cik0001137360-20210930
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PROSPECTUS
February
1, 2022 |
VANECK®
Inflation
Allocation ETF RAAX®
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Principal
U.S. Listing Exchange for the Fund: NYSE Arca, Inc. The U.S. Securities
and Exchange Commission (“SEC”) and the Commodity Futures Trading
Commission (“CFTC”) have 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. |
800.826.2333
vaneck.com
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TABLE
OF CONTENTS |
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Summary
Information |
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Additional
Information About the Fund's Investment Strategies and Risks |
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Portfolio
Holdings |
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Management
of the Fund |
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Portfolio
Managers |
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Shareholder
Information |
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Financial
Highlights |
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Premium/Discount
Information |
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General
Information |
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VANECK®
INFLATION ALLOCATION ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
The
investment objective of VanEck®
Inflation Allocation ETF1
(the “Fund”) is long-term total return. In pursuing long-term total return, the
Fund seeks to maximize “real returns” (as defined below) while seeking to reduce
downside risk during sustained market declines.
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
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Shareholder Fees (fees paid directly from
your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses |
1.10 |
% |
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Acquired
Fund Fees and Expenses(a) |
0.18 |
% |
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Total
Annual Fund Operating Expenses(b) |
1.78 |
% |
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Fee
Waivers and Expense Reimbursement(b) |
-1.04 |
% |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(b) |
0.74 |
% |
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(a)“Acquired Fund Fees and
Expenses” include fees and expenses incurred indirectly by the Fund as a result
of investments in other investment companies, including funds which invest
exclusively in money market instruments. Because acquired fund fees and expenses
are not borne directly by the Fund, they will not be reflected in the expense
information in the Fund’s financial statements and the information presented in
the table will differ from that presented in the Fund’s financial highlights
included in the Fund’s reports to shareholders. Acquired fund fees and expenses
include fees and expenses associated with investments in investment companies
managed by Van Eck Absolute Return Advisers Corporation (the “Adviser”) or its
affiliates; the Adviser has agreed to waive the management fee it charges to the
Fund by any amount the Adviser or its affiliates collect as a management fee
from such investment company. Such waivers are included in “Fee Waivers and
Expense Reimbursement” above.
(b)The Adviser has agreed to
reduce its advisory fee by the amount paid to the Adviser by the Subsidiary and
waive fees and/or reimburse Fund and Subsidiary 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 and Subsidiary) from exceeding 0.55% of the Fund’s average daily net
assets per year until at least February 1,
2023. 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:
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YEAR |
EXPENSES |
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1 |
$76 |
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3 |
$459 |
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5 |
$867 |
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10 |
$2,009 |
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1
Prior to June 23, 2021,
the Fund's name was VanEck Vectors® Real Asset Allocation
ETF.
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
76% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund is an actively managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by investing, under normal circumstances, primarily in
(i) exchange traded products that provide exposure to real assets through
investment in domestic and foreign equity and debt securities, master limited
partnerships (“MLPs”), and commodities, including ETFs and non-1940 Act (defined
herein) commodity pools or commodity trusts and exchange traded notes (“ETNs”)
(collectively, “ETPs”); and (ii) cash or cash equivalents. Real assets include
commodities (such as gold), real estate, natural resources and infrastructure,
as well as companies that own, operate, or derive a significant portion of their
value from real assets or the production thereof. The investments held by the
ETPs may include physical assets and equity securities of companies of any
market capitalization, debt securities of any credit quality (including
high-yield (or “junk”) securities), duration and maturity and emerging market
securities. The Fund seeks to maximize “real returns” while seeking to reduce
downside risk during sustained market declines. The Fund seeks to reduce
downside risk by allocating a significant portion of the Fund’s assets to cash
and cash equivalents based on the model described below. “Real returns” are
defined as total returns adjusted for the effects of inflation.
The
Adviser uses a proprietary, rules-based real asset allocation model (the “Real
Asset Model”), which considers various inputs to guide asset allocation
decisions and select real asset investments (and to thereby select ETPs that
provide exposure to those real asset classes). The Real Asset Model uses various
indicators, such as technical, macroeconomic and sentiment indicators to
generate allocation signals among real asset investments. These signals are used
as an input to guide which ETPs to allocate to as well as to guide the total
cash or cash equivalent allocation.
The
indicators used by the Real Asset Model may include, but are not limited to,
equity price trends, commodity price trends, volatility (the measure of
variation of returns for a given security or market index), investor sentiment
(investor attitude towards a particular security or financial market as revealed
through market activity or investor surveys) and macroeconomic supply and demand
(the relationship between the consumption and production of assets, and its
effect on price levels). The Adviser anticipates that the Real Asset Model will
evolve over time and may incorporate additional indicators and/or remove or
modify existing indicators. The Adviser allocates the Fund’s assets to those
ETPs that it believes will have returns that, in the aggregate, closely
correlate (before fees and expenses) to the returns of the Real Asset Model. The
Real Asset Model typically adjusts its allocation signals on a monthly basis,
and the Adviser may adjust the Fund's portfolio allocation as needed in response
to such changes in the Real Asset Model.
A significant portion of the Fund’s
assets may be held in cash or cash equivalents including, but not limited to,
money market instruments, U.S. Treasury bills, treasury inflation-protected
securities, interests in short-term investment funds or shares of money market
or short-term bond funds. The Adviser currently anticipates investing in 1- to
3- month U.S. Treasury bills when a portion of the Fund’s assets are allocated
to cash or cash equivalents. The Fund may engage in active and frequent trading
of portfolio securities.
The
Fund will invest in certain ETPs through the Subsidiary, an exempted limited
company organized under the laws of the Cayman Islands. The Subsidiary is wholly
owned and controlled by the Fund and is advised by the Adviser. The Fund’s
investment in the Subsidiary will generally not exceed 25% of the value of the
Fund’s total assets at each quarter-end of the Fund's fiscal year. The Fund's
investment in the Subsidiary, via the Subsidiary’s investment in ETPs, generally
provides the Fund with exposure to commodities and futures and derivatives of
commodities (“Commodities Instruments”) within the limits of the federal tax
laws, which limit the ability of investment companies like the Fund to invest
directly in such instruments. The Subsidiary has the same investment objective
as the Fund and will follow the same general investment policies and
restrictions except that, unlike the Fund, it may invest, via its investment in
ETPs, without limit in Commodities Instruments.
Except
as noted, for purposes of this Prospectus, references to the Fund’s investment
strategies and risks include those of its Subsidiary. The Fund complies with the
provisions of the Investment Company Act of 1940, as amended (the “1940 Act”),
governing investment policies (Section 8) and capital structure and leverage
(Section 18) on an aggregate basis with the Subsidiary. The Subsidiary will
comply with the 1940 Act provisions governing affiliate transactions and custody
of assets.
The
Fund is classified as a non-diversified fund under the 1940 Act and, therefore,
may invest a greater percentage of its assets in a particular
issuer.
PRINCIPAL RISKS OF INVESTING IN THE
FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Fund
of Funds Risk.
The performance of the Fund is dependent on the performance of underlying funds.
The Fund is subject to the risks of the underlying funds’ investments. In
addition, the Fund’s shareholders will indirectly bear the expenses of the
underlying funds, absorbing duplicative levels of fees with respect to
investments in the underlying funds. In addition, at times, certain segments of
the market represented by the underlying funds may be out of favor and
underperform other segments. The Fund, through the Subsidiary’s investment in
ETPs, may invest in ETFs and ETNs. ETNs are senior, unsecured notes linked to an
index. Like ETFs, ETNs may be bought and sold on a securities exchange. However,
while ETF shares represent an interest in the ETF’s underlying assets, ETNs are
structured products that are an obligation of the issuing bank, broker-dealer or
other intermediary, whereby the intermediary agrees to pay a return based on the
target index less any fees. ETNs combine certain aspects of bonds and ETFs.
Investors can hold an ETN until maturity. Investments in other ETFs and ETNs
will subject the Fund to the additional fees and expenses of the underlying ETF
or ETN. At the same time, the Fund would continue to pay its own fees and other
expenses. The ETNs in which the Fund invests may include ETNs that invest in
equity and debt securities, as well as other asset categories. Additionally, the
value of an ETN may be influenced by time to maturity, level of supply and
demand, volatility and lack of liquidity in the underlying market (e.g.,
the commodities market), changes in interest rates or the issuer’s credit
rating, and other economic, legal, political or geographic events. ETNs are also
subject to counterparty risk.
In
October 2020, the SEC adopted certain regulatory changes and took other actions
related to the ability of an investment company to invest in another investment
company, including the rescission of exemptive relief issued by the SEC
permitting such investments in excess of statutory limits. These regulatory
changes may adversely impact the Fund’s investment strategies and
operations.
Affiliated
Fund Risk.
In managing the Fund, the Adviser will have the ability to select underlying
funds which it believes will achieve the Fund’s investment objective. The
Adviser may be subject to potential conflicts of interest in selecting
underlying funds because the Adviser may, due to its own financial interest or
other business considerations, have an incentive to invest in funds managed by
the Adviser or its affiliates in lieu of investing in funds managed or sponsored
by others.
Risk
of U.S. Treasury Bills. Direct
obligations of the U.S. Treasury have historically involved little risk of loss
of principal if held to maturity. However, due to fluctuations in interest
rates, the market value of such securities may vary.
Subsidiary
Investment Risk.
Changes in the laws of the United States and/or the Cayman Islands, under which
the Fund and the Subsidiary are organized, respectively, could result in the
inability of the Fund to operate as intended and could negatively affect the
Fund and its shareholders. The Subsidiary is not registered under the 1940 Act
and is not subject to all the investor protections of the 1940 Act. Thus, the
Fund, as an investor in the Subsidiary, will not have the protections offered to
investors in registered investment companies.
Commodity
Regulatory Risk (with respect to investments in the Subsidiary).
