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 February 16, 2023
Vietnam
ETF VNM
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Principal
U.S. Listing Exchange: Cboe BZX Exchange, Inc. |
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The
U.S. Securities and Exchange Commission (“SEC”) has not approved or
disapproved these securities or passed upon the accuracy or adequacy of
this Prospectus. Any representation to the contrary is a criminal
offense. |
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800.826.2333 vaneck.com
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TABLE
OF CONTENTS |
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Summary
Information |
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SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck®
Vietnam ETF (the “Fund”) seeks to replicate as closely as possible, before fees
and expenses, the price and yield performance of the MarketVectorTM
Vietnam Local Index (the “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)
[TO
BE UPDATED]
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Management
Fee |
0.50 |
% |
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Other
Expenses |
[
] |
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Total
Annual Fund Operating Expenses(a) |
[
] |
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Fee
Waivers and Expense Reimbursement(a) |
[
] |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
[
] |
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(a) Van
Eck Associates Corporation (the “Adviser”) has agreed to waive fees and/or pay
Fund expenses to the extent necessary to prevent the operating expenses of the
Fund (excluding acquired fund fees and expenses, interest expense, trading
expenses, taxes and extraordinary expenses) from exceeding [ ]% of the Fund’s
average daily net assets per year until at least [ ]. During such time, the
expense limitation is expected to continue until the Fund’s Board of Trustees
acts to discontinue all or a portion of such expense limitation.
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 (except that the example
incorporates the fee waivers and/or expense reimbursement arrangement for only
the first year). Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
[TO
BE UPDATED]
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YEAR |
EXPENSES |
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1 |
[
] |
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3 |
[
] |
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5 |
[
] |
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10 |
[
] |
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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 [ ]% 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 Index includes securities of Vietnamese
companies. A company is generally considered to be a Vietnamese company if it is
incorporated in Vietnam. Such companies may include small- and
medium-capitalization companies. As of [ ], the Index included [ ] securities of
companies with a market capitalization range of between approximately [ ] and [
] and a weighted average market capitalization of [ ]. 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 Index by investing in a portfolio of
securities that generally replicates the Index. Unlike many investment companies
that try to “beat” the performance of a benchmark index, the Fund does not try
to “beat” the Index and does not seek temporary defensive positions that are
inconsistent with its investment objective of seeking to replicate the 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 Index concentrates in an industry or group of industries. As of [ ], each of
the [real estate, consumer staples, financials and basic materials] sectors
represented a significant portion of the Index.
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.
Special
Risk Considerations of Investing in Vietnamese Issuers. Investments
in securities of Vietnamese issuers, including issuers located outside of
Vietnam that generate significant revenues from Vietnam, involve risks and
special considerations not typically associated with investments in the U.S.
securities markets. Such heightened risks include, among others, expropriation
and/or nationalization of assets, restrictions on and government intervention in
international trade, confiscatory taxation, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, the impact on the economy as a result of civil war, and social
instability as a result of religious, ethnic and/or socioeconomic unrest.
Vietnam is dependent on trading relationships with certain key trading partners,
including the United States, China and Japan, and as a result may be adversely
affected if demand for Vietnam’s exports in those nations decline.
The
securities markets in Vietnam are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Vietnam are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, illiquidity, greater price fluctuations, uncertainty
regarding the existence of trading markets, governmental control, heavy
regulation of labor and industry and inflation. Vietnam has experienced, and may
in the future experience, a high inflation rate, which is at least partially a
result of the country’s large trade deficit. Due to governmental focus on
economic growth at the expense of currency stability, the inflation rate may
continue at a high level and economic stability could be threatened. Moreover,
trading on securities markets may be suspended altogether.
Regulations
in Vietnam may require the Fund to execute trades of securities of Vietnamese
companies through a single broker. As a result, the Adviser will have less
flexibility to choose among brokers on behalf of the Fund than is typically the
case for investment managers. In addition, because the process of purchasing
securities in Vietnam requires that payment to the local broker occur prior to
receipt of securities, failure of the broker to deliver the securities will
adversely affect the Fund.
The
government in Vietnam may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Vietnam. These restrictions and/or controls may at times limit or prevent
foreign investment in securities of issuers located or operating in Vietnam.
Moreover, Vietnam may require governmental approval or special licenses prior to
investments by foreign investors and may also require governmental approval in
connection with the repatriation of capital by foreign investors. The Vietnamese
government may limit the amount of investments by foreign investors in a
particular industry and/or issuer and may limit such foreign investment to a
certain class of securities of an issuer that may have less advantageous rights
than the classes available for purchase by domiciliaries of Vietnam and/or
impose additional taxes on foreign investors. These factors, among others, make
investing in issuers located or operating in Vietnam significantly riskier than
investing in issuers located or operating in more developed countries, and any
one of them could cause a decline in the value of the Fund’s
Shares.
[Basic
Materials Sector Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the basic materials sector. Companies
engaged in the production and distribution of basic materials may be adversely
affected by changes in world events, political and economic conditions, energy
conservation, environmental policies, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.]
Foreign
Securities Risk.
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.
Frontier
Market Issuers Risk. Vietnam
is considered to be a “frontier market.” Frontier market countries generally
have smaller economies and less developed capital markets than traditional
emerging markets, and, as a result, the risks of investing in frontier market
countries are magnified. Investments in securities of frontier market issuers
are exposed to a number of risks that may make these investments volatile in
price or difficult to trade. Frontier markets are more likely than developed
markets to experience problems with the clearing and settling of trades, as well
as the holding of securities by local banks, agents and depositories. Political
risks may include unstable governments, nationalization, restrictions on foreign
ownership, laws that prevent investors from getting their money out of a country
and legal systems that do not protect property rights as well as the laws of the
United States. Market risks may also include economies that concentrate in only
a few industries, securities issues that are held by only a few investors,
liquidity issues and limited trading capacity in local exchanges and the
possibility that markets or issues may be manipulated by foreign nationals who
have inside information.
Foreign Currency Risk.
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. The Fund may also incur costs in connection with conversions
between U.S. dollars and foreign currencies.
Depositary Receipts
Risk. The
Fund may invest in depositary receipts (including American 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. 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. The issuers of depositary receipts may discontinue
issuing new depositary receipts and withdraw existing depositary receipts at any
time, which may result in costs and delays in the distribution of the underlying
assets to the Fund and may negatively impact the Fund’s
performance.
[Real
Estate Sector Risk.
Companies in the real estate sector include companies that invest in real
estate, such as REITs and real estate management and development companies. The
Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the real estate sector. Companies
that invest in real estate are subject to the risks of owning real estate
directly as well as to risks that relate specifically to the way that such
companies operate, including management risk (such companies are dependent upon
the management skills of a few key individuals and may have limited financial
resources). Adverse economic, business or political developments affecting real
estate could have a major effect on the values of the Fund’s investments.
Investing in real estate is subject to such risks as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent, possible lack of availability of
mortgage financing, market saturation, fluctuations in rental income and the
value of underlying properties and extended vacancies of properties. Certain
real estate securities have a relatively small market capitalization, which may
tend to increase the volatility of the market price of these securities. Real
estate securities have limited diversification and are, therefore, subject to
risks inherent in operating and financing a limited number of projects. Real
estate securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.]
[Consumer Staples Sector
Risk.
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.]
[Financials
Sector Risk. Companies
in the financials sector may be subject to extensive government regulation that
affects the scope of their activities, the prices they can charge and the amount
of capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefiting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.]
Small-
and Medium-Capitalization Companies Risk.
The
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.
Cash
Transactions Risk. Unlike
other ETFs, the Fund expects to effect its creations and redemptions at least
partially for cash, rather than wholly for in-kind securities. Therefore, it may
be required to sell portfolio securities and subsequently incur brokerage costs
and/or recognize gains or losses on such sales that the Fund might not have
recognized if it were to distribute portfolio securities in kind. As such,
investments in Shares may be less tax-efficient than an investment in a
conventional ETF. Transaction costs, including brokerage costs, will decrease
the Fund’s net asset value to the extent not offset by the transaction fee
payable by an Authorized Participant.
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 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.
Market
Risk.
The prices of securities 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 may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including 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.
High
Portfolio Turnover Risk.
The Fund may engage in active and frequent trading of its portfolio securities,
which will result in increased transaction costs to the Fund, including
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of the securities and on reinvestment in other securities. High portfolio
turnover may also result in higher taxes when Fund Shares are held in a taxable
account. The effects of high portfolio turnover may adversely affect Fund
performance.
Index Tracking Risk.
