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PROSPECTUS |
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September 1,
2022 |
VANECK®
CEF
Muni Income ETF XMPT®
High
Yield Muni ETF HYD®
HIP
Sustainable Muni ETF SMI
Intermediate
Muni ETF ITM®
Long
Muni ETF MLN®
Muni
Allocation ETF MAAX™
Short
High Yield Muni ETF SHYD®
Short
Muni ETF SMB®
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Principal
U.S. Listing Exchange for each Fund: Cboe BZX Exchange,
Inc. |
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The
U.S. Securities and Exchange Commission (“SEC”) has not approved or
disapproved these securities or passed upon the accuracy or adequacy of
this Prospectus. Any representation to the contrary is a criminal
offense. |
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800.826.2333 vaneck.com
INVESTMENT OBJECTIVE
VanEck® CEF Muni Income ETF (the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the S-Network Municipal Bond Closed-End Fund
IndexSM
(the “CEFMX Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.40 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Acquired
Fund Fees and Expenses(b) |
1.41 |
% |
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Total
Annual Fund Operating Expenses(a) |
1.81 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
(b) “Acquired Fund Fees and
Expenses” reflect the Fund’s pro rata portion of the expenses charged by the
Underlying Funds (as defined herein). These expenses are based on the total
expense ratio disclosed in each Underlying Fund’s most recent shareholder
report. Because Acquired Fund Fees and Expenses are not borne directly by the
Fund, they will not be reflected in the expense information in the Fund’s
financial statements and the information presented in the table will differ from
that presented in the Fund’s financial highlights included in the Fund’s reports
to shareholders.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
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YEAR |
EXPENSES |
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1 |
$184 |
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3 |
$569 |
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5 |
$980 |
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10 |
$2,127 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
15% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in investments the income from which is exempt
from U.S. federal income tax (other than federal alternative minimum tax
(“AMT”)). The Fund is a “fund of funds,” meaning that it invests all or a
portion of its assets in other funds (the “Underlying Funds”). The Fund normally
invests at least 80% of its total assets in securities of issuers that comprise
the Fund’s benchmark index. The CEFMX Index is comprised of shares of
U.S.-listed closed-end funds.
The
Underlying Funds invest in municipal bonds issued by states or local governments
or agencies the income of which is exempt from U.S. federal income tax, but a
portion of this income may be subject to the AMT and will generally be subject
to state income taxes. The Fund’s 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 AMT) requires shareholder approval before it can
be changed. The Fund may count investments that generate income subject to the
AMT toward the 80% investment requirement.
The
Investment Company Act of 1940, as amended (the “1940 Act”), places limits on
the percentage of the total outstanding stock of an Underlying Fund that may be
owned by the Fund.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the CEFMX Index by investing in a portfolio of
securities that generally replicates the CEFMX Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the CEFMX Index and does not take temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the CEFMX Index.
The
Fund may become “non-diversified” as defined under the 1940 Act, solely as a
result of a change in relative market capitalization or index weighting of one
or more constituents of the CEFMX Index. This means that the Fund may invest a
greater percentage of its assets in a limited number of issuers than would be
the case if the Fund were always managed as a diversified management investment
company. The Fund intends to be diversified in approximately the same proportion
as the CEFMX Index. Shareholder approval will not be sought when the Fund
crosses from diversified to non-diversified status due solely to a change in the
relative market capitalization or index weighting of one or more constituents of
the CEFMX Index.
The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the CEFMX Index concentrates in an industry or group of
industries.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Fund
of Funds Risk.
The performance of the Fund is dependent on the performance of the Underlying
Funds. The Fund is subject to the risks of the Underlying Funds’ investments. In
addition, the Fund’s shareholders will indirectly bear the expenses of the
Underlying Funds, absorbing duplicative levels of fees with respect to
investments in the Underlying Funds. In addition, at times certain segments of
the market represented by the Underlying Funds may be out of favor and
underperform other segments.
Risks
of Investing in Closed-End Funds. The
shares of a closed-end fund may trade at a discount or premium to their net
asset value (“NAV”). A closed-end fund may be leveraged as part of its
investment strategy. As a result, the Fund may be indirectly exposed to the
effects of leverage through its investment in the Underlying Funds. Investments
in Underlying Funds that use leverage may cause the value of the Fund’s Shares
to be more volatile than if the Fund invested in Underlying Funds that do not
utilize leverage and may expose the Fund to the possibility that the Fund’s
long-term returns on such securities (and, indirectly, the long-term returns on
the Shares) will be diminished.
To
comply with provisions of the 1940 Act, the Adviser may be required to vote
Underlying Fund shares in the same general proportion as shares held by other
shareholders of the Underlying Fund.
Underlying
Funds Risk.
The Fund may be subject to the following risks as a result of its investment in
the Underlying Funds:
Market
Risk.
The prices of the securities in the Underlying Funds 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. 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.
An investment in an Underlying Fund may lose
money.
Municipal
Securities Risk.
The Underlying Funds may invest in municipal securities. 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. 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. Municipal securities include
general
obligation bonds, which 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. General obligation bonds generally are not backed
by revenues from a specific project or source. Municipal securities also 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. The market for municipal
bonds may be less liquid than for taxable bonds. There may be less information
available on the financial condition of issuers of municipal securities than for
public corporations. 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. For example, the COVID-19 pandemic has significantly stressed the
financial resources of many municipal issuers, which may impair a municipal
issuer’s ability to meet its financial obligations when due and could adversely
impact the value of its bonds, which could negatively impact the performance of
the Fund.
High
Yield Securities Risk. The
Underlying Funds may invest in high yield securities. Securities rated below
investment
grade
are commonly referred to as high yield securities or “junk bonds.” High yield
securities are often issued by issuers that are restructuring, are smaller or
less creditworthy than other issuers, or are more highly indebted than other
issuers. High yield securities are subject to greater risk of loss of income and
principal than higher rated securities and are considered speculative. The
prices of high yield securities are likely to be more sensitive to adverse
economic changes or individual municipal developments than higher rated
securities. During an economic downturn or substantial period of rising interest
rates, high yield security issuers may experience financial stress that would
adversely affect their ability to service their principal and interest payment
obligations, to meet their projected business goals or to obtain additional
financing. In the event of a default, the Fund may incur additional expenses to
seek recovery. The secondary market for municipal securities that are high yield
securities may be less liquid than the markets for higher quality municipal
securities or high yield securities issued by corporate issuers and, as such,
may have an adverse effect on the market prices of and an Underlying Fund’s
ability to arrive at a fair value for certain securities. In addition, periods
of economic uncertainty and change may result in an increased volatility of
market prices of high yield securities and a corresponding volatility in the
Fund’s NAV.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security
will be unable and/or unwilling
to make timely interest payments and/or repay the principal on its debt or to
otherwise honor its obligations and/or default completely. Bonds are subject to
varying degrees of credit risk, depending on the issuer’s financial condition
and on the terms of the securities, which may be reflected in credit ratings.
There is a possibility that the credit rating of a bond may be downgraded after
purchase or the perception of an issuer’s credit worthiness may decline, which
may adversely affect the value of the security. The Underlying Funds may hold
securities that are insured by a bond insurer. A downgrade of the credit rating
of such bond insurer may cause the value of the insured security to
decline.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities with shorter durations. In response to the COVID-19 pandemic, as with
other serious economic disruptions, governmental authorities and regulators are
enacting significant fiscal and monetary policy changes, including providing
direct capital infusions into companies, creating new monetary programs and
lowering interest rates. These actions present heightened risks to debt
instruments, and such risks could increase if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
The Underlying Funds may invest in callable bonds. If interest rates fall, it is
possible that issuers of callable securities will “call” (or prepay) their bonds
before their maturity date. If a call were exercised by the issuer during or
following a period of declining interest rates, the Underlying Fund is likely to
have to replace such called security with a lower yielding security or
securities with greater risks or other less favorable features. If that were to
happen, it would decrease the Underlying Fund’s net investment income, resulting
in a decline in the Fund’s income.
Tax
Risk.
There is no guarantee that an Underlying Fund’s income will be exempt from U.S.
federal or state income taxes. Events occurring after
the date of issuance of a municipal bond or after an Underlying 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 an Underlying 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.
Liquidity
Risk.
Unlike the Fund, as closed-end funds the Underlying Funds are not limited in
their ability to invest in illiquid securities. Securities with reduced
liquidity involve greater risk than securities with more liquid markets. Prices
of securities not traded on an exchange may vary over time. Secondary trading of
a fixed-income security may decline for a period of time if its credit quality
unexpectedly declines. An Underlying Fund may not receive full value for assets
sold during periods of infrequent trading.
Leverage
Risk.
Ordinary borrowings by an Underlying Fund or an Underlying Fund’s investment in
derivatives may result in
leverage. If the prices of those investments decrease, or if the cost of
borrowing exceeds any increase in the prices of investments made with the
proceeds of the borrowing, the NAV of the Underlying Fund’s shares will decrease
more than if the Underlying Fund had not used leverage. An Underlying Fund may
have to sell investments at a time and at a price that is unfavorable to the
Underlying Fund to repay borrowings. Interest on borrowings is an expense the
Underlying Fund would not otherwise incur. Leverage magnifies the potential for
gain and the risk of loss. If an Underlying Fund uses leverage, there can be no
assurance that the Underlying Fund’s leverage strategy will be
successful.
Anti-Takeover
Measures Risk.
Certain Underlying Funds may have provisions in their organizational documents
intended to limit the ability of third parties to acquire control or change the
composition of the Underlying Fund’s board. This may discourage a third party
from seeking to obtain control of the Underlying Fund, which could limit the
ability of Underlying Fund shareholders to sell their shares at a premium over
prevailing market prices.
Non-Diversified
Risk. Some
of the Underlying Funds may invest a relatively high percentage of their assets
in a smaller number of issuers or may invest a larger proportion of their assets
in the obligations of a single issuer. Moreover, the gains and losses on an
investment in such an Underlying Fund may have a greater impact on the Fund’s
NAV and may make the value of the Fund’s investment in such an Underlying Fund
more volatile than an investment in more diversified Underlying
Funds.
Risk
of Investment Restrictions.
The Fund and its affiliates are limited in the amount that they, in the
aggregate, can invest in the outstanding voting securities of any one Underlying
Fund. The Fund and its affiliates may not acquire “control” of an unaffiliated
Underlying Fund, which is presumed once ownership of an Underlying Fund’s
outstanding voting securities exceeds 25%. This limitation could inhibit the
Fund’s ability to purchase one or more Underlying Funds in the CEFMX Index in
the proportions represented in the CEFMX Index. In these circumstances, the Fund
would be required to use sampling techniques, which could increase the risk of
tracking error.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the CEFMX Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the CEFMX Index and incurs costs associated with buying
and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the CEFMX Index or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units
(defined herein), which are not factored into the return of the CEFMX Index.
Transaction costs, including brokerage costs, will decrease the Fund’s NAV to
the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the CEFMX Index. Errors in CEFMX Index data, CEFMX
Index computations and/or the construction of the CEFMX Index in accordance with
its methodology may occur from time to time and may not be identified and
corrected by the CEFMX Index provider for a period of time or at all, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the CEFMX Index provider's errors will be kept by
the Fund and its shareholders and any losses or costs resulting from the CEFMX
Index provider's errors will be borne by the Fund and its shareholders. When the
CEFMX Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the CEFMX
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders. Apart from
scheduled rebalances, the CEFMX Index provider or its agents may carry out
additional ad hoc rebalances to the CEFMX Index. Therefore, errors and
additional ad hoc rebalances carried out by the CEFMX Index provider or its
agents to the CEFMX Index may increase the costs to and the tracking error risk
of the Fund. The Fund’s performance may also deviate from the return of the
CEFMX Index due to certain listing standards of the Fund's listing exchange (the
“Exchange”) or legal restrictions or limitations (such as diversification
requirements). The Fund may value certain of its investments, underlying
securities and/or currencies, and/or other assets based on fair value prices.
When markets are volatile, the ability to sell securities at fair value prices
may be adversely impacted and may result in additional trading costs and/or
increase the index tracking risk. For tax efficiency purposes, the Fund may sell
certain securities, and such sale may cause the Fund to realize a loss and
deviate from the performance of the CEFMX Index. In light of the factors
discussed above, the Fund’s return may deviate significantly from the return of
the CEFMX
Index.
Changes to the composition of the CEFMX Index in connection with a rebalancing
or reconstitution of the CEFMX Index may cause the Fund to experience increased
volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the CEFMX Index, the Fund generally
would not sell a security because the security’s issuer was in financial
trouble. Additionally, unusual market conditions may cause the CEFMX Index
provider to postpone a scheduled rebalance or reconstitution, which could cause
the CEFMX Index to vary from its normal or expected composition. Therefore, the
Fund’s performance could be lower than funds that may actively shift their
portfolio assets to take advantage of market opportunities or to lessen the
impact of a market decline or a decline in the value of one or more
issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid-ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversification
Risk. The Fund may become classified as
non-diversified under the 1940 Act, as amended, solely as a result of a change
in relative market capitalization or index weighting of one or more constituents
of the CEFMX Index. If the Fund becomes non-diversified, it may invest a greater
portion of assets in securities of a smaller number of individual issuers than a
diversified fund. As a result, changes in the market value of a single
investment could cause greater fluctuations in share price than would occur in a
more diversified fund.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the CEFMX Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is 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 those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows shows
how the Fund performed for the calendar years shown. The table below the bar
chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily
indicative of how the Fund will perform in the future. Updated
performance information is available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
The
year-to-date total return as of
June 30, 2022 was
-20.77%.
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Best
Quarter: |
10.40% |
1Q 2019 |
Worst
Quarter: |
-9.05% |
4Q
2016 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past
One Year |
Past
Five Years |
Past
Ten Years |
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VanEck CEF Muni Income ETF (return
before taxes) |
8.34% |
7.35% |
6.05% |
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VanEck CEF Muni Income ETF (return
after taxes on distributions) |
8.32% |
7.33% |
6.03% |
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VanEck CEF Muni Income ETF (return
after taxes on distributions and sale of Fund
Shares) |
6.70% |
6.72% |
5.80% |
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S-Network
Municipal Bond Closed-End Fund Index
(reflects no deduction for
fees, expenses or taxes) |
8.35% |
7.64% |
6.38% |
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Bloomberg
US Aggregate Bond Index
(reflects
no deduction for fees, expenses or taxes) |
-1.54% |
3.57% |
2.90% |
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ICE
BofA Broad US Market Index1
(reflects no deduction for fees, expenses or
taxes) |
-1.58% |
3.63% |
2.97% |
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See “License Agreements
and Disclaimers” for important information.
1
On September 1, 2022, the
ICE BofA Broad US Market Index replaced the Bloomberg US Aggregate Bond Index as
the Fund's broad-based benchmark index as the Adviser believes it is more
representative of broad bond market
exposure.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Manager. The
following individual is primarily responsible for the day-to-day management of
the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
July
2011 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck® High Yield Muni ETF (the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the ICE High Yield Crossover Municipal Bond
Transition Index (the “High Yield Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.35 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
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YEAR |
EXPENSES |
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1 |
$36 |
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3 |
$113 |
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5 |
$197 |
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10 |
$443 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
11% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the benchmark index.
The High Yield Index is comprised of publicly traded municipal bonds that cover
the U.S. dollar denominated high yield long-term tax-exempt bond market. By the
end of the Fund’s index transition period (as described below), the High Yield
Index is expected to track the high yield municipal bond market with an ultimate
weight of 70% in non-investment grade municipal bonds, 25% in triple-B rated
investment grade municipal bonds and 5% in single-A rated investment grade
municipal bonds (in accordance with the High Yield Index provider’s
methodology). This 80% investment policy is non-fundamental and may be changed
without shareholder approval upon 60 days' prior written notice to
shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the High Yield Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the High Yield Index and does not take temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the High Yield Index. Because of the practical difficulties and
expense of purchasing all of the securities in the High Yield Index, the Fund
does not purchase all of the securities in the High Yield Index. Instead, the
Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s
objective. As such, the Fund may purchase a subset of the bonds in the High
Yield Index in an effort to hold a portfolio of bonds with generally the same
risk and return characteristics of the High Yield Index.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the High Yield Index concentrates in an industry
or group of industries. As of April 30, 2022, the High Yield Index had 21,443
component securities and each of the industrial development and special tax
(i.e.,
revenue bonds backed by a special tax) sectors represented a significant portion
of the High Yield Index. The High Yield Index is rebalanced on the last calendar
day of the month.
Prior
to the selection of the High Yield Index, the Fund tracked the Bloomberg
Municipal Custom High Yield Composite Index (the “Prior High Yield Index”). The
Fund began tracking the High Yield Index on March 1, 2022. The High Yield Index
is an interim index that gradually increases exposure to securities based on
their weightings in the ICE Broad High Yield Crossover Municipal Index (the
"Final High Yield Index") while proportionally reducing exposure to certain
component securities of the Prior High Yield Index.
The
Fund is expected to begin tracking the Final High Yield Index on
December 1, 2022.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
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. 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. Municipal securities include
general obligation bonds, which 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. General obligation bonds generally are not
backed by revenues from a specific project or source. Municipal securities also
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. The market for municipal bonds may be less liquid than for
taxable bonds. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
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. For example, the COVID-19
pandemic has significantly stressed the financial resources of many municipal
issuers, which may impair a municipal issuer’s ability to meet its financial
obligations when due and could adversely impact the value of its bonds, which
could negatively impact the performance of the Fund.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual municipal developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for municipal
securities that are high yield securities may be less liquid than the markets
for higher quality municipal securities or high yield securities issued by
corporate issuers and, as such, may have an adverse effect on the market prices
of and the Fund’s ability to arrive at a fair value for certain securities. The
illiquidity of the market also could make it difficult for the Fund to sell
certain securities in
connection
with a rebalancing of the High Yield Index. In addition, periods of economic
uncertainty and change may result in an increased volatility of market prices of
high yield securities and a corresponding volatility in the Fund’s net asset
value (“NAV”).
Credit
Risk. Bonds
are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities with shorter durations. In response to the COVID-19 pandemic, as with
other serious economic disruptions, governmental authorities and regulators are
enacting significant fiscal and monetary policy changes, including providing
direct capital infusions into companies, creating new monetary programs and
lowering interest rates. These actions present heightened risks to debt
instruments, and such risks could increase if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Private
Activity Bonds Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition and performance of private activity bonds. The
issuers of private activity bonds in which the Fund may invest may be negatively
impacted by conditions affecting either the general credit of the user of the
private activity project or the project itself. The Fund’s private activity bond
holdings also may pay interest subject to the alternative minimum tax. See the
section of the Prospectus entitled “Shareholder Information—Tax Information” for
more details.
Industrial
Development Bond Risk. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition and performance of industrial development bonds. These
revenue bonds are 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 on 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.
Special
Tax Bond Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition and performance of special tax bonds. 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 the Fund’s portfolio.
California
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
Illinois
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of Illinois. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
Illinois and by the financial condition of Illinois’ political subdivisions,
agencies, instrumentalities and public authorities.
Market
Risk.
The prices of the securities in the 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. 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. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the High Yield Index. As a result, an
adverse development respecting an issuer of securities held by the Fund could
result in a greater decline in NAV than would be the case if the Fund held all
of the bonds in the High Yield Index. Conversely, a positive development
relating to an issuer of securities in the High Yield Index that is not held by
the Fund could cause the Fund to underperform the High Yield Index. To the
extent the assets in the Fund are smaller, these risks will be
greater.
Index
Tracking Risk.
The Fund’s return may not match the return of the High Yield Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the High Yield Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the High
Yield Index or (to the extent the Fund effects creations and redemptions for
cash) raising cash to meet redemptions or deploying cash in connection with
newly created Creation Units (defined herein), which are not factored into the
return of the High Yield Index. Transaction costs, including brokerage costs,
will decrease the Fund’s NAV to the extent not offset by the transaction fee
payable by an Authorized Participant (“AP”). Market disruptions and regulatory
restrictions could have an adverse effect on the Fund’s ability to adjust its
exposure to the required levels in order to track the High Yield Index. Errors
in the High Yield Index data, High Yield Index computations and/or the
construction of the High Yield Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the High
Yield Index provider for a period of time or at all, which may have an adverse
impact on the Fund and its shareholders. Shareholders should understand that any
gains from the High Yield Index provider's errors will be kept by the Fund and
its shareholders and any losses or costs resulting from the High Yield Index
provider's errors will be borne by the Fund and its shareholders. When the High
Yield Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the High
Yield Index, any transaction costs and market exposure arising from such
portfolio rebalancing will be borne directly by the Fund and its shareholders.
In addition, the Fund's use of a representative sampling approach may cause the
fund to not be as well correlated with the return of the High Yield Index as
would be the case if the Fund purchased all of the securities in the High Yield
Index in the proportions in which they are represented in the High Yield Index.
Apart from scheduled rebalances, the High Yield Index provider or its agents may
carry out additional ad hoc rebalances to the High Yield Index. Therefore,
errors and additional ad hoc rebalances carried out by the High Yield Index
provider or its agents to the High Yield Index may increase the costs to and the
tracking error risk of the Fund. The Fund’s performance may also deviate from
the return of the High Yield Index due to certain listing standards of the
Fund's listing exchange (the “Exchange”) or legal restrictions or limitations
(such as diversification requirements). The Fund may value certain of its
investments, underlying securities and/or currencies, and/or other assets based
on fair value prices. When markets are volatile, the ability to sell securities
at fair value prices may be adversely impacted and may result in additional
trading costs and/or increase the index tracking risk. For tax efficiency
purposes, the Fund may sell certain securities, and such sale may cause the Fund
to realize a loss and deviate from the performance of the High Yield Index. In
addition, sale of securities may result in the recognition of accrued market
discount and/or net realized gains for tax purposes, which may result in taxable
distributions to shareholders. In light of the factors discussed above, the
Fund’s return may deviate significantly from the return of the High Yield Index.
Changes to the composition of the High Yield Index in connection with a
rebalancing or reconstitution of the High Yield Index may cause the Fund to
experience increased volatility, during which time the Fund’s index tracking
risk may be heightened.
The
High Yield Index will gradually increase exposure to securities based on their
weightings in the Final High Yield Index while proportionally reducing exposure
to certain component securities of the Prior High Yield Index. These adjustments
to the Fund's portfolio holdings are expected to increase the Fund's transaction
costs and turnover rate.
Tax
Risk.
There is no guarantee that the Fund’s income will be exempt from U.S. federal or
state income taxes. Events occurring after the date of issuance of a municipal
bond or after the 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 the 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.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step
away
from making a market in the Shares and in executing creation and redemption
orders, which could cause a material deviation in the Fund’s market price from
its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the High Yield Index, the Fund
generally would not sell a security because the security’s issuer was in
financial trouble. Additionally, unusual market conditions may cause the High
Yield Index provider to postpone a scheduled rebalance or reconstitution, which
could cause the High Yield Index to vary from its normal or expected
composition. Therefore, the Fund’s performance could be lower than funds that
may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid-ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the High Yield Index concentrates
in a particular sector or sectors or industry or group of industries. To the
extent that the Fund is 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 those
sectors and/or industries may negatively impact the Fund to a greater extent
than if the Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows shows
how the Fund performed for the calendar years shown. The table below the bar
chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1, 2022, the Fund
sought to replicate as closely as possible, before fees and expenses, the price
and yield performance of the Prior High Yield Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior High Yield Index. On December 1, 2022, the Fund is
expected to begin tracking the Final High Yield Index. All returns assume
reinvestment of dividends and distributions. The Fund’s past
performance (before and after taxes) is not
necessarily indicative of how the Fund will perform in the
future. Updated performance information is available online at
www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
The
year-to-date total return as of
June 30, 2022 was
-13.04%.
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Best
Quarter: |
6.39% |
1Q 2012 |
Worst
Quarter: |
-7.55% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past
One Year |
Past
Five Years |
Past
Ten Years |
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(return
before taxes)* |
5.33% |
5.34% |
5.24% |
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VanEck High Yield Muni
ETF (return after taxes on distributions) |
5.33% |
5.33% |
5.22% |
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VanEck High Yield Muni
ETF (return after taxes on distributions and sale of Fund
Shares) |
4.77% |
5.11% |
5.13% |
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Bloomberg
Municipal Custom High Yield Composite Index
(reflects no deduction for
fees, expenses or taxes) |
7.02% |
7.30% |
6.88% |
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ICE High Yield Crossover Municipal Bond
Transition Index (reflects no deduction for fees, expenses or
taxes)** |
— |
— |
— |
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ICE
Broad High Yield Crossover Municipal Index
(reflects
no deduction for fees, expenses or
taxes)** |
— |
— |
— |
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Bloomberg US Aggregate Bond
Index (reflects no deduction for fees, expenses or
taxes) |
-1.54% |
3.57% |
2.90% |
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ICE
BofA Broad US Market Index1
(reflects
no deduction for fees, expenses or taxes) |
-1.58% |
3.63% |
2.97% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior High Yield Index. Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior High Yield Index.
**
The inception date of the
High Yield Index and the Final High Yield Index was December 11,
2021.
