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The
information in this Prospectus is not complete and may be changed. The
Trust may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This Prospectus
is not an offer to sell these securities and is not soliciting an offer to
buy these securities in any jurisdiction where the offer or sale is not
permitted.
Subject
to Completion
Preliminary
Prospectus dated November 12, 2021 |
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PROSPECTUS
[
], 2021 |
VANECK®
Biotech
ETF BBH
Pharmaceutical
ETF PPH®
Retail
ETF RTH®
Semiconductor
ETF SMH®
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Principal
U.S. Listing Exchange for BBH, PPH, RTH and SMH: The NASDAQ Stock
Market LLC. 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®
Biotech ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
US Listed Biotech 25 Index (the “Biotech 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)(b) |
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 February 1, 2023.
(b) "Other
Expenses" have been restated to reflect current fees.
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 40% 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 Fund’s benchmark index. The Biotech Index includes common stocks
and depositary receipts of U.S. exchange-listed companies in the biotechnology
industry. Such companies may include medium-capitalization companies and foreign
companies that are listed on a U.S. exchange. To be initially eligible for the
Biotech Index, companies must generate at least 50% of their revenues from
biotechnology.
____________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Biotech ETF.
Biotechnology
includes companies engaged primarily in research (including research
contractors) and development as well as production, marketing and sales of drugs
based on genetic analysis and diagnostic equipment (excluding pharmacies). Of
the largest 50 stocks in the biotechnology industry by full market
capitalization, the top 25 by free-float market capitalization (i.e.,
includes only shares that are readily available for trading in the market) and
three month average daily trading volume are included in the Biotech Index. As
of [December 31, 2020], the Biotech Index included 24 securities of companies
with a market capitalization range of between approximately $[7.1] billion and
$[133.9] billion and a weighted average market capitalization of $[44.9]
billion. These amounts are subject to change. The Fund’s 80% investment policy
is non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Biotech Index by investing in a portfolio of
securities that generally replicates the Biotech Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Biotech Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Biotech Index.
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. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Biotech Index concentrates in an industry or group of industries. [As of
September 30, 2020, the Fund was concentrated in the biotechnology industry and
the health care sector.]
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.
Risk
of Investing in the Biotechnology Industry.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the biotechnology industry. The success of
biotechnology companies is highly dependent on the development, procurement
and/or marketing of drugs. The values of biotechnology companies are also
dependent on the development, protection and exploitation of intellectual
property rights and other proprietary information, and the profitability of
biotechnology companies may be affected significantly by such things as the
expiration of patents or the loss of, or the inability to enforce, intellectual
property rights. The research and development and other costs associated with
developing or procuring new drugs, products or technologies and the related
intellectual property rights can be significant, and the results of such
research and expenditures are unpredictable and may not necessarily lead to
commercially successful products. In addition, the potential for an increased
amount of required disclosure or proprietary scientific information could
negatively impact the competitive position of these companies. Governmental
regulation may delay or inhibit the release of new products. The process for
obtaining regulatory approval by the U.S. Food and Drug Administration (the
"FDA") or other governmental regulatory authorities is long and costly and there
can be no assurance that the necessary approvals will be obtained or maintained.
Companies in the biotechnology industry may also be subject to expenses and
losses from expensive insurance costs due to the risk of product liability
lawsuits, and extensive litigation based on intellectual property, product
liability and similar claims. Companies in the biotechnology industry may be
adversely affected by government regulation and changes in reimbursement rates.
Health care providers, principally hospitals, that transact with companies in
the biotechnology industry often rely on third party payors, such as Medicare,
Medicaid and other government sponsored programs, private health insurance plans
and health maintenance organizations to reimburse all or a portion of the cost
of health care related products or services.
A
biotechnology company’s valuation can often be based largely on the potential or
actual performance of a limited number of products. A biotechnology company’s
valuation can also be greatly affected if one of its products proves unsafe,
ineffective, unprofitable or if such product is not approved by the FDA. Such
companies may also be characterized by thin capitalization and limited markets,
financial resources or personnel. The stock prices of companies in the
biotechnology industry have been and will likely continue to be extremely
volatile, particularly when their products are up for regulatory approval and/or
under regulatory scrutiny. Some of the companies in the biotechnology industry
are engaged in other lines of business unrelated to biotechnology, and they may
experience problems with these lines of business which could adversely affect
their operating results. The operating results of these companies may fluctuate
as a result of these additional risks and events in the other lines of business.
In addition, a company’s ability to engage in new activities may expose it to
business risks with which it has less experience than it has with the business
risks associated with its traditional businesses. Despite a company’s possible
success in traditional biotechnology activities, there can be no assurance that
the other lines of business in which these companies are engaged will not have
an adverse effect on a company’s business or financial condition.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and
financial
reporting standards, practices and requirements applicable to non-U.S. issuers
may differ from those applicable to U.S. issuers.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the Health Care Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the health care sector. Companies in the
health care sector may be affected by extensive government regulation,
restrictions on government reimbursement for medical expenses, rising costs of
medical products and services, pricing pressure, an increased emphasis on
outpatient services, limited number of products, industry innovation, changes in
technologies and other market developments. Many health care companies are
heavily dependent on patent protection and are subject to extensive litigation
based on product liability and similar claims.
Risk
of Investing in Depositary Receipts.
The Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments in depositary receipts may be less
liquid than the underlying shares in their primary trading market and, if not
included in the Biotech Index, may negatively affect the Fund’s ability to
replicate the performance of the Biotech Index.
Risk
of Investing in Medium-Capitalization Companies.
The Fund may invest in medium-capitalization companies and, therefore will be
subject to certain risks associated with medium-capitalization companies. These
companies are often subject to less analyst coverage and may be in early and
less predictable periods of their corporate existences, with little or no record
of profitability. In addition, these companies often have greater price
volatility, lower trading volume and less liquidity than larger, more
established companies. These companies tend to have smaller revenues, narrower
product lines, less management depth and experience, smaller shares of their
product or service markets, fewer financial resources and less competitive
strength than large-capitalization companies. Returns on investments in
securities of medium-capitalization companies could trail the returns on
investments in securities of larger companies.
Issuer-Specific
Changes Risk.
The value of individual securities or particular types of securities in the
Fund’s portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers.
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.
Index
Tracking Risk.
The Fund’s return may not match the return of the Biotech Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Biotech 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 Biotech 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
(as defined herein), which are not factored into the return of the Biotech
Index. Transaction costs, including brokerage costs, will decrease the Fund’s
net asset value (“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 Biotech Index. Errors in
the Biotech Index data, the Biotech Index computations and/or the construction
of the Biotech Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the Biotech 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 Biotech Index provider's errors will
be kept by the Fund and its shareholders and any losses or costs resulting from
the Biotech Index provider's errors will be borne by the Fund and its
shareholders. The Fund may not be fully invested at times either as a result of
cash flows into the Fund (if the Fund effects creations and redemptions for
cash) or reserves of cash held by the Fund to meet redemptions or pay expenses.
When
the Biotech Index is rebalanced and the Fund in turn rebalances its
portfolio
to attempt to increase the correlation between the Fund’s portfolio and the
Biotech 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 Biotech Index provider or its agents may carry
out additional ad hoc rebalances to the Biotech Index. Therefore, errors and
additional ad hoc rebalances carried out by the Biotech Index provider or its
agents to the Biotech Index may increase the costs to and the tracking error
risk of the Fund. In
addition, the Fund may not be able to invest in certain securities included in
the Biotech Index, or invest in them in the exact proportions in which they are
represented in the Biotech Index. The Fund’s performance may also deviate from
the return of the Biotech Index due to legal restrictions or limitations imposed
by the governments of certain countries, certain listing standards of the Fund’s
listing exchange (the “Exchange”), a lack of liquidity on stock exchanges in
which such securities trade, potential adverse tax consequences or other
regulatory reasons or legal restrictions or limitations (such as diversification
requirements). The Fund may value certain of its investments, underlying
securities and/or underlying currencies based on fair value prices. To the
extent the Fund calculates its NAV based on fair value prices and the value of
the Biotech Index is based on securities’ closing prices on local foreign
markets (i.e.,
the value of the Biotech Index is not based on fair value prices), the Fund’s
ability to track the Biotech Index may be adversely affected. 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. The Fund may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. 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 Biotech Index. In light of the factors
discussed above, the Fund’s return may deviate significantly from the return of
the Biotech Index. Changes to the composition of the Biotech Index in connection
with a rebalancing or reconstitution of the Biotech 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 equity securities traded on an exchange, 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 Biotech 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 Biotech Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Biotech 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-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. The Fund may be particularly vulnerable to this risk because
the Biotech Index is comprised of securities of a limited number of
companies.
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 Biotech 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
[TO
BE UPDATED]
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Best
Quarter: |
27.58% |
2Q
2020 |
Worst
Quarter: |
-18.19% |
1Q
2016 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
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.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception
(12/20/2011) |
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VanEck
Biotech ETF (return before taxes) |
22.05% |
6.43% |
19.35% |
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VanEck
Biotech ETF (return after taxes on distributions) |
21.94% |
6.33% |
19.26% |
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VanEck
Biotech ETF (return after taxes on distributions and sale of Fund
Shares) |
13.13% |
5.02% |
16.57% |
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MVIS
US Listed Biotech 25 Index (reflects no deduction for fees, expenses or
taxes, except withholding taxes) |
22.13% |
6.60% |
19.55% |
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S&P
500®
Index (reflects no deduction for fees, expenses or taxes) |
18.40% |
15.22% |
15.39% |
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See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and 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 |
December
2011 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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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®
Pharmaceutical ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
US Listed Pharmaceutical 25 Index (the “Pharmaceutical 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)(b) |
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 February 1, 2023.
(b) "Other
Expenses" have been restated to reflect current fees.
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 18% 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 Fund’s benchmark index. The Pharmaceutical Index includes common
stocks and depositary receipts of U.S. exchange-listed companies in the
pharmaceutical industry. Such companies may include medium-capitalization
companies and foreign companies that are listed on a U.S. exchange. To be
initially eligible for the Pharmaceutical Index, companies must generate at
least 50% of their revenues from pharmaceuticals. Pharmaceuticals include
companies engaged primarily in research (including research contractors)
____________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Pharmaceutical ETF.
and
development as well as production, marketing and sales of pharmaceuticals
(excluding pharmacies). Of the largest 50 stocks in the pharmaceutical industry
by full market capitalization, the top 25 by free-float market capitalization
(i.e.,
includes only shares that are readily available for trading in the market) and
three month average daily trading volume are included in the Pharmaceutical
Index. As of [December 31, 2020], the Pharmaceutical Index included 25
securities of companies with a market capitalization range of between
approximately $[1.9] billion and $[414.3] billion and a weighted average market
capitalization of $[113.6] billion. As of September 30, 2020, a significant
portion of the Fund's assets was invested in securities of European issuers.
These amounts are subject to change. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Pharmaceutical Index by investing in a
portfolio of securities that generally replicates the Pharmaceutical Index.
Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Pharmaceutical Index and
does not seek temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Pharmaceutical
Index.
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. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Pharmaceutical Index concentrates in an industry or group of industries. [As
of September 30, 2020, the Fund was concentrated in the health care sector and
the pharmaceutical industry.]