Changes in the laws or regulations of the United States or the Cayman Islands,
including any changes to applicable tax laws and regulations, could impair the
ability of the Fund to achieve its investment objective and could increase the
operating expenses of the Fund or the Subsidiary. Based on the Fund’s and the
Subsidiary’s current investment strategies, the Fund and the Subsidiary are each
a “commodity pool” and the Adviser is considered a “commodity pool operator”
(“CPO”) with respect to the Fund and the Subsidiary under the Commodity Exchange
Act of 1936, as amended (“CEA”). Accordingly, the Fund and the Adviser are
subject to dual regulation by the Commodity Futures Trading Commission (“CFTC”)
and the Securities Exchange Commission (“SEC”). Pursuant to certain CFTC
regulations, the Fund and the Adviser have elected to meet the requirements of
certain CFTC regulations by complying with specific SEC rules and regulations
relating to disclosure and reporting requirements. The CFTC could deem the Fund
or the Adviser in violation of an applicable CFTC regulation if the Fund or the
Adviser failed to comply with a related SEC regulatory requirement. In addition,
the Fund and the Adviser will remain subject to certain CFTC-mandated
disclosure, reporting and recordkeeping regulations with respect to the Fund and
the Subsidiary. Compliance with the CFTC regulations could increase the Fund’s
expenses, adversely affecting the Fund’s total return.
Tax
Risk (with respect to investments in the Subsidiary).
The Fund must derive at least 90% of its gross income from certain qualifying
sources of income in order to qualify as a regulated investment company (“RIC”)
under the Internal Revenue Code of 1986, as amended (the “Code”). The Internal
Revenue Service (the “IRS”) issued a revenue ruling in December 2005, which
concluded that income and gains from certain commodity-linked derivatives are
not qualifying income under Subchapter M of the Code. As a result, the Fund’s
ability to invest directly in commodity-linked futures contracts or swaps or in
certain exchange-traded trusts that hold commodities as part of its investment
strategy is limited by the requirement that it receive no more than ten percent
(10%) of its gross income from such investments. The Fund expects to invest its
assets in the Subsidiary, consistent with applicable law and the advice of
counsel, in a manner that should permit the Fund to treat income allocable from
the Subsidiary as qualifying income. The IRS has issued regulations that treat a
fund’s income inclusion with respect to an
investment
in a non-U.S. company generating investment income as qualifying income only if
there is a current-year distribution out of the earnings and profits of the
non-U.S. company that are attributable to such income inclusion or if the income
from the Subsidiary is related to the Fund's business of investing. The Fund
intends to treat its income from the Subsidiary as qualifying income. There can
be no assurance that the IRS will not change its position with respect to some
or all of these issues or if the IRS did so, that a court would not sustain the
IRS’s position. Furthermore, the tax treatment of the Fund’s investments in the
Subsidiary may be adversely affected by future legislation, court decisions,
future IRS guidance or Treasury regulations.
Risk
of ETPs.
The Fund may be subject to the following risks as a result of its investments in
ETPs:
Commodities
Risk.
Commodities include, among other things, energy products, agricultural products,
industrial metals, precious metals and livestock. The commodities markets may
fluctuate widely based on a variety of factors, including overall market
movements, economic events and policies, changes in interest rates or inflation
rates, changes in monetary and exchange control programs, war, acts of
terrorism, natural disasters and technological developments. Variables such as
disease, drought, floods, weather, trade, embargoes, tariffs and other political
events, in particular, may have a larger impact on commodity prices than on
traditional securities. These additional variables may create additional
investment risks that subject an ETP’s investments to greater volatility than
investments in traditional securities. The prices of commodities can also
fluctuate widely due to supply and demand disruptions in major producing or
consuming regions. Because certain commodities may be produced in a limited
number of countries and may be controlled by a small number of producers,
political, economic and supply-related events in such countries could have a
disproportionate impact on the prices of such commodities. These factors may
affect the value of an ETP in varying ways, and different factors may cause the
value and the volatility of an ETP to move in inconsistent directions at
inconsistent rates.
Risk
of Investing in Gold.
Certain of the ETPs may focus their investments in gold. Investments related to
gold are considered speculative and are affected by a variety of factors. The
price of gold may fluctuate substantially over short periods of time, so an
ETP’s share price may be more volatile than other types of investments.
Fluctuation in the price of gold may be due to a number of factors, including
changes in inflation and changes in industrial and commercial demand for metals.
Additionally, increased environmental or labor costs may depress the value of
gold investments. In times of significant inflation or great economic
uncertainty, gold and other precious metals may outperform traditional
investments such as bonds and stocks. However, in times of stable economic
growth, traditional equity and debt investments could offer greater appreciation
potential and the value of gold and other precious metals may be adversely
affected, which could in turn affect an ETP’s returns.
Risk
of Investing in Natural Resources Companies.
Certain of the ETPs may be sensitive to, and their performance may depend to a
greater extent on, the overall condition of the natural resources sector.
Investments in natural resources and natural resources companies, which include
companies engaged in agriculture, alternatives (e.g.,
water and alternative energy), base and industrial metals, energy, forest
products and precious metals, can be significantly affected by events relating
to these industries, including international political and economic
developments, embargoes, tariffs, inflation, weather and natural disasters,
livestock diseases, limits on exploration, rapid changes in the supply and
demand for natural resources and other factors. An ETP’s portfolio securities
may experience substantial price fluctuations as a result of these factors and
may move independently of the trends of other operating companies. Companies
engaged in the industries listed above may be adversely affected by changes in
government policies and regulations, technological advances and/or obsolescence,
environmental damage claims, energy conservation efforts, the success of
exploration projects, limitations on the liquidity of certain natural resources
and commodities and competition from new market entrants. Changes in general
economic conditions, including commodity price volatility, changes in exchange
rates, imposition of import controls, rising interest rates, prices of raw
materials and other commodities, depletion of resources and labor relations,
could adversely affect an ETP’s portfolio companies.
Risk
of Investing in MLPs.
MLP units may trade infrequently and in limited volume. Investments in MLPs
could also expose an ETP to volatility risk because units of MLPs may be subject
to more abrupt or erratic price movements than securities of larger or more
broadly based companies. Holders of MLP units are subject to certain risks
inherent in the structure of MLPs, including (i) tax risks, (ii) the limited
ability to elect or remove management or the general partner or managing member,
(iii) limited voting rights, (iv) conflicts of interest between the general
partner or managing member and its affiliates and the limited partners or
members, (v) dilution risks and risks related to the general partner’s right to
require unit-holders to sell their common units at an undesirable time or price,
resulting from regulatory changes or other reasons and (vi) cash flow risks, as
described below. Holders of units of MLPs have more limited control rights and
limited rights to vote on matters affecting the MLP as compared to holders of
stock of a corporation. For example, MLP unit holders may not elect the general
partner or the directors of the general partner and the MLP unit holders have
limited ability to remove an MLP’s general partner. MLPs are controlled by their
general partners, which generally have conflicts of interest and limited
fiduciary duties to the MLP, which may permit the general partner to favor its
own interests over the MLPs. The amount of cash that each individual MLP can
distribute to its partners will depend on the amount of cash it generates from
operations, which will vary from quarter to quarter depending on factors
affecting the particular business lines of the MLP. Available cash will also
depend on the MLP's level of operating costs (including incentive distributions
to the general partner), level of capital expenditures, debt service
requirements, acquisition costs (if any), fluctuations in working capital needs
and other factors. Certain MLP securities may
trade
in relatively low volumes due to their smaller capitalizations or other factors,
which may cause them to have a high degree of volatility and lack sufficient
market liquidity to enable an underlying fund to effect a sale at an
advantageous time or price. Because many MLPs pay out most of their operating
cash flows, the MLPs rely on capital markets for access to equity and debt
financing to fund growth through organization. If market conditions limit an
MLPs access to capital markets, the MLPs growth prospects could diminish and its
costs of capital increase, which would decrease the value of the common units
held by an underlying fund.
Risk
of Investing in the Real Estate Sector.
Companies in the real estate sector include companies that invest in real
estate, such as real estate investment trusts and real estate management and
development companies. 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 value of an ETP’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.
Infrastructure
Risk.
Infrastructure-related companies are subject to a variety of factors that may
adversely affect their business or operations including high interest costs,
costs associated with compliance with and changes in environmental and other
regulations, difficulty in raising capital, increased competition, and
uncertainty concerning the availability of fuel at reasonable prices and other
factors. Infrastructure-related securities may be issued by companies that are
highly leveraged, less creditworthy or financially distressed. These investments
are considered to be speculative and are subject to greater risk of loss,
greater sensitivity to interest rate and economic changes, valuation
difficulties, and potential illiquidity.
Equity
Securities Risk.
The value of the equity securities held by an ETP may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by an ETP participate, or factors relating to specific
issuers in which an ETP invests. Equity securities are subordinated to preferred
securities and debt in a company’s capital structure with respect to priority in
right to a share of corporate income, and therefore will be subject to greater
dividend risk than preferred securities or debt instruments. In addition, while
broad market measures of equity securities have historically generated higher
average returns than fixed income securities, equity securities have generally
also experienced significantly more volatility in those returns, although under
certain market conditions fixed income securities may have comparable or greater
price volatility.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small-capitalization and
medium-capitalization companies could trail the returns on investments in
securities of large-capitalization companies.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. An ETP may invest 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 ETP’s investments.
Risk
of Investing in Emerging Market Issuers.
Investments in securities of emerging market issuers are exposed to a number of
risks that may make these investments volatile in price or difficult to trade.
Emerging 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 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. The
frequency, availability and quality of financial information about investments
in emerging markets varies. 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, and the Fund's passive investment approach does
not take account of these risks. All of these factors can make emerging market
securities more volatile and potentially less liquid than securities issued in
more developed markets.
Foreign
Currency Risk.
Because
all or a portion of the income received by an ETP from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the ETP’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 ETP, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the ETP may incur costs in connection with
conversions between U.S. dollars and foreign currencies.
Credit
Risk.