1
On September 1, 2022, the
ICE BofA Broad US Market Index replaced the Bloomberg US Aggregate Bond Index as
the Fund's broad-based benchmark index as the Adviser believes it is more
representative of broad bond market exposure.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager. The
following individual is primarily responsible for the day-to-day management of
the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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James
T. Colby III |
Portfolio
Manager |
February
2009 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
The
investment objective of VanEck®
HIP
Sustainable Muni ETF (the
“Fund”) is to seek current income generally exempt from federal income tax
(other than federal alternative minimum tax
(“AMT”)).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.24 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.24 |
% |
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(a)
Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
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1 |
$25 |
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3 |
$77 |
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5 |
$135 |
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10 |
$306 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the period from September 8, 2021 (the Fund’s commencement of operations)
through April 30, 2022, the Fund’s portfolio turnover rate was 11% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in investments the income from which is exempt
from U.S. federal income tax (other than AMT). The Fund is an actively managed
exchange-traded fund (“ETF”) that seeks to achieve its investment objective by
investing, under normal circumstances, in investment grade municipal debt
securities that fund issuers with operations or projects helping to promote
progress towards sustainable development, in alignment with the goals and
metrics defined by the United Nations Sustainable Development Goals (“SDGs”) 9,
11 and 12. The SDGs were adopted by the United Nations General Assembly to
achieve sustainable development for all, and the specific goals of SDGs 9, 11
and 12 are as follows: SDG 9 is to “build resilient infrastructure, promote
inclusive and sustainable industrialization and foster innovation,” SDG 11 is to
“make cities and human settlements inclusive, safe, resilient and sustainable”
and SDG 12 is to “ensure sustainable consumption and production patterns.” The
Fund normally invests at least 80% of its total assets in securities that
support sustainable development. The Adviser determines which operations or
projects of issuers it believes to be supportive of sustainable
development
and that promote beneficial environmental and social outcomes in U.S.
communities and cities by utilizing the rules-based investment approach
described below. The Fund's policy to normally invest at least 80% of its total
assets in securities that support sustainable development is non-fundamental and
may be changed without shareholder approval upon 60 days' prior written notice
to shareholders.
The
Adviser primarily uses a rules-based investment approach which utilizes
proprietary HIP (Human Impact + Profit) Ratings data for the application of
impact criteria to security selection and portfolio management. HIP Ratings are
produced and licensed from HIP Investor, Inc. (“HIP” or the “Data Provider”),
which provides services
to
evaluate, rate and rank issuers and their securities based on data-driven,
quantitative performance measures that demonstrate positive social,
environmental and economic outcomes or mission accomplishment. The Adviser’s
investment process begins by using HIP Ratings to screen municipal securities
based on their SDGs 9, 11 and 12 ratings by HIP, Environmental, Social and
Governance (“ESG”) ratings by HIP
and
Climate-Threat and Resilience ratings by HIP. HIP Ratings are only assigned to
the municipal securities of issuers where at least one qualified opportunity
zone is located in the issuer’s region. An “opportunity zone” is an
economically-distressed community where new investments, under certain
conditions, may be eligible for preferential tax treatment based on
certification from the Internal Revenue Service. HIP, as the Data Provider,
analyzes multiple data points of municipal securities to determine an estimate
of
the
impact (i.e.,
net benefit to the community) each municipal security provides. The HIP Ratings
used by the Adviser seek to evaluate the impact of municipal securities with
respect to the goals and metrics defined by SDGs 9, 11 and 12, climate
resilience, and overall net benefit to people, planet, and prosperity. These HIP
Ratings are used by the Adviser to narrow the universe of eligible Fund
investments to municipal securities that, based on the HIP Ratings, the Adviser
believes have been issued to fund operations or projects that support or advance
sustainable development, as well as promote positive social and environmental
outcomes. Such municipal debt securities may include, but are not limited
to, bonds issued in connection with (i) new or revitalized infrastructure
(i.e.,
roads, bridges, tunnels, buildings, transportation of people and freight,
affordable and safe housing and redevelopment of urban areas (e.g.,
green spaces), school or campus upgrades and Leadership in Energy and
Environmental Design (“LEED”) qualified real estate); (ii) information and
education systems (i.e.,
schools, research, financial services, communication services and technologies
and information services); (iii) healthier communities (i.e.,
hospitals, food and nutrition infrastructure, waste systems, air quality and
environmental management systems); (iv) cleaner energy (i.e.,
utilities, resource and material use); (v) inclusive and sustainable
industrialization towards increased gross domestic product (“GDP”); (vi) action
and resilience planning and projects to mitigate the effects of climate change
and other natural disasters and hazards; and (vii) ensuring sustainable
consumption and production patterns. The Adviser is not required to invest in
any issuer rated by the Data Provider and the Data Provider is not acting as a
sub-adviser to the Fund.
Municipal
securities that the Fund may invest in include securities issued by U.S. states
and municipal governments, any of their political subdivisions, agencies, or
instrumentalities, or by U.S. territories and possessions, such as Guam, the
U.S. Virgin Islands, and Puerto Rico, and their political subdivisions and
public corporations. The Fund may invest a significant portion of its assets in
municipal obligations of issuers located in the States of California and New
York. The Fund does not expect to invest in non-investment grade (or “junk”)
securities. The Fund may invest in debt securities of any maturity or duration
and does not have a target maturity or duration. “Duration” is a measure of a
debt security’s price sensitivity to changes in interest rates. The longer the
duration of a debt security, the more sensitive its market price is to changes
in interest rates. The Fund seeks to reduce its exposure to credit risk by
diversifying its assets among many municipal issuers and among the different
types and maturities of municipal securities available.
The
Fund’s 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 AMT) may not be changed without shareholder approval. The Fund may count
investments that generate income subject to the AMT toward its 80% investment
policy. For purposes of this policy, the term “assets” means net assets plus the
amount of any borrowings for investment purposes. This percentage limitation
applies at the time of the investment.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”) and, therefore, may invest a greater
percentage of its assets in a particular issuer.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Therefore, you should consider
carefully the following risks before investing in the Fund, each of which could
significantly and adversely affect the value of an investment in the
Fund.
Sustainable
Impact Investing Strategy Risk. The
Fund's strategy of investing in municipal debt securities of issuers promoting
sustainable development may limit the types and number of investments available
to the Fund or cause the Fund to invest in securities that underperform the
market as a whole. As a result, the Fund may underperform funds that do not have
a sustainable investing strategy or funds with sustainable investing strategies
that do not employ HIP Ratings. In addition, the Fund relies on the Data
Provider for the identification of issuers that promote sustainable development
based on their HIP Ratings; however, there can be no guarantee that the Data
Provider's methodology will align with the Fund's investment strategy or
desirable issuers can
be
correctly identified. Moreover, SDGs 9, 11 and 12 may be modified or abandoned
in the future and there can be no guarantee that the Fund will be able to
continue to use HIP Ratings or find an appropriate substitute ratings
system.
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. 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. Municipal securities include
general obligation bonds, which 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. General obligation bonds generally are not
backed by revenues from a specific project or source. Municipal securities also
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. The market for municipal bonds may be less liquid than for
taxable bonds. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
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. For example, the COVID-19
pandemic has significantly stressed the financial resources of many municipal
issuers, which may impair a municipal issuer’s ability to meet its financial
obligations when due and could adversely impact the value of its bonds, which
could negatively impact the performance of the Fund.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities with shorter durations. In response to the COVID-19 pandemic, as with
other serious economic disruptions, governmental authorities and regulators are
enacting significant fiscal and monetary policy changes, including providing
direct capital infusions into companies, creating new monetary programs and
lowering interest rates. These actions present heightened risks to debt
instruments, and such risks could increase if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Data
Risk. Given
the complexity of the investments and strategies of the Fund, the Adviser relies
heavily on quantitative models and information and data (“Data”). Data is used
to construct sets of transactions and investments, and to provide risk
management insights. When Data proves to be incorrect or incomplete, any
decisions made in reliance thereon expose the Fund to potential
risks.
California
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of New York. Consequently, the Fund may be affected
by political, economic, regulatory and other developments within New York and by
the financial condition of New York’s political subdivisions, agencies,
instrumentalities and public authorities.
Education
Bond Risk. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition and performance of education bonds. 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 substate)
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.
Health
Care Bond Risk. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition and performance of health care bonds. 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. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition and performance of housing revenue bonds.
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.
Transportation
Bond Risk. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition and performance of transportation bonds.
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.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed ETF. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as
Authorized Participants (“APs”), none of which are obligated to engage in
creation and/or redemption transactions. To the extent that those APs exit the
business, or are unable to or choose not to process creation and/or redemption
orders, and no other AP is able to step forward to create and redeem, there may
be a significantly diminished trading market for Shares or Shares may trade like
closed-end funds at a greater discount (or premium) to net asset value (“NAV”)
and possibly face trading halts and/or de-listing. The AP concentration risk may
be heightened in scenarios where APs have limited or diminished access to the
capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Market
Risk.
The prices of the securities in the 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. 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. An investment in the Fund may lose
money.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund 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. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified
funds.
State Concentration
Risk. The Fund may invest a significant portion
of its assets in municipal obligations of issuers located in a particular state
or states. Consequently, the Fund may be affected by political, economic,
regulatory and other developments within the state or states and by the
financial condition of the state's or states' political subdivisions, agencies,
instrumentalities and public authorities.
PERFORMANCE
The Fund commenced operations on September 8,
2021 and therefore does not have a performance history for a full calendar
year. The Fund’s financial performance for the Fund’s first
fiscal period is included in the “Financial Highlights” section of the
Prospectus. Visit www.vaneck.com
for current performance figures.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
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|
James
T. Colby III |
Portfolio
Manager |
August
2021 |
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|
Stephanie
Wang |
Deputy
Portfolio Manager |
August
2021 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck® Intermediate Muni ETF
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the ICE Intermediate AMT-Free Broad
National Municipal Transition Index (the “Intermediate
Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.24 |
% |
|
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|
|
Other
Expenses(a) |
0.00 |
% |
|
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|
|
Total
Annual Fund Operating Expenses(a) |
0.24 |
% |
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|
(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
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YEAR |
EXPENSES |
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|
1 |
$25 |
|
|
|
3 |
$77 |
|
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|
5 |
$135 |
|
|
|
10 |
$306 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
4% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund normally invests at least 80% of its total assets in fixed income
securities that comprise the Intermediate Index. The Intermediate Index is
comprised of publicly traded municipal bonds that cover the U.S. dollar
denominated intermediate term tax-exempt bond market. This 80% investment policy
is non-fundamental and may be changed without shareholder approval upon 60 days'
prior written notice to shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Intermediate Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not
try to “beat” the Intermediate Index and does not take temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Intermediate Index. Because of the practical difficulties and
expense of purchasing all of the securities in the Intermediate Index, the Fund
does not purchase all of the securities in the Intermediate Index. Instead, the
Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s
objective. As such, the Fund may purchase a subset of the bonds in the
Intermediate Index in an effort to hold a portfolio of bonds with generally the
same risk and return characteristics of the Intermediate Index.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Intermediate Index concentrates in an industry
or group of industries. As of April 30, 2022, the Intermediate Index had 22,848
component securities and the special tax (i.e.,
revenue bonds backed by a specific tax) sector represented a significant portion
of the Intermediate Index. The Intermediate Index is rebalanced on the last
calendar day of the month.
Prior
to the selection of the Intermediate Index, the Fund tracked the Bloomberg
AMT-Free Intermediate Continuous Municipal Index (the “Prior Intermediate
Index”). The Fund began tracking the Intermediate Index on March 1, 2022. The
Intermediate Index is an interim index that gradually increases exposure to
securities based on their weightings in the ICE Intermediate AMT-Free Broad
National Municipal Index (the “Final Intermediate Index”) while proportionally
reducing exposure to certain component securities of the Prior Intermediate
Index. The Fund is expected to begin tracking the Final Intermediate Index on
December 1, 2022.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
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. 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. Municipal securities include
general obligation bonds, which 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. General obligation bonds generally are not
backed by revenues from a specific project or source. Municipal securities also
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. The market for municipal bonds may be less liquid than for
taxable bonds. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
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. For example, the COVID-19
pandemic has significantly stressed the financial resources of many municipal
issuers, which may impair a municipal issuer’s ability to meet its financial
obligations when due and could adversely impact the value of its bonds, which
could negatively impact the performance of the Fund.
Credit
Risk. Bonds
are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities with shorter durations. In response to the COVID-19 pandemic, as with
other serious economic disruptions, governmental authorities and regulators are
enacting significant fiscal and monetary policy changes, including providing
direct capital infusions into companies, creating new
monetary
programs and lowering interest rates. These actions present heightened risks to
debt instruments, and such risks could increase if these actions are
unexpectedly or suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
California
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of New York. Consequently, the Fund may be affected
by political, economic, regulatory and other developments within New York and by
the financial condition of New York’s political subdivisions, agencies,
instrumentalities and public authorities.
Special
Tax Bond Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition and performance of special tax bonds. 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 the Fund’s portfolio.
Market
Risk.
The prices of the securities in the 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. 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. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the Intermediate Index. As a result,
an adverse development respecting an issuer of securities held by the Fund could
result in a greater decline in net asset value (“NAV”) than would be the case if
the Fund held all of the securities in the Intermediate Index. Conversely, a
positive development relating to an issuer of securities in the Intermediate
Index that is not held by the Fund could cause the Fund to underperform the
Intermediate Index. To the extent the assets in the Fund are smaller, these
risks will be greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the Intermediate Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Intermediate Index and incurs costs associated with
buying and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Intermediate Index or (to
the extent the Fund effects creations and redemptions for cash) raising cash to
meet redemptions or deploying cash in connection with newly created Creation
Units (defined herein), which are not factored into the return of the
Intermediate Index. Transaction costs, including brokerage costs, will decrease
the Fund’s NAV to the extent not offset by the transaction fee payable by an
Authorized Participant (“AP”). Market disruptions and regulatory restrictions
could have an adverse effect on the Fund’s ability to adjust its exposure to the
required levels in order to track the Intermediate Index. Errors in the
Intermediate Index data, Intermediate Index computations and/or the construction
of the Intermediate Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Intermediate Index
provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders. Shareholders should understand that any gains from
the Intermediate Index provider's errors will be kept by the Fund and its
shareholders and any losses or costs resulting from the Intermediate Index
provider's errors will be borne by the Fund and its shareholders. When the
Intermediate Index is rebalanced and the Fund in turn rebalances its portfolio
to attempt to increase the correlation between the Fund’s portfolio and the
Intermediate Index, any transaction costs and market exposure arising from such
portfolio rebalancing will be borne directly by the Fund and its shareholders.
In addition, the Fund's use of a representative sampling approach may cause the
fund to not be as well correlated with the return of the Intermediate Index as
would be the case if the Fund purchased all of the securities in the
Intermediate Index in the proportions in which they are represented in the
Intermediate Index. Apart from scheduled rebalances, the Intermediate Index
provider or its agents may carry out additional ad hoc rebalances to the
Intermediate Index. Therefore, errors and additional ad hoc rebalances carried
out by the Intermediate Index provider or its agents to the Intermediate Index
may increase the costs to and the tracking error risk of the Fund. The Fund’s
performance may also deviate from the return of the Intermediate Index due to
certain listing standards of the Fund's listing exchange (the “Exchange”) or
legal restrictions or limitations (such as diversification requirements). The
Fund may value certain of its investments, underlying securities and/or
currencies, and/
or
other assets based on fair value prices. When markets are volatile, the ability
to sell securities at fair value prices may be adversely impacted and may result
in additional trading costs and/or increase the index tracking risk. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the
Intermediate Index. In addition, sale of securities may result in the
recognition of accrued market discount and/or net realized gains for tax
purposes, which may result in taxable distributions to shareholders. In light of
the factors discussed above, the Fund’s return may deviate significantly from
the return of the Intermediate Index. Changes to the composition of the
Intermediate Index in connection with a rebalancing or reconstitution of the
Intermediate Index may cause the Fund to experience increased volatility, during
which time the Fund’s index tracking risk may be heightened.
The
Intermediate Index will gradually increase exposure to securities based on their
weightings in the Final Intermediate Index while proportionally reducing
exposure to certain component securities of the Prior Intermediate Index. These
adjustments to the Fund's portfolio holdings are expected to increase the Fund's
transaction costs and turnover rate.
Tax
Risk.
There is no guarantee that the Fund’s income will be exempt from U.S. federal or
state income taxes. Events occurring after the date of issuance of a municipal
bond or after the 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 the 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.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Intermediate Index, the Fund
generally would not sell a security because the security’s issuer was in
financial trouble. Additionally, unusual market conditions may cause the
Intermediate Index provider to postpone a scheduled rebalance or reconstitution,
which could cause the Intermediate Index to vary from its normal or expected
composition. Therefore, the Fund’s performance could be lower than funds that
may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid-ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Intermediate Index
concentrates in a particular sector or sectors or industry or group of
industries. To the extent that the Fund is 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
those sectors and/or industries may negatively impact the Fund to a greater
extent than if the Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1, 2022, the Fund
sought to replicate as closely as possible, before fees and expenses, the price
and yield performance of the Prior Intermediate Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Intermediate Index. On December 1, 2022, the Fund is
expected to begin tracking the Final Intermediate Index. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
The
year-to-date total return as of
June 30, 2022 was
-10.73%.
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Best
Quarter: |
3.56% |
1Q 2019 |
Worst
Quarter: |
-5.13% |
4Q
2016 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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|
Past One
Year |
Past Five
Years |
Past Ten
Years |
|
|
VanEck Intermediate Muni ETF (return
before taxes)* |
0.91% |
4.29% |
3.56% |
|
|
VanEck Intermediate Muni ETF (return
after taxes on distributions) |
0.88% |
4.27% |
3.55% |
|
|
VanEck Intermediate Muni ETF (return
after taxes on distributions and sale of Fund
Shares) |
1.32% |
3.82% |
3.30% |
|
|
Bloomberg AMT-Free Intermediate
Continuous Municipal Index (reflects no deduction for
fees, expenses or taxes)
|
1.28% |
4.82% |
4.17% |
|
|
ICE Intermediate AMT-Free Broad
National Municipal Transition Index (reflects no deduction for fees,
expenses or taxes)** |
— |
— |
— |
|
|
ICE
Intermediate AMT-Free Broad National Municipal Index
(reflects
no deduction for fees, expenses or
taxes)** |
— |
— |
— |
|
|
Bloomberg US Aggregate Bond
Index (reflects no deduction for fees, expenses or
taxes) |
-1.54% |
3.57% |
2.90% |
|
|
ICE
BofA Broad US Market Index1
(reflects
no deduction for fees, expenses or taxes) |
-1.58% |
3.63% |
2.97% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Intermediate Index. Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior Intermediate Index.
**
The inception date of the
Intermediate Index and the Final Intermediate Index was December 11,
2021.
1
On September 1, 2022, the
ICE BofA Broad US Market Index replaced the Bloomberg US Aggregate Bond Index as
the Fund's broad-based benchmark index as the Adviser believes it is more
representative of broad bond market exposure.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager.
The following individual is primarily responsible for the day-to-day management
of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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James
T. Colby III |
Portfolio
Manager |
December
2007 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck® Long Muni ETF (the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the ICE Long AMT-Free Broad National Municipal
Transition Index (the “Long Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.24 |
% |
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|
Other
Expenses(a) |
0.00 |
% |
|
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|
Total
Annual Fund Operating Expenses(a) |
0.24 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
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YEAR
|
EXPENSES |
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1 |
$25 |
|
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3 |
$77 |
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5 |
$135 |
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|
10 |
$306 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
7% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund normally invests at least 80% of its total assets in fixed income
securities that comprise the Long Index. The Long Index is comprised of publicly
traded municipal bonds that cover the U.S. dollar denominated long-term
tax-exempt bond market. This 80% investment policy is non-fundamental and may be
changed without shareholder approval upon 60 days' prior written notice to
shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Long Index. Unlike many investment companies
that try to “beat” the performance of a benchmark index, the Fund does not try
to
“beat”
the Long Index and does not take temporary defensive positions that are
inconsistent with its investment objective of seeking to replicate the Long
Index. Because of the practical difficulties and expense of purchasing all of
the securities in the Long Index, the Fund does not purchase all of the
securities in the Long Index. Instead, the Adviser utilizes a “sampling”
methodology in seeking to achieve the Fund’s objective. As such, the Fund may
purchase a subset of the bonds in the Long Index in an effort to hold a
portfolio of bonds with generally the same risk and return characteristics of
the Long Index.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Long Index concentrates in an industry or
group of industries. As of April 30, 2022, the Long Index had 10,866 component
securities and health care and the special tax (i.e.
revenue bonds backed by a special tax) sectors represented a significant portion
of the Long Index. The Long Index is rebalanced on the last calendar day of the
month.
Prior
to the selection of the Long Index, the Fund tracked the Bloomberg AMT-Free Long
Continuous Municipal Index (the “Prior Long Index”). The Fund began tracking the
Long Index on March 1, 2022. The Long Index is an interim index that gradually
increases exposure to securities based on their weightings in the ICE Long
AMT-Free Broad National Municipal Index (the “Final Long Index”) while
proportionally reducing exposure to certain component securities of the Prior
Long Index. The Fund is expected to begin tracking the Final Long Index on
December 1, 2022.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
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. 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. Municipal securities include
general obligation bonds, which 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. General obligation bonds generally are not
backed by revenues from a specific project or source. Municipal securities also
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. The market for municipal bonds may be less liquid than for
taxable bonds. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
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. For example, the COVID-19
pandemic has significantly stressed the financial resources of many municipal
issuers, which may impair a municipal issuer’s ability to meet its financial
obligations when due and could adversely impact the value of its bonds, which
could negatively impact the performance of the Fund.
Credit
Risk. Bonds
are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities with shorter durations. In response to the COVID-19 pandemic, as with
other serious economic disruptions, governmental authorities and regulators are
enacting significant fiscal and monetary policy changes, including providing
direct capital infusions into companies, creating new monetary programs and
lowering interest rates. These actions present heightened risks to debt
instruments, and such risks could increase if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
California
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of New York. Consequently, the Fund may be affected
by political, economic, regulatory and other developments within New York and by
the financial condition of New York’s political subdivisions, agencies,
instrumentalities and public authorities.
Texas
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of Texas. Consequently, the Fund may be affected
by political, economic, regulatory and other developments within Texas and by
the financial condition of Texas’ political subdivisions, agencies,
instrumentalities and public authorities.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Health
Care Bond Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition and performance of health care bonds. 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.
Special
Tax Bond Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition and performance of special tax bonds. 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 the Fund’s portfolio.
Market
Risk.
The prices of the securities in the 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. 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. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in the Long Index. As a result, an adverse
development respecting an issuer of securities held by the Fund could result in
a greater decline in net asset value (“NAV”) than would be the case if the Fund
held all of the securities in the Long Index. Conversely, a positive development
relating to an issuer of securities in the Long Index that is not held by the
Fund could cause the Fund to underperform the Long Index. To the extent the
assets in the Fund are smaller, these risks will be greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the Long Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Long Index and incurs costs associated with buying
and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Long Index or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units
(defined herein), which are not factored into the return of the Long Index.
Transaction costs, including brokerage costs, will decrease the Fund’s NAV to
the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the Long Index. Errors in the Long Index data, Long
Index computations and/or the construction of the Long Index in accordance with
its methodology may occur from time to time and may not be identified and
corrected by the Long Index provider for a period of time or at all, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Long Index provider's errors will
be
kept by the Fund and its shareholders and any losses or costs resulting from the
Long Index provider's errors will be borne by the Fund and its shareholders.
When the Long Index is rebalanced and the Fund in turn rebalances its portfolio
to attempt to increase the correlation between the Fund’s portfolio and the Long
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders. In
addition, the Fund's use of a representative sampling approach may cause the
fund to not be as well correlated with the return of the Long Index as would be
the case if the Fund purchased all of the securities in the Long Index in the
proportions in which they are represented in the Long Index. Apart from
scheduled rebalances, the Long Index provider or its agents may carry out
additional ad hoc rebalances to the Long Index. Therefore, errors and additional
ad hoc rebalances carried out by the Long Index provider or its agents to the
Long Index may increase the costs to and the tracking error risk of the Fund.
The Fund’s performance may also deviate from the return of the Long Index due to
certain listing standards of the Fund's listing exchange (the “Exchange”) or
legal restrictions or limitations (such as diversification requirements). The
Fund may value certain of its investments, underlying securities and/or
currencies, and/or other assets based on fair value prices. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. For tax efficiency purposes, the Fund may sell certain
securities, and such sale may cause the Fund to realize a loss and deviate from
the performance of the Long Index. In addition, sale of securities may result in
the recognition of accrued market discount and/or net realized gains for tax
purposes, which may result in taxable distributions to shareholders. In light of
the factors discussed above, the Fund’s return may deviate significantly from
the return of the Long Index. Changes to the composition of the Long Index in
connection with a rebalancing or reconstitution of the Long Index may cause the
Fund to experience increased volatility, during which time the Fund’s index
tracking risk may be heightened.
The
Long Index will gradually increase exposure to securities based on their
weightings in the Final Long Index while proportionally reducing exposure to
certain component securities of the Prior Long Index. These adjustments to the
Fund's portfolio holdings are expected to increase the Fund's transaction costs
and turnover rate.
Tax
Risk.
There is no guarantee that the Fund’s income will be exempt from U.S. federal or
state income taxes. Events occurring after the date of issuance of a municipal
bond or after the 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 the 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.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Long Index, the Fund generally
would not sell a security because the security’s issuer was in financial
trouble. Additionally, unusual market conditions may cause the Long Index
provider to postpone a scheduled rebalance or reconstitution, which could cause
the Long Index to vary from its normal or expected composition. Therefore, the
Fund’s performance could be lower than funds that may actively shift their
portfolio assets to take advantage of market opportunities or to lessen the
impact of a market decline or a decline in the value of one or more
issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells
Shares
at a time when the market price is at a discount to the NAV, the shareholder may
pay significantly more or receive significantly less than the underlying value
of the Shares that were bought or sold or the shareholder may be unable to sell
his or her Shares. The securities held by the Fund may be traded in markets that
close at a different time than the Exchange. Liquidity in those securities may
be reduced after the applicable closing times. Accordingly, during the time when
the Exchange is open but after the applicable market closing, fixing or
settlement times, bid-ask spreads on the Exchange and the resulting premium or
discount to the Shares’ NAV may widen. Additionally, in stressed market
conditions, the market for the Fund’s Shares may become less liquid in response
to deteriorating liquidity in the markets for the Fund’s underlying portfolio
holdings. There are various methods by which investors can purchase and sell
Shares. Investors should consult their financial intermediaries before
purchasing or selling Shares of the Fund.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Long Index concentrates in a particular
sector or sectors or industry or group of industries. To the extent that the
Fund is 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 those sectors and/or industries
may negatively impact the Fund to a greater extent than if the Fund’s assets
were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1, 2022, the Fund
sought to replicate as closely as possible, before fees and expenses, the price
and yield performance of the Prior Long Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Long Index. On December 1, 2022, the Fund is expected
to begin tracking the Final Long Index. All returns assume reinvestment of
dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
The
year-to-date total return as of
June 30, 2022 was
-16.56%.