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.
Risk
of Investing in the Pharmaceutical Industry.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the pharmaceutical industry. The success of
companies in the pharmaceutical industry is highly dependent on the development,
procurement and marketing of drugs. The values of pharmaceutical companies are
also dependent on the development, protection and exploitation of intellectual
property rights and other proprietary information, and the profitability of
pharmaceutical companies may be significantly affected by such things as the
limited number of products, expiration of patents or the loss of, or the
inability to enforce, intellectual property rights. The research and other costs
associated with developing or procuring new drugs and the related intellectual
property rights can be significant, and the results of such research and
expenditures are unpredictable. In addition, pharmaceutical companies may be
susceptible to product obsolescence. Many pharmaceutical companies face intense
competition from new products and less costly generic products. Moreover, the
process for obtaining regulatory approval by the U.S. Food and Drug
Administration (“FDA”) or other governmental regulatory authorities is long and
costly and there can be no assurance that the necessary approvals will be
obtained or maintained.
Companies
in the pharmaceutical industry may also be subject to expenses and losses from
extensive litigation based on intellectual property, product liability and
similar claims. Companies in the pharmaceutical industry may be adversely
affected by government regulation and changes in reimbursement rates. The
ability of many pharmaceutical companies to commercialize current and any future
products depends in part on the extent to which reimbursement for the cost of
such products and related treatments are available from third party payors, such
as Medicare, Medicaid and other government sponsored programs, private health
insurance plans and health maintenance organizations.
The
international operations of many pharmaceutical companies expose them to risks
associated with instability and changes in economic and political conditions,
foreign currency fluctuations, changes in foreign regulations and other risks
inherent to international business. Such companies also may be characterized by
thin capitalization and limited markets, financial resources or personnel, as
well as dependence on wholesale distributors. A pharmaceutical company’s
valuation can be adversely affected if one of its products proves unsafe,
ineffective or unprofitable. The stock prices of companies in the pharmaceutical
industry have been and will likely continue to be extremely volatile, in part
due to the prevalence of merger and acquisition activity in the pharmaceutical
industry. Some pharmaceutical companies are engaged in other lines of business
unrelated to pharmaceuticals, and they may experience problems with these lines
of business which could adversely affect their operating results. The operating
results of these companies may fluctuate as a result of these additional risks
and events in the other lines of business. In addition, a company’s ability to
engage in new activities may expose it to business risks with which it has less
experience than it has with the business risks associated with its traditional
businesses. Despite a company’s possible success in traditional pharmaceutical
activities, there can be no assurance that the other lines of business in which
these companies are engaged will not have an adverse effect on a company’s
business or financial condition.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or
economic
developments, taxation by foreign governments, political instability, the
possibility that foreign governmental restrictions may be adopted which might
adversely affect such securities and that the selection of such securities may
be more difficult because there may be less publicly available information
concerning such non-U.S. issuers or the accounting, auditing and financial
reporting standards, practices and requirements applicable to non-U.S. issuers
may differ from those applicable to U.S. issuers.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the Health Care Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the health care sector. Companies in the
health care sector may be affected by extensive government regulation,
restrictions on government reimbursement for medical expenses, rising costs of
medical products and services, pricing pressure, an increased emphasis on
outpatient services, limited number of products, industry innovation, changes in
technologies and other market developments. Many health care companies are
heavily dependent on patent protection and are subject to extensive litigation
based on product liability and similar claims.
Risk
of Investing in Depositary Receipts.
The Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments in depositary receipts may be less
liquid than the underlying shares in their primary trading market and, if not
included in the Pharmaceutical Index, may negatively affect the Fund’s ability
to replicate the performance of the Pharmaceutical Index.
Special
Risk Considerations of Investing in European Issuers.
Investments in securities of European issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Economic and Monetary Union ("EMU") of the European Union ("EU")
requires member countries to comply with restrictions on inflation rates,
deficits, interest rates, debt levels and fiscal and monetary controls, each of
which may significantly affect every country in Europe. Decreasing imports or
exports, changes in governmental or EU regulations on trade, changes in the
exchange rate of the euro, the default or threat of default by an EU member
country on its sovereign debt, and/or an economic recession in an EU member
country may have a significant adverse effect on the economies of EU member
countries and on major trading partners outside Europe. The European financial
markets have previously experienced, and may continue to experience, volatility
and have been adversely affected, and may in the future be affected, by concerns
about economic downturns, credit rating downgrades, rising government debt
levels and possible default on or restructuring of government debt in several
European countries. These events have adversely affected, and may in the future
affect, the value and exchange rate of the euro and may continue to
significantly affect the economies of every country in Europe, including EU
member countries that do not use the euro and non-EU member countries. In a
referendum held on June 23, 2016, voters in the UK voted to leave the EU,
creating economic and political uncertainty in its wake. On January 31, 2020,
the UK officially withdrew from the EU and the UK entered a transition period
which ended on December 31, 2020. On December 30, 2020, the EU and UK signed the
EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on the terms
governing certain aspects of the EU's and the UK's relationship following the
end of the transition period. Notwithstanding the TCA, following the transition
period, there is likely to be considerable uncertainty as to the UK's
post-transition framework.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s
investments.
Foreign
Currency Risk.
Because all or a portion of the proceeds received by the Fund from its
investments and/or the revenues received by the underlying issuer will generally
be denominated in foreign currencies, the Fund’s exposure to foreign currencies
and changes in the value of foreign currencies versus the U.S. dollar may result
in reduced returns for the Fund, and the value of certain foreign currencies may
be subject to a high degree of fluctuation. Moreover, the Fund may incur costs
in connection with conversions between U.S. dollars and foreign
currencies.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less
management
depth and experience and less competitive strength. In addition, these companies
often have greater price volatility, lower trading volume and less liquidity
than larger, more established companies. Returns on investments in securities of
small- and medium-capitalization companies could trail the returns on
investments in securities of large-capitalization companies.
Issuer-Specific
Changes Risk.
The value of individual securities or particular types of securities in the
Fund’s portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers.
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.
Index
Tracking Risk. The
Fund’s return may not match the return of the Pharmaceutical Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Pharmaceutical 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
Pharmaceutical 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 (as defined herein), which are not
factored into the return of the Pharmaceutical Index. Transaction costs,
including brokerage costs, will decrease the Fund’s net asset value (“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 Pharmaceutical Index. Errors in the Pharmaceutical
Index data, the Pharmaceutical Index computations and/or the construction of the
Pharmaceutical Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the Pharmaceutical 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 Pharmaceutical Index provider's errors
will be kept by the Fund and its shareholders and any losses or costs resulting
from the Pharmaceutical Index provider's errors will be borne by the Fund and
its shareholders. When
the Pharmaceutical Index is rebalanced and the Fund in turn rebalances its
portfolio to attempt to increase the correlation between the Fund’s portfolio
and the Pharmaceutical Index, any transaction costs and market exposure arising
from such portfolio rebalancing will be borne directly by the Fund and its
shareholders. The Fund may not be fully invested at times either as a result of
cash flows into the Fund (if the Fund effects creations and redemptions for
cash) or reserves of cash held by the Fund to meet redemptions or pay expenses.
Apart
from scheduled rebalances, the Pharmaceutical Index provider or its agents may
carry out additional ad hoc rebalances to the Pharmaceutical Index. Therefore,
errors and additional ad hoc rebalances carried out by the Pharmaceutical Index
provider or its agents to the Pharmaceutical Index may increase the costs to and
the tracking error risk of the Fund. In
addition, the Fund may not be able to invest in certain securities included in
the Pharmaceutical Index, or invest in them in the exact proportions in which
they are represented in the Pharmaceutical Index. The Fund’s performance may
also deviate from the return of the Pharmaceutical Index due to legal
restrictions or limitations imposed by the governments of certain countries,
certain listing standards of the Fund’s listing exchange (the “Exchange”), a
lack of liquidity on stock exchanges in which such securities trade, potential
adverse tax consequences or other regulatory reasons or legal restrictions or
limitations (such as diversification requirements). The Fund may value certain
of its investments, underlying securities and/or underlying currencies based on
fair value prices. To the extent the Fund calculates its NAV based on fair value
prices and the value of the Pharmaceutical Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Pharmaceutical Index is not based on fair value prices), the
Fund’s ability to track the Pharmaceutical Index may be adversely affected. 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. In addition, any issues the Fund encounters with regard
to currency convertibility (including the cost of borrowing funds, if any) and
repatriation may also increase the index tracking risk. The Fund may also need
to rely on borrowings to meet redemptions, which may lead to increased expenses.
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
Pharmaceutical Index. In light of the factors discussed above, the Fund’s return
may deviate significantly from the return of the Pharmaceutical Index. Changes
to the composition of the Pharmaceutical Index in connection with a rebalancing
or reconstitution of the Pharmaceutical 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 equity securities traded on an exchange, 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
Pharmaceutical 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 Pharmaceutical Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Pharmaceutical 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-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. The Fund may be particularly vulnerable to this risk because
the Pharmaceutical Index is comprised of securities of a limited number of
companies.
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 Pharmaceutical 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
[TO
BE UPDATED]
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Best
Quarter: |
15.01 |
% |
2Q
2020 |
Worst
Quarter: |
-15.01 |
% |
1Q
2020 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
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.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception
(12/20/2011) |
|
|
VanEck
Pharmaceutical ETF (return before taxes) |
5.20% |
2.33% |
9.26% |
|
|
VanEck
Pharmaceutical ETF (return after taxes on distributions) |
4.78% |
1.83% |
8.69% |
|
|
VanEck
Pharmaceutical ETF (return after taxes on distributions and sale of Fund
Shares) |
3.32% |
1.70% |
7.42% |
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|
MVIS
US Listed Pharmaceutical 25 Index (reflects no deduction for fees,
expenses or taxes, except withholding taxes) |
4.96% |
2.26% |
9.22% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or taxes) |
18.40% |
15.22% |
15.39% |
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See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and 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 |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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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®
Retail ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS® US Listed Retail 25 Index (the “Retail 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)(b) |
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 February 1, 2023.
(b) "Other
Expenses" have been restated to reflect current fees.
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 12% 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 Fund’s benchmark index. To be initially eligible for the Retail
Index, companies must generate at least 50% of their revenues from retail.
Retail includes companies engaged primarily in retail distribution; wholesalers;
online, direct mail and TV retailers; multi-line retailers; specialty retailers,
such as apparel, automotive, computer and electronics, drug, home improvement
and home furnishing retailers; and food and other staples retailers. Of the
largest 50 stocks in the retail industry by full market capitalization, the top
25 by free-float market
____________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Retail ETF.
capitalization
(i.e.,
includes only shares that are readily available for trading in the market) and
three month average daily trading volume are included in the Retail Index. Such
companies may include foreign companies that are listed on a U.S. exchange. As
of [December 31, 2020], the Retail Index included 25 securities of companies
with a market capitalization range of between approximately $[7.6] billion and
$[1634.2] billion and a weighted average market capitalization of $[450.4]
billion. These amounts are subject to change. The Fund’s 80% investment policy
is non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Retail Index by investing in a portfolio of
securities that generally replicates the Retail Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Retail Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Retail Index.
