETF |
|
|
|
|
X |
$250 |
Long/Flat
Trend ETF |
X |
|
|
|
|
$250 |
Morningstar
ESG Moat ETF |
X |
|
|
|
|
$250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
Name |
In Kind |
In Cash |
Partially
In Cash/Partially In Kind |
Primarily
in Cash/Partially In Kind |
Primarily
In Kind/Partially in Cash |
Standard
Transaction
Fee* |
Morningstar
Global Wide Moat ETF |
|
|
|
|
X |
$500 |
Morningstar
International Moat ETF |
|
|
|
|
X |
$750 |
Morningstar
SMID Moat ETF |
X |
|
|
|
|
$250 |
Morningstar
Wide Moat ETF |
X |
|
|
|
|
$250 |
Morningstar
Wide Moat Growth ETF |
X |
|
|
|
|
$250 |
Morningstar
Wide Moat Value ETF |
X |
|
|
|
|
$250 |
Pharmaceutical
ETF |
X |
|
|
|
|
$250 |
Retail
ETF |
X |
|
|
|
|
$250 |
Robotics
ETF |
X |
|
|
|
|
$400 |
Semiconductor
ETF |
X |
|
|
|
|
$300 |
Social
Sentiment ETF |
X |
|
|
|
|
$250 |
Video
Gaming and eSports ETF |
|
|
|
|
X |
$500 |
Commodity
Strategy/Natural Resources ETFs |
Agribusiness
ETF |
|
|
|
|
X |
$500 |
CMCI
Commodity Strategy ETF |
|
X |
|
|
|
$100 |
Commodity
Strategy ETF |
|
X |
|
|
|
$100 |
Ethereum
Strategy ETF |
|
X |
|
|
|
$100 |
Gold
Miners ETF |
X |
|
|
|
|
$500 |
Green
Metals ETF |
|
|
|
|
X |
$400 |
Junior
Gold Miners ETF |
X |
|
|
|
|
$750 |
Low
Carbon Energy ETF |
|
|
|
|
X |
$500 |
Natural
Resources ETF |
|
|
|
|
X |
$1,000 |
Office
and Commercial REIT ETF |
X |
|
|
|
|
$250 |
Oil
Refiners ETF |
|
|
|
|
X |
$500 |
Oil
Services ETF |
X |
|
|
|
|
$300 |
Rare
Earth and Strategic Metals ETF |
|
|
|
|
X |
$500 |
Steel
ETF |
X |
|
|
|
|
$250 |
Uranium
and Nuclear ETF |
|
|
|
|
X |
$500 |
Country/Regional
ETFs |
Africa
Index ETF |
|
|
|
|
X |
$750 |
Brazil
Small-Cap ETF |
|
|
|
X |
|
$500 |
ChiNext
ETF |
|
X |
|
|
|
$250 |
Digital
India ETF |
|
|
|
X |
|
$250 |
|
|
|
|
|
|
|
India
Growth Leaders ETF |
|
|
|
X |
|
$250 |
Indonesia
Index ETF |
X |
|
|
|
|
$750 |
Israel
ETF |
X |
|
|
|
|
$800 |
Russia
ETF |
X |
|
|
|
|
$500 |
Russia
Small-Cap ETF |
X |
|
|
|
|
$500 |
Vietnam
ETF |
|
|
|
X |
|
$250 |
*Standard
(fixed) Transaction Fee is payable to the Custodian (as defined herein);
however, the Custodian may increase the standard (fixed) transaction fee for
administration and settlement of non-standard orders requiring additional
administrative processing by the Custodian. The Trust may also impose variable
fees in connection with certain creation and redemption transactions. See the
“Creation and Redemption of Creation Units” section below for additional
information.
INVESTMENT
POLICIES AND RESTRICTIONS
General
Each
of VanEck Long/Flat Trend ETF (to the extent the Fund is holding shares of one
or more exchange-traded funds (“ETFs”) rather than investing directly in the
shares of the companies comprising the S&P 500 Index), VanEck CEF Muni
Income ETF and VanEck Inflation Allocation ETF is a “fund of funds.” Each of
VanEck CEF Muni Income ETF, VanEck Inflation Allocation ETF and VanEck Long/Flat
Trend ETF invests all or a portion of its assets in other funds it invests in
(the “Underlying Funds”). The performance of VanEck CEF Muni Income ETF is
dependent on the performance of the Underlying Funds. VanEck CEF Muni Income ETF
will be subject to the risks of the Underlying Funds’ investments. Because the
investment characteristics of VanEck CEF Muni Income ETF will correspond
directly to those of the Underlying Funds, the following applies to both VanEck
CEF Muni Income ETF and the Underlying Funds, as applicable, and except where
otherwise indicated, this SAI uses the term “Fund,” when referring to VanEck CEF
Muni Income ETF to mean VanEck CEF Muni Income ETF and the Underlying Funds, as
applicable. The VanEck Inflation Allocation ETF invests all or a portion of its
assets in exchange traded products that are registered under the federal
securities laws (“Exchange Traded Products”), including ETFs and exchange-traded
notes (“ETNs”). The performance of VanEck Inflation Allocation ETF is dependent
on the performance of the Exchange Traded Products. VanEck Inflation Allocation
ETF will be subject to the risks of the Exchange Traded Products’ investments.
The performance of VanEck Long/Flat Trend ETF (to the extent the Fund is holding
shares of one or more ETFs rather than investing directly in the shares of the
companies comprising the S&P 500 Index) is dependent on the performance of
the ETFs it invests in. VanEck Long/Flat Trend ETF will be subject to the risks
of the ETFs' investments.
VanEck
CEF Muni Income ETF, VanEck China Bond ETF, VanEck Emerging Markets High Yield
Bond ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck Green Bond ETF, VanEck
High Yield Muni ETF, VanEck Intermediate Muni ETF, VanEck International High
Yield Bond ETF, VanEck IG Floating Rate ETF, VanEck J.P. Morgan EM Local
Currency Bond ETF, VanEck Long Muni ETF, VanEck Moody's Analytics BBB Corporate
Bond ETF, VanEck Moody's Analytics IG Corporate Bond ETF, VanEck Short High
Yield Muni ETF and VanEck Short Muni ETF are each defined as a “Fixed Income
Fund” and collectively as the “Fixed Income Funds.”
VanEck
India Growth Leaders ETF seeks to achieve its investment objective by investing
substantially all of its assets in a wholly-owned subsidiary in Mauritius, MV
SCIF Mauritius, a private company limited by shares incorporated in Mauritius
(the “Mauritius Subsidiary”), that has the same investment objective as VanEck
India Growth Leaders ETF. Because the investment characteristics of VanEck India
Growth Leaders ETF will correspond directly to those of the Mauritius Subsidiary
(which is managed by and its decisions are taken by its independent Board of
Directors), the following applies to both VanEck India Growth Leaders ETF and
the Mauritius Subsidiary, as applicable, and except where otherwise indicated,
this SAI uses the term “Fund” when referring to VanEck India Growth Leaders ETF
to mean VanEck India Growth Leaders ETF and/or the Mauritius Subsidiary, as
applicable.
VanEck
CLO ETF seeks to achieve its investment objective by investing, under normal
circumstances, primarily in investment grade-rated debt tranches of
collateralized loan obligations (“CLOs”) of any maturity. Investment grade CLOs
are rated inclusive and above BBB- by S&P Global Ratings or Baa3 Moody’s
Investors Service, Inc. (or equivalent rating issued by a nationally recognized
statistical rating organization (“NRSRO”)), or if unrated, determined to be of
comparable credit quality by the Adviser (as defined below) and/or PineBridge
Investments, LLC, the Fund’s sub-adviser (the “Sub-Adviser”).
VanEck
Commodity Strategy ETF seeks to achieve its investment objective by investing,
under normal circumstances, in exchange-traded commodity futures contracts,
exchange-traded and over-the-counter (“OTC”) commodity-linked instruments, and
pooled investment vehicles, including exchange-traded products that provide
exposure to commodities (“Commodities Instruments”) and cash and certain fixed
income investments.
VanEck
Dynamic High Income ETF is an actively managed ETF that seeks to achieve its
investment objective by investing, under normal circumstances, in
exchange-traded products (“ETPs”) that are registered under the applicable
federal securities laws and that invest in securities that generate income. The
Fund may also invest in U.S. Treasury securities under normal circumstances.
While Van Eck Associates Corporation (“VEAC”) currently anticipates that the
ETPs that the Fund may invest in will primarily be ETFs managed VEAC, Van Eck
Absolute Return Advisers Corporation (“VEARA”) or their affiliates, the Fund may
also invest in affiliated and unaffiliated ETPs, which could include ETFs and
closed-end funds that invest in income generating asset classes. The performance
of the Fund is largely dependent on the performance of, and the Fund will be
subject to the risks of, such other funds that the Fund invests in.
VanEck
CMCI Commodity Strategy ETF seeks to achieve its investment objective by
investing under normal circumstances in instruments that derive their value from
the performance of the Index. In seeking to replicate the Index, the Fund
invests in (i) commodity-linked derivative instruments, including commodity
index-linked notes, swap agreements, commodity futures contracts and options on
futures contracts that provide economic exposure to the investment returns of
the
commodities
markets, as represented by the Index and its constituents and in (ii) bonds,
debt securities and other fixed income instruments issued by various U.S.
public- or private-sector entities.
VanEck
Ethereum Strategy ETF pursues its investment strategy primarily by investing in
standardized, cash-settled Ether (“ETH”) futures contracts (“ETH Futures”)
traded on commodity exchanges registered with the Commodity Futures Trading
Commission (“CFTC”). Currently, the only ETH Futures the Fund intends to invest
in are those traded on the Chicago Mercantile Exchange (the “CME”). The Fund
seeks to invest in ETH Futures so that the total value of the ETH to which the
Fund has economic exposure is approximately 100% to 125% of the total assets of
the Fund (the “Target Exposure”) in order to account for the Fund’s accrued tax
liabilities. The Fund is not seeking a levered return to ETH. In addition, the
Fund expects to have significant holdings of U.S. Treasuries, other U.S.
government obligations, money market funds and funds that invest in short-term
bonds, cash and cash-like equivalents (e.g., high quality commercial paper and
similar instruments that are rated investment grade or, if unrated, of
comparable quality, as the Adviser determines), mortgage-backed securities
issued or guaranteed by U.S. government agencies, instrumentalities or sponsored
enterprises of the U.S. government (whether or not the securities are U.S.
government securities), municipal debt securities, Treasury inflation-protected
securities, sovereign debt obligations of non-U.S. countries, and repurchase
agreements. If the Fund is unable to achieve the Target Exposure because it is
approaching or has exceeded position limits or because of liquidity or other
constraints, the Fund may invest in equity securities of “ETH-related
companies.” For these purposes, ETH-related companies are companies, including
investment companies, listed on a U.S. stock exchange that the Adviser believes
provide returns that generally correspond, or are closely related, to the
performance of ETH or ETH Futures. For example, the Fund may invest in U.S.
listed companies engaged in digital asset mining or offering digital asset
trading platforms. The
Fund currently only intends to invest in the securities and instruments
discussed above. Any discussion in this SAI regarding any other type of
investment not included in this paragraph does not apply to the
Fund.
Municipal
Securities
Certain
Funds may invest in securities issued by states, municipalities and other
political subdivisions, agencies, authorities and instrumentalities of states
and multi-state agencies or authorities. Municipal securities share the
attributes of debt/fixed income securities in general, but are generally issued
by states, municipalities and other political subdivisions, agencies,
authorities and instrumentalities of states and multi-state agencies or
authorities. The municipal securities that each Fund may purchase include
general obligation bonds and limited obligation bonds (or revenue bonds),
including industrial development bonds issued pursuant to former federal tax
law. General obligation bonds are obligations involving the credit of an issuer
possessing taxing power and are payable from such issuer’s general revenues and
not from any particular source. Limited obligation bonds are payable only from
the revenues derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or other specific revenue
source. Tax-exempt industrial development bonds generally are also revenue bonds
and thus are not payable from the issuer’s general revenues. The credit and
quality of industrial development bonds are usually related to the credit of the
corporate user of the facilities. Payment of interest on and repayment of
principal of such bonds is the responsibility of the corporate user (and/or any
guarantor). In addition, certain Funds may invest in lease obligations. Lease
obligations may take the form of a lease or an installment purchase contract
issued by public authorities to acquire a wide variety of equipment and
facilities. The securities of state and municipal governments and their
political subdivisions are not considered to be issued by members of any
industry.
Investments
in municipal securities are subject to the risk that the issuer could default on
its obligations. Such a default could result from the inadequacy of the sources
or revenues from which interest and principal payments are to be made, including
property tax collections, sales tax revenue, income tax revenue and local, state
and federal government funding, or the assets collateralizing such obligations.
Municipal securities and their issuers may be more susceptible to downgrade,
default, and bankruptcy as a result of recent periods of economic stress. During
and following the economic downturn beginning in 2008, several municipalities
have filed for bankruptcy protection or have indicated that they may seek
bankruptcy protection in the future. In addition, many states and municipalities
have been adversely impacted by the COVID-19 pandemic as a result of declines in
revenues and increased expenditures required to manage and mitigate the
outbreak. Revenue bonds, including private activity bonds, are backed only by
specific assets or revenue sources and not by the full faith and credit of the
governmental issuer.
Repurchase
Agreements
The
Funds may invest in repurchase agreements with commercial banks, brokers or
dealers to generate income from their excess cash balances and to invest
securities lending cash collateral. A repurchase agreement is an agreement under
which a Fund acquires a money market instrument (generally a security issued by
the U.S. Government or an agency thereof, a banker’s acceptance or a certificate
of deposit) from a seller, subject to resale to the seller at an agreed-upon
price and date (normally, the next business day). A repurchase agreement may be
considered a loan collateralized by securities. The resale price reflects an
agreed upon interest rate effective for the period the instrument is held by a
Fund and is unrelated to the interest rate on the underlying
instrument.
In
these repurchase agreement transactions, the securities acquired by a Fund
(including accrued interest earned thereon) must have a total value at least
equal to the value of the repurchase agreement and are held by the Trust’s
custodian bank until repurchased. In addition, the Trust’s Board of Trustees
(“Board” or “Trustees”) has established guidelines and standards for review of
the creditworthiness of any bank, broker or dealer counterparty to a repurchase
agreement with each Fund. No more than an aggregate of 15% of each Fund’s net
assets will be invested in repurchase agreements having maturities longer than
seven days.
The
use of repurchase agreements involves certain risks. For example, if the other
party to the agreement defaults on its obligation to repurchase the underlying
security at a time when the value of the security has declined, the Funds may
incur a loss upon disposition of the security. If the other party to the
agreement becomes insolvent and subject to liquidation or reorganization under
the Bankruptcy Code or other laws, a court may determine that the underlying
security is collateral not within the control of a Fund and, therefore, the Fund
may incur delays in disposing of the security and/or may not be able to
substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement.
Reverse
Repurchase Agreements
The
Funds may enter into reverse repurchase agreements with respect to its portfolio
investments subject to the investment restrictions set forth herein. Reverse
repurchase agreements involve the sale of securities held by a Fund with an
agreement by the Fund to repurchase the securities at an agreed upon price, date
and interest payment. The use by a Fund of reverse repurchase agreements
involves the risks of leverage since the proceeds derived from such reverse
repurchase agreements may be invested in additional securities. Reverse
repurchase agreements involve the risk that the market value of the securities
acquired in connection with the reverse repurchase agreement may decline below
the price of the securities a Fund has sold but is obligated to repurchase.
Also, reverse repurchase agreements involve the risk that the market value of
the securities retained in lieu of sale by the Fund in connection with the
reverse repurchase agreement may decline in price.
If
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce a Fund's obligation
to repurchase the securities, and the Fund's use of the proceeds of the reverse
repurchase agreement may effectively be restricted pending such decision. Also,
a Fund would bear the risk of loss to the extent that the proceeds of the
reverse repurchase agreement are less than the value of the securities subject
to such agreement.
In
October 2020, the SEC adopted a final rule related to the use of derivatives,
short sales, reverse repurchase agreements and certain other transactions by
registered investment companies (the “derivatives rule”). Under the derivatives
rule, when a fund trades reverse repurchase agreements or similar financing
transactions, including certain tender option bonds, it needs to aggregate the
amount of indebtedness associated with the reverse repurchase agreements or
similar financing transactions with the aggregate amount of any other senior
securities representing indebtedness (e.g.,
bank borrowings, if applicable) when calculating a fund’s asset coverage ratio
or treat all such transactions as derivatives transactions. See “SEC Regulatory
Matters” below.
Futures
Contracts and Options
Futures
contracts generally provide for the future purchase or sale of a specified
instrument, index or commodity at a specified future time and at a specified
price. Stock or bond index futures contracts and other types of futures
contracts are settled daily with a payment by the Fund (or exchange) to an
exchange (or Fund) of a cash amount based on the difference between the level of
the stock or bond index or underlying instrument specified in the contract from
one day to the next. Futures contracts are standardized as to maturity date and
underlying instrument and are traded on futures exchanges. The Funds may use
futures contracts and options on futures contracts which (i) in the case of all
Funds other than VanEck CLO ETF, VanEck CMCI Commodity Strategy ETF, VanEck
Commodity Strategy ETF, VanEck Dynamic High Income ETF, VanEck Ethereum Strategy
ETF, VanEck HIP
Sustainable
Muni ETF and VanEck Inflation Allocation ETF, VEAC (the “Adviser” with respect
to all Funds other than VanEck BDC Income ETF, VanEck CMCI Commodity Strategy
ETF, VanEck Commodity Strategy ETF, VanEck Ethereum Strategy ETF and VanEck
Inflation Allocation ETF) or VEARA (the “Adviser” with respect to VanEck BDC
Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF,
VanEck Ethereum Strategy ETF and VanEck Inflation Allocation ETF and, together
with VEAC, the “Advisers”) believes to be representative of each Fund’s
respective benchmark index (each, an “Index”), (ii) in the case of VanEck CLO
ETF, VanEck Dynamic High Income ETF and VanEck HIP
Sustainable
Muni ETF, VEAC believes to be appropriate and (iii) in the case of VanEck CMCI
Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck Ethereum Strategy
ETF and VanEck Inflation Allocation ETF, VEARA believes to be appropriate based
on other indices or combinations of indices.
An
option is a contract that provides the holder of the option the right to buy or
sell shares or other assets at a fixed price, within a specified period of time.
An American call option gives the option holder the right to buy the underlying
security from the option writer at the option exercise price at any time prior
to the expiration of the option. A European call option gives the option holder
the right to buy the underlying security from the option writer only on the
option expiration date. An American put option gives the option holder the right
to sell the underlying security to the option writer at the option exercise
price at any time prior to the expiration of the option. A European put option
gives the option holder the right to sell the underlying security to the option
writer at the option exercise price only on the option expiration
date.
Although
futures contracts (other than cash settled futures contracts, including most
stock or bond index futures contracts) by their terms call for actual delivery
or acceptance of the underlying instrument or commodity, in most cases the
contracts are closed out before the maturity date without the making or taking
of delivery. Closing out an open futures position is done by taking an opposite
position (buying the same contract which was previously sold or selling the same
contract previously purchased) in an identical contract to terminate the
position. Brokerage commissions are incurred when a futures contract position is
opened or closed.
Futures
traders are required to make a margin deposit (typically in cash or government
securities) with a broker or custodian to initiate and maintain open positions
in futures contracts. A margin deposit is intended to assure completion of the
contract (delivery or acceptance of the underlying instrument or commodity or
payment of the cash settlement amount) if it is not terminated prior to the
specified delivery date. Brokers may establish deposit requirements that are
higher than the exchange minimums. Futures contracts are customarily purchased
and sold on margin deposits that may vary.
After
a futures contract position is opened, the value of the contract is
marked-to-market daily. If the futures contract price changes to the extent that
the margin on deposit does not satisfy margin requirements, payment of
additional “variation” margin will be required.
Conversely,
a change in the contract value may reduce the required margin, resulting in a
repayment of excess margin to the contract holder. Variation margin payments are
made to and from the futures broker for as long as the contract remains open.
The Funds expect to earn interest income on their margin deposits in the form of
cash.
The
Funds may use futures contracts and options thereon, together with positions in
cash and money market instruments, to simulate full investment in each Fund’s
respective Index. Under such circumstances, the Adviser may seek to utilize
other instruments that it believes to be correlated to the Fund’s Index
components or a subset of the components. Liquid futures contracts may not be
currently available for the Index of each Fund.
Positions
in futures contracts and options may be closed out only on an exchange that
provides a secondary market therefor. However, there can be no assurance that a
liquid secondary market will exist for any particular futures contract or option
at any specific time. Thus, it may not be possible to close a futures or options
position. In the event of adverse price movements, the Funds would continue to
be required to make daily cash payments to maintain its required margin. In such
situations, if a Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Funds may be required to make
delivery of the instruments underlying futures contracts they have sold.
The
Funds may seek to minimize the risk that they will be unable to close out a
futures or options contract by only entering into futures and options for which
there appears to be a liquid secondary market.
The
risk of loss in trading futures contracts or uncovered call options in some
strategies (e.g.,
selling uncovered stock index futures contracts) is potentially unlimited. The
Funds do not plan to use futures and options contracts in this way. The risk of
a futures position may still be large as traditionally measured due to the low
margin deposits required. In many cases, a relatively small price movement in a
futures contract may result in immediate and substantial loss or gain to the
investor relative to the size of a required margin deposit.
Utilization
of futures transactions by certain Funds involves the risk of imperfect or even
negative correlation to each Fund’s respective Index if the index underlying the
futures contracts differs from the Index. There is also the risk of loss by the
Funds of margin deposits in the event of the bankruptcy or other similar
insolvency with respect to a broker with whom a Fund has an open position in the
futures contract or option.
Certain
financial futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day’s settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movements during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several
consecutive
trading days with little or no trading, thereby preventing prompt liquidation of
future positions and subjecting some futures traders to substantial
losses.
Except
as otherwise specified in the Funds’ Prospectuses or this SAI, there are no
limitations on the extent to which the Funds may engage in transactions
involving futures and options thereon. With respect to certain Funds, under
applicable Indian securities regulations, there are position limits on foreign
portfolio investor (“FPI”) investments in index futures and index futures
contracts on a particular underlying index under the Foreign Portfolio Investors
Regulations, 2019 (“FPI Regulations”) of the Securities and Exchange Board of
India (“SEBI”). The Funds also are required to comply with the derivatives rule
when they engage in transactions involving futures and options thereon. See “SEC
Regulatory Matters” below.
Swaps
OTC
swap agreements are contracts between parties in which one party agrees to make
payments to the other party based on the change in market value or level of a
specified index or asset. In return, the other party agrees to make payments to
the first party based on the return of a different specified index or asset,
usually an interest rate. Although OTC swap agreements entail the risk that a
party will default on its payment obligations thereunder, each Fund seeks to
reduce this risk generally by receiving (or paying) collateral daily and
entering into agreements that involve payments no less frequently than
quarterly. The net amount of the excess, if any, of a Fund’s obligations over
its entitlements with respect to each swap is accrued on a daily basis and an
amount of cash or highly liquid securities having an aggregate value at least
equal to the accrued excess is maintained in an account at the Trust’s custodian
bank.