The
Fund’s return may not match the return of the Index for a number of reasons. For
example, the Fund incurs operating expenses, including taxes, not applicable to
the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index or (to the extent the Fund effects creations and redemptions in
cash) raising cash to meet redemptions or deploying cash in connection with
newly created Creation Units. Transaction costs, including brokerage costs, will
decrease the Fund’s net asset value to the extent not offset by the transaction
fee payable by an Authorized Participant.
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 Index. Errors in the Index data, the Index computations and/or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index provider, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Index provider’s or others’ errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Index provider’s or others’ errors will be borne by the Fund and its
shareholders. Additionally, 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. Apart from scheduled rebalances, the Index provider or its
agents may carry out additional ad hoc rebalances to the Index. Therefore,
errors and additional ad hoc rebalances carried out by the Index provider or its
agents to the Index may increase the costs to and the tracking error risk of the
Fund.
The
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 or to meet
redemptions. In addition, the Fund may not invest in certain securities included
in the Index, or invest in them in the exact proportions in which they are
represented in the Index. The Fund’s performance may also deviate from the
return of the Index for various reasons, including 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). To the extent the Fund utilizes depositary
receipts, the purchase of depositary receipts may negatively affect the Fund’s
ability to track the performance of the Index and increase tracking error,
which
may be exacerbated if the issuer of the depositary receipt discontinues issuing
new depositary receipts or withdraws existing depositary receipts.
The
Fund may value certain of its investments, underlying currencies and/or other
assets based on fair value prices. To the extent the Fund calculates its net
asset value based on fair value prices and the value of the Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the 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), repatriation or economic sanctions may also increase
the index tracking risk. The Fund’s performance may also deviate from the
performance of the Index due to the impact of withholding taxes, late
announcements relating to changes to the Index and high turnover of the 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. 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 Index. In light of the
factors discussed above, the Fund’s return may deviate significantly from the
return of the Index. Changes to the composition of the 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.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Trading
Issues Risk. 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 relevant exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of the exchange
occurs, a shareholder may be unable to purchase or sell Shares of the Fund.
There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk. Unlike
many investment companies, the Fund is not “actively” managed. Therefore, unless
a specific security is removed from its Index, the Fund generally would not sell
a security because the security’s issuer is in financial trouble. If a specific
security is removed from the 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 the Fund involves risks similar to those of investing
in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on market and economic conditions,
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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder may be unable to sell his or her Shares.
Issuer-Specific
Changes Risk. The
value of individual 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, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund’s Index may cause the value of its
securities to decline.
Non-Diversified
Risk. The
Fund is classified as a “non-diversified” fund under the Investment Company Act
of 1940. The 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 the Fund’s net asset value and may make the Fund
more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if its Index is comprised of securities of a limited
number of companies.
Index-Related
Concentration Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to reflect the Index’s allocation to those types
of securities. 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, the 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
securities.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. Prior to March
17, 2023, the Fund sought to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
Vietnam Index (the “Prior Index”). Therefore, performance information prior to
March 17, 2023 reflects the performance of the Fund tracking the Prior
Index.
All
returns assume reinvestment of dividends and distributions. The Fund’s past
performance (before and after taxes) is not necessarily indicative of how the
Fund will perform in the future. Updated performance information is available
online at www.vaneck.com.
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
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Best
Quarter: |
[
] |
[
] |
Worst
Quarter: |
[
] |
[
] |
Average
Annual Total Returns for the Periods Ended December 31, 2022
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 |
Past Ten
Years |
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VanEck
Vietnam ETF (return before taxes)* |
[
] |
[
] |
[
] |
|
|
VanEck
Vietnam ETF (return after taxes on distributions) |
[
] |
[
] |
[
] |
|
|
VanEck
Vietnam ETF (return after taxes on distributions and sale of Fund
Shares) |
[
] |
[
] |
[
] |
|
|
MVIS
Vietnam Index (reflects no deduction for fees, expenses or taxes,
except withholding taxes) |
[
] |
[
] |
[
] |
|
|
MarketVectorTM
Vietnam Local Index(reflects no deduction for fees, expenses or taxes,
except withholding taxes)** |
[
] |
[
] |
[
] |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or taxes) |
[
] |
[
] |
[
] |
|
|
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|
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*
Prior to March 17, 2023, the Fund sought to replicate as closely as possible,
before fees and expenses, the price and yield performance of the MVIS Vietnam
Index. Therefore, performance information prior to March 17, 2023 reflects the
performance of the Fund tracking the MVIS Vietnam Index.
**
The inception date of the MarketVector Vietnam Local Index was November 22,
2022.
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager.
The following individual is primarily responsible for the day-to-day management
of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
August
2009 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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SUMMARY
INFORMATION ABOUT PURCHASES AND SALES OF FUND SHARES, TAXES AND PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL
INTERMEDIARIES |
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than NAV, Shares of the Fund may trade at a price greater than NAV (i.e.,
a “premium”) or less than NAV (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid/ask spread”).
Recent
information, including information about the Fund’s NAV, market price, premiums
and discounts, and bid/ask spreads, is included on the Fund’s website at
www.vaneck.com.
TAX
INFORMATION
The
Fund’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.
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ADDITIONAL
INFORMATION ABOUT THE FUND’S INVESTMENT STRATEGIES AND
RISKS |
PRINCIPAL
INVESTMENT STRATEGIES
The
Adviser anticipates that, generally, the Fund will hold or gain exposure to all
of the securities that comprise its benchmark index (the “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, the 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 the 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.
The 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. The Fund may also, in
order to comply with the tax diversification requirements of the Internal
Revenue Code of 1986, as amended (the “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
The
Fund’s investment objective and each of its other investment policies are
non-fundamental policies that may be changed by the Board of Trustees of the
Trust (the “Board of Trustees”) without shareholder approval, except as noted in
this Prospectus or the Statement of Additional Information (“SAI”) under the
section entitled “Investment Policies and Restrictions—Investment
Restrictions.”
RISKS
OF INVESTING IN THE FUND
The
following section provides additional information regarding the principal risks
identified under “Principal Risks of Investing in the Fund” in the Fund’s
“Summary Information” section followed by additional risk information.
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.
Special
Risk Considerations of Investing in Vietnamese Issuers. Investments
in securities of Vietnamese issuers, including issuers located outside of
Vietnam that generate significant revenues from Vietnam, involve risks and
special considerations not typically associated with investments in the U.S.
securities markets. Such heightened risks include, among others, expropriation
and/or nationalization of assets, restrictions on and government intervention in
international trade, confiscatory taxation, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, the impact on the economy as a result of civil war, and social
instability as a result of religious, ethnic and/or socioeconomic unrest.
Vietnam is dependent on trading relationships with certain key trading partners,
including the United States, China and Japan, and as a result may be adversely
affected if demand for Vietnam’s exports in those nations decline. Vietnam may
be heavily dependent upon international trade and, consequently, Vietnam may be
negatively affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which it trades. The economy may also be adversely
affected by economic conditions in the countries with which it trades. Vietnam
is also subject to certain environmental risks, including typhoons and floods,
as well as rapid environmental degradation due to industrialization and lack of
regulation, which may negatively impact the value of investments in
Vietnam.
The
securities markets in Vietnam are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Vietnam are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, illiquidity, greater price fluctuations, uncertainty
regarding the existence of trading markets, governmental control, heavy
regulation of labor and industry and inflation. Vietnam has experienced, and may
in the future experience, a high inflation rate, which is at least partially a
result of the country’s large trade deficit. Due to governmental focus on
economic growth at the expense of currency stability, the inflation rate may
continue at a high level and economic stability could be threatened. Moreover,
trading on securities markets may be suspended altogether. The Vietnamese
economy also suffers from excessive intervention by the Communist government.
Many companies listed on the exchanges are still partly state-owned and have a
degree of state influence in their operations. State owned and operated
companies tend to be less efficient than privately owned companies, due to lack
of market competition.
Regulations
in Vietnam may require the Fund to execute trades of securities of Vietnamese
companies through a single broker. As a result, the Adviser will have less
flexibility to choose among brokers on behalf of the Fund than is typically the
case for investment managers. In addition, because the process of purchasing
securities in Vietnam requires that payment to the local broker occur prior to
receipt of securities, failure of the broker to deliver the securities will
adversely affect the Fund.
The
government in Vietnam may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Vietnam. These restrictions and/or controls may at times limit or prevent
foreign investment in securities of issuers located or operating in Vietnam.