Debt securities are subject to credit risk. Credit risk refers to the
possibility that the issuer or guarantor of a security will be unable and/or
unwilling to make timely interest payments and/or repay the principal on its
debt or to otherwise honor its obligations and/or default completely. Debt
securities are subject to varying degrees of credit risk, depending on the
issuer’s financial condition and on the terms of the securities, which may be
reflected in credit ratings. There is a possibility that the credit rating of a
debt security may be downgraded after purchase or the perception of an issuer’s
credit worthiness may decline, which may adversely affect the value of the
security.
Interest
Rate Risk.
Debt securities, such as bonds, are also subject to interest rate risk. Interest
rate risk refers to fluctuations in the value of a debt security resulting from
changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities go down. When the
general level of interest rates goes down, the prices of most debt securities go
up. A low interest rate environment increases the risk associated with rising
interest rates, including the potential for periods of volatility and increased
redemptions. In addition, debt securities, such as bonds, with longer durations
tend to be more sensitive to interest rate changes, usually making them more
volatile than debt securities with shorter durations. In addition, in response
to the COVID-19 pandemic, as with other serious economic disruptions,
governmental authorities and regulators are enacting significant fiscal and
monetary policy changes, including providing direct capital infusions into
companies, creating new monetary programs and lowering interest rates. These
actions present heightened risks to debt instruments, and such risks could be
even further heightened if these actions are unexpectedly or suddenly reversed
or are ineffective in achieving their desired outcomes.
Call
Risk. An
ETP may invest in callable debt securities. If interest rates fall, it is
possible that issuers of callable securities will “call” (or prepay) their debt
securities before their maturity date. If a call were exercised by the issuer
during or following a period of declining interest rates, the ETP is likely to
have to replace such called security with a lower yielding security or
securities with greater risks or other less favorable features. If that were to
happen, it would decrease the ETP’s net investment income.
Concentration
Risk. Certain
of the ETPs may be concentrated in a particular sector or sectors or industry or
group of industries. To the extent that an ETP is concentrated in a particular
sector or sectors or industry or group of industries, the ETP will be subject to
the risk that economic, political or other conditions that have a negative
effect on those sectors and/or industry or groups of industries may negatively
impact the ETP to a greater extent than if the ETP’s assets were invested in a
wider variety of sectors or industries.
Derivatives
Risk.
The use of derivatives, including Commodities Instruments, presents risks
different from, and possibly greater than, the risks associated with investing
directly in traditional securities. The use of derivatives can lead to losses
because of adverse movements in the price or value of the underlying security,
commodity, asset, index or reference rate. Derivative strategies often involve
leverage, which may exaggerate a loss, potentially causing the Fund or an ETP to
lose more money than it would have lost had it invested in the underlying
security. Also, a liquid secondary market may not always exist for the Fund’s or
an ETP’s derivative positions at times when the Fund or ETP might wish to
terminate or sell such positions. Over the counter instruments may be illiquid,
and transactions in derivatives traded in the over-the-counter market are
subject to counterparty risk.
In
October 2020, the SEC adopted a final rule related to the use of derivatives,
short sales, reverse repurchase agreements and certain other transactions by
registered investment companies. In connection with the final rule, and after an
eighteen-month transition period, the SEC and its staff will rescind and
withdraw applicable guidance and relief regarding asset segregation and coverage
transactions reflected in the Fund’s asset segregation and cover practices.
Subject to certain exceptions, and after an eighteen-month transition period,
the final rule requires the Fund to trade derivatives and other transactions
that create future payment or delivery obligations (except reverse repurchase
agreements and similar financing transactions) subject to a value-at-risk
leverage limit and certain derivatives risk management program and reporting
requirements.
Cryptocurrency
Risk.
Cryptocurrencies
(also referred to as “virtual currencies” and “digital currencies”) are digital
assets designed to act as a medium of exchange. Cryptocurrency is an emerging
asset class. There are thousands of cryptocurrencies, the most well-known of
which is bitcoin. The Fund may gain exposure to bitcoin by investing in pooled
investment vehicles that invest in bitcoin.
Cryptocurrency
generally operates without central authority (such as a bank) and is not backed
by any government. Cryptocurrency is not legal tender. Federal, state and/or
foreign governments may restrict the use and exchange of cryptocurrency, and
regulation in the United States is still developing. The market price of bitcoin
has been subject to extreme fluctuations. If cryptocurrency markets continue to
be subject to sharp fluctuations, the Fund’s shareholders may experience losses.
Similar to fiat currencies (i.e.,
a currency that is backed by a central bank or a national, supra-national or
quasi-national organization), cryptocurrencies are susceptible to theft, loss
and destruction. Accordingly, the Fund’s indirect investment in bitcoin is also
susceptible to these risks, as well as transaction costs and other risks related
to the purchase and sale of shares or interests in a pooled investment vehicle
that invests in bitcoin. Cryptocurrency exchanges and other trading venues on
which cryptocurrencies trade are relatively new and, in most cases, largely
unregulated and may therefore be more exposed to fraud and failure than
established, regulated exchanges for securities, derivatives and other
currencies. The Fund’s indirect investment in bitcoin remains subject to
volatility experienced by the cryptocurrency exchanges and other cryptocurrency
trading venues. Such volatility can adversely affect an investment in the Fund.
Cryptocurrency exchanges have in the past, and may in the future, stop operating
or permanently shut down due to fraud, cybersecurity issues, manipulation,
technical glitches, hackers or malware, which may also affect the price of
bitcoin and thus the Fund’s indirect investment in bitcoin.
Cryptocurrency
Tax Risk.
Many
significant aspects of the U.S. federal income tax treatment of investments in
bitcoin are uncertain
and an investment in bitcoin may produce income that is not treated as
qualifying income for purposes of the income test applicable to regulated
investment companies, such as the Fund. The Fund currently expects that certain
indirect investments in bitcoin may be treated as grantor trusts for U.S.
federal income tax purposes, and therefore such investments will generally be
treated as direct investments in bitcoin for such purposes.
Liquidity
Risk.
The Subsidiary invests in ETPs that invest in Commodities Instruments, which may
be less liquid than other types of investments. The illiquidity of Commodities
Instruments could have a negative effect on the Fund’s ability to achieve its
investment objective and may result in losses to Fund shareholders. In stressed
market conditions, the liquidity of the Fund’s shares may begin to mirror those
of the underlying portfolio holdings, which can be significantly less liquid
than the Fund’s shares.
Gap
Risk.
The Fund and the Subsidiary are subject to the risk that a commodity price will
change from one level to another with no trading in between. Usually, such
movements occur when there are adverse news announcements, which can cause a
commodity price to drop substantially from the previous day’s closing
price.
Risk
of Cash Transactions.
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.
High
Portfolio Turnover Risk.
The Fund may engage in active and frequent trading of its portfolio securities.
High portfolio turnover may result in increased transaction costs to the Fund,
including brokerage commissions, dealer mark-ups and other transaction costs on
the sale of the securities and on reinvestment in other securities. High
portfolio turnover may also result in higher taxes when Fund Shares are held in
a taxable account.
Model
and Data Risk.
Given the complexity of the investments and strategies of the Fund, the Adviser
relies heavily on quantitative models and information and data (“Models and
Data”). Models and Data are used to construct sets of transactions and
investments, and to provide risk management insights. When Models and Data prove
to be incorrect or incomplete, any decisions made in reliance thereon expose the
Fund to potential risks.
Management
Risk.
The Fund is subject to management risk because it is an actively managed ETF. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of financial institutions that act as APs, none
of which are obligated to engage in creation and/or redemption transactions. To
the extent that those APs exit the business, or are unable to or choose not to
process creation and/or redemption orders, and no other AP is able to step
forward to create and redeem, there may be a significantly diminished trading
market for Shares or Shares may trade like closed-end funds at a greater
discount (or premium) to NAV and possibly face trading halts and/or de-listing.
The AP concentration risk may be heightened in scenarios where APs have limited
or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Market
Risk. Both
the Fund and the ETPs in which the Fund may invest are subject to market risk.
The prices of the securities in the Fund or
an
ETP are subject to the risks associated with investing in the securities market,
including general economic conditions, sudden and unpredictable drops in value,
exchange trading suspensions and closures and public health risks. These risks
may be magnified if certain social, political, economic and other conditions and
events (such as natural disasters, epidemics and pandemics, terrorism, conflicts
and social unrest) adversely interrupt the global economy; in these and other
circumstances, such events or developments might affect companies world-wide.
An
investment in the Fund or an ETP may lose money.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified
funds.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s broad-based benchmark
index. All returns assume reinvestment of dividends and
distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
14.72 |
% |
1Q 2021 |
Worst
Quarter: |
-25.77 |
% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past
One Year |
Since
Inception (4/9/2018) |
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VanEck Inflation Allocation ETF (return
before taxes) |
28.83% |
4.28% |
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|
VanEck Inflation Allocation ETF (return
after taxes on distributions) |
21.83% |
2.44% |
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VanEck Inflation Allocation ETF (return
after taxes on distributions and sale of Fund
Shares) |
16.94% |
2.52% |
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Bloomberg Commodity Index
(reflects no deduction for
fees, expenses or taxes) |
27.11% |
4.39% |
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PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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David
Schassler |
Portfolio
Manager |
April
2018 |
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John
Lau |
Deputy
Portfolio Manager |
February
2021 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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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 (other than return of capital distributions) are taxable
and will generally be taxed as both ordinary income and capital gains. As a
result of the Fund’s investment strategies, it is expected that distributions by
the Fund will generally be taxable as ordinary income.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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ADDITIONAL
INFORMATION ABOUT THE FUND'S INVESTMENT STRATEGIES AND
RISKS |
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed ETF that seeks to achieve its investment objective
by investing, under normal circumstances, primarily in (i) exchange traded
products that provide exposure to real assets through investment in domestic and
foreign equity and debt securities, MLPs and commodities, including ETPs; and
(ii) cash or cash equivalents. Real assets include commodities (such as gold),
real estate, natural resources and infrastructure, as well as companies that
own, operate, or derive a significant portion of their value from real assets or
the production thereof. The investments held by the ETPs may include physical
assets and equity securities of companies of any market capitalization, debt
securities of any credit quality (including high-yield (or “junk”) securities),
duration and maturity and emerging market securities. The Fund seeks to maximize
“real returns” while seeking to reduce downside risk during sustained market
declines. The Fund seeks to reduce downside risk by allocating a significant
portion of the Fund’s assets to cash and cash equivalents based on the model
described below. “Real returns” are defined as total returns adjusted for the
effects of inflation.
