The
information in this Prospectus is not complete and may be changed. The Trust may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
Subject
to Completion
Preliminary
Prospectus dated June 15, 2021
VANECK
VECTORS®
BDC
Income ETF BIZD
Emerging
Markets Aggregate Bond ETF EMAG®
Emerging
Markets High Yield Bond ETF HYEM®
Fallen
Angel High Yield Bond ETF ANGL®
Green
Bond ETF GRNB®
International
High Yield Bond ETF IHY®
Investment
Grade Floating Rate ETF FLTR®
Mortgage
REIT Income ETF MORT®
Preferred
Securities ex Financials ETF PFXF®
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Principal
U.S. Listing Exchange for BIZD, EMAG, HYEM, GRNB, IHY, FLTR, MORT,
PFXF: NYSE Arca, Inc. Principal U.S. Listing Exchange for ANGL: The
NASDAQ Stock Market LLC. |
The
U.S. Securities and Exchange Commission ("SEC") has not approved or
disapproved these securities or passed upon the accuracy or adequacy of
this Prospectus. Any representation to the contrary is a criminal
offense. |
800.826.2333 vaneck.com
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VANECK
VECTORS®
BDC INCOME ETF |
INVESTMENT
OBJECTIVE
VanEck
Vectors®
BDC Income ETF (the “Fund”) seeks to replicate as closely as possible, before
fees and expenses, the price and yield performance of the MVIS®
US Business Development Companies Index (the “BDC Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your investment)
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Management
Fee |
0.40 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Acquired
Fund Fees and Expenses(c) |
9.66 |
% |
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Total
Annual Fund Operating Expenses(a) |
10.06 |
% |
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(a)Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)"Other
Expenses" have been restated to reflect current fees.
(c)“Acquired
fund fees and expenses” include fees and expenses incurred indirectly by the
Fund as a result of investments in other investment companies, including
business development companies (“BDCs”). Because acquired fund fees and expenses
are not borne directly by the Fund, they will not be reflected in the expense
information in the Fund’s financial statements and the information presented in
the table will differ from that presented in the Fund’s financial highlights
included in the Fund’s reports to shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$981 |
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3 |
$2,795 |
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5 |
$4,431 |
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10 |
$7,849 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 26% of the average value of its portfolio.
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VANECK
VECTORS®
BDC INCOME ETF (continued) |
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The BDC Index is comprised of BDCs. To be
eligible for the BDC Index and qualify as a BDC, a company must be organized
under the laws of, and have its principal place of business in, the United
States, be registered with the Securities and Exchange Commission (the “SEC”)
and have elected to be regulated as a BDC under the Investment Company Act of
1940, as amended (the “1940 Act”). BDCs are vehicles whose principal business is
to invest in, lend capital to or provide services to privately-held U.S.
companies or thinly traded U.S. public companies. Small- and
medium-capitalization BDCs are eligible for inclusion in the BDC Index. As of
[June 30, 2021], the BDC Index included 26 securities of companies with a market
capitalization range of between approximately $[182] million to $[6.1] billion
and a weighted average market capitalization of $[2.1] billion. This 80%
investment policy is non-fundamental and may be changed without shareholder
approval upon 60 days’ prior written notice to shareholders.
The
1940 Act places limits on the percentage of the total outstanding stock of a BDC
that may be owned by the Fund; however, exemptive relief from the SEC applicable
to the Fund permits it to invest in BDCs in excess of this limitation if certain
conditions are met (the “Exemptive Relief”).
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the BDC Index by investing in a portfolio of
securities that generally replicates the BDC Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the BDC Index and does not take temporary defensive positions
that are inconsistent with its investment objective of seeking to replicate the
BDC Index.
The
Fund will concentrate its investments in a particular industry or group of
industries to the extent that the BDC Index concentrates in an industry or group
of industries. [As of April 30, 2020, the Fund was concentrated in the
financials sector.]
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An
investment in the Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in BDCs. BDCs
generally invest in less mature U.S. private companies or thinly traded U.S.
public companies which involve greater risk than well-established
publicly-traded companies. While the BDCs that comprise the BDC Index are
expected to generate income in the form of dividends, certain BDCs during
certain periods of time may not generate such income. The Fund will indirectly
bear its proportionate share of any management fees and other operating expenses
incurred by the BDCs and of any performance-based or incentive fees payable by
the BDCs in which it invests, in addition to the expenses paid by the Fund. A
BDC’s incentive fee may be very high, vary from year to year and be payable even
if the value of the BDC’s portfolio declines in a given time period. Incentive
fees may create an incentive for a BDC’s manager to make investments that are
risky or more speculative than would be the case in the absence of such
compensation arrangements, and may also encourage the BDC’s manager to use
leverage to increase the return on the BDC’s investments. The use of leverage by
BDCs magnifies gains and losses on amounts invested and increases the risks
associated with investing in BDCs. A BDC may make investments with a larger
amount of risk of volatility and loss of principal than other investment options
and may also be highly speculative and aggressive.