In
addition, certain Funds may enter into interest rate swaps and credit default
swaps. Interest rate swaps are typically exchange-traded contracts in which a
party agrees to make periodic payments on certain referenced interest rates
(e.g.,
a fixed rate or a floating rate) applied to a specified notional amount. A
credit default swap on a security is a bilateral contract that enables an
investor to buy or sell protection against a defined-issuer credit event. Credit
default swaps referencing fixed income indices are generally traded on
exchanges. Certain Funds may enter into credit default swap agreements either as
a buyer or a seller. A Fund may buy protection to attempt to mitigate the risk
of default or credit quality deterioration in one or more of its individual
holdings or in a segment of the fixed income securities market to which it has
exposure, or to take a “short” position in individual bonds or market segments
which it does not own. A Fund may sell protection in an attempt to gain exposure
to the credit quality characteristics of particular bonds or market segments
without investing directly in those bonds or market segments. As the protection
seller in a credit default swap, a Fund effectively adds economic leverage to
its portfolio because, in addition to being subject to investment exposure on
its total net assets, the Fund is subject to investment exposure on the notional
amount of the swap.
The
use of such swap agreements involves certain risks. For example, if the
counterparty under an OTC swap agreement defaults on its obligation to make
payments due from it as a result of its bankruptcy or otherwise, the Funds may
lose such payments altogether or collect only a portion thereof, which
collection could involve costs or delays.
The
Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”)
and related regulatory developments require the clearing and exchange-trading of
certain standardized OTC derivative instruments that the CFTC and the SEC
defined as “swaps” and “security-based swaps,” respectively. Mandatory
exchange-trading and clearing is occurring on a phased-in basis based on the
type of market participant and CFTC approval of contracts for central clearing
and exchange trading. In a cleared swap, a Fund’s ultimate counterparty is a
central clearinghouse rather than a swap dealer, bank or other financial
institution. A Fund enters into cleared swaps through an executing broker. Such
transactions are then submitted for clearing and, if cleared, will be held at
regulated futures commission merchants (“FCMs”) that are members of the
clearinghouse that serves as the central counterparty. When a Fund enters into a
cleared swap, it must deliver to the central counterparty (via an FCM) an amount
referred to as “initial margin.” Initial margin requirements are determined by
the central counterparty, but an FCM may require additional initial margin above
the amount required by the central counterparty. During the term of the swap
agreement, a “variation margin” amount may also be required to be paid by a Fund
or may be received by the Fund in accordance with margin controls set for such
accounts, depending upon changes in the price of the underlying reference asset
subject to the swap agreement. At the conclusion of the term of the swap
agreement, if a Fund has a loss equal to or greater than the margin amount, the
margin amount is paid to the FCM along with any loss in excess of the margin
amount. If a Fund has a loss of less than the margin amount, the excess margin
is returned to the Fund. If a Fund has a gain, the full margin amount and the
amount of the gain is paid to the Fund.
Central
clearing is designed to reduce counterparty credit risk compared to uncleared
swaps because central clearing interposes the central clearinghouse as the
counterparty to each participant’s swap, but it does not eliminate those risks
completely. There is also a risk of loss by a Fund of the initial and variation
margin deposits in the event of bankruptcy of the FCM with which the Fund has an
open position in a swap contract. The assets of a Fund may not be fully
protected in the
event
of the bankruptcy of the FCM or central counterparty because the Fund might be
limited to recovering only a pro rata share of all available funds and margin
segregated on behalf of an FCM’s customers or central counterparty’s clearing
members. If the FCM does not provide accurate reporting, a Fund is also subject
to the risk that the FCM could use the Fund’s assets, which are held in an
omnibus account with assets belonging to the FCM’s other customers, to satisfy
its own financial obligations or the payment obligations of another customer to
the central counterparty. Certain swaps have begun trading on exchanges called
swap execution facilities. Exchange-trading is expected to, but may not
necessarily, increase the liquidity of swaps trading.
In
addition, with respect to cleared swaps, a Fund may not be able to obtain as
favorable terms as it would be able to negotiate for an uncleared swap. In
addition, an FCM may unilaterally impose position limits or additional margin
requirements for certain types of swaps in which a Fund may invest. Central
counterparties and FCMs generally can require termination of existing cleared
swap transactions at any time, and can also require increases in margin above
the margin that is required at the initiation of the swap agreement. Margin
requirements for cleared swaps vary on a number of factors, and the margin
required under the rules of the clearinghouse and FCM may be in excess of the
collateral required to be posted by a Fund to support its obligations under a
similar uncleared swap. However, regulators recently adopted rules imposing
certain margin requirements, including minimums and required daily margin
transfers on uncleared swaps.
The
Funds are also subject to the risk that, after entering into a cleared swap with
an executing broker, no FCM or central counterparty is willing or able to clear
the transaction. In such an event, the central counterparty would void the
trade. Before a Fund can enter into a new trade, market conditions may become
less favorable to the Fund.
The
Adviser will continue to monitor developments regarding trading and execution of
cleared swaps on exchanges, particularly to the extent regulatory changes affect
a Fund’s ability to enter into swap agreements and the costs and risks
associated with such investments.
SEBI
has prohibited FPIs (in their capacity as issuers of offshore derivative
instruments (“ODIs”)) from issuing ODIs that have derivatives as their
underlying instruments, unless such exposure is for hedging purposes. ODIs are
defined under the FPI Regulations as any instrument issued overseas by an FPI
against securities held by it that are listed or proposed to be listed on any
recognized stock exchange in India or unlisted debt securities or securitized
debt instruments as its underlying instrument.
SEC
Regulatory Matters
Subject
to certain exceptions, the derivatives rule requires a Fund to trade derivatives
and other transactions that create future payment or delivery obligations
subject to a value-at-risk (“VaR”) leverage limit and certain derivatives risk
management program and reporting requirements. Generally, these requirements
apply unless a fund satisfies a “limited derivatives users” exception that is
included in the derivatives rule. Under the derivatives rule, when a fund trades
reverse repurchase agreements or similar financing transactions, including
certain tender option bonds, it needs to aggregate the amount of indebtedness
associated with the reverse repurchase agreements or similar financing
transactions with the aggregate amount of any other senior securities
representing indebtedness (e.g.,
bank borrowings, if applicable) when calculating a Fund’s asset coverage ratio
or treat all such transactions as derivatives transactions. Reverse repurchase
agreements or similar financing transactions aggregated with other indebtedness
do not need to be included in the calculation of whether a fund satisfies the
limited derivatives users exception, but for funds subject to the VaR testing
requirement, reverse repurchase agreements and similar financing transactions
must be included for purposes of such testing whether treated as derivatives
transactions or not. In addition, under the derivatives rule, a Fund is
permitted to invest in a security on a when-issued or forward-settling basis, or
with a non-standard settlement cycle, and the transaction will be deemed not to
involve a senior security under the 1940 Act, provided that (i) the Fund intends
to physically settle the transaction and (ii) the transaction will settle within
35 days of its trade date (the “Delayed-Settlement Securities Provision”). A
Fund may otherwise engage in such transactions that do not meet the conditions
of the Delayed-Settlement Securities Provision so long as the Fund treats any
such transaction as a “derivatives transaction” for purposes of compliance with
the derivatives rule. Furthermore, under the derivatives rule, a Fund will be
permitted to enter into an unfunded commitment agreement, and such unfunded
commitment agreement will not be subject to the asset coverage requirements
under the 1940 Act, if the Fund reasonably believes, at the time it enters into
such agreement, that it will have sufficient cash and cash equivalents to meet
its obligations with respect to all such agreements as they come due. The
Advisers cannot predict the effects of these regulations on the Funds. The
Advisers intend to monitor developments and seek to manage each Fund in a manner
consistent with achieving the Fund’s investment objective.
Warrants
and Subscription Rights
Warrants
are equity securities in the form of options issued by a corporation which give
the holder the right, but not the obligation, to purchase stock, usually at a
price that is higher than the market price at the time the warrant is issued. A
purchaser
takes the risk that the warrant may expire worthless because the market price of
the common stock fails to rise above the price set by the warrant.
Currency
Forwards
A
currency forward transaction is a contract to buy or sell a specified quantity
of currency at a specified date in the future at a specified price which may be
any fixed number of days from the date of the contract agreed upon by the
parties at a price set at the time of the contract. Currency forward contracts
may be used to increase or reduce exposure to currency price
movements.
The
use of currency forward transactions involves certain risks. For example, if the
counterparty under the contract defaults on its obligation to make payments due
from it as a result of its bankruptcy or otherwise, a Fund may lose such
payments altogether or collect only a portion thereof, which collection could
involve costs or delays.
In
early 2018, SEBI and the Reserve Bank of India (the “RBI”) introduced new
regulation that permits FPIs to take long or short positions without having to
establish underlying exposure up to a single limit of $100 million or its
equivalent, across all currency pairs involving Indian rupees combined across
all stock exchanges in India. FPIs are required to ensure that their short
positions on all stock exchanges across all contracts in foreign currency-Indian
rupee (“FCY-INR”) pairs do not exceed $100 million. In the event an FPI breaches
the short position limit, a stock exchange shall restrict the FPI from
increasing its existing short positions or creating new short positions in the
currency pair until such time the FPI is in compliance with the existing
requirements. To take long positions in excess of $100 million in all contracts
in FCY-INR pairs, FPIs are required to have an underlying exposure in Indian
debt or equity securities, including units of equity or debt funds.
The
Funds also are required to comply with the derivatives rule when they engage in
currency forward transactions that create future Fund payment or delivery
obligations. See “SEC Regulatory Matters”above.
Convertible
Securities
A
convertible security is a bond, debenture, note, preferred stock, right, warrant
or other security that may be converted into or exchanged for a prescribed
amount of common stock or other security of the same or a different issuer or
into cash within a particular period of time at a specified price or formula. A
convertible security generally entitles the holder to receive interest paid or
accrued on debt securities or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities generally have characteristics similar to
both debt and equity securities. The value of convertible securities tends to
decline as interest rates rise and, because of the conversion feature, tends to
vary with fluctuations in the market value of the underlying securities.
Convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stock of the same or similar issuers.
Convertible securities generally rank senior to common stock in a corporation’s
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases of the underlying securities although the market
prices of convertible securities may be affected by any dividend changes or
other changes in the underlying securities.
Initial
Public Offerings
A
Fund may invest in initial public offerings (“IPOs”) of common stock or other
primary or secondary syndicated offerings of equity or debt securities issued by
a corporate issuer. A purchase of IPO securities often involves higher
transaction costs than those associated with the purchase of securities already
traded on exchanges or markets. IPO securities are subject to market risk and
liquidity risk. The market value of recently issued IPO securities may fluctuate
considerably due to factors such as the absence of a prior public market,
unseasoned trading and speculation, a potentially small number of securities
available for trading, limited information about the issuer, and other factors.
A Fund may hold IPO securities for a period of time, or may sell them soon after
the purchase. Investments in IPOs could have a magnified impact – either
positive or negative – on a Fund’s performance while a Fund’s assets are
relatively small. The impact of an IPO on a Fund’s performance may tend to
diminish as a Fund’s assets grow. In circumstances when investments in IPOs make
a significant contribution to the Fund’s performance, there can be no assurance
that similar contributions from IPOs will continue in the future.
Special
Purpose Acquisition Companies
A
Fund may invest in stock, warrants, and other securities of special purpose
acquisition companies (“SPACs”) or similar special purpose entities. A SPAC is
typically a publicly traded company that raises investment capital via an IPO
for the
purpose
of acquiring the equity securities of one or more existing companies (or
interests therein) via merger, combination, acquisition or other similar
transactions. A Fund may acquire an interest in a SPAC in an IPO or a secondary
market transaction.
Unless
and until an acquisition is completed, a SPAC generally invests its assets (less
a portion retained to cover expenses) in U.S. government securities, money
market securities and cash. To the extent the SPAC is invested in cash or
similar securities, this may negatively affect a Fund’s performance. Because
SPACs and similar entities are in essence blank check companies without
operating history or ongoing business other than seeking acquisitions, the value
of their securities is particularly dependent on the ability of the entity’s
management to identify and complete a profitable acquisition. There is no
guarantee that the SPACs in which a Fund invests will complete an acquisition or
that any acquisitions that are completed will be profitable. Some SPACs may
pursue acquisitions only within certain industries or regions, which may
increase the volatility of their prices. In addition, these securities, which
are typically traded in the over-the-counter market, may be considered illiquid
and/or be subject to restrictions on resale.
Other
risks of investing in SPACs include that a significant portion of the monies
raised by the SPAC may be expended during the search for a target transaction;
an attractive transaction may not be identified at all (or any requisite
approvals may not be obtained) and the SPAC may dissolve and be required to
return any remaining monies to shareholders, causing a Fund to incur the
opportunity cost of missed investment opportunities a Fund otherwise could have
benefited from; a transaction once identified or effected may prove unsuccessful
and an investment in the SPAC may lose value; the warrants or other rights with
respect to the SPAC held by a Fund may expire worthless or may be repurchased or
retired by the SPAC at an unfavorable price; and an investment in a SPAC may be
diluted by additional later offerings of interests in the SPAC or by other
investors exercising existing rights to purchase shares of the SPAC. In
addition, a SPAC target company may have limited operating experience, a smaller
size, limited product lines, markets, distribution channels and financial and
managerial resources. Investing in the securities of smaller companies involves
greater risk, and portfolio price volatility.
Market
Risk
A
Fund could lose money over short periods due to short-term market movements and
over longer periods during more prolonged market downturns. The prices of
the securities in a Fund are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. Market risk arises mainly from uncertainty about
future values of financial instruments and may be influenced by price, currency
and interest rate movements. These risks may be magnified if certain social,
political, economic and other conditions and events (such as natural disasters,
epidemics and pandemics, terrorism, conflicts and social unrest) adversely
interrupt the global economy; in these and other circumstances, such events or
developments might affect companies world-wide. As global systems, economies and
financial markets are increasingly interconnected, events that occur in one
country, region or financial market will, more frequently, adversely impact
issuers in other countries, regions or markets. During a general market
downturn, multiple asset classes may be negatively affected. Changes in
market conditions and interest rates generally do not have the same impact on
all types of securities and instruments.
Economies
and financial markets throughout the world have experienced periods of increased
volatility, uncertainty and distress. To the extent these conditions continue,
the risks associated with an investment in the Fund, including those described
below, could be heightened and the Fund’s investments (and thus a shareholder’s
investment in the Fund) may be particularly susceptible to sudden and
substantial losses, reduced yield or income or other adverse
developments.
Structured
Notes
A
structured note is a derivative security for which the amount of principal
repayment and/or interest payments is based on the movement of one or more
“factors.” These factors include, but are not limited to, currency exchange
rates, interest rates (such as the prime lending rate), referenced bonds and
stock indices. Some of these factors may or may not correlate to the total rate
of return on one or more underlying instruments referenced in such notes.
Investments in structured notes involve risks including interest rate risk,
credit risk and market risk. Depending on the factor(s) used and the use of
multipliers or deflators, changes in interest rates and movement of such
factor(s) may cause significant price fluctuations. Structured notes may be less
liquid than other types of securities and more volatile than the reference
factor underlying the note.
Participation
Notes
Participation
notes (“P-Notes”) are issued by banks or broker-dealers and are designed to
offer a return linked to the performance of a particular underlying equity
security or market. P-Notes can have the characteristics or take the form of
various
instruments, including, but not limited to, certificates or warrants. The holder
of a P-Note that is linked to a particular underlying security may, among other
things, be entitled to receive any dividends paid in connection with the
underlying security. However, the holder of a P-Note generally does not receive
voting rights as it would if it directly owned the underlying security. P-Notes
constitute direct, general and unsecured contractual obligations of the banks or
broker-dealers that issue them, which therefore subject the subscriber to
counterparty risk, as discussed below. Investments in P-Notes involve certain
risks in addition to those associated with a direct investment in the underlying
foreign securities or foreign securities markets whose return they seek to
replicate. For instance, there can be no assurance that the trading price of a
P-Note will equal the value of the underlying foreign security or foreign
securities market that it seeks to replicate. As the purchaser of a P-Note, a
Fund is relying on the creditworthiness of the counterparty issuing the P-Note
and has no rights under a P-Note against the issuer of the underlying security.
Therefore, if such counterparty were to become insolvent, a Fund would lose its
investment. The risk that a Fund may lose its investments due to the insolvency
of a single counterparty may be amplified to the extent the Fund purchases
P-Notes issued by one issuer or a small number of issuers. P-Notes also include
transaction costs in addition to those applicable to a direct investment in
securities. In addition, a Fund’s use of P-Notes may cause the Fund’s
performance to deviate from the performance of the portion of the Index to which
the Fund is gaining exposure through subscription to P-Notes.
Due
to liquidity and transfer restrictions, the secondary markets on which P-Notes
are traded may be less liquid than the markets for other securities, which may
lead to the absence of readily available market quotations for securities in a
Fund’s portfolio and may cause the value of the P-Notes to decline. The ability
of a Fund to value its securities becomes more difficult and the Adviser’s
and/or Sub-Adviser’s judgment in the application of fair value procedures may
play a greater role in the valuation of a Fund’s securities due to reduced
availability of reliable objective pricing data. Consequently, while such
determinations will be made in good faith, it may nevertheless be more difficult
for a Fund to accurately assign a daily value to such securities.
P-Notes
in India eligible for subscription by certain Funds must be issued by banks or
broker-dealers that are registered with the SEBI as a Category I FPI as defined
under the SEBI FPI Regulations to issue offshore derivative instruments (“ODIs”)
and are subject to eligibility requirements and transfer restrictions. For more
information, please see “Investment Policies and Restrictions -
Swaps.”
Indian
SEBI Takeover Regulations
Under
the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 (“Takeover Code”), any acquirer who acquires, together with
persons acting in concert with him, 5% or more of the shares or voting rights of
a listed public Indian company, is required to notify the company and the stock
exchanges on which the shares of such company are listed about its holding
within the prescribed time period (including changes in holdings by more than
certain thresholds).
Upon
the acquisition of 25% or more of shares or voting rights or an acquisition of
control of the company, whether directly or indirectly, the acquirer is required
to make an open offer to the other shareholders offering to purchase at least
26% of all the outstanding shares of the company at an offer price as determined
pursuant to the provisions of the Takeover Code.
Collateralized
Loan Obligations
A
CLO is a type of structured credit typically organized as a trust or other
special purpose vehicle. The CLO issues debt and equity interests and uses the
proceeds from this issuance to acquire a portfolio of bank loans. The underlying
loans are generally senior-secured/first-priority loans; however, the CLO may
also include an allowance for second-lien and/or unsecured debt. Additionally,
the underlying loans may include domestic and foreign senior secured loans,
senior unsecured loans and subordinate corporate loans, some of which may
individually be below investment grade or the equivalent if unrated. The
portfolio of underlying loans is actively managed by the CLO manager for a fixed
period of time (“reinvestment period”). During the reinvestment period, the CLO
manager may buy and sell individual loans to create trading gains or mitigate
losses. The CLO portfolio will generally be required to adhere to certain
diversification rules established by the CLO issuer to mitigate against the risk
of concentrated defaults within a given industry or sector. After a specified
period of time, the majority owner of equity interests in the CLO may seek to
call the CLO’s outstanding debt or refinance its position. If not called or
refinanced, when the reinvestment period ends, the CLO uses cash flows from the
underlying loans to pay down the outstanding debt tranches and wind up the CLO’s
operations.
Interests
in the CLOs are divided into two or more separate debt and equity tranches, each
with a different credit rating and risk/return profile based upon its priority
of claim on the cashflows produced by the underlying loan pool. Tranches are
categorized as senior, mezzanine and subordinated/equity, according to their
degree of credit risk. If there are defaults or the
CLO’s
collateral otherwise underperforms, scheduled payments to senior tranches take
precedence over those of mezzanine tranches, and scheduled payments to mezzanine
tranches take precedence over those to subordinated/equity tranches. The
riskiest portion is the “Equity” tranche, which bears the bulk of defaults from
the loans in the CLO and serves to protect the other, more senior tranches from
default in all but the most severe circumstances. Senior and mezzanine tranches
are typically rated, with the former receiving ratings of A/A to AAA/Aaa and the
latter receiving ratings of B/B2 to BBB/Baa2. The ratings reflect both the
credit quality of underlying collateral as well as how much protection a given
tranche is afforded by tranches that are subordinate to it. Normally, CLOs are
privately offered and sold, and thus are not registered under the securities
laws. CLOs themselves, and the loan obligations underlying the CLOs, are
typically subject to certain restrictions on transfer and sale, potentially
making them less liquid than other types of securities. Additionally, when
VanEck CLO ETF purchases a newly issued CLO directly from the issuer (rather
than from the secondary market), there will be a delayed settlement period,
during which time the liquidity of the CLO may be further reduced. During
periods of limited liquidity and higher price volatility, VanEck CLO ETF’s
ability to acquire or dispose of CLOs at a price and time VanEck CLO ETF deems
advantageous may be severely impaired. CLOs are generally considered to be
long-term investments and there is no guarantee that an active secondary market
will exist or be maintained for any given CLO. CLOs are typically structured
such that, after a specified period of time, the majority investor in the equity
tranche can call (i.e.,
redeem) the security in full. VanEck CLO ETF may not be able to accurately
predict when or which of VanEck CLO ETF’s CLO investments will be called,
resulting in VanEck CLO ETF having to reinvest the proceeds in unfavorable
circumstances, resulting in a decline in VanEck CLO ETF’s income. As interest
rates decrease, issuers of the underlying loan obligations may refinance any
floating rate loans, which will result in a reduction in the principal value of
the CLO’s portfolio and require VanEck CLO ETF to reinvest cash at inopportune
times. Conversely, as interest rates rise, borrowers with floating rate loans
may experience difficulty in making payments, resulting and delinquencies and
defaults, which will result in a reduction in cash flow to the CLO and the CLO’s
investors.
Future
Developments
The
Funds may take advantage of opportunities in the area of options, futures
contracts, options on futures contracts, warrants, swaps and any other
investments which are not presently contemplated for use or which are not
currently available, but which may be developed, to the extent such investments
are considered suitable for a Fund by the Advisers or Sub-Adviser.
Investment
Restrictions
The
Trust and the Board of Directors of the Mauritius Subsidiary (to the extent that
such restrictions are applicable to the VanEck India Growth Leaders ETF) have
adopted the following investment restrictions as fundamental policies with
respect to each Fund (and the Mauritius Subsidiary), unless otherwise noted.
These restrictions cannot be changed with respect to a Fund (or the Mauritius
Subsidiary) without the approval of the holders of a majority of such Fund’s (or
Mauritius Subsidiary’s) outstanding voting securities. For purposes of the 1940
Act, a majority of the outstanding voting securities of a Fund means the vote,
at an annual or a special meeting of the security holders of the Trust, of the
lesser of (1) 67% or more of the voting securities of the Fund present at such
meeting, if the holders of more than 50% of the outstanding voting securities of
the Fund are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of the Fund. Similar voting requirements apply
with respect to a change in the fundamental investment policies of the Mauritius
Subsidiary. If VanEck India Growth Leaders ETF, as an investor in the Mauritius
Subsidiary, is requested to vote on a change in the fundamental investment
policies of the Mauritius Subsidiary, the Fund will either call a meeting of its
shareholders and will vote its shares in the Mauritius Subsidiary in accordance
with instructions it receives from its shareholders or otherwise vote as
required under the 1940 Act.