Moreover, Vietnam may require governmental approval or special licenses prior to
investments by foreign investors and may also require governmental approval in
connection with the repatriation of capital by foreign investors. The Vietnamese
government may limit the amount of investments by foreign investors in a
particular industry
and/or
issuer and may limit such foreign investment to a certain class of securities of
an issuer that may have less advantageous rights than the classes available for
purchase by domiciliaries of Vietnam and/or impose additional taxes on foreign
investors. In addition, there is the risk that if Vietnam’s balance of payments
declines, Vietnam may impose temporary restrictions on foreign capital
remittances. Additionally, investments in Vietnam may require the Fund to adopt
special procedures, seek local government approvals or take other actions, each
of which may involve additional costs to the Fund. These factors, among others,
make investing in issuers located or operating in Vietnam significantly riskier
than investing in issuers located or operating in more developed countries, and
any one of them could cause a decline in the value of the Fund’s
Shares.
In
addition, pursuant to the methodology of the Index Provider used to calculate
and maintain the Index, a company may be removed from the Index at a quarterly
rebalancing as a result of reaching its limitation on foreign ownership.
Consequently, the Fund may be forced to sell securities at inopportune times or
for prices other than at current market values or may elect not to sell such
securities on the day that they are removed from the Index, due to market
conditions or otherwise. Due to these factors, the variation between the Fund’s
annual return and the return of the Index may increase.
Foreign
Securities Risk.
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.
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. Because the Fund may invest in securities denominated in foreign
currencies and some of the income received by the Fund may be in foreign
currencies, changes in currency exchange rates may negatively impact the Fund’s
return.
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 the Fund’s ability to invest in foreign securities or may
prevent the Fund from repatriating its investments. The Fund may also invest in
depositary receipts which involve similar risks to those associated with
investments in foreign securities. In addition, the 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 further sanctions or other actions, may
negatively affect the value and liquidity of the Fund.
Also,
certain issuers located in foreign countries in which the 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. The Fund, as an
investor in such issuers, will be indirectly subject to those
risks.
Emerging
and Frontier Market Issuers Risk.
Certain Funds invest in securities of emerging market issuers and frontier
market issuers. Frontier market countries generally have smaller economies and
less developed capital markets than traditional emerging markets, and, as a
result, the risks of investing in frontier market countries are magnified.
Investment in securities of emerging and frontier market issuers involves risks
not typically associated with investments in securities of issuers in more
developed countries that may negatively affect the value of your investment in
the Fund. Such heightened risks may include, among others, expropriation and/or
nationalization of assets, restrictions on and government intervention in
international trade, confiscatory taxation, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, the impact on the economy as a result of civil war, crime (including
drug violence) and social instability as a result of religious, ethnic and/or
socioeconomic unrest. Issuers in certain emerging and frontier market countries
are subject to less stringent requirements regarding accounting, auditing,
financial reporting and record keeping than are issuers in more developed
markets, and therefore, all material information may not be available or
reliable. Emerging and frontier markets are also more likely to experience
problems with the clearing and settling of trades, as well as the holding of
securities by local banks, agents and depositories. Low trading volumes and
volatile prices in less developed markets may make trades harder to complete and
settle, and governments or trade groups may compel local agents to hold
securities in designated depositories that may not be subject to independent
evaluation.
Local
agents are held only to the standards of care of their local markets. In
general, the less developed a country’s securities markets are, the greater the
likelihood of custody problems. Additionally, each of the factors described
below could have a negative impact on the Fund’s performance and increase the
volatility of the Fund.
Securities
Markets.
Securities markets in emerging and frontier market countries are underdeveloped
and are often considered to be less correlated to global economic cycles than
those markets located in more developed countries. Securities markets in
emerging and frontier market countries are subject to greater risks associated
with market volatility, lower market capitalization, lower trading volume,
illiquidity, inflation, greater price fluctuations, uncertainty regarding the
existence of trading markets, governmental control and heavy regulation of labor
and industry. These factors, coupled with restrictions on foreign investment and
other factors, limit the supply of securities available for investment by the
Fund. This will affect the rate at which the Fund is able to invest in emerging
and frontier market countries, the purchase and sale prices for such securities
and the timing of purchases and sales. Emerging and frontier markets can
experience high rates of inflation, deflation and currency devaluation. The
prices of certain securities listed on securities markets in emerging and
frontier market countries have been subject to sharp fluctuations and sudden
declines, and no assurance can be given as to the future performance of listed
securities in general. Volatility of prices may be greater than in more
developed securities markets. Moreover, securities markets in emerging and
frontier market countries may be closed for extended periods of time or trading
on securities markets may be suspended altogether due to political or civil
unrest. Market volatility may also be heightened by the actions of a small
number of investors. Brokerage firms in emerging and frontier market countries
may be fewer in number and less established than brokerage firms in more
developed markets. Since the Fund may need to effect securities transactions
through these brokerage firms, the Fund is subject to the risk that these
brokerage firms will not be able to fulfill their obligations to the Fund. This
risk is magnified to the extent the Fund effects securities transactions through
a single brokerage firm or a small number of brokerage firms. In addition, the
infrastructure for the safe custody of securities and for purchasing and selling
securities, settling trades, collecting dividends, initiating corporate actions,
and following corporate activity is not as well developed in emerging and
frontier market countries as is the case in certain more developed
markets.
Political
and Economic Risk.
Certain emerging and frontier market countries have historically been subject to
political instability and their prospects are tied to the continuation of
economic and political liberalization in the region. Instability may result from
factors such as government or military intervention in decision making,
terrorism, civil unrest, extremism or hostilities between neighboring countries.
Any of these factors, including an outbreak of hostilities could negatively
impact the Fund’s returns. Extremist groups in certain countries in the Middle
East and North Africa region have traditionally held anti-Western views and are
opposed to openness to foreign investments. Egypt borders the Gaza Strip and
Israel and there are risks of further instability and violence in the region.
Limited political and democratic freedoms in emerging and frontier market
countries might cause significant social unrest. These factors may have a
significant adverse effect on an emerging or frontier market country’s
economy.
Many
emerging and frontier market countries may be heavily dependent upon
international trade and, consequently, may continue to be negatively affected by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which it trades. They also have been, and may continue to be, adversely
affected by economic conditions in the countries with which they
trade.
In
addition, commodities (such as oil, gas and minerals) represent a significant
percentage of certain emerging markets’ exports and these economies are
particularly sensitive to fluctuations in commodity prices. Adverse economic
events in one country may have a significant adverse effect on other countries
of this region. In addition, most emerging market countries have experienced, at
one time or another, severe and persistent levels of inflation, including, in
some cases, hyperinflation.
This
has, in turn, led to high interest rates, extreme measures by governments to
keep inflation in check, and a generally debilitating effect on economic growth.
Although inflation in many countries has lessened, there is no guarantee it will
remain at lower levels. The political history of certain emerging market
countries has been characterized by political uncertainty, intervention by the
military in civilian and economic spheres, and political corruption. Such events
could reverse favorable trends toward market and economic reform, privatization,
and removal of trade barriers, and result in significant disruption in
securities markets in the region.
Also,
from time to time, certain issuers located in emerging and frontier market
countries in which the 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. The Fund, as an investor in such issuers, will be
indirectly subject to those risks.
The
economies of one or more countries in which the Fund may invest may be in
various states of transition from a planned economy to a more market-oriented
economy. The economies of such countries differ from the economies of most
developed countries in many respects, including levels of government
involvement, states of development, growth rates, control of foreign exchange
and allocation of resources. Economic growth in these economies may be uneven
both geographically and among various sectors of their economies and may also be
accompanied by periods of high inflation. Political changes, social instability
and adverse diplomatic developments in these countries could result in the
imposition of
additional
government restrictions including expropriation of assets, confiscatory taxes or
nationalization of some or all of the property held by the underlying issuers of
securities included in the Fund’s Index. There is no guarantee that the
governments of these countries will not revert back to some form of planned or
non-market-oriented economy, and such governments continue to be active
participants in many economic sectors through ownership positions and
regulation. The allocation of resources in such countries is subject to a high
level of government control. Such countries’ governments may strictly regulate
the payment of foreign currency denominated obligations and set monetary policy.
Through their policies, these governments may provide preferential treatment to
particular industries or companies. The policies set by the government of one of
these countries could have a substantial effect on that country’s
economy.
Investment
and Repatriation Restrictions.
The government in an emerging or frontier market country may restrict or control
to varying degrees the ability of foreign investors to invest in securities of
issuers located or operating in such emerging and frontier market countries.
These restrictions and/or controls may at times limit or prevent foreign
investment in securities of issuers located or operating in emerging and
frontier market countries and may inhibit the Fund’s ability to track its Index.