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. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Retail Index concentrates in an industry or group of industries. [As of
September 30, 2020, the Fund was concentrated in the consumer discretionary and
consumer staples sectors].
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.
Risk
of Investing in Retail Companies. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the retail industry. Companies involved in retail
may be affected by the performance of the domestic and international economy,
interest rates, rates of inflation, exchange rates, competition, consumer
confidence and reputational damage. The success of companies involved in retail
depends heavily on disposable household income and consumer spending, and
changes in demographics and consumer preferences can affect the success of
retail companies. Certain retail companies have historically been subject to
significant seasonal and quarterly variations. The success of retail companies
may be strongly affected by fads, marketing campaigns and other factors
affecting supply and demand, and a retail company’s success can be tied to its
ability to anticipate changing consumer tastes. These companies may be subject
to severe competition, which may have an adverse impact on their
profitability.
Certain
business segments of retail companies are highly cyclical, which may cause the
operating results of such companies to vary significantly. Retail companies may
be dependent on outside financing, which may be difficult to obtain. Many of
these companies are dependent on third party suppliers and distribution systems.
Retail companies may be unable to protect their intellectual property rights and
may be liable for infringing the intellectual property rights of others. Changes
in labor laws and other labor issues, such as increased labor costs, could
adversely affect the financial performance of retail companies. If retail
companies do not maintain the security of customer-related information, they
could damage their reputations with customers, incur substantial costs and
become subject to litigation, all of which could adversely affect the financial
performance of such companies. The international operations of certain retail
companies in expose them to risks associated with instability and changes in
economic and political conditions, foreign currency fluctuations, changes in
foreign regulations, tariffs and trade disputes and other risks inherent to
international business. Some retail companies are engaged in other lines of
business unrelated to retail, and they may experience problems with these lines
of business which could adversely affect their operating results. The operating
results of these companies may fluctuate as a result of these additional risks
and events in the other lines of business. In addition, a company’s ability to
engage in new activities may expose it to business risks with which it has less
experience than it has with the business risks associated with its traditional
businesses. Despite a company’s possible success in traditional retail
activities, there can be no assurance that the other lines of business in which
these companies are engaged will not have an adverse effect on a company’s
business or financial condition.
Retail
companies may also be exposed to online retail risk. Companies that operate in
the online marketplace are subject to fluctuating consumer demand. Unlike
traditional brick and mortar retailers, online marketplaces and retailers must
assume shipping costs or pass such costs to consumers. Consumer access to price
information for the same or similar products may cause companies that operate in
the online marketplace to reduce profit margins in order to compete. Due to the
nature of their business models, companies that operate in the online
marketplace may also be subject to heightened cybersecurity risk, including the
risk of theft or damage to vital hardware, software and information systems. The
loss or public dissemination of sensitive customer information or other
proprietary data may negatively affect the financial performance of such
companies to a greater extent than traditional brick and mortar retailers. As a
result of such companies being web-based and the fact that they process, store
and transmit large amounts of data, including personal information, for their
customers, failure to prevent or mitigate data loss or other security breaches,
including breaches of vendors’ technology and systems, could expose companies
that operate in the online marketplace or their customers to a risk of loss or
misuse of such information, adversely affect their operating results, result in
litigation or potential liability and otherwise harm their
businesses.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and financial reporting standards,
practices and requirements applicable to non-U.S. issuers may differ from those
applicable to U.S. issuers.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the Consumer Discretionary Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the consumer discretionary sector. The
consumer discretionary sector comprises companies whose businesses are sensitive
to economic cycles, such as manufacturers of high-end apparel and automobile and
leisure companies. Companies engaged in the consumer discretionary sector are
subject to fluctuations in supply and demand. These companies may also be
adversely affected by changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.
Risk
of Investing in the Consumer Staples Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the consumer staples sector. The consumer staples
sector comprises companies whose businesses are less sensitive to economic
cycles, such as manufacturers and distributors of food and beverages and
producers of non-durable household goods and personal products. Companies in the
consumer staples sector may be adversely affected by changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending. Companies in this sector are also affected
by changes in government regulation, world events and economic
conditions.
Risk
of Investing in Depositary Receipts.
The Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments in depositary receipts may be less
liquid than the underlying shares in their primary trading market and, if not
included in the Retail Index, may negatively affect the Fund’s ability to
replicate the performance of the Retail Index.
Issuer-Specific
Changes Risk.
The value of individual securities or particular types of securities in the
Fund’s portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers.
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.
Index
Tracking Risk.
The Fund’s return may not match the return of the Retail Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Retail 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 Retail 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
(as defined herein), which are not factored into the return of the Retail Index.
Transaction costs, including brokerage costs, will decrease the Fund’s net asset
value (“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 Retail Index. Errors in the
Retail
Index data, the Retail Index computations and/or the construction of the Retail
Index in accordance with its methodology may occur from time to time and may not
be identified and corrected by the Retail Index provider for a period of time or
at all, which may have an adverse impact on the Fund and its shareholders. The
Fund may not be fully invested at times either as a result of cash flows into
the Fund (if the Fund effects creations and redemptions for cash) or reserves of
cash held by the Fund to meet redemptions or pay expenses. Shareholders
should understand that any gains from the Retail Index provider's errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Retail Index provider's errors will be borne by the Fund and its shareholders.
When
the Retail Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the Retail
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 Retail Index provider or its agents may carry out
additional ad hoc rebalances to the Retail Index. Therefore, errors and
additional ad hoc rebalances carried out by the Retail Index provider or its
agents to the Retail Index may increase the costs to and the tracking error risk
of the Fund. In
addition, the Fund may not be able to invest in certain securities included in
the Retail Index, or invest in them in the exact proportions in which they are
represented in the Retail Index. The Fund’s performance may also deviate from
the return of the Retail Index due to legal restrictions or limitations imposed
by the governments of certain countries, certain listing standards of the Fund’s
listing exchange (the “Exchange”), a lack of liquidity on stock exchanges in
which such securities trade, potential adverse tax consequences or other
regulatory reasons or legal restrictions or limitations (such as diversification
requirements). The Fund may value certain of its investments, underlying
securities and/or underlying currencies based on fair value prices. To the
extent the Fund calculates its NAV based on fair value prices and the value of
the Retail Index is based on securities’ closing prices on local foreign markets
(i.e.,
the value of the Retail Index is not based on fair value prices), the Fund’s
ability to track the Retail Index may be adversely affected. 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. The Fund may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. 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 Retail Index. In light of the factors
discussed above, the Fund’s return may deviate significantly from the return of
the Retail Index. Changes to the composition of the Retail Index in connection
with a rebalancing or reconstitution of the Retail 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 equity securities traded on an exchange, 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 Retail 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 Retail Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Retail 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-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. The Fund may be particularly vulnerable to this risk because
the Retail Index is comprised of securities of a limited number of
companies.
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 Retail 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
[TO
BE UPDATED]
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|
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|
Best
Quarter: |
25.61 |
% |
2Q
2020 |
Worst
Quarter: |
-14.78 |
% |
4Q
2018 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
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.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception
(12/20/2011) |
|
|
VanEck
Retail ETF (return before taxes) |
31.36% |
16.47% |
18.75% |
|
|
VanEck
Retail ETF (return after taxes on distributions) |
31.16% |
16.15% |
18.37% |
|
|
VanEck
Retail ETF (return after taxes on distributions and sale of Fund
Shares) |
18.71% |
13.25% |
15.86% |
|
|
MVIS
US Listed Retail 25 Index (reflects no deduction for fees, expenses or
taxes, except withholding taxes) |
31.23% |
16.32% |
18.58% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or taxes) |
18.40% |
15.22% |
15.39% |
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|
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are jointly and 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 |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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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®
Semiconductor ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
US Listed Semiconductor 25 Index (the “Semiconductor 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)(b) |
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 February 1, 2023.
(b) "Other
Expenses" have been restated to reflect current fees.
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 |
|
|
1 |
$36 |
|
|
3 |
$113 |
|
|
5 |
$197 |
|
|
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 14% 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 Fund’s benchmark index. The Semiconductor Index includes common
stocks and depositary receipts of U.S. exchange-listed companies in the
semiconductor industry. Such companies may include medium-capitalization
companies and foreign companies that are listed on a U.S. exchange. To be
initially eligible for the Semiconductor Index, companies must generate at least
50% of their revenues from semiconductors. Semiconductors include companies
engaged primarily in the production of semiconductors and semiconductor
____________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Semiconductor ETF.
equipment.
Of the largest 50 stocks in the semiconductor industry by full market
capitalization, the top 25 by free-float market capitalization (i.e.,
includes only shares that are readily available for trading in the market) and
three month average daily trading volume are included in the Semiconductor
Index. As of [December 31, 2020], the Semiconductor Index included 25 securities
of companies with a market capitalization range of between approximately $[10.8]
billion and $[565.5 billion] and a weighted average market capitalization of
$[117.1] billion. These amounts are subject to change. The Fund’s 80% investment
policy is non-fundamental and may be changed without shareholder approval upon
60 days’ prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Semiconductor Index by investing in a
portfolio of securities that generally replicates the Semiconductor Index.
Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Semiconductor Index and
does not seek temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Semiconductor
Index.
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. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Semiconductor Index concentrates in an industry or group of industries. [As
of September 30, 2020, the Fund was concentrated in the semiconductor
industry.]
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.
Risk
of Investing in the Semiconductor Industry.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the semiconductor industry. Competitive
pressures may have a significant effect on the financial condition of companies
in the semiconductor industry. The Fund is subject to the risk that companies
that are in the semiconductor industry may be similarly affected by particular
economic or market events. As product cycles shorten and manufacturing capacity
increases, these companies may become increasingly subject to aggressive
pricing, which hampers profitability. Semiconductor companies are vulnerable to
wide fluctuations in securities prices due to rapid product obsolescence. Many
semiconductor companies may not successfully introduce new products, develop and
maintain a loyal customer base or achieve general market acceptance for their
products, and failure to do so could have a material adverse effect on their
business, results of operations and financial condition. Reduced demand for
end-user products, underutilization of manufacturing capacity, and other factors
could adversely impact the operating results of companies in the semiconductor
industry. Semiconductor companies typically face high capital costs and such
companies may need additional financing, which may be difficult to obtain. They
also may be subject to risks relating to research and development costs and the
availability and price of components. Moreover, they may be heavily dependent on
intellectual property rights and may be adversely affected by loss or impairment
of those rights. Some of the companies involved in the semiconductor industry
are also engaged in other lines of business unrelated to the semiconductor
business, and they may experience problems with these lines of business, which
could adversely affect their operating results. The international operations of
many semiconductor companies expose them to risks associated with instability
and changes in economic and political conditions, foreign currency fluctuations,
changes in foreign regulations, tariffs and trade disputes, competition from
subsidized foreign competitors with lower production costs and other risks
inherent to international business. The semiconductor industry is highly
cyclical, which may cause the operating results of many semiconductor companies
to vary significantly. Companies in the semiconductor industry also may be
subject to competition from new market entrants. The stock prices of companies
in the semiconductor industry have been and will likely continue to be extremely
volatile compared to the overall market.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and financial reporting standards,
practices and requirements applicable to non-U.S. issuers may differ from those
applicable to U.S. issuers.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more
volatility
in those returns, although under certain market conditions fixed income
securities may have comparable or greater price volatility.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Foreign
Currency Risk.