The
following investment restrictions are applicable to each Fund (unless otherwise
noted) except the VanEck Energy Income ETF:
1.Each
Fund may not make loans, except that a Fund may (i) lend portfolio securities,
(ii) enter into repurchase agreements, (iii) purchase all or a portion of an
issue of debt securities, bank loan or participation interests, bank
certificates of deposit, bankers’ acceptances, debentures or other securities,
whether or not the purchase is made upon the original issuance of the securities
and (iv) participate in an interfund lending program with other registered
investment companies;
2.Each
Fund may not borrow money, except as permitted under the 1940 Act, and as
interpreted or modified by regulation from time to time;
3.Each
Fund may not issue senior securities except as permitted under the 1940 Act, and
as interpreted or modified by regulation from time to time;
4.Each
of VanEck Africa Index ETF, VanEck BDC Income ETF, VanEck Brazil Small-Cap ETF,
VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend
ETF, VanEck Emerging
Markets
High Yield Bond ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck High Yield
Muni ETF, VanEck India Growth Leaders ETF, VanEck Inflation Allocation ETF,
VanEck Intermediate Muni ETF, VanEck International High Yield Bond ETF, VanEck
Long/Flat Trend ETF, VanEck Long Muni ETF, VanEck Moody’s Analytics IG Corporate
Bond ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar
International Moat ETF, VanEck Morningstar Wide Moat ETF, VanEck Natural
Resources ETF, VanEck Short High Yield Muni ETF and VanEck Short Muni ETF may
not invest in a manner inconsistent with its classification as a “diversified
company” as provided by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief applicable to the Fund from
the provisions of the 1940 Act, as amended from time to time;
5.VanEck
Africa Index ETF, VanEck Agribusiness ETF, VanEck Brazil Small-Cap ETF, VanEck
Environmental Services ETF, VanEck Gaming ETF, VanEck Gold Miners ETF, VanEck
High Yield Muni ETF, VanEck Indonesia ETF, VanEck Intermediate Muni ETF, VanEck
Long Muni ETF, VanEck Low Carbon Energy ETF, VanEck Natural Resources ETF,
VanEck Russia ETF, VanEck Short Muni ETF, VanEck Steel ETF, VanEck Uranium and
Nuclear ETF and VanEck Vietnam ETF may not purchase a security (other than
obligations of the U.S. Government, its agencies or instrumentalities) if, as a
result, 25% or more of its total assets would be invested in a single
issuer;
6.Each
Fund may not purchase or sell real estate, except that a Fund may (i) invest in
securities of issuers that invest in real estate or interests therein; (ii)
invest in mortgage-related securities and other securities that are secured by
real estate or interests therein; and (iii) hold and sell real estate acquired
by the Fund as a result of the ownership of securities;
7.Each
Fund may not engage in the business of underwriting securities issued by others,
except to the extent that the Fund may be considered an underwriter within the
meaning of the Securities Act of 1933, as amended (the “Securities Act”), in the
disposition of restricted securities or in connection with its investments in
other investment companies;
8.Each
Fund may not purchase or sell commodities, unless acquired as a result of owning
securities or other instruments, but it may purchase, sell or enter into
financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments and may
invest in securities or other instruments backed by commodities. In addition,
VanEck Gold Miners ETF may invest up to 25% of its total assets in gold and
silver coins, which are legal tender in the country of issue and gold and silver
bullion, and palladium and platinum group metals bullion; and
9.Each
Fund (except VanEck BDC Income ETF, VanEck Biotech ETF, VanEck CLO ETF, VanEck
CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck Digital India
ETF, VanEck Digital Transformation ETF, VanEck Ethereum Strategy ETF, VanEck
Gold Miners ETF, VanEck Green Infrastructure ETF, VanEck Green Metals ETF,
VanEck HIP Sustainable Muni ETF, VanEck Low Carbon Energy ETF, VanEck Moody's
Analytics BBB Corporate Bond ETF, VanEck Moody's Analytics IG Corporate Bond
ETF, VanEck Morningstar ESG Moat ETF, VanEck Morningstar SMID Moat ETF, VanEck
Morningstar Wide Moat Growth ETF, VanEck Morningstar Wide Moat Value ETF, VanEck
Mortgage REIT Income ETF, VanEck Office and Commercial REIT ETF, VanEck Oil
Services ETF, VanEck Pharmaceutical ETF, VanEck Inflation Allocation ETF, VanEck
Retail ETF, VanEck Robotics ETF, VanEck Semiconductor ETF and VanEck Social
Sentiment ETF) may not purchase any security if, as a result of that purchase,
25% or more of its total assets would be invested in securities of issuers
having their principal business activities in the same industry, except that the
Fund may invest 25% or more of the value of its total assets in securities of
issuers in any one industry or group of industries if the index that the Fund
replicates concentrates in an industry or group of industries. Each of VanEck
HIP Sustainable Muni ETF and VanEck Inflation Allocation ETF may not purchase
any security if, as a result of that purchase, 25% or more of its total assets
would be invested in securities of issuers having their principal business
activities in the same industry. VanEck Gold Miners ETF may not purchase any
security if, as a result of that purchase, 25% or more of its total assets would
be invested in securities of issuers having their principal business activities
in the same industry except that the Fund will invest 25% or more of its total
assets in the gold-mining industry. VanEck Low Carbon Energy ETF may not
purchase any security if, as a result of that purchase, 25% or more of its total
assets would be invested in securities of issuers having their principal
business activities in the same industry except that the Fund will invest 25% or
more of its total assets in the alternative energy industry. Each of VanEck BDC
Income ETF, VanEck Biotech ETF, VanEck Mortgage REIT Income ETF, VanEck Oil
Services ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF and VanEck
Semiconductor ETF may not purchase any security if, as a result of that
purchase, 25% or more of its total assets would be invested in securities of
issuers having their principal business activities in the same
industry,
except that the Fund will invest 25% or more of the value of its total assets in
securities of issuers in any one industry or group of industries if the index
that the Fund replicates concentrates in an industry or group of industries.
Each of VanEck CMCI Commodity Strategy ETF, VanEck Digital India ETF, VanEck
Digital Transformation ETF, VanEck Green Infrastructure ETF, VanEck Green Metals
ETF, VanEck Moody's Analytics BBB Corporate Bond ETF, VanEck Moody's Analytics
IG Corporate Bond ETF, VanEck Morningstar ESG Moat ETF, VanEck Morningstar SMID
Moat ETF, VanEck Morningstar Wide Moat Growth ETF, VanEck Morningstar Wide Moat
Value ETF, VanEck Office and Commercial REIT ETF, VanEck Robotics ETF and VanEck
Social Sentiment ETF may not purchase any security if, as a result of that
purchase, 25% or more of its total assets would be invested in securities of
issuers having their principal business activities in the same industry, except
that the Fund may invest 25% or more of the value of its total assets in
securities of issuers in any one industry or group of industries if the index
that the Fund tracks concentrates in an industry or group of industries. VanEck
CLO ETF and VanEck Dynamic High Income ETF may not purchase any security if, as
a result of that purchase, 25% or more of its total assets would be invested in
securities of issuers having their principal business activities in the same
industry or group of industries. VanEck Commodity Strategy ETF may not purchase
any security if, as a result of that purchase, 25% or more of its total assets
would be invested in securities of issuers having their principal business
activities in the same industry or group of industries, except that the Fund may
invest 25% or more of its total assets in investments that provide exposure to
commodities. VanEck Ethereum Strategy ETF may not purchase any security if, as a
result of that purchase, 25% or more of its total assets would be invested in
securities of issuers having their principal business activities in one or more
industries, except that the Fund will invest more than 25% of its total assets
in investments that provide exposure to ETH and/or ETH Futures. These limits do
not apply to securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
In
addition, each of VanEck High Yield Muni ETF, VanEck Intermediate Muni ETF,
VanEck Long Muni ETF, VanEck Short High Yield Muni ETF and VanEck Short Muni ETF
(collectively, the “Municipal Funds”) has adopted a fundamental investment
policy to invest at least 80% of its assets in investments suggested by its
name. For purposes of this policy, the term “assets” means net assets plus the
amount of borrowings for investment purposes. Accordingly, each Municipal Fund
will invest at least 80% of its assets in municipal securities. Each of VanEck
CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF has adopted a
fundamental investment policy to invest at least 80% of its total assets in
investments the income from which is exempt from U.S. federal income tax (other
than the Alternative Minimum Tax (“AMT”)). For purposes of this policy, the term
“total assets” means net assets plus the amount of any borrowings for investment
purposes. Each of VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF
may count securities that generate income subject to the AMT toward the 80%
investment requirement.
In
addition to the investment restrictions (and with respect to the Municipal
Funds, VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF, the
applicable policy) adopted as fundamental policies as set forth above, each Fund
(except the VanEck Energy Income ETF) observes the following non-fundamental
investment restrictions, which may be changed by the Board without a shareholder
vote. Under these restrictions:
1.Each
Fund will not invest in securities which are “illiquid” securities if the result
is that more than 15% of the Fund’s net assets would be invested in such
securities.
2.Each
Fund will not make short sales of securities.
3.Each
Fund (except for VanEck HIP Sustainable Muni ETF and VanEck Inflation Allocation
ETF) will not purchase any security on margin, except for such short-term loans
as are necessary for clearance of securities transactions. The deposit or
payment by a Fund of initial or variation margin in connection with futures
contracts or related options thereon is not considered the purchase of a
security on margin. Each of VanEck HIP Sustainable Muni ETF and VanEck Inflation
Allocation ETF will not purchase any security on margin, except for such
short-term loans as are necessary for clearance of securities transactions. The
deposit or payment by each of VanEck HIP Sustainable Muni ETF and VanEck
Inflation Allocation ETF of initial or variation margin in connection with
futures contracts, options on futures contracts or other derivative instruments
shall not constitute the purchase of a security on margin.
4.Each
Fund will not participate in a joint or joint-and-several basis in any trading
account in securities, although transactions for the Funds and any other account
under common or affiliated management may be combined or allocated between a
Fund and such account.
In
addition to the fundamental and non-fundamental investment restrictions set
forth above, each of VanEck Agribusiness ETF, VanEck Biotech ETF, VanEck Brazil
Small-Cap ETF, VanEck Emerging Markets High Yield Bond ETF, VanEck Gold Miners
ETF, VanEck Green Bond ETF, VanEck Indonesia Index ETF, VanEck International
High Yield Bond ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck
Junior Gold Miners ETF, VanEck Moody's Analytics
BBB
Corporate Bond ETF, VanEck Moody's Analytics IG Corporate Bond ETF, VanEck
Morningstar Wide Moat ETF, VanEck Natural Resources ETF, VanEck Oil Services
ETF, VanEck Pharmaceutical ETF, VanEck Preferred Securities ex Financials ETF,
VanEck Rare Earth and Strategic Metals ETF, VanEck Russia ETF, VanEck Steel ETF
and VanEck Semiconductor ETF observes the following additional restrictions,
which may be changed by the Board without a shareholder vote: under normal
market conditions (i) any borrowings by the Fund will be on a temporary basis
and will not exceed 10% of the Fund’s net assets; and (ii) the Fund’s
investments in the securities of other pooled investment vehicles will not
exceed 10% of the Fund’s net assets. For purposes of restriction (ii), real
estate investment trusts are not considered to be pooled investment vehicles. In
addition, each of VanEck Gold Miners ETF, VanEck India Growth Leaders ETF,
VanEck Junior Gold Miners ETF, VanEck Low Carbon Energy ETF and VanEck
Semiconductor ETF will invest at least 51% of its net assets in equity
securities. This may be changed by the Board without a shareholder
vote.
If
a percentage limitation is adhered to at the time of investment or contract, a
later increase or decrease in percentage resulting from any change in value or
total or net assets will not result in a violation of such restriction, except
that the percentage limitation with respect to the borrowing of money described
above in fundamental restriction 2 will be continuously complied
with.
With
respect to fundamental restriction 2, the 1940 Act permits each Fund to borrow
money from banks in an amount up to one-third of its total assets (including the
amount borrowed) less its liabilities (not including any borrowings but
including the fair market value at the time of computation of any other senior
securities then outstanding). Each Fund may also borrow an additional 5% of its
total assets without regard to the foregoing limitation for temporary purposes
such as clearance of portfolio transactions. Practices and investments that may
involve leverage but are not considered to be borrowings are not subject to the
policy.
With
respect to fundamental restriction 3, the 1940 Act prohibits each Fund from
issuing senior securities, except that the Fund may borrow money in amounts of
up to one-third of the Fund’s total assets from banks for any purpose. Each Fund
may also borrow money or engage in economically similar transactions if those
transactions do not constitute “senior securities” under the 1940 Act. The
policy above will be interpreted not to prevent collateral arrangements with
respect to swaps, options, forward or futures contracts or other derivatives, or
the posting of initial or variation margin.
With
respect to fundamental restriction 4, each of VanEck CEF Muni Income ETF, VanEck
ChiNext ETF, VanEck Durable High Dividend ETF, VanEck Fallen Angel High Yield
Bond ETF, VanEck India Growth Leaders ETF, VanEck Long/Flat Trend ETF, VanEck
Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF and
VanEck Morningstar Wide Moat ETF intends to be diversified in approximately the
same proportion as its underlying index is diversified. Each of VanEck CEF Muni
Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend ETF, VanEck Fallen
Angel High Yield Bond ETF, VanEck India Growth Leaders ETF, VanEck Long/Flat
Trend ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar
International Moat ETF and VanEck Morningstar Wide Moat ETF may become
non-diversified, as defined in the 1940 Act, solely as a result of a change in
relative market capitalization or index weighting of one or more constituents of
its underlying index. With respect to fundamental restriction 9, investment
companies are not considered to be part of an industry. Additionally, the
securities of state and municipal governments and their political subdivisions
are not considered to be issued by members of any industry. With respect to
VanEck Ethereum Strategy ETF, to the extent such Fund invests in a private
activity municipal security whose principal and interest payments are derived
principally from the assets and revenues of a non-government issuer, the Fund
will seek to determine the industry to which such private activity municipal
investment should be allocated when determining the Fund’s compliance with its
concentration policy. In accordance with each of VanEck CLO ETF’s, VanEck
Dynamic High Income ETF’s, VanEck Inflation Allocation ETF’s and VanEck
Long/Flat Trend ETF’s principal investment strategies as set forth in its
Prospectus, each of VanEck CLO ETF, VanEck Dynamic High Income ETF, VanEck
Inflation Allocation ETF and VanEck Long/Flat Trend ETF may invest its assets in
underlying investment companies. Although each of VanEck CLO ETF, VanEck Dynamic
High Income ETF, VanEck Inflation Allocation ETF and VanEck Long/Flat Trend ETF
does not have a policy to concentrate its investments in a particular industry,
25% or more of VanEck CLO ETF’s, VanEck Dynamic High Income ETF’s, VanEck
Inflation Allocation ETF’s and VanEck Long/Flat Trend ETF’s total assets may be
indirectly exposed to a particular industry or group of related industries
through its investment in one or more underlying investment companies.
Each
of VanEck CLO ETF, VanEck Dynamic High Income ETF and VanEck Inflation
Allocation ETF may invest its remaining assets in securities, which may include
but may not be limited to, money market instruments or funds which reinvest
exclusively in money market instruments, stocks that are in the relevant market
and/or in combinations of certain stock index futures contracts, options on such
futures contracts, stock options, stock index options, options on the Shares,
and stock index swaps and swaptions. These investments may be made to invest
uncommitted cash balances or, in limited circumstances, to assist in meeting
shareholder redemptions of Creation Units. Each of VanEck CLO ETF, VanEck
Dynamic High Income ETF and VanEck Inflation Allocation ETF may also invest in
money market instruments for cash management purposes or as part of a temporary
defensive strategy to protect against potential stock market
declines.
VanEck
Commodity Strategy ETF expects to invest its assets in any one or more of the
following to provide liquidity, serve as margin or collateralize the Fund’s
investments in certain Commodities Instruments: U.S. Treasuries, other U.S.
government obligations, money market funds and funds that invest in short-term
bonds, cash and cash-like equivalents (e.g.,
high quality commercial paper and similar instruments that are rated investment
grade or, if unrated, of comparable quality, as the Adviser determines),
mortgage-backed securities issued or guaranteed by U.S. government agencies,
instrumentalities or sponsored enterprises of the U.S. government (whether or
not the securities are U.S. government securities), municipal debt securities,
Treasury inflation-protected securities, sovereign debt obligations of non-U.S.
countries, and repurchase agreements.
VanEck
Ethereum Strategy ETF expects to invest its remaining assets in any one or more
of the following to provide liquidity, serve as margin or collateralize the
Fund’s investments in ETH Futures: U.S. Treasuries, other U.S. government
obligations, money market funds and funds that invest in short-term bonds, cash
and cash-like equivalents (e.g., high quality commercial paper and similar
instruments that are rated investment grade or, if unrated, of comparable
quality, as the Adviser determines), mortgage-backed securities issued or
guaranteed by U.S. government agencies, instrumentalities or sponsored
enterprises of the U.S. government (whether or not the securities are U.S.
government securities), municipal debt securities, Treasury inflation-protected
securities, sovereign debt obligations of non-U.S. countries, and repurchase
agreements.
Each
Fixed Income Fund may invest its remaining assets in securities not included in
its respective Index, municipal bonds (with respect to VanEck CEF Muni Income
ETF), money market instruments, repurchase agreements or funds which reinvest
exclusively in money market instruments, convertible securities (with respect to
VanEck Green Bond ETF), structured notes (notes on which the amount of principal
repayment and interest payments are based on the movement of one or more
specified factors, such as the movement of a particular stock or stock index)
(with respect to VanEck Green Bond ETF), certain derivatives (with respect to
VanEck Green Bond ETF), in bonds that are in the relevant market but not the
Fund’s respective Index and/or in combinations of certain bond index futures
contracts, options on such futures contracts, bond options, bond index options,
options on the Shares, and bond index swaps and swaptions, each with a view
towards providing each Fund with exposure to the securities in its respective
Index.
Each
Fund (other than the Fixed Income Funds, VanEck CLO ETF, VanEck Commodity
Strategy ETF, VanEck Dynamic High Income ETF, VanEck Ethereum Strategy ETF,
VanEck HIP
Sustainable
Muni ETF and VanEck Inflation Allocation ETF) may invest its remaining assets in
securities not included in its respective Index, which may include but is not
limited to money market instruments or funds which reinvest exclusively in money
market instruments, in stocks that are in the relevant market but not its Index,
and/or in combinations of certain stock index futures contracts, options on such
futures contracts, stock options, stock index options, options on the Shares,
and stock index swaps and swaptions, each with a view towards providing each
Fund with exposure to the securities in its respective Index.
These
investments may be made to invest uncommitted cash balances or, in limited
circumstances, to assist in meeting shareholder redemptions of Creation Units.
Each Fund (except VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck Dynamic
High Income ETF, VanEck Ethereum Strategy ETF, VanEck HIP
Sustainable
Muni ETF and VanEck Inflation Allocation ETF) does not take temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate/track (as applicable) its Index.
The
following fundamental investment restrictions are applicable to only the VanEck
Energy Income ETF. The VanEck Energy Income ETF may not:
1.Concentrate
its investments in an industry or group of industries (i.e.,
hold 25% or more of its total assets in the stocks of a particular industry or
group of industries), except that the Fund will concentrate to approximately the
same extent that its Index concentrates in the stocks of such particular
industry or group of industries. For purposes of this limitation, securities of
the U.S. government (including its agencies and instrumentalities), repurchase
agreements collateralized by U.S. government securities and securities of state
or municipal governments and their political subdivisions are not considered to
be issued by members of any industry.
2.Borrow
money or issue senior securities (as defined under the 1940 Act), except to the
extent permitted under the 1940 Act, the rules and regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be amended or
interpreted from time to time.
3.Make
loans, except to the extent permitted under the 1940 Act, the rules and
regulations thereunder or any exemption therefrom, as such statute, rules or
regulations may be amended or interpreted from time to time.
4.Purchase
or sell commodities or real estate, except to the extent permitted under the
1940 Act, the rules and regulations thereunder or any exemption therefrom, as
such statute, rules or regulations may be amended or interpreted from time to
time.
5.Underwrite
securities issued by other persons, except to the extent permitted under the
1940 Act, the rules and regulations thereunder or any exemption therefrom, as
such statute, rules or regulations may be amended or interpreted from time to
time.
In
addition to the investment restrictions adopted as fundamental policies as set
forth above, the VanEck Energy Income ETF observes the following non-fundamental
investment restrictions, which may be changed by the Board without a shareholder
vote. Under these restrictions:
1.The
Fund will not invest in securities which are “illiquid” securities if the result
is that more than 15% of a Fund’s net assets would be invested in such
securities.
If
a percentage limitation is adhered to at the time of investment or contract, a
later increase or decrease in percentage resulting from any change in value or
total or net assets will not result in a violation of such restriction, except
that the percentage limitation with respect to the borrowing of money described
above in fundamental restriction 2 will be continuously complied
with.
With
respect to fundamental restriction 2, the 1940 Act permits the Fund to borrow
money from banks in an amount up to one-third of its total assets (including the
amount borrowed) less its liabilities (not including any borrowings but
including the fair market value at the time of computation of any other senior
securities then outstanding). The Fund may also borrow an additional 5% of its
total assets without regard to the foregoing limitation for temporary purposes
such as clearance of portfolio transactions. Practices and investments that may
involve leverage but are not considered to be borrowings are not subject to the
policy.
With
respect to fundamental restriction 2, the 1940 Act prohibits the Fund from
issuing senior securities, except that a Fund may borrow money in amounts of up
to one-third of the Fund’s total assets from banks for any purpose. The Fund may
also borrow money or engage in economically similar transactions if those
transactions do not constitute “senior securities” under the 1940 Act. The
policy above will be interpreted not to prevent collateral arrangements with
respect to swaps, options, forward or futures contracts or other derivatives, or
the posting of initial or variation margin.
The
VanEck Energy Income ETF may invest its remaining assets in securities not
included in its Index, which may include but is not limited to money market
instruments or funds which reinvest exclusively in money market instruments, in
stocks that are in the relevant market but not the Fund’s Index, and/or in
combinations of certain stock index futures contracts, options on such futures
contracts, stock options, stock index options, options on the Shares, and stock
index swaps and swaptions, each with a view towards providing the Fund with
exposure to the securities in its Index. These investments may be made to invest
uncommitted cash balances or, in limited circumstances, to assist in meeting
shareholder redemptions of Creation Units. The Fund does not take temporary
defensive positions that are inconsistent with its investment objective of
seeking to replicate its Index.
Indian
Investment Restrictions
The
investment restrictions described below only apply to investments in Indian
issuers made by VanEck India Growth Leaders ETF (or the Mauritius Subsidiary)
and VanEck Digital India ETF.
Each
of the Mauritius Subsidiary and VanEck Digital India ETF is registered as a
Category I FPI with the SEBI. As such, the universe of permissible investments
for these entities is limited pursuant to FPI Regulations and other applicable
regulations.
FPIs
are not allowed to short sell in the Indian market except in certain limited
circumstances as specified by the SEBI. Further, sales against open purchases
are not permitted for FPIs and FPIs can sell such securities only after their
settlement.
The
extent to which percentage positions may be taken in index options and index
futures by the Mauritius Subsidiary and VanEck Digital India ETF would be
restricted to the limits prescribed by applicable regulators from time to time.
Separately, there are multiple restrictions including regarding ownership and
use of derivatives as a result of applicable Indian regulations.
SPECIAL
CONSIDERATIONS AND RISKS
A
discussion of the risks associated with an investment in each Fund is contained
in each Fund’s Prospectus under the headings “Summary Information—Principal
Risks of Investing in the Fund” with respect to the applicable Fund and
“Additional Information About the Funds’ Investment Strategies and Risks—Risks
of Investing in the Funds.” The discussion below supplements, and should be read
in conjunction with, such sections of each Fund’s Prospectus.