In addition, the Fund may not be able to buy or sell securities or receive full
value for such securities. Moreover, certain emerging and frontier market
countries may require governmental approval or special licenses prior to
investments by foreign investors and may limit the amount of investments by
foreign investors in a particular industry and/or issuer; may limit such foreign
investment to a certain class of securities of an issuer that may have less
advantageous rights than the classes available for purchase by domiciliaries of
such emerging and frontier market countries; and/or may impose additional taxes
on foreign investors. A delay in obtaining a required government approval or a
license would delay investments in those emerging and frontier market countries,
and, as a result, the Fund may not be able to invest in certain securities while
approval is pending. The government of certain emerging and frontier market
countries may also withdraw or decline to renew a license that enables the Fund
to invest in such country. These factors make investing in issuers located or
operating in emerging and frontier market countries significantly riskier than
investing in issuers located or operating in more developed countries, and any
one of them could cause a decline in the value of the Fund’s
Shares.
Additionally,
investments in issuers located in certain emerging and frontier market countries
may be subject to a greater degree of risk associated with governmental approval
in connection with the repatriation of investment income, capital or the
proceeds of sales of securities by foreign investors. Moreover, there is the
risk that if the balance of payments in an emerging or frontier market country
declines, the government of such country may impose temporary restrictions on
foreign capital remittances. Consequently, the Fund could be adversely affected
by delays in, or a refusal to grant, required governmental approval for
repatriation of capital, as well as by the application to the Fund of any
restrictions on investments. Furthermore, investments in emerging and frontier
market countries may require the Fund to adopt special procedures, seek local
government approvals or take other actions, each of which may involve additional
costs to the Fund.
Available
Disclosure About Emerging and Frontier Market Issuers.
Issuers located or operating in emerging and frontier market countries are not
subject to the same rules and regulations as issuers located or operating in
more developed countries. Therefore, there may be less financial and other
information publicly available with regard to issuers located or operating in
emerging and frontier market countries and such issuers are not subject to the
uniform accounting, auditing and financial reporting standards applicable to
issuers located or operating in more developed countries.
Foreign
Currency Considerations.
The Fund’s assets that are invested in equity securities of issuers in emerging
and frontier market countries will generally be denominated in foreign
currencies, and the income received by the Fund from these investments will be
principally in foreign currencies. The value of an emerging or frontier market
country’s currency may be subject to a high degree of fluctuation. This
fluctuation may be due to changes in interest rates, 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. The economies of certain emerging and
frontier market countries can be significantly affected by currency
devaluations. Certain emerging and frontier 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
can lead to sudden and large adjustments in the currency which, in turn, can
have a disruptive and negative effect on foreign investors.
The
Fund’s exposure to an emerging or frontier market country’s currency and changes
in value of such foreign currencies versus the U.S. dollar may reduce the Fund’s
investment performance and the value of your investment in the Fund. Meanwhile,
the Fund will compute and expects to distribute its income in U.S. dollars, and
the computation of income will be made on the date that the income is earned by
the Fund at the foreign exchange rate in effect on that date. Therefore, if the
value of the respective emerging or frontier market country’s currency falls
relative to the U.S. dollar between the earning of the income and the time at
which the Fund converts the relevant emerging or frontier market country’s
currency to U.S. dollars, the Fund may be required to liquidate certain
positions in order to make distributions if the Fund has insufficient cash in
U.S. dollars to meet distribution requirements under the Internal Revenue Code.
The liquidation of investments, if required, could be at disadvantageous prices
or otherwise have an adverse impact on the Fund’s performance.
Certain
emerging and frontier market countries also restrict the free conversion of
their currency into foreign currencies, including the U.S. dollar. There is no
significant foreign exchange market for many such currencies and it would, as a
result,
be
difficult for the Fund to engage in foreign currency transactions designed to
protect the value of the Fund’s interests in securities denominated in such
currencies. Furthermore, if permitted, the Fund may incur costs in connection
with conversions between U.S. dollars and an emerging or frontier market
country’s currency. Foreign exchange dealers realize a profit based on the
difference between the prices at which they are buying and selling various
currencies. Thus, a dealer normally will offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire immediately to resell that currency to the dealer. The Fund will conduct
its foreign currency exchange transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward, futures or options contracts to purchase or
sell foreign currencies.
Operational
and Settlement Risk.
In addition to having less developed securities markets, emerging and frontier
market countries have less developed custody and settlement practices than
certain developed countries. Rules adopted under the Investment Company Act of
1940 permit the Fund to maintain its foreign securities and cash in the custody
of certain eligible non-U.S. banks and securities depositories. Banks in
emerging and frontier market countries that are eligible foreign sub-custodians
may be recently organized or otherwise lack extensive operating experience. In
addition, in certain emerging and frontier market countries there may be legal
restrictions or limitations on the ability of the Fund to recover assets held in
custody by a foreign sub-custodian in the event of the bankruptcy of the
sub-custodian. Because settlement systems in emerging and frontier market
countries may be less organized than in other developed markets, there may be a
risk that settlement may be delayed and that cash or securities of the Fund may
be in jeopardy because of failures of or defects in the systems. Under the laws
in many emerging and frontier market countries, the Fund may be required to
release local shares before receiving cash payment or may be required to make
cash payment prior to receiving local shares, creating a risk that the Fund may
surrender cash or securities without ever receiving securities or cash from the
other party. Settlement systems in emerging and frontier market countries also
have a higher risk of failed trades and back to back settlements may not be
possible.
The
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event of a redemption request from
an Authorized Participant, the Fund will be required to deliver U.S. dollars to
the Authorized Participant on the settlement date. In the event that the Fund is
not able to convert the foreign currency to U.S. dollars in time for settlement,
which may occur as a result of the delays described above, the Fund may be
required to liquidate certain investments and/or borrow money in order to fund
such redemption. The liquidation of investments, if required, could be at
disadvantageous prices or otherwise have an adverse impact on the Fund’s
performance (e.g.,
by causing the Fund to overweight foreign currency denominated holdings and
underweight other holdings which were sold to fund redemptions). In addition,
the Fund will incur interest expense on any borrowings and the borrowings will
cause the Fund to be leveraged, which may magnify gains and losses on its
investments.
In
certain frontier and emerging market countries, the marketability of quoted
shares may be limited due to the restricted opening hours of stock exchanges,
and a narrow range of investors and a relatively high proportion of market value
may be concentrated in the hands of a relatively small number of shareholders.
In addition, because certain frontier and emerging market countries’ stock
exchanges on which the Fund’s portfolio securities may trade are open when the
Exchange is closed, the Fund may be subject to heightened risk associated with
market movements. Trading volume may be lower on certain frontier and emerging
market countries’ stock exchanges than on more developed securities markets and
equities may be generally less liquid. The infrastructure for clearing,
settlement and registration on the primary and secondary markets of certain
frontier and emerging market countries are less developed than in certain other
markets and under certain circumstances this may result in the Fund experiencing
delays in settling and/or registering transactions in the markets in which it
invests, particularly if the growth of foreign and domestic investment in
certain frontier and emerging market countries places an undue burden on such
investment infrastructure. Such delays could affect the speed with which the
Fund can transmit redemption proceeds and may inhibit the initiation and
realization of investment opportunities at optimum times.
Certain
issuers in emerging and frontier market countries may utilize share blocking
schemes. Share blocking refers to a practice, in certain foreign markets, where
voting rights related to an issuer’s securities are predicated on these
securities being blocked from trading at the custodian or sub-custodian level
for a period of time around a shareholder meeting. These restrictions have the
effect of barring the purchase and sale of certain voting securities within a
specified number of days before and, in certain instances, after a shareholder
meeting where a vote of shareholders will be taken. Share blocking may prevent
the Fund from buying or selling securities for a period of time. During the time
that shares are blocked, trades in such securities will not settle. The blocking
period can last up to several weeks. The process for having a blocking
restriction lifted can be quite onerous with the particular requirements varying
widely by country. In addition, in certain countries, the block cannot be
removed. As a result of the ramifications of voting ballots in markets that
allow share blocking, the Adviser, on behalf of the Fund, reserves the right to
abstain from voting proxies in those markets.
Corporate
and Securities Laws.