Because all or a portion of the proceeds received by the Fund from its
investments and/or the revenues received by the underlying issuer will generally
be denominated in foreign currencies, the Fund’s exposure to foreign currencies
and changes in the value of foreign currencies versus the U.S. dollar may result
in reduced returns for the Fund, and the value of certain foreign currencies may
be subject to a high degree of fluctuation. Moreover, the Fund may incur costs
in connection with conversions between U.S. dollars and foreign
currencies.
Risk
of Investing in Depositary Receipts. The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments in depositary receipts may be less
liquid than the underlying shares in their primary trading market and, if not
included in the Semiconductor Index, may negatively affect the Fund’s ability to
replicate the performance of the Semiconductor Index.
Risk
of Investing in Medium-Capitalization Companies.
Medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of medium-capitalization companies could trail the
returns on investments in securities of large-capitalization
companies.
Issuer-Specific
Changes Risk. The
value of individual securities or particular types of securities in the Fund’s
portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers.
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.
Index
Tracking Risk. The
Fund’s return may not match the return of the Semiconductor Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Semiconductor 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
Semiconductor 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 (as defined herein), which are not
factored into the return of the Semiconductor Index. Transaction costs,
including brokerage costs, will decrease the Fund’s net asset value (“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 Semiconductor Index. Errors in the Semiconductor
Index data, the Semiconductor Index computations and/or the construction of the
Semiconductor Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the Semiconductor 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 Semiconductor Index provider's errors
will be kept by the Fund and its shareholders and any losses or costs resulting
from the Semiconductor Index provider's errors will be borne by the Fund and its
shareholders. When
the Semiconductor Index is rebalanced and the Fund in turn rebalances its
portfolio to attempt to increase the correlation between the Fund’s portfolio
and the Semiconductor Index, any transaction costs and market exposure arising
from such portfolio rebalancing will be borne directly by the Fund and its
shareholders. The Fund may not be fully invested at times either as a result of
cash flows into the Fund (if the Fund effects creations and redemptions for
cash) or reserves of cash held by the Fund to meet redemptions or pay expenses.
Apart
from scheduled rebalances, the Semiconductor Index provider or its agents may
carry out additional ad hoc rebalances to the Semiconductor Index. Therefore,
errors and
additional
ad hoc rebalances carried out by the Semiconductor Index provider or its agents
to the Semiconductor Index may increase the costs to and the tracking error risk
of the Fund. In
addition, the Fund may not be able to invest in certain securities included in
the Semiconductor Index, or invest in them in the exact proportions in which
they are represented in the Semiconductor Index. The Fund’s performance may also
deviate from the return of the Semiconductor Index due to legal restrictions or
limitations imposed by the governments of certain countries, certain listing
standards of the Fund’s listing exchange (the “Exchange”), a lack of liquidity
on stock exchanges in which such securities trade, potential adverse tax
consequences or other regulatory reasons or legal restrictions or limitations
(such as diversification requirements). The Fund may value certain of its
investments, underlying securities and/or underlying currencies based on fair
value prices. To the extent the Fund calculates its net asset value NAV based on
fair value prices and the value of the Semiconductor Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Semiconductor Index is not based on fair value prices), the
Fund’s ability to track the Semiconductor Index may be adversely affected. In
addition, any issues the Fund encounters with regard to currency convertibility
(including the cost of borrowing funds, if any) and repatriation may also
increase the index tracking risk. 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. The Fund may
also need to rely on borrowings to meet redemptions, which may lead to increased
expenses. 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 Semiconductor Index. In light of the factors discussed above, the Fund’s
return may deviate significantly from the return of the Semiconductor Index.
Changes to the composition of the Semiconductor Index in connection with a
rebalancing or reconstitution of the Semiconductor 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 equity securities traded on an exchange, 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 Semiconductor 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 Semiconductor Index provider to postpone
a scheduled rebalance or reconstitution, which could cause the Semiconductor
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-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. The Fund may be particularly vulnerable to this risk because
the Semiconductor Index is comprised of securities of a very limited number of
issuers.
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 Semiconductor 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
[TO
BE UPDATED]
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Best
Quarter: |
30.65 |
% |
2Q
2020 |
Worst
Quarter: |
-17.27 |
% |
1Q
2020 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
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.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception
(12/20/2011) |
|
|
VanEck
Semiconductor ETF (return before taxes) |
55.30% |
34.21% |
26.43% |
|
|
VanEck
Semiconductor ETF (return after taxes on distributions) |
55.03% |
33.69% |
25.86% |
|
|
VanEck
Semiconductor ETF (return after taxes on distributions and sale of Fund
Shares) |
32.90% |
28.58% |
22.78% |
|
|
MVIS
US Listed Semiconductor 25 Index (reflects no deduction for fees, expenses
or taxes, except withholding taxes) |
55.24% |
34.21% |
26.37% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or taxes) |
18.40% |
15.22% |
15.39% |
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See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are jointly and 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 |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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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
Each
Fund’s distributions are taxable and will generally be taxed as ordinary income
or capital gains.
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
The
Adviser anticipates that, generally, each Fund will hold or gain exposure to all
of the securities that comprise its Index in proportion to their weightings in
such Index. However, under various circumstances, it may not be possible or
practicable to purchase all of those securities in those weightings. In these
circumstances, a Fund may purchase a sample of securities in its Index. There
also may be instances in which the Adviser may choose to underweight or
overweight a security in a Fund’s Index, purchase securities not in the Fund’s
Index that the Adviser believes are appropriate to substitute for certain
securities in such 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 Fund’s Index. Each
Fund may sell securities that are represented in its Index in anticipation of
their removal from its Index or purchase securities not represented in its Index
in anticipation of their addition to such Index. Each Fund may also, in order to
comply with the tax diversification requirements of the Internal Revenue Code of
1986, as amended (the “Internal Revenue Code”), temporarily invest in securities
not included in its Index that are expected to be highly correlated with the
securities included in its Index.
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 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.
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.
Risk
of Investing in the Biotechnology Industry.
(VanEck Biotech ETF only.) The Fund will be sensitive to, and its performance
may depend to a greater extent on, the overall condition of the biotechnology
industry. The success of biotechnology companies is highly dependent on the
development, procurement and/or marketing of drugs. The values of biotechnology
companies are also dependent on the development, protection and exploitation of
intellectual property rights and other proprietary information, and the
profitability of biotechnology companies may be affected significantly by such
things as the expiration of patents or the loss of, or the inability to enforce,
intellectual property rights.
The
research and development and other costs associated with developing or procuring
new drugs, products or technologies and the related intellectual property rights
can be significant, and the results of such research and expenditures are
unpredictable and may not necessarily lead to commercially successful products.
In addition, the potential for an increased amount of required disclosure of
proprietary scientific information could negatively impact the competitive
position of these companies. Governmental regulation may delay or inhibit the
release of new products. There can be no assurance that those efforts or costs
will result in the development of a profitable drug, product or technology.
Moreover, the process for obtaining regulatory approval by the U.S. Food and
Drug Administration (“FDA”) or other governmental regulatory authorities is long
and costly and there can be no assurance that the necessary approvals will be
obtained or maintained.
The
biotechnology industry is also subject to rapid and significant technological
change and competitive forces that may make drugs, products or technologies
obsolete or make it difficult to raise prices and, in fact, may result in price
discounting. Companies in the biotechnology industry may also be subject to
expenses and losses from expensive insurance costs due to the risk of product
liability lawsuits, and extensive litigation based on intellectual property,
product liability and similar claims. Failure of biotechnology companies to
comply with applicable laws and regulations can result in the imposition of
civil and/or criminal fines, penalties and, in some instances, exclusion of
participation in government sponsored programs such as Medicare and
Medicaid.
Companies
in the biotechnology industry may be adversely affected by government regulation
and changes in reimbursement rates. Health care providers, principally
hospitals, that transact with companies in the biotechnology industry, often
rely on third party payors, such as Medicare, Medicaid and other government
sponsored programs, private health insurance plans and health maintenance
organizations to reimburse all or a portion of the cost of health care related
products or services. Biotechnology companies will continue to be affected by
the efforts of governments and third party payors to contain or reduce health
care costs. For example, certain foreign markets control pricing or
profitability of biotechnology products and technologies. In the United States,
there have been, and there will likely to continue to be, a number of federal
and state proposals to implement similar controls.
A
biotechnology company’s valuation can often be based largely on the potential or
actual performance of a limited number of products. A biotechnology company’s
valuation can also be greatly affected if one of its products proves unsafe,
ineffective or unprofitable. Such companies may also be characterized by thin
capitalization and limited markets, financial resources or personnel. The stock
prices of companies involved in the biotechnology industry, especially those of
smaller, less-seasoned
companies,
have been and will likely continue to be extremely volatile, particularly when
their products are up for regulatory approval and/or under regulatory scrutiny.
Some of the companies in the biotechnology industry are engaged in other lines
of business unrelated to biotechnology, and they may experience problems with
these lines of business which could adversely affect their operating results.
The operating results of these companies may fluctuate as a result of these
additional risks and events in the other lines of business. In addition, a
company’s ability to engage in new activities may expose it to business risks
with which it has less experience than it has with the business risks associated
with its traditional businesses. Despite a company’s possible success in
traditional biotechnology activities, there can be no assurance that the other
lines of business in which these companies are engaged will not have an adverse
effect on a company’s business or financial condition.
Certain
companies in which a Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and financial reporting standards,
practices and requirements applicable to non-U.S. issuers may differ from those
applicable to U.S. issuers.
Risk
of Investing in the Pharmaceutical Industry.
(VanEck Pharmaceutical ETF only.) The Fund will be sensitive to, and its
performance may depend to a greater extent on, the overall condition of the
pharmaceutical industry. The success of companies in the pharmaceutical industry
is highly dependent on the development, procurement and marketing of drugs. The
values of pharmaceutical companies are also dependent on the development,
protection and exploitation of intellectual property rights and other
proprietary information, and the profitability of pharmaceutical companies may
be significantly affected by such things as the expiration of patents or the
loss of, or the inability to enforce, intellectual property rights. There can be
no assurance that the steps taken by pharmaceutical companies to protect their
proprietary rights will be adequate to prevent misappropriation of their
proprietary rights or that competitors will not independently develop products
that are substantially equivalent or superior to such companies’ products.
Pharmaceutical companies also rely on trade secrets, know-how and technology,
which are not protected by patents, to maintain their competitive position. If
any trade secret, know-how or other technology not protected by a patent were
disclosed to, or independently developed by, a competitor, that company’s
business and financial condition could be materially adversely
affected.
The
research and other costs associated with developing or procuring new drugs and
the related intellectual property rights can be significant, and the results of
such research and expenditures are unpredictable. There can be no assurance that
those efforts or costs will result in the development of a profitable drug.
Pharmaceutical companies may be susceptible to product obsolescence. Many
pharmaceutical companies face intense competition from new products and less
costly generic products.
Pharmaceutical
products are subject to approval of the FDA. The research, design, testing,
manufacturing, labeling, marketing, distribution and advertising of
pharmaceutical products are subject to extensive regulation by governmental
authorities in the United States and other countries. The process for obtaining
regulatory approval by the FDA or other governmental regulatory authorities is
long and costly and may require extensive preclinical and clinical trials. There
can be no assurance that the necessary approvals will be obtained or maintained.