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Best
Quarter: |
6.69% |
1Q 2014 |
Worst
Quarter: |
-6.22% |
4Q
2016 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
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VanEck Long Muni ETF (return before
taxes)* |
2.61% |
5.30% |
4.75% |
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VanEck Long Muni ETF (return after
taxes on distributions) |
2.49% |
5.27% |
4.74% |
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VanEck Long Muni ETF (return after
taxes on distributions and sale of Fund Shares) |
2.62% |
4.77% |
4.45% |
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Bloomberg
AMT-Free Long Continuous Municipal Index
(reflects no deduction for
fees, expenses or taxes) |
3.01% |
5.87% |
5.49% |
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ICE
Long AMT-Free Broad National Municipal Transition Index
(reflects
no deduction for fees, expenses or
taxes)** |
— |
— |
— |
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ICE Long AMT-Free Broad National
Municipal Index (reflects no deduction for fees, expenses or
taxes)** |
— |
— |
— |
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Bloomberg
US Aggregate Bond Index
(reflects
no deduction for fees, expenses or taxes) |
-1.54% |
3.57% |
2.90% |
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ICE
BofA Broad US Market Index1
(reflects no deduction for fees, expenses or
taxes) |
-1.58% |
3.63% |
2.97% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Long Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Long Index.
**
The inception date of the
Long Index and the Final Long Index was December 11,
2021.
1
On September 1, 2022, the
ICE BofA Broad US Market Index replaced the Bloomberg US Aggregate Bond Index as
the Fund's broad-based benchmark index as the Adviser believes it is more
representative of broad bond market exposure.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Manager. The
following individual is primarily responsible for the day-to-day management of
the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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James
T. Colby III |
Portfolio
Manager |
January
2008 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
The
investment objective of VanEck® Muni Allocation ETF (the
“Fund”) is maximum long-term after-tax return, consisting of capital
appreciation and income generally exempt from federal income tax (other than
federal alternative minimum tax (“AMT”)).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a
percentage of the value of your investment)
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Management
Fee |
0.08 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Acquired
Fund Fees and Expenses
(b) |
0.25 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.33 |
% |
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(a)Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
(b)"Acquired Fund Fees
and Expenses” reflect the Fund’s pro rata portion of the expenses charged by
other investment companies in which the Fund invests, including VanEck
exchange-traded funds and funds which invest exclusively in money market
instruments. Because Acquired Fund Fees and Expenses are not borne directly by
the Fund, they will not be reflected in the expense information in the Fund’s
financial statements and the information presented in the table will differ from
that presented in the Fund’s financial highlights included in the Fund’s reports
to shareholders.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
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YEAR |
EXPENSES |
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1 |
$34 |
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3 |
$106 |
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5 |
$185 |
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10 |
$418 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
98% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in investments the income from which is exempt
from U.S. federal income tax (other than AMT). The Fund is an actively managed
exchange-traded fund (“ETF”) that seeks to achieve its investment objective by
investing, under normal circumstances, primarily in VanEck ETFs that are
registered under the applicable federal securities laws and that invest in
publicly traded municipal bonds that cover the U.S. dollar-denominated
investment
grade and below investment grade (high yield or "junk" bonds) tax-exempt bond
market. While the Adviser currently anticipates that the Fund will invest
primarily in other VanEck ETFs, the Fund may also invest in unaffiliated
exchange-traded products ("ETPs"), which could include ETFs and closed-end
funds, that invest in municipal bonds. The Fund does not have any limits on its
investments in below investment grade securities ("junk" bonds), and the Fund
will have indirect exposure to below investment grade securities through its
investments in ETPs. The Fund’s 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 AMT) may not be changed without shareholder approval. The
Fund may count investments that generate income subject to the AMT toward its
80% investment policy. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Adviser primarily uses a proprietary, rules-based allocation model (the
“Municipal Allocation Model”), which considers various inputs to guide asset
allocation decisions and select ETPs that provide exposure to tax-exempt
investments and that the Adviser believes will offer enhanced risk-adjusted
returns. The term “risk-adjusted returns” does not imply that the Adviser
employs low-risk strategies or that an investment in the Fund should
be considered a low-risk or no risk investment. The Municipal
Allocation Model uses various indicators to generate allocation signals among
tax-exempt investments. These signals are used as inputs to determine ETP
allocation and individual portfolio weights.
The
Municipal Allocation Model utilizes various indicators to identify periods of
credit and duration risk. These indicators measure various risk metrics, which
include but are not limited to, market prices and trends, volatility
(i.e.,
the measure of historic and/or predicted future variation of returns for a given
security or market index), yield spreads (i.e.,
the difference between yields on differing fixed income securities of varying
maturities, credit ratings and risk), and relative yield ratios (i.e.,
the yield on a security relative to the yield on a benchmark security). The
Adviser anticipates that the Municipal Allocation Model will evolve over time
and may incorporate additional indicators and/or remove or modify existing
indicators.
The
Adviser allocates the Fund’s assets to those ETPs that it believes will have
returns that, in the aggregate, closely correlate (before fees and expenses) to
the returns of the Municipal Allocation Model. The Municipal Allocation Model
typically adjusts its allocation signals on a monthly basis, and the Adviser may
adjust the Fund's portfolio allocation as needed in response to such changes in
the Municipal Allocation Model. The Fund may engage in active and frequent
trading of portfolio securities.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”) and, therefore, may invest a greater
percentage of its assets in a particular issuer.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Fund
of Funds Risk.
The performance of the Fund is dependent on the performance of underlying funds.
The Fund is subject to the risks of the underlying funds’ investments. In
addition, the Fund’s shareholders will indirectly bear the expenses of the
underlying funds, absorbing duplicative levels of fees with respect to
investments in the underlying funds. In addition, at times certain segments of
the market represented by the underlying funds may be out of favor and
underperform other segments.
Risk
of ETPs.
The Fund may be subject to the following risks as a result of its investments in
ETPs:
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. 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
securities include general obligation bonds, which 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. General
obligation bonds generally are not backed by revenues from a specific project or
source. Municipal securities also 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. The market for municipal bonds may be less liquid than for taxable
bonds. The value and liquidity of
many
municipal securities have decreased as a result of the past financial crises,
which has also adversely affected many municipal securities issuers and may
continue to do so. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
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. For example,
the COVID-19 pandemic has significantly stressed the financial resources of many
municipal issuers, which may impair a municipal issuer’s ability to meet its
financial obligations when due and could adversely impact the value of its
bonds, which could negatively impact the performance of the Fund.
Credit
Risk.
Debt securities are subject to credit risk. Credit risk refers to the
possibility that the issuer or guarantor of a security will be unable and/or
unwilling to make timely interest payments and/or repay the principal on its
debt or to otherwise honor its obligations and/or default completely on
securities. Debt securities are subject to varying degrees of credit risk,
depending on the issuer’s financial condition and on the terms of the
securities, which may be reflected in credit ratings. There is a possibility
that the credit rating of a debt security may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, issuers of high yield securities may experience
financial stress that would adversely affect their ability to service their
principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. In the event of a default, an ETP may
incur additional expenses to seek recovery. The secondary market for securities
that are high yield securities may be less liquid than the markets for higher
quality securities and high yield securities issued by non-corporate issuers may
be less liquid than high yield securities issued by corporate issuers, which, in
either instance, may have an adverse effect on the market prices of and an ETP’s
ability to arrive at a fair value for certain securities. The illiquidity of the
market also could make it difficult for an ETP to sell certain securities in
connection with a rebalancing of its index, if applicable. In addition, periods
of economic uncertainty and change may result in an increased volatility of
market prices of high yield securities and a corresponding volatility in an
ETP’s NAV.
Tax
Risk.
There is no guarantee that an ETP’s income will be exempt from U.S. federal or
state income taxes. Events occurring after the date of issuance of a municipal
bond or after the ETP’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 the ETP 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.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities with shorter durations. In response to the COVID-19 pandemic, as with
other serious economic disruptions, governmental authorities and regulators are
enacting significant fiscal and monetary policy changes, including providing
direct capital infusions into companies, creating new monetary programs and
lowering interest rates. These actions present heightened risks to debt
instruments, and such risks could increase if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
An ETP may invest in callable debt securities. If interest rates fall, it is
possible that issuers of callable securities will “call” (or prepay) their debt
securities before their maturity date. If a call were exercised by the issuer
during or following a period of declining interest rates, the ETP is likely to
have to replace such called security with a lower yielding security or
securities with greater risks or other less favorable features. If that were to
happen, it would decrease the ETP’s net investment income.
State
Concentration Risk. Certain
of the ETPs may invest a significant portion of its assets in municipal
obligations of issuers located in a particular state or
states. Consequently, the Fund may be affected by political, economic,
regulatory and other developments within the state or states and by the
financial condition of the state's or states' political subdivisions, agencies,
instrumentalities and public authorities.
Concentration
Risk.
Certain of the ETPs may be concentrated in a particular sector or sectors or
industry or group of industries. To the extent that an ETP is concentrated in a
particular sector or sectors or industry or group of industries, the ETP will be
subject to the risk that economic, political or other conditions that have a
negative effect on those sectors and/or industry or groups of industries may
negatively impact the ETP to a greater extent than if the ETP’s assets were
invested in a wider variety of sectors or industries.
High
Portfolio Turnover Risk.
The Fund may engage in active and frequent trading of its portfolio securities.
High portfolio turnover may result in increased transaction costs to the Fund,
including brokerage commissions, dealer mark-ups and other transaction costs on
the sale of the securities and on reinvestment in other securities. High
portfolio turnover may also result in higher taxes when Fund Shares are held in
a taxable account.
Model
and Data Risk.
Given the complexity of the investments and strategies of the Fund, the Adviser
relies heavily on quantitative models and information and data (“Models and
Data”). Models and Data are used to construct sets of transactions and
investments, and to provide risk management insights. When Models and Data prove
to be incorrect or incomplete, any decisions made in reliance thereon expose the
Fund to potential risks.
Active
Management Risk.
The Fund is subject to management risk because it is an actively managed ETF. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of financial institutions that act as APs, none
of which are obligated to engage in creation and/or redemption transactions. To
the extent that those APs exit the business, or are unable to or choose not to
process creation and/or redemption orders, and no other AP is able to step
forward to create and redeem, there may be a significantly diminished trading
market for Shares or Shares may trade like closed-end funds at a greater
discount (or premium) to NAV and possibly face trading halts and/or de-listing.
The AP concentration risk may be heightened in scenarios where APs have limited
or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Market
Risk. Both
the Fund and the ETPs in which the Fund may invest are subject to market risk.
The prices of the securities in the Fund or
an
ETP 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. 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.
An
investment in the Fund or an ETP may lose money.
Fund Shares Trading,
Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may
fluctuate in response to the Fund’s NAV, the intraday value of the Fund’s
holdings and supply and demand for Shares. The Adviser cannot predict whether
Shares will trade above, below, or at their most recent NAV. Disruptions to
creations and redemptions, the existence of market volatility or potential lack
of an active trading market for Shares (including through a trading halt), as
well as other factors, may result in Shares trading at a significant premium or
discount to NAV or to the intraday value of the Fund’s holdings. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may pay significantly more or receive significantly less
than the underlying value of the Shares that were bought or sold, or the
shareholder may be unable to sell his or her Shares. Additionally, in stressed
market conditions, the market for the Fund’s Shares may become less liquid in
response to deteriorating liquidity in the markets for the Fund’s underlying
portfolio holdings. There are various methods by which investors can purchase
and sell Shares. Investors should consult their financial intermediaries before
purchasing or selling Shares of the Fund.
PERFORMANCE
The bar chart that follows shows
how the Fund performed for the calendar years shown. The table below the bar
chart shows the Fund’s average annual returns (before and after taxes).
The bar chart and table provide
an indication of the risks of investing in the Fund by comparing the Fund’s
performance from year to year and by showing how the Fund’s average annual
returns for
the one year, five year, ten year and/or
since inception periods, as applicable, compared with the Fund’s broad-based
benchmark index. All returns assume reinvestment of dividends
and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
The
year-to-date total return as of
June 30, 2022 was
-12.67%.
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Best
Quarter: |
5.57% |
2Q 2020 |
Worst
Quarter: |
-9.03% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past
One Year |
Since
Inception (05/15/2019)
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VanEck Muni Allocation ETF (return
before taxes) |
2.30% |
2.32% |
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VanEck Muni Allocation ETF (return
after taxes on distributions) |
2.29% |
2.28% |
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VanEck Muni Allocation ETF (return
after taxes on distributions and sale of Fund
Shares) |
2.48% |
2.37% |
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Bloomberg Municipal Bond
Index (reflects no deduction for
fees, expenses or taxes) |
1.52% |
3.75% |
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ICE
BofA Broad Municipal Index1 (reflects
no deduction for fees, expenses or taxes) |
1.56% |
3.64% |
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1 On September 1, 2022, the ICE BofA Broad
Municipal Index replaced the Bloomberg Municipal Bond Index as the Fund's
primary performance benchmark index as the Adviser believes it is more
representative of broad tax-exempt market
exposure.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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David
Schassler |
Portfolio
Manager |
May
2019 |
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John
Lau |
Deputy
Portfolio Manager |
September
2020 |
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PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than NAV, Shares of the Fund may trade at a price greater than NAV (i.e.,
a “premium”) or less than NAV (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid/ask spread”).
Recent
information, including information about the Fund’s NAV, market price, premiums
and discounts, and bid/ask spreads, is included on the Fund’s website at
www.vaneck.com.
TAX
INFORMATION
The
Fund expects to distribute net investment income, if any, at least monthly, and
any net realized long-term or short-term capital gains annually. The Fund may
also pay a special distribution at any time to comply with U.S. federal tax
requirements. Dividends paid by the Fund that are properly reported as
exempt-interest dividends will not be subject to regular U.S. federal income
tax. The Fund intends to invest its assets in a manner such that a significant
portion of its dividend distributions to shareholders will generally be exempt
from U.S. federal income taxes. Such distributions will generally be subject to
state income taxes.
Distributions
from the Fund’s net investment income (other than net tax-exempt income),
including any net short-term capital gains, if any, are taxable to you as
ordinary income.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck® Short High Yield Muni
ETF (the “Fund”) seeks to replicate as closely as possible,
before fees and expenses, the price and yield performance of the ICE 1-12 Year
High Yield Crossover Municipal Bond Transition Index (the “Short High Yield
Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.35 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
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YEAR |
EXPENSES |
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1 |
$36 |
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3 |
$113 |
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5 |
$197 |
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10 |
$443 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
16% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the benchmark index.
The Short High Yield Index is composed of publicly traded municipal bonds that
cover the U.S. dollar denominated high yield short-term tax-exempt bond market.
By the end of the Fund’s index transition period (as described below), the Short
High Yield Index is expected to track the high yield municipal bond market with
an ultimate weight of 70% in non-investment grade municipal bonds, 20% in
triple-B rated investment grade municipal bonds and a targeted 10% in single-A
rated investment grade municipal bonds (in accordance with the Short High Yield
Index provider's methodology). All bonds must have a nominal maturity of 1 to 12
years. This 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days' prior written notice to
shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Short High Yield Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Short High Yield Index and does not take temporary
defensive positions that are inconsistent with its investment objective of
seeking to replicate the Short High Yield Index. Because of the practical
difficulties and expense of purchasing all of the securities in the Short High
Yield Index, the Fund does not purchase all of the securities in the Short High
Yield Index. Instead, the Adviser utilizes a “sampling” methodology in seeking
to achieve the Fund’s objective. As such, the Fund may purchase a subset of the
bonds in the Short High Yield Index in an effort to hold a portfolio of bonds
with generally the same risk and return characteristics of the Short High Yield
Index.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Short High Yield Index concentrates in an
industry or group of industries. As of April 30, 2022, the Short High Yield
Index had 10,727 component securities and each of the industrial development and
special tax (i.e.
revenue bonds backed by a special tax) sectors represented a significant portion
of the Short High Yield Index. The Short High Yield Index is rebalanced on the
last calendar day of the month.
Prior
to the selection of the Short High Yield Index, the Fund tracked the Bloomberg
Municipal High Yield Short Duration Index (the “Prior Short High Yield Index”).
The Fund began tracking the Short High Yield Index on March 1, 2022. The Short
High Yield Index is an interim index that gradually increases exposure to
securities based on their weightings in the ICE 1-12 Year Broad High Yield
Crossover Municipal Index (the “Final Short High Yield Index”) while
proportionally reducing exposure to certain component securities of the Prior
Short High Yield Index. The Fund is expected to begin tracking the Final Short
High Yield Index on December 1, 2022.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
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. 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. Municipal securities include
general obligation bonds, which 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. General obligation bonds generally are not
backed by revenues from a specific project or source. Municipal securities also
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. The market for municipal bonds may be less liquid than for
taxable bonds. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
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. For example, the COVID-19
pandemic has significantly stressed the financial resources of many municipal
issuers, which may impair a municipal issuer’s ability to meet its financial
obligations when due and could adversely impact the value of its bonds, which
could negatively impact the performance of the Fund.
Credit
Risk. Bonds
are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general
economic
conditions. The prevailing historically low interest rate environment increases
the risks associated with rising interest rates, including the potential for
periods of volatility and increased redemptions. In addition, debt securities
with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
In response to the COVID-19 pandemic, as with other serious economic
disruptions, governmental authorities and regulators are enacting significant
fiscal and monetary policy changes, including providing direct capital infusions
into companies, creating new monetary programs and lowering interest rates.
These actions present heightened risks to debt instruments, and such risks could
increase if these actions are unexpectedly or suddenly reversed or are
ineffective in achieving their desired outcomes.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual municipal developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for municipal
securities that are high yield securities may be less liquid than the markets
for higher quality municipal securities or high yield securities issued by
corporate issuers and, as such, may have an adverse effect on the market prices
of and the Fund’s ability to arrive at a fair value for certain securities. The
illiquidity of the market also could make it difficult for the Fund to sell
certain securities in connection with a rebalancing of the Short High Yield
Index. In addition, periods of economic uncertainty and change may result in an
increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund’s net asset value (“NAV”).
Industrial
Development Bond Risk. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition and performance of industrial development bonds. These
revenue bonds are 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 on 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.
Special
Tax Bond Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition and performance of special tax bonds. 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 the Fund’s
portfolio.
Illinois
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of Illinois. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
Illinois and by the financial condition of Illinois’ political subdivisions,
agencies, instrumentalities and public authorities.
New
York Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of New York. Consequently, the Fund may be affected
by political, economic, regulatory and other developments within New York and by
the financial condition of New York’s political subdivisions, agencies,
instrumentalities and public authorities.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Private
Activity Bonds Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition and performance of private activity bonds. The
issuers of private activity bonds in which the Fund may invest may be negatively
impacted by conditions affecting either the general credit of the user of the
private activity project or the project itself. The Fund’s private activity bond
holdings also may pay interest subject to the alternative minimum tax. See the
section of the Prospectus entitled “Shareholder Information—Tax Information” for
more details.
Market
Risk.
The prices of the securities in the 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. 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. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the Short High Yield Index. As a
result, an adverse development respecting an issuer of securities held by the
Fund could result in a greater decline in NAV than would be the case if the Fund
held all of the securities in the Short High Yield Index. Conversely, a positive
development relating to an issuer of securities in the Short High Yield Index
that is not held by the Fund could cause the Fund to underperform the Short High
Yield Index. To the extent the assets in the Fund are smaller, these risks will
be greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the Short High Yield Index for a
number of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Short High Yield Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the Short
High Yield Index or (to the extent the Fund effects creations and redemptions
for cash) raising cash to meet redemptions or deploying cash in connection with
newly created Creation Units (defined herein), which are not factored into the
return of the Short High Yield Index. Transaction costs, including brokerage
costs, will decrease the Fund’s NAV to the extent not offset by the transaction
fee payable by an Authorized Participant (“AP”). Market disruptions and
regulatory restrictions could have an adverse effect on the Fund’s ability to
adjust its exposure to the required levels in order to track the Short High
Yield Index. Errors in the Short High Yield Index data, Short High Yield Index
computations and/or the construction of the Short High Yield Index in accordance
with its methodology may occur from time to time and may not be identified and
corrected by the Short High Yield Index provider for a period of time or at all,
which may have an adverse impact on the Fund and its shareholders. Shareholders
should understand that any gains from the Short High Yield Index provider's
errors will be kept by the Fund and its shareholders and any losses or costs
resulting from the Short High Yield Index provider's errors will be borne by the
Fund and its shareholders. When the Short High Yield Index is rebalanced and the
Fund in turn rebalances its portfolio to attempt to increase the correlation
between the Fund’s portfolio and the Short High Yield Index, any transaction
costs and market exposure arising from such portfolio rebalancing will be borne
directly by the Fund and its shareholders. In addition, the Fund's use of a
representative sampling approach may cause the fund to not be as well correlated
with the return of the Short High Yield Index as would be the case if the Fund
purchased all of the securities in the Short High Yield Index in the proportions
in which they are represented in the Short High Yield Index. Apart from
scheduled rebalances, the Short High Yield Index provider or its agents may
carry out additional ad hoc rebalances to the Short High Yield Index. Therefore,
errors and additional ad hoc rebalances carried out by the Short High Yield
Index provider or its agents to the Short High Yield Index may increase the
costs to and the tracking error risk of the Fund. The Fund’s performance may
also deviate from the return of the Short High Yield Index due to certain
listing standards of the Fund's listing exchange (the “Exchange”) or legal
restrictions or limitations (such as diversification requirements). The Fund may
value certain of its investments, underlying securities and/or currencies,
and/or other assets based on fair value prices. When markets are volatile, the
ability to sell securities at fair value prices may be adversely impacted and
may result in additional trading costs and/or increase the index tracking risk.
For tax efficiency purposes, the Fund may sell certain securities, and such sale
may cause the Fund to realize a loss and deviate from the performance of the
Short High Yield Index. In addition, sale of securities may result in the
recognition of accrued market discount and/or net realized gains for tax
purposes, which may result in taxable distributions to shareholders. In light of
the factors discussed above, the Fund’s return may deviate significantly from
the return of the Short High Yield Index. Changes to the composition of the
Short High Yield Index in connection with a rebalancing or reconstitution of the
Short High Yield Index may cause the Fund to experience increased volatility,
during which time the Fund’s index tracking risk may be heightened.
The
Short High Yield Index will gradually increase exposure to securities based on
their weightings in the Final Short High Yield Index while proportionally
reducing exposure to certain component securities of the Prior Short High Yield
Index. These adjustments to the Fund's portfolio holdings are expected to
increase the Fund's transaction costs and turnover rate.
Tax
Risk.
There is no guarantee that the Fund’s income will be exempt from U.S. federal or
state income taxes. Events occurring after the date of issuance of a municipal
bond or after the 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 the 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.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end
funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Short High Yield Index, the Fund
generally would not sell a security because the security’s issuer was in
financial trouble. Additionally, unusual market conditions may cause the Short
High Yield Index provider to postpone a scheduled rebalance or reconstitution,
which could cause the Short High Yield Index to vary from its normal or expected
composition. Therefore, the Fund’s performance could be lower than funds that
may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid-ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Short High Yield Index concentrates in
a particular sector or sectors or industry or group of industries. To the extent
that the Fund is 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 those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows shows
how the Fund performed for the calendar years shown. The table below the bar
chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1, 2022, the Fund
sought to replicate as closely as possible, before fees and expenses, the price
and yield performance of the Prior Short High Yield Index. Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior Short High Yield Index. On December 1,
2022, the Fund is expected to begin tracking the Final Short High Yield Index.
All returns assume reinvestment of dividends and distributions. The
Fund’s past performance (before and after
taxes) is not necessarily indicative of how the Fund will perform in the
future. Updated performance information is available online at
www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
The
year-to-date total return as of
June 30, 2022 was
-8.73%.
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Best
Quarter: |
3.00% |
1Q 2019 |
Worst
Quarter: |
-5.03% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past
One Year |
Past
Five Years |
Since
Inception
(1/13/2014) |
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VanEck Short High Yield Muni ETF
(return before taxes)* |
3.92% |
4.17% |
3.12% |
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VanEck Short High Yield Muni ETF
(return after taxes on distributions) |
3.92% |
4.15% |
3.11% |
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VanEck Short High Yield Muni ETF
(return after taxes on distributions and sale of Fund
Shares) |
3.50% |
3.93% |
3.09% |
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Bloomberg
Municipal High Yield Short Duration Index
(reflects no deduction for
fees, expenses or taxes) |
4.98% |
5.43% |
4.72% |
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ICE 1-12 Year High Yield Crossover
Municipal Bond Transition Index (reflects no deduction for fees,
expenses or taxes)** |
— |
— |
— |
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ICE 1-12 Year Broad High Yield
Crossover Municipal Index (reflects no deduction for fees, expenses or
taxes)** |
— |
— |
— |
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Bloomberg US Aggregate Bond
Index (reflects no deduction for fees, expenses or
taxes) |
-1.54% |
3.57% |
3.26% |
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ICE
BofA Broad US Market Index1
(reflects no deduction for fees, expenses or
taxes) |
-1.58% |
3.63% |
3.33% |
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* Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Short High Yield Index. Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior Short High Yield Index.