Securities laws in emerging and frontier market countries are relatively new and
unsettled and, consequently, there is a risk of rapid and unpredictable change
in laws regarding foreign investment, securities regulation, title to securities
and shareholder rights. Accordingly, foreign investors may be adversely affected
by new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging and frontier market issuers are subject may be less
advanced than those systems to which issuers located in more developed countries
are
subject,
and therefore, shareholders of issuers located in emerging and frontier market
countries may not receive many of the protections available to shareholders of
issuers located in more developed countries. In circumstances where adequate
laws and shareholder rights exist, it may not be possible to obtain swift and
equitable enforcement of the law. In addition, the enforcement of systems of
taxation at federal, regional and local levels in emerging and frontier market
countries may be inconsistent and subject to sudden change. The Fund has limited
rights and few practical remedies in emerging markets and the ability of U.S.
authorities to bring enforcement actions in emerging markets may be
limited.
Foreign Currency Risk.
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. The Fund may also incur costs in connection with conversions
between U.S. dollars and foreign currencies.
Several
factors may affect the price of euros and the British pound sterling, including
the debt level and trade deficit of the Economic and Monetary Union and the
United Kingdom, inflation and interest rates of the Economic and Monetary Union
and the United Kingdom and investors’ expectations concerning inflation and
interest rates and global or regional political, economic or financial events
and situations. The European financial markets have experienced, and may
continue to experience, volatility and have been adversely 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
European Union member countries that do not use the euro and non-European Union
member countries. In a referendum held on June 23, 2016, voters in the United
Kingdom voted to leave the European Union, creating economic and political
uncertainty in its wake. On January 31, 2020, the United Kingdom officially
withdrew from the European Union and the United Kingdom entered a transition
period which ended on December 31, 2020. On December 30, 2020, the European
Union and United Kingdom signed the EU-UK Trade and Cooperation Agreement, an
agreement on the terms governing certain aspects of the European Union’s and the
United Kingdom’s relationship following the end of the transition period.
Notwithstanding the EU-UK Trade and Cooperation Agreement, following the
transition period, there is likely to be considerable uncertainty as to the
United Kingdom’s post-transition framework. Significant uncertainty exists
regarding the effects such withdrawal will have on the euro, European economies
and the global markets. In addition, one or more countries may abandon the euro
and the impact of these actions, especially if conducted in a disorderly manner,
may have significant and far-reaching consequences on the euro.
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 the Fund and its
investments.
Depositary Receipts
Risk.
The Fund may invest in depositary receipts (including American 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.
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. The issuers of depositary receipts may discontinue
issuing new depositary receipts and withdraw existing depositary receipts at any
time, which may result in costs and delays in the distribution of the underlying
assets to the Fund and may negatively impact the Fund’s
performance.
[Basic
Materials Sector Risk.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the basic materials sector. Companies
engaged in the production and distribution of basic materials may be adversely
affected by changes in world events, political and economic conditions, energy
conservation, environmental policies, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.]
[Consumer Staples Sector
Risk.
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.]
[Financials
Sector Risk.
Companies in the financials sector may be subject to extensive government
regulation that affects the scope of their activities, the prices they can
charge and the amount of capital they must maintain. The profitability of
companies in
the
financials sector may be adversely affected by increases in interest rates, by
loan losses, which usually increase in economic downturns, and by credit rating
downgrades. In addition, the financials sector is undergoing numerous changes,
including continuing consolidations, development of new products and structures
and changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefiting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.]
[Real
Estate Sector Risk.
Companies in the real estate sector include companies that invest in real
estate, such as REITs and real estate management and development companies. The
Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the real estate sector. Companies
that invest in real estate are subject to the risks of owning real estate
directly as well as to risks that relate specifically to the way that such
companies operate, including management risk (such companies are dependent upon
the management skills of a few key individuals and may have limited financial
resources). Adverse economic, business or political developments affecting real
estate could have a major effect on the values of the Fund’s investments.
Investing in real estate is subject to such risks as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent, possible lack of availability of
mortgage financing, market saturation, fluctuations in rental income and the
value of underlying properties and extended vacancies of properties. Certain
real estate securities have a relatively small market capitalization, which may
tend to increase the volatility of the market price of these securities. Real
estate securities have limited diversification and are, therefore, subject to
risks inherent in operating and financing a limited number of projects. Real
estate securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.]
Small-
and Medium-Capitalization Companies Risk.
The 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.
Cash
Transactions Risk.
Unlike other ETFs, the Fund effects its creations and redemptions at least
partially for cash, rather than wholly for in-kind securities. Because the Fund
currently intends to effect all or a portion of redemptions for cash, rather
than in-kind distributions, it may be required to sell portfolio securities in
order to obtain the cash needed to distribute redemption proceeds, which
involves transaction costs that the Fund may not have incurred had it effected
redemptions entirely in-kind. These costs may include brokerage costs and/or
taxable gains or losses, which may be imposed on the Fund and decrease the
Fund’s net asset value to the extent such costs are not offset by a transaction
fee payable by an Authorized Participant. If the Fund recognizes a gain on these
sales, this generally will cause the Fund to recognize a gain its might not
otherwise have recognized if it were to distribute portfolio securities in-kind,
or to recognize such gain sooner than would otherwise be required. As a result,
an investment in the Fund may be less tax-efficient than an investment in a more
conventional ETF. Other ETFs generally are able to make in-kind redemptions and
avoid realizing gains in connection with transactions designed to raise cash to
meet redemption requests. The Fund generally intends to distribute these gains
to shareholders to avoid being taxed on this gain at the Fund level and
otherwise comply with the special tax rules that apply to it. This strategy may
cause shareholders to be subject to tax on gains they would not otherwise be
subject to, or at an earlier date than, if they had made an investment in a
different ETF. Additionally, transactions may have to be carried out over
several days if the securities market is relatively illiquid and may involve
considerable transaction fees and taxes.
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. 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 the 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 the Fund. In addition, the equity
securities of an issuer in the 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 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.
Risk
of Investing in Other Funds.
The
Fund may invest in shares of other funds, including ETFs. As a result, the Fund
will indirectly be exposed to the risks of an investment in the underlying
funds. Shares of other funds have many of the same risks as direct investments
in common stocks or bonds. In addition, the market value of such funds’ shares
is expected to rise and fall as
the
value of the underlying index or securities rise and fall. If the shares of such
funds are traded on a secondary market, the market value of such funds’ shares
may differ from the net asset value of the particular fund. As a shareholder in
a fund, the Fund will bear its ratable share of the underlying fund’s expenses.
At the same time, the Fund will continue to pay its own investment management
fees and other expenses. As a result, the Fund and its shareholders will be
absorbing duplicate levels of fees with respect to investments in other funds,
including ETFs. The expenses of such underlying funds will not, however, be
counted towards the Fund’s expense cap. The Fund is subject to the conditions
set forth in provisions of the Investment Company Act of 1940 that limit the
amount that the Fund and its affiliates, in the aggregate, can invest in the
outstanding voting securities of any one investment company.
Market
Risk.
The prices of securities 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 may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including 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.
High
Portfolio Turnover Risk. The
Fund may engage in active and frequent trading of its portfolio securities,
which will result in increased transaction costs to the Fund, including
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of the securities and on reinvestment in other securities. High portfolio
turnover may also result in higher taxes when Fund Shares are held in a taxable
account. The effects of high portfolio turnover may adversely affect Fund
performance.
Index Tracking Risk.
The Fund’s return may not match the return of the Index for a number of reasons.
For example, the Fund incurs operating expenses, including taxes, not applicable
to the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index, or (to the extent the Fund effects creations and redemptions in
cash) raising cash to meet redemptions or deploying cash in connection with
newly created Creation Units. Transaction costs, including brokerage costs, will
decrease the Fund’s net asset value to the extent not offset by the transaction
fee payable by an Authorized Participant.
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 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 provider or any
agents that may act on its behalf will compile the Index accurately, or that the
Index will be determined, composed or calculated accurately. Errors in respect
of the quality, accuracy and completeness of the data used to compile the Index
may occur from time to time and may not be identified and corrected by the Index
provider, 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 provider or its agents will generally be borne by the Fund and its
shareholders. For example, during a period where the Index contains incorrect
constituents, the Fund would have market exposure to such constituents and would
be underexposed to the Index’s other constituents. Such errors may negatively or
positively impact the Fund and its shareholders.
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. The 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 or to meet redemptions. The
Fund may accept cash in connection with a purchase of Creation Units or effect
its redemptions in cash rather than in-kind and, as a result, the Fund’s ability
to match the return of the Index will be affected. In addition, the Fund may not
invest in certain securities and/or other assets included in the Index, or
invest in them in the exact proportions in which they are represented in the
Index. The Fund’s performance may also deviate from the return of the Index for
a variety of reasons, including 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 the Fund’s
performance. Moreover, the Fund may be delayed in purchasing or selling
securities included in the 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. To the extent
the Fund encounters any issues with regard to currency convertibility (including
the cost of borrowing funds, if any), repatriation or economic sanctions, such
issues may also increase 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 Index.