General
An
investment in each Fund should be made with an understanding that the value of
the Fund’s portfolio securities may fluctuate in accordance with changes in the
financial condition of the issuers of the portfolio securities, the value of
securities generally and other factors.
(All
Funds except VanEck CLO ETF, VanEck CMCI Commodity Strategy ETF, VanEck
Commodity Strategy ETF, VanEck Dynamic High Income ETF,
VanEck
Ethereum Strategy ETF,
VanEck
HIP
Sustainable
Muni ETF and VanEck Inflation Allocation ETF)
An
investment in each Fixed Income Fund should be made with an understanding of the
risks inherent in an investment in fixed income securities. An issuer may have
the right to redeem or “call” a bond before maturity, in which case the investor
may have to reinvest the proceeds at lower market rates. Most bonds bear
interest income at a “coupon” rate that is fixed for the life of the bond. The
value of a fixed rate bond usually rises when market interest rates fall, and
falls when market interest rates rise. Accordingly, a fixed rate bond’s yield
(income as a percent of the bond’s current value) may differ from its coupon
rate as its value rises or falls. Other types of bonds bear income at an
interest rate that is adjusted periodically. Because of their adjustable
interest rates, the values of “floating-rate” or “variable-rate” bonds generally
fluctuate less in response to market interest rate movements than the value of
similar fixed rate bonds. The Fixed Income Funds may treat some of these bonds
as having a shorter maturity for purposes of calculating the weighted average
maturity of its investment portfolio. Generally, prices of higher quality issues
tend to fluctuate more with changes in market interest rates than prices of
lower quality issues and prices of longer maturity issues tend to fluctuate more
than prices of shorter maturity issues. Bonds may be senior or subordinated
obligations. Senior obligations generally have the first claim on a
corporation’s earnings and assets and, in the event of liquidation, are paid
before subordinated obligations. Bonds may be unsecured (backed only by the
issuer’s general creditworthiness) or secured (also backed by specified
collateral).
An
investment in each Fund (other than the Fixed Income Funds) should be made with
an understanding of the risks inherent in an investment in equity securities,
including the risk that the financial condition of issuers may become impaired
or that the general condition of the stock market may deteriorate (either of
which may cause a decrease in the value of the portfolio securities and thus in
the value of Shares). Common stocks are susceptible to general stock market
fluctuations and to volatile increases and decreases in value as market
confidence in and perceptions of their issuers change. These investor
perceptions are based on various and unpredictable factors, including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic and banking crises. Holders of common stocks incur
more risk than holders of preferred stocks and debt obligations because common
stockholders, as owners of the issuer, have generally inferior rights to receive
payments from the issuer in comparison with the rights of creditors of, or
holders of debt obligations or preferred stocks issued by, the issuer. Further,
unlike debt securities which typically have a stated principal amount payable at
maturity (whose value, however, will be subject to market fluctuations prior
thereto), or preferred stocks which typically have a liquidation preference and
which may have stated optional or mandatory redemption provisions, common stocks
have neither a fixed principal amount nor a maturity. Common stock values are
subject to market fluctuations as long as the common stock remains outstanding.
In the event that the securities in a Fund’s Index (except with respect to the
Fixed Income Funds) are not listed on a national securities exchange, the
principal trading market for some may be in the over the counter market.
The
existence of a liquid trading market for certain securities may depend on
whether dealers will make a market in such securities. There can be no assurance
that a market will be made or maintained or that any such market will be or
remain liquid. The price at which securities may be sold and the value of a
Fund’s Shares will be adversely affected if trading markets for a Fund’s
portfolio securities are limited or absent or if bid/ask spreads are
wide.
With
the exception of VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck Dynamic
High Income ETF, VanEck Ethereum Strategy ETF, VanEck HIP
Sustainable
Muni ETF and VanEck Inflation Allocation ETF, the Funds are not actively managed
by traditional methods, and therefore the adverse financial condition of any one
issuer may not result in the elimination of its securities from the securities
held by a Fund unless the securities of such issuer are removed from its
respective Index.
An
investment in each Fund should be made with an understanding that the Fund will
not be able to replicate/track (as applicable) exactly the performance of its
respective Index because the total return generated by the securities will be
reduced by transaction costs incurred in adjusting the actual balance of the
securities and other Fund expenses, whereas such transaction costs and expenses
are not included in the calculation of its respective Index. In addition,
certain Funds’ use of a representative sampling approach may cause each such
Fund to not be as well correlated with the return of its respective Index as
would be the case if the Fund purchased all of the securities in its respective
Index in the proportions represented in such Index. The risk of non-correlation
may be higher than other ETFs which utilize a sampling approach to the extent
that a
Fund
invests a portion of its assets in securities that have economic characteristics
that are substantially identical to the securities comprising its respective
Index, but which are not included in such Index. It is also possible that for
periods of time, a Fund may not fully replicate the performance of its
respective Index due to the temporary unavailability of certain Index securities
in the secondary market or due to other extraordinary circumstances. Such events
are unlikely to continue for an extended period of time because the Fund is
required to correct such imbalances by means of adjusting the composition of the
securities. It is also possible that the composition of a Fund may not exactly
replicate the composition of its respective Index if the Fund has to adjust its
portfolio holdings in order to continue to qualify as a regulated investment
company (“RIC”) under the U.S. Internal Revenue Code of 1986, as amended (the
“Internal Revenue Code”), or, in the case of VanEck BDC Income ETF, to comply
with the provisions of the 1940 Act that limit the amount the Fund and its
affiliates, in the aggregate, can invest in any one business development
company.
Each
Fund is subject to the risks of an investment in an economic sector or industry
in which the Fund’s Index is highly concentrated. In addition, because it is the
policy of each Fund to generally invest in the securities that comprise the
Fund’s respective Index, the portfolio of securities (“Fund Securities”) held by
such Fund also will be concentrated in that economic sector or
industry.
Regulatory
developments affecting the exchange-traded and OTC derivatives markets may
impair a Fund’s ability to manage or hedge its investment portfolio through the
use of derivatives. The Dodd-Frank Act and the rules promulgated thereunder may
limit the ability of a Fund to enter into one or more exchange-traded or OTC
derivatives transactions.
(All
Funds except VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck CMCI
Commodity
Strategy
ETF, VanEck Commodity Strategy ETF, VanEck Ethereum Strategy ETF, VanEck
Inflation Allocation ETF, VanEck Mortgage REIT Income ETF and VanEck Office and
Commercial REIT ETF)
VEAC,
on behalf of the Funds, has filed a notice of eligibility with the National
Futures Association claiming an exclusion from the definition of the term
“commodity pool operator” (“CPO”) pursuant to CFTC Regulation 4.5, as
promulgated under the Commodity Exchange Act (“CEA”), with respect to the Funds’
operations. Therefore, neither the Funds nor VEAC (with respect to the Funds) is
subject to registration or regulation as a commodity pool or CPO under the CEA.
If a Fund becomes subject to these requirements, a Fund may incur additional
compliance and other expenses.
Each
Fund’s use of derivatives may also be limited by the requirements of the
Internal Revenue Code for qualification as a RIC for U.S. federal income tax
purposes.
With
respect to investments in swap transactions, commodity futures, commodity
options or certain other derivatives used for purposes other than bona fide
hedging purposes, an investment company must meet one of the following tests
under the amended regulations in order to claim an exemption from being
considered a “commodity pool” or CPO. First, the aggregate initial margin and
premiums required to establish an investment company’s positions in such
investments may not exceed five percent (5%) of the liquidation value of the
investment company’s portfolio (after accounting for unrealized profits and
unrealized losses on any such investments). Alternatively, the aggregate net
notional value of such instruments, determined at the time of the most recent
position established, may not exceed one hundred percent (100%) of the
liquidation value of the investment company’s portfolio (after accounting for
unrealized profits and unrealized losses on any such positions). In addition to
meeting one of the foregoing trading limitations, the investment company may not
market itself as a commodity pool or otherwise as a vehicle for trading in the
commodity futures, commodity options or swaps and derivatives markets. In the
event that an Adviser is required to register as a CPO, the disclosure and
operations of the Funds would need to comply with all applicable CFTC
regulations. Compliance with these additional registration and regulatory
requirements would increase operational expenses. Other potentially adverse
regulatory initiatives could also develop.
(VanEck
BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Mortgage REIT Income ETF and
VanEck Office and Commercial REIT ETF only)
Each
of VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Mortgage REIT
Income ETF and VanEck Office and Commercial REIT ETF has claimed a temporary
exemption from the definition of the term CPO under the CEA, and therefore, is
not currently subject to registration or regulation as commodity pools under the
CEA. When the temporary exemption expires, to the extent VanEck BDC Income ETF,
VanEck CEF Muni Income ETF, VanEck Mortgage REIT Income ETF or VanEck Office and
Commercial REIT ETF are not otherwise eligible to claim an exclusion from CFTC
regulation, VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Mortgage
REIT Income ETF or VanEck Office and Commercial REIT ETF, as applicable, may
determine to operate subject to CFTC regulation and may incur additional
expenses.
Specific
Risks Applicable to the Municipal Funds, VanEck CEF Muni Income ETF and VanEck
HIP
Sustainable
Muni ETF
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades or the bankruptcy, of the issuer could have a significant effect on
an issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. In addition, there is a risk that, as a
result of the recent economic crisis, the ability of any issuer to pay, when
due, the principal or interest on its municipal bonds may be materially
affected. Certain municipalities may have difficulty meeting their obligations
due to, among other reasons, changes in underlying demographics.
Municipal
securities can be significantly affected by political changes as well as
uncertainties in the municipal market related to government regulation,
taxation, legislative changes or the rights of municipal security holders.
Because many municipal securities are issued to finance similar projects,
especially those relating to education, health care, transportation, utilities
and water and sewer, conditions in those sectors can affect the overall
municipal market. In addition, changes in the financial condition of an
individual municipal insurer can affect the overall municipal market. Municipal
instruments may be susceptible to periods of economic stress, which could affect
the market values and marketability of many or all municipal obligations of
issuers in a state, U.S. territory, or possession. A number of municipalities
have had significant financial problems recently, and these and other
municipalities could, potentially, continue to experience significant financial
problems resulting from lower tax revenues and/or decreased aid from state and
local governments in the event of an economic downturn. This could potentially
decrease the Fund’s income or hurt its ability to preserve capital and
liquidity. Municipal securities may include revenue bonds, which are generally
backed by revenue from a specific project or tax. The issuer of a revenue bond
makes interest and principal payments from revenues generated from a particular
source or facility, such as a tax on particular property or revenues generated
from a municipal water or sewer utility or an airport. Revenue bonds generally
are not backed by the full faith and credit and general taxing power of the
issuer. Municipal securities backed by current or anticipated revenues from a
specific project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the inability
to collect revenues for the project or from the assets due to factors such as
lower property tax collections as a result of lower home values, lower sales tax
revenues as a result of consumers cutting back spending and lower income tax
revenue as a result of a higher unemployment rate. In addition, since some
municipal obligations may be secured or guaranteed by banks and other
institutions, the risk to the Fund could increase if the banking or financial
sector suffers an economic downturn and/or if the credit ratings of the
institutions issuing the guarantee are downgraded or at risk of being downgraded
by a national rating organization.
If
the IRS determines that an issuer of a municipal security has not complied with
applicable tax requirements, interest from the security could become taxable and
the security could decline significantly in value.
The
market for municipal bonds may be less liquid than for taxable bonds. There may
also be less publicly available information on the financial condition of
issuers of municipal securities than for public corporations. This means that it
may be harder to buy and sell municipal securities, especially on short notice,
and municipal securities may be more difficult for a Fund (and the Underlying
Funds in which VanEck CEF Muni Income ETF invest) to value accurately than
securities of public corporations. Since the Fund (and the Underlying Funds in
which VanEck CEF Muni Income ETF invest) invest a significant portion of their
portfolio in municipal securities, each Fund’s (and each Underlying Fund’s)
portfolio may have greater exposure to liquidity risk than a fund that invests
in non-municipal securities. In addition, the value and liquidity of many
municipal securities have decreased as a result of the recent financial crisis,
which has also adversely affected many municipal securities issuers and may
continue to do so. The markets for many credit instruments, including municipal
securities, have experienced periods of illiquidity and extreme volatility since
the latter half of 2007. In response to the global economic downturn,
governmental cost burdens may be reallocated among federal, state and local
governments. In addition, issuers of municipal securities may seek protection
under the bankruptcy or similar laws. For example, Chapter 9 of the Bankruptcy
Code provides a financially distressed municipality protection from its
creditors while it develops and negotiates a plan for reorganizing its debts.
“Municipality” is defined broadly by the Bankruptcy Code as a “political
subdivision or public agency or instrumentality of a state” and may include
various issues of securities in which the Fund invests. The reorganization of a
municipality’s debts may include extending debt maturities, reducing the amount
of principal or interest, refinancing the debt or taking other measures, which
may significantly affect the rights of creditors and the value of the securities
issued by the municipality and the value of a Fund’s investments.
Many
state and local governments that issue municipal securities are currently under
significant economic and financial stress and may not be able to satisfy their
obligations. The taxing power of any governmental entity may be limited and an
entity’s credit may depend on factors which are beyond the entity’s
control.
Education
Bond Risk.
In general, there are two types of education-related bonds: those issued to
finance projects for public and private colleges and universities, and those
representing pooled interests in student loans. Bonds issued to supply
educational institutions with funds are subject to the risk of unanticipated
revenue decline, primarily the result of decreasing
student
enrollment or decreasing state and federal funding. Among the factors that may
lead to declining or insufficient revenues are restrictions on students’ ability
to pay tuition, availability of state and federal funding, and general economic
conditions. Student loan revenue bonds are generally offered by state (or
sub-state) authorities or commissions and are backed by pools of student loans.
Underlying student loans may be guaranteed by state guarantee agencies and may
be subject to reimbursement by the United States Department of Education through
its guaranteed student loan program. Others may be private, uninsured loans made
to parents or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be applied to
redemption of bonds or may be used to re-lend, depending on program latitude and
demand for loans. Cash flows supporting student loan revenue bonds are impacted
by numerous factors, including the rate of student loan defaults, seasoning of
the loan portfolio and student repayment deferral periods of forbearance. Other
risks associated with student loan revenue bonds include potential changes in
federal legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
Electric
Utilities Bond Risk.
The electric utilities industry has been experiencing, and may continue to
experience, increased competitive pressures. Federal legislation may open
transmission access to any electricity supplier, although it is not presently
known to what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel; (b) the availability and cost of capital; (c) the
effects of conservation on energy demand; (d) the effects of rapidly changing
environmental, safety and licensing requirements, and other federal, state and
local regulations, (e) timely and sufficient rate increases and governmental
limitations on rates charged to customers; (f) the effects of opposition to
nuclear power; (g) increases in operating costs; and (h) obsolescence of
existing equipment, facilities and products.
General
Obligation Bond Risk.
General obligation bonds are not backed by revenues from a specific project or
source. Instead, general obligation bonds are backed by the “full faith and
credit” of the issuer, which has the power to tax residents to pay bondholders.
Timely payments depend on the issuer’s credit quality, ability to raise tax
revenues and ability to maintain an adequate tax base.
Health
Care Bond Risk.
The health care industry is subject to regulatory action by a number of private
and governmental agencies, including federal, state and local governmental
agencies. A major source of revenues for the health care industry is payments
from Medicare and Medicaid programs. As a result, the industry is sensitive to
legislative changes and reductions in governmental spending for such programs.
Numerous other factors may also affect the industry and the value and credit
quality of health care bonds, such as general and local economic conditions,
demand for services, expenses (including malpractice insurance premiums) and
competition among health care providers. The following elements may adversely
affect health care facility operations: the implementation of national and/or
state-specific health insurance exchanges; other national, state or local health
care reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services are
delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; efforts by employers, insurers, and governmental
agencies to reduce the costs of health insurance and health care services; and
increases and decreases in the cost and availability of medical
products.
Housing
Bond Risk.
Housing revenue bonds are generally issued by a state, county, city, local
housing authority or other public agency. They generally are secured by the
revenues derived from mortgages purchased with the proceeds of the bond issue.
It is extremely difficult to predict the supply of available mortgages to be
purchased with the proceeds of an issue or the future cash flow from the
underlying mortgages. Consequently, there are risks that proceeds will exceed
supply, resulting in early retirement of bonds, or that homeowner repayments
will create an irregular cash flow. Many factors may affect the financing of
multi-family housing projects, including acceptable completion of construction,
proper management, occupancy and rent levels, economic conditions and changes to
current laws and regulations.
Industrial
Development Bond Risk.
Industrial development bonds are revenue bonds issued by or on behalf of public
authorities to obtain funds to finance various public and/or privately operated
facilities, including those for business and manufacturing, housing, sports,
pollution control, airport, mass transit, port and parking facilities. These
bonds are normally secured only by the revenues from the project and not by
state or local government tax payments. Consequently, the credit quality of
these securities is dependent upon the ability of the user of the facilities
financed by the bonds and any guarantor to meet its financial obligations.
Payment of interest on and repayment of principal of such bonds are the
responsibility of the user and/or any guarantor. These bonds are subject to a
wide variety of risks, many of which relate to the nature of the specific
project. Generally, the value and credit quality of these bonds are sensitive to
the risks related to an economic slowdown.
There
is no guarantee that a Fund’s income will be exempt from federal or state income
taxes. Events occurring after the date of issuance of a municipal bond or after
a Fund’s acquisition of a municipal bond may result in a determination that
interest on that bond is includible in gross income for U.S. federal income tax
purposes retroactively to its date of issuance. Such a determination may cause a
portion of prior distributions by a Fund to its shareholders to be taxable to
those
shareholders
in the year of receipt. Federal or state changes in income or alternative
minimum tax rates or in the tax treatment of municipal bonds may make municipal
bonds less attractive as investments and cause them to lose value.
Lease
Obligations Risk.
Lease obligations may have risks not normally associated with general obligation
or other revenue bonds. Leases and installment purchase or conditional sale
contracts (which may provide for title to the leased asset to pass eventually to
the issuer) have developed as a means for governmental issuers to acquire
property and equipment without the necessity of complying with the
constitutional statutory requirements generally applicable for the issuance of
debt. Certain lease obligations contain “non-appropriation” clauses that provide
that the governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for that purpose by the
appropriate legislative body on an annual or other periodic basis. Consequently,
continued lease payments on those lease obligations containing
“non-appropriation” clauses are dependent on future legislative actions. If
these legislative actions do not occur, the holders of the lease obligation may
experience difficulty in exercising their rights, including disposition of the
property. In such circumstances, a Fund might not recover the full principal
amount of the obligation.
Municipal
Market Disruption Risk.
The value of municipal securities may be affected by uncertainties in the
municipal market related to legislation or litigation involving the taxation of
municipal securities or the rights of municipal securities holders in the event
of a bankruptcy. Proposals to restrict or eliminate the federal income tax
exemption for interest on municipal securities are introduced before Congress
from time to time. Proposals also may be introduced before state legislatures
that would affect the state tax treatment of a municipal fund’s distributions.
If such proposals were enacted, the availability of municipal securities and the
value of a municipal fund’s holdings would be affected. Municipal bankruptcies
are relatively rare, and certain provisions of the U.S. Bankruptcy Code
governing such bankruptcies are unclear and remain untested. Further, the
application of state law to municipal issuers could produce varying results
among the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market generally,
certain specific segments of the market, or the relative credit quality of
particular securities. There is also the possibility that as a result of
litigation or other conditions, the power or ability of issuers to meet their
obligations for the payment of interest and principal on their municipal
securities may be materially affected or their obligations may be found to be
invalid or unenforceable. Such litigation or conditions may from time to time
have the effect of introducing uncertainties in the market for municipal
securities or certain segments thereof, or of materially affecting the credit
risk with respect to particular bonds. Adverse economic, business, legal or
political developments might affect all or a substantial portion of the Funds’
municipal securities in the same manner. Any of these effects could have a
significant impact on the prices of some or all of the municipal securities held
by a Fund.
Resource
Recovery Bond Risk.
Resource recovery bonds are a type of revenue bond issued to build facilities
such as solid waste incinerators or waste-to-energy plants. Typically, a private
corporation is involved, at least during the construction phase, and the revenue
stream is secured by fees or rents paid by municipalities for use of the
facilities. These bonds are normally secured only by the revenues from the
project and not by state or local government tax receipts. Consequently, the
credit quality of these securities is dependent upon the ability of the user of
the facilities financed by the bonds and any guarantor to meet its financial
obligations. The viability of a resource recovery project, environmental
protection regulations, and project operator tax incentives may affect the value
and credit quality of resource recovery bonds.
Special
Tax Bond Risk.
Special tax bonds are usually backed and payable through a single tax, or series
of special taxes such as incremental property taxes. The failure of the tax levy
to generate adequate revenue to pay the debt service on the bonds may cause the
value of the bonds to decline. Adverse conditions and developments affecting a
particular project may result in lower revenues to the issuer of the municipal
securities, which may adversely affect the value of a Fund’s
portfolio.
Tobacco
Bond Risk.
Tobacco settlement revenue bonds are generally neither general nor legal
obligations of a state or any of its political subdivisions and neither the full
faith and credit nor the taxing power nor any other assets or revenues of a
state or of any political subdivision will be pledged to the payment of any such
bonds. In addition, tobacco companies’ profits from the sale of tobacco products
are inherently variable and difficult to estimate. There can be no guarantee
that tobacco companies will earn enough revenues to cover the payments due under
tobacco bonds. The revenues of tobacco companies may be adversely affected by
the adoption of new legislation and/or by litigation.
Transportation
Bond Risk.
Transportation debt may be issued to finance the construction of airports, toll
roads, highways or other transit facilities. Airport bonds are dependent on the
general stability of the airline industry and on the stability of a specific
carrier who uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of fuel. Toll
road bonds are also affected by the cost and availability of fuel as well as
toll levels, the presence of competing roads and the general economic health of
an area. Fuel costs and availability also affect other transportation-related
securities, as do the presence of alternate forms of transportation, such as
public transportation. Municipal securities that are issued to finance a
particular transportation project often depend solely on revenues from that
project
to make principal and interest payments. Adverse conditions and developments
affecting a particular project may result in lower revenues to the issuer of the
municipal securities.
Water
and Sewer Bond Risk.
Water and sewer revenue bonds are often considered to have relatively secure
credit as a result of their issuer’s importance, monopoly status and generally
unimpeded ability to raise rates. Despite this, lack of water supply due to
insufficient rain, run-off or snow pack is a concern that has led to past
defaults. Further, public resistance to rate increases, costly environmental
litigation, and federal environmental mandates are challenges faced by issuers
of water and sewer bonds.