The
Adviser uses Real Asset Model, which considers various inputs to guide asset
allocation decisions and select real asset investments (and to thereby select
ETPs that provide exposure to those real asset classes). The Real Asset Model
uses various indicators, such as technical, macroeconomic and sentiment
indicators to generate allocation signals among real asset investments. These
signals are used as an input to guide which ETPs to allocate to as well as to
guide the total cash or cash equivalent allocation.
The
indicators used by the Real Asset Model may include, but are not limited to,
equity price trends, commodity price trends, volatility (the measure of
variation of returns for a given security or market index), investor sentiment
(investor attitude towards a particular security or financial market as revealed
through market activity or investor surveys) and macroeconomic supply and demand
(the relationship between the consumption and production of assets, and its
effect on price levels). The Adviser anticipates that the Real Asset Model will
evolve over time and may incorporate additional indicators and/or remove or
modify existing indicators. The Adviser allocates the Fund’s assets to those
ETPs that it believes will have returns that, in the aggregate, closely
correlate (before fees and expenses) to the returns of the Real Asset Model. The
Real Asset Model typically adjusts its allocation signals on a monthly basis,
and the Adviser may adjust the Fund's portfolio allocation as needed in response
to such changes in the Real Asset Model.
A
significant portion of the Fund’s assets may be held in cash or cash equivalents
including, but not limited to, money market instruments, U.S. Treasury bills,
treasury inflation-protected securities, interests in short-term investment
funds or shares of money market or short-term bond funds. The Adviser currently
anticipates investing in 1- to 3- month U.S. Treasury bills when a portion of
the Fund’s assets are allocated to cash or cash equivalents. The Fund may engage
in active and frequent trading of portfolio securities.
The
Fund will invest in certain ETPs through the Subsidiary, an exempted limited
company organized under the laws of the Cayman Islands. The Subsidiary is wholly
owned and controlled by the Fund and is advised by the Adviser. The Fund’s
investment in the Subsidiary will generally not exceed 25% of the value of the
Fund’s total assets at each quarter-end of the Fund’s fiscal year. The Fund’s
investment in the Subsidiary, via the Subsidiary’s investment in ETPs, generally
provides the Fund with exposure to commodities and futures and derivatives of
commodities (“Commodities Instruments”) within the limits of the federal tax
laws, which limit the ability of investment companies like the Fund to invest
directly in such instruments. The Subsidiary has the same investment objective
as the Fund and will follow the same general investment policies and
restrictions except that, unlike the Fund, it may invest, via its investment in
ETPs, without limit in Commodities Instruments.
Except
as noted, for purposes of this Prospectus, references to the Fund’s investment
strategies and risks include those of its Subsidiary. The Fund complies with the
provisions of the 1940 Act, governing investment policies (Section 8) and
capital structure and leverage (Section 18) on an aggregate basis with the
Subsidiary. The Subsidiary will comply with the 1940 Act provisions governing
affiliate transactions and custody of assets.
The
Fund is classified as a non-diversified fund under the 1940 Act and, therefore,
may invest a greater percentage of its assets in a particular
issuer.
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 without
shareholder approval, except as noted in the Statement of Additional Information
(“SAI”) under the section entitled “Investment Policies and
Restrictions—Investment Restrictions.” Shareholders will be given notice of
material changes to the Fund’s investment objective or other non-fundamental
investment policies.
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.
Fund
of Funds Risk. The
performance of the Fund is dependent on the performance of underlying funds. The
Fund is subject to the risks of the underlying funds’ investments. In addition,
the Fund’s shareholders will indirectly bear the expenses of the underlying
funds, absorbing duplicative levels of fees with respect to investments in the
underlying funds. In addition, at times, certain segments of the market
represented by the underlying funds may be out of favor and underperform other
segments. The Fund, through the Subsidiary’s investment in ETPs, may invest in
ETFs and ETNs. ETNs are senior, unsecured notes linked to an index. Like ETFs,
ETNs may be bought and sold on a securities exchange. However, while ETF shares
represent an interest in the ETF’s underlying assets, ETNs are structured
products that are an obligation of the issuing bank, broker-dealer or other
intermediary, whereby the intermediary agrees to pay a return based on the
target index less any fees. ETNs combine certain aspects of bonds and ETFs.
Investors can hold an ETN until maturity. Investments in other ETFs and ETNs
will subject the Fund to the additional fees and expenses of the underlying ETF
or ETN. At the same time, the Fund would continue to pay its own fees and other
expenses. The ETNs in which the Fund invests may include ETPs that invest in
equity and debt securities, as well as other asset categories. Additionally, the
value of an ETN may be influenced by time to maturity, level of supply and
demand, volatility and lack of liquidity in the underlying market (e.g.,
the commodities market), changes in interest rates or the issuer’s credit
rating, and other economic, legal, political or geographic events. ETNs are also
subject to counterparty risk.
In
October 2020, the SEC adopted certain regulatory changes and took other actions
related to the ability of an investment company to invest in another investment
company, including the rescission of exemptive relief issued by the SEC
permitting such investments in excess of statutory limits. These regulatory
changes may adversely impact the Fund’s investment strategies and
operations.
Affiliated
Fund Risk.
In managing the Fund, the Adviser will have the ability to select underlying
funds which it believes will achieve the Fund’s investment objective. The
Adviser may be subject to potential conflicts of interest in selecting
underlying funds because the Adviser may, due to its own financial interest or
other business considerations, have had an incentive to invest in funds managed
by the Adviser or its affiliates in lieu of investing in funds managed or
sponsored by others.
Risk
of U.S. Treasury Bills. Direct
obligations of the U.S. Treasury have historically involved little risk of loss
of principal if held to maturity. However, due to fluctuations in interest
rates, the market value of such securities may vary.
Subsidiary
Investment Risk. Changes
in the laws of the United States and/or the Cayman Islands, under which the Fund
and the Subsidiary are organized, respectively, could result in the inability of
the Fund to operate as intended and could negatively affect the Fund and its
shareholders. The Subsidiary is not registered under the 1940 Act and is not
subject to the investor protections of the 1940 Act. Thus, the Fund, as an
investor in the Subsidiary, will not have all the protections offered to
investors in registered investment companies.
Commodity
Regulatory Risk (with respect to investments in the Subsidiary).
Changes in the laws or regulations of the United States or the Cayman Islands,
including any changes to applicable tax laws and regulations, could impair the
ability of the Fund to achieve its investment objective and could increase the
operating expenses of the Fund or the Subsidiary. Based on the Fund’s and the
Subsidiary’s current investment strategies, the Fund and the Subsidiary are each
a “commodity pool” and the Adviser is considered a CPO with respect to the Fund
and the Subsidiary under the Commodity Exchange Act of 1936, as amended (“CEA”).
Accordingly, the Fund and the Adviser are subject to dual regulation by the CFTC
and the SEC. Pursuant to certain CFTC regulations, the Fund and the Adviser have
elected to meet the requirements of certain CFTC regulations by complying with
specific SEC rules and regulations relating to disclosure and reporting
requirements. The CFTC could deem the Fund or the Adviser in violation of an
applicable CFTC regulation if the Fund or the Adviser failed to comply with a
related SEC regulatory requirement. In addition, the Fund and the Adviser will
remain subject to certain CFTC-mandated disclosure, reporting and recordkeeping
regulations with respect to the Fund and the Subsidiary. Compliance with the
CFTC regulations could increase the Fund’s expenses, adversely affecting the
Fund’s total return.
Tax
Risk (with respect to investments in the Subsidiary).
The Fund must derive at least 90% of its gross income from certain qualifying
sources of income in order to qualify as a RIC under the Code. The IRS issued a
revenue ruling in December 2005, which concluded that income and gains from
certain commodity-linked derivatives are not qualifying income under Subchapter
M of the Code. As a result, the Fund’s ability to invest directly in
commodity-linked futures contracts or swaps or in certain exchange-traded trusts
that hold commodities as part of its investment strategy is limited by the
requirement that it receive no more than ten percent (10%) of its gross income
from such investments. However, in Revenue Ruling 2006-31, the IRS indicated
that income from alternative investment instruments that create commodity
exposure may be considered qualifying income under the Code. The IRS
subsequently issued private letter rulings to other taxpayers in which the IRS
specifically concluded that income derived from a fund’s investment in a CFC
also will constitute qualifying income to the fund, even if the CFC itself owns
commodity-linked futures contracts or swaps. A private letter ruling cannot be
used or cited as precedent and is binding on the IRS only for the taxpayer that
receives it. The Fund has not obtained a ruling from the IRS with respect to its
investments or its
structure.
In the absence of such a ruling, the Fund expects to invest its assets in the
Subsidiary, consistent with applicable law and the advice of counsel, in a
manner that should permit the Fund to treat income allocable from the Subsidiary
as qualifying income. The IRS will no longer issue private letter rulings
relating to the tax treatment of income generated by investments in a
subsidiary. The IRS has issued regulations that treat a fund’s income inclusion
with respect to an investment in a non-U.S. company generating investment income
as qualifying income if there is a current-year distribution out of the earnings
and profits of the non-U.S. company that are attributable to such income
inclusion or if the income from the Subsidiary is related to the Fund's business
of investing. The Fund intends to treat its income from the Subsidiary as
qualifying income. There can be no assurance that the IRS will not change its
position with respect to some or all of these issues or if the IRS did so, that
a court would not sustain the IRS’s position. Furthermore, the tax treatment of
the Fund’s investments in the Subsidiary may be adversely affected by future
legislation, court decisions, future IRS guidance or Treasury regulations. If
the IRS were to change its position or otherwise determine that income derived
from the Fund’s investment in the Subsidiary does not constitute qualifying
income and if such positions were upheld, or if future legislation, court
decisions, future IRS guidance or Treasury regulations were to adversely affect
the tax treatment of such investments, the Fund might cease to qualify as a RIC
and would be required to reduce its exposure to such investments which could
result in difficulty in implementing its investment strategy. If the Fund did
not qualify as a RIC for any taxable year, the Fund’s taxable income would be
subject to tax at the Fund level at regular corporate tax rates (without
reduction for distributions to shareholders) and to a further tax at the
shareholder level when such income is distributed. In such event, in order to
re-qualify for taxation as a RIC, the Fund may be required to recognize
unrealized gains, pay substantial taxes and interest and make certain
distributions.