The Fund’s performance may also deviate from the performance of the Index due to
the impact of withholding taxes, late announcements relating to changes to the
Index and high turnover of the Index.
The
Fund may fair value certain of its investments, underlying currencies and/or
other assets. To the extent the Fund calculates its net asset value based on
fair value prices and the value of the Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices) or if the Fund
otherwise calculates its net asset value based on prices that differ from those
used in calculating the Index, the Fund’s ability to track the Index may be
adversely affected. The need to comply with the tax diversification and other
requirements of the Internal Revenue Code may also impact the Fund’s ability to
track the performance of the Index. In addition, if the Fund utilizes depositary
receipts or other derivative instruments, its return may not correlate as well
with the return of the Index as would be the case if the Fund purchased all the
securities in the Index directly. To the extent the Fund utilizes depositary
receipts, the purchase of depositary receipts may negatively affect the Fund’s
ability to track the performance of the Index and increase tracking error, which
may be exacerbated if the issuer of the depositary receipt discontinues issuing
new depositary receipts or withdraws existing depositary receipts. Actions taken
in response to proposed corporate actions could also result in increased
tracking error. In light of the factors discussed above, the Fund’s return may
deviate significantly from the return of the 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 the 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.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Van
Eck Securities Corporation, the distributor of the Shares, 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 Authorized Participants creating and redeeming directly
with the Fund.
Decisions
by market makers or Authorized Participants 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 the 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 net asset value and also in greater than normal intraday
bid/ask spreads for Fund Shares.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk.
Unlike many investment companies, the Fund is not “actively” managed. Therefore,
unless a specific security is removed from its Index, the Fund generally would
not sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from the 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 the Fund involves risks similar to those of
investing in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on
market
and economic conditions, 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. 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 net asset value or to the intraday value of the Fund’s holdings.
The net asset value of the Shares will fluctuate with changes in the market
value of the Fund’s securities holdings. The market price of Shares may
fluctuate, in some cases materially, in accordance with changes in net asset
value and the intraday value of the Fund’s holdings, as well as supply and
demand on the Exchange. Shares may trade below, at or above their net asset
value. While the creation/redemption feature is designed to make it likely that
Shares normally will trade close to the value of the Fund’s holdings, market
prices are not expected to correlate exactly to the Fund’s net asset value 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 the 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 net asset value or sells Shares at a
time when the market price is at a discount to the net asset value, 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 the
Fund’s net asset value. In addition, because certain of the Fund’s underlying
securities trade on exchanges that are closed when 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 net asset value that may be greater than those experienced by other
ETFs. In addition, 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 and the resulting premium or discount to the
Shares’ net asset value 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.
When
you buy or sell Shares of the 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 the Fund’s Shares varies over time based
on the Fund’s trading volume and market liquidity and may increase if the Fund’s
trading volume, the spread of the Fund’s underlying securities, or market
liquidity decrease. In times of severe market disruption, including when trading
of the Fund’s holdings may be halted, the bid/ask spread may increase
significantly. This means that Shares may trade at a discount to the Fund’s net
asset value, and the discount is likely to be greatest during significant market
volatility.
Issuer-Specific
Changes Risk.
The value of individual 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, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund’s Index may cause the value of its
securities to decline.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The 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 the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if its Index is comprised of securities of a limited
number of companies.
Index-Related
Concentration Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to reflect the Index’s allocation to those types
of securities. 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, the 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
securities.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
The
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 the Fund track its Index. Depositary receipts not
included in an Index may be used by the 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. The Fund may also utilize
participation
notes to seek performance that corresponds to its respective Index. The 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. The Fund will not invest as part of a temporary
defensive strategy to protect against potential securities market
declines.
BORROWING
MONEY The
Fund may borrow money from a bank up to a limit of one-third of the market value
of its assets. The 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 the 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 the Fund might realize, and may increase volatility in
the value of the Fund’s investments.
LENDING
PORTFOLIO SECURITIES
The
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, the Fund receives cash, U.S.
government securities and stand-by letters of credit not issued by the Fund’s
bank lending agent equal to at least 102% of the value of the portfolio
securities being loaned. This collateral is marked-to-market on a daily basis.
Although the 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. The Fund may pay fees to the party arranging the loan of securities.
In addition, the 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. The Fund could also lose money in the event of a decline in
the value of any cash collateral or in the value of investments made with the
cash collateral. These events could trigger adverse tax consequences for the
Fund. Substitute payments for dividends received by the Fund for securities
loaned out by the Fund will not be considered qualified dividend
income.
ADDITIONAL
NON-PRINCIPAL RISKS
Derivatives
Risk.
Derivatives and other similar instruments (referred to collectively as
“derivatives”) are financial instruments whose values are based on the value of
one or more reference assets or indicators, such as a security, currency,
interest rate, or index. The 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 the 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 the 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 the 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 the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the 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). Counterparty risk also refers to the related risks of
having concentrated exposure to such a counterparty. A liquid secondary market
may not always exist for the Fund’s derivative positions at any time, and the
Fund may not be able to initiate or liquidate a swap position at an advantageous
time or price, which may result in significant losses. The Fund may also face
the risk that it may not be able to meet margin and payment requirements and
maintain a derivatives position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Under
Rule 18f-4 (the “derivatives rule”), funds need to trade derivatives and other
transactions that create future fund payment or delivery obligations subject to
a value-at-risk (“VaR”) leverage limit, and certain derivatives risk management
program and reporting requirements. Generally, these requirements apply unless a
fund qualifies as a “limited derivatives user,” as defined in the derivatives
rule. Under the derivatives rule, when a fund trades reverse repurchase
agreements or similar financing transactions, including certain tender option
bonds, it needs to aggregate the amount of indebtedness associated with the
reverse repurchase agreements or similar financing transactions with the
aggregate amount of any other senior securities representing indebtedness 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 Securities and Exchange
Commission also provided guidance in connection with the derivatives rule
regarding use of securities lending collateral that may limit a fund's
securities lending activities. In addition, under the derivatives rule, the Fund
is permitted to invest in a security on a when-issued or forward-settling basis,
or with a non-standard settlement cycle, and the transaction will be deemed not
to involve a senior security under the Investment Company Act of 1940, provided
that (i) the Fund intends to physically settle the transaction and (ii) the
transaction will settle within 35 days of its trade date (the
“Delayed-Settlement Securities Provision”). The Fund may otherwise engage in
such transactions that do not meet the conditions of the Delayed-Settlement
Securities Provision so long as the Fund treats any such transaction as a
“derivatives transaction” for purposes of compliance with the derivatives rule.
Furthermore, under the derivatives rule, the Fund will be permitted to enter
into an unfunded commitment agreement, and such unfunded commitment agreement
will not be subject to the asset coverage requirements under the Investment
Company Act of 1940, if the Fund reasonably believes, at the time it enters into
such agreement, that it will have sufficient cash and cash equivalents to meet
its obligations with respect to all such agreements as they come due.
Participation
Notes.
Participation notes (“P-Notes”) are issued by banks or broker-dealers and are
designed to offer a return linked to the performance of a particular underlying
equity security or market. P-Notes can have the characteristics or take the form
of various instruments, including, but not limited to, certificates or warrants.
The holder of a P-Note that is linked to a particular underlying security is
entitled to receive any dividends paid in connection with the underlying
security. However, the holder of a P-Note generally does not receive voting
rights as it would if it directly owned the underlying security. P-Notes
constitute direct, general and unsecured contractual obligations of the banks or
broker-dealers that issue them, which therefore subject the Fund to counterparty
risk.
Investments
in P-Notes involve certain risks in addition to those associated with a direct
investment in the underlying foreign securities or foreign securities markets
whose return they seek to replicate. For instance, there can be no assurance
that the trading price of a P-Note will equal the value of the underlying
foreign security or foreign securities market that it seeks to replicate. As the
purchaser of a P-Note, the Fund is relying on the creditworthiness of the
counterparty issuing the P-Note and has no rights under a P-Note against the
issuer of the underlying security. Therefore, if such counterparty were to
become insolvent or default on its obligations, the Fund would lose its
investment. The risk that the Fund may lose its investments due to the
insolvency of a single counterparty may be amplified to the extent the Fund
purchases P-Notes issued by one issuer or a small number of issuers. P-Notes
also include transaction costs in addition to those applicable to a direct
investment in securities. In addition, the Fund’s use of P-Notes may cause the
Fund’s performance to deviate from the performance of the portion of the Index
to which the Fund is gaining exposure through the use of P-Notes.