Specific
Risks Applicable to the VanEck Russia ETF and VanEck Russia Small-Cap
ETF
Risks
Related to Russian Invasion of Ukraine. In
late February 2022, Russian military forces invaded Ukraine, significantly
amplifying already existing geopolitical tensions among Russia, Ukraine, Europe,
NATO, and the West. Russia’s invasion, the responses of countries and political
bodies to Russia’s actions, and the potential for wider conflict may increase
financial market volatility and could have severe adverse effects on regional
and global economic markets, including the markets for certain securities and
commodities such as oil and natural gas. Following Russia’s actions, various
countries, including the U.S., Canada, the United Kingdom, Germany, and France,
as well as the European Union, issued broad-ranging economic sanctions against
Russia. The sanctions consist of the prohibition of trading in certain Russian
securities and engaging in certain private transactions, the prohibition of
doing business with certain Russian corporate entities, large financial
institutions, officials and oligarchs, and the freezing of Russian assets. The
sanctions include a commitment by certain countries and the European Union to
remove selected Russian banks from the Society for Worldwide Interbank Financial
Telecommunications, commonly called “SWIFT,” the electronic network that
connects banks globally, and imposed restrictive measures to prevent the Russian
Central Bank from undermining the impact of the sanctions. A number of large
corporations and U.S. states have also announced plans to divest interests or
otherwise curtail business dealings with certain Russian
businesses.
The
imposition of these current sanctions (and potential further sanctions in
response to continued Russian military activity) and other actions undertaken by
countries and businesses may adversely impact various sectors of the Russian
economy, including but not limited to, the financials, energy, metals and
mining, engineering, and defense and defense-related materials sectors. Such
actions also may result in a weakening of the ruble, a downgrade of Russia’s
credit rating, and the decline of the value and liquidity of Russian securities,
and could impair the ability of a Fund to buy, sell, receive, or deliver those
securities. Moreover, the measures could adversely affect global financial and
energy markets and thereby negatively affect the value of a Fund's investments
beyond any direct exposure to Russian issuers or those of adjoining geographic
regions. In response to sanctions, Russia has taken and may take additional
counter measures or retaliatory actions, which may impair the value and
liquidity of Russian securities and Fund investments. Such actions could, for
example, include restricting gas exports to other countries, seizure of U.S. and
European residents' assets, conducting cyberattacks on other governments,
corporations or individuals, or undertaking or provoking other military conflict
elsewhere in Europe, any of which could exacerbate negative consequences on
global financial markets and the economy. The actions discussed above could have
a negative effect on the performance of Funds that have exposure to Russia. The
conflict between Russia and Ukraine is currently unpredictable and has the
potential to result in broadened military actions. The duration of ongoing
hostilities and corresponding sanctions and related events cannot be predicted
and may result in a negative impact on performance and the value of Fund
investments, particularly as it relates to Russia exposure.
The
Funds are in the process of liquidating their assets and winding up their
business pursuant to the Plan of Liquidation and Termination and will be unable
to meet their investment objectives. Due to difficulties transacting in impacted
securities, a Fund may experience challenges liquidating the applicable
positions as part of the Fund’s liquidation. Additionally, due to current and
potential future sanctions or potential market closure impacting the ability to
trade Russian securities, a Fund may experience higher transaction costs.
Furthermore, any exposure that a Fund may have to Russian counterparties or
counterparties that are otherwise impacted by sanctions also could negatively
impact the Fund’s portfolio.
Tax
Risks
As
with any investment, you should consider how your investment in Shares of a Fund
will be taxed. The tax information in the Prospectus and SAI is provided as
general information. You should consult your own tax professional about the tax
consequences of an investment in Shares of a Fund.
U.S.
Federal Tax Treatment of Certain Futures Contracts and Option
Contracts
Each
Fund may be required for federal income tax purposes to mark-to-market and
recognize as income for each taxable year its net unrealized gains and losses on
certain regulated futures contracts and option contracts (“Section 1256
Contracts”) as of the end of the year as well as those actually realized during
the year. Gain or loss from Section 1256 Contracts will be 60% long-term and 40%
short-term capital gain or loss. Application of this rule may alter the timing
and character of distributions to shareholders. Each Fund may be required to
defer the recognition of losses on futures contracts or certain option contracts
to the extent of any unrecognized gains on related positions held by the
Fund.
In
order for a Fund to continue to qualify for U.S. federal income tax treatment as
a RIC, at least 90% of its gross income for a taxable year must be derived from
qualifying income, i.e.,
dividends, interest, income derived from loans of securities, income derived
from interests in qualified publicly traded partnerships (which generally are
partnerships that are traded on an established securities market or readily
tradable on a secondary market (or the substantial equivalent thereof), other
than partnerships that derive 90% of their income from interest, dividends and
other permitted RIC income), gains from the sale of securities or of foreign
currencies or other income derived with respect to the Fund’s business of
investing in securities. It is anticipated that any net gain realized from the
closing out of futures contracts or certain option contracts will be considered
gain from the sale of securities and therefore will be qualifying income for
purposes of the 90% requirement.
Each
Fund (except for VanEck Ethereum Strategy ETF) distributes to shareholders
annually any net capital gains which have been recognized for U.S. federal
income tax purposes (including unrealized gains at the end of the Fund’s fiscal
year on certain futures transactions and certain option contracts). Such
distributions are combined with distributions of capital gains realized on each
Fund’s other investments and shareholders are advised on the nature of the
distributions.
For
VanEck Ethereum Strategy ETF, the Fund may be required for federal income tax
purposes to mark-to-market and recognize as income for each taxable year its net
unrealized gains and losses on certain futures contracts and option contracts as
of the end of the year as well as those actually realized during the year. Gain
or loss from futures contracts required to be marked-to-market will be 60%
long-term and 40% short-term capital gain or loss, although all of the Fund's
income and gains will be taxed at the same rate. Application of this rule may
alter the timing and character of distributions to shareholders. The VanEck
Ethereum Strategy ETF may be required to defer the recognition of losses on ETH
Futures, to the extent of any unrecognized gains on related positions held by
the Fund.
Concentration
Considerations
To
the extent that a Fund’s investments are concentrated in a particular sector or
sectors or industry or group of industries, the Fund will be subject to the risk
that economic, political or other conditions that have a negative effect on that
sector or industry will negatively impact the Fund to a greater extent than if
the Fund’s assets were invested in a wider variety of sectors or industries. The
securities of state and municipal governments and their political subdivisions
are not considered to be issued by members of any industry.
(VanEck
Ethereum Strategy ETF only)
Since
VanEck Ethereum Strategy ETF's assets will have concentrated economic exposure
to ETH and ETH Futures, the Fund's performance may be disproportionately
affected by poor performance in ETH. By having concentrated economic exposure to
ETH and ETH Futures, the Fund is subject to the risk that economic, political,
regulatory or other conditions that have a negative effect on ETH, ETH Futures
and/or the digital asset industry may negatively impact the Fund.
Cyber
Security
The
Funds, their service providers, each Exchange and Authorized Participants
(defined below) are susceptible to cyber security risks that include, among
other things, theft, unauthorized monitoring, release, misuse, loss, destruction
or corruption of confidential and highly restricted data; denial of service
attacks; unauthorized access to relevant systems, compromises to networks or
devices that the Funds and their service providers use to service the Fund’s
operations; or operational disruption or failures in the physical infrastructure
or operating systems that support the Funds and their service providers. Cyber
attacks against or security breakdowns of the Funds, their service providers, an
Exchange or Authorized Participants may adversely impact the Funds and their
shareholders, potentially resulting in, among other things, financial losses;
the inability of Fund shareholders to transact business and the Fund to process
transactions; inability to calculate the Fund’s NAV; violations of applicable
privacy and other laws; regulatory fines, penalties, reputational damage,
reimbursement or other compensation costs; and/or additional compliance costs.
The Fund may incur additional costs for cyber security risk management and
remediation purposes. In addition, cyber security risks may also impact issuers
of securities in which a Fund invests, which may cause the Fund’s investment in
such issuers to lose value. There can be no
assurance
that the Funds, their service providers, an Exchange or Authorized Participants
will not suffer losses relating to cyber attacks or other information security
breaches in the future.
Securities
Lending
The
Funds, except VanEck Ethereum Strategy ETF, may lend securities to approved
borrowers, including affiliates of the Fund’s securities lending agent, State
Street Bank and Trust Company (“State Street”). VanEck Ethereum Strategy ETF may
only lend its investments in ETH-related companies, U.S. Treasuries and other
U.S. government obligations. Securities lending allows a Fund to retain
ownership of the securities loaned and, at the same time, earn additional
income. The borrower provides cash or non-cash collateral equal to at least 102%
(105% for foreign securities) of the value of the securities loaned. Collateral
is maintained by State Street on behalf of the Fund. Cash received as collateral
through loan transactions is generally invested in shares of a money market
fund. Investing this cash subjects that investment, as well as the securities
loaned, to market appreciation or depreciation. Non-cash collateral consists of
securities issued or guaranteed by the United States government or one of its
agencies and cannot be re-hypothecated by the Fund. The SEC provided
guidance in connection with the derivatives rule discussed above regarding the
use of securities lending collateral that may limit the Funds from engaging in
certain uses of cash and non-cash collateral. The Fund maintains the ability to
vote or consent on proxy proposals involving material events affecting
securities loaned. If the borrower defaults on its obligation to return the
securities loaned because of insolvency or other reasons, a Fund could
experience delays and costs in recovering the securities loaned or in gaining
access to the collateral. These delays and costs could be greater for foreign
securities. If a Fund is not able to recover the securities loaned, the
collateral may be sold and a replacement investment may be purchased in the
market. The value of the collateral could decrease below the value of the
replacement investment by the time the replacement investment is purchased.
Inability
to Pass Through Deduction from MLPs
(VanEck Energy Income ETF only)
Individuals
and certain other non-corporate entities are generally eligible for a 20%
deduction with respect to certain taxable income from master limited
partnerships (“MLPs”) through 2025. The VanEck Energy Income ETF does not have
the regulatory authority to pass through MLP net income, if any, or the 20%
deduction to Fund shareholders. As a result, in comparison, investors investing
directly in MLPs would be eligible for the 20% deduction for MLP net income from
these investments while investors investing in MLPs held indirectly through the
Fund would not be eligible for the 20% deduction for their share of such taxable
income.
Risks
Relating to VanEck Digital India ETF and VanEck India Growth Leaders ETF
Tax
Risks.
The taxation of income and capital gains of the VanEck Digital India ETF and
VanEck India Growth Leaders ETF is subject to the fiscal laws and practices of
different jurisdictions. Any of those jurisdictions may change their fiscal laws
and practices (or interpretation thereof) and enforcement policies, possibly
with retroactive effect. The VanEck India Growth Leaders ETF’s investment in the
Mauritius Subsidiary involves certain tax risks. Changes to the Double Taxation
Avoidance Treaty (the “Treaty”) between Mauritius and India (or its
interpretation) may adversely affect the ability of the Mauritius Subsidiary to
realize efficiently income or capital gains. Consequently, it is possible that
Mauritius Subsidiary may face unfavorable tax treatment, which may materially
adversely affect the value of its investments or the feasibility of making
investments in India.
The
Mauritius Subsidiary is a wholly-owned subsidiary of the Trust in Mauritius. The
following tax risks are relevant to the Mauritius Subsidiary and, where
indicated, to VanEck Digital India ETF.
a.Indirect
Transfer Risk:
Indian capital gains tax can be imposed on income arising from the transfer of
shares in a company registered outside India which derives, directly or
indirectly, its value substantially from the assets located in India. For more
information about this issue, please see “Taxation of Indirect Transfer of
Indian Assets” in the “Taxes” section of this SAI. Being a Category I FPI, the
Mauritius Subsidiary and VanEck Digital India ETF are currently exempt from the
application of these rules. In case of loss of the Mauritius Subsidiary's and/or
VanEck Digital India ETF's registration as a Category I FPI or changes in Indian
rules, the Mauritius Subsidiary, VanEck India Growth Leaders ETF, VanEck Digital
India ETF and their investors could be subject to the indirect transfer tax
provisions in the future.
b.Exposure
to Permanent Establishment (“PE”):
While the Fund believes that the activities of the Mauritius Subsidiary or
VanEck Digital India ETF should not create a PE of the Mauritius Subsidiary or
VanEck Digital India ETF in India, the Indian tax authorities may claim that
these activities have resulted in a PE of the Mauritius Subsidiary or VanEck
Digital India ETF in India. Under such circumstances, the profits of the
Mauritius
Subsidiary or VanEck Digital India ETF to the extent attributable to the PE
would be subject to taxation in India.
c.General
Anti-Avoidance Rules (“GAAR”):
GAAR, as contained in the Indian Income Tax Act, 1961 (“ITA 1961”), became
effective April 1, 2017. GAAR empowers the tax authorities to investigate and
declare an arrangement as an “impermissible avoidance arrangement” and,
consequently, the authorities can disregard entities in a structure, reallocate
income and expenditure between parties to the arrangement, alter the tax
residence of such entities and the legal situs of assets involved, treat debt as
equity and vice versa. An “impermissible avoidance arrangement” is an
arrangement entered into with the main purpose of obtaining a tax benefit and
satisfying one or more of the following: (a) non-arm’s length dealings; (b)
misuse or abuse of the provisions of the domestic income tax provisions; (c)
lack of commercial substance; or (d) arrangement similar to that employed for
non-bona fide purposes.
If
the Indian Tax authorities deem the Mauritius Subsidiary’s structure to be an
“impermissible avoidance arrangement,” then the
Mauritius Subsidiary may not be able to claim benefits under the Treaty.
Inability of the Mauritius Subsidiary to claim the tax benefits under the Treaty
could have an adverse impact on the tax liabilities of the Mauritius Subsidiary,
and would likely have an adverse impact on the returns to the Fund.
d.Renegotiation
of the India-Mauritius Double Taxation Avoidance Treaty:
India and Mauritius signed a protocol (“2016 Protocol”) on May 10, 2016 amending
the Treaty. The 2016 Protocol gives India a source-based right to tax capital
gains which arise from alienation of shares of an Indian resident company
acquired by a Mauritian tax resident (as opposed to the previous residence-based
tax regime under the Treaty). However, the 2016 Protocol provides for
grandfathering of investments and stipulates that the revised position shall
only be applicable to investments made on or after April 1, 2017. There can be
no assurance that the terms of the Treaty will not be further amended in the
future or be subject to a different interpretation or that the Mauritius
Subsidiary will continue to be deemed a tax resident by Mauritius, allowing it
favorable tax treatment. Any further changes in the provisions of the Treaty or
in its applicability to the Mauritius Subsidiary could result in the imposition
of withholding and other taxes on the Mauritius Subsidiary by India, which would
reduce the return to the Fund on its investments.
e.Exposure
to Place of Effective Management (“POEM”) risk:
While
the VanEck Digital India ETF and Mauritius Subsidiary believe that their
activities or the activities of the Adviser described in the Prospectus or this
SAI should not lead to a situation where the POEM of the VanEck Digital India
ETF, Mauritius Subsidiary or the Adviser is considered to be in India, there may
be a risk that the Indian tax authorities will claim that these activities have
resulted in a POEM of the VanEck Digital India ETF, Mauritius Subsidiary and/or
the Adviser in India. If for any reason the activities are held to be a POEM of
the VanEck Digital India ETF, Mauritius Subsidiary and/or the Adviser in India,
then the worldwide profits of the VanEck Digital India ETF or Mauritius
Subsidiary would be subject to taxation in India.
f.Limitations
on the Mauritius Subsidiary’s Ability to Make Distributions or Pay Redemption
Proceeds to the Fund.
Certain limitations under the Mauritius Companies Act 2001 may adversely affect
the ability of the Mauritius Subsidiary and the VanEck India Growth Leaders ETF
to make distributions or pay the redemption proceeds to the investors. If VanEck
India Growth Leaders ETF’s ability to make distributions is adversely affected,
VanEck India Growth Leaders ETF may be unable to satisfy distribution
requirements applicable to RICs under the Internal Revenue Code, and be subject
to income and/or excise tax at the Fund level. See “Taxes.”
g.Mauritius
Subsidiary Risks.
The Fund may cease utilizing the Mauritius Subsidiary in the future or the use
of the Subsidiary as intended may not be possible. Ceasing to utilize the
Mauritius Subsidiary could result in realized gains for the Fund, in capital
gains tax liability and other tax liability in India and Mauritius and in other
associated liabilities.
Special
Risk Considerations of Investing in China (VanEck
China Bond ETF and VanEck ChiNext ETF (together, the “China Funds”) only)
Investments
in securities of Chinese issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets, including
the following:
Political
and Economic Risk. The
economy of China differs from the economies of most developed countries in many
respects, including the level of government involvement, its state of
development, its growth rate, control of foreign exchange, and allocation of
resources. The economy of China’s growth has been uneven both geographically and
among various sectors of the 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.
For
more than 30 years, the PRC government has carried out economic reforms to
achieve decentralization and utilization 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 market in
the PRC as well as the underlying securities of a Fund’s Index. Further, the PRC
government may from time to time adopt corrective measures to control the growth
of the PRC economy which may also have an adverse impact on the capital growth
and performance of a Fund.
Political
changes, social instability and adverse diplomatic developments in the PRC could
result in the imposition of additional government restrictions including
expropriation of assets, confiscatory taxes or nationalization of some or all of
the property held by the issuers of a Fund’s investments or contained in a
Fund’s Index.
Market
volatility caused by potential regional or territorial conflicts, including
military conflicts, either in response to internal social unrest or conflicts
with other countries, popular unrest associated with demands for improved
political, economic and social conditions, the impact of regional conflict on
the economy and hostile relations with neighboring countries, or natural or
other disasters, may have an adverse impact on the performance of the
Fund.
The
laws, regulations, government policies and political and economic climate in
China may change with little or no advance notice. Any such change could
adversely affect market conditions and the performance of the Chinese economy
and, thus, the value of the A-shares in a Fund’s portfolio.
Since
1949, the PRC has been a socialist state controlled by the Communist party.
China has only recently opened up to foreign investment and has only begun to
permit private economic activity. There is no guarantee that the Chinese
government will not revert from its current open-market economy to the economic
policy of central planning that it implemented prior to 1978.
Under
the economic reforms implemented by the Chinese government, the Chinese economy
has experienced tremendous growth, developing into one of the largest economies
in the world. There is no assurance, however, that such growth will be sustained
in the future.
The
Chinese government continues to be an active participant in many economic
sectors through ownership positions and regulation. The allocation of resources
in China is subject to a high level of government control. The Chinese
government strictly regulates the payment of foreign currency denominated
obligations and sets monetary policy. Through its policies, the government may
provide preferential treatment to particular industries or companies. The
policies set by the government could have a substantial adverse effect on the
Chinese economy and a Fund’s investments.
The
Chinese economy is export-driven and highly reliant on trade, and much of
China’s growth in recent years has been the result of focused investments in
economic sectors intended to produce goods and services for export purposes. The
performance of the Chinese economy may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rate of
inflation, currency revaluation, capital reinvestment, resource self-sufficiency
and balance of payments position. Adverse changes to the economic conditions of
its primary trading partners, such as the United States, Japan and South Korea,
would adversely impact the Chinese economy and a Fund’s investments.
International trade tensions involving China and its trading counterparties may
arise from time to time which can result in trade tariffs, embargoes, sanctions,
investment restrictions, trade limitations, trade wars and other negative
consequences. Such actions and consequences may ultimately result in a
significant reduction in international trade, an oversupply of certain
manufactured goods, devaluations of existing inventories and potentially the
failure of individual companies and/or large segments of China’s export industry
with a potentially severe negative impact to a Fund.
Moreover,
the current slowdown or any future recessions in other significant economies of
the world, such as the United States, the European Union and certain Asian
countries, may adversely affect economic growth in China. An economic downturn
in China would adversely impact a Fund’s investments.
Inflation.
Economic
growth in China has also historically been accompanied by periods of high
inflation. Rising inflation may, in the future, adversely affect the performance
of the Chinese economy and a Fund’s investments.
Tax
Changes. The
Chinese system of taxation is not as well settled as that of the United States.
China has implemented a number of tax reforms in recent years and may amend or
revise its existing tax laws and/or procedures in the future,
possibly
with retroactive effect. Changes in applicable Chinese tax law, such as the
cessation of tax exemptions in respect of investments in A-shares via Stock
Connect, could reduce the after-tax profits of the Fund, directly or indirectly,
including by reducing the after-tax profits of companies in China in which a
Fund invests. Uncertainties in Chinese tax rules could result in unexpected tax
liabilities for the Fund. Should legislation limit U.S. investors’ ability to
invest in specific Chinese companies through A-shares or other share class
listings that are part of the underlying holdings, these shares may be excluded
from Fund holdings. In addition, changes in the Chinese tax system may have
retroactive effects.
Nationalization
and Expropriation. After
the formation of the Chinese socialist state in 1949, the Chinese government
renounced various debt obligations and nationalized private assets without
providing any form of compensation. There can be no assurance that the Chinese
government will not take similar actions in the future. Accordingly, an
investment in a Fund involves a risk of a total loss.
Hong
Kong Policy. As
part of Hong Kong’s transition from British to Chinese sovereignty in 1997,
China agreed to allow Hong Kong to maintain a high degree of autonomy with
regard to its political, legal and economic systems for a period of at least 50
years. China controls matters that relate to defense and foreign affairs. Under
the agreement, China does not tax Hong Kong, does not limit the exchange of the
Hong Kong dollar for foreign currencies and does not place restrictions on free
trade in Hong Kong. However, there is no guarantee that China will continue to
honor the agreement, and China may change its policies regarding Hong Kong at
any time. As of July 2020, the Chinese Standing Committee of the National
People's Congress enacted the Law of the People's Republic of China on
Safeguarding National Security in the Hong Kong Special Administrative Region.
As of the same month, Hong Kong is no longer afforded preferential economic
treatment by the United States under US law, and there is uncertainty as to how
the economy of Hong Kong will be affected. Any further changes in PRC’s policies
could adversely affect market conditions and the performance of the Hong Kong
economy and, thus, the value of securities in the Fund’s portfolio.
Any
such change could adversely affect market conditions and the performance of the
Chinese economy and, thus, the value of securities in the Fund’s portfolio.
Furthermore, as demonstrated by Hong Kong protests in recent years over
political, economic, and legal freedoms, and the Chinese government's response
to them, there continues to exist political uncertainty within Hong
Kong.
Chinese
Securities Markets. The
securities markets in China have a limited operating history and are not as
developed as those in the United States. These markets tend to have had greater
volatility than markets in the United States and some other countries. In
addition, there is less regulation and monitoring of Chinese securities markets
and the activities of investors, brokers and other participants than in the
United States. Accordingly, issuers of securities in China are not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as insider trading rules, tender offer regulation, stockholder proxy
requirements and the requirements mandating timely disclosure of information.
During periods of significant market volatility, the Chinese government has,
from time to time, intervened in its domestic securities markets to a greater
degree than would be typical in more developed markets. Stock markets in China
are in the process of change and further development. This may lead to trading
volatility, unpredictable trading suspensions, difficulty in the settlement and
recording of transactions and difficulty in interpreting and applying the
relevant regulations. These risks may be more pronounced for the A-share market
than for Chinese securities markets generally because the A-share market is
subject to greater government restrictions and control, including trading
suspensions, as described in greater detail above.
Available
Disclosure About Chinese Companies.
Disclosure and regulatory standards in emerging market countries, such as China,
are in many respects less stringent than U.S. standards. There is substantially
less publicly available information about Chinese issuers than there is about
U.S. issuers. The Chinese government has taken positions that prevent the United
States Public Company Accounting Oversight Board (“PCAOB”) from inspecting the
audit work and practices of accounting firms in mainland China and Hong Kong for
compliance with U.S. law and professional standards. Audits performed by
PCAOB-registered accounting firms in mainland China and Hong Kong may be less
reliable than those performed by firms subject to PCAOB inspection. Therefore,
disclosure of certain material information may not be made, and less information
may be available to a Fund and other investors than would be the case if a
Fund’s investments were restricted to securities of U.S. issuers. Chinese
issuers are subject to accounting, auditing and financial standards and
requirements that differ, in some cases significantly, from those applicable to
U.S. issuers. In particular, the assets and profits appearing on the financial
statements of a Chinese issuer may not reflect its financial position or results
of operations in the way they would be reflected had such financial statements
been prepared in accordance with U.S. Generally Accepted Accounting Principles.