**
The inception date of the
Short High Yield Index and the Final Short High Yield Index was December 11,
2021.
1
On September 1, 2022, the
ICE BofA Broad US Market Index replaced the Bloomberg US Aggregate Bond Index as
the Fund's broad-based benchmark index as the Adviser believes it is more
representative of broad bond market exposure.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Manager. The
following individual is primarily responsible for the day-to-day management of
the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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James
T. Colby III |
Portfolio
Manager |
January
2014 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck® Short Muni ETF (the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the ICE Short AMT-Free Broad National Municipal
Transition Index (the “Short Index”).
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.20 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.20 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least September 1,
2023.
EXPENSE EXAMPLE
This example is intended to help
you compare the cost of investing in the Fund with the cost of investing in
other funds. This example does not take into account brokerage commissions that
you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest $10,000
in the Fund for the time periods indicated and then sell or hold all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
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YEAR |
EXPENSES |
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1 |
$20 |
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3 |
$64 |
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5 |
$113 |
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10 |
$255 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
18% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund normally invests at least 80% of its total assets in fixed income
securities that comprise the Short Index. The Short Index is comprised of
publicly traded municipal bonds that cover the U.S. dollar denominated
short-term tax-exempt bond market. This 80% investment policy is non-fundamental
and may be changed without shareholder approval upon 60 days’ prior written
notice to shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Short Index. Unlike many investment companies
that try to “beat” the performance of a benchmark index, the Fund does not try
to
“beat” the Short Index and does not take temporary defensive positions that are
inconsistent with its investment objective of seeking to replicate the Short
Index. Because of the practical difficulties and expense of purchasing all of
the securities in the Short Index, the Fund does not purchase all of the
securities in the Short Index. Instead, the Adviser utilizes a “sampling”
methodology in seeking to achieve the Fund’s objective. As such, the Fund may
purchase a subset of the bonds in the Short Index in an effort to hold a
portfolio of bonds with generally the same risk and return characteristics of
the Short Index.
The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Short Index concentrates in an industry or group of industries. As of April
30, 2022, the Short Index had 16,461 component securities. The Short Index is
rebalanced on the last calendar day of the month.
Prior
to the selection of the Short Index, the Fund tracked the Bloomberg AMT-Free
Short Continuous Municipal Index (the “Prior Short Index”). The Fund began
tracking the Short Index on March 1, 2022. The Short Index is an interim index
that gradually increases exposure to securities based on their weightings in the
ICE Short AMT-Free Broad National Municipal Index (the “Final Short Index”)
while proportionally reducing exposure to certain component securities of the
Prior Short Index. The Fund is expected to begin tracking the Final Short Index
on December 1, 2022.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
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. 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. Municipal securities include
general obligation bonds, which 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. General obligation bonds generally are not
backed by revenues from a specific project or source. Municipal securities also
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. The market for municipal bonds may be less liquid than for
taxable bonds. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
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. For example, the COVID-19
pandemic has significantly stressed the financial resources of many municipal
issuers, which may impair a municipal issuer’s ability to meet its financial
obligations when due and could adversely impact the value of its bonds, which
could negatively impact the performance of the Fund.
Credit
Risk. Bonds
are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities with shorter durations. In response to the COVID-19 pandemic, as with
other serious economic disruptions, governmental authorities and regulators are
enacting significant fiscal and monetary policy changes, including providing
direct capital infusions into companies, creating new monetary programs and
lowering interest rates. These actions present heightened risks to debt
instruments, and such risks could increase if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
California
Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of New York. Consequently, the Fund may be affected
by political, economic, regulatory and other developments within New York and by
the financial condition of New York’s political subdivisions, agencies,
instrumentalities and public authorities.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Market
Risk.
The prices of the securities in the 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. 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. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the Short Index. As a result, an
adverse development respecting an issuer of securities held by the Fund could
result in a greater decline in net asset value (“NAV”) than would be the case if
the Fund held all of the securities in the Short Index. Conversely, a positive
development relating to an issuer of securities in the Short Index that is not
held by the Fund could cause the Fund to underperform the Short Index. To the
extent the assets in the Fund are smaller, these risks will be
greater.
Index
Tracking Risk.
The Fund’s return may not match the return of the Short Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Short Index and incurs costs associated with buying
and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Short Index or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units
(defined herein), which are not factored into the return of the Short Index.
Transaction costs, including brokerage costs, will decrease the Fund’s NAV to
the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the Short Index. Errors in the Short Index data, Short
Index computations and/or the construction of the Short Index in accordance with
its methodology may occur from time to time and may not be identified and
corrected by the Short Index provider for a period of time or at all, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Short Index provider's errors will be kept by
the Fund and its shareholders and any losses or costs resulting from the Short
Index provider's errors will be borne by the Fund and its shareholders. When the
Short Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the Short
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders. In
addition, the Fund's use of a representative sampling approach may cause the
fund to not be as well correlated with the return of the Short Index as would be
the case if the Fund purchased all of the securities in the Short Index in the
proportions in which they are represented in the Short Index. Apart from
scheduled rebalances, the Short Index provider or its agents may carry out
additional ad hoc rebalances to the Short Index. Therefore, errors and
additional ad hoc rebalances carried out by the Short Index provider or its
agents to the Short Index may increase the costs to and the tracking error risk
of the Fund. The Fund’s performance may also deviate from the return of the
Short Index due to certain listing standards of the Fund's listing exchange (the
“Exchange”) or legal restrictions or limitations (such as diversification
requirements). The Fund may value certain of its investments, underlying
securities and/or currencies, and/or other assets based on fair value prices.
When markets are volatile, the ability to sell securities at fair value prices
may be adversely impacted and may result in additional trading costs and/or
increase the index tracking risk. For tax efficiency purposes, the Fund may sell
certain securities, and such sale may cause the Fund to realize a loss and
deviate from the performance of the Short Index. In addition, sale of securities
may result in the recognition of accrued market discount and/or net realized
gains for tax purposes, which may result in taxable distributions to
shareholders. In light of the factors discussed above, the Fund’s return may
deviate significantly from the return of the Short Index. Changes to the
composition of the Short Index in connection with a rebalancing or
reconstitution of the Short Index may cause the Fund to experience increased
volatility, during which time the Fund’s index tracking risk may be
heightened.
The
Short Index will gradually increase exposure to securities based on their
weightings in the Final Short Index while proportionally reducing exposure to
certain component securities of the Prior Short Index. These adjustments to the
Fund's portfolio holdings are expected to increase the Fund's transaction costs
and turnover rate.
Tax
Risk.
There is no guarantee that the Fund’s income will be exempt from U.S. federal or
state income taxes. Events occurring after the date of issuance of a municipal
bond or after the 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 the 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.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Short Index, the Fund generally
would not sell a security because the security’s issuer was in financial
trouble. Additionally, unusual market conditions may cause the Short Index
provider to postpone a scheduled rebalance or reconstitution, which could cause
the Short Index to vary from its normal or expected composition. Therefore, the
Fund’s performance could be lower than funds that may actively shift their
portfolio assets to take advantage of market opportunities or to lessen the
impact of a market decline or a decline in the value of one or more
issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid-ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Short Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is 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 those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows shows
how the Fund performed for the calendar years shown. The table below the bar
chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1, 2022, the Fund
sought to replicate as closely as possible, before fees and expenses, the price
and yield performance of the Prior Short Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Short Index. On December 1, 2022, the Fund is expected
to begin
tracking the Final Short Index. All returns
assume reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
The
year-to-date total return as of
June 30, 2022 was
-4.30%.
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Best
Quarter: |
2.62% |
2Q 2020 |
Worst
Quarter: |
-1.78% |
4Q
2016 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past
One Year |
Past
Five Years |
Past
Ten Years |
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VanEck Short Muni ETF (return
before taxes)* |
0.25% |
2.12% |
1.50% |
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VanEck Short Muni ETF (return after
taxes on distributions) |
0.21% |
2.11% |
1.49% |
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VanEck Short Muni ETF (return after
taxes on distributions and sale of Fund Shares) |
0.67% |
1.96% |
1.46% |
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Bloomberg
AMT-Free Short Continuous Index
(reflects no deduction for
fees, expenses or taxes) |
0.35% |
2.51% |
1.95% |
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ICE
Short AMT-Free Broad National Municipal Transition Index
(reflects
no deduction for fees, expenses or
taxes)** |
— |
— |
— |
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ICE
Short AMT-Free Broad National Municipal Index
(reflects
no deduction for fees, expenses or
taxes)** |
— |
— |
— |
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Bloomberg US Aggregate Bond
Index (reflects no deduction for fees, expenses or
taxes) |
-1.54% |
3.57% |
2.90% |
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ICE
BofA Broad US Market Index1
(reflects
no deduction for fees, expenses or taxes) |
-1.58% |
3.63% |
2.97% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Short Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Short Index.
**
The inception date of the
Short Index and the Final Short Index was December 11,
2021.
1
On September 1, 2022, the ICE BofA Broad US Market Index replaced the Bloomberg
US Aggregate Bond Index as the Fund's broad-based benchmark index as the Adviser
believes it is more representative of broad bond market exposure.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Manager. The
following individual is primarily responsible for the day-to-day management of
the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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James
T. Colby III |
Portfolio
Manager |
February
2008 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of a Fund may only be purchased and sold in secondary market transactions
through a broker or dealer at a market price. Shares of the Funds are listed on
the Exchange, and because Shares trade at market prices rather than NAV, Shares
of the Funds may trade at a price greater than NAV (i.e.,
a “premium”) or less than NAV (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of a Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid/ask spread”).
Recent
information, including information about each Fund’s NAV, market price, premiums
and discounts, and bid/ask spreads, is included on the Fund’s website at
www.vaneck.com.
TAX
INFORMATION
The
Funds expect to distribute net investment income, if any, at least monthly, and
any net realized long-term or short-term capital gains annually. The Funds may
also pay a special distribution at any time to comply with U.S. federal tax
requirements.
Dividends
paid by the Funds that are properly reported as exempt-interest dividends will
not be subject to regular U.S. federal income tax. The Funds intend to invest
its assets in a manner such that a significant portion of their dividend
distributions to shareholders will generally be exempt from U.S. federal income
taxes, including the federal alternative minimum tax for noncorporate
shareholders. Such distributions will generally be subject to state income
taxes.
Distributions
from a Fund’s net investment income (other than net tax-exempt income),
including any net short-term capital gains, if any, are taxable to you as
ordinary income.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
PRINCIPAL
INVESTMENT STRATEGIES
(All
Funds except VanEck CEF Muni Income ETF, VanEck HIP Sustainable Muni ETF and
VanEck Muni Allocation ETF)
Each
Fund uses a sampling approach in seeking to achieve its investment objective.
Sampling means that the Adviser uses quantitative analysis to select a
representative sample of securities that the Adviser believes collectively have
an investment profile similar to a Fund’s Index. The Adviser seeks to select
securities that will have, in the aggregate, investment characteristics (based
on factors such as market capitalization and industry weightings), fundamental
characteristics (such as return variability, duration, maturity or credit
ratings and yield) and liquidity measures similar to those of a Fund’s Index.
The quantity of holdings in a Fund will be based on a number of factors,
including asset size of such Fund. The Adviser generally expects a Fund to hold
less than the total number of securities in its Index, but reserves the right to
hold as many securities as it believes necessary to achieve the Fund’s
investment objective. In addition, from time to time, securities are added to or
removed from the applicable Index. Each Fund may sell securities that are
represented in its Index, or purchase securities that are not yet represented in
its Index, in anticipation of their removal from or addition to such Index.
Further, the Adviser may choose to underweight or overweight securities,
purchase or sell securities not in an Index, or utilize various combinations of
other available investment techniques, in seeking to track a Fund’s
Index.
(VanEck
CEF Muni Income ETF only)
The
Adviser anticipates that, generally, VanEck CEF Muni Income ETF will hold or
gain exposure to all of the securities that comprise the CEFMX Index in
proportion to their weightings in the CEFMX Index. However, because of
limitations imposed by the 1940 Act regarding investments in other investment
companies, VanEck CEF Muni Income ETF may purchase a sample of securities in the
CEFMX Index. There also may be instances in which the Adviser may choose to
underweight or overweight a security in the CEFMX Index, purchase securities not
in the CEFMX Index that the Adviser believes are appropriate to substitute for
certain securities in the CEFMX Index or utilize various combinations of other
available investment techniques in seeking to replicate as closely as possible,
before fees and expenses, the price and yield performance of the CEFMX Index.
VanEck CEF Muni Income ETF may sell securities that are represented in the CEFMX
Index in anticipation of their removal from the CEFMX Index or purchase
securities not represented in the CEFMX Index in anticipation of their addition
to the CEFMX Index. VanEck CEF Muni Income ETF may also, in order to comply with
the tax diversification requirements of the Internal Revenue Code of 1986, as
amended ("Internal Revenue Code"), temporarily invest in securities not included
on the CEFMX Index that are expected to be highly correlated with the securities
included in the CEFMX Index.
(VanEck
HIP Sustainable Muni ETF only)
The
Fund normally invests at least 80% of its total assets in investments the income
from which is exempt from U.S. federal income tax (other than AMT). The Fund is
an actively managed exchange-traded fund (“ETF”) that seeks to achieve its
investment objective by investing, under normal circumstances, in investment
grade municipal debt securities that fund issuers with operations or projects
helping to promote progress towards sustainable development, in alignment with
the goals and metrics defined by the United Nations Sustainable Development
Goals (“SDGs”) 9, 11 and 12. The SDGs were adopted by the United Nations General
Assembly to achieve sustainable development for all, and the specific goals of
SDGs 9, 11 and 12 are as follows: SDG 9 is to "build resilient infrastructure,
promote inclusive and sustainable industrialization and foster innovation," SDG
11 is to "make cities and human settlements inclusive, safe, resilient and
sustainable" and SDG 12 is to "ensure sustainable consumption and production
patterns." The Fund normally invests at least 80% of its total assets in
securities that support sustainable development. The Adviser determines which
operations or projects of issuers it believes to be supportive of sustainable
development and that promote beneficial environmental and social outcomes in
U.S. communities and cities by utilizing the rules-based investment approach
described below. The Fund’s policy to normally invest at least 80% of its total
assets in securities that support sustainable development is non-fundamental and
may be changed without shareholder approval upon 60 days’ prior written notice
to shareholders.
The
Adviser primarily uses a rules-based investment approach which utilizes
proprietary HIP (Human Impact + Profit) Ratings data for the application of
impact criteria to security selection and portfolio management. HIP Ratings are
produced and licensed from HIP Investor, Inc. (“HIP” or the "Data Provider"),
which provides services to evaluate, rate and rank issuers and their securities
based on data-driven, quantitative performance measures that demonstrate
positive social, environmental and economic outcomes or mission accomplishment.
The Adviser’s investment process begins by using HIP Ratings to screen municipal
securities based on their SDGs 9, 11 and 12 ratings by HIP, Environmental,
Social and Governance (“ESG”) ratings by HIP and Climate-Threat and Resilience
ratings by HIP. HIP Ratings are only assigned to the municipal securities of
issuers where at least one qualified opportunity zone is located in the issuer’s
region. An “opportunity zone” is an economically-distressed community where new
investments, under certain conditions, may be eligible for preferential tax
treatment based on certification from the Internal Revenue Service. HIP, as the
Data Provider, analyzes multiple data points of municipal securities to
determine an estimate of the impact (i.e., net benefit to the community) each
municipal security provides. The HIP Ratings used by the Adviser seek to
evaluate the impact of municipal securities with respect to the goals and
metrics defined by SDGs 9, 11 and 12, climate resilience, and overall net
benefit to people, planet, and prosperity. These HIP Ratings are used by the
Adviser to narrow the universe of eligible Fund investments to municipal
securities that, based on the HIP Ratings, the Adviser believes have been issued
to fund operations or projects that support or advance sustainable development,
as well as promote positive social and
environmental
outcomes. Such municipal debt securities may include, but are not limited to,
bonds issued in connection with (i) new or revitalized infrastructure (i.e.
roads, bridges, tunnels, buildings, transportation of people and freight,
affordable and safe housing and redevelopment of urban areas (e.g. green
spaces), school or campus upgrades and Leadership in Energy and Environmental
Design ("LEED") qualified real estate); (ii) information and education systems
(i.e. schools, research, financial services, communication services and
technologies and information services); (iii) healthier communities (i.e.
hospitals, food and nutrition infrastructure, waste systems, air quality and
environmental management systems); (iv) cleaner energy (i.e. utilities, resource
and material use); (v) inclusive and sustainable industrialization towards
increased Gross Domestic Product ("GDP"); (vi) action and resilience planning
and projects to mitigate the effects of climate change and other natural
disasters and hazards; and (vii) ensuring sustainable consumption and production
patterns. The Adviser is not required to invest in any issuer rated by the Data
Provider and the Data Provider is not acting as a sub-adviser to the Fund.
Municipal
securities that the Fund may invest in include securities issued by U.S. states
and municipal governments, any of their political subdivisions, agencies, or
instrumentalities, or by U.S. territories and possessions, such as Guam, the
U.S. Virgin Islands, and Puerto Rico, and their political subdivisions and
public corporations. The Fund may invest a significant portion of its assets in
municipal obligations of issuers located in the States of California and New
York. The Fund does not expect to invest in non-investment grade (or “junk”)
securities. The Fund may invest in debt securities of any maturity or duration
and does not have a target maturity or duration. “Duration” is a measure of a
debt security’s price sensitivity to changes in interest rates. The longer the
duration of a debt security, the more sensitive its market price is to changes
in interest rates. The Fund seeks to reduce its exposure to credit risk by
diversifying its assets among many municipal issuers and among the different
types and maturities of municipal securities available.
The
Fund’s 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 AMT) may not be changed without shareholder approval. The Fund may count
investments that generate income subject to the AMT toward its 80% investment
policy. For purposes of this policy, the term “assets” means net assets plus the
amount of any borrowings for investment purposes. This percentage limitation
applies at the time of the investment.
(VanEck
Muni Allocation ETF only)
The
Fund normally invests at least 80% of its total assets in investments the income
from which is exempt from U.S. federal income tax (other than AMT). The Fund is
an actively managed exchange-traded fund (“ETF”) that seeks to achieve its
investment objective by investing, under normal circumstances, primarily in
VanEck ETFs that are registered under the applicable federal securities laws and
that invest in publicly traded municipal bonds that cover the U.S.
dollar-denominated investment grade and below investment grade (high yield or
"junk" bonds) tax-exempt bond market. While the Adviser currently anticipates
that the Fund will invest primarily in other VanEck ETFs, the Fund may also
invest in unaffiliated exchange-traded products ("ETPs"), which could include
ETFs and closed-end funds, that invest in municipal bonds. The Fund does not
have any limits on its investments in below investment grade securities ("junk"
bonds), and the Fund will have indirect exposure to below investment grade
securities through its investments in ETPs. The Fund’s 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 AMT) may not be changed without
shareholder approval. The Fund may count investments that generate income
subject to the AMT toward its 80% investment policy. For purposes of this
policy, the term “assets” means net assets plus the amount of any borrowings for
investment purposes. This percentage limitation applies at the time of the
investment.
The
Adviser primarily uses a proprietary, rules-based allocation model (the
“Municipal Allocation Model”), which considers various inputs to guide asset
allocation decisions and select ETPs that provide exposure to tax-exempt
investments and that the Adviser believes will offer enhanced risk-adjusted
returns. The term “risk-adjusted returns” does not imply that the Adviser
employs low-risk strategies or that an investment in the Fund should be
considered a low-risk or no risk investment. The Municipal Allocation Model uses
various indicators to generate allocation signals among tax-exempt investments.
These signals are used as inputs to determine ETP allocation and individual
portfolio weights.
The
Municipal Allocation Model utilizes various indicators to identify periods of
credit and duration risk. These indicators measure various risk metrics, which
include but are not limited to, market prices and trends, volatility (i.e., the
measure of historic and/or predicted future variation of returns for a given
security or market index), yield spreads (i.e., the difference between yields on
differing fixed income securities of varying maturities, credit ratings and
risk), and relative yield ratios (i.e., the yield on a security relative to the
yield on a benchmark security). The Adviser anticipates that the Municipal
Allocation Model will evolve over time and may incorporate additional indicators
and/or remove or modify existing indicators. Any such changes to the Municipal
Allocation Model would be made to, in the Adviser's opinion, assist the Fund in
achieving its investment objective.
The
Adviser allocates the Fund’s assets to those ETPs that it believes will have
returns that, in the aggregate, closely correlate (before fees and expenses) to
the returns of the Municipal Allocation Model. The Municipal Allocation Model
typically adjusts its allocation signals on a monthly basis, and the Adviser may
adjust the Fund's portfolio allocation as needed in response to such changes in
the Municipal Allocation Model. The Fund may engage in active and frequent
trading of portfolio securities.
A
portion of the Fund's assets may be held in cash or cash equivalents including,
but not limited to, money market instruments, US. Treasury bills, treasury
inflation-protected securities, interests in short-term investments funds or
shares of money market or short-term bond funds. The Adviser currently
anticipates investing in 1- to 3-month U.S. Treasury Bills when a portion of the
Fund's assets are allocated to cash or cash equivalents.
FUNDAMENTAL
AND NON-FUNDAMENTAL POLICIES
Each
Fund’s investment objective and each of its other investment policies are
non-fundamental policies that may be changed by the Board of Trustees of the
Trust (the "Board of Trustees") without shareholder approval, except as noted in
this Prospectus or the Statement of Additional Information (“SAI”) under the
section entitled “Investment Policies and Restrictions—Investment
Restrictions.”
RISKS
OF INVESTING IN THE FUNDS
The
following section provides additional information regarding the principal risks
identified under “Principal Risks of Investing in the Fund” in each Fund’s
“Summary Information” section followed by additional risk information. The risks
listed below are applicable to each Fund unless otherwise noted.
Investors
in a Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
a Fund involves a substantial degree of risk. An investment in a Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in a Fund, each of which
could significantly and adversely affect the value of an investment in a
Fund.
Credit
Risk.
Debt securities, such as bonds are subject to credit risk. Credit risk refers to
the possibility that the issuer or guarantor of a security will be unable and/or
unwilling to make timely interest payments and/or repay the principal on its
debt or to otherwise honor its obligations and/or default completely. Debt
securities are subject to varying degrees of credit risk, depending on the
issuer’s financial condition and on the terms of the securities, which may be
reflected in credit ratings. There is a possibility that the credit rating of a
debt security may be downgraded after purchase or the perception of an issuer’s
credit worthiness may decline, which may adversely affect the value of the
security. Lower credit quality may also affect liquidity and make it difficult
for a Fund to sell the security.
Interest
Rate Risk.
Debt securities, such as bonds, are subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. Many factors
can cause interest rates to rise, including central bank monetary policy, rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the risks associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities, such as bonds with longer durations
tend to be more sensitive to interest rate changes, usually making them more
volatile than debt securities with shorter durations. To the extent the Fund
invests a substantial portion of its assets in debt securities with longer term
maturities, rising interest rates may cause the value of the Fund’s investments
to decline significantly.
In
addition, in response to the COVID-19 pandemic, as with other serious economic
disruptions, governmental authorities and regulators are enacting significant
fiscal and monetary policy changes, including providing direct capital infusions
into companies, creating new monetary programs and lowering interest rates.
These actions present heightened risks to debt instruments, and such risks could
be even further heightened if these actions are unexpectedly or suddenly
reversed or are ineffective in achieving their desired outcomes.
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 an issuer could have a significant effect on the
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. These actions
present heightened risks to debt instruments, and such risks could be even
further heightened if these actions are unexpectedly or suddenly reversed or are
ineffective in achieving their desired outcomes. 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. For example, the COVID-19 pandemic has
significantly stressed the financial resources of many municipal issuers, which
may impair a municipal issuer’s ability to meet its financial obligations when
due and could adversely impact the value of its bonds, which could negatively
impact the performance of the Funds.
Municipal
securities can be significantly affected by political changes as well as
uncertainties in the municipal market related to 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. Municipal securities include
general obligation bonds, which 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. General obligation bonds generally
are
not backed by revenues from a specific project or source. Municipal securities
also 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.
If
the Internal Revenue Service (“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 information available on the financial condition of issuers of
municipal securities than for public corporations. 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. 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.
High
Yield Securities Risk.
(VanEck CEF Muni Income ETF, VanEck High Yield Muni ETF and
VanEck Short High Yield Muni ETF only.) Securities rated below investment grade
are commonly referred to as high yield securities or “junk bonds.” High yield
securities are often issued by issuers that are restructuring, are smaller or
less creditworthy than other issuers, or are more highly indebted than other
issuers. High yield securities are subject to greater risk of loss of income and
principal than higher rated securities and are considered speculative. The
prices of high yield securities are likely to be more sensitive to adverse
economic changes or individual issuer developments than higher rated securities.
During an economic downturn or substantial period of rising interest rates, high
yield security issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet their projected business goals or to obtain additional
financing. In the event of a default, a Fund may incur additional expenses to
seek recovery. The secondary market for municipal securities that are high yield
securities may be less liquid than the markets for higher quality municipal
securities or high yield securities issued by corporate issuers and, as such,
may have an adverse effect on the market prices of and an underlying Fund’s
ability to arrive at a fair value for certain securities. The illiquidity of the
market also could make it difficult for a Fund to sell certain securities in
connection with a rebalancing of its respective Index. In addition, periods of
economic uncertainty and change may result in an increased volatility of market
prices of high yield securities and corresponding volatility in a Fund's
NAV.