Due
to liquidity and transfer restrictions, the secondary markets on which P-Notes
are traded may be less liquid than the markets for other securities, which may
lead to the absence of readily available market quotations for securities in the
Fund’s portfolio and may cause the value of the P-Notes to decline. The ability
of the Fund to value its securities may become more difficult and the Adviser’s
judgment in the application of fair value procedures may play a greater role in
the valuation of the Fund’s securities due to reduced availability of reliable
objective pricing data. Consequently, while such determinations will be made in
good faith, it may nevertheless be more difficult for the Fund to accurately
assign a daily value to such securities.
Shareholder
Risk.
Certain shareholders, including other funds advised by the Adviser, may from
time to time own a substantial amount of the Fund’s Shares. In addition, a third
party investor, the Adviser or an affiliate of the Adviser, an Authorized
Participant, a market maker, or another entity may invest in the 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 the Fund. In addition, transactions by large
shareholders may account for a large percentage of the trading volume on the
exchange and may, therefore, have a material effect on the market price of the
Shares.
Leverage
Risk.
To
the extent that the Fund borrows money or utilizes certain derivatives, it may
be leveraged. Leveraging generally exaggerates the effect on net asset value of
any increase or decrease in the market value of the Fund’s portfolio securities.
The Fund is required to comply with the derivatives rule when it engages in
transactions that create future Fund payment or delivery obligations. The Fund
is required to comply with the asset coverage requirements under the Investment
Company Act of 1940 when it engages in borrowings and/or transactions treated as
borrowings.
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TAX
ADVANTAGED PRODUCT STRUCTURE |
Unlike
many conventional mutual funds which are only bought and sold at closing NAVs,
the Shares of the Fund have been designed to be tradable in a secondary market
on an intra-day basis and to be created and redeemed partially or principally
for cash, in Creation Units at each day’s market close. These in-kind
arrangements are designed to mitigate the adverse effects on the 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 the Fund’s policies and procedures with respect to the disclosure
of the Fund’s portfolio securities is available in the Fund’s 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 Fund’s SAI.
Investment
Adviser.
Under the terms of an investment management agreement between the Trust and Van
Eck Associates Corporation with respect to the Funds (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 [ ], the Adviser managed
approximately $[ ] 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 is available in the Trust’s semi-annual report for the
period ended June 30, 2022.
For
the services provided to the Fund under the Investment Management Agreement, the
Fund pays the Adviser monthly fees based on a percentage of the Fund’s average
daily net assets at the annual rate of 0.50%. From time to time, the Adviser may
waive all or a portion of its fee. Until at least [ ], the Adviser has agreed to
waive fees and/or pay Fund expenses to the extent necessary to prevent the
operating expenses of the Fund (excluding acquired fund fees and expenses,
interest expense, trading expenses, taxes and extraordinary expenses of the
Fund) from exceeding [ ]% of its average daily net assets per year.
The
Fund is responsible for all of its expenses, including the investment advisory
fees, costs of transfer agency, custody, legal, audit and other services,
interest, taxes, any distribution fees or expenses, offering fees or expenses
and extraordinary expenses.
Administrator,
Custodian and Transfer Agent. Van
Eck Associates Corporation is the administrator for the Fund (the
“Administrator”), and State Street Bank and Trust Company is the custodian of
the Fund’s assets and provides transfer agency and fund accounting services to
the Fund. The Administrator is responsible for certain clerical, recordkeeping
and/or bookkeeping services which are required to be provided pursuant to the
Investment Management Agreement.
Distributor.
Van Eck Securities Corporation is the distributor of the Shares (the
“Distributor”). The Distributor will not distribute Shares in less than a
specified number of Shares, each called a “Creation Unit,” and does not maintain
a secondary market in the Shares. The Shares are traded in the secondary market.
The
portfolio manager currently responsible for the day-to-day management of the
Fund’s portfolio is Peter H. Liao, CFA. Mr. Liao has been employed by the
Adviser as an analyst since the summer of 2004 and has been a portfolio manager
since 2006. Mr. Liao graduated from New York University in 2004 with a Bachelor
of Arts in Economics and Mathematics. Mr. Liao also serves as portfolio manager
for certain other investment companies and pooled investment vehicles advised by
the Adviser. See the Fund’s SAI for additional information about the portfolio
manager’s compensation, other accounts managed by the portfolio managers and
their respective ownership of Shares.
DETERMINATION
OF NAV
The
NAV per Share for the 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 the
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 the 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 the
Fund invests, 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 the 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. The 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, the 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,
the 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 the Fund’s NAV and the prices used by the Fund’s Index. This
may adversely affect the Fund’s ability to track its Index. With respect to
securities that are principally traded on foreign exchanges, the value of the
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 Fund’s Shares in the secondary market generally differ
from the Fund’s daily NAV and are affected by market forces such as the supply
of and demand for Fund Shares and underlying securities held by the Fund,
economic conditions and other factors. Information regarding the intraday value
of the Fund’s 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 the 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 Fund’s 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 the 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. The 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 the 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 Fund 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 the Fund’s Shares based
on the Fund’s trading volume and market liquidity, and is generally lower if the
Fund has high trading volume and market liquidity, and generally higher if the
Fund has 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
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SHAREHOLDER
INFORMATION (continued) |
or
low trading volume in the 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 Fund’s SAI.
Each
Exchange is open for trading Monday through Friday and is closed on weekends and
the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Because
non-U.S. exchanges may be open on days when the 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 the Fund’s Shares.
The
right of redemption by an AP may be suspended or the date of payment postponed
(1) for any period during which an Exchange is closed (other than customary
weekend and holiday closings); (2) for any period during which trading on an
Exchange is suspended or restricted; (3) for any period during which an
emergency exists as a result of which disposal of the Shares of the 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 Fund imposes 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 the Fund’s portfolio securities after the close of the primary markets
for the Fund’s portfolio securities and the reflection of that change in the
Fund’s NAV (“market timing”). The Board of Trustees considered the nature of the
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 Fund
reserves the right to reject orders that may be disruptive to the management of
or otherwise not in the Fund’s best interests, and that the 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 Fund at the present time.
DISTRIBUTIONS
Net
Investment Income and Capital Gains.
As a shareholder of the Fund, you are entitled to your share of such Fund’s
distributions of net investment income and net realized capital gains on its
investments. The Fund pays out substantially all of its net earnings to its
shareholders as “distributions.”
The
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. The Fund realizes capital
gains or losses whenever it sells securities. Net capital gains are distributed
to shareholders as “capital gain distributions.”
Net
investment income, if any, and net capital gains, if any, are
typically distributed to shareholders at
least annually. Dividends may be declared and paid more frequently to improve
index tracking or to comply with the distribution requirements of the Code. In
addition, in situations where the Fund acquires investment securities after the
beginning of a dividend period, the Fund may elect to distribute at least
annually amounts representing the full dividend yield net of expenses on the
underlying investment securities, as if the Fund owned the underlying investment
securities for the entire dividend period. If the Fund so elects, some portion
of each distribution may result in a return of capital, which, for tax purposes,
is treated as a return of your investment in Shares. You will be notified
regarding the portion of the distribution which represents a return of capital.
Distributions
in cash may be reinvested automatically in additional Shares of the Fund only if
the broker through which you purchased Shares makes such option
available.
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SHAREHOLDER
INFORMATION (continued) |
TAX
INFORMATION
As
with any investment, you should consider how your Fund investment will be taxed.
The tax information in this Prospectus is provided as general information. You
should consult your own tax professional about the tax consequences of an
investment in the Fund, including the possible application of foreign, state and
local taxes. Unless your investment in the 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, the Fund expects to distribute net investment income, if any, at
least annually, and any net realized long-term or short-term capital gains, if
any, annually. The 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 the 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 the Fund owned
the investments that generated them, rather than how long you have owned your
Shares. Distributions of net short-term capital gains in excess of net long—term
capital losses, if any, are generally taxable as ordinary income. Distributions
of net long-term capital gains in excess of net short-term capital losses, if
any, that are properly reported as capital gain dividends are generally taxable
as long-term capital gains. Long-term capital gains of a non-corporate
shareholder are generally taxable at a maximum rate of 15% or 20%, depending on
whether the shareholder’s income exceeds certain threshold amounts.
The
Fund may receive dividends, the distribution of which the Fund may report as
qualified dividends. In the event that the 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 the Fund’s
distributions will be eligible for qualified dividend treatment.