In addition, the potential for an increased amount of required disclosure of
proprietary scientific information could negatively impact the position of
pharmaceutical companies. The pharmaceutical industry is also subject to laws
and regulations governing the protection of the environment and occupational
health and safety, including laws regulating air emissions, wastewater
discharges, the management and disposal of hazardous materials and wastes, and
the health and safety of employees. Failure to comply with applicable domestic
and/or foreign requirements can result in civil and criminal fines or other
enforcement actions, recall or seizure of products, total or partial suspension
of production, withdrawal of existing product approvals or clearances, refusal
to approve or clear new applications or notifications, increased quality control
costs, criminal prosecution, other penalties and, in some instances, exclusion
of participation in government sponsored programs such as Medicare, Medicaid and
other government sponsored programs.
The
pharmaceutical industry is also subject to rapid and significant technological
change and competitive forces that may make drugs obsolete or make it difficult
to raise prices and, in fact, may result in price discounting. Companies in the
pharmaceutical industry may also be subject to expenses and losses from
extensive litigation based on intellectual property, product liability and
similar claims that are inherent in the development, manufacturing and marketing
of human therapeutic products. Product liability claims could delay or prevent
completion of companies’ clinical development programs as well as result in FDA
investigations of the safety and effectiveness of companies’ products,
manufacturing processes and facilities, and marketing programs.
Companies
in the pharmaceutical industry may be adversely affected by government
regulation and changes in reimbursement rates. The ability of many
pharmaceutical companies to commercialize current and any future products
depends in part on the extent to which reimbursement for the cost of such
products and related treatments are available from third party payors, such as
Medicare, Medicaid and other government sponsored programs, private health
insurance plans and health maintenance organizations. Third party payors are
increasingly challenging the price and cost-effectiveness of medical products.
Significant
uncertainty
exists as to the reimbursement status of health care products, and there can be
no assurance that adequate third party coverage will be available for
pharmaceutical companies to obtain satisfactory price levels for their
products.
The
international operations of many pharmaceutical companies expose them to risks
associated with instability and changes in economic and political conditions,
foreign currency fluctuations, changes in foreign regulations and other risks
inherent to international business. Additionally, a pharmaceutical company’s
valuation can often be based largely on the potential or actual performance of a
limited number of products. A pharmaceutical company’s valuation can also be
greatly affected if one of its products proves unsafe, ineffective or
unprofitable. Such companies also may be characterized by thin capitalization
and limited markets, financial resources or personnel, as well as dependence on
wholesale distributors. The stock prices of companies in the pharmaceutical
industry have been and will likely continue to be extremely volatile, in part
due to the prevalence of merger and acquisition activity in the pharmaceutical
industry. Some pharmaceutical companies are engaged in other lines of business
unrelated to pharmaceuticals, and they may experience problems with these lines
of business which could adversely affect their operating results. The operating
results of these companies may fluctuate as a result of these additional risks
and events in the other lines of business. In addition, a company’s ability to
engage in new activities may expose it to business risks with which it has less
experience than it has with the business risks associated with its traditional
businesses. Despite a company’s possible success in traditional pharmaceutical
activities, there can be no assurance that the other lines of business in which
these companies are engaged will not have an adverse effect on a company’s
business or financial condition.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. Investing in non-U.S. issuers involves risks beyond
those associated with investments in U.S. securities, including greater market
volatility, higher transactional costs, the possibility that the liquidity of
such securities could be impaired because of future political and/or economic
developments, taxation by foreign governments, political instability, the
possibility that foreign governmental restrictions may be adopted which might
adversely affect such securities and that the selection of such securities may
be more difficult because there may be less publicly available information
concerning such non-U.S. issuers or the accounting, auditing and financial
reporting standards, practices and requirements applicable to non-U.S. issuers
may differ from those applicable to U.S. issuers.
Risk
of Investing in Retail Companies.
(VanEck Retail ETF only.) The Fund will be sensitive to, and its performance may
depend to a greater extent on, the overall condition of the retail industry.
Companies involved in retail may be affected by the performance of the domestic
and international economy, interest rates, rates of inflation, exchange rates,
competition, consumer confidence and reputational damage. The success of
companies involved in retail depends heavily on disposable household income and
consumer spending, and changes in demographics and consumer preferences can
affect the success of retail companies. Certain retail companies have
historically been subject to significant seasonal and quarterly variations. The
success of retail companies may be strongly affected by fads, marketing
campaigns and other factors affecting supply and demand and a retail company’s
success can be tied to its ability to anticipate changing consumer tastes. These
companies may be subject to severe competition, which may have an adverse impact
on their profitability. Certain business segments of retail companies are highly
cyclical, which may cause the operating results of certain retail companies to
vary significantly.
Retail
companies may be dependent on outside financing, which may be difficult to
obtain. Many of these companies are dependent on third party suppliers and
distribution systems and purchase merchandise both directly from brand owners
and indirectly from retailers and third party suppliers. Such companies may also
be dependent upon suppliers for the products used for their own brand name
merchandise. Reliance on third party suppliers subjects retail companies to
risks of delivery delays, price increases and receipt of nonconforming or poor
quality merchandise. Retail companies may be unable to protect their
intellectual property rights and may be liable for infringing the intellectual
property rights of others. Changes in labor laws and other labor issues, such as
increased labor costs, could adversely affect the financial performance of
retail companies. If retail companies do not maintain the security of
customer-related information, they could damage their reputations with
customers, incur substantial costs and become subject to litigation, all of
which could adversely affect the financial performance of such companies. The
international operations of certain retail companies expose them to risks
associated with instability and changes in economic and political conditions,
foreign currency fluctuations, changes in foreign regulations, tariffs and trade
disputes and other risks inherent to international business. Some of the
companies in the Retail Index are engaged in other lines of business unrelated
to retail, and they may experience problems with these lines of business which
could adversely affect their operating results. The operating results of these
companies may fluctuate as a result of these additional risks and events in the
other lines of business. In addition, a company’s ability to engage in new
activities may expose it to business risks with which it has less experience
than it has with the business risks associated with its traditional businesses.
Despite a company’s possible success in traditional retail activities, there can
be no assurance that the other lines of business in which these companies are
engaged will not have an adverse effect on a company’s business or financial
condition.
Retail
companies may also be exposed to online retail risk. Companies that operate in
the online marketplace are subject to fluctuating consumer demand. Unlike
traditional brick and mortar retailers, online marketplaces and retailers must
assume shipping costs or pass such costs to consumers. Consumer access to price
information for the same or similar products may cause companies that operate in
the online marketplace to reduce profit margins in order to compete. Due to the
nature of their business models, companies that operate in the online
marketplace may also be subject to heightened cybersecurity risk, including the
risk of theft or damage to vital hardware, software and information systems. The
loss or public dissemination of
sensitive
customer information or other proprietary data may negatively affect the
financial performance of such companies to a greater extent than traditional
brick and mortar retailers. As a result of such companies being web-based and
the fact that they process, store and transmit large amounts of data, including
personal information, for their customers, failure to prevent or mitigate data
loss or other security breaches, including breaches of vendors’ technology and
systems, could expose companies that operate in the online marketplace or their
customers to a risk of loss or misuse of such information, adversely affect
their operating results, result in litigation or potential liability and
otherwise harm their businesses.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and financial reporting standards,
practices and requirements applicable to non-U.S. issuers may differ from those
applicable to U.S. issuers.
Risk
of Investing in the Semiconductor Industry.
(VanEck Semiconductor ETF only.) The Fund will be sensitive to, and its
performance may depend to a greater extent on, the overall condition of the
semiconductor industry. Competitive pressures may have a significant effect on
the financial condition of companies in the semiconductor industry. The Fund is
subject to the risk that companies that are in the semiconductor industry may be
similarly affected by particular economic or market events, which may, in
certain circumstances, cause the value of securities of all companies in the
semiconductor industry of the market to decrease. As product cycles shorten and
manufacturing capacity increases, these companies may become increasingly
subject to aggressive pricing, which hampers profitability. The Fund is also
subject to the risk that the securities of such issuers will underperform the
market as a whole due to legislative or regulatory changes. Additionally,
semiconductor companies are vulnerable to wide fluctuations in securities prices
due to rapid product obsolescence. Many semiconductor companies may not
successfully introduce new products, develop and maintain a loyal customer base
or achieve general market acceptance for their products, and failure to do so
could have a material adverse effect on their business, results of operations
and financial condition. Reduced demand for end-user products, underutilization
of manufacturing capacity, limited personnel, periods of production shortages,
significant price erosion, a limited number of products, wide fluctuations in
securities prices due to risks of rapid obsolescence of products, economic
performance of the customers of semiconductor companies and other factors could
adversely impact the operating results of companies in the semiconductor
industry. Semiconductor companies typically face high capital costs and such
companies may need additional financing, which may be difficult to obtain. In
addition, their capital equipment could suffer from rapid obsolescence. Some of
the companies involved in the semiconductor industry are also engaged in other
lines of business unrelated to the semiconductor business, and they may
experience problems with these lines of business, which could adversely affect
their operating results. The international operations of many semiconductor
companies expose them to risks associated with instability and changes in
economic and political conditions, foreign currency fluctuations, changes in
foreign regulations, competition from subsidized foreign competitors with lower
production costs, tariffs and trade disputes and other risks inherent to
international business. The semiconductor industry is highly cyclical, which may
cause the operating results of many semiconductor companies to vary
significantly. Companies in the semiconductor industry also may be subject to
competition from new market entrants, both domestically and internationally,
including competition from foreign competitors with lower production costs. The
stock prices of companies in the semiconductor industry have been and will
likely continue to be extremely volatile compared to the overall
market.
Semiconductor
manufacturing processes are highly complex, costly and potentially vulnerable to
impurities and other disruptions that can significantly increase costs and delay
product shipments to customers. Many semiconductor companies rely on a single
supplier or a limited number of suppliers for the parts and raw materials used
in their products, and if quality parts and materials are not delivered by the
suppliers on a timely basis, these companies will not be able to manufacture and
deliver their products on a timely schedule which could adversely affect their
financial condition.
Semiconductor
design and process methodologies are subject to rapid technological change
requiring large expenditures for research and development in order to improve
product performance and increase manufacturing yields. Semiconductor companies
also may be subject to risks relating to research and development costs and the
availability and price of components. Many semiconductor companies have created
new technologies for the semiconductor sector and currently rely on a limited
number of customers as purchasers of their products and services. Semiconductor
companies rely on a combination of patents, trade secret laws and contractual
provisions to protect their technologies. Inability to adequately protect
proprietary rights may harm the competitive positions of many semiconductor
companies. Additionally, semiconductor companies may be subject to claims of
infringement of third party intellectual property rights, which could adversely
affect their business. Many semiconductor companies are dependent on their
ability to continue to attract and retain highly skilled technical and
managerial personnel to develop and generate their business.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or
economic
developments, taxation by foreign governments, political instability, the
possibility that foreign governmental restrictions may be adopted which might
adversely affect such securities and that the selection of such securities may
be more difficult because there may be less publicly available information
concerning such non-U.S. issuers or the accounting, auditing and financial
reporting standards, practices and requirements applicable to non-U.S. issuers
may differ from those applicable to U.S. issuers.