Fund
of Funds Risk.
(VanEck CEF Muni Income ETF and VanEck Muni Allocation ETF only.) The
performance of a Fund is dependent on the performance of an Underlying Fund. A
Fund will be subject to the risks of an Underlying Fund’s investments. A Fund
will pay indirectly a proportional share of the fees and expenses of an
Underlying Fund in which it invests, including their investment advisory and
administration fees, while continuing to pay its own management fee. As a
result, a Fund’s shareholders will indirectly bear the expenses of an Underlying
Fund, absorbing duplicative levels of fees with respect to investments in an
Underlying Fund. In addition, at times certain segments of the market
represented by an Underlying Fund may be out of favor and underperform other
segments.
Risks
of Investing in Closed-End Funds.
(VanEck CEF Muni Income ETF only.) The shares of a closed-end fund may trade at
a discount or premium to its NAV. Certain closed-end funds traded on exchanges
may be thinly traded and experience large spreads between the “ask” price quoted
by a seller and the “bid” price offered by a buyer. A closed-end fund may be
leveraged as part of its investment strategy. As a result, the Fund may be
indirectly exposed to the effects of leverage through its investment in an
Underlying Fund. Investments in Underlying Funds that use leverage may cause the
value of the Fund’s Shares to be more volatile than if the Fund invested in
Underlying Funds that do not utilize leverage and may expose the Fund to the
possibility that the Fund’s long-term returns on such securities (and,
indirectly, the long-term returns on the Shares) will be diminished. To comply
with provisions of the 1940 Act, on any matter upon which the Underlying Fund
shareholders are solicited to vote, the Adviser will vote Underlying Fund shares
held by the Fund in the same general proportion as shares held by other
shareholders of an Underlying Fund. In addition, to the extent that a closed-end
fund persistently trades at a significant discount to NAV, it may become the
target of activist shareholders seeking to narrow the discount, which may
increase the expenses of such fund.
Risk
of ETPs.
(VanEck Muni Allocation ETF only.) The Fund may be subject to the following
risks as a result of its investments in ETPs:
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. Certain municipalities may have difficulty
meeting their obligations due to, among other reasons, changes in underlying
demographics. 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. For
example, the COVID-19 pandemic has significantly stressed the financial
resources of many
municipal
issuers, which may impair a municipal issuer’s ability to meet its financial
obligations when due and could adversely impact the value of its bonds, which
could negatively impact the performance of the Fund.
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 securities include general obligation bonds, which 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. General obligation bonds generally are not backed by revenues from a
specific project or source.
Municipal
securities also 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. The market for
municipal bonds may be less liquid than for taxable bonds. The value and
liquidity of many municipal securities have decreased as a result of the past
financial crises, which has also adversely affected many municipal securities
issuers and may continue to do so. There may be less information available on
the financial condition of issuers of municipal securities than for public
corporations.
Credit
Risk.
Debt securities are subject to credit risk. Credit risk refers to the
possibility that the issuer or guarantor of a security will be unable and/or
unwilling to make timely interest payments and/or repay the principal on its
debt or to otherwise honor its obligations and/or default completely on
securities. Debt securities are subject to varying degrees of credit risk,
depending on the issuer’s financial condition and on the terms of the
securities, which may be reflected in credit ratings. There is a possibility
that the credit rating of a debt security may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, an ETP may incur
additional expenses to seek recovery. The secondary market for securities that
are high yield securities may be less liquid than the markets for higher quality
securities and high yield securities issued by non-corporate issuers may be less
liquid than high yield securities issued by corporate issuers, which, in either
instance, may have an adverse effect on the market prices of and an ETP’s
ability to arrive at a fair value for certain securities. The illiquidity of the
market also could make it difficult for an ETP to sell certain securities in
connection with a rebalancing of its index, if applicable. In addition, periods
of economic uncertainty and change may result in an increased volatility of
market prices of high yield securities and a corresponding volatility in an
ETP’s NAV. In addition, adverse publicity and investor perceptions may decrease
the values and liquidity of high yield securities.
Tax
Risk. There
is no guarantee that an ETP’s income will be exempt from U.S. federal or state
income taxes. Events occurring after the date of issuance of a municipal bond or
after the ETP’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 the ETP 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.
Additionally,
tax reform legislation commonly known as the Tax Cuts and Jobs Act (the “Act”)
was enacted on December 22, 2017 which contained certain provisions that may
affect ETPs in which the Fund invests. Under prior law, the tax-exemption for
interest from state and local bonds generally applied to refunded bonds with
certain limitations on advance refunding bonds. Advance refunding bonds are
bonds that are issued more than 90 days before the redemption of the refunded
bond. Under the Act, interest income from advance refunding bonds will now be
considered to be taxable interest income for any advance refundings that occur
after December 31, 2017. Additionally, the applicability of certain provisions
of the Act remain unclear as legislative and / or interpretive guidance has not
yet been issued by Treasury and the IRS. These provisions could lead to an
increase in taxable income distributed to shareholders of the ETPs which would
in turn, lead to higher taxable distributions by the Fund.
Interest
Rate Risk.
Debt securities, such as bonds, are also subject to interest rate risk. Interest
rate risk refers to fluctuations in the value of a security resulting from
changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities go down. When the
general level of interest rates goes down, the prices of most debt securities go
up. Many factors can cause interest rates to rise, including central bank
monetary policy, rising inflation rates and general economic conditions. A low
interest rate environment increases the risk associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions.
Measures
taken by the Federal Reserve Board may affect the money supply and as a result
of these measures, an ETF may face a heightened interest rate risk.
In
addition, debt securities with longer durations tend to be more sensitive to
interest rate changes, usually making them more volatile than debt securities
with shorter durations. To the extent an ETP invests a substantial portion of
its assets in debt securities with longer-term maturities, rising interest rates
may cause the value of an ETP’s investments to decline significantly.
In
addition, in response to the COVID-19 pandemic, as with other serious economic
disruptions, governmental authorities and regulators are enacting significant
fiscal and monetary policy changes, including providing direct capital infusions
into companies, creating new monetary programs and lowering interest rates
considerably. These actions present heightened risks to debt instruments, and
such risks could be even further heightened if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
An ETP may invest in callable debt securities. If interest rates fall, it is
possible that issuers of callable securities will “call” (or prepay) their debt
securities before their maturity date. If a call were exercised by the issuer
during or following a period of declining interest rates, the ETP is likely to
have to replace such called security with a lower yielding security or
securities with greater risks or other less favorable features. If that were to
happen, it would decrease the ETP’s net investment income. An ETP also may fail
to recover additional amounts (i.e., premiums) paid for securities with higher
interest rates, resulting in an unexpected capital loss.
State
Concentration Risk.
Certain of the ETPs may invest a significant portion of its assets in municipal
obligations of issuers located in a particular state or states. Consequently,
the Fund may be affected by political, economic, regulatory and other
developments within the state or states and by the financial condition of the
state's or states' political subdivisions, agencies, instrumentalities and
public authorities.
Concentration
Risk.
Certain of the ETPs may be concentrated in a particular sector or sectors or
industry or group of industries. To the extent that an ETP is concentrated in a
particular sector or sectors or industry or group of industries, the ETP will be
subject to the risk that economic, political or other conditions that have a
negative effect on those sectors and/or industry or groups of industries may
negatively impact the ETP to a greater extent than if the ETP’s assets were
invested in a wider variety of sectors or industries.
Risk
of Investment Restrictions.
(VanEck CEF Muni Income ETF only.) The Fund and its affiliates are limited in
the amount that they, in the aggregate, can invest in the outstanding voting
securities of any one Underlying Fund. The Fund and its affiliates may not
acquire “control” of an unaffiliated Underlying Fund, which is presumed once
ownership of an Underlying Fund’s outstanding voting securities exceeds 25%.
This limitation could inhibit the Fund’s ability to purchase one or more
Underlying Funds in the CEFMX Index in the proportions represented in the CEFMX
Index. In these circumstances, the Fund would be required to use sampling
techniques, which could increase the risk of tracking error.
Sampling
Risk.
(All Funds except VanEck CEF Muni Income ETF.) A Fund’s use of a representative
sampling approach will result in its holding a smaller number of securities than
are in its respective Index. As a result, an adverse development respecting an
issuer of securities held by a Fund could result in a greater decline in NAV
than would be the case if the Fund held all of the securities in its respective
Index. Conversely, a positive development relating to an issuer of securities in
an Index that is not held by the Fund could cause the Fund to underperform its
respective Index. To the extent the assets in a Fund are smaller, these risks
will be greater.
Private
Activity Bonds Risk.
(VanEck High Yield Muni ETF and VanEck Short High Yield Muni
ETF only.) A Fund will be sensitive to, and its performance will depend to a
greater extent on, the overall condition and performance of private activity
bonds. The issuers of private activity bonds in which the Fund may invest may be
negatively impacted by conditions affecting either the general credit of the
user of the private activity project or the project itself. Conditions such as
regulatory and environmental restrictions and economic downturns may lower the
need for these facilities and the ability of users of the project to pay for the
facilities. This could cause a decline in the Fund’s value. The Fund’s private
activity bond holdings also may pay interest subject to the alternative minimum
tax.
Call
Risk.
Each Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, a Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease a
Fund’s net investment income. A Fund
also
may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Operational
Risk.
Each Fund is exposed to operational risk arising from a number of factors,
including but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or system failures.
Market
Risk.
The prices of the securities in the Funds 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. 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. Overall securities
values could decline generally or could underperform other investments. An
investment in the Funds may lose money.
VanEck High Yield Muni ETF, VanEck HIP Sustainable Muni ETF,
VanEck Intermediate Muni ETF, VanEck Long Muni ETF, VanEck Short High Yield Muni
ETF, VanEck Short Muni ETF and the Underlying Funds, with respect to VanEck CEF
Muni Income ETF and VanEck Muni Allocation ETF, may invest in bonds from the
following industries/sectors:
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
substate) 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 will 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; (h) increases in operating costs; and (i) 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 and the ability of the facility to provide the services
required, physicians’ confidence in the facility, management capabilities,
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. Hospitals and other health care facilities are
additionally subject to claims and legal actions by patients and others in the
ordinary course of business. There can be no assurance that a claim will not
exceed the insurance coverage of a health care facility or that insurance
coverage will be available to a facility.
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.
These revenue bonds are 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.
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, the Fund might not recover the full principal amount of the
obligation.
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 the 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 bonds are obligations of issuers that own and operate public
transit systems, ports, highways, turnpikes, bridges and other transportation
systems. The ability of these issuers to make payments on these bonds depends on
variations in use, the degree of government subsidization, competition from
other forms of transportation and increased costs. Port authorities derive
revenues primarily from fees imposed on ships using the port facilities. These
fees can fluctuate depending on the local economy and competition from air, rail
and truck transportation. Transportation bonds 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.
California
Risk.
(VanEck High Yield Muni ETF, VanEck HIP Sustainable Muni
ETF, VanEck Intermediate Muni ETF, VanEck Long Muni ETF and VanEck Short Muni
ETF only.) Each Fund may invest a significant portion of its assets in municipal
obligations of issuers located in the State of California. Consequently, the
Funds may be affected by political, economic, regulatory and other developments
within California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities. The following
is a summary of certain factors affecting the State’s current financial
situation that could, in turn, adversely affect the Funds’ investments in
California municipal obligations.
Provisions
of the California Constitution and State statutes limit the taxing and spending
authority of California governmental entities. Payments of certain municipal
obligations may also be structurally subordinated to other obligations as a
matter of California law. These provisions may impair the ability of California
issuers to pay principal and/or interest on their obligations and the ability of
the State and municipalities to address financial downturns, including
limitations on the ability of the State or municipalities to raise taxes, fees
or charges without voter approval. In addition, California has in the past
experienced financial and economic difficulties, which heightened the risks
associated with investing in bonds issued by the State of California and its
political subdivisions, agencies, instrumentalities and public authorities.
Risks that threaten the State’s fiscal condition include the significant
unfunded liabilities of the State’s two main retirement systems. California has
committed to significant increases in annual payments to these systems to reduce
the unfunded liabilities, and California also has significant unfunded liability
with respect to other post-employment benefits. Moreover, many local government
agencies may face budget constraints due to mandated expenditures for health,
welfare and public safety, as well as the adverse impact local economic
conditions have had on property taxes and sales taxes, two major sources of
revenue for local government. In particular, there is an increased risk that
payments to bondholders could be interrupted or that an issuer could default on
its obligations. A default or credit rating downgrade of a small number of
California municipal security issuers could negatively impact the market values
and marketability of all California municipal securities held by each Fund.
California’s
economy is broad, it does have major concentrations in high technology, trade,
entertainment, manufacturing, agriculture, government, tourism, construction and
services and may be sensitive to economic problems affecting those industries.
In addition, future California political and economic developments,
constitutional amendments, legislative measures, executive orders,
administrative regulations, litigation and voter initiatives could negatively
impact California’s economy. Such developments could adversely affect each
Fund’s income, NAV, liquidity and/or ability to preserve or realize appreciation
of capital. Furthermore, investments in California municipal securities may be
affected by natural disasters, such as earthquakes or wildfires, which could
impair an issuer's ability to pay principal and/or interest on its
obligations.
Other
risks affecting issuers of California municipal securities include, but are not
limited to, the ongoing and evolving economic and health-related impacts of the
COVID-19 pandemic on the national, State and local economies; the impact of
federal tax law changes; the impact of international events on consumer
confidence, oil supplies and oil prices; shifts in monetary policy affecting
interest rates and the financial markets; the magnitude of pension and
post-retirement health care commitments, and the impact on the funding of such
benefits of lower-than-expected returns; the impact of consumer spending on tax
collections; increased demand for entitlement-based and claims-based programs
such as Medicaid, public assistance and general public health; access to the
capital markets in light of disruptions in the market; litigation against the
State; and actions taken by the federal government, including audits,
disallowances, changes in aid levels, and changes to Medicaid
rules.
New
York Risk.
(VanEck HIP Sustainable Muni ETF, VanEck Intermediate Muni ETF, VanEck Long Muni
ETF, VanEck Short High Yield Muni ETF and VanEck Short Muni ETF only). Each Fund
may invest a significant portion of its assets in New York municipal bonds.
Consequently, each Fund may be affected by political, economic, regulatory or
other developments within the State of New York, and by the financial condition
of its public authorities and political subdivisions. Unfavorable developments
in any economic sector may have a substantial impact on the overall New York
municipal market. As the nation’s financial capital, New York’s and New York
City’s economy is heavily dependent on the financial sector and may be sensitive
to economic problems affecting the sector. New York and New York City also face
a particularly large degree of uncertainty from interest rate risk and equity
market volatility. The New York and New York City economy tends to be more
sensitive to monetary policy actions and to movements in the national and world
economies than the economies of other states. The economies of New York State
and New York City are diversified across the finance, insurance, real estate,
entertainment and services sectors. Any downturn in these sectors or related
industries may adversely affect the economy of the state. Certain issuers of New
York municipal bonds have experienced serious financial difficulties in the past
and reoccurrence of these difficulties may impair the
ability
of certain New York issuers to pay principal or interest on their obligations.
The economic, financial and social impact from the COVID-19 pandemic has been
unprecedented—and New York State was the epicenter of the initial wave; however,
the state's general obligation ratings have remained strong. Climate change
remains a long term threat to New York State. These threats include rising sea
levels, more severe coastal flooding, more intense storms, and greenhouse gas
emissions.
Illinois
Risk.
(VanEck High Yield Muni ETF and VanEck Short High Yield Muni
ETF only.) Each Fund may invest a significant portion of its assets in Illinois
municipal bonds. Consequently, the Funds may be affected by negative political,
economic, regulatory or other developments within the State of Illinois
including the financial condition of its public authorities and political
subdivisions.
Unfavorable
developments in any economic sector may have a substantial impact on the overall
Illinois municipal market. Illinois has experienced significant budgetary
challenges in recent years. Certain issuers of Illinois municipal bonds have
experienced serious financial difficulties in the past and reoccurrence of these
difficulties may impair the ability of certain Illinois issuers to pay principal
or interest on their obligations. In 2017, Illinois narrowly avoided becoming
the first state to be issued a “junk” credit rating after it passed its first
budget in more than two years. However, the state’s recent budget stalemate
could still trigger a credit downgrade from one of the other major ratings
companies. Any future failures to pass a budget could have an adverse impact on
the state’s ability to pay outstanding debt obligations, including with respect
to debt owned by a Fund.
In
addition, Illinois has been materially adversely impacted by the health-related
and economic impacts of the COVID-19 pandemic. Illinois has also faced
increasing levels of debt in recent years. There is no assurance that Illinois
can maintain its credit ratings for any given period of time. A downward
revision or withdrawal of any such rating may have an adverse effect on the
market prices of the securities issued by Illinois, which would in turn
negatively impact the performance of a Fund.
Texas
Risk. (VanEck
Long Muni ETF only.) Each Fund may invest a significant portion of its assets in
Texas municipal bonds. Consequently, the Funds may be affected by negative
political, economic, regulatory or other developments within the State of Texas
including the financial condition of its public authorities and political
subdivisions.
Index
Tracking Risk.
(All Funds except VanEck HIP Sustainable Muni ETF and VanEck Muni Allocation
ETF.) Each Fund’s return may not match the return of its Index for a number of
reasons. For example, a Fund incurs a number of operating expenses, including
taxes, not applicable to its Index and incurs costs associated with buying and
selling securities, especially when rebalancing the Fund’s securities holdings
to reflect changes in the composition of its Index or (to the extent the Fund
effects creations and redemptions for cash) raising cash to meet redemptions or
deploying cash in connection with newly created Creation Units (defined herein),
which are not factored into the return of its Index. Transaction costs,
including brokerage costs, will decrease the Fund’s NAV to the extent not offset
by the transaction fee payable by an AP. Market disruptions and regulatory
restrictions could have an adverse effect on a Fund’s ability to adjust its
exposure to the required levels in order to track its respective Index. There is
no assurance that a Fund’s Index Provider (defined herein) or any agents that
may act on its behalf will compile the Fund’s Index accurately, or that an Index
will be determined, composed or calculated accurately. Errors in respect of the
quality, accuracy and completeness of the data used to compile an Index may
occur from time to time and may not be identified and corrected by the
applicable Index Provider for a period of time or at all, particularly where the
indices are less commonly used as benchmarks by funds or managers. Therefore,
gains, losses or costs associated with errors of an Index Provider or its agents
will generally be borne by the applicable Fund and its shareholders. Apart from
scheduled rebalances, the Index Providers or their agents may carry out
additional ad hoc rebalances to a Fund's Index. Therefore, errors and additional
ad hoc rebalances carried out by the Index Providers or their agents to a
respective Index may increase the costs to and the tracking error risk of the
Funds. When a Fund’s Index is rebalanced and the Fund in turn rebalances its
portfolio to attempt to increase the correlation between the Fund’s portfolio
and its respective Index, any transaction costs and market exposure arising from
such portfolio rebalancing will be borne directly by the applicable Fund and its
shareholders. For example, during a period where a Fund’s Index contains
incorrect constituents, the Fund would have market exposure to such constituents
and would be underexposed to the Index’s other constituents. Such errors may
negatively or positively impact a Fund and its shareholders. Any gains due to an
Index Provider’s or others’ errors will be kept by a Fund and its shareholders
and any losses resulting from an Index Provider’s or others’ errors will be
borne by a Fund and its shareholders. In addition, a Fund’s use of a
representative sampling approach may cause the Fund’s returns to not be as well
correlated with the return of its Index as would be the case if the Fund
purchased all of the securities in its Index in the proportions represented in
such Index and can be expected to result in greater tracking error than if the
Fund used a replication indexing strategy.
Each
Fund may not be fully invested at times as a result of reserves of cash held by
the Fund to pay expenses. In addition, a Fund may not be able to invest in
certain securities included in its Index, or invest in them in the exact
proportions in which they are represented in its Index, due to legal
restrictions or limitations imposed by the governments of certain countries, the
Exchange listing requirements, a lack of liquidity on stock exchanges in which
such securities trade, potential adverse tax consequences or other regulatory
reasons (such as diversification requirements). Moreover, a Fund may be delayed
in purchasing or selling securities included in its Index. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. Any issues a Fund encounters with regard to currency
convertibility (including the cost of borrowing funds, if any) and repatriation
may also increase the Index tracking
risk.
For tax efficiency purposes, a Fund may sell certain securities, and such sale
may cause the Fund to realize a loss and deviate from the performance of its
Index.
Certain
Funds are expected to fair value certain of the securities they hold. To the
extent a Fund calculates its NAV based on fair value prices or on the prices
that differ from those used in calculating a Fund’s respective Index, the Fund’s
ability to track its Index may be adversely affected. The need to comply with
the tax diversification and other requirements of the Internal Revenue Code may
also impact the Fund’s ability to replicate the performance of its Index. In
addition, if a Fund utilizes depositary receipts and other derivative
instruments, its return may not correlate as well with the return of its Index
as would be the case if the Fund purchased all the securities in its Index
directly. Actions taken in response to proposed corporate actions could result
in increased tracking error. In light of the factors discussed above, each
Fund’s return may deviate significantly from the return of its index. Index
tracking risk may be heightened during times of increased market volatility or
other unusual market conditions. Changes to the composition of a Fund’s Index in
connection with a rebalancing or reconstitution of the Index may cause the Fund
to experience increased volatility, during which time the Fund’s index tracking
risk may be heightened. In addition, sale of securities may result in the
recognition of accrued market discount and/or net realized gains for tax
purposes, which may result in taxable distributions to
shareholders.
Each
Fund's Index will gradually increase exposure to securities based on their
weightings in the Fund's final index while proportionally reducing exposure to
certain component securities of the Fund's prior index. These adjustments to a
Fund's portfolio holdings are expected to increase the Fund's transaction costs
and turnover rate.
Active
Management Risk.
(VanEck HIP Sustainable Muni ETF and VanEck Muni Allocation ETF only.) The Funds
are subject to management risk because they are actively managed ETFs. In
managing the Funds portfolios, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Funds, but there can be no
guarantee that these will produce the desired results.
Passive
Management Risk.
(All Funds except VanEck HIP Sustainable Muni ETF and VanEck Muni Allocation
ETF.) Unlike many investment companies, the Funds are not “actively” managed.
Therefore, unless a specific security is removed from a Fund’s respective Index,
a Fund generally would not sell a security because the security’s issuer is in
financial trouble. If a specific security is removed from a Fund’s respective
Index, a Fund may be forced to sell such security at an inopportune time or for
prices other than at current market values. An investment in the Funds involves
risks similar to those of investing in any Fund that invests in bonds, such as
market fluctuations caused by such factors as economic and political
developments, changes in interest rates and perceived trends in security prices.
A Fund’s respective Index may not contain the appropriate or a diversified mix
of securities for any particular economic cycle. The timing of changes in the
securities of a Fund’s portfolio in seeking to replicate its Index could have a
negative effect on the Fund. Unlike with an actively managed fund, the Adviser
does not use techniques or defensive strategies designed to lessen the effects
of market volatility or to reduce the impact of periods of market decline.
Additionally, unusual market conditions may cause a Fund’s Index Provider to
postpone a scheduled rebalance or reconstitution, which could cause a Fund’s
Index to vary from its normal or expected composition. This means that, based on
market and economic conditions, a Fund’s performance could be lower than funds
that may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Tax
Risk.
There is no guarantee that a Fund’s income will be exempt from U.S. 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.
Liquidity
Risk.
(VanEck CEF Muni Income ETF only.) Unlike the Fund, as closed-end funds the
Underlying Funds are not limited in their ability to invest in illiquid
securities. Securities with reduced liquidity involve greater risk than
securities with more liquid markets. Prices of securities not traded on an
exchange may vary over time. Secondary trading of a fixed-income security may
decline for a period of time if its credit quality unexpectedly declines. An
Underlying Fund may not receive full value for assets sold during periods of
infrequent trading.
Anti-Takeover
Measures Risk.
(VanEck CEF Muni Income ETF only.) Certain Underlying Funds may have provisions
in their organizational documents intended to limit the ability of third parties
to acquire control or change the composition of the Underlying Fund’s board.
This may discourage a third party from seeking to obtain control of the
Underlying Fund, which could limit the ability of Underlying Fund shareholders
to sell their shares at a premium over prevailing market prices.
Leverage
Risk.
(VanEck CEF Muni Income ETF only.) Ordinary borrowings by an Underlying Fund or
an Underlying Fund’s investment in derivatives may result in leverage. If the
prices of those investments decrease, or if the cost of borrowing exceeds any
increase in the prices of investments made with the proceeds of the borrowing,
the NAV of the Underlying Fund’s shares will decrease more than if the
Underlying Fund had not used leverage. An Underlying Fund may have to sell
investments at a time and at a price that is unfavorable to the Underlying Fund
to repay borrowings. Interest on borrowings is an expense the Underlying Fund
would not otherwise incur. Leverage magnifies the potential for gain and the
risk of loss. If an Underlying Fund uses leverage,
there
can be no assurance that the Underlying Fund’s leverage strategy will be
successful. Furthermore, the Underlying Funds may pay a management fee to their
advisers based on a percentage of “managed assets.” Managed assets for this
purpose can include the proceeds realized and managed from the Underlying Fund’s
use of leverage. Accordingly, the fact that a decision to increase an Underlying
Fund’s leverage will have the effect, all other things being equal, of
increasing managed assets and therefore the management fee means that an
Underlying Fund’s adviser may have a conflict of interest in determining whether
to use or increase leverage with respect to its management of the Underlying
Fund’s portfolio.
High
Portfolio Turnover Risk.