As a result, there is substantially greater risk that disclosures will be
incomplete or misleading and, in the event of investor harm, that there will be
substantially less access to recourse, in comparison to U.S. domestic companies.
Furthermore, under amendments to the Sarbanes-Oxley Act enacted in December
2020, which requires that the PCAOB be permitted to inspect the accounting firm
of a U.S.-listed Chinese issuer, Chinese companies with securities listed on
U.S. exchanges may be delisted if the PCAOB is unable to inspect the accounting
firm.
Chinese
Corporate and Securities Law. The
regulations on investments and repatriation of capital are relatively new. As a
result, the application and interpretation of such investment regulations are
relatively untested. In addition, PRC authorities have broad discretion in this
regard. A Fund’s rights with respect to its investments in A-shares through
Stock Connect will not be governed by U.S. law, and instead will be governed by
Chinese law. China operates under a civil law system, in which court precedent
is not binding. Because there is no binding precedent to interpret existing
statutes, there is uncertainty regarding the implementation of existing
law.
Legal
principles relating to corporate affairs and the validity of corporate
procedures, directors’ fiduciary duties and liabilities and stockholders’ rights
often differ from those that may apply in the United States and other countries.
Chinese laws providing protection to investors, such as laws regarding the
fiduciary duties of officers and directors, are undeveloped and will not provide
investors, such as a Fund, with protection in all situations where protection
would be provided by comparable law in the United States. China lacks a national
set of laws that address all issues that may arise with regard to a foreign
investor such as a Fund.
It
may therefore be difficult for a Fund to enforce its rights as an investor under
Chinese corporate and securities laws, and it may be difficult or impossible for
a Fund to obtain a judgment in court. Moreover, as Chinese corporate and
securities laws continue to develop, these developments may adversely affect
foreign investors, such as a Fund.
Special
Risk Considerations of Investing in Chinese-Issued A-shares
(VanEck
ChiNext ETF only)
The
Fund’s investments in A-shares via Stock Connect are limited by the market-wide
quotas imposed by Stock Connect. Currently, there are two stock exchanges in
mainland China, the Shanghai and Shenzhen Stock Exchanges, and there is one
stock exchange in Hong Kong. The Shanghai and Shenzhen Stock Exchanges are
supervised by the China Securities Regulatory Commission and are highly
automated with trading and settlement executed electronically. The Shanghai and
Shenzhen Stock Exchanges are more volatile than the major securities markets in
the United States. In comparison to the mainland Chinese securities markets, the
securities markets in Hong Kong are relatively well developed and active.
The
Shanghai and Shenzhen Stock Exchanges divide listed shares into two classes:
A-shares and B-shares. Companies whose shares are traded on the Shanghai and
Shenzhen Stock Exchanges that are incorporated in mainland China may issue both
A-shares and B-shares. In China, the A-shares and B-shares of an issuer may only
trade on one exchange. A-shares and B-shares may both be listed on either the
Shanghai or Shenzhen Stock Exchanges. Both classes represent an ownership
interest
comparable
to a share of common stock and all shares are entitled to substantially the same
rights and benefits associated with ownership. A-shares are traded on the
Shanghai and Shenzhen Stock Exchanges in RMB.
Because
restrictions continue to exist and capital therefore cannot flow freely into the
A-share market, it is possible that in the event of a market disruption, the
liquidity of the A-share market and trading prices of A-shares could be more
severely affected than the liquidity and trading prices of markets where
securities are freely tradable and capital therefore flows more freely. The Fund
cannot predict the nature or duration of such a market disruption or the impact
that it may have on the A-share market and the short-term and long-term
prospects of its investments in the A-share market.
The
Chinese government has in the past taken actions that benefited holders of
A-shares. As A-shares become more available to foreign investors, such as the
Fund, the Chinese government may be less likely to take action that would
benefit holders of A-shares.
From
time to time, certain of the companies in which the Fund expects to invest may
operate in, or have dealings with, countries subject to sanctions or embargoes
imposed by the U.S. Government and the United Nations and/or countries
identified by the U.S. Government as state sponsors of terrorism. A company may
suffer damage to its reputation if it is identified as a company which operates
in, or has dealings with, countries subject to sanctions or embargoes imposed by
the U.S. Government and the United Nations and/or countries identified by the
U.S. Government as state sponsors of terrorism. As an investor in such
companies, the Fund will be indirectly subject to those risks.
Investment
and Repatriation Restrictions. Investments
by the Fund in A-shares and other Chinese financial instruments regulated by the
China Securities Regulatory Commission, including warrants and open- and
closed-end investment companies, are subject to governmental pre-approval
limitations on the quantity that the Fund may purchase or limits on the classes
of securities in which the Fund may invest.
The
Chinese government limits foreign investment in the securities of certain
Chinese issuers entirely if foreign investment is banned in respect of the
industry in which the relevant Chinese issuers are conducting their business.
These restrictions or limitations may have adverse effects on the liquidity and
performance of the Fund
holdings
as compared to the performance of its Index. This may increase the risk of
tracking error and may adversely affect the Fund’s ability to pursue its
investment objective.
Risk
of Loss of Favorable U.S. Tax Treatment. The
Fund intends to distribute annually all or substantially all of its investment
company taxable income and net capital gain. However, if the Fund does not
repatriate funds associated with direct investment in A-shares on a timely
basis, it may be unable to satisfy the distribution requirements required to
qualify for the favorable tax treatment otherwise generally afforded to
regulated investment companies under the Internal Revenue Code. If the Fund
fails to qualify for any taxable year as a regulated investment company, the
Fund would be treated as a corporation subject to U.S. federal income tax,
thereby subjecting any income earned by the Fund to tax at the corporate level
(currently at a 21% U.S. federal tax rate) and, when such income is distributed,
to a further tax at the shareholder level to the extent of the Fund’s current or
accumulated earnings and profits. In addition, the Fund would not be eligible
for a deduction for dividends paid to shareholders. In addition, the Fund could
be required to recognize unrealized gains, pay taxes and make distributions (any
of which could be subject to interest charges) before re-qualifying for taxation
as a regulated investment company. See the Fund’s Prospectus entitled
“Shareholder Information—Tax Information—Taxes on Distributions” for more
information.
Tax
on Retained Income and Gains.
To the extent the Fund does not distribute to shareholders all of its investment
company taxable income and net capital gain in a given year, it will be required
to pay U.S. federal income and excise tax on the retained income and gains,
thereby reducing the Fund’s return. The Fund may elect to treat its net capital
gain as having been distributed to shareholders. In that case, shareholders of
record on the last day of the Fund’s taxable year will be required to include
their attributable share of the retained gain in income for the year as a
long-term capital gain despite not actually receiving the dividend, and will be
entitled to a tax credit or refund for the tax deemed paid on their behalf by
the Fund as well as an increase in the basis of their shares to reflect the
difference between their attributable share of the gain and the related credit
or refund.
Foreign
Exchange Control.
The Chinese government heavily regulates the domestic exchange of foreign
currencies within China. Chinese law requires that all domestic transactions
must be settled in RMB, places significant restrictions on the remittance of
foreign currency and strictly regulates currency exchange from RMB. These
restrictions may adversely affect the Fund and its investments. There may not be
sufficient amounts of RMB for the Fund to be fully invested. It should also be
noted that the PRC government’s policies on exchange control and repatriation
restrictions are subject to change, and any such change may adversely impact the
Fund. There can be no assurance that the RMB exchange rate will not fluctuate
widely against the US dollar or any other foreign currency in the future. Under
exceptional circumstances, payment of redemptions and/or dividend payment in RMB
may be delayed due to the exchange controls and restrictions applicable to RMB.
Custody
Risks of Investing
in
A-shares.
Custody arrangements for investments in China are subject to the rules and
regulations of the China Securities Regulatory Commission and the People’s Bank
of China, which may materially differ from custody arrangements in other
jurisdictions. The Fund’s investments in China are subject to the risks of such
arrangements, including the risk of a liquidation or bankruptcy by the Chinese
sub-custodian, which may result in losses to the Fund.
Foreign
Currency Considerations.
Emerging markets such as China can experience high rates of inflation, deflation
and currency devaluation. The value of the RMB may be subject to a high degree
of fluctuation due to, among other things, changes in interest rates, the
effects of monetary policies issued by the PRC, the United States, foreign
governments, central banks or supranational entities, the imposition of currency
controls or other national or global political or economic developments. The
Fund invests a significant portion of its assets in investments denominated in
RMB and the income received by the Fund will principally be in RMB. The Fund’s
exposure to the RMB and changes in value of the RMB versus the U.S. dollar may
result in reduced returns for the Fund. Moreover, the Fund may incur costs in
connection with conversions between U.S. dollars and RMB. The RMB is currently
not a freely convertible currency. The value of the RMB is based on a managed
floating exchange rate based on market supply and demand with reference to a
basket of foreign currencies. The daily trading price of the RMB is allowed to
float within a narrow band around the central parity published by the People’s
Bank of China. The Chinese government’s imposition of restrictions on the
repatriation of RMB out of mainland China may limit the depth of the offshore
RMB market and reduce the liquidity of the Fund’s investments. These
restrictions as well as any accelerated appreciation or depreciation of RMB may
adversely affect the Fund and its investments. The Fund may be required to
liquidate certain positions in order to make distributions if the Fund has
insufficient cash in U.S. dollars to meet distribution requirements under the
Internal Revenue Code due to currency convertibility. The liquidation of
investments, if required, may also have an adverse impact on the Fund’s
performance.
Furthermore,
the Fund may incur costs in connection with conversions between U.S. dollars and
RMB. Foreign exchange dealers realize a profit based on the difference between
the prices at which they are buying and selling various currencies. Thus, a
dealer normally will offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire immediately to
resell that currency to the dealer. The Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot
rate
prevailing
in the foreign currency exchange market, or through entering into forward,
futures or options contracts to purchase or sell foreign currencies.
RMB
can be further categorized into onshore RMB (CNY), which can be traded only in
the PRC, and offshore RMB (CNH), which can be traded outside the PRC. CNY and
CNH are traded at different exchange rates and their exchange rates may not move
in the same direction. The Fund may also be adversely affected by the exchange
rates between CNY and CNH. In addition, there may not be sufficient amounts of
RMB for the Fund to be fully invested. Moreover, the trading and settlement of
RMB-denominated securities are recent developments in Hong Kong and there is no
assurance that problems will not be encountered with the systems or that other
logistical problems will not arise.
Currently,
there is no market in China in which the Fund may engage in hedging transactions
to minimize RMB foreign exchange risk, and there can be no guarantee that
instruments suitable for hedging currency will be available to the Fund in China
at any time in the future. In the event that in the future it becomes possible
to hedge RMB currency risk in China, the Fund may seek to protect the value of
some portion or all of its portfolio holdings against currency risks by engaging
in hedging transactions. In that case, such Fund may enter into forward currency
exchange contracts and currency futures contracts and options on such futures
contracts, as well as purchase put or call options on currencies, in China.
Currency hedging would involve special risks, including possible default by the
other party to the transaction, illiquidity and, to the extent the Adviser’s
view as to certain market movements is incorrect, the risk that the use of
hedging could result in losses greater than if they had not been used. The use
of currency transactions could result in the Fund’s incurring losses as a result
of the imposition of exchange controls, exchange rate regulation, suspension of
settlements or the
inability
to deliver or receive a specified currency.
China-Related
Index Tracking Risk.
To the extent the Fund is unable to invest in A-shares or enter into swaps or
other derivatives linked to the performance of its Index or securities
comprising its Index, it may enter into swaps or other derivatives linked to the
performance of other funds that seek to track the performance of its Index.
These funds may trade at a premium or discount to net asset value, which may
result in additional tracking error for the Fund. Moreover, the ability of the
Fund to track its Index may be affected by foreign exchange fluctuations as
between the U.S. dollar and the RMB. Additionally, the terms of the swaps
require the payment of the U.S. dollar equivalent of the RMB distributions and
dividends, meaning that the Fund is exposed to foreign exchange risk and
fluctuations in value between the U.S. dollar and the RMB. The Fund will be
required to remit RMB to settle the purchase of A-shares and repatriate RMB to
U.S. dollars to settle redemption orders. In the event such remittance is
delayed or disrupted, the Fund will not be able to fully replicate the Index by
investing in the relevant A-shares, which may lead to increased tracking error,
and may need to rely on borrowings to meet redemptions, which may lead to
increased expenses. Because the Index is priced in Chinese RMB and the Fund is
priced in U.S. dollars, the ability of the Fund to track the Index is in part
subject to foreign exchange fluctuations as between the U.S. dollar and the RMB.
The Fund may underperform the Index when the value of the U.S. dollar increases
relative to the value of the RMB.
PRC
Custodian Risks
Custody
arrangements for investments in China are subject to the rules and regulations
of the China Securities Regulatory Commission and the People’s Bank of China,
which may materially differ from custody arrangements in other jurisdictions.
The Fund’s investments in China are subject to the risks of such arrangements,
including the risk of a liquidation or bankruptcy by the Chinese sub-custodian,
which may result in losses to the Fund.
Stock
Connect Program Risks (VanEck
ChiNext ETF, VanEck Green Metals ETF and VanEck Rare Earth and Strategic Metals
ETF only)
VanEck
ChiNext ETF, VanEck Green Metals ETF and VanEck Rare Earth and Strategic Metals
ETF may invest in A-shares listed and traded on the Shanghai Stock Exchange and
the Shenzhen Stock Exchange through the Shanghai-Hong Kong Stock Connect Program
and the Shenzhen-Hong Kong Stock Connect Program (together, “Stock Connect”), or
on such
other
stock exchanges in China which participate in Stock Connect from time to time or
in the future. Trading through Stock Connect is subject to a number of
restrictions that may affect a Fund’s investments and returns. For example,
purchases of A-shares through Stock Connect are subject to a daily quota which
does not belong to the Fund and can only be utilised on a first-come-first-serve
basis. Once the daily quota is exceeded, buy orders may be rejected. The Fund's
ability to invest in A-shares may therefore be limited. In addition, investments
made through Stock Connect are subject to trading, clearance and settlement
procedures that are relatively untested in the PRC, which could pose risks to a
Fund. Furthermore, securities purchased via Stock Connect will be held via a
book entry omnibus account in the name of Hong Kong Securities Clearing Company
Limited (“HKSCC”), Hong Kong’s clearing entity, at the China Securities
Depository and Clearing Corporation Limited (“CSDCC”). A Fund’s ownership
interest in Stock Connect securities will not be reflected directly in book
entry with CSDCC and will instead only be reflected on the books of its Hong
Kong sub-custodian. A Fund may therefore depend on HKSCC’s ability or
willingness as record-holder of Stock Connect securities to enforce the Fund’s
shareholder rights. PRC law did not historically recognize the concept of
beneficial ownership; while PRC regulations and the Hong Kong Stock Exchange
have issued clarifications and guidance supporting the concept of beneficial
ownership via Stock Connect, the interpretation of beneficial ownership in the
PRC by regulators and courts may continue to evolve. Moreover, Stock Connect
A-shares generally may not be sold, purchased or otherwise transferred other
than through Stock Connect in accordance with applicable rules.
A
primary feature of Stock Connect is the application of the home market’s laws
and rules applicable to investors in A-shares. Therefore, a Fund’s investments
in Stock Connect A-shares are generally subject to PRC securities regulations
and listing rules, among other restrictions. The Stock Exchange of Hong Kong,
Shenzhen Stock Exchange (“SZSE”) and Shanghai Stock Exchange (“SSE”) reserve the
right to suspend trading if necessary for ensuring an orderly and fair market
and managing risks prudently, which could adversely affect a Fund’s ability to
access the mainland China market. A stock may be recalled from the scope of
eligible SSE securities or SZSE securities for trading via the Stock Connects
for various reasons, and in such event, the stock can only be sold but is
restricted from being bought. Stock Connect is only available on days when
markets in both the PRC and Hong Kong are open, which may limit the Fund’s
ability to trade when it would be otherwise attractive to do so.
Uncertainties
in permanent PRC tax rules governing the taxation of income and gains from
investments in Stock Connect A-shares could result in unexpected tax liabilities
for the Fund. Please refer to the section titled “PRC taxation” below.
A
Fund may, through Stock Connect, access securities listed on the ChiNext Market
and STAR Board of the SZSE. Listed companies on the ChiNext Market and STAR
Board are usually of an emerging nature with smaller operating scale. Listed
companies on the ChiNext Market and STAR Board are subject to wider price
fluctuation limits and due to higher entry thresholds for investors, may have
limited liquidity, compared to other boards. They are subject to higher
fluctuation in stock prices and liquidity and have higher risks and turnover
ratios than companies listed on the main board of the SZSE. Securities listed on
the ChiNext Market may be overvalued and such exceptionally high valuation may
not be sustainable. Stock prices may be more susceptible to manipulation due to
fewer circulating shares. It may be more common and faster for companies listed
on the ChiNext Market to delist. This may have an adverse impact on a Fund if
the companies that they invest in are delisted. Also, the rules and regulations
regarding companies listed on the ChiNext Market and STAR Board are less
stringent in terms of profitability and share capital than those on the main
board. Investments in the ChiNext Market and STAR Board may result in
significant losses for a Fund and its investors. STAR Board is a newly
established board and may have a limited number of listed companies during the
initial stage. Investments in STAR board may be concentrated in a small number
of stocks and subject the Fund to higher concentration risk.
Stock
Connect only operates 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 Fund cannot carry out any China A-shares
trading via Stock Connect. The Fund may be subject to a risk of price
fluctuations in China A-shares during the time when any of Stock Connect is not
trading as a result.
PRC
regulations require that before an investor sells any share, there should be
sufficient shares in the account; otherwise the SSE or SZSE will reject the sell
order concerned. SEHK will carry out pre-trade checking on China A-shares sell
orders of its participants (i.e.
the stock brokers) to ensure there is no over-selling. If the 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, the Fund
may not be able to dispose of its holdings of China A-shares in a timely
manner.
The
Stock Connect program is a relatively new program and may be subject to further
interpretation and guidance. There can be no assurance as to the program’s
continued existence or whether future developments regarding the program may
restrict or adversely affect a Fund’s investments or returns. In addition, the
application and interpretation of the laws and
regulations
of Hong Kong and the PRC, and the rules, policies or guidelines published or
applied by relevant regulators and exchanges in respect of the Stock Connect
program are uncertain, and they may have a detrimental effect on a Fund’s
investments and returns. Moreover, the rules and regulations may have potential
retrospective effect. There can be no assurance that the Stock Connects will not
be abolished. Investments in mainland China markets through the Stock Connects
may adversely affect the Fund as a result of such changes.
Bond
Connect Risks (VanEck
China Bond ETF only)
The
“Mutual Bond Market Access between mainland China and Hong Kong” (“Bond
Connect”) program is an initiative established to facilitate investors from
mainland China and Hong Kong to trade in each other’s bond markets through
connection between the mainland China and Hong Kong financial
institutions.
Under
the prevailing PRC regulations, eligible foreign investors will be allowed to
invest in the bonds available on the China Interbank Bond Market (“CIBM”)
through the northbound trading of Bond Connect (“Northbound Trading Link”).
There will be no investment quota for the Northbound Trading Link.
Under
the Northbound Trading Link, eligible foreign investors are required to appoint
the China Foreign Exchange Trade System & National Interbank Funding Centre
(“CFETS”) or other institutions recognized by the PBOC as registration agents to
apply for registration with the PBOC.
Eligible
foreign investors may submit trade requests for bonds circulated in the CIBM
through the Northbound Trading Link provided by offshore electronic bond trading
platforms, which will in turn transmit their requests for quotation to CFETS.
CFETS will send the requests for quotation to a number of approved onshore
dealers (including market makers and others engaged in the market-making
business) in mainland China. The approved onshore dealers will respond to the
requests for quotation via CFETS, and CFETS will send their responses to those
eligible foreign investors through the same offshore electronic bond trading
platforms. Once the eligible foreign investor accepts the quotation, the trade
is concluded on CFETS.
On
the other hand, the settlement and custody of bond securities traded in the CIBM
under Bond Connect will be done through the settlement and custody link between
an offshore custody agent and onshore custodian and clearing institutions in
mainland China. In August 2018, Bond Connect enhanced its settlement system to
fully implement real-time delivery-versus-payment settlement of trades, which
has resulted in increased adoption of Bond Connect by investors. However, there
is a risk that Chinese regulators may alter all or part of the structure and
terms of, as well as a China Fund’s access to, Bond Connect in the future or
eliminate it altogether, which may limit or prevent the Fund from investing
directly in or selling its bond securities. Pursuant to the prevailing
regulations in mainland China, all bonds traded by eligible foreign investors
will be registered in the name of the Central Moneymarkets Unit of the Hong Kong
Monetary Authority (“CMU”), which will hold such bonds as a nominee
owner.
Bond
Connect is relatively new. Laws, rules, regulations, policies, notices,
circulars or guidelines relating to Bond Connect as published or applied by any
of the Bond Connect Authorities (as defined below) are untested and are subject
to change from time to time. There can be no assurance that Bond Connect will
not be restricted, suspended or abolished. If such event occurs, the Fund’s
ability to invest in the CIBM through Bond Connect will be adversely affected,
and if the Fund is unable to adequately access the CIBM through other means, the
Fund’s ability to achieve its investment objective will be adversely affected.
Under
the prevailing regulations, eligible foreign investors who wish to participate
in Bond Connect may do so through an offshore custody agent, registration agent
or other third parties (as the case may be), who would be responsible for making
the relevant filings and account opening with the relevant authorities. The Fund
is therefore subject to the risk of default or errors on the part of such
agents.
Trading
through Bond Connect is performed through newly developed trading platforms and
operational systems. There is no assurance that such systems will function
properly (in particular, under extreme market conditions) or will continue to be
adapted to changes and developments in the market. In the event that the
relevant systems fails to function properly, trading through Bond Connect may be
disrupted. The Fund’s ability to trade through Bond Connect (and hence to pursue
its investment strategy) may therefore be adversely affected. In addition, where
the Fund invests in the CIBM through Bond Connect, it may be subject to risks of
delays inherent in the order placing and/or settlement.
The
CMU (i.e.
the HKMA) is the “nominee holder” of the bonds acquired by the Fund through Bond
Connect. Whilst the Bond Connect Authorities have expressly stated that
investors will enjoy the rights and interests of the bonds acquired through Bond
Connect in accordance with applicable laws, the exercise and the enforcement of
beneficial ownership rights over such bonds in the courts in China is yet to be
tested. In addition, in the event that the nominee holder becomes
insolvent,
such bonds may form part of the pool of assets of the nominee holder available
for distribution to its creditors and the Fund, as a beneficial owner, may have
no rights whatsoever in respect thereof.