Risk
of Investing in the Consumer Discretionary Sector.
(VanEck Retail ETF only.) The Fund will be sensitive to, and its performance may
depend to a greater extent on, the overall condition of the consumer
discretionary sector. The consumer discretionary sector comprises companies
whose businesses are sensitive to economic cycles, such as manufacturers of
high-end apparel and automobile and leisure companies. Companies in the consumer
discretionary sector are subject to fluctuations in supply and demand. These
companies may also be adversely affected by changes in consumer spending as a
result of world events, political and economic conditions, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources and labor relations.
Risk
of Investing in the Consumer Staples Sector.
(VanEck Retail ETF only.) The Fund will be sensitive to, and its performance may
depend to a greater extent on, the overall condition of the consumer staples
sector. The consumer staples sector comprises companies whose businesses are
less sensitive to economic cycles, such as manufacturers and distributors of
food and beverages and producers of non-durable household goods and personal
products. Companies in the consumer staples sector may be adversely affected by
changes in the worldwide economy, consumer spending, competition, demographics
and consumer preferences, exploration and production spending. Companies in this
sector are also affected by changes in government regulation, world events and
economic conditions.
Risk
of Investing in the Health Care Sector. (VanEck
Biotech ETF and VanEck Pharmaceutical ETF only.) A Fund will be sensitive to,
and its performance will depend to a greater extent on, the overall condition of
the health care sector. Companies in the health care sector may be affected by
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products and services, pricing
pressure, an increased emphasis on outpatient services, limited number of
products, industry innovation, changes in technologies and other market
developments. Many health care companies are heavily dependent on patent
protection. The expiration of patents may adversely affect the profitability of
these companies. Many health care companies are subject to extensive litigation
based on product liability and similar claims. Health care companies are subject
to competitive forces that may make it difficult to raise prices and, in fact,
may result in price discounting. Many new products in the health care sector may
be subject to regulatory approvals. The process of obtaining such approvals may
be long and costly. Companies in the health care sector may be thinly
capitalized and may be susceptible to product obsolescence.
Risk
of Investing in Foreign Securities.
(VanEck Pharmaceutical ETF and VanEck Semiconductor ETF only.) Investments in
the securities of foreign issuers involve risks beyond those associated with
investments in U.S. securities. These additional risks include greater market
volatility, the availability of less reliable financial information, higher
transactional and custody costs, taxation by foreign governments, decreased
market liquidity and political instability. Because certain foreign securities
markets may be limited in size, the activity of large traders may have an undue
influence on the prices of securities that trade in such markets. Certain
foreign markets that have historically been considered relatively stable may
become volatile in response to changed conditions or new developments. Increased
interconnectivity of world economies and financial markets increases the
possibility that adverse developments and conditions in one country or region
will affect the stability of economies and financial markets in other countries
or regions. Each Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on a Fund’s investments.
Because each Fund may invest in securities denominated in foreign currencies and
some of the income received by each Fund may be in foreign currency, changes in
currency exchange rates may negatively impact the Funds’ return. The risks of
investing in emerging market countries are greater than risks associated with
investments in foreign developed countries.
Foreign
issuers are often subject to less stringent requirements regarding accounting,
auditing, financial reporting and record keeping than are U.S. issuers, and,
therefore, not all material information may be available or reliable. Securities
exchanges or foreign governments may adopt rules or regulations that may
negatively impact a Fund’s ability to invest in foreign securities or may
prevent each Fund from repatriating its investments. Each Fund may also invest
in depositary receipts which involve similar risks to those associated with
investments in foreign securities. In addition, each Fund may not receive
shareholder communications or be permitted to vote the securities that it holds,
as the issuers may be under no legal obligation to distribute shareholder
communications.
Certain
foreign markets may rely heavily on particular industries or foreign capital and
are more vulnerable to diplomatic developments, the imposition of economic
sanctions against a particular country or countries, organizations, entities
and/or individuals, changes in international trade patterns, trade barriers and
other protectionist or retaliatory measures. The United States and other nations
or international organizations may impose economic sanctions or take other
actions that may adversely affect issuers of specific countries. Economic
sanctions could, among other things, effectively restrict or eliminate the
Fund’s ability to purchase or sell securities or groups of securities for a
substantial period of time, and may make the Fund’s investments in such
securities harder to value. These sanctions, any future sanctions or other
actions, or even the threat of future sanctions or other actions, may negatively
affect the value and liquidity of the Fund.
Also,
certain issuers located in foreign countries in which a Fund invests may operate
in, or have dealings with, countries subject to sanctions and/or embargoes
imposed by the U.S. Government and the United Nations and/or countries
identified by the U.S. Government as state sponsors of terrorism. As a result,
an issuer may sustain damage to its reputation if it is identified as an issuer
which operates in, or has dealings with, such countries. A Fund, as an investor
in such issuers, may be indirectly subject to those risks.
Foreign
Currency Risk.
(VanEck Pharmaceutical ETF and VanEck Semiconductor ETF only.) Because a Fund’s
assets that are invested in equity securities of issuers in foreign countries
may be denominated in foreign currencies, the proceeds received by the Fund from
these investments will generally be in foreign currencies. A Fund’s exposure to
foreign currencies and changes in the value of foreign currencies versus the
U.S. dollar may result in reduced returns for the Fund, and the value of certain
foreign currencies may be subject to a high degree of fluctuation. Moreover, a
Fund may incur costs in connection with conversions between U.S. dollars and
foreign currencies. The value of certain emerging market countries' currencies
may be subject to a high degree of fluctuation. This fluctuation may be due to
changes in interest rates, investors’ expectations concerning inflation and
interest rates, the emerging market country’s debt levels and trade deficit, the
effects of monetary policies issued by the United States, foreign governments,
central banks or supranational entities, the imposition of currency controls or
other national or global political or economic developments. For example,
certain emerging market countries have experienced economic challenges and
liquidity issues with respect to their currency. The economies of certain
emerging market countries can be significantly affected by currency
devaluations. Certain emerging market countries may also have managed currencies
which are maintained at artificial levels relative to the U.S. dollar rather
than at levels determined by the market. This type of system could lead to
sudden and large adjustments in the currency, which in turn, may have a negative
effect on a Fund and its investments.
Risk
of Investing in Depositary Receipts.
A Fund may invest in depositary receipts (including ADRs) which involve similar
risks to those associated with investments in foreign securities. Depositary
receipts are receipts listed on U.S. or foreign exchanges issued by banks or
trust companies that entitle the holder to all dividends and capital gains that
are paid out on the underlying foreign shares. The issuers of certain depositary
receipts are under no obligation to distribute shareholder communications to the
holders of such receipts, or to pass through to them any voting rights with
respect to the deposited securities. Investments in depositary receipts may be
less liquid than the underlying shares in their primary trading market and, if
not included in a Fund’s Index, may negatively affect a Fund’s ability to
replicate the performance of its Index. In addition, investments in depositary
receipts that are not included in a Fund’s Index may increase tracking
error.
Risk
of Investing in Small- and Medium-Capitalization Companies.
A Fund may invest in small- and medium-capitalization companies and, therefore,
will be subject to certain risks associated with small- and
medium-capitalization companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences, with little or no record of profitability. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. These companies tend to
have smaller revenues, narrower product lines, less management depth and
experience, smaller shares of their product or service markets, fewer financial
resources and less competitive strength than large-capitalization companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of larger
companies.
Issuer-Specific
Changes Risk.
(VanEck Biotech ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF and VanEck
Semiconductor ETF only.) The value of individual securities or particular types
of securities in a Fund’s portfolio can be more volatile than the market as a
whole and can perform differently from the value of the market as a whole, which
may have a greater impact if the Fund’s portfolio is concentrated in a country,
group of countries, region, market, industry, group of industries, sector or
asset class. The value of securities of smaller issuers can be more volatile
than that of larger issuers. A change in the financial condition, market
perception or the credit rating of an issuer of securities included in a Fund’s
Index may cause the value of its securities to decline.
Special
Risk Considerations of Investing in European Issuers.
(VanEck Pharmaceutical ETF only.) Investments in securities of European issuers
involve risks and special considerations not typically associated with
investments in the U.S. securities markets. The EMU of the EU requires member
countries to comply with restrictions on inflation rates, deficits, interest
rates, debt levels and fiscal and monetary controls, each of which may
significantly affect every country in Europe. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of other EU countries and on major
trading partners outside Europe. The European financial markets have previously
experienced, and may continue to experience, volatility and have been adversely
affected, and may in the future be affected, by concerns about economic
downturns, credit rating downgrades, rising government debt levels and possible
default on or restructuring of government debt in several European countries.
These events have adversely affected, and may in the future affect, the value
and exchange rate of the euro and may continue to significantly affect the
economies of every country in Europe, including EU member countries that do not
use the euro and non-EU member countries. In a referendum held on June 23, 2016,
voters in the UK voted to leave the EU, creating economic and political
uncertainty in its wake. On January 31, 2020, the UK officially withdrew from
the EU and the UK entered a transition period which ended on December 31, 2020.
On December 30, 2020, the EU and UK signed the EU-UK Trade and Cooperation
Agreement ("TCA"), an agreement on the terms
governing
certain aspects of the EU's and the UK's relationship following the end of the
transition period. Notwithstanding the TCA, following the transition period,
there is likely to be considerable uncertainty as to the UK's post-transition
framework.
Responses
to the financial problems by European governments, central banks and others,
including austerity measures and reforms, may not work, may result in social
unrest and may limit future growth and economic recovery or have other
unintended consequences. Further defaults or restructurings by governments and
other entities of their debt could have additional adverse effects on economies,
financial markets and asset valuations around the world. In addition, one or
more countries may abandon the euro and/or withdraw from the EU. The impact of
these actions, especially if they occur in a disorderly fashion, is not clear
but could be significant and far-reaching.
Special
Risk Considerations of Investing in United Kingdom Issuers. (VanEck
Pharmaceutical ETF only.) Investments in securities of UK issuers, including
issuers located outside of the UK that generate significant revenues from the
UK, involve risks and special considerations not typically associated with
investments in the U.S. securities markets. Investments in UK issuers may
subject a Fund to regulatory, political, currency, security and economic risks
specific to the UK. The British economy relies heavily on the export of
financials to the United States and other European countries. A prolonged
slowdown in the financials sector may have a negative impact on the British
economy. In the past, the UK has been a target of terrorism. Acts of terrorism
in the UK or against British interests abroad may cause uncertainty in the
British financial markets and adversely affect the performance of the issuers to
which the Fund has exposure. The British economy, along with the United States
and certain other EU economies, experienced a significant economic slowdown
during the recent financial crisis.
In
a referendum held on June 23, 2016, voters in the UK voted to leave the EU,
creating economic and political uncertainty in its wake. On January 31, 2020,
the UK officially withdrew from the EU. On December 30, 2020, the EU and UK
signed the EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on the
terms governing certain aspects of the EU's and the UK's relationship following
the end of the transition period. Notwithstanding the TCA, following the
transition period, there is likely to be considerable uncertainty as to the UK's
post-transition framework.