(VanEck Muni Allocation ETF only.) The Fund may engage in active and frequent
trading of its portfolio securities. High portfolio turnover may result in
increased transaction costs to the Fund, including brokerage commissions, dealer
mark-ups and other transaction costs on the sale of the securities and on
reinvestment in other securities. High portfolio turnover may also result in
higher taxes when Fund Shares are held in a taxable account.
Model
and Data Risk.
(VanEck Muni Allocation ETF only.) Given the complexity of the investments and
strategies of the Fund, the Adviser relies heavily on quantitative models and
information and data (“Models and Data”). Models and Data are used to construct
sets of transactions and investments, and to provide risk management insights.
When Models and Data prove to be incorrect or incomplete, any decisions made in
reliance thereon expose the Fund to potential risks. Some of the models used by
the Adviser for the Fund are predictive in nature. The use of predictive models
has inherent risks. Because predictive models are usually constructed based on
historical data, the success of relying on such models may depend heavily on the
accuracy and reliability of the supplied historical data. All models rely on
correct market data inputs. If incorrect market data is entered into even a
well-founded model, the resulting information will be incorrect. However, even
if market data is input correctly, “model prices” will often differ
substantially from market prices, especially for instruments with complex
characteristics, such as derivative instruments.
Authorized
Participant (“AP”) Concentration Risk.
A Fund may have a limited number of financial institutions that act as APs, none
of which are obligated to engage in creation and/or redemption transactions. To
the extent that those APs exit the business, or are unable to or choose not to
process creation and/or redemption orders, and no other AP is able to step
forward to create and redeem, there may be a significantly diminished trading
market for Shares or Shares may trade like closed-end funds at a greater
discount (or premium) to NAV and possibly face trading halts and/or de-listing.
The AP concentration risk may be heightened in scenarios where APs have limited
or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market. While
Shares are listed on the Exchange there can be no assurance that an active
trading market for the Shares will be maintained. Further, secondary markets may
be subject to irregular trading activity, wide bid/ask spreads and extended
trade settlement periods in times of market stress because market makers and APs
may step away from making a market in the Shares and in executing creation and
redemption orders, which could cause a material deviation in a Fund’s market
price from its NAV. Van Eck Securities Corporation, the distributor of the
Shares (the “Distributor”), does not maintain a secondary market in the Shares.
Investors purchasing and selling Shares in the secondary market may not
experience investment results consistent with those experienced by those APs
creating and redeeming directly with a Fund.
Decisions
by market makers or APs to reduce their role or “step away” from these
activities in times of market stress could inhibit the effectiveness of the
arbitrage process in maintaining the relationship between the underlying value
of a Fund’s portfolio securities and the Fund’s market price. This reduced
effectiveness could result in Fund Shares trading price which differs materially
from NAV and also in greater than normal intraday bid/ask spreads for Fund
Shares.
Trading
Issues. Trading
in Shares on the Exchange may be halted due to market conditions or for reasons
that, in the view of the Exchange, make trading in Shares inadvisable. In
addition, trading in Shares on the Exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the Exchange’s “circuit breaker”
rules. If a trading halt or unanticipated early close of the Exchange occurs, a
shareholder may be unable to purchase or sell Shares of a Fund. There can be no
assurance that the requirements of the Exchange necessary to maintain the
listing of a Fund will continue to be met or will remain unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
Disruptions to creations and redemptions, the existence of market volatility or
potential lack of an active trading market for Shares (including through a
trading halt), as well as other factors, may result in Shares trading at a
significant premium or discount to NAV or to the intraday value of a Fund’s
holdings. The NAV of the Shares will fluctuate with changes in the market value
of a Fund’s securities holdings. The market price of Shares may fluctuate, in
some cases materially, in accordance with changes in NAV and the intraday value
of a Fund’s holdings, as well as supply and demand on the Exchange. The Adviser
cannot predict whether Shares will trade below, at or above their NAV. Given the
fact that Shares can be created and redeemed by APs in Creation Units (defined
herein), the Adviser believes that large discounts or premiums to the NAV of
Shares should not be sustained in the long-term. While the creation/redemption
feature is designed to make it likely that Shares normally will trade close to
the value of a Fund’s holdings, market prices are not expected to correlate
exactly to the Fund’s NAV due to timing reasons, supply and demand imbalances
and other factors. The price differences may be due, in large part, to the fact
that supply and demand forces at work in the secondary trading market for Shares
may be closely related to, but not necessarily identical to, the same forces
influencing the prices of the securities of a Fund’s portfolio of investments
trading individually or in the aggregate at any point in time. If a shareholder
purchases Shares at a time when the market price is at a premium to the NAV or
sells Shares at a time when the market price is
at
a discount to the NAV, the shareholder may pay significantly more or receive
significantly less than the underlying value of the Shares that were bought or
sold or the shareholder may be unable to sell his or her Shares. Any of these
factors, discussed above and further below, may lead to the Shares trading at a
premium or discount to a Fund’s NAV. In addition, because certain of a Fund’s
underlying securities trade on exchanges that are closed when the Exchange
(i.e.,
the exchange that Shares of the Fund trade on) is open, there are likely to be
deviations between the expected value of an underlying security and the closing
security’s price (i.e.,
the last quote from its closed foreign market) resulting in premiums or
discounts to NAV that may be greater than those experienced by other ETFs. In
addition, the securities held by a Fund may be traded in markets that close at a
different time than the Exchange. Liquidity in those securities may be reduced
after the applicable closing times. Accordingly, during the time when the
Exchange is open but after the applicable market closing, fixing or settlement
times, bid/ask spreads and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
When
you buy or sell Shares of a Fund through a broker, you will likely incur a
brokerage commission or other charges imposed by brokers. In addition, the
market price of Shares, like the price of any exchange-traded security, includes
a bid/ask spread charged by the market makers or other participants that trade
the particular security. The spread of a Fund’s Shares varies over time based on
the Fund’s trading volume and market liquidity and may increase if the Fund’s
trading volume, the spread of the Fund’s underlying securities, or market
liquidity decrease. In times of severe market disruption, including when trading
of a Fund’s holdings may be halted, the bid/ask spread may increase
significantly. This means that Shares may trade at a discount to the Fund’s NAV,
and the discount is likely to be greatest during significant market
volatility.
Concentration
Risk.
A Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent that its respective Index
concentrates in a particular sector or sectors or industry or group of
industries. The securities of many or all of the companies in the same sector or
industry may decline in value due to developments adversely affecting such
sector or industry. By concentrating its assets in a particular sector or
sectors or industry or group of industries, a Fund is subject to the risk that
economic, political or other conditions that have a negative effect on that
sector or sectors or industry or group of industries may negatively impact the
Fund to a greater extent than if the Fund’s assets were invested in a wider
variety of sectors or industries.
State
Concentration Risk.
(VanEck HIP Sustainable Muni ETF only.) A Fund may invest a significant portion
of its assets in municipal obligations of issuers located in a particular state
or states. Consequently, a Fund may be affected by political, economic,
regulatory and other developments within the state or states and by the
financial condition of the state's or states' political subdivisions, agencies,
instrumentalities and public authorities.
Non-Diversified
Risk.
(VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF only.) The Funds
are classified as “non-diversified” fund under the 1940 Act. Therefore, the
Funds may invest a relatively high percentage of their assets in a smaller
number of issuers or may invest a larger proportion of their assets in a single
issuer. Moreover, the gains and losses on a single investment may have a greater
impact on the Funds NAV and may make the Funds more volatile than more
diversified funds.
Non-Diversification
Risk.
(VanEck CEF Muni Income ETF only.) The Fund may become classified as
“non-diversified” under the Investment Company Act of 1940, as amended, solely
as a result of a change in relative market capitalization or index weighting of
one or more constituents of the its Index. If the Fund becomes non-diversified,
it may invest a greater portion of its assets in securities of a smaller number
of individual issuers than a diversified fund. As a result, changes in the
market value of a single investment could cause greater fluctuations in share
price than would occur in a more diversified fund.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
Each
Fund may invest in securities not included in its respective Index, money market
instruments, including repurchase agreements or other funds which invest
exclusively in money market instruments, convertible securities, 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), and/or certain derivatives, which the
Adviser believes will help a Fund track its Index. Depositary receipts not
included in a Fund’s Index may be used by certain Funds in seeking performance
that corresponds to its respective Index, and in managing cash flows, and may
count towards compliance with a Fund’s 80% policy. Each Fund may also invest, to
the extent permitted by the 1940 Act and SEC regulations thereunder in other
affiliated and unaffiliated funds, such as open-end or closed-end management
investment companies, including other ETFs.
With
respect to the VanEck Muni Allocation ETF, the Fund may also invest in
securities issued by other investment companies, equity securities, fixed income
securities and money market instruments, including repurchase agreements or
other funds which invest exclusively in money market instruments. For temporary
defensive purposes, the Fund may invest without limit in money market
instruments, including repurchase agreements or other funds which invest
exclusively in money market instruments. The Fund may also pursue temporary
defensive positions in anticipation of or in an attempt to respond to adverse
market, economic, political or other conditions. Such a position could have the
effect of reducing any benefit the Fund may receive from a market
increase.
BORROWING
MONEY
Each
Fund may borrow money from a bank up to a limit of one-third of the market value
of its assets. Each Fund has entered into a credit facility to borrow money for
temporary, emergency or other purposes, including the funding of shareholder
redemption requests, trade settlements and as necessary to distribute to
shareholders any income required to maintain the Fund’s status as a regulated
investment company. To the extent that a Fund borrows money, it may be
leveraged; at such times, the Fund will appreciate or depreciate in value more
rapidly than its Index. Leverage generally has the effect of increasing the
amount of loss or gain a Fund might realize, and may increase volatility in the
value of a Fund’s investments.
LENDING
PORTFOLIO SECURITIES
Each
Fund may lend its portfolio securities to brokers, dealers and other financial
institutions desiring to borrow securities to complete transactions and for
other purposes. In connection with such loans, a Fund receives cash, U.S.
government securities and stand-by letters of credit not issued by the Fund’s
bank lending agent equal to at least 102% of the value of the portfolio
securities being loaned. This collateral is marked-to-market on a daily basis.
Although a Fund will receive collateral in connection with all loans of its
securities holdings, the Fund would be exposed to a risk of loss should a
borrower fail to return the borrowed securities (e.g.,
the Fund would have to buy replacement securities and the loaned securities may
have appreciated beyond the value of the collateral held by the Fund) or become
insolvent. A Fund may pay fees to the party arranging the loan of securities. In
addition, a Fund will bear the risk that it may lose money because the borrower
of the loaned securities fails to return the securities in a timely manner or at
all. Each Fund could also lose money in the event of a decline in the value of
any cash collateral or in the value of investments made with the cash
collateral. These events could trigger adverse tax consequences for the Funds.
Substitute payments for dividends received by a Fund for securities loaned out
by a Fund will not be considered qualified dividend income.
ADDITIONAL
NON-PRINCIPAL RISKS
Risk
of Investing in Derivatives.
Derivatives are financial instruments whose values are based on the value of one
or more reference assets or indicators, such as a security, currency, interest
rate, or index. The Funds’ use of derivatives involves risks different from, and
possibly greater than, the risks associated with investing directly in
securities and other more traditional investments. Moreover, although the value
of a derivative is based on an underlying asset or indicator, a derivative
typically does not carry the same rights as would be the case if a Fund invested
directly in the underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and a Fund could lose more than the amount
it invests. The use of derivatives may increase the amount and affect the timing
and character of taxes payable by shareholders of a Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of a Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, a Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it is contractually
entitled to receive). A liquid secondary market may not always exist for a
Fund’s derivative positions at any time, and a Fund may not be able to initiate
or liquidate a swap position at an advantageous time or price, which may result
in significant losses.
In
October 2020, the Securities and Exchange Commission (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”). The derivatives rule requires funds to trade
derivatives and other transactions that create future fund 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 qualifies as a “limited derivatives user,” as
defined in the final rule. Under the 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 when
calculating the 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 is a limited derivatives user, but for funds
subject to the VaR testing, reverse repurchase agreements and similar financing
transactions must be included for purposes of such testing whether treated as
derivatives transactions or not. The SEC also provided guidance in connection
with the rule regarding use of securities lending collateral that may limit a
fund's securities lending activities. 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.
Shareholder
Risk.
Certain shareholders, including other funds advised by the Adviser, may from
time to time own a substantial amount of a Fund’s Shares. In addition, a third
party investor, the Adviser or an affiliate of the Adviser, an AP, a market
maker, or another entity may invest in a Fund and hold its investment for a
limited period of time. There can be no assurance that any large shareholder
would not redeem its investment. Redemptions by shareholders could have a
negative impact on a Fund. In addition, transactions by large shareholders may
account for a large percentage of the trading volume on an Exchange and may,
therefore, have a material effect on the market price of the
Shares.
Leverage
Risk.
(Each Fund except VanEck CEF Muni Income ETF, for which Leverage Risk is a
principal risk.) To the extent that a Fund borrows money or utilizes certain
derivatives, it may be leveraged. Leveraging generally exaggerates the effect on
NAV of any increase or decrease in the market value of a Fund’s portfolio
securities. The Funds are required to comply with the derivatives rule when they
engage in transactions that create future Fund payment or delivery obligations.
Puerto
Rico Risk.
(VanEck High Yield Muni ETF and VanEck Short High Yield Muni
ETF only.) Each Fund may invest a portion of its assets in municipal obligations
of issuers located in Puerto Rico. Consequently, the Fund may be affected by
political, economic, regulatory and other developments within Puerto Rico and by
the financial condition of Puerto Rico’s political subdivisions, agencies,
instrumentalities and public authorities. Events, including economic and
political policy changes, tax base erosion, territory constitutional limits on
tax increases, budget deficits and other financial difficulties and changes in
the credit ratings assigned to Puerto Rico’s municipal issuers, are likely to
affect the Fund’s performance. The Puerto Rican economy is reliant on
manufacturing, services and tourism, and its economic and financial operations
parallel the economic cycles of the United States. As a result, a decline in
tourism, which is an important component of the Puerto Rico economy, and U.S.
recessions have had a negative effect on the overall economy of Puerto Rico.
Puerto Rico continues to face significant fiscal challenges, including
persistent government deficits, underfunded public pension benefit obligations,
underfunded government retirement systems, sizable debt service obligations and
a high unemployment rate.
The
Puerto Rican government defaulted on nearly $2 billion in debt payments due on
July 1, 2016. In May 2017, the newly-created oversight board that oversees
Puerto Rico's finance and court-supervised debt restructuring (the “Oversight
Board”) initiated a bankruptcy-like process for the general government, general
obligation debt, and certain Puerto Rico instrumentalities, including the Puerto
Rico Sales Tax Financing Corporation, the Highways and Transportation Authority,
and the Employee Retirement System. These municipal obligations are subject to
heightened risks that may adversely affect the value of a Fund’s portfolio and
the repayment of such bonds may be subject to significant uncertainties if
Puerto Rico’s economic downturn continues. The negotiations between Puerto Rico
and its instrumentalities and their respective creditors to restructure
outstanding debt obligations remain ongoing, and it is not possible to predict
whether Puerto Rico and its instrumentalities will be able to come to agreements
with their creditors.
In
addition, due to the ongoing budget impact from the COVID-19 pandemic on Puerto
Rico's finances, the Oversight Board or Puerto Rico could seek to revise or even
terminate earlier agreements reached with certain creditors.
Temporary
Defensive Strategy.
(VanEck Muni Allocation ETF only.) When the Fund utilizes a temporary defensive
strategy, it may not achieve its investment objective.
Under
normal circumstances, the VanEck Muni Allocation ETF intends to invest primarily
in VanEck ETPs that are registered under the federal securities laws and that
invest in publicly traded municipal bonds that cover the U.S. dollar-denominated
investment grade and below investment grade (“high yield”) tax-exempt bond
market. The following table sets forth (i) the names of the underlying funds
that the VanEck Muni Allocation ETF is currently considering for investment, and
(ii) brief descriptions of the underlying funds’ investment objectives and
principal investment strategies. The list of underlying funds is not exhaustive
and subject to change at the discretion of the Adviser without notice to
shareholders. In addition, the investment objective(s) and principal investment
strategies of each underlying fund are subject to change without notice to
shareholders.
Prospectuses
for the VanEck ETPs can be obtained at www.vaneck.com.
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Fund
Name |
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Investment
Objective(s) and Principal Investment Strategies |
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VanEck High Yield Muni ETF |
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VanEck High Yield Muni ETF (the “High Yield Fund”) seeks
to replicate as closely as possible, before fees and expenses, the price
and yield performance of the ICE High Yield Crossover Municipal Bond
Transition Index (the “High Yield Index”). The High Yield Fund normally
invests at least 80% of its total assets in securities that comprise the
benchmark index. The High Yield Index is comprised of publicly traded
municipal bonds that cover the U.S. dollar denominated high yield
long-term tax-exempt bond market. |
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VanEck
Intermediate Muni ETF |
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VanEck
Intermediate Muni ETF (the “Intermediate Fund”) seeks to replicate as
closely as possible, before fees and expenses, the price and yield
performance of the ICE Intermediate AMT-Free Broad National Municipal
Transition Index (the “Intermediate Index”). The Intermediate Fund
normally invests at least 80% of its total assets in fixed income
securities that comprise the Intermediate Index. The Intermediate
Index is comprised of publicly traded municipal bonds that cover the U.S.
dollar denominated intermediate term tax-exempt bond
market.
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VanEck
Long Muni ETF
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VanEck
Long Muni ETF (the “Long Fund”) seeks to replicate as closely as possible,
before fees and expenses, the price and yield performance of the ICE Long
AMT-Free Broad National Municipal Transition Index (the “Long Index”). The
Long Fund normally invests at least 80% of its total assets in fixed
income securities that comprise the Long Index. The Long Index is
comprised of publicly traded municipal bonds that cover the U.S. dollar
denominated long-term tax-exempt bond market.
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VanEck
Short High Yield Muni ETF |
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VanEck
Short High Yield Muni ETF (the “Short High Yield Fund”) seeks to replicate
as closely as possible, before fees and expenses, the price and yield
performance of the ICE 1-12 Year High Yield Crossover Municipal Bond
Transition Index (the “Short High Yield Index”). The Short High Yield Fund
normally invests at least 80% of its total assets in securities that
comprise the benchmark index. The Short High Yield Index is composed of
publicly traded municipal bonds that cover the U.S. dollar denominated
high yield short-term tax-exempt bond market. |
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VanEck
Short Muni ETF
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VanEck
Short Muni ETF (the “Short Fund”) seeks to replicate as closely as
possible, before fees and expenses, the price and yield performance of the
ICE Short AMT-Free Broad National Municipal Transition Index (the “Short
Index”). The Short Fund normally invests at least 80% of its total assets
in fixed income securities that comprise the Short Index. The Short Index
is comprised of publicly traded municipal bonds that cover the U.S. dollar
denominated short-term tax-exempt bond market.
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Unlike
many conventional mutual funds which are only bought and sold at closing NAVs,
the Shares of each Fund have been designed to be tradable in a secondary market
on an intra-day basis and to be created and redeemed principally in-kind in
Creation Units at each day’s market close. These in-kind arrangements are
designed to mitigate the adverse effects on a Fund’s portfolio that could arise
from frequent cash purchase and redemption transactions that affect the NAV of
the Fund. Moreover, in contrast to conventional mutual funds, where frequent
redemptions can have an adverse tax impact on taxable shareholders because of
the need to sell portfolio securities which, in turn, may generate taxable gain,
the in-kind redemption mechanism of each Fund, to the extent used, generally is
not expected to lead to a tax event for shareholders whose Shares are not being
redeemed.
A
description of each Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio securities is available in the Funds’
SAI.
Board
of Trustees.
The Board of Trustees of the Trust has responsibility for the general oversight
of the management of the Funds, including general supervision of the Adviser and
other service providers, but is not involved in the day-to-day management of the
Trust. A list of the Trustees and the Trust officers, and their present
positions and principal occupations, is provided in the Funds’ SAI.
Investment
Adviser.
Under the terms of an investment management agreement between the Trust and Van
Eck Associates Corporation with respect to VanEck CEF Muni Income ETF, VanEck High Yield Muni ETF, VanEck HIP Sustainable Muni ETF,
VanEck Intermediate Muni ETF, VanEck Long Muni ETF, VanEck Muni Allocation ETF,
VanEck Short High Yield Muni ETF, and VanEck Short Muni ETF (the “Municipal
Investment Management Agreement”), Van Eck Associates Corporation serves as the
adviser to each Fund and, subject to the supervision of the Board of Trustees,
is responsible for the day-today investment management of each Fund. As of July
31, 2022, the Adviser managed approximately $70.83 billion in assets. The
Adviser has been an investment adviser since 1955 and also acts as adviser or
sub-adviser to mutual funds, other ETFs, other pooled investment vehicles and
separate accounts. The Adviser’s principal business address is 666 Third Avenue,
9th
Floor, New York, New York 10017. A discussion regarding the Board of Trustees’
approval of the Investment Management Agreement for each Fund will be available
in the Trust’s semi-annual report for the period ended October 31, 2022.
Pursuant
to the Municipal Investment Management Agreement, the Adviser is responsible for
all expenses of VanEck CEF Muni Income ETF, VanEck High Yield
Muni ETF, VanEck HIP Sustainable Muni ETF, VanEck Intermediate Muni ETF,
VanEck Long Muni ETF, VanEck Muni Allocation ETF, VanEck Short High Yield Muni
ETF and VanEck Short Muni ETF, including the costs of transfer agency, custody,
fund administration, legal, audit and other services, except for the fee payment
under the Municipal Investment Management Agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. For its services to each Fund, each Fund has agreed to
pay the Adviser an annual unitary management fee equal to 0.40% (with respect to
VanEck CEF Muni Income ETF), 0.35% (with respect to VanEck High
Yield Muni ETF and VanEck Short High Yield Muni ETF), 0.24% (with respect to
VanEck HIP Sustainable Muni ETF, VanEck Intermediate Muni ETF and VanEck Long
Muni ETF), ) 0.08% (with respect to VanEck Muni Allocation ETF) and 0.20% (with
respect to VanEck Short Muni ETF) of its average daily net assets. Offering
costs excluded from the annual unitary management fee are: (a) legal fees
pertaining to a Fund’s Shares offered for sale; (b) SEC and state registration
fees; and (c) initial fees paid for Shares of a Fund to be listed on an
exchange. Notwithstanding the foregoing, the Adviser has agreed to pay all such
offering costs until at least September 1, 2023.
Manager
of Managers Structure. With
respect to VanEck HIP Sustainable Muni ETF and VanEck Muni Allocation ETF,
the
Adviser and the Trust may rely on an exemptive order (the “Order”) from the SEC
that permits the Adviser to enter into investment sub-advisory agreements with
unaffiliated sub-advisers without obtaining shareholder approval. The Adviser,
subject to the review and approval of the Board of Trustees, may select one or
more sub-advisers for the Fund and supervise, monitor and evaluate the
performance of each sub-adviser.
The
Order also permits the Adviser, subject to the approval of the Board of
Trustees, to replace sub-advisers and amend investment sub-advisory agreements,
including applicable fee arrangements, without shareholder approval whenever the
Adviser and the Board of Trustees believe such action will benefit the Fund and
its shareholders. The Adviser thus would have the responsibility (subject to the
oversight of the Board of Trustees) to recommend the hiring and replacement of
sub-advisers as well as the discretion to terminate any sub-adviser and
reallocate the Fund’s assets for management among any other sub-adviser(s)
and
itself. This means that the Adviser would be able to reduce the sub-advisory
fees and retain a larger portion of the management fee, or increase the
sub-advisory fees and retain a smaller portion of the management fee. The
Adviser would compensate each sub-adviser out of its management
fee.
Administrator,
Custodian and Transfer Agent. Van
Eck Associates Corporation is the administrator for the Funds (the
“Administrator”), and State Street Bank and Trust Company is the custodian of
the Funds’ assets and provides transfer agency and fund accounting services to
the Funds. The Administrator is responsible for certain clerical, recordkeeping
and/or bookkeeping services which are required to be provided pursuant to the
Investment Management Agreement.
Distributor.
Van
Eck Securities Corporation is the distributor of the Shares (the “Distributor”).
The Distributor will not distribute Shares in less than a specified number of
Shares, each called a “Creation Unit,” and does not maintain a secondary market
in the Shares. The Shares are traded in the secondary market.
The
portfolio manager who is currently responsible for the day-to-day management of
the VanEck CEF Muni Income ETF’s portfolio is Peter H. Liao.
Mr.
Liao has been employed by the Adviser as an analyst since the summer of 2004 and
has been a portfolio manager since 2006. Mr. Liao graduated from New York
University in 2004 with a Bachelor of Arts in Economics and Mathematics.
Mr.
Liao serves as a portfolio manager of other funds of the Trust. Mr. Liao also
serves as portfolio manager for certain other investment companies and pooled
investment vehicles advised by the Adviser. See the Funds’ SAI for additional
information about the portfolio manager’s compensation, other accounts managed
by the portfolio manager and his respective ownership of Shares.
The
portfolio manager who is currently responsible for the day-to-day management of
the VanEck Intermediate Muni ETF’s, VanEck Long Muni ETF’s, VanEck Short Muni
ETF’s, VanEck High Yield Muni ETF’s and VanEck Short High
Yield Muni ETF’s portfolios is James T. Colby III. Mr. Colby shares joint
responsibility for the day-to-day management of the VanEck HIP Sustainable Muni
ETF’s portfolio with Stephanie Wang.
Mr.
Colby has been employed by the Adviser as a portfolio manager since September
2007. Mr. Colby graduated from Brown University in 1972 with a Bachelor of Arts
in Economics and International Relations; and from Hofstra University in 1979
with a Masters of Business Administration in Finance.