Chinese
Variable Interest Entities Risks
Chinese
operating companies sometimes rely on variable interest entity (“VIE”)
structures to raise capital from non-Chinese investors. In a VIE structure, a
China-based operating company establishes an entity (typically offshore) that
enters into service and other contracts with the Chinese company designed to
provide economic exposure to the company. The offshore entity then issues
exchange-traded shares that are sold to the public, including non-Chinese
investors (such as a Fund). Shares of the offshore entity are not equity
ownership interests in the Chinese operating company and therefore the ability
of the offshore entity to control the activities of the Chinese company are
limited and the Chinese company may engage in activities that negatively impact
investment value. The VIE structure is designed to provide the offshore entity
(and in turn, investors in the entity) with economic exposure to the Chinese
company that replicates equity ownership, without actual equity ownership. VIE
structures are used due to Chinese government prohibitions on foreign ownership
of companies in certain industries and it is not clear that the contracts are
enforceable or that the structures will otherwise work as intended.
Intervention
by the Chinese government with respect to VIE structures could adversely affect
the Chinese operating company’s performance, the enforceability of the offshore
entity’s contractual arrangements with the Chinese company and the value of the
offshore entity’s shares. Further, if the Chinese government determines that the
agreements establishing the VIE structure do not comply with Chinese law and
regulations, including those related to prohibitions on foreign ownership, the
Chinese government could subject the Chinese company to penalties, revocation of
business and operating licenses or forfeiture of ownership interests. The
offshore entity’s control over the Chinese company may also be jeopardized if
certain legal formalities are not observed in connection with the agreements, if
the agreements are breached or if the agreements are otherwise determined not to
be enforceable. If any of the foregoing were to occur, the market value of a
Fund’s associated portfolio holdings would likely fall, causing substantial
investment losses for the Fund.
In
addition, Chinese companies listed on U.S. exchanges, including ADRs and
companies that rely on VIE structures, may be delisted if they do not meet U.S.
accounting standards and auditor oversight requirements. Delisting could
significantly decrease the liquidity and value of the securities of these
companies, decrease the ability of a Fund to invest in such securities and
increase the cost of the Fund if it is required to seek alternative markets in
which to invest in such securities.
Specific
Risks Applicable to VanEck Ethereum Strategy ETF
Under
normal circumstances, the Fund will invest in ETH Futures traded on commodity
exchanges registered with the CFTC. Currently, the only ETH Futures the Fund
intends to invest in are those traded on the CME.
The
Fund is an actively managed ETF that does not seek to replicate the performance
of a specified index.
ETH
Futures. Futures
contracts are financial contracts the value of which depends on, or is derived
from, the underlying reference asset. In the case of ETH Futures, the underlying
reference asset is ETH. Futures contracts may be physically-settled or
cash-settled. The only futures contracts in which the Fund invests are
cash-settled ETH Futures. “Cash-settled” means that when the relevant futures
contract expires, if the value of the underlying asset exceeds the futures
contract price, the seller pays to the purchaser cash in the amount of that
excess, and if the futures contract price exceeds the value of the underlying
asset, the purchaser pays to the seller cash in the amount of that excess. In a
cash-settled futures contract on ETH, the amount of cash to be paid is equal to
the difference between the value of the ETH underlying the futures contract at
the close of the last trading day of the contract and the futures contract price
specified in the agreement. The CME has specified that the value of ETH
underlying ETH Futures traded on the CME will be determined by reference to a
volume-weighted average of ETH trading prices on multiple trading
platforms.
Margin
requirements for ETH Futures traded on the CME or other futures exchanges may be
substantially higher than margin requirements for many other types of futures
contracts. If the Fund is unable to meet its investment objective, the Fund’s
returns may be lower than expected. Additionally, these collateral requirements
may require the Fund to liquidate its position when it otherwise would not do
so.
Futures
contracts exhibit “futures basis,” which refers to the difference between the
current market value of the underlying ETH (the “spot” price) and the price of
the cash-settled futures contracts. A negative futures basis exists when
cash-settled ETH futures contracts generally trade at a premium to the current
market value of ETH. If a negative futures basis exists, the Fund’s investments
in ETH futures contracts will generally underperform a direct investment in ETH,
and, therefore, it may be more difficult for the Fund to maintain the Target
Exposure.
ETH
Reference Rate.
ETH Futures commenced trading on the CME Globex electronic trading platform on
February 8, 2021 under the ticker symbol "ETH". CME-traded Ether Futures are
cash-settled in U.S. dollars, based on the CME CF Ether
Reference
Rate. The CME CF Ether Reference Rate is a volume-weighted composite of U.S.
dollar-ether trading activity on the constituent trading platforms. The
constituent trading platforms are selected by CF Benchmarks based on the
constituent trading platform criteria.
Each
constituent trading platform is reviewed annually by an oversight committee
established by CF Benchmarks to confirm that the constituent trading platform
continues to meet all criteria. CF Benchmarks and the CME CF Ether Reference
Rate are subject to United Kingdom Financial Conduct Authority
Regulation.
Regulatory
Aspects of Investments in Futures.
VEARA has registered as a CPO with the CFTC. VEARA’s investment decisions may
need to be modified, and commodity contract positions held by the Fund may have
to be liquidated at disadvantageous times or prices, to avoid exceeding position
limits established by the CFTC, potentially subjecting the Fund to substantial
losses. The regulation of commodity transactions in the United States is subject
to ongoing modification by government, self-regulatory and judicial action. The
effect of any future regulatory change on the Fund is impossible to predict, but
could be substantial and adverse to the Fund.
Derivatives
Rule.
The
Fund is required to comply with the derivatives rule when it engages in
transactions involving futures and other derivatives involving future Fund
payment or delivery obligations. See “SEC Regulatory Matters”
above.
Specific
Risks Applicable to VanEck CMCI Commodity Strategy ETF, VanEck Commodity
Strategy ETF and VanEck Inflation Allocation ETF
Under
normal circumstances, VanEck Inflation Allocation ETF, through a wholly-owned
subsidiary of the Fund, invests in Exchange Traded Products that invest in
commodities and Commodities Instruments. Under normal circumstances, each of
VanEck CMCI Commodity Strategy ETF and VanEck Commodity Strategy ETF invests in
certain Commodities Instruments through a wholly-owned subsidiary. The Funds’
wholly-owned subsidiaries are collectively referred to as the “Cayman
Subsidiaries.”
Cayman
Subsidiaries. Each
Fund’s investment in its Cayman Subsidiary will generally not exceed 25% of the
value of the Fund’s total assets at each quarter-end of the Fund's fiscal year.
Each Cayman Subsidiary may invest in Commodities Instruments, as described under
“Commodities Instruments” below. Because each Fund may invest a substantial
portion of its assets in its Cayman Subsidiary, which may hold certain of the
investments described in the Fund’s Prospectus and this SAI, each Fund may be
considered to be investing indirectly in those investments through its Cayman
Subsidiary. Therefore, except as otherwise noted, for purposes of this
disclosure, references to a Fund’s investments strategies and risks include
those of its Cayman Subsidiary.
The
Cayman Subsidiaries are not registered under the 1940 Act and are not directly
subject to its investor protections, except as noted in each Fund’s Prospectus
or this SAI. However, each Cayman Subsidiary is wholly-owned and controlled by
its Fund and is advised by VEARA. The Trust’s Board of Trustees has oversight
responsibility for the investment activities of the Funds, including its
investment in the Cayman Subsidiaries, and each Fund’s role as the sole
shareholder of its Cayman Subsidiary. The Cayman Subsidiaries will also enter
into separate contracts for the provision of custody, transfer agency, and
accounting agent services with the same service providers or with affiliates of
the same service providers that provide those services to its Fund.
Changes
in the laws of the United States (where the Funds are organized) and/or the
Cayman Islands (where the Cayman Subsidiaries are incorporated) could prevent a
Fund and/or its Cayman Subsidiary from operating as described in its Prospectus
and this SAI and could negatively affect the Fund and its shareholders. For
example, the Cayman Islands currently does not impose certain taxes on the
Cayman Subsidiaries, including income and capital gains tax, among others. If
Cayman Islands laws were changed to require the Cayman Subsidiaries to pay
Cayman Islands taxes, the investment returns of the Funds would likely
decrease.
The
financial statements of each Cayman Subsidiary will be consolidated with its
Fund’s financial statements in the Fund’s filings on Form N-CSR with the SEC.
Commodities
Instruments. Each
Fund gains exposure to Commodities Instruments primarily through its Cayman
Subsidiary. Additional information on the Cayman Subsidiaries is set forth under
“Cayman Subsidiaries” above. Additional information regarding specific
Commodities Instruments is set forth below. The Funds, either directly or
through the Cayman Subsidiaries, may also gain exposure to Commodities
Instruments through investment in certain investment companies, including ETFs,
and in ETNs.
Each
Fund may invest up to 25% of its total assets in its Cayman Subsidiary, portions
of which will be committed as “initial” and “variation” margin to secure the
Cayman Subsidiary’s positions in Commodities Instruments. These assets are
placed in accounts maintained by the Fund’s Cayman Subsidiary at the Cayman
Subsidiary’s clearing broker or FCM, and are
held
in cash or invested in U.S. Treasury bills and other direct or guaranteed debt
obligations of the U.S. government maturing within less than one year at the
time of investment.
In
the event that the securities are not listed on a national securities exchange,
the principal trading market for some may be in the OTC market. The existence of
a liquid trading market for certain securities may depend on whether dealers
will make a market in such securities. There can be no assurance that a market
will be made or maintained or that any such market will be or remain liquid. The
price at which securities may be sold and the value of the Funds’ Shares will be
adversely affected if trading markets for the Funds’ portfolio securities are
limited or absent or if bid/ask spreads are wide.
Each
Fund may also invest in securities issued by other investment companies, equity
securities, fixed income securities and money market instruments, including
repurchase agreements. For temporary defensive purposes, each Fund may invest
without limit in money market instruments, including repurchase agreements or
other funds which invest exclusively in money market instruments.
Each
Fund except VanEck CMCI Commodity Strategy ETF is an actively managed ETF that
does not seek to replicate the performance of a specified index.
Regulatory
developments affecting the exchange-traded and OTC derivatives markets may
impair a Fund’s ability to manage or hedge its investment portfolio through the
use of derivatives. The Dodd-Frank Act and the rules promulgated thereunder may
limit the ability of a Fund to enter into one or more exchange-traded or OTC
derivatives transactions.
Changes
in the laws or regulations of the United States or the Cayman Islands, including
any changes to applicable tax laws and regulations, could impair the ability of
a Fund to achieve its investment objective and could increase the operating
expenses of the Fund or its Cayman Subsidiary. CFTC regulations require an
investment adviser of a registered investment company to register with the CFTC
as a CPO if the investment company either markets itself as a vehicle for
trading commodity interests or conducts more than a de minimis amount of
speculative trading in commodity interests. Based on each Fund’s and its Cayman
Subsidiary’s current investment strategies, each Fund and its Cayman Subsidiary
are each a “commodity pool” and VEARA, which is currently registered with the
CFTC as a CPO and commodity trading adviser under the CEA, is considered a CPO
with respect to each Fund and its Cayman Subsidiary. Accordingly, each Fund and
VEARA are subject to dual regulation by the CFTC and the SEC. Pursuant to
certain CFTC regulations, each Fund and VEARA have elected to meet the
requirements of certain CFTC regulations by complying with specific SEC rules
and regulations relating to disclosure and reporting requirements. The CFTC
could deem a Fund or VEARA in violation of an applicable CFTC regulation if the
Fund or VEARA failed to comply with a related SEC regulatory requirement. In
addition, the Funds and VEARA will remain subject to certain CFTC-mandated
disclosure, reporting and recordkeeping regulations with respect to the Funds
and the Cayman Subsidiaries. Compliance with the CFTC regulations could increase
a Fund’s expenses, adversely affecting the Fund’s total return.
In
addition, the CFTC or the SEC could at any time alter the regulatory
requirements governing the use of commodity index-linked notes, commodity
futures, options on commodity futures or swap transactions by investment
companies, which could result in the inability of a Fund to achieve its
investment objective through its current strategies. Amendments to position
limits rules the CFTC has adopted that establish certain new and amended
position limits for 25 specified physical commodity futures and related options
contracts traded on exchanges, other futures contracts and related options
directly or indirectly linked to such 25 specified contracts, and any OTC
transactions that are economically equivalent to the 25 specified contracts have
become effective. VEARA will need to consider whether the exposure created under
these contracts (if applicable) might exceed the new and amended limits, and the
limits may constrain the ability of the Fund to use such contracts. The
amendments also modify the bona fide hedging exemption for which certain swap
dealers were previously eligible, which could limit the amount of speculative
OTC transaction capacity each such swap dealer would have available for a
Fund.
Each
Fund and its Cayman Subsidiary may utilize futures contracts. The use of futures
is subject to applicable regulations of the SEC, the several exchanges upon
which they are traded, the CFTC and various state regulatory
authorities.
Futures
Contracts. Each
Fund may purchase and sell futures contracts. Each Fund (directly or through its
Cayman Subsidiary) may invest in commodity futures contracts. Commodity futures
contracts are generally based upon commodities within the six principal
commodity groups: energy, industrial metals, agriculture, precious metals, foods
and fibers, and livestock. The price of a commodity futures contract will
reflect the storage costs of purchasing the commodity. These storage costs
include the time value of money invested in the commodity plus the actual costs
of storing the commodity less any benefits from ownership of the commodity that
are not obtained by the holder of a futures contract (this is sometimes referred
to as the “convenience yield”). To the extent that these storage costs change
for an underlying commodity while the Fund is in a long position on that
commodity, the value of the futures contract may change
proportionately.
Commodity
futures contracts are traded on futures exchanges. These futures exchanges offer
a central marketplace in which to transact futures contracts, a clearing
corporation to process trades, a standardization of expiration dates and
contract sizes, and the availability of a secondary market. Futures markets also
specify the terms and conditions of delivery as well as
the
maximum permissible price movement during a trading session. Additionally, the
commodity futures exchanges may have position limit rules that limit the amount
of futures contracts that any one party may hold in a particular commodity at
any point in time. These position limit rules are designed to prevent any one
participant from controlling a significant portion of the market. In the
commodity futures markets, the exchange clearing corporation takes the other
side in all transactions, either buying or selling directly to the market
participants. The clearinghouse acts as the counterparty to all exchange-traded
futures contracts, that is, a Fund’s or its Cayman Subsidiary’s obligation is to
the clearinghouse, and the Fund or its Cayman Subsidiary will look to the
clearinghouse to satisfy the Fund’s or its Cayman Subsidiary’s rights under a
commodity futures contract.
Transaction
costs are incurred when a futures contract is bought or sold and margin deposits
must be maintained. A futures contract may be satisfied by delivery or purchase,
as the case may be, of the instrument or by payment of the change in the cash
value of the index. More commonly, futures contracts are closed out prior to
delivery by entering into an offsetting transaction in a matching futures
contract. Although the value of an index might be a function of the value of
certain specified securities, no physical delivery of those securities is made.
If the offsetting purchase price is less than the original sale price, a gain
will be realized; if it is more, a loss will be realized. Conversely, if the
offsetting sale price is more than the original purchase price, a gain will be
realized; if it is less, a loss will be realized. The transaction costs must
also be included in these calculations. There can be no assurance, however, that
a Fund or its Cayman Subsidiary will be able to enter into an offsetting
transaction with respect to a particular futures contract at a particular time.
If a Fund or its Cayman Subsidiary is not able to enter into an offsetting
transaction, the Fund or its Cayman Subsidiary will continue to be required to
maintain the margin deposits on the futures contract.
Margin
is the amount of funds that must be deposited by a Fund or its Cayman Subsidiary
with its custodian or FCM in a segregated account in the name of the FCM in
order to initiate futures trading and to maintain the Fund’s or its Cayman
Subsidiary’s open positions in futures contracts. A margin deposit is intended
to ensure a Fund’s or its Cayman Subsidiary’s performance of the futures
contract. The margin required for a particular futures contract is set by the
exchange on which the futures contract is traded and may be significantly
modified from time to time by the exchange during the term of the futures
contract. Futures contracts are customarily purchased and sold on margins that
may vary.
If
the price of an open futures contract changes (by increase in the case of a sale
or by decrease in the case of a purchase) so that the loss on the futures
contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if the
value of a position increases because of favorable price changes in the futures
contract so that the margin deposit exceeds the required margin, the broker will
pay the excess to a Fund or its Cayman Subsidiary. In computing daily net asset
value, a Fund or its Cayman Subsidiary will mark to market the current value of
its open futures contracts. A Fund and its Cayman Subsidiary expect to earn
interest income on their margin deposits.
Because
of the low margin deposits required, futures trading involves an extremely high
degree of leverage. As a result, a relatively small price movement in a futures
contract may result in immediate and substantial loss, as well as gain, to the
investor. For example, if at the time of purchase, 10% of the value of the
futures contract is deposited as margin, a subsequent 10% decrease in the value
of the futures contract would result in a total loss of the margin deposit,
before any deduction for the transaction costs, if the account were then closed
out. A 15% decrease would result in a loss equal to 150% of the original margin
deposit, if the futures contract were closed out. Thus, a purchase or sale of a
futures contract may result in losses in excess of the amount initially invested
in the futures contract. However, a Fund or its Cayman Subsidiary would
presumably have sustained comparable losses if, instead of investing in the
futures contract, it had invested in the underlying financial instrument and
sold it after the decline.
Most
U.S. futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day’s settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of futures contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore does
not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses. Despite the daily price limits on various
futures exchanges, the price volatility of commodity futures contracts has been
historically greater than that for traditional securities such as stocks and
bonds. To the extent that a Fund or its Cayman Subsidiary invests in commodity
futures contracts, the assets of the Fund and the Cayman Subsidiary, and
therefore the prices of Fund shares, may be subject to greater
volatility.
There
can be no assurance that a liquid market will exist at a time when a Fund or its
Cayman Subsidiary seeks to close out a futures contract. A Fund or its Cayman
Subsidiary would continue to be required to meet margin requirements until the
position is closed, possibly resulting in a decline in the Fund’s net asset
value. There can be no assurance that an active secondary market will develop or
continue to exist.
Regulatory
Aspects of Investments in Futures. VEARA
has registered as a CPO with the CFTC. VEARA’s investment decisions may need to
be modified, and commodity contract positions held by a Fund and/or its Cayman
Subsidiary may have to be liquidated at disadvantageous times or prices, to
avoid exceeding position limits established by the CFTC, potentially subjecting
the Fund to substantial losses. The regulation of commodity transactions in the
United States is subject to ongoing modification by government, self-regulatory
and judicial action. The effect of any future regulatory change on a Fund is
impossible to predict, but could be substantial and adverse to the
Fund.
Derivatives
Rule. The
Fund is required to comply with the derivatives rule when it engages in
transactions involving futures and other derivatives involving future Fund
payment or delivery obligations. VEARA cannot predict the effects of these
requirements on the Fund. VEARA intends to monitor developments and seek to
manage the Fund in a manner consistent with achieving the Fund’s investment
objective. See “SEC Regulatory Matters” above.
Federal
Income Tax Treatment of Investments in the Cayman Subsidiaries.
Each Fund must derive at least 90% of its gross income from certain qualifying
sources of income in order to qualify as a RIC under the Internal Revenue Code.
The IRS issued a revenue ruling in December 2005 which concluded that income and
gains from certain commodity-linked derivatives are not qualifying income under
subchapter M of the Internal Revenue Code. As a result, a Fund’s ability to
invest directly in commodity-linked futures contracts or swaps or in certain
exchange-traded trusts that hold commodities as part of its investment strategy
is limited by the requirement that it receive no more than ten percent (10%) of
its gross income from such investments. The IRS has issued private letter
rulings to other taxpayers in which the IRS specifically concluded that income
derived from a fund’s investment in a controlled foreign corporation (“CFC”)
also will constitute qualifying income to the fund, even if the CFC itself owns
commodity-linked futures contracts or swaps. A private letter ruling cannot be
used or cited as precedent and is binding on the IRS only for the taxpayer that
receives it. The Funds have not obtained a ruling from the IRS with respect to
their investments or their structure. The IRS has currently suspended the
issuance of private letter rulings relating to the tax treatment of income
generated by investments in a subsidiary. The IRS has issued regulations that
generally treat a fund’s income inclusion with respect to an investment in a
non-U.S. company generating investment income as qualifying income if there is a
current-year distribution out of the earnings and profits of the non-U.S.
company that are attributable to such income inclusion, or if the income
inclusion is derived with respect to the fund’s business of investing in stocks
and securities. Each Fund intends to treat its income from its Cayman Subsidiary
as qualifying income without any such ruling from the IRS. There can be no
assurance that the IRS will not change its position with respect to some or all
of these issues or if the IRS did so, that a court would not sustain the IRS’s
position. Furthermore, the tax treatment of each Fund’s investments in its
Cayman Subsidiary may be adversely affected by future legislation, court
decisions, future IRS guidance or Treasury regulations. If the IRS were to
change its position or otherwise determine that income derived from a Fund’s
investment in its Cayman Subsidiary does not constitute qualifying income and if
such positions were upheld, or if future legislation, court decisions, future
IRS guidance or Treasury regulations were to adversely affect the tax treatment
of such investments, the Fund might cease to qualify as a RIC and would be
required to reduce its exposure to such investments which could result in
difficulty in implementing its investment strategy. If a Fund did not qualify as
a RIC for any taxable year, the Fund’s taxable income would be subject to tax at
the Fund level at regular corporate tax rates (without reduction for
distributions to shareholders) and to a further tax at the shareholder level
when such income is distributed. In such event, in order to re-qualify for
taxation as a RIC, the Fund may be required to recognize unrealized gains, pay
substantial taxes and interest and make certain distributions.
Cayman
Subsidiaries. Investments
in the Cayman Subsidiaries are expected to provide the Funds with exposure to
the commodity markets within the limitations of subchapter M of the Internal
Revenue Code and recent IRS revenue rulings and regulations, as discussed above
under “Federal Income Tax Treatment of Investments in the Cayman Subsidiaries”
and below under “Taxes.” Each Cayman Subsidiary is a company organized under the
laws of the Cayman Islands and is overseen by its own board of directors. Each
Fund is the sole shareholder of its Cayman Subsidiary, and it is not currently
expected that shares of the Cayman Subsidiaries will be sold or offered to other
investors. It is expected that the Cayman Subsidiaries will primarily invest in
Commodities Instruments. To the extent that a Fund invests in its Cayman
Subsidiary, the Fund may be subject to the risks associated with such
Commodities Instruments.
While
the Cayman Subsidiaries may be considered similar to investment companies, they
are not registered under the 1940 Act and, unless otherwise noted in each Fund’s
Prospectus and this SAI, are not subject to all of the investor protections of
the 1940 Act and other U.S. regulations. Changes in the laws of the United
States and/or the Cayman Islands could result in the inability of a Fund and/or
its Cayman Subsidiary to operate as described in the Fund’s Prospectus and this
SAI and could eliminate or severely limit the Fund’s ability to invest in its
Cayman Subsidiary which may adversely affect the Fund and its
shareholders.
EXCHANGE
LISTING AND TRADING
A
discussion of exchange listing and trading matters associated with an investment
in each Fund is contained in each Fund’s Prospectus under the headings “Summary
Information—Principal Risks of Investing in the Fund” with respect to the
applicable Fund, “Additional Information About the Funds’ Investment Strategies
and Risks—Risks of Investing in the Funds,” “Shareholder
Information—Determination of NAV” and “Shareholder Information—Buying and
Selling Exchange-Traded Shares.” The discussion below supplements, and should be
read in conjunction with, such sections of each Fund’s Prospectus.