Special
Risk Considerations of Investing in Taiwanese Issuers.
(VanEck Semiconductor ETF only.) Investments in securities of Taiwanese issuers,
including issuers located outside of Taiwan that generate significant revenues
from Taiwan, involve risks and special considerations not typically associated
with investments in the U.S. securities markets. To the extent the Fund
continues to invest in securities issued by Taiwanese issuers, the Fund may be
subject to the risk of investing in such issuers. Investments in Taiwanese
issuers may subject the Fund to legal, regulatory, political, currency and
economic risks that are specific to Taiwan. Specifically, Taiwan’s geographic
proximity and history of political contention with China have resulted in
ongoing tensions between the two countries. These tensions may materially affect
the Taiwanese economy and its securities market. Taiwan’s economy is
export-oriented, so it depends on an open world trade regime and remains
vulnerable to fluctuations in the world economy.
Equity
Securities Risk.
The value of the equity securities held by each Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by a Fund participate, or factors relating to
specific issuers in which a Fund invests. For example, an adverse event, such as
an unfavorable earnings report, may result in a decline in the value of equity
securities of an issuer held by a Fund; the price of the equity securities of an
issuer may be particularly sensitive to general movements in the securities
markets; or a drop in the securities markets may depress the price of most or
all of the equities securities held by a Fund. In addition, the equity
securities of an issuer in a Fund’s portfolio may decline in price if the issuer
fails to make anticipated dividend payments. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility. A change in the financial condition,
market perception or the credit rating of an issuer of securities included in a
Fund’s Index may cause the value of its securities to decline.
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 underperform other investments. An investment
in the Funds may lose money.
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.
Index
Tracking Risk.
Each Fund’s return may not match the return of its Index for a number of
reasons. For example, each 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 a Fund effects creations and redemptions are effected in 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 each Fund's 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 the Fund’s ability to adjust its exposure to the required levels in
order to track its Index. Unusual market conditions may cause the Index Provider
to postpone a scheduled rebalance, which could cause the Index to vary from its
normal or expected composition.There is no assurance that the Index Providers
(defined herein) or any agents that may act on their behalf will compile each
Fund’s Index accurately, or that each 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 Index Providers 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 the Index Providers or their agents will generally be borne 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 an Index’s other
constituents. Such errors may negatively or positively impact a Fund and its
shareholders. Any gains due to the Index Provider's or others’ errors will be
kept by the applicable Fund and its shareholders and any losses resulting from
an Index Providers’ or others’ errors will be borne by the applicable Fund and
its shareholders. 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. A Fund may not be fully invested at times,
either as a result of cash flows into the Fund or reserves of cash held by the
Fund to pay expenses and (to the extent creations and redemptions are effected
in cash) to meet redemptions. In
addition, a Fund may not be able to invest in certain securities and/or other
assets
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, certain Exchange listing standards, a lack
of liquidity in markets in which such securities trade, potential adverse tax
consequences or other regulatory reasons (such as diversification requirements).
A lack of liquidity may be due to various events, including market events,
economic conditions or investor perceptions. Illiquid securities may be
difficult to value and their value may be lower than the market price of
comparable liquid securities, which would negatively affect a Fund's
performance. 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. Certain Funds may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. 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 may accept cash in
connection with a purchase of Creation Units or effect their redemptions in cash
rather than in-kind and, as a result, a Fund’s ability to match the return of
its respective Index will be affected.
Certain
Funds may fair value certain of the securities, underlying currencies and/or
other assets it holds, except those securities primarily traded on exchanges
that close at the same time the Fund calculates its NAV. To the extent a Fund
calculates its NAV based on fair value prices and the value of its Index is
based on securities’ closing prices on local foreign markets (i.e.,
the value of its Index is not based on fair value prices) or if a Fund otherwise
calculates its NAV based on prices that differ from those used in calculating
its 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 a 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
returns 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.
Apart
from scheduled rebalances, the Index Provider or its agents may carry out
additional ad hoc rebalances to the Index in order, for example, to correct an
error in the selection of index constituents. When the Index is rebalanced and
the Fund in turn rebalances its portfolio to attempt to increase the correlation
between the Fund’s portfolio and the Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by the
Fund and its shareholders. Therefore, errors and additional ad hoc rebalances
carried out by the Index Provider to the Index may increase the costs to and the
tracking error risk of the Fund.
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.
Passive
Management Risk. Unlike
many investment companies, the Funds are not “actively” managed. Therefore,
unless a specific security is removed from its 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 Index, the Fund may be forced to sell
such security at an inopportune time or for prices other than at current market
values. An investment in a Fund involves risks similar to those of investing in
any fund that invests in bonds or equity securities traded on an exchange, such
as market fluctuations caused by such factors as economic and political
developments, changes in interest rates and perceived trends in security prices.
Each Fund’s 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.
Authorized
Participant 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. The Distributor (defined herein), 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 at a 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 an 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 an Exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the relevant Exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of an Exchange
occurs, a shareholder may be unable to purchase or sell Shares of a Fund. There
can be no assurance that the requirements of an 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 an 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, 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 a
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 an 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 an Exchange. Liquidity in those securities may be reduced
after the applicable closing times. Accordingly, during the time when an
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 a 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
Funds.
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
a Fund’s trading volume and market liquidity and may increase if a Fund’s
trading volume, the spread of a 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 a Fund’s NAV,
and the discount is likely to be greatest during significant market
volatility.
Non-Diversified
Risk.
Each Fund is a separate investment portfolio of VanEck ETF Trust (the “Trust”),
which is an open-end investment company registered under the 1940 Act. Each Fund
is classified as a “non-diversified” fund under the 1940 Act. Moreover, each
Fund is subject to the risk that it will be more volatile than a diversified
fund because 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 a Fund’s NAV and may make the Fund more volatile than more
diversified funds. Certain Funds may be particularly vulnerable to this risk
because their respective Index is comprised of securities of a limited number of
companies.
Concentration
Risk. Each
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 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.
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 an Index may be used by a Fund in seeking performance that
corresponds to its Index and in managing cash flows, and may count towards
compliance with the Fund’s 80% policy. Each Fund may also invest, to the extent
permitted by the 1940 Act, in other affiliated and unaffiliated funds, such as
open-end or closed-end management investment companies, including other ETFs.
None of the Funds employs a temporary defensive strategy to protect against
potential stock market declines.
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 or intends to enter 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 such 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 such 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 Funds’
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 a Fund.
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. A Fund’s 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
that will rescind and withdraw the guidance of the SEC and its staff regarding
asset segregation and cover transactions. The final rule requires funds to trade
derivatives and other transactions that create future payment or delivery
obligations (except reverse repurchase agreements and similar financing
transactions) subject to a value-at-risk (“VaR”) leverage limit, 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 final 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 new rule regarding use of securities lending collateral that may limit
a fund's securities lending activities. Compliance with these new requirements
will be required after an eighteen-month transition period.
Leverage
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. To manage the
risk associated with leveraging, a Fund may segregate liquid assets, or
otherwise “cover” its derivatives position in a manner consistent with the 1940
Act and the rules and SEC interpretations thereunder. A Fund may modify its
asset segregation policies at any time to comply with any changes in the SEC’s
positions regarding asset segregation.
Shareholder
Risk.
Certain shareholders, including other funds advised by the Adviser, may from
time to time own a substantial amount of the Funds’ 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.
Unlike
many conventional mutual funds which are only bought and sold at closing NAVs,
the Shares of the Funds 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 certain Funds, 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 each Fund (the “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-to-day investment management of the Funds. As of December 31, 2020, the
Adviser managed approximately $68.11 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 will be available in the Trust’s annual report
for the period ended September 30, 2021.
Pursuant
to the Investment Management Agreement, the Adviser is responsible for all
expenses of the Funds including the costs of transfer agency, custody, fund
administration, legal, audit and other services, 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. For its services to the Funds, each Fund has agreed to pay the Adviser
an annual unitary management fee equal to 0.35% 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 February 1, 2023 with respect to each
Fund.
Prior
to October 1, 2021, for the services provided to each Fund under the Investment
Management Agreement, each Fund paid the Adviser monthly fees based on a
percentage of each Fund’s average daily net assets at the annual rate of
0.35%.
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 managers who currently share joint responsibility for the day-to-day
management of each Fund’s portfolio are Peter H. Liao, CFA and Guo Hua (Jason)
Jin. 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. Jin has been employed by the Adviser as an analyst since January 2007 and
has been a portfolio manager since 2018. Mr. Jin graduated from the State
University of New York at Buffalo in 2004 with a Bachelor of Science degree in
Business Administration with a concentration in Financial Analysis. Messrs. Liao
and Jin also serve as portfolio managers for certain other investment companies
and pooled investment vehicles advised by the Adviser. 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 an 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, 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 the an Exchange is closed (other than customary
weekend and holiday closings); (2) for any period during which trading on the 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 interest from debt
securities. These amounts, net of expenses, are typically passed along to Fund
shareholders as dividends from net investment income. Each Fund realizes capital
gains or losses
whenever
it sells securities. Net capital gains are distributed to shareholders as
“capital gain distributions.” Distributions from the Fund’s net investment
income, including net short-term capital gains, if any, are taxable to you as
ordinary income. Any long-term capital gains distributions you receive from the
Fund are taxable as long-term capital gain.
Net
investment income, if any, is typically distributed to shareholders quarterly
for VanEck Pharmaceutical ETF. Net investment income, if any, is typically
distributed to shareholders at least annually for all other Funds while net
realized capital gains, if any, are also 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 a Fund acquires investment
securities after the beginning of a dividend period, a 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 Fund owned the
underlying investment securities for the entire dividend period. If a 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 a 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 a Fund, 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) the 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,
at least annually (except for VanEck Pharmaceutical ETF, which expects to
distribute net investment income, if any, at least quarterly), 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.
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 a Fund. Distributions of
net investment income, including net short-term gains, if any, are generally
taxable as ordinary income. Whether distributions of capital gains represent
long-term or short-term capital gains is determined by how long a 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 may receive dividends, the distribution of which a Fund may report as
qualified dividends. In the event that a Fund receives such a dividend and
reports the distribution of such dividend as a qualified dividend, the dividend
may be taxed at the maximum capital gains rates of 15% or 20%, provided holding
period and other requirements are met at both the shareholder and the Fund
level. There can be no assurance that any significant portion of a Fund’s
distributions will be eligible for qualified dividend treatment.
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.
Dividends,
interest and gains from non-U.S. investments of a Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may, in some cases, reduce or
eliminate such taxes.
If
more than 50% of a Fund’s total assets at the end of its taxable year consist of
foreign securities, the Fund may elect to “pass through” to its investors
certain foreign income taxes paid by the Fund, with the result that each
investor will (i) include in gross income, even though not actually received,
the investor’s pro rata share of the Fund’s foreign income taxes, and (ii)
either deduct (in calculating U.S. taxable income) or credit (in calculating
U.S. federal income), subject to certain holding period and other limitations,
the investor’s pro rata share of the Fund’s foreign income taxes.
Backup
Withholding.
Each 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 Internal Revenue Service.