Risk
of ETPs.
The Fund may be subject to the following risks as a result of its investments in
ETPs:
Commodities
Risk.
Commodities include, among other things, energy products, agricultural products,
industrial metals, precious metals and livestock. The commodities markets may
fluctuate widely based on a variety of factors, including overall market
movements, economic events and policies, changes in interest rates or inflation
rates, changes in monetary and exchange control programs, war, acts of
terrorism, natural disasters and technological developments. Variables such as
disease, drought, floods, weather, trade, embargoes, tariffs and other political
events, in particular, may have a larger impact on commodity prices than on
traditional securities. These additional variables may create additional
investment risks that subject an ETP’s investments to greater volatility than
investments in traditional securities. The prices of commodities can also
fluctuate widely due to supply and demand disruptions in major producing or
consuming regions. Because certain commodities may be produced in a limited
number of countries and may be controlled by a small number of producers,
political, economic and supply-related events in such countries could have a
disproportionate impact on the prices of such commodities. These factors may
affect the value of an ETP in varying ways, and different factors may cause the
value and the volatility of an ETP to move in inconsistent directions at
inconsistent rates.
Risk
of Investing in Gold.
Certain of the ETPs may focus their investments in gold. Investments related to
gold are considered speculative and are affected by a variety of factors. The
price of gold may fluctuate substantially over short periods of time so an ETP’s
share price may be more volatile than other types of investments. Fluctuation in
the prices of gold may be due to a number of factors, including changes in
inflation and changes in industrial and commercial demand for metals.
Additionally, increased environmental or labor costs may depress the value of
metal investments. In times of significant inflation or great economic
uncertainty, gold and other precious metals may outperform traditional
investments such as bonds and stocks. However, in times of stable economic
growth, traditional equity and debt investments could offer greater appreciation
potential and the value of gold and other precious metals may be adversely
affected, which could in turn affect an ETP’s returns. A significant portion of
the world’s gold reserves are held by governments, central banks and related
institutions. The production, purchase and sale of gold by governments or
central banks or other larger holders can be negatively affected by various
economic, financial, social and political factors, which may be unpredictable
and may have a significant adverse impact on the supply and price of gold.
Additionally, the United States or foreign governments may pass laws or
regulations limiting metal investments for strategic or other policy reasons.
The principal supplies of metal industries also may be concentrated in a small
number of countries and regions. Economic, social and political conditions in
those countries that are the largest producers of gold may have a direct
negative effect on the production and marketing of gold and silver and on sales
of central bank gold holdings. The price of gold also can be significantly
adversely affected by events relating to international political developments,
the success of exploration projects, commodity prices, tax and government
regulations and intervention (including government restrictions on private
ownership of gold and mining land), changes expectations regarding inflation in
various countries and investment speculation.
Risk
of Investing in Natural Resources Companies.
Certain of the ETPs may be sensitive to, and their performance may depend to a
greater extent on, the overall condition of natural resources companies.
Investments in natural resources and natural resources companies, which include
companies engaged in agriculture, alternatives (e.g.,
water and alternative energy), base and industrial metals, energy, forest
products and precious metals, can be significantly affected by events relating
to these industries, including international political and economic
developments, embargoes, tariffs, inflation, weather and natural disasters,
livestock diseases, limits on exploration, often rapid changes in the supply and
demand for natural resources and other factors. An ETP’s portfolio securities
may experience substantial price fluctuations as a result of these factors, and
may move independently of the trends of other operating companies. Companies
engaged in the industries listed
above
may be adversely affected by changes in government policies and regulations,
technological advances and/or obsolescence, environmental damage claims, energy
conservation efforts, the success of exploration projects, limitations on the
liquidity of certain natural resources and commodities and competition from new
market entrants. Political risks and the other risks to which foreign securities
are subject may also affect domestic natural resource companies if they have
significant operations or investments in foreign countries. Changes in general
economic conditions, including commodity price volatility, changes in exchange
rates, imposition of import controls, rising interest rates, prices of raw
materials and other commodities, depletion of resources and labor relations,
could adversely affect an ETP’s portfolio companies.
Risk
of Investing in MLPs.
MLP units may trade infrequently and in limited volume. Investments in MLPs
could also expose an ETP to volatility risk, because units of MLPs may be
subject to more abrupt or erratic price movements than securities of larger or
more broadly based companies. Holders of MLP units are subject to certain risks
inherent in the structure of MLPs, including (i) tax risks (described further
below), (ii) the limited ability to elect or remove management or the general
partner or managing member, (iii) limited voting rights, (iv) conflicts of
interest between the general partner or managing member and its affiliates and
the limited partners or members, (v) dilution risks and risks related to the
general partner’s right to require unit-holders to sell their common units at an
undesirable time or price, resulting from regulatory changes or other reasons
and (vi) cash flow risks, as described below. Holders of units of MLPs have more
limited control rights and limited rights to vote on matters affecting the MLP
as compared to holders of stock of a corporation. For example, MLP unit holders
may not elect the general partner or the directors of the general partner and
the MLP unit holders have limited ability to remove an MLP’s general partner.
MLPs are controlled by their general partners, which generally have conflicts of
interest and limited fiduciary duties to the MLP, which may permit the general
partner to favor its own interests over the MLPs. The amount of cash that each
individual MLP can distribute to its partners will depend on the amount of cash
it generates from operations, which will vary from quarter to quarter depending
on factors affecting the particular business lines of the MLP. Available cash
will also depend on the MLPs’ level of operating costs (including incentive
distributions to the general partner), level of capital expenditures, debt
service requirements, acquisition costs (if any), fluctuations in working
capital needs and other factors.
Some
MLPs may be treated as “passive foreign investment companies” or “controlled
foreign corporations” corporations for U.S. federal income tax purposes. The
manner and extent of an ETP’s investments in MLPs may be limited by its
intention to qualify as a RIC under the Code (which would increase the risk of
tracking error), and any such investments by the ETP may adversely affect the
ability of the ETP to so qualify. If any of the MLPs owned by an ETP were
treated as entities other than partnerships for U.S. federal income tax
purposes, it could result in a reduction of the value of an investment in the
ETP.
Risk
of Investing in the Real Estate Sector.
Companies in the real estate sector include companies that invest in real
estate, such as real estate investment trusts and real estate management and
development companies. 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 an ETP’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.
Infrastructure
Risk.
Infrastructure-related companies are subject to a variety of factors that may
adversely affect their business or operations including high interest costs,
costs associated with compliance with and changes in environmental and other
regulations, difficulty in raising capital in adequate amounts on reasonable
terms in periods of high inflation and unsettled markets, the effects of surplus
capacity, increased competition from other providers of services, and
uncertainty concerning the availability of fuel at reasonable prices, the
effects of energy conservation policies, and other factors. Additionally,
infrastructure-related entities may be subject to regulation by various
governmental authorities and may also be affected by governmental regulation of
rates charged to customers, government budgetary constraints, service
interruption due to environmental, operational or other mishaps and the
imposition of special tariffs and changes in tax laws, regulatory policies and
accounting standards. Other factors that may affect the operations of
infrastructure-related companies include innovations in technology that could
render the way in which a company delivers a product or service obsolete,
significant changes to the number of ultimate end- users of a company’s
products, increased susceptibility to terrorist acts or political actions, risks
of environmental damage due to a company’s operations or an accident, and
general changes in market sentiment towards infrastructure and utilities assets.
Infrastructure-related securities may be issued by companies that are highly
leveraged, less creditworthy or financially distressed (also known as junk
bonds). These investments are considered to be speculative and are subject to
greater risk of loss, greater sensitivity to interest rate and economic changes,
valuation difficulties, and potential illiquidity.
Equity
Securities Risk.
The value of the equity securities held by an ETP may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by an ETP participate, or factors relating to specific
issuers in which an ETP 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 an ETP; 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 an ETP. In addition, the equity
securities of an issuer in an ETP’s portfolio may decline in price if the issuer
fails to make anticipated dividend payments. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in Small- and Medium-Capitalization Companies.
An ETP may invest in small- and/or medium- capitalization companies and,
therefore may 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.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets.
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. An ETP may invest in countries whose economies are heavily dependent
upon trading with key partners. Any reduction in this trading may have an
adverse impact on the ETP’s investments. Because an ETP may invest in securities
denominated in foreign currencies and some of the income received by the ETP may
be in foreign currency, changes in currency exchange rates may negatively impact
the ETP’s return. To the extent an ETP invests in emerging market countries,
risks of investing in such countries are greater than risks associated with
investments in foreign developed countries.
Foreign
issuers are often subject to less stringent requirements regarding accounting,
auditing, financial reporting and record keeping than are U.S. issuers, and
therefore, not all material information may be available or reliable. Securities
exchanges or foreign governments may adopt rules or regulations that may
negatively impact an ETP’s ability to invest in foreign securities or may
prevent an ETP from repatriating its investments.
Risk
of Investing in Emerging Market Issuers.
Investments in securities of emerging market issuers are exposed to a number of
risks that may make these investments volatile in price or difficult to trade.
Emerging 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 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. The
frequency, availability and quality of financial information about investments
in emerging markets varies. 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, and the Fund's passive
investment approach does not take account of these risks. All of these factors
can make emerging market securities more volatile and potentially less liquid
than securities issued in more developed markets.
Foreign
Currency Risk.