Ms.
Wang has been employed with the Adviser since 2016. Ms. Wang graduated from
Baruch College in 2013 with a Bachelor of Science in Finance and in 2016 with a
Master's in Financial Engineering. She is a CFA®
charter holder and a member of the CFA Institute. See the Funds’ SAI for
additional information about the portfolio managers’ compensation, other
accounts managed by the portfolio managers and their respective ownership of
Shares.
The
portfolio managers who currently share joint responsibility for the day-to-day
management of the VanEck Muni Allocation ETF’s portfolio are David Schassler and
John Lau.
Mr.
Schassler has been employed by the Adviser as a portfolio manager since May
2016, a deputy portfolio manager from 2015 to 2016 and a director of manager
research from 2012 to 2015. Mr. Schassler graduated from the State University of
New York College at Cortland in 2003 with a Bachelor of Arts and from the NYU
Stern School of Business in 2012 with a Master’s of Business Administration.
Mr.
Lau is deputy portfolio manager of the Fund. He has been employed with the
Adviser since 2007 and has over 10 years of experience in the financial markets.
Mr. Lau received his Bacherlor of Science in Business Administration, with a
concentration in Financial Analysis from the State University of New York at
Buffalo. See the Funds’ SAI for additional information about the portfolio
managers’ compensation, other accounts managed by the portfolio managers and
their respective ownership of Shares.
DETERMINATION
OF NAV
The
NAV per Share for each Fund is computed by dividing the value of the net assets
of the Fund (i.e., the value of its total assets less total liabilities) by the
total number of Shares outstanding. Expenses and fees, including the management
fee, are accrued daily and taken into account for purposes of determining NAV.
The NAV of each Fund is determined each business day as of the close of trading
(ordinarily 4:00 p.m., Eastern time) on the New York Stock
Exchange.
The
values of each Fund’s portfolio securities are based on the securities’ closing
prices on the markets on which the securities trade, when available. Due to the
time differences between the United States and certain countries in which
certain Funds invest, securities on these exchanges may not trade at times when
Shares of the Fund will trade. In the absence of a last reported sales price, or
if no sales were reported, and for other assets for which market quotes are not
readily available, values may be based on quotes obtained from a quotation
reporting system, established market makers or by an outside independent pricing
service. Debt instruments with remaining maturities of more than 60 days are
valued at the evaluated mean price provided by an outside independent pricing
service. If an outside independent pricing service is unable to provide a
valuation, the instrument is valued at the mean of the highest bid and the
lowest asked quotes obtained from one or more brokers or dealers selected by the
Adviser. Prices obtained by an outside independent pricing service may use
information provided by market makers or estimates of market values obtained
from yield data related to investments or securities with similar
characteristics and may use a computerized grid matrix of securities and its
evaluations in determining what it believes is the fair value of the portfolio
securities. Short-term debt instruments having a maturity of 60 days or less are
valued at amortized cost. Any assets or liabilities denominated in currencies
other than the U.S. dollar are converted into U.S. dollars at the current market
rates on the date of valuation as quoted by one or more sources. If a market
quotation for a security or other asset is not readily available or the Adviser
believes it does not otherwise accurately reflect the market value of the
security or asset at the time a Fund calculates its NAV, the security or asset
will be fair valued by the Adviser in accordance with the Trust’s valuation
policies and procedures approved by the Board of Trustees. Each Fund may also
use fair value pricing in a variety of circumstances, including but not limited
to, situations when the value of a security in the Fund’s portfolio has been
materially affected by events occurring after the close of the market on which
the security is principally traded (such as a corporate action or other news
that may materially affect the price of a security) or trading in a security has
been suspended or halted. In addition, each Fund that holds foreign equity
securities currently expects that it will fair value certain of the foreign
equity securities held by the Fund, if any, each day the Fund calculates its
NAV, except those securities principally traded on exchanges that close at the
same time the Fund calculates its NAV.
Accordingly,
a Fund’s NAV may reflect certain portfolio securities’ fair values rather than
their market prices at the time the exchanges on which they principally trade
close. Fair value pricing involves subjective judgments and it is possible that
a fair value determination for a security or other asset is materially different
than the value that could be realized upon the sale of such security or asset.
In addition, fair value pricing could result in a difference between the prices
used to calculate a Fund’s NAV and the prices used by such Fund’s respective
Index. This may adversely affect a Fund’s ability to track its Index. With
respect to securities that are principally traded on foreign exchanges, the
value of a Fund’s portfolio securities may change on days when you will not be
able to purchase or sell your Shares.
INTRADAY
VALUE
The
trading prices of the Funds’ Shares in the secondary market generally differ
from the Funds’ daily NAV and are affected by market forces such as the supply
of and demand for Fund Shares and underlying securities held by each Fund,
economic conditions and other factors. Information regarding the intraday value
of the Funds’ Shares (“IIV”) may be disseminated throughout each trading day by
an Exchange or by market data vendors or other information providers. The IIV is
based on the current market value of the securities and/or cash required to be
deposited in exchange for a Creation Unit. The IIV does not necessarily reflect
the precise composition of the current portfolio of securities held by each Fund
at a particular point in time or the best possible valuation of the current
portfolio. Therefore, the IIV should not be viewed as a “real-time” update of
the Funds’ NAV, which is computed only once a day. The IIV is generally
determined by using current market quotations and/or price quotations obtained
from broker-dealers and other market intermediaries that may trade in the
portfolio securities held by each Fund and valuations based on current market
rates. The quotations and/or valuations of certain Fund holdings may not be
updated during U.S. trading hours if such holdings do not trade in the United
States. Each Fund is not involved in, or responsible for, the calculation or
dissemination of the IIV and makes no warranty as to its accuracy.
RULE
144A AND OTHER UNREGISTERED SECURITIES
An
AP (i.e., a person eligible to place orders with the Distributor to create or
redeem Creation Units of a Fund) that is not a “qualified institutional buyer,”
as such term is defined under Rule 144A of the Securities Act of 1933, as
amended (the “Securities Act”), will not be able to receive, as part of a
redemption, restricted securities eligible for resale under Rule 144A or other
unregistered securities.
BUYING
AND SELLING EXCHANGE-TRADED SHARES
The
Shares of the Funds are listed on the Exchange. If you buy or sell Shares in the
secondary market, you will incur customary brokerage commissions and charges and
may pay some or all of the “spread,” which is any difference between the bid
price and the ask price. The spread varies over time for a Fund’s Shares based
on the Fund’s trading volume and market liquidity, and is generally lower if the
Funds have high trading volume and market liquidity, and generally higher if the
Funds have little
trading
volume and market liquidity (which is often the case for funds that are newly
launched or small in size). In times of severe market disruption or low trading
volume in a Fund’s Shares, this spread can increase significantly. It is
anticipated that the Shares will trade in the secondary market at prices that
may differ to varying degrees from the NAV of the Shares. During periods of
disruptions to creations and redemptions or the existence of extreme market
volatility, the market prices of Shares are more likely to differ significantly
from the Shares’ NAV.
The
Depository Trust Company (“DTC”) serves as securities depository for the Shares.
(The Shares may be held only in book- entry form; stock certificates will not be
issued.) DTC, or its nominee, is the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on the records
of DTC or its participants (described below). Beneficial owners of Shares are
not entitled to have Shares registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and are
not considered the registered holder thereof. Accordingly, to exercise any
rights of a holder of Shares, each beneficial owner must rely on the procedures
of: (i) DTC; (ii) “DTC Participants,” i.e.,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives) own
DTC; and (iii) “Indirect Participants,” i.e.,
brokers, dealers, banks and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly,
through which such beneficial owner holds its interests. The Trust understands
that under existing industry practice, in the event the Trust requests any
action of holders of Shares, or a beneficial owner desires to take any action
that DTC, as the record owner of all outstanding Shares, is entitled to take,
DTC would authorize the DTC Participants to take such action and that the DTC
Participants would authorize the Indirect Participants and beneficial owners
acting through such DTC Participants to take such action and would otherwise act
upon the instructions of beneficial owners owning through them. As described
above, the Trust recognizes DTC or its nominee as the owner of all Shares for
all purposes. For more information, see the section entitled “Book Entry Only
System” in the Funds’ SAI.
Each
Exchange is open for trading Monday through Friday and is closed on weekends and
the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Because
non-U.S. exchanges may be open on days when a Fund does not price its Shares,
the value of the securities in the Fund’s portfolio may change on days when
shareholders will not be able to purchase or sell a Fund’s Shares.
The
right of redemption by an AP may be suspended or the date of payment postponed
(1) for any period during which an Exchange is closed (other than customary
weekend and holiday closings); (2) for any period during which trading on an
Exchange is suspended or restricted; (3) for any period during which an
emergency exists as a result of which disposal of the Shares of a Fund or
determination of its NAV is not reasonably practicable; or (4) in such other
circumstance as is permitted by the SEC.
Market
Timing and Related Matters.
The
Funds impose no restrictions on the frequency of purchases and redemptions.
Frequent purchases and redemptions of Fund Shares may attempt to take advantage
of a potential arbitrage opportunity presented by a lag between a change in the
value of a Fund’s portfolio securities after the close of the primary markets
for a Fund’s portfolio securities and the reflection of that change in a Fund’s
NAV (“market timing”). The Board of Trustees considered the nature of each Fund
(i.e.,
a fund whose Shares are expected to trade intraday), that the Adviser monitors
the trading activity of APs for patterns of abusive trading, that the Funds
reserve the right to reject orders that may be disruptive to the management of
or otherwise not in the Funds’ best interests, and that each Fund may fair value
certain of its securities. Given this structure, the Board of Trustees
determined that it is not necessary to impose restrictions on the frequency of
purchases and redemptions for the Funds at the present time.
DISTRIBUTIONS
Net
Investment Income and Capital Gains.
As a shareholder of a Fund, you are entitled to your share of such Fund’s
distributions of net investment income and net realized capital gains on its
investments. Each Fund pays out substantially all of its net earnings to its
shareholders as “distributions.”
Each
Fund typically earns income dividends from stocks and/or interest on municipal
securities. These amounts, net of expenses, are typically passed along to Fund
shareholders as dividends from net investment income. Each Fund generally
realizes capital gains or losses whenever it sells securities. Net capital gains
are distributed to shareholders as “capital gain distributions.” Dividends paid
by the Funds that are properly reported as exempt-interest dividends will not be
subject to regular federal income tax. Distributions from a Fund’s net
investment income (other than net tax-exempt income), including any net short
term capital gains, if any, are taxable to you as ordinary income. Any long-term
capital gains distributions you receive from a Fund are taxable as long-term
capital gains.
Net
investment income, if any, is typically distributed to shareholders at least
monthly and net realized capital gains, if any, are typically distributed to
shareholders at least annually. Dividends may be declared and paid more
frequently to improve index tracking or to comply with the distribution
requirements of the Internal Revenue Code. In addition, in situations where the
Fund acquires investment securities after the beginning of a dividend period,
the Fund may elect to distribute at least annually amounts representing the full
dividend yield net of expenses on the underlying investment securities, as if
the Funds owned the underlying investment securities for the entire dividend
period. If the Fund so elects, some portion of each distribution may result
in
a return of capital, which, for tax purposes, is treated as a return of your
investment in Shares. You will be notified regarding the portion of the
distribution which represents a return of capital.
Distributions
in cash may be reinvested automatically in additional Shares of your Fund only
if the broker through which you purchased Shares makes such option
available.
TAX
INFORMATION
As
with any investment, you should consider how your Fund investment will be taxed.
The tax information in this Prospectus is provided as general information. You
should consult your own tax professional about the tax consequences of an
investment in the Funds, including the possible application of foreign, state
and local taxes. Unless your investment in a Fund is through a tax-exempt entity
or tax-deferred retirement account, such as a 401(k) plan, you need to be aware
of the possible tax consequences when: (i) a Fund makes distributions; (ii) you
sell Shares in the secondary market or (iii) you create or redeem Creation
Units.
Taxes
on Distributions.
As noted above, each Fund expects to distribute net investment income, if any,
monthly, and any net realized long-term or short-term capital gains, if any,
annually. Each Fund may also pay a special distribution at any time to comply
with U.S. federal tax requirements.
Dividends
paid by the Funds that are properly reported as exempt-interest dividends will
not be subject to regular U.S. federal income tax. The Funds intend to invest
their assets in a manner such that a significant portion of their dividend
distributions to shareholders will generally be exempt from U.S. federal income
taxes, including the federal alternative minimum tax for noncorporate
shareholders. The VanEck High Yield Muni ETF, VanEck Short
High Yield Muni ETF and the Underlying Funds in which the VanEck CEF Muni Income
ETF invests may invest a portion of their assets in certain “private activity
bonds,” and as a result, a portion of the exempt-interest dividends paid by them
will be an item of tax preference to shareholders subject to the alternative
minimum tax. Depending on a shareholder’s state of residence, exempt-interest
dividends from interest earned on municipal securities of a state or its
political subdivisions may be exempt in the hands of such shareholder from
income tax in that state. However, income from municipal securities of states
other than the shareholder’s state of residence generally will not qualify for
tax-free treatment for such shareholder.
Distributions
from a Fund’s net investment income other than net tax-exempt income, including
any net short-term gains, if any, are taxable to you as ordinary
income.
In
general, your distributions are subject to U.S. federal income tax when they are
paid, whether you take them in cash or reinvest them in the Fund. Whether
distributions of capital gains represent long-term or short-term capital gains
is determined by how long the Fund owned the investments that generated them,
rather than how long you have owned your Shares. Distributions of net short-term
capital gains in excess of net long–term capital losses, if any, are generally
taxable as ordinary income. Distributions of net long-term capital gains in
excess of net short-term capital losses, if any, that are properly reported as
capital gain dividends are generally taxable as long-term capital gains.
Long-term capital gains of a non-corporate shareholder are generally taxable at
a maximum rate of 15% or 20%, depending on whether the shareholder’s income
exceeds certain threshold amounts. The Funds do not expect that any of their
distributions will be qualified dividends eligible for lower tax rates or for
the corporate dividends received deduction.
Exempt-interest
dividends from a Fund are taken into account in determining the taxable portion
of any Social Security or railroad retirement benefits that you
receive.
Distributions
in excess of a Fund’s current and accumulated earnings and profits are treated
as a tax-free return of your investment to the extent of your basis in the
Shares, and generally as capital gain thereafter. A return of capital, which for
tax purposes is treated as a return of your investment, reduces your basis in
Shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition of Shares. A distribution will reduce a Fund’s NAV per Share and may
be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of capital.
The
VanEck CEF Muni Income ETF will not be able to offset gains realized by one
Underlying Fund in which the VanEck CEF Muni Income ETF invests against losses
realized by another Underlying Fund in which the VanEck CEF Muni Income ETF
invests. Short-term capital gains earned by an Underlying Fund when distributed
will be ordinary income to the VanEck CEF Muni Income ETF and will not be offset
by its capital losses, if any. Redemptions of Shares in an Underlying Fund could
also result in a gain and/or income to the VanEck CEF Muni Income ETF and
realized losses from such redemptions may be deferred indefinitely as wash
sales. The VanEck CEF Muni Income ETF’s use of the fund-of-funds structure could
therefore affect the amount, timing and character of distributions to
shareholders. Redemptions of Shares in an Underlying Fund could also cause
additional distributable gains to shareholders.
Backup
Withholding.
A Fund may be required to withhold a percentage of your distributions and
proceeds if you have not provided a taxpayer identification number or social
security number or otherwise established a basis for exemption from backup
withholding. The backup withholding rate for individuals is currently 24%. This
is not an additional tax and may be refunded, or credited against your U.S.
federal income tax liability, provided certain required information is furnished
to the IRS.
Taxes
on the Sale or Cash Redemption of Exchange Listed Shares.
Currently, any capital gain or loss realized upon a sale of Shares is generally
treated as long term-capital gain or loss if the Shares have been held for more
than one year and as a short-term capital gain or loss if held for one year or
less. However, any capital loss on a sale of Shares held for six months or less
is treated as long-term capital loss to the extent that capital gain dividends
were paid with respect to such Shares. The ability to deduct capital losses may
be limited. To the extent that a Fund’s shareholder’s Shares are redeemed for
cash, this is normally treated as a sale for tax purposes.
Taxes
on Creations and Redemptions of Creation Units.
A person who exchanges securities for Creation Units generally will recognize a
gain or loss. The gain or loss will be equal to the difference between the
market value of the Creation Units at the time of exchange and the sum of the
exchanger’s aggregate basis in the securities surrendered and the amount of any
cash paid for such Creation Units. A person who exchanges Creation Units for
securities will generally recognize a gain or loss equal to the difference
between the exchanger’s basis in the Creation Units and the sum of the aggregate
market value of the securities received. The IRS, however, may assert that a
loss realized upon an exchange of primarily securities for Creation Units cannot
be deducted currently under the rules governing “wash sales,” or on the basis
that there has been no significant change in economic position. Persons
exchanging securities for Creation Units or redeeming Creation Units should
consult their own tax adviser with respect to whether wash sale rules apply and
when a loss might be deductible and the tax treatment of any creation or
redemption transaction.
Under
current U.S. federal income tax laws, any capital gain or loss realized upon a
redemption (or creation) of Creation Units held as capital assets is generally
treated as long-term capital gain or loss if the Shares (or securities
surrendered) have been held for more than one year and as a short-term capital
gain or loss if the Shares (or securities surrendered) have been held for one
year or less.
If
you create or redeem Creation Units, you will be sent a confirmation statement
showing how many Shares you created or sold and at what price.
Medicare
Tax.
An additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
Non-U.S.
Shareholders.
Dividends paid by a Fund to non-U.S. shareholders are generally subject to
withholding tax at a 30% rate or a reduced rate specified by an applicable
income tax treaty to the extent derived from investment income and short-term
capital gains. Dividends paid by a Fund from net tax-exempt income or long-term
capital gains are generally not subject to such withholding tax.
Properly-reported dividends are generally exempt from U.S. federal withholding
tax where they (i) are paid in respect of a Fund’s “qualified net interest
income” (generally, a Fund’s U.S. source interest income, other than certain
contingent interest and interest from obligations of a corporation or
partnership in which a Fund is at least a 10% shareholder, reduced by expenses
that are allocable to such income); or (ii) are paid in respect of a Fund’s
“qualified short-term capital gains” (generally, the excess of a Fund’s net
short-term capital gain over a Fund’s long-term capital loss for such taxable
year). However, depending on its circumstances, a Fund may report all, some or
none of its potentially eligible dividends as such qualified net interest income
or as qualified short-term capital gains and/or treat such dividends, in whole
or in part, as ineligible for this exemption from withholding.
Any
capital gain realized by a non-U.S. shareholder upon a sale of Shares of a Fund
will generally not be subject to U.S. federal income or withholding tax unless
(i) the gain is effectively connected with the shareholder’s trade or business
in the United States, or in the case of a shareholder who is a nonresident alien
individual, the shareholder is present in the United States for 183 days or more
during the taxable year and certain other conditions are met or (ii) the Fund is
or has been a U.S. real property holding corporation, as defined below, at any
time within the five-year period preceding the date of disposition of the Fund’s
Shares or, if shorter, within the period during which the non-U.S. shareholder
has held the Shares. Generally, a corporation is a U.S. real property holding
corporation if the fair market value of its U.S. real property interests, as
defined in the Internal Revenue Code and applicable regulations, equals or
exceeds 50% of the aggregate fair market value of its worldwide real property
interests and its other assets used or held for use in a trade or business. A
Fund may be, or may prior to a non-U.S. shareholder’s disposition of Shares
become, a U.S. real property holding corporation. If a Fund is or becomes a U.S.
real property holding corporation, so long as the Fund’s Shares are regularly
traded on an established securities market, only a non-U.S. shareholder who
holds or held (at any time during the shorter of the five-year period preceding
the date of disposition or the holder’s holding period) more than 5% (directly
or indirectly as determined under applicable attribution rules of the Internal
Revenue Code) of the Fund’s Shares will be subject to United States federal
income tax on the disposition of Shares.
As
part of the Foreign Account Tax Compliance Act, (“FATCA”), a Fund may be
required to withhold 30% tax on certain types of U.S. sourced income
(e.g.,
dividends, interest, and other types of passive income) paid to (i) foreign
financial institutions (“FFIs”), including non-U.S. investment funds, unless
they agree to collect and disclose to the IRS information regarding their direct
and indirect U.S. account holders and (ii) certain nonfinancial foreign entities
(“NFFEs”), unless they certify certain information regarding their direct and
indirect U.S. owners. To avoid possible withholding, FFIs will need to enter
into agreements with the IRS which state that they will provide the IRS
information, including the names, account numbers and balances, addresses and
taxpayer
identification
numbers of U.S. account holders and comply with due diligence procedures with
respect to the identification of U.S. accounts as well as agree to withhold tax
on certain types of withholdable payments made to non-compliant foreign
financial institutions or to applicable foreign account holders who fail to
provide the required information to the IRS, or similar account information and
required documentation to a local revenue authority, should an applicable
intergovernmental agreement be implemented. NFFEs will need to provide certain
information regarding each substantial U.S. owner or certifications of no
substantial U.S. ownership, unless certain exceptions apply, or agree to provide
certain information to the IRS.
A
Fund may be subject to the FATCA withholding obligation, and also will be
required to perform due diligence reviews to classify foreign entity investors
for FATCA purposes. Investors are required to agree to provide information
necessary to allow a Fund to comply with the FATCA rules. If a Fund is required
to withhold amounts from payments pursuant to FATCA, investors will receive
distributions that are reduced by such withholding amounts.
Non-U.S.
shareholders are advised to consult their tax advisors with respect to the
particular tax consequences to them of an investment in the Funds, including the
possible applicability of the U.S. estate tax.
The
foregoing discussion summarizes some of the consequences under current U.S.
federal income tax law of an investment in a Fund. It is not a substitute for
personal tax advice. Consult your own tax advisor about the potential tax
consequences of an investment in a Fund under all applicable tax laws. Changes
in applicable tax authority could materially affect the conclusions discussed
above and could adversely affect the Funds, and such changes often
occur.
The
CEFMX Index is published by S-Network Global Indexes, LLC (“S-Network”). The
High Yield Index, Intermediate Index, Long Index, Short High Yield Index and
Short Index are published by ICE Data Indices, LLC (“ICE Data”) and its
affiliates. ICE Data is referred to herein as the “Index Provider.” The Index
Provider does not sponsor, endorse, or promote the Funds and bear no liability
with respect to the Funds or any security.
The
CEFMX Index is a rules based index intended to serve as a benchmark for
closed-end funds listed in the U.S. that are principally engaged in asset
management processes designed to produce federally tax-exempt annual yield. The
CEFMX Index employs a modified total net assets weighting methodology designed
to provide investment exposure across the various business segments that
together comprise the federally tax-exempt annual yield sector of the closed-end
fund market. The CEFMX Index is divided into four main closed-end fund segments
including: leveraged municipal fixed income closed-end funds; unleveraged
municipal fixed income closed-end funds; leveraged high yield municipal fixed
income closed-end funds; and unleveraged high yield municipal fixed income
closed-end funds.
The
CEFMX Index will reconstitute at the conclusion of trading on the last business
day of the last month of each calendar half (March/September) and rebalance at
the conclusion of trading on the last business day of the last month of each
calendar quarter. The CEFMX Index is calculated and maintained by ICE Data
Indices on behalf of S-Network. The CEFMX Index is reviewed on an ongoing basis.
S-Network may delay or change a scheduled rebalancing or reconstitution of the
CEFMX Index or the implementation of certain rules at its sole
discretion.
The
Final High Yield Index tracks the performance of lower-rated and unrated U.S.
dollar denominated tax-exempt debt publicly issued in the U.S. domestic market
by U.S. states and territories as well as their political
subdivisions.
The
Final High Yield Index is a modified blend of the following indices, with
additional constraints placed on certain exposure concentrations:
70%
ICE Core High Yield & Unrated Municipal Index;
25%
ICE Core BBB Municipal Index;
5%
ICE Core Single-A Municipal Index.
The
Final High Yield Index is rebalanced on the last calendar day of the month,
based on the rebalanced constituencies of the three component indices. ICE Data
may delay or change a scheduled rebalancing or reconstitution of the Final High
Yield Index or the implementation of certain rules at its sole
discretion.
The
Final Intermediate Index tracks the performance of intermediate maturity U.S.
dollar denominated investment grade tax-exempt debt publicly issued in the U.S.
domestic market by U.S. states and territories as well as their political
subdivisions. Qualifying securities must be exempt from Federal taxes and must
not be subject to alternative minimum tax. In addition, qualifying securities
must have at least six years but less than 17 years remaining term to final
maturity, a fixed coupon schedule (including zero coupon and step up or stepdown
bonds) and an investment grade rating (based on the middle rating of Moody’s,
S&P and Fitch).
The
Final Intermediate Index is rebalanced on the last calendar day of the month.
ICE Data may delay or change a scheduled rebalancing or reconstitution of the
Final Intermediate Index or the implementation of certain rules at its sole
discretion.
The
Final Long Index tracks the performance of long maturity U.S. dollar denominated
investment grade tax-exempt debt publicly issued in the U.S. domestic market by
U.S. states and territories as well as their political subdivisions. Qualifying
securities must be exempt from Federal taxes and must not be subject to
alternative minimum tax. In addition, qualifying securities must have at least
17 years remaining term to final maturity, a fixed coupon schedule (including
zero coupon and step up or stepdown bonds) and an investment grade rating (based
on the middle rating of Moody’s, S&P and Fitch).
The
Final Long Index is rebalanced on the last calendar day of the month. ICE Data
may delay or change a scheduled rebalancing or reconstitution of the Final Long
Index or the implementation of certain rules at its sole
discretion.