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 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 a 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 the Funds 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 the Funds 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 the Funds' “qualified net interest
income” (generally, the Funds' U.S. source interest income, other than certain
contingent interest and interest from obligations of a corporation or
partnership in which the Fund is at least a 10% shareholder, reduced by expenses
that are allocable to such income); or (ii) are paid in respect of the Funds'
“qualified short-term capital gains” (generally, the excess of the Fund’s net
short-term capital gain over the Funds' long-term capital loss for such taxable
year). However, depending on its circumstances, the Funds 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
Biotech Index, Pharmaceutical Index, Retail Index and Semiconductor Index are
published by MV Index Solutions GmbH (“MVIS”), which is an indirectly wholly
owned subsidiary of the Adviser.
MVIS
does not sponsor, endorse, or promote the Funds and bears no liability with
respect to the Funds or any security.
The
Biotech Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
companies involved in the biotech industry. Biotechnology includes research
(including research contractors), development as well as production, marketing
and sales of drugs based on genetic analysis and diagnostic equipment (excluding
pharmacies).
To
be initially eligible for the Biotech Index, (i) companies must generate at
least 50% of their revenues from biotechnology (as defined above) and (ii)
stocks must have a market capitalization of greater than $150 million as of the
end of the month prior to the month in which a rebalancing date occurs. The
Biotech Index includes common stocks and depositary receipts of U.S.-listed
companies that meet the eligibility requirements described above.
The
Biotech Index is the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the Biotech Index. Solactive AG uses its
best efforts to ensure that the Biotech Index is calculated correctly.
Irrespective of its obligations towards MVIS, Solactive AG has no obligation to
point out errors in the Biotech Index to third parties. VanEck Biotech ETF is
not sponsored, endorsed, sold or promoted by MVIS and MVIS makes no
representation regarding the advisability of investing in the VanEck Biotech
ETF.
The
Biotech Index is reconstituted semi-annually and rebalanced quarterly. MVIS may
delay or change a scheduled rebalancing or reconstitution of the Biotech Index
or the implementation of certain rules at its sole discretion.
The
Pharmaceutical Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of companies involved in the pharmaceutical industry.
Pharmaceuticals include companies engaged primarily in research (including
research contractors) and development as well as production, marketing and sales
of pharmaceuticals (excluding pharmacies).
To
be initially eligible for the Pharmaceutical Index, (i) companies must generate
at least 50% of their revenues from pharmaceuticals (as defined above) and (ii)
stocks must have a market capitalization of greater than $150 million as of the
end of the month prior to the month in which a rebalancing date occurs. The
Pharmaceutical Index includes common stocks and depositary receipts of
U.S.-listed companies that meet the eligibility requirements described above.
The
Pharmaceutical Index is the exclusive property of MVIS, which has contracted
with Solactive AG to maintain and calculate the Pharmaceutical Index. Solactive
AG uses its best efforts to ensure that the Pharmaceutical Index is calculated
correctly. Irrespective of its obligations towards MVIS, Solactive AG has no
obligation to point out errors in the Pharmaceutical Index to third parties.
VanEck Pharmaceutical ETF is not sponsored, endorsed, sold or promoted by MVIS
and MVIS makes no representation regarding the advisability of investing in the
VanEck Pharmaceutical ETF.
The
Pharmaceutical Index is reconstituted semi-annually and rebalanced quarterly.
MVIS may delay or change a scheduled rebalancing or reconstitution of the
Pharmaceutical Index or the implementation of certain rules at its sole
discretion.
The
Retail Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
companies involved in the retail industry. Retail includes companies engaged
primarily in retail distribution; wholesalers; online, direct mail retailers;
multi-line retailers; specialty retailers, such as apparel, automotive, computer
and electronics, drug, home improvement and home furnishing retailers; and food
and other staples retailers.
To
be initially eligible for the Retail Index, (i) companies must generate at least
50% of their revenues from retail (as defined above) and (ii) stocks must have a
market capitalization of greater than $150 million as of the end of the month
prior to the month in which a rebalancing date occurs. The Retail Index includes
common stocks and depositary receipts of U.S.-listed companies that meet the
eligibility requirements described above.
The
Retail Index is the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the Retail Index. Solactive AG uses its
best efforts to ensure that the Retail Index is calculated correctly.
Irrespective of its obligations towards MVIS, Solactive AG has no obligation to
point out errors in the Retail Index to third parties. VanEck Retail ETF is not
sponsored, endorsed, sold or promoted by MVIS and MVIS makes no representation
regarding the advisability of investing in the VanEck Retail ETF.
The
Retail Index is reconstituted semi-annually and rebalanced quarterly. MVIS may
delay or change a scheduled rebalancing or reconstitution of the Retail Index or
the implementation of certain rules at its sole discretion.
The
Semiconductor Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of companies involved in the semiconductor industry. Semiconductors
include companies engaged primarily in the production of semiconductors and
semiconductor equipment.
To
be initially eligible for the Semiconductor Index, (i) companies must generate
at least 50% of their revenues from semiconductors (as defined above) and (ii)
stocks must have a market capitalization of greater than $150 million as of the
end of the month prior to the month in which a rebalancing date occurs. The
Semiconductor Index includes common stocks and depositary receipts of
U.S.-listed companies that meet the eligibility requirements described above.
The
Semiconductor Index is the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the Semiconductor Index. Solactive AG
uses its best efforts to ensure that the Semiconductor Index is calculated
correctly. Irrespective of its obligations towards MVIS, Solactive AG has no
obligation to point out errors in the Semiconductor Index to third parties.
VanEck Semiconductor ETF is not sponsored, endorsed, sold or promoted by MVIS
and MVIS makes no representation regarding the advisability of investing in the
VanEck Semiconductor ETF.
The
Semiconductor Index is reconstituted semi-annually and rebalanced quarterly.
MVIS may delay or change a scheduled rebalancing or reconstitution of the
Semiconductor Index or the implementation of certain rules at its sole
discretion.
The
Adviser has entered into a licensing agreement with MVIS to use each of the
Biotech Index, Pharmaceutical Index, Retail Index and Semiconductor Index (each
an "MVIS Index," and together, the "MVIS Indices"). The Index Provider is a
wholly owned subsidiary of the Adviser. Each of VanEck Biotech ETF, VanEck
Pharmaceutical ETF, VanEck Retail ETF and VanEck Semiconductor ETF (each an
"MVIS Index ETF," and together, the "MVIS Index ETFs") is entitled to use its
Index pursuant to a sublicensing arrangement with the Adviser.
Shares
of the MVIS Index ETFs are not sponsored, endorsed, sold or promoted by MVIS.
MVIS makes no representation or warranty, express or implied, to the owners of
the Shares of the MVIS Index ETFs or any member of the public regarding the
advisability of investing in securities generally or in the Shares of the MVIS
Index ETFs particularly or the ability of the MVIS Indices to track the
performance of its respective securities markets. Each of the MVIS Indices is
determined and composed by MVIS without regard to the Adviser or the Shares of
the MVIS Index ETFs. MVIS has no obligation to take the needs of the Adviser or
the owners of the Shares of the MVIS Index ETFs into consideration in
determining or composing the respective Index. MVIS is not responsible for and
has not participated in the determination of the timing of, prices at, or
quantities of the Shares of the MVIS Index ETFs to be issued or in the
determination or calculation of the equation by which the Shares of the MVIS
Index ETFs are to be converted into cash. MVIS has no obligation or liability in
connection with the administration, marketing or trading of the Shares of the
MVIS Index ETFs.
The
MVIS Indices are the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the MVIS Indices. Solactive AG uses its
best efforts to ensure that the MVIS Indices are calculated correctly.
Irrespective of its obligations towards the MVIS, Solactive AG has no obligation
to point out errors in the MVIS Indices to third parties including but not
limited to investors and/or financial intermediaries of the financial
instrument.
Solactive
AG nor does Solactive AG offer any express or implicit guarantee or assurance
either with regard to the results of using the MVIS Indices and/or its trade
mark or its price at any time or in any other respect. The MVIS Indices are
calculated and maintained by Solactive AG. Solactive AG uses its best efforts to
ensure that the MVIS Indices are calculated correctly. Irrespective of its
obligations towards MVIS, Solactive AG has no obligation to point out errors in
the MVIS Indices to third parties including but not limited to investors and/or
financial intermediaries of the MVIS Index ETFs. Neither publication of the MVIS
Indices by Solactive AG nor the licensing of the MVIS Indices or its trade mark
for the purpose of use in connection with the MVIS Index ETFs constitutes a
recommendation by Solactive AG to invest capital in the MVIS Index ETFs nor does
it in any way represent an assurance or opinion of Solactive AG with regard to
any investment in the MVIS Index ETFs. Solactive AG is not responsible for
fulfilling the legal requirements concerning the accuracy and completeness of
the prospectus of the MVIS Index ETFs.
MVIS
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE MVIS INDICES OR
ANY DATA INCLUDED THEREIN AND MVIS SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. MVIS MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE MVIS INDEX
ETFS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE MVIS INDICES, OR MVIS
INDEX ETFS OR ANY DATA INCLUDED THEREIN. MVIS 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 MVIS INDICES OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MVIS
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
The
S&P 500®
Index included in certain Funds’ performance tables is a product of S&P Dow
Jones Indices LLC and/or its affiliates and has been licensed for use by the
Adviser. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P
Global, Inc., and/or its affiliates. All rights reserved. Redistribution or
reproduction in whole or in part are prohibited without written permission of
S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones
Indices LLC’s indices please visit www.spdji.com. S&P®
is a registered trademark of S&P Global and Dow Jones®
is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P
Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor
their third party licensors make any representation or warranty, express or
implied, as to the ability of any index to accurately represent the asset class
or market sector that it purports to represent and neither S&P Dow Jones
Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third
party licensors shall have any liability for any errors, omissions, or
interruptions of any index or the data included therein.
S&P
DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR
THE COMPLETENESS OF EACH INDEX OR ANY DATA RELATED THERETO, OR ANY COMMUNICATION
INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING
ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL
NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS
THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF EACH INDEX, OR WITH RESPECT TO ANY DATA
RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER
SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF
PROFITS, TRADING LOSSES, LOST TIME, OR
GOODWILL,
EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN
CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY
BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES
INDICES AND THE ADVISER, OTHER THAN THE LICENSORS OF S&P DOW JONES
INDICES.
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 [ ], the Trust’s
independent registered public accounting firm, whose report, along with the
Funds’ financial statements, are included in the Funds’ Annual Report, which is
available upon request.
[TO
BE UPDATED]
For
a share outstanding throughout each year:
[TO
BE UPDATED]
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 an Exchange is satisfied by the fact that
the prospectus is available at an 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 beyond the limits set forth in Section 12(d)(1) subject to certain terms
and conditions set forth in an SEC exemptive order or SEC regulations, including
that such investment companies enter into an agreement with the
Funds.
The
Prospectus, SAI and any other Fund communication do not create any contractual
obligations between the Fund’s shareholders and the Trust, the Funds, 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. [ ] 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 [ ], as may be
supplemented from time to time. Additional information about each of 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 each 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].
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Transfer
Agent: State Street Bank and Trust Company SEC Registration Number:
333-123257 1940 Act Registration Number: 811-10325 |
800.826.2333 vaneck.com |
INDUSPRO |