Because all or a portion of the income received by an ETP from its investments
and/or the revenues received by the underlying issuer will generally be
denominated in foreign currencies, the ETP’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 ETP, and the value of certain foreign currencies may be
subject to a high degree of fluctuation. Moreover, the ETP may incur costs in
connection with conversions between U.S. dollars and foreign currencies. The
value of certain emerging market countries 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 ETP and its
investments.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security. An ETP may hold securities that are insured by
a bond issuer. A downgrade of the credit rating of such bond issuer may cause
the value of the insured security to decline. Lower credit quality may also
affect liquidity and make it difficult for the ETP to sell the
security.
Interest
Rate Risk.
Debt securities, such as bonds, are also subject to interest rate risk. Interest
rate risk refers to fluctuations in the value of a security resulting from
changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities go down. When the
general level of interest rates goes down, the prices of most debt securities go
up. Many factors can cause interest rates to rise, including central bank
monetary policy, rising inflation rates and general economic conditions. A low
interest rate environment increases the risk associated with rising interest
rates, including the potential for periods of volatility and increased
redemptions.
Measures
taken by the Federal Reserve Board may affect the money supply and as a result
of these measures, an ETF may face a heightened
interest rate risk.
In
addition, debt securities with longer durations tend to be more sensitive to
interest rate changes, usually making them more volatile than debt securities
with shorter durations. To the extent an ETP invests a substantial portion of
its assets in debt securities with longer-term maturities, rising interest rates
may cause the value of an ETP’s investments to decline significantly.
In
addition, in response to the COVID-19 pandemic, as with other serious economic
disruptions, governmental authorities and regulators are enacting significant
fiscal and monetary policy changes, including providing direct capital infusions
into companies, creating new monetary programs and lowering interest rates
considerably. These actions present heightened risks to debt instruments, and
such risks could be even further heightened if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
An ETP may invest in callable debt securities. If interest rates fall, it is
possible that issuers of callable securities will “call” (or prepay) their debt
securities before their maturity date. If a call were exercised by the issuer
during or following a period of declining interest rates, the ETP is likely to
have to replace such called security with a lower yielding security or
securities with greater risks or other less favorable features. If that were to
happen, it would decrease the ETP’s net investment income. An ETP also may fail
to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Concentration
Risk.
Certain of the ETPs may be concentrated in a particular sector or sectors or
industry or group of industries. To the extent that an ETP is concentrated in a
particular sector or sectors or industry or group of industries, the ETP will be
subject to the risk that economic, political or other conditions that have a
negative effect on those sectors and/or industry or groups of industries may
negatively impact the ETP to a greater extent than if the ETP’s assets were
invested in a wider variety of sectors or industries.
Derivatives
Risk. The
use of derivatives, including Commodities Instruments, presents risks different
from, and possibly greater than, the risks associated with investing directly in
traditional securities. The use of derivatives can lead to losses because of
adverse movements in the price or value of the underlying security, commodity,
asset, index or reference rate. Derivative strategies often involve leverage,
which may exaggerate a loss, potentially causing the Fund or an ETP to lose more
money than it would have lost had it invested in the underlying security. Also,
a liquid secondary market may not always exist for the Fund’s or an ETP’s
derivative positions at times when the Fund or ETP might wish to terminate or
sell such positions. Over-the-counter instruments may be illiquid, and
transactions in derivatives traded in the over-the-counter market are subject to
counterparty risk.
In
October 2020, the SEC adopted a final rule related to the use of derivatives,
short sales, reverse repurchase agreements and certain other transactions by
registered investment companies. In connection with the final rule, and after an
eighteen-month transition period, the SEC and its staff will rescind and
withdraw applicable guidance and relief regarding asset segregation and coverage
transactions reflected in the Fund’s asset segregation and cover practices.
Subject to certain exceptions, and after an eighteen-month transition period,
the final rule requires the Fund to trade derivatives and other transactions
that create future payment or delivery obligations (except reverse repurchase
agreements and similar financing transactions) subject to a value-at-risk
leverage limit and certain derivatives risk management program and reporting
requirements.
Cryptocurrency
Risk.
Cryptocurrencies
(also referred to as “virtual currencies” and “digital currencies”) are digital
assets designed to act as a medium of exchange. Cryptocurrency is an emerging
asset class. There are thousands of cryptocurrencies, the most well-known of
which is bitcoin. The Fund may gain exposure to bitcoin by investing in pooled
investment vehicles that invest in bitcoin.
Cryptocurrency
generally operates without central authority (such as a bank) and is not backed
by any government. Cryptocurrency is not legal tender. Federal, state and/or
foreign governments may restrict the use and exchange of cryptocurrency, and
regulation in the United States is still developing. The market price of bitcoin
has been subject to extreme fluctuations. If cryptocurrency markets continue to
be subject to sharp fluctuations, the Fund’s shareholders may experience losses.
Similar to fiat currencies (i.e.,
a currency that is backed by a central bank or a national, supra-national or
quasi-national organization), cryptocurrencies are susceptible to theft, loss
and destruction. Accordingly, the Fund’s indirect investment in bitcoin is also
susceptible to these risks, as well as transaction costs and other risks related
to the purchase and sale of shares or interests in a pooled investment vehicle
that invests in bitcoin. Cryptocurrency exchanges and other trading venues on
which cryptocurrencies trade are relatively new and, in most cases, largely
unregulated and may therefore be more exposed to fraud and failure than
established, regulated exchanges for securities, derivatives and other
currencies. The Fund’s indirect investment in bitcoin remains subject to
volatility experienced by the cryptocurrency exchanges and other cryptocurrency
trading venues. Such volatility can adversely affect an investment in the Fund.
Cryptocurrency exchanges have in the past, and may in the future, stop operating
or permanently shut down due to fraud, cybersecurity issues, manipulation,
technical glitches, hackers or malware, which may also affect the price of
bitcoin and thus the Fund’s indirect investment in bitcoin.
Cryptocurrency
Tax Risk.
Many
significant aspects of the U.S. federal income tax treatment of investments in
bitcoin are uncertain
and an investment in bitcoin may produce income that is not treated as
qualifying income for purposes of the income test applicable to regulated
investment companies, such as the Fund. The Fund currently expects that certain
indirect investments in bitcoin may be treated as grantor trusts for U.S.
federal income tax purposes, and therefore such investments will generally be
treated as direct investments in bitcoin for such purposes.
Liquidity
Risk.
The Subsidiary invests in ETPs that invest in Commodities Instruments, which may
be less liquid than other types of investments. The illiquidity of Commodities
Instruments could have a negative effect on the Fund’s ability to achieve its
investment objective and may result in losses to Fund shareholders. In stressed
market conditions, the liquidity of the Fund’s shares may begin to mirror those
of the underlying portfolio holdings, which can be significantly less liquid
than the Fund’s shares.
Gap
Risk.
The Fund and the Subsidiary are subject to the risk that a commodity price will
change from one level to another with no trading in between. Usually, such
movements occur when there are adverse news announcements, which can cause a
commodity price to drop substantially from the previous day’s closing
price.
Risk
of Cash Transactions. Unlike
other ETFs, the Fund effects its creations and redemptions at least partially
for cash, rather than wholly for in-kind securities, due to various legal and
operational constraints in certain countries in which the Fund invests. Because
the Fund currently intends to effect 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 (“NAV”) to the extent such costs are not offset by a
transaction fee payable to an authorized participant (“AP”). If the Fund
recognizes gain on these sales, this generally will cause the Fund to recognize
gain it 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.
High
Portfolio Turnover Risk.
The Fund may engage in active and frequent trading of its portfolio securities.
High portfolio turnover may result in increased transaction costs to the Fund,
including brokerage commissions, dealer mark-ups and other transaction costs on
the sale of the securities and on reinvestment in other securities.
High
portfolio turnover may also result in higher taxes when Fund Shares are held in
a taxable account.
Model
and Data Risk.
Given the complexity of the investments and strategies of the Fund, the Adviser
relies heavily on quantitative models and information and data (“Models and
Data”). Models and Data are used to construct sets of transactions and
investments, and to provide risk management insights. When Models and Data prove
to be incorrect or incomplete, any decisions made in reliance thereon expose the
Fund to potential risks. Some of the models used by the Adviser for the Fund are
predictive in nature. The use of predictive models has inherent risks. Because
predictive models are usually constructed based on historical data, the success
of relying on such models may depend heavily on the accuracy and reliability of
the supplied historical data. All models rely on correct market data inputs. If
incorrect market data is entered into even a well-founded model, the resulting
information will be incorrect. However, even if market data is input correctly,
“model prices” will often differ substantially from market prices, especially
for instruments with complex characteristics, such as derivative
instruments.
Management
Risk.
The Fund is subject to management risk because it is an actively managed ETF. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results.
Operational
Risk. The
Fund is exposed to operational risk arising from a number of factors, including,
but not limited to, human error, processing and communication errors, errors of
the Fund’s service providers, counterparties or other third parties, failed or
inadequate processes and technology or system failures.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market. While
Shares are listed on the Fund’s listing exchange (the “Exchange”), there can be
no assurance that an active trading market for the Shares will be maintained.
Further, secondary markets may be subject to irregular trading activity, wide
bid/ask spreads and extended trade settlement periods in times of market stress
because market makers and APs may step away from making a market in the Shares
and in executing creation and redemption orders, which could cause a material
deviation in the Fund’s market price from its NAV. Van Eck Securities
Corporation, the distributor of the Shares (the “Distributor”), does not
maintain a secondary market in the Shares. Investors purchasing and selling
Shares in the secondary market may not experience investment results consistent
with those experienced by those APs creating and redeeming directly with the
Fund.
Decisions
by market makers or APs to reduce their role or “step away” from these
activities in times of market stress could inhibit the effectiveness of the
arbitrage process in maintaining the relationship between the underlying value
of the Fund’s portfolio securities and the Fund’s market price. This reduced
effectiveness could result in Fund Shares trading at a price that differs
materially from NAV and also in greater than normal intraday bid/ask spreads for
Fund Shares.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of the Exchange
occurs, a shareholder may be unable to purchase or sell Shares of the Fund.