The
Final Short High Yield Index tracks the performance of lower-rated and unrated
U.S. dollar denominated tax-exempt debt publicly issued in the U.S. domestic
market by U.S. states and territories as well as their political
subdivisions.
The
Final Short High Yield Index is a modified blend of the following indices, with
additional constraints placed on certain exposure concentrations:
70%
ICE 1-12 Year Core High Yield & Unrated Municipal Index;
20%
ICE 1-12 Year Core BBB Municipal Index;
10%
ICE 1-12 Year Core Single-A Municipal Index.
The
Final Short High Yield Index is rebalanced on the last calendar day of the
month, based on the rebalanced constituencies of the three component indices.
ICE Data may delay or change a scheduled rebalancing or reconstitution of the
Final Short High Yield Index or the implementation of certain rules at its sole
discretion.
The
Final Short Index tracks the performance of short maturity U.S. dollar
denominated investment grade tax-exempt debt publicly issued in the U.S.
domestic market by U.S. states and territories as well as their political
subdivisions. Qualifying securities must be exempt from Federal taxes and must
not be subject to alternative minimum tax. In addition, qualifying securities
must have less than six years remaining term to final maturity, a fixed coupon
schedule (including zero coupon and step up or stepdown bonds) and an investment
grade rating (based on the middle rating of Moody’s, S&P and
Fitch).
Qualifying
securities included in the Final Short Index must have at least one year but
less than six years remaining term to final maturity.
The
Final Short Index is rebalanced on the last calendar day of the month. ICE Data
may delay or change a scheduled rebalancing or reconstitution of the Final Short
Index or the implementation of certain rules at its sole
discretion.
The
Adviser has entered into a licensing agreement with each Index Provider to use
each Fund’s respective Index. Each Fund is entitled to use its respective Index
pursuant to a sublicensing arrangement with the Adviser.
VanEck
CEF Muni Income ETF is not sponsored, endorsed, sold or promoted by S-Network.
S-Network makes no representation or warranty, express or implied, to the owners
of VanEck CEF Muni Income ETF, or any member of the public regarding the
advisability of investing in securities generally or in VanEck CEF Muni Income
ETF particularly or the ability of the CEFMX Index to track the performance of
the federally tax-exempt annual yield sector of the closed-end fund market.
S-Network’s only relationship to the Adviser is the licensing of certain service
marks and trade names of S-Network and of the CEFMX Index that is determined,
composed and calculated by the S-Network without regard to the Adviser or VanEck
CEF Muni Income ETF. S-Network has no obligation to take the needs of the
Adviser or the owners of VanEck CEF Muni Income ETF, into consideration in
determining, composing or calculating the CEFMX Index. S-Network is not
responsible for and has not participated in the determination of the timing of,
prices at, or quantities of VanEck CEF Muni Income ETF to be issued or in the
determination or calculation of the equation by which VanEck CEF Muni Income ETF
is to be converted into cash. S-Network has no obligation or liability in
connection with the administration, marketing or trading of VanEck CEF Muni
Income ETF.
S-NETWORK
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE CEFMX INDEX OR
ANY DATA INCLUDED THEREIN AND THE INDEX PROVIDER SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S-NETWORK MAKES NO WARRANTY,
EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF
VANECK CEF MUNI INCOME ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
CEFMX INDEX OR ANY DATA INCLUDED THEREIN. S-NETWORK MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE CEFMX INDEX OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE
CEFMX INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
The
information contained herein regarding the High Yield Index, the Final High
Yield Index, the Intermediate Index, the Final Intermediate Index, the Long
Index, the Final Long Index, the Short High Yield Index, the Final Short High
Yield Index, the Short Index and the Final Short Index (collectively, the “ICE
Indices”) was provided by ICE Data and its affiliates.
The
Adviser has entered into a licensing agreement with ICE Data to use the ICE
Indices. 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 “Products”) is entitled to use its
respective Index pursuant to a sub-licensing arrangement with the
Adviser.
Source
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The
financial highlights tables which follow are intended to help you understand the
Funds’ financial performance for the past five years or as indicated. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in a Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by another independent
registered public accounting firm for the periods reflected in the financial
highlights below, whose report, along with the Funds’ financial statements, are
included in the Funds’ annual report, which is available upon
request.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEF
Muni Income ETF |
|
Year
Ended April 30, |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
Net
asset value, beginning of year |
$29.07 |
|
|
|
$24.34 |
|
|
|
$26.18 |
|
|
|
$24.97 |
|
|
|
$26.58 |
|
|
Net
investment income (a) |
1.14 |
|
|
|
1.14 |
|
|
|
1.09 |
|
|
|
1.16 |
|
|
|
1.27 |
|
|
Net
realized and unrealized gain (loss) on investments |
(5.56) |
|
|
|
4.71 |
|
|
|
(1.83) |
|
|
|
1.21 |
|
|
|
(1.61) |
|
|
Total
from investment operations |
(4.42) |
|
|
|
5.85 |
|
|
|
(0.74) |
|
|
|
2.37 |
|
|
|
(0.34) |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(1.12) |
|
|
|
(1.12) |
|
|
|
(1.10) |
|
|
|
(1.16) |
|
|
|
(1.27) |
|
|
Net
asset value, end of year |
$23.53 |
|
|
|
$29.07 |
|
|
|
$24.34 |
|
|
|
$26.18 |
|
|
|
$24.97 |
|
|
Total
return (b) |
(15.82) |
|
% |
|
24.38 |
|
% |
|
(3.17) |
|
% |
|
9.83 |
|
% |
|
(1.45) |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
expenses (c)(d) |
0.40 |
|
% |
|
0.40 |
|
% |
|
0.45 |
|
% |
|
0.48 |
|
% |
|
0.50 |
|
% |
Net
expenses (c)(d) |
0.40 |
|
% |
|
0.40 |
|
% |
|
0.40 |
|
% |
|
0.40 |
|
% |
|
0.40 |
|
% |
Net
investment income (c) |
4.01 |
|
% |
|
4.17 |
|
% |
|
4.02 |
|
% |
|
4.67 |
|
% |
|
4.78 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$169 |
|
|
|
$177 |
|
|
|
$142 |
|
|
|
$144 |
|
|
|
$95 |
|
|
Portfolio
turnover rate (e) |
15 |
|
% |
|
11 |
|
% |
|
10 |
|
% |
|
13 |
|
% |
|
9 |
|
% |
(a) Calculated
based upon average shares outstanding
(b) Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c) The
ratios presented do not reflect the Fund’s proportionate share of income and
expenses from the Fund’s investment in underlying funds.
(d) Periods
after November 1, 2019 reflect a unitary management fee structure.
(e) Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
Yield Muni ETF (a) |
|
Year
Ended April 30, |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
Net
asset value, beginning of year |
$62.48 |
|
|
|
$56.13 |
|
|
|
$62.79 |
|
|
|
$62.16 |
|
|
|
$61.52 |
|
|
Net
investment income (b) |
2.09 |
|
|
|
2.36 |
|
|
|
2.69 |
|
|
|
2.67 |
|
|
|
2.72 |
|
|
Net
realized and unrealized gain (loss) on investments |
(7.27) |
|
|
|
6.38 |
|
|
|
(6.73) |
|
|
|
0.64 |
|
|
|
0.60 |
|
|
Total
from investment operations |
(5.18) |
|
|
|
8.74 |
|
|
|
(4.04) |
|
|
|
3.31 |
|
|
|
3.32 |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(2.12) |
|
|
|
(2.39) |
|
|
|
(2.62) |
|
|
|
(2.68) |
|
|
|
(2.68) |
|
|
Net
asset value, end of year |
$55.18 |
|
|
|
$62.48 |
|
|
|
$56.13 |
|
|
|
$62.79 |
|
|
|
$62.16 |
|
|
Total
return (c) |
(8.62) |
|
% |
|
15.84 |
|
% |
|
(6.86) |
|
% |
|
5.46 |
|
% |
|
5.48 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
0.35 |
|
% |
|
0.35 |
|
% |
|
0.35 |
|
% |
|
0.35 |
|
% |
|
0.35 |
|
% |
Net
Investment Income |
3.38 |
|
% |
|
3.91 |
|
% |
|
4.26 |
|
% |
|
4.31 |
|
% |
|
4.37 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$3,018 |
|
|
|
$3,461 |
|
|
|
$2,570 |
|
|
|
$2,656 |
|
|
|
$2,437 |
|
|
Portfolio
turnover rate (d) |
11 |
|
% |
|
9 |
|
% |
|
12 |
|
% |
|
10 |
|
% |
|
14 |
|
% |
(a) On
October 26, 2018, the Fund effected a 1 for 2 reverse share split. Per share
data has been adjusted to reflect the reverse share split.
(b) Calculated
based upon average shares outstanding
(c) Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(d) Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
HIP Sustainable Muni
ETF |
|
Period Ended April
30, 2022(a) |
Net
asset value, beginning of period |
$50.00 |
|
|
Net
investment income (b) |
0.10 |
|
|
Net
realized and unrealized loss on investments |
(4.22) |
|
|
Total
from investment operations |
(4.12) |
|
|
Distributions
from: |
|
|
Net
investment income |
(0.22) |
|
|
Net
asset value, end of period |
$45.66 |
|
|
Total
return (c) |
(8.26) |
|
%(d) |
Ratios
to average net assets |
|
|
Expenses |
0.24 |
|
%(e) |
Net
Investment Income |
0.33 |
|
%(e) |
Supplemental
data |
|
|
Net
assets, end of period (in millions) |
$14 |
|
|
Portfolio
turnover rate (f) |
11 |
|
%(d) |
(a) For
the period September 9, 2021 (commencement of operations) through April 30,
2022.
(b) Calculated
based upon average shares outstanding
(c) Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(d) Not
Annualized
(e) Annualized
(f) Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intermediate
Muni ETF (a) |
|
Year
Ended April 30, |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
Net
asset value, beginning of year |
$51.62 |
|
|
|
$48.97 |
|
|
|
$48.94 |
|
|
|
$46.83 |
|
|
|
$47.40 |
|
|
Net
investment income (b) |
0.83 |
|
|
|
0.98 |
|
|
|
1.09 |
|
|
|
1.12 |
|
|
|
1.08 |
|
|
Net
realized and unrealized gain (loss) on investments |
(5.92) |
|
|
|
2.72 |
|
|
|
0.10 |
|
|
|
2.11 |
|
|
|
(0.59) |
|
|
Total
from investment operations |
(5.09) |
|
|
|
3.70 |
|
|
|
1.19 |
|
|
|
3.23 |
|
|
|
0.49 |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.84) |
|
|
|
(0.98) |
|
|
|
(1.10) |
|
|
|
(1.12) |
|
|
|
(1.06) |
|
|
Net
realized capital gains |
— |
|
(c) |
|
(0.07) |
|
|
|
(0.06) |
|
|
|
— |
|
|
|
— |
|
|
Total
distributions |
(0.84) |
|
|
|
(1.05) |
|
|
|
(1.16) |
|
|
|
(1.12) |
|
|
|
(1.06) |
|
|
Net
asset value, end of year |
$45.69 |
|
|
|
$51.62 |
|
|
|
$48.97 |
|
|
|
$48.94 |
|
|
|
$46.83 |
|
|
Total
return (d) |
(9.99) |
|
% |
|
7.59 |
|
% |
|
2.40 |
|
% |
|
6.98 |
|
% |
|
1.04 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
0.24 |
|
% |
|
0.24 |
|
% |
|
0.24 |
|
% |
|
0.24 |
|
% |
|
0.24 |
|
% |
Net
investment income |
1.64 |
|
% |
|
1.90 |
|
% |
|
2.17 |
|
% |
|
2.37 |
|
% |
|
2.24 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$1,695 |
|
|
|
$1,801 |
|
|
|
$1,582 |
|
|
|
$1,720 |
|
|
|
$1,698 |
|
|
Portfolio
turnover rate (e) |
4 |
|
% |
|
6 |
|
% |
|
7 |
|
% |
|
7 |
|
% |
|
9 |
|
% |
(a)On
October 26, 2018, the Fund effected a 1 for 2 reverse share split. Per share
data has been adjusted to reflect the reverse share split.
(b)Calculated
based upon average shares outstanding
(c)Amount
represents less than $0.005 per share.
(d)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(e)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long
Muni ETF |
|
Year
Ended April 30, |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
Net
asset value, beginning of year |
$21.68 |
|
|
|
$20.18 |
|
|
|
$20.40 |
|
|
|
$19.63 |
|
|
|
$19.63 |
|
|
Net
investment income (a) |
0.46 |
|
|
|
0.52 |
|
|
|
0.57 |
|
|
|
0.60 |
|
|
|
0.59 |
|
|
Net
realized and unrealized gain (loss) on investments |
(3.26) |
|
|
|
1.54 |
|
|
|
(0.20) |
|
|
|
0.77 |
|
|
|
0.01 |
|
|
Total
from investment operations |
(2.80) |
|
|
|
2.06 |
|
|
|
0.37 |
|
|
|
1.37 |
|
|
|
0.60 |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.46) |
|
|
|
(0.52) |
|
|
|
(0.57) |
|
|
|
(0.60) |
|
|
|
(0.60) |
|
|
Net
realized capital gains |
(0.07) |
|
|
|
(0.04) |
|
|
|
(0.02) |
|
|
|
— |
|
|
|
— |
|
|
Total
distributions |
(0.53) |
|
|
|
(0.56) |
|
|
|
(0.59) |
|
|
|
(0.60) |
|
|
|
(0.60) |
|
|
Net
asset value, end of year |
$18.35 |
|
|
|
$21.68 |
|
|
|
$20.18 |
|
|
|
$20.40 |
|
|
|
$19.63 |
|
|
Total
return (b) |
(13.26) |
|
% |
|
10.31 |
|
% |
|
1.75 |
|
% |
|
7.15 |
|
% |
|
3.02 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
0.24 |
|
% |
|
0.24 |
|
% |
|
0.24 |
|
% |
|
0.24 |
|
% |
|
0.24 |
|
% |
Net
investment income |
2.15 |
|
% |
|
2.45 |
|
% |
|
2.72 |
|
% |
|
3.06 |
|
% |
|
2.96 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$216 |
|
|
|
$228 |
|
|
|
$200 |
|
|
|
$153 |
|
|
|
$154 |
|
|
Portfolio
turnover rate (c) |
7 |
|
% |
|
23 |
|
% |
|
22 |
|
% |
|
22 |
|
% |
|
33 |
|
% |
(a) Calculated
based upon average shares outstanding
(b) Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c) Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Muni
Allocation ETF |
|
Year
Ended April 30, |
|
|
|
|
2022 |
|
2021 |
|
Period
Ended April 30, 2020 (a) |
Net
asset value, beginning of period |
$24.95 |
|
|
|
$22.96 |
|
|
|
$25.05 |
|
|
Net
investment income (b) |
0.62 |
|
|
|
0.62 |
|
|
|
0.72 |
|
|
Net
realized and unrealized gain (loss) on investments |
(3.31) |
|
|
|
2.05 |
|
|
|
(2.20) |
|
|
Total
from investment operations |
(2.69) |
|
|
|
2.67 |
|
|
|
(1.48) |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
Net
investment income |
(0.58) |
|
|
|
(0.68) |
|
|
|
(0.61) |
|
|
Net
asset value, end of period |
$21.68 |
|
|
|
$24.95 |
|
|
|
$22.96 |
|
|
Total
return (c) |
(11.03) |
|
% |
|
11.70 |
|
% |
|
(6.13) |
|
%(d) |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
Gross
expenses (e)(f) |
0.08 |
|
% |
|
0.08 |
|
% |
|
1.28 |
|
%(g) |
Net
expenses (e)(f) |
0.08 |
|
% |
|
0.08 |
|
% |
|
0.08 |
|
%(g) |
Net
investment income (e) |
2.54 |
|
% |
|
2.54 |
|
% |
|
3.02 |
|
%(g) |
Supplemental
data |
|
|
|
|
|
|
|
|
Net
assets, end of period (in millions) |
$4 |
|
|
|
$5 |
|
|
|
$5 |
|
|
Portfolio
turnover rate (h) |
98 |
|
% |
|
169 |
|
% |
|
162 |
|
%(d) |
(a) For
the period May 15, 2019 (commencement of operations) through April 30,
2020.
(b) Calculated
based upon average shares outstanding
(c) Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(d) Not
Annualized
(e) The
ratios presented do not reflect the Fund’s proportionate share of income and
expenses from the Fund’s investment in underlying funds.
(f) Periods
after November 1, 2019 reflect a unitary management fee structure.
(g) Annualized
(h) Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short
High Yield Muni ETF |
|
Year
Ended April 30, |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
Net
asset value, beginning of year |
$25.06 |
|
|
|
$23.09 |
|
|
|
$24.70 |
|
|
|
$24.24 |
|
|
|
$24.26 |
|
|
Net
investment income (a) |
0.58 |
|
|
|
0.73 |
|
|
|
0.84 |
|
|
0.80 |
|
0.80 |
|
|
|
0.76 |
|
|
Net
realized and unrealized gain (loss) on investments |
(2.18) |
|
|
|
1.99 |
|
|
|
(1.64) |
|
|
|
0.43 |
|
|
|
(0.02) |
|
|
Total
from investment operations |
(1.60) |
|
|
|
2.72 |
|
|
|
(0.80) |
|
|
|
1.23 |
|
|
|
0.74 |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.60) |
|
|
|
(0.75) |
|
|
|
(0.81) |
|
|
|
(0.77) |
|
|
|
(0.76) |
|
|
Net
asset value, end of year |
$22.86 |
|
|
|
$25.06 |
|
|
|
$23.09 |
|
|
|
$24.70 |
|
|
|
$24.24 |
|
|
Total
return (b) |
(6.58) |
|
% |
|
11.89 |
|
% |
|
(3.44) |
|
% |
|
5.16 |
|
% |
|
3.07 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
0.35 |
|
% |
|
0.35 |
|
% |
|
0.35 |
|
% |
|
0.35 |
|
% |
|
0.35 |
|
% |
Net
investment income |
2.34 |
|
% |
|
2.98 |
|
% |
|
3.37 |
|
% |
|
3.28 |
|
% |
|
3.11 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$418 |
|
|
|
$306 |
|
|
|
$263 |
|
|
|
$203 |
|
|
|
$135 |
|
|
Portfolio
turnover rate (c) |
16 |
|
% |
|
14 |
|
% |
|
17 |
|
% |
|
22 |
|
% |
|
27 |
|
% |
(a) Calculated
based upon average shares outstanding
(b) Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c) Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short
Muni ETF |
|
Year
Ended April 30, |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
Net
asset value, beginning of year |
$18.04 |
|
|
|
$17.55 |
|
|
|
$17.54 |
|
|
|
$17.18 |
|
|
|
$17.52 |
|
|
Net
investment income (a) |
0.15 |
|
|
|
0.23 |
|
|
|
0.27 |
|
|
0.80 |
|
0.27 |
|
|
|
0.22 |
|
|
Net
realized and unrealized gain (loss) on investments |
(1.09) |
|
|
|
0.51 |
|
|
|
0.02 |
|
|
|
0.36 |
|
|
|
(0.34) |
|
|
Total
from investment operations |
(0.94) |
|
|
|
0.74 |
|
|
|
0.29 |
|
|
|
0.63 |
|
|
|
(0.12) |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.19) |
|
|
|
(0.25) |
|
|
|
(0.28) |
|
|
|
(0.27) |
|
|
|
(0.22) |
|
|
Net
realized capital gains |
(0.02) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total
distributions |
(0.21) |
|
|
|
(0.25) |
|
|
|
(0.28) |
|
|
|
(0.27) |
|
|
|
(0.22) |
|
|
Net
asset value, end of year |
$16.89 |
|
|
|
$18.04 |
|
|
|
$17.55 |
|
|
|
$17.54 |
|
|
|
$17.18 |
|
|
Total
return (b) |
(5.27) |
|
% |
|
4.27 |
|
% |
|
1.66 |
|
% |
|
3.70 |
|
% |
|
(0.70) |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
0.20 |
|
% |
|
0.20 |
|
% |
|
0.20 |
|
% |
|
0.20 |
|
% |
|
0.20 |
|
% |
Net
investment income |
0.86 |
|
% |
|
1.26 |
|
% |
|
1.54 |
|
% |
|
1.57 |
|
% |
|
1.26 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$328 |
|
|
|
$297 |
|
|
|
$204 |
|
|
|
$201 |
|
|
|
$220 |
|
|
Portfolio
turnover rate (c) |
18 |
|
% |
|
30 |
|
% |
|
34 |
|
% |
|
33 |
|
% |
|
41 |
|
% |
(a) Calculated
based upon average shares outstanding
(b) Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c) Portfolio
turnover rate excludes in-kind transactions.
Information
regarding how often the closing trading price of the Shares of each Fund was
above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund
for the most recently completed calendar year and the most recently completed
calendar quarter(s) since that year (or the life of the Fund, if shorter) can be
found at www.vaneck.com.
CONTINUOUS
OFFERING
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Trust on an ongoing basis, a “distribution,” as such term is used in the
Securities Act, may occur at any point. Broker dealers and other persons are
cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery and liability provisions of the Securities Act.
For
example, a broker dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent Shares, and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker
dealers who are not “underwriters” but are participating in a distribution (as
contrasted to ordinary secondary trading transactions), and thus dealing with
Shares that are part of an “unsold allotment” within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
This is because the prospectus delivery exemption in Section 4(a)(3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the 1940 Act. As a result, broker dealer firms should note that
dealers who are not underwriters but are participating in a distribution (as
contrasted with ordinary secondary market transactions) and thus dealing with
the Shares that are part of an overallotment within the meaning of Section
4(a)(3)(A) of the Securities Act would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
Firms that incur a prospectus delivery obligation with respect to Shares are
reminded that, under Rule 153 of the Securities Act, a prospectus delivery
obligation under Section 5(b)(2) of the Securities Act owed to an exchange
member in connection with a sale on the Exchange is satisfied by the fact that
the prospectus is available at the Exchange upon request. The prospectus
delivery mechanism provided in Rule 153 is only available with respect to
transactions on an exchange.
In
addition, certain affiliates of the Funds and the Adviser may purchase and
resell Fund shares pursuant to this Prospectus.
OTHER
INFORMATION
The
Trust was organized as a Delaware statutory trust on March 15, 2001. Its
Declaration of Trust currently permits the Trust to issue an unlimited number of
Shares of beneficial interest. If shareholders are required to vote on any
matters, each Share outstanding would be entitled to one vote. Annual meetings
of shareholders will not be held except as required by the 1940 Act and other
applicable law. See the Funds’ SAI for more information concerning the Trust’s
form of organization. Section 12(d)(1) of the 1940 Act restricts investments by
investment companies in the securities of other investment companies, including
Shares of a Fund. Registered investment companies are permitted to invest in the
Funds (except VanEck CEF Muni Income ETF and VanEck Muni Allocation ETF) beyond
the limits set forth in Section 12(d)(1) subject to certain terms and conditions
set forth in SEC regulations, including that such investment companies enter
into an agreement with such Fund.
The
Prospectus, SAI and any other Fund communication do not create any contractual
obligations between the Fund’s shareholders and the Trust, the Fund, the Adviser
and/or the Trustees. Further, shareholders are not intended third-party
beneficiaries of any contracts entered into by (or on behalf of) any Fund,
including contracts with the Adviser or other parties who provide services to
the Fund.
Dechert
LLP serves as counsel to the Trust, including the Funds. PricewaterhouseCoopers
LLP serves as the Trust’s independent registered public accounting firm and will
audit the Fund’s financial statements annually.
ADDITIONAL
INFORMATION
This
Prospectus does not contain all the information included in the Registration
Statement filed with the SEC with respect to the Funds’ Shares. The Funds’
Registration Statement, including this Prospectus, the Funds’ SAI and the
exhibits are available on the EDGAR database at the SEC’s website
(http://www.sec.gov), and copies may be obtained, after paying a duplicating
fee, by electronic request at the following email address: [email protected].
The
SAI for the Funds, which has been filed with the SEC, provides more information
about the Funds. The SAI for the Funds is incorporated herein by reference and
is legally part of this Prospectus. Additional information about the Funds’
investments is available in each Fund’s annual and semi-annual reports to
shareholders. In each Fund’s annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund’s performance during its last fiscal year. The SAI and the Funds’ annual
and semi-annual reports may be obtained without charge by writing to the Funds
at Van Eck Securities Corporation, the Funds’ Distributor, at 666 Third Avenue,
9th Floor, New York, New York 10017 or by calling the distributor at the
following number: Investor Information: 800.826.2333.
Shareholder
inquiries may be directed to the Funds in writing to 666 Third Avenue, 9th
Floor, New York, New York 10017 or by calling 800.826.2333.
The
Funds’ SAI is available at www.vaneck.com.
(Investment
Company Act file no. 811-10325)
For
more detailed information about the Funds, see the SAI dated September 1, 2022,
as may be supplemented from time to time. Additional information about the
Funds’ investments is or will be available in each Fund’s annual and semi-annual
reports to shareholders. In each Fund’s annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund’s performance during its last fiscal year.
Call
VanEck at 800.826.2333 to request, free of charge, the annual or semi-annual
reports, the SAI, or other information about the Funds or to make shareholder
inquiries. You may also obtain the SAI or a Fund’s annual or semi-annual
reports, by visiting the VanEck website at www.vaneck.com.
Reports
and other information about the Funds are available on the EDGAR Database on the
SEC’s internet site at http://www.sec.gov. In addition, copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following email address: [email protected].
|
|
|
|
|
|
|
|
Transfer
Agent: State Street Bank and Trust Company SEC Registration Number:
333-123257 1940 Act Registration Number: 811-10325 |
800.826.2333 vaneck.com |
MUNIPRO |