Distributions
in excess of the 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 the Fund’s NAV per Share and
may be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of
capital.
The
Fund may make investments in companies classified as passive foreign investment
companies (“PFICs”) for U.S. federal income tax purposes. Investments in PFICs
are subject to special tax rules which may result in adverse tax consequences to
the Fund and its shareholders. The Fund generally intends to elect to “mark to
market” these investments at the end of each taxable year. By making this
election, the Fund will recognize as ordinary income any increase in the value
of such shares as of the close of the taxable year over their adjusted basis and
as ordinary loss any decrease in such investment (but only to the extent of
prior income from such investment under the mark to market rules). Gains
realized with respect to a disposition of a PFIC that the Fund has elected to
mark to market will be ordinary income. By making the mark to market election,
the Fund may recognize income in excess of the distributions that it receives
from its investments. Accordingly, the Fund may need to borrow money or dispose
of some of its investments in order to meet its distribution requirements. If
the Fund does not make the mark to market election with respect to an investment
in a PFIC, the Fund could become subject to U.S. federal income tax with respect
to certain distributions from, and gain on the dispositions of, the PFIC which
cannot be avoided by distributing such amounts to the Fund’s
shareholders.
Dividends,
interest and gains from non-U.S. investments of the 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 the 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. It is expected
that more than 50% of the Fund’s assets will consist of foreign
securities.
Backup
Withholding.
The 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
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SHAREHOLDER
INFORMATION (continued) |
deduct
capital losses may be limited. To the extent that the 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.
To the extent a person 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 the
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
Non-U.S.
Shareholders. Dividends
paid by the Fund to Non-U.S. shareholders are generally subject to withholding
tax at a 30% rate or a reduced rate specified by an applicable income tax treaty
to the extent derived from investment income and short-term capital gains.
Dividends paid by the Fund from net tax-exempt income or long-term capital gains
are generally not subject to such withholding tax. Properly-reported dividends
are generally exempt from U.S. federal withholding tax where they (i) are paid
in respect of the Fund’s “qualified net interest income” (generally, the Fund’s
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 Fund’s “qualified short-term capital gains”
(generally, the excess of the Fund’s net short-term capital gain over the Fund’s
long-term capital loss for such taxable year). However, depending on its
circumstances, the Fund may report all, some or none of its potentially eligible
dividends as such qualified net interest income or as qualified short-term
capital gains and/or treat such dividends, in whole or in part, as ineligible
for this exemption from withholding.
Any
capital gain realized by a Non-U.S. shareholder upon a sale of Shares of the
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 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. The
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 the 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 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”), the 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
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SHAREHOLDER
INFORMATION (continued) |
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.
The
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 the Fund to comply with the FATCA rules. If the 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 Fund, 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 the Fund. It is not a substitute for
personal tax advice. Consult your own tax advisor about the potential tax
consequences of an investment in the Fund under all applicable tax laws. Changes
in applicable tax authority could materially affect the conclusions discussed
above and could adversely affect the Fund, and such changes often
occur.
The
Index is published by MarketVector IndexesTM
(“MarketVector”),
which is a wholly owned subsidiary of the Adviser.
MarketVector
is referred to herein as the “Index Provider”. The Index Provider does not
sponsor, endorse, or promote the Fund and bear no liability with respect to the
Fund or any security.
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MARKETVECTORTM
VIETNAM LOCAL INDEX |
The
Index is a rules based, modified capitalization weighted, float adjusted index
intended to give investors a means of tracking the overall performance of
publicly traded companies that are incorporated in Vietnam.
To
be initially eligible for the Index, (i) companies must be incorporated in
Vietnam and (ii) their 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
Index is the exclusive property of MarketVector IndexesTM
(“MarketVector”) (a wholly owned subsidiary of the Adviser, which has contracted
with a third party calculation agent to maintain and calculate the Index. The
calculation agent uses its best efforts to ensure that the Index is calculated
correctly. Irrespective of its obligations towards MarketVector, the calculation
agent has no obligation to point out errors in the Index to third parties. The
Fund is not sponsored, endorsed, sold or promoted by MarketVector and
MarketVector makes no representation regarding the advisability of investing in
the Fund.
The
Index is reconstituted and rebalanced quarterly. MarketVector may delay or
change a scheduled rebalancing or reconstitution of the Index or the
implementation of certain rules at its sole discretion.
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LICENSE
AGREEMENT AND DISCLAIMERS |
The
information contained herein regarding the Vietnam Index was provided by
MarketVector, which is a wholly owned subsidiary of the Adviser.
The
Adviser has entered into a licensing agreement with MarketVector to use the
Index. The Fund is entitled to use its Index pursuant to a sub-licensing
arrangement with the Adviser.
Shares
of the Fund are not sponsored, endorsed, sold or promoted by MarketVector.
MarketVector makes no representation or warranty, express or implied, to the
owners of Shares of the Fund or any member of the public regarding the
advisability of investing in securities generally or in the Shares of the Fund
particularly or the ability of the Index to track the performance of its
respective securities market. MarketVector's only relationship to the Adviser is
the licensing of certain service marks and trade names and of the Index that are
determined, composed and calculated by MarketVector without regard to the
Adviser or the Shares of the Fund. MarketVector has no obligation to take the
needs of the Adviser or the owners of Shares of the Fund into consideration in
determining, composing or calculating the Index. MarketVector is not responsible
for and has not participated in the determination of the timing of, prices at,
or quantities of the Shares of the Fund to be issued or in the determination or
calculation of the equation by which the Shares of the Fund are to be converted
into cash. MarketVector has no obligation or liability in connection with the
administration, marketing or trading of the Shares of the Fund.
MARKETVECTOR
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA
INCLUDED THEREIN AND MARKETVECTOR SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. MARKETVECTOR MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE
FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA
INCLUDED THEREIN. MARKETVECTOR 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 INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MARKETVECTOR
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
Shares
of the Fund are not sponsored, promoted, sold or supported in any other manner
by Solactive AG nor does Solactive AG offer any express or implicit guarantee or
assurance either with regard to the results of using the Index and/or its trade
mark or its price at any time or in any other respect. The Index is calculated
and maintained by Solactive AG. Solactive AG uses its best efforts to ensure
that the Index is calculated correctly. Irrespective of its obligations towards
MarketVector, Solactive AG has no obligation to point out errors in the Index to
third parties including but not limited to investors and/or financial
intermediaries of the Fund. Neither publication of the Index by Solactive AG nor
the licensing of the Index or its trade mark for the purpose of use in
connection with the Fund constitutes a recommendation by Solactive AG to invest
capital in the Fund nor does it in any way represent an assurance or opinion of
Solactive AG with regard to any investment in the Fund. Solactive AG is not
responsible for fulfilling the legal requirements concerning the accuracy and
completeness of the prospectus of the Fund.
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 the Fund (assuming reinvestment of all dividends and
distributions).
The
information below has been audited by [ ], the Trust’s independent registered
public accounting firm, whose report, along with the Fund’s financial
statements, are included in the Fund’s Annual Report, which is available upon
request. The information for periods prior to the fiscal year ended [ ] was
audited by another independent registered public accounting firm.
For
a share outstanding throughout each year:
[TO
BE UPDATED]
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PREMIUM/DISCOUNT
INFORMATION |
Information
regarding how often the closing trading price of the Shares of the 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 Fund 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 Fund’s 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 the 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 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 Fund. [ ] 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 Fund’s Shares. The Fund’s
Registration Statement, including this Prospectus, the Fund’s 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 Fund, which has been filed with the SEC, provides more information
about the Fund. The SAI for the Fund is incorporated herein by reference and is
legally part of this Prospectus. Additional information about the Fund’s
investments is available in the Fund’s annual and semi-annual reports to
shareholders. In the 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 Fund’s annual
and semi-annual reports may be obtained without charge by writing to the Fund at
Van Eck Securities Corporation, the Fund’s 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
Fund’s SAI is available at www.vaneck.com.
(Investment
Company Act file no. 811-10325)
For
more detailed information about the Fund, see the SAI dated [ ], as may be
supplemented from time to time. Additional information about the Fund’s
investments is or will be available in the Fund’s annual and semi-annual reports
to shareholders. In the Fund’s annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund’s performance during its last fiscal year.
Call
VanEck at 800.826.2333 to request, free of charge, the annual or semi-annual
reports, the SAI, or other information about the Funds or to make shareholder
inquiries. You may also obtain the SAI or the Fund’s annual or semi-annual
reports, by visiting the VanEck website at www.vaneck.com.
Reports
and other information about the Fund 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 |
[
] |