There can be no assurance that the requirements of the Exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Market
Risk. Both
the Fund and the ETPs in which the Fund may invest are subject to market risk.
The prices of the securities in the Fund or an ETP are subject to the risks
associated with investing in the securities market, including general economic
conditions, sudden and unpredictable drops in value, exchange trading
suspensions and closures and public health risks. These risks may be magnified
if certain social, political, economic and other conditions and events (such as
natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) adversely interrupt the global economy; in these and other
circumstances, such events or developments might affect companies world-wide.
Overall securities values could decline generally or underperform other
investments An investment in the Fund or an ETP may lose money.
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 AP, 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.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. Disruptions
to creations and redemptions, the existence of market volatility or potential
lack of an active trading market for Shares (including through a trading halt),
as well as other factors, may result in Shares trading at a significant premium
or discount to NAV or to the intraday value of the Fund’s holdings. The NAV of
the Shares will fluctuate with changes in the market value of the Fund’s
securities holdings. The market prices of Shares may fluctuate, in some cases
materially, in accordance with changes in NAV and the intraday value of the
Fund’s holdings, as well as supply and demand on the Exchange. The Adviser
cannot predict whether Shares will trade below, at or above their NAV. Given the
fact that Shares can be created and redeemed by APs in Creation Units (defined
herein), the Adviser believes that large discounts or premiums to the NAV of
Shares should not be sustained in the long-term. While the creation/redemption
feature is designed to make it likely that Shares normally will trade close to
the value of the Fund’s holdings, market prices are not expected to correlate
exactly to the Fund’s NAV due to timing reasons, supply and demand imbalances
and other factors. The price differences may be due, in large part, to the fact
that supply and demand forces at work in the secondary trading market for Shares
may be closely related to, but not necessarily identical to, the same forces
influencing the prices of the securities of 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 NAV or
sells Shares at a time when the market price is at a discount to the NAV, the
shareholder may pay significantly more or receive significantly less than the
underlying value of the Shares that were bought or sold or the shareholder may
be unable to sell his or her Shares. Any of these factors, discussed above and
further below, may lead to the Shares trading at a premium or discount to the
Fund’s NAV. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
When
you buy or sell Shares of 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 NAV,
and the discount is likely to be greatest during significant market
volatility.
Non-Diversified
Risk.
The Fund is a separate investment portfolio of VanEck ETF Trust (the “Trust”),
which is an open-end investment company registered under the 1940 Act. The Fund
is classified as a “non-diversified” fund under the 1940 Act. Moreover, the Fund
is subject to the risk that it will be more volatile than a diversified fund
because the Fund may invest its assets in a smaller number of issuers or may
invest a larger proportion of its assets in a single issuer. As a result, the
gains and losses on a single investment may have a greater impact on each the
Fund’s NAV and may make the Fund more volatile than more diversified
funds.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
The
Fund may also invest in securities issued by other investment companies, equity
securities, fixed income securities and money market instruments, including
repurchase agreements or other funds which invest exclusively in money market
instruments. For temporary defensive purposes, the Fund may invest without limit
in money market instruments, including repurchase agreements or other funds
which invest exclusively in money market instruments. The Fund may also pursue
temporary defensive positions in anticipation of or in an attempt to respond to
adverse market, economic, political or other conditions. Such a position could
have the effect of reducing any benefit the Fund may receive from a market
increase.
BORROWING
MONEY
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 into a credit facility to borrow money for
temporary, emergency or other purposes, including the funding of shareholder
redemption requests, trade settlements and as necessary to distribute to
shareholders any income required to maintain the Fund’s status as a regulated
investment company. To the extent that the Fund borrows money, it may be
leveraged. Leveraging generally exaggerates the effect on NAV of any increase or
decrease in the market value of the Fund’s portfolio securities. 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
Futures
Risk. All
futures and futures-related products are highly volatile. Futures contacts
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a futures contract may not correlate perfectly with the
underlying indicator. Even a well-conceived futures transaction may be
unsuccessful due to market events. Price movements are influenced by, among
other things, changing supply and demand relationships; climate; government
agricultural, trade, fiscal, monetary and exchange control programs and
policies; national and international political and economic events; crop
diseases; the purchasing and marketing programs of different nations; and
changes in interest rates. In addition, governments from time to time intervene,
directly and by regulation, in certain markets, particularly those in
currencies.
Borrowing
and Leverage Risk.
To the extent that the Fund borrows money or utilizes certain derivatives, it
may be leveraged. Leveraging generally exaggerates the effect on NAV of any
increase or decrease in the market value of the Fund’s portfolio securities. To
manage the risk associated with leveraging, the Fund may segregate liquid
assets, or otherwise “cover” its derivatives position in a manner consistent
with the 1940 Act and the rules and SEC interpretations thereunder. The Fund may
modify its asset segregation policies at any time to comply with any changes in
the SEC’s positions regarding asset segregation.
Temporary
Defensive Strategy.
When the Fund utilizes a temporary defensive strategy, it may not achieve its
investment objective.
Investment
Restrictions. The
Fund may invest in securities of other investment companies subject to statutory
limitations prescribed by the 1940 Act or exemptive relief or regulations
thereunder. The Fund is subject to the conditions set forth in an exemptive
order obtained from the SEC or under an exemptive rule adopted by the SEC and
certain additional provisions of the 1940 Act 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. The Fund and its affiliates may not
actively acquire “control” of an investment company, which is presumed once
ownership of an investment company’s outstanding voting securities exceeds 25%.
Also, to comply with provisions of the 1940 Act and exemptive relief or
regulations thereunder, the Adviser may be required to vote shares of an
investment company in the same general proportion as shares held by other
shareholders of the investment company.
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 Fund, 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
Absolute Return Advisers Corporation with respect to the Fund (the “Investment
Management Agreement”), Van Eck Absolute Return Advisers Corporation will serve
as the adviser to the Fund and, subject to the supervision of the Board of
Trustees, will be responsible for the day-to-day investment management of the
Fund. The Adviser has been an investment adviser since 1995 and also acts as
adviser or sub-adviser to mutual funds, other ETFs, other pooled investment
vehicles and separate accounts. The Adviser is a wholly-owned subsidiary of Van
Eck Associates Corporation (“VEAC”). As of December 31, 2021, VEAC
managed approximately $81.73 billion in assets. VEAC 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 annual report for the period
ending September 30, 2021.
For
the services provided to the Fund under the Investment Management Agreement, the
Fund will pay the Adviser monthly fees based on a percentage of the Fund’s
average daily net assets at the annual rate of 0.50%. For purposes of
calculating the fees for the Fund, the net assets of the Fund include the value
of the Fund’s interest in the Subsidiary. Pursuant to a management agreement
between the Adviser and the Subsidiary (the “Subsidiary Investment Management
Agreement”), the Adviser will receive certain fees for managing the Subsidiary’s
assets and the Adviser will waive or credit such amounts against the fees
payable to the Adviser by the Fund. From time to time, the Adviser may waive all
or a portion of its fee. Until at least February 1, 2023, the Adviser has agreed
to reduce its advisory fee by the amount paid to the Adviser by the Subsidiary
and waive fees and/or reimburse Fund and Subsidiary 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 and the Subsidiary) from exceeding 0.55% 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.
Manager
of Managers Structure.
The Adviser and the Trust may rely on an exemptive order (the “Order”) from the
SEC that permits the Adviser to enter into investment sub-advisory agreements
with unaffiliated sub-advisers without obtaining shareholder approval. The
Adviser, subject to the review and approval of the Board of Trustees, may select
one or more sub- advisers for the Fund and supervise, monitor and evaluate the
performance of each sub-adviser.
The
Order also permits the Adviser, subject to the approval of the Board of
Trustees, to replace sub-advisers and amend investment sub-advisory agreements,
including applicable fee arrangements, without shareholder approval whenever the
Adviser and the Board of Trustees believe such action will benefit the Fund and
its shareholders. The Adviser thus would have the responsibility (subject to the
oversight of the Board of Trustees) to recommend the hiring and replacement of
sub-advisers as well as the discretion to terminate any sub-adviser and
reallocate the Fund’s assets for management among any other sub-adviser(s) and
itself. This means that the Adviser would be able to reduce the sub-advisory
fees and retain a larger portion of the management fee, or increase the
sub-advisory fees and retain a smaller portion of the management fee. The
Adviser would compensate each sub-adviser out of its management
fee.
Administrator,
Custodian and Transfer Agent. Van
Eck Absolute Return Advisers 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 (“Distributor”) of the Shares.
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 expected to be traded in the secondary
market.
The
portfolio managers who currently share joint responsibility for the day-to-day
management of the Fund’s portfolio are David Schassler and John
Lau.
Mr.
Schassler has been employed by the Adviser as a portfolio manager since May
2016, a deputy portfolio manager from 2015 to 2016 and a director of manager
research from 2012 to 2015. Mr. Schassler graduated from the State University of
New York College at Cortland in 2003 with a Bachelor of Arts and from the NYU
Stern School of Business in 2012 with a Masters of Business
Administration.
Mr.
Lau is deputy portfolio manager of the Fund. He has been employed with the
Adviser since 2007 and has over 10 years’ experience in the financial markets.
Mr. Lau received his BS in Business Administration, with a concentration in
Financial Analysis from the State University of New York at Buffalo.
See
the Fund’s SAI for additional information about the portfolio managers’
compensation, other accounts managed by the portfolio managers and their
respective ownership of Shares.
DETERMINATION
OF NAV
The
NAV per Share for 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 approved by the Board of Trustees. 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 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.
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
the 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 Fund is not involved in, or responsible for, the calculation or
dissemination of the IIV and makes no warranty as to its accuracy.
RULE
144A AND OTHER UNREGISTERED SECURITIES
An
AP (i.e., a person eligible to place orders with the Distributor to create or
redeem Creation Units of a Fund) that is not a “qualified institutional buyer,”
as such term is defined under Rule 144A of the Securities Act of 1933, as
amended (the “Securities Act”), will not be able to receive, as part of a
redemption, restricted securities eligible for resale under Rule 144A or other
unregistered securities.