The
Shares of each Fund are listed on NYSE Arca, NASDAQ or Cboe and trade in the
secondary market at prices that may differ to some degree from their NAV. An
Exchange may but is not required to remove the Shares of the Funds from listing
if: (1) following the initial twelve-month period beginning upon the
commencement of trading of the Funds, there are fewer than 50 beneficial holders
of the Shares, (2) the Exchange becomes aware that the Funds are no longer
eligible to operate in reliance on Rule 6c-11 under the 1940 Act, (3) the Funds
no longer comply with certain listing exchange rules, or (4) such other event
shall occur or condition exists that, in the opinion of the Exchange, makes
further dealings on the Exchange inadvisable. In addition, the Exchange will
remove the Shares from listing and trading upon termination of the Trust. There
can be no assurance that the requirements of the Exchange necessary to maintain
the listing of Shares of the Funds will continue to be met.
As
in the case of other securities traded on an Exchange, brokers’ commissions on
secondary market transactions in Shares of each of the Funds will be based on
negotiated commission rates at customary levels.
In
order to provide investors with a basis to gauge whether the market price of the
Shares on the Exchange is approximately consistent with the current value of the
assets of a Fund on a per Share basis, an “intra-day indicative value” (“IIV”
and also known as the Indicative Optimized Portfolio Value) for a Fund may be
disseminated through the facilities of the Consolidated Tape Association’s
Network B. IIVs are disseminated during regular Exchange trading hours. The
Funds are not involved in or responsible for the calculation or dissemination of
the IIVs and make no warranty as to the accuracy of the IIVs.
The
IIV has a securities component and a cash component reflecting cash and other
assets that may be held by the Funds. The securities values included in the IIV
are the values of the Deposit Securities (as defined below under the heading
“Creation and Redemption of Creation Units—Fund Deposit”) for the Funds. While
the IIV reflects the approximate current value of the Deposit Securities
required to be deposited in connection with the purchase of a Creation Unit, it
does not necessarily reflect the precise composition of the current portfolio of
securities held by the Funds at a particular point in time because the current
portfolio of each Fund may include securities that are not a part of the current
Deposit Securities. Therefore, while each Fund’s IIV may be disseminated during
the Exchange trading hours, it should not be viewed as a real-time update of the
Fund’s NAV, which is calculated only once a day.
The
cash component included in the IIV could consist of estimated accrued interest,
dividends and other income, less expenses. If applicable, the IIV also reflects
changes in currency exchange rates between the U.S. dollar and the applicable
currency.
BOARD
OF TRUSTEES OF THE TRUST
Trustees
and Officers of the Trust
The
Board of the Trust consists of six Trustees, five of whom are not “interested
persons” (as defined in the 1940 Act) of the Trust (the “Independent Trustees”).
Mr. Peter J. Sidebottom, an Independent Trustee, serves as Chairperson of the
Board. The Board is responsible for overseeing the management and operations of
the Trust, including general supervision of the duties performed by the Advisers
and other service providers to the Trust. The Advisers are responsible for the
day-to-day administration and business affairs of the Trust.
The
Board believes that each Trustee’s experience, qualifications, attributes or
skills on an individual basis and in combination with those of the other
Trustees lead to the conclusion that the Board possesses the requisite skills
and attributes to carry out its oversight responsibilities with respect to the
Trust. The Board believes that the Trustees’ ability to review, critically
evaluate, question and discuss information provided to them, to interact
effectively with the Advisers, other service providers, counsel and independent
auditors, and to exercise effective business judgment in the performance of
their duties, support this conclusion. The Board also has considered the
following experience, qualifications, attributes and/or skills, among others, of
its members in reaching its conclusion: such person’s character and integrity;
length of service as a board member of the Trust; such person’s willingness to
serve and willingness and ability to commit the time necessary to perform the
duties of a Trustee; and, as to each Trustee other than Mr. van Eck, his status
as not being an “interested person” (as defined in the 1940 Act) of the Trust.
In addition, the following specific experience, qualifications, attributes
and/or skills
apply
as to each Trustee: Mr. Chow, significant business and financial experience,
particularly in the investment management industry, experience with trading and
markets through his involvement with the Pacific Stock Exchange, and service as
a chief executive officer, board member, partner or executive officer of various
businesses and non-profit organizations; Ms. Hesslein, business and financial
experience, particularly in the investment management industry, and service as a
president, board member and/or executive officer of various businesses; Mr.
Short, business and financial experience, particularly in the investment
management industry, and service as a president, board member or executive
officer of various businesses; Mr. Sidebottom, business and financial
experience, particularly in the investment management industry, and service as
partner and/or executive officer of various businesses; Mr. Stamberger,
extensive business and financial experience as founder, president and CEO of
SmartBrief, Inc., and previous service as the Senior Vice President of B2B,
Future Plc, a global media company; and Mr. van Eck, business and financial
experience, particularly in the investment management industry, and service as a
president, executive officer and/or board member of various businesses,
including VEAC, Van Eck Securities Corporation (“VESC”), and VEARA. References
to the experience, qualifications, attributes and skills of Trustees are
pursuant to requirements of the SEC, do not constitute holding out of the Board
or any Trustee as having any special expertise or experience, and shall not
impose any greater responsibility or liability on any such person or on the
Board by reason thereof.
The
Trustees of the Trust, their addresses, positions with the Trust, year of birth,
term of office and length of time served, principal occupations during the past
five years, the number of portfolios in the Fund Complex overseen by each
Trustee and other directorships, if any, held by the Trustees, are set forth
below.
Independent
Trustees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name,
Address1
and
Year of Birth |
Position(s)
Held
with
the
Trust |
Term
of Office2
and
Length of
Time
Served |
Principal
Occupation(s)
During
Past Five Years |
Number
of
Portfolios
in
Fund
Complex3
Overseen |
Other
Directorships
Held
Outside the Fund Complex3
During
Past Five Years |
David
H. Chow, 1957*† |
Trustee
|
Since
2006
|
Founder
and CEO, DanCourt Management LLC (financial/strategy consulting firm and
Registered Investment Adviser), March 1999 to present. |
69 |
Trustee,
Berea College of Kentucky, May 2009 to present and currently Chairman of
the Investment Committee; Trustee, MainStay Fund
Complex4,
January 2016 to present and currently Chairman of the Investment
Committee. Formerly, Member of the Governing Council of the Independent
Directors Council, October 2012 to September 2020. |
Laurie
A. Hesslein, 1959*†
|
Trustee
|
Since
2019 |
Citigroup,
Managing Director and Business Head, Local Consumer Lending North America,
and CEO and President, CitiFinancial Servicing LLC (2013 -
2017). |
69 |
Formerly,
Trustee, First Eagle Senior Loan Fund, March 2017 to December 2021; and
Trustee, Eagle Growth and Income Opportunities Fund, March 2017 to
December 2020. |
R.
Alastair Short, 1953*† |
Trustee |
Since
2006 |
President,
Apex Capital Corporation (personal investment vehicle). |
79 |
Chairman
and Independent Director, EULAV Asset Management; Lead Independent
Director, Total Fund Solution; Independent Director, Contingency Capital,
LLC; Trustee, Kenyon Review; Trustee, Children's Village. Formerly,
Independent Director, Tremont offshore funds. |
Peter
J. Sidebottom, 1962*† |
Chairperson Trustee |
Since
2022 Since 2012 |
Global
Lead Partner, Financial Services Strategy, Accenture, January 2021 to
present; Lead Partner, North America Banking and Capital Markets Strategy,
Accenture, May 2017 to December 2021. |
69 |
Formerly,
Board Member, Special Olympics, New Jersey, November 2011 to September
2013; Director, The Charlotte Research Institute, December 2000 to 2009;
Board Member, Social Capital Institute, University of North Carolina
Charlotte, November 2004 to January 2012; Board Member, NJ- CAN, July 2014
to 2016. |
Richard
D. Stamberger, 1959*† |
Trustee |
Since
2006 |
Senior
Vice President, B2B, Future Plc (a global media company), July 2020 to
August 2022; President, CEO and co-founder, SmartBrief, Inc., 1999 to
2020. |
79 |
Director,
Food and Friends, Inc., 2013 to present; Board Member, The Arc Foundation
of the US, 2022 to present; Chairman, Lifetime Care Services, LLC, 2023 to
present. |
________________________
1The
address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York,
New York 10017.
2Each
Trustee serves until resignation, death, retirement or removal. Officers are
elected yearly by the Trustees.
3The
Fund Complex consists of the VanEck Funds, VanEck VIP Trust and the
Trust.
4The
MainStay Fund Complex consists of MainStay Funds, MainStay Funds Trust, MainStay
VP Funds Trust and MainStay MacKay Defined Term Municipal Opportunities
Fund.
* Member
of the Audit Committee.
† Member
of the Nominating and Corporate Governance Committee.
Interested
Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name,
Address1
and
Year of Birth |
Position(s)
Held
with
the
Trust |
Term
of Office2
and
Length of
Time
Served |
Principal
Occupation(s)
During
Past Five Years |
Number
of
Portfolios
in
Fund
Complex3
Overseen |
Other
Directorships
Held
Outside the Fund Complex3
During
Past Five Years |
Jan
F. van Eck, 19634 |
Trustee,
Chief Executive Officer and President |
Trustee
(Since 2006); Chief Executive Officer and President (Since 2009) |
Director,
President and Chief Executive Officer of VEAC, VEARA and
VESC; Officer and/or Director of other companies
affiliated with VEAC and/or the Trust. |
79 |
Director,
National Committee on US-China Relations. |
____________________
1The
address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York,
New York 10017.
2Each
Trustee serves until resignation, death, retirement or removal. Officers are
elected yearly by the Trustees.
3The
Fund Complex consists of the VanEck Funds, VanEck VIP Trust and the
Trust.
4“Interested
person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an
officer of VEAC, VEARA and VESC.
Officer
Information
The
Officers of the Trust, their addresses, positions with the Trust, year of birth
and principal occupations during the past five years are set forth
below.
|
|
|
|
|
|
|
|
|
|
|
|
Officer’s
Name, Address1
and
Year of Birth |
Position(s)
Held with the Trust |
Term
of
Office2
and
Length
of
Time
Served |
Principal
Occupation(s) During Past Five Years |
Lawrence
G. Altadonna, 1966 |
Vice
President and Treasurer |
Since
2024 |
Vice
President of VEAC and VEARA; Officer of other investment companies advised
by VEAC and VEARA. Formerly, Fund Assistant Treasurer and Vice President
of Credit Suisse Asset Management, LLC (June 2022- January
2024). |
Matthew
A. Babinsky, 1983 |
Vice
President and Assistant Secretary |
Vice
President (Since 2023); Assistant Secretary (Since 2016) |
Vice
President, Associate General Counsel and Assistant Secretary of VEAC,
VEARA and VESC; Officer of other investment companies advised by VEAC and
VEARA. Formerly, Assistant Vice President of VEAC, VEARA and
VESC. |
Russell
G. Brennan, 1964 |
Assistant
Vice President and Assistant Treasurer |
Since
2008 |
Assistant
Vice President of VEAC; Officer of other investment companies advised by
VEAC and VEARA. |
Charles
T. Cameron, 1960 |
Vice
President |
Since
2006 |
Portfolio
Manager of VEAC; Officer and/or Portfolio Manager of other investment
companies advised by VEAC and VEARA. Formerly, Director of Trading of
VEAC. |
John
J. Crimmins, 1957 |
Vice
President, Chief Financial Officer and Principal Accounting
Officer |
Vice
President, Chief Financial Officer and Principal Accounting Officer (Since
2012) |
Vice
President of VEAC and VEARA; Officer of other investment companies advised
by VEAC and VEARA. Formerly, Vice President of VESC. Formerly, Treasurer
of other investment companies advised by VEAC and VEARA. |
Susan
Curry, 1966 |
Assistant
Vice President |
Since
2022 |
Assistant
Vice President of VEAC, VEARA and VESC; Formerly, Managing Director, Legg
Mason, Inc. |
Eduardo
Escario, 1975 |
Vice
President |
Since
2012 |
Regional
Director, Business Development/Sales for Southern Europe and South America
of VEAC. |
F.
Michael Gozzillo, 1965 |
Chief
Compliance Officer |
Since
2018 |
Vice
President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance
Officer of VESC; Officer of other investment companies advised by VEAC and
VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC
and City National Rochdale Funds. |
Laura
Hamilton, 1977 |
Vice
President |
Since
2019 |
Assistant
Vice President of VEAC and VESC; Officer of other investment companies
advised by VEAC and VEARA. Formerly, Operations Manager of Royce &
Associates. |
Nicholas
Jackson, 1974 |
Assistant
Vice President |
Since
2018 |
Director,
Business Development of VanEck Australia Pty Ltd. Formerly, Vice
President, Business Development of VanEck Australia Pty Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
Laura
I. Martínez, 1980 |
Vice
President and Assistant Secretary |
Vice
President (Since 2016); Assistant Secretary (Since 2008) |
Vice
President, Associate General Counsel and Assistant Secretary of VEAC,
VEARA and VESC; Officer of other investment companies advised by VEAC and
VEARA. |
Matthew
McKinnon, 1970 |
Assistant
Vice President |
Since
2018 |
Head
of Asia - Business Development of VanEck Australia Pty Ltd. Formerly,
Director, Intermediaries and Institutions of VanEck Australia Pty
Ltd. |
Lisa
A. Moss, 1965 |
Assistant
Vice President and Assistant Secretary |
Since
2022 |
Assistant
Vice President of VEAC, VEARA and VESC; Officer of other investment
companies advised by VEAC and VEARA. Formerly Senior Counsel, Perkins Coie
LLP. |
Arian
Neiron, 1979 |
Vice
President |
Since
2018 |
CEO
(since 2021) & Managing Director and Head of Asia Pacific of VanEck
Australia Pty Ltd.; Officer and/or Director of other companies affiliated
with VEAC and/or the Trust. |
James
Parker, 1969 |
Assistant
Treasurer |
Since
2014 |
Assistant
Vice President of VEAC and VEARA; Manager, Portfolio Administration of
VEAC and VEARA. Officer of other investment companies advised by VEAC and
VEARA. |
Adam
Phillips, 1970 |
Vice
President |
Since
2018 |
ETF
Chief Operating Officer of VEAC; Director of other companies affiliated
with VEAC. |
Philipp
Schlegel, 1974 |
Vice
President |
Since
2016 |
Managing
Director of Van Eck Switzerland AG. |
Jonathan
R. Simon, 1974 |
Senior
Vice President, Secretary and Chief Legal Officer |
Senior
Vice President (Since 2016); Secretary and Chief Legal Officer (Since
2014) |
Senior
Vice President, General Counsel and Secretary of VEAC, VEARA and VESC;
Officer and/or Director of other companies affiliated with VEAC and/or the
Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
Andrew
Tilzer, 1972 |
Assistant
Vice President |
Since
2021 |
Vice
President of VEAC and VEARA; Vice President of Portfolio Administration of
VEAC. Formerly, Assistant Vice President, Portfolio Operations of
VEAC. |
_____________________
1The
address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York,
New York 10017.
2Officers
are elected yearly by the Trustees.
The
Board has an Audit Committee consisting of five Trustees who are Independent
Trustees. Ms. Hesslein and Messrs. Chow, Short, Sidebottom and Stamberger
currently serve as members of the Audit Committee and each of Ms. Hesslein and
Messrs. Chow, Short, Sidebottom and Stamberger has been designated as an “audit
committee financial expert” as defined under Item 407 of Regulation S-K of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). Ms. Hesslein
is the Chairperson of the Audit Committee. The Audit Committee has the
responsibility, among other things, to: (i) oversee the accounting and financial
reporting processes of the Trust and its internal control over financial
reporting; (ii) oversee the quality and integrity of the Trust’s financial
statements and the independent audit thereof; (iii) oversee or, as appropriate,
assist the Board’s oversight of the Trust’s compliance with legal and regulatory
requirements that relate to the Trust’s accounting and financial reporting,
internal control over financial reporting and independent audit; (iv) approve
prior to appointment the engagement of the Trust’s independent registered public
accounting firm and, in connection therewith, to review and evaluate the
qualifications, independence and performance of the Trust’s independent
registered public accounting firm; and (v) act as a liaison between the Trust’s
independent registered public accounting firm and the full Board.
The
Board also has a Nominating and Corporate Governance Committee consisting of
five Independent Trustees. Ms. Hesslein and Messrs. Chow, Short, Sidebottom and
Stamberger currently serve as members of the Nominating and Corporate Governance
Committee. Mr. Short is the Chairperson of the Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance Committee has the
responsibility, among other things, to: (i) evaluate, as necessary, the
composition of the Board, its committees and sub-committees and make such
recommendations to the Board as deemed appropriate by the Committee; (ii) review
and define Independent Trustee qualifications; (iii) review the qualifications
of individuals serving as Trustees on the Board and its committees; (iv)
evaluate, recommend and nominate qualified individuals for election or
appointment as members of the Board and recommend the appointment of members and
chairs of each Board committee and subcommittee; and (v) review and assess, from
time to time, the performance of the committees and subcommittees of the Board
and report the results to the Board.
Board
of Trustees and Committee Meetings
The
Board, as well as its Audit and Nominating and Corporate Governance Committees
held meetings as set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year |
Number
of Regular Meetings of the Board of Trustees |
Number
of Audit Committee Meetings |
Number
of Nominating and Corporate Governance Committee
Meetings |
October
1, 2022 - September 30, 2023 |
5 |
4 |
3 |
January
1, 2023 - December 31, 2023 |
5 |
4 |
4 |
May
1, 2023 - April 30, 2024 |
5 |
4 |
4 |
The
Board has determined that its leadership structure is appropriate given the
business and nature of the Trust. In connection with its determination, the
Board considered that the Chairperson of the Board is an Independent Trustee.
The Chairperson of the Board can play an important role in setting the agenda of
the Board and also serves as a key point person for dealings between management
and the other Independent Trustees. The Independent Trustees believe that the
Chairperson’s independence facilitates meaningful dialogue between the Advisers
and the Independent Trustees. The Board also considered that the Chairperson of
each Board committee is an Independent Trustee, which yields similar benefits
with respect to the functions and activities of the various Board committees.
The Independent Trustees also regularly meet outside the presence of management
and are advised by independent legal counsel. The Board has determined that its
committees help ensure that the Trust has effective and independent governance
and oversight. The Board also believes that its leadership structure facilitates
the orderly and efficient flow of information to the Independent Trustees from
management of the Trust, including the Advisers. The Board reviews its structure
on an annual basis.
As
an integral part of its responsibility for oversight of the Trust in the
interests of shareholders, the Board, as a general matter, oversees risk
management of the Trust’s investment programs and business affairs. The function
of the Board with respect to risk management is one of oversight and not active
involvement in, or coordination of, day-to-day risk management activities for
the Trust. The Board recognizes that not all risks that may affect the Trust can
be identified, that it may not be practical or cost-effective to eliminate or
mitigate certain risks, that it may be necessary to bear certain risks (such as
investment-related risks) to achieve the Trust’s goals, and that the processes,
procedures and controls employed to address certain risks may be limited in
their effectiveness. Moreover, reports received by the Trustees that may relate
to risk management matters are typically summaries of the relevant
information.
The
Board exercises oversight of the risk management process. The Trust faces a
number of risks, such as investment-related and compliance risks. The Advisers’
personnel seek to identify and address risks, i.e.,
events or circumstances that could have material adverse effects on the
business, operations, shareholder services, investment performance or reputation
of the Trust. Under the overall supervision of the Board or the applicable
Committee of the Board, the Trust, the Advisers and the affiliates of the
Advisers employ a variety of processes, procedures and controls to identify such
possible events or circumstances, to lessen the probability of their occurrence
and/or to mitigate the effects of such events or circumstances if they do occur.
Different processes, procedures and controls are employed with respect to
different types of risks. Various personnel, including the Trust’s Chief
Compliance Officer, as well as various personnel of the Advisers and other
service providers such as the Trust’s independent accountants, may report to the
Audit Committee and/or to the Board with respect to various aspects of risk
management, as well as events and circumstances that have arisen and responses
thereto.
The
officers and Trustees of the Trust, in the aggregate, owned less than 1% of the
Shares of VanEck Fabless Semiconductor ETF as of August 20, 2024.
The
officers and Trustees of the Trust, in the aggregate, owned less than 1% of the
Shares of VanEck Morningstar Wide Moat Growth ETF as of March 15,
2024.
The
officers and Trustees of the Trust, in the aggregate, owned less than 1% of the
Shares of VanEck Morningstar Wide Moat Value ETF as of March 15, 2024.
For
each Fund with a fiscal year end of April 30, 2024, except as follows, the
officers and Trustees of the Trust, in the aggregate, owned less than 1% of the
Shares of each Fund as of July 31, 2024. The officers and Trustees of the Trust,
in the aggregate, owned 11.00% of the Shares of VanEck Dynamic High Income
ETF.
For
each Fund with a fiscal year end of September 30, 2023, the officers and
Trustees of the Trust, in the aggregate, owned less than 1% of the Shares of
each Fund as of December 31, 2023.
For
each Fund with a fiscal year end of December 31, 2023, except as follows, the
officers and Trustees of the Trust, in the aggregate, owned less than 1% of the
Shares of each Fund as of March 31, 2023. The officers and Trustees of the
Trust, in the aggregate, owned 1.69% of VanEck Brazil Small Cap Index ETF and
16.67% of VanEck Office and Commercial REIT ETF.
The
general management of the Mauritius Subsidiary is the responsibility of its
Board of Directors, a majority of which are also Trustees of the
Trust.
For
each Trustee, the dollar range of equity securities beneficially owned
(including ownership through the Trust’s Deferred Compensation Plan) by the
Trustee in the Trust and in all registered investment companies advised by the
Advisers (“Family of Investment Companies”) that are overseen by the Trustee is
shown below. With respect to the Funds with a fiscal year end of September 30,
2023, December 31, 2023, and April 30, 2024, the dollar range of equity
securities in such Funds is provided as of December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds
with Fiscal Year Ended 9/30/2023 |
|
Independent
Trustees |
Interested
Trustee |
|
David
H.
Chow |
Laurie
A. Hesslein |
R.
Alastair
Short |
Peter
J.
Sidebottom |
Richard
D.
Stamberger |
Jan
F. van Eck |
VanEck
Biotech ETF |
None |
None |
None |
None |
None |
None |
VanEck
Commodity Strategy ETF |
None |
None |
None |
None |
None |
None |
VanEck
Digital Transformation ETF |
None |
None |
None |
None |
None |
None |
VanEck
Durable High Dividend ETF |
None |
None |
None |
None |
None |
None |
VanEck
Energy Income ETF |
None |
None |
None |
None |
None |
None |
VanEck
Environmental Services ETF |
None |
None |
None |
None |
None |
None |
VanEck
Fabless Semiconductor ETF* |
None |
None |
None |
None |
None |
None |
VanEck
Gaming ETF |
None |
None |
None |
None |
$10,001-$50,000 |
$1-$10,000 |
VanEck
Green Infrastructure ETF |
None |
None |
None |
None |
None |
None |
VanEck
Inflation Allocation ETF |
None |
None |
None |
None |
None |
None |
VanEck
Long/Flat Trend ETF |
None |
None |
None |
None |
None |
None |
VanEck
Morningstar ESG Moat ETF |
None |
None |
None |
None |
None |
None |
VanEck
Morningstar Global Wide Moat ETF |
None |
None |
None |
None |
None |
None |
VanEck
Morningstar International Moat ETF |
None |
None |
None |
None |
Over
$100,000 |
None |
VanEck
Morningstar SMID Moat ETF |
None |
None |
None |
None |
None |
None |
VanEck
Morningstar Wide Moat ETF |
Over
$100,000 |
$10,001-$50,000 |
|