BUYING
AND SELLING EXCHANGE-TRADED SHARES
The
Shares of the Fund are listed on the Exchange. If you buy or sell Shares in the
secondary market, you will incur customary brokerage commissions and charges and
may pay some or all of the “spread,” which is any difference between the bid
price and the ask price. The spread varies over time for 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 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.
The
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 the Exchange is closed (other than customary
weekend and holiday closings); (2) for any period during which trading on the
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 the 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 from writing options and capital gains or losses whenever it sells
securities. Any net realized long-term capital gains they are anticipated, are
distributed to shareholders as “capital gain distributions.” Distributions from
the Fund’s net investment income, including net short-term capital gains, if
any, are taxable to you as ordinary income. Any long-term capital gains
distributions you receive from the Fund are taxable as long-term capital
gains.
Net
investment income, if any, is typically distributed to shareholders at least
annually, and net realized capital gains, if any, are typically distributed
annually. Dividends may be declared and paid more frequently 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.
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. As a result of the Fund’s investment strategies, it is expected
that any distributions by the Fund will be taxable as ordinary income and
capital gains. 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
from the Fund’s net investment income, including net short-term gains, if any,
are taxable to you 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% of 20%, provided holding
period and other requirements are met at both the shareholder and the Fund
level. Given the investment strategies of the Fund, it is not anticipated that a
significant portion of the Fund’s distributions will be eligible to be reported
as qualified dividends.
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.
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 or if at least 50% of the value of the Fund’s total assets
at the close of each quarter end is represented by interests in RICs, 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, as an additional dividend, 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.
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, a 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.
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 IRS.
Taxes
on the Sale or Cash Redemption of Exchange Listed Shares.
Currently, any capital gain or loss realized upon a sale of Shares is generally
treated as long-term capital gain or loss if the Shares have been held for more
than one year and as a short-term capital gain or loss if held for one year or
less. However, any capital loss on a sale of Shares held for six months or less
is treated as long-term capital loss to the extent that capital gain dividends
were paid with respect to such Shares. The ability to deduct capital losses may
be limited. To the extent that a shareholder’s Shares are redeemed for cash,
this is normally treated as a sale for tax purposes.
Taxes
on Creations and Redemptions of Creation Units.
A person who exchanges securities for Creation Units generally will recognize a
gain or loss. The gain or loss will be equal to the difference between the
market value of the Creation Units at the time of exchange and the sum of the
exchanger’s aggregate basis in the securities surrendered and the amount of any
cash paid for such Creation Units. A person who exchanges Creation Units for
securities will generally recognize a gain or loss equal to the difference
between the exchanger’s basis in the Creation Units and the sum of the aggregate
market value of the securities received. The IRS, however, may assert that a
loss realized upon an exchange of primarily securities for Creation Units cannot
be deducted currently under the rules governing “wash sales,” or on the basis
that there has been no significant change in economic position. Persons
exchanging securities for Creation Units or redeeming Creation Units should
consult their own tax adviser with respect to whether wash sale rules apply and
when a loss might be deductible and the tax treatment of any creation or
redemption transaction. Under current U.S. federal income tax laws, any capital
gain or loss realized upon a redemption (or creation) of Creation Units held as
capital assets is generally treated as long-term capital gain or loss if the
Shares (or securities surrendered) have been held for more than one year and as
a short-term capital gain or loss if the Shares (or securities surrendered) have
been held for one year or less.
If
you create or redeem Creation Units, you will be sent a confirmation statement
showing how many Shares you created or sold and at what price.
Investment
in the Subsidiary and Commodity-linked Investments. The
Fund must derive at least 90% of its gross income from certain qualifying
sources of income in order to qualify as a RIC under the Code. The IRS issued a
revenue ruling in December 2005 which concluded that income and gains from
certain commodity-linked derivatives are not qualifying income under Subchapter
M of the Code. As a result, the Fund’s ability to invest directly in
commodity-linked futures contracts or swaps or in certain exchange-traded trusts
that hold commodities as part of its investment strategy is limited by the
requirement that it receive no more than ten percent (10%) of its gross income
from such investments.
The
IRS has issued private letter rulings to other taxpayers in which the IRS
specifically concluded that income derived from a fund’s investment in a CFC
also will constitute qualifying income to the fund, even if the CFC itself owns
commodity-linked futures contracts or swaps. A private letter ruling cannot be
used or cited as precedent and is binding on the IRS only for the taxpayer that
receives it. The Fund has not obtained a ruling from the IRS with respect to its
investments or its structure.
The
IRS no longer issues private letter rulings relating to the tax treatment of
income and gains generated by investments in commodity index-linked notes and
income generated by investments in a subsidiary. The IRS regulations generally
treat a fund’s income inclusion with respect to an investment in a non-U.S.
company generating investment income as qualifying income if there is a
current-year distribution of the earnings and profits of the non-U.S. company
that are attributable to such income inclusion or if the income inclusion is
related to a fund's business of investing.
The
Fund intends to treat its income from the Subsidiary as qualifying income. There
can be no assurance that the IRS will not change its position with respect to
some or all of these issues or if the IRS did so, that a court would not sustain
the IRS’s position. Furthermore, the tax treatment of the Fund’s investments in
the Subsidiary may be adversely affected by future legislation, court decisions,
future IRS guidance or Treasury regulations.
If
the IRS were to change its position or otherwise determine that income derived
from the Fund’s investment in the Subsidiary does not constitute qualifying
income and if such positions were upheld, or if future legislation, court
decisions, future IRS guidance or Treasury regulations were to adversely affect
the tax treatment of such investments, the Fund might cease to qualify as a RIC
and would be required to reduce its exposure to such investments which could
result in difficulty in implementing its investment strategy. If the Fund did
not qualify as a RIC for any taxable year, the Fund’s taxable income would be
subject to tax at the Fund level at regular corporate tax rates (without
reduction for distributions to shareholders) and to a further tax at the
shareholder level when such income is distributed. In such event, in order to
re-qualify for taxation as a RIC, the Fund may be required to recognize
unrealized gains, pay substantial taxes and interest and make certain
distributions.
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.
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 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.
While
some parts of the FATCA rules have not been finalized, 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
financial highlights table which follows is intended to help you understand the
Fund’s 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). This information has been audited by Ernst & Young LLP, the
Trust’s independent registered public accounting firm, whose report, along with
the Fund’s financial statements, is included in the Fund’s Annual Report, which
is available upon request.
For
a share outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inflation
Allocation ETF (a) |
|
Year
Ended September 30, |
|
Period
Ended September 30, 2018 (b) |
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
asset value, beginning of period |
$ |
20.15 |
|
|
|
$ |
25.25 |
|
|
|
$ |
25.39 |
|
|
|
$ |
25.18 |
|
|
Net
investment income (c) |
0.14 |
|
|
|
0.45 |
|
|
|
0.31 |
|
|
|
0.10 |
|
|
Net
realized and unrealized gain (loss) on investments |
6.57 |
|
|
|
(4.94) |
|
|
|
(0.31) |
|
|
|
0.11 |
|
|
Total
from investment operations |
6.71 |
|
|
|
(4.49) |
|
|
|
— |
|
|
|
0.21 |
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(1.39) |
|
|
|
(0.61) |
|
|
|
(0.14) |
|
|
|
— |
|
|
Net
asset value, end of period |
$ |
25.47 |
|
|
|
$ |
20.15 |
|
|
|
$ |
25.25 |
|
|
|
$ |
25.39 |
|
|
Total
return (d) |
34.11 |
|
% |
|
(18.32) |
|
% |
|
0.02 |
|
% |
|
0.83 |
|
%(e) |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
Gross
expenses (f) |
1.60 |
|
% |
|
1.12 |
|
% |
|
0.93 |
|
% |
|
1.57 |
|
%(g) |
Net
expenses (f) |
0.56 |
|
% |
|
0.55 |
|
% |
|
0.55 |
|
% |
|
0.55 |
|
%(g) |
Net
expenses excluding interest expense (f) |
0.55 |
|
% |
|
0.55 |
|
% |
|
0.55 |
|
% |
|
0.55 |
|
%(g) |
Net
investment income (f) |
0.58 |
|
% |
|
1.97 |
|
% |
|
1.23 |
|
% |
|
0.78 |
|
%(g) |
Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of period (in millions) |
$ |
17 |
|
|
|
$ |
9 |
|
|
|
$ |
30 |
|
|
|
$ |
15 |
|
|
Portfolio
turnover rate (h) |
76 |
|
% |
|
195 |
|
% |
|
449 |
|
% |
|
130 |
|
%(e) |
(a)Consolidated
Financial Highlights
(b)For
the period April 9, 2018 (commencement of operations) through September 30,
2018.
(c)Calculated
based upon average shares outstanding
(d)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(e)Not
Annualized
(f)The
ratios presented do not reflect the Fund’s proportionate share of income and
expenses from the Fund’s investment in underlying funds.
(g)Annualized
(h)Portfolio
turnover rate excludes in-kind transactions.
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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 the Exchange is satisfied by the fact that
the prospectus is available at the Exchange upon request. The prospectus
delivery mechanism provided in Rule 153 is only available with respect to
transactions on an exchange.
In
addition, certain affiliates of the 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 not permitted to invest
in the Fund beyond the limits set forth in Section 12(d)(1).
The
Prospectus, SAI and any other Fund communication do not create any contractual
obligations between the Fund’s shareholders and the Trust, the Fund, the Adviser
and/or the Trustees. Further, shareholders are not intended third-party
beneficiaries of any contracts entered into by (or on behalf of) the 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. Ernst & Young LLP
serves as the Trust’s independent registered public accounting firm and will
audit the Fund’s financial statements annually.
ADDITIONAL
INFORMATION
This
Prospectus does not contain all the information included in the Registration
Statement filed with the SEC with respect to the 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].,
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 Fund 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 February 1, 2022, 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 Fund or to make shareholder
inquiries. You may also obtain the SAI or the Fund’s annual or semi-annual
reports, when available, 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 |
RAAXPRO |