The
1940 Act imposes certain constraints upon the operations of a BDC. For example,
BDCs are required to invest at least 70% of their total assets primarily in
securities of U.S. private companies or thinly traded U.S. public companies,
cash, cash equivalents, U.S. government securities and high quality debt
investments that mature in one year or less. Generally, little public
information exists for private and thinly traded companies in which a BDC may
invest and there is a risk that investors may not be able to make a fully
informed evaluation of a BDC and its portfolio of investments. With respect to
investments in debt instruments, there is a risk that the issuers of such
instruments may default on their payments or declare bankruptcy. Many debt
investments in which a BDC may invest will not be rated by a credit rating
agency and will be below investment grade quality. These investments are
commonly referred to as “junk bonds” and have predominantly speculative
characteristics with respect to an issuer’s capacity to make payments of
interest and principal. Although lower grade securities are potentially higher
yielding, they are also characterized by high risk. In addition, the secondary
market for lower grade securities may be less liquid than that of higher rated
securities.
Certain
BDCs may also be difficult to value since many of the assets of BDCs do not have
readily ascertainable market values. Therefore, such assets are most often
recorded at fair value, in good faith, in accordance with valuation procedures
adopted by such companies, which may potentially result in material differences
between a BDC’s net asset value (“NAV”) per share and its market
value.
Additionally,
a BDC may only incur indebtedness in amounts such that the BDC’s asset coverage
ratio of total assets to total senior securities equals at least 150% after such
incurrence. These limitations on asset mix and leverage may affect the way that
the BDC raises capital. BDCs compete with other entities for the types of
investments they make, and such entities are not necessarily subject to the same
investment constraints as BDCs.
To
comply with provisions of the 1940 Act and the Exemptive Relief, the Adviser may
be required to vote BDC shares in the same general proportion as shares held by
other shareholders of the BDC.
To
qualify and remain eligible for the special tax treatment accorded to regulated
investment companies (“RICs”) and their shareholders under the Internal Revenue
Code of 1986, as amended (the “Internal Revenue Code”), the BDCs in which the
Fund invests must meet certain source-of-income, asset diversification and
annual distribution requirements. If a BDC in which the Fund invests fails to
qualify as a regulated investment company, such BDC would be liable for federal,
and possibly state, corporate taxes on its taxable income and gains. Such
failure by a BDC could substantially reduce the BDC’s net assets and the amount
of income available for distribution to the Fund, which would in turn decrease
the total return of the Fund in respect of such investment.
Risk
of Investment Restrictions.
The Fund is subject to the conditions set forth in the Exemptive Relief 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 BDC. The Fund and its affiliates may not acquire “control”
of a BDC, which is presumed once ownership of a BDC’s outstanding voting
securities exceeds 25%. This limitation could inhibit the Fund’s ability to
purchase one or more BDCs in the BDC Index in the proportions represented in the
BDC Index. In these circumstances, the Fund would be required to use sampling
techniques, which could increase the risk of tracking error.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the
Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk. The
Fund’s return may not match the return of the BDC Index for a number of reasons.
For example, the Fund incurs a number of operating expenses, including taxes,
not applicable to the BDC Index and incurs costs associated with buying and
selling securities, especially when rebalancing the Fund’s securities holdings
to reflect changes in the composition of the BDC Index, which are not factored
into the return of the BDC Index. Transaction costs, including brokerage costs,
will decrease the Fund’s NAV to the extent not offset by the transaction fee
payable by an Authorized Participant (“AP”). Market
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VANECK
VECTORS®
BDC INCOME ETF (continued) |
disruptions
and regulatory restrictions could have an adverse effect on the Fund’s ability
to adjust its exposure to the required levels in order to track the BDC Index.
Errors in the BDC Index data, the BDC Index computations and/or the construction
of the BDC Index in accordance with its methodology may occur from time to time
and may not be identified and corrected by the BDC Index provider for a period
of time or at all, which may have an adverse impact on the Fund and its
shareholders. Shareholders should understand that any gains from the BDC Index
provider's errors will be kept by the Fund and its shareholders and any losses
or costs resulting from the BDC Index provider's errors will be borne by the
Fund and its shareholders. When the BDC Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the BDC Index, any transaction costs and market exposure
arising from such portfolio rebalancing will be borne directly by the Fund and
its shareholders. Apart from scheduled rebalances, the BDC Index provider or its
agents may carry out additional ad hoc rebalances to the BDC Index. Therefore,
errors and additional ad hoc rebalances carried out by the BDC Index provider or
its agents to the BDC Index may increase the costs to and the tracking error
risk of the Fund. The Fund’s performance may also deviate from the return of the
BDC Index due to legal restrictions or limitations imposed by the governments of
certain countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). The Fund may value certain of its investments
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the BDC Index is
based on securities’ closing prices ( i.e.
,
the value of the BDC Index is not based on fair value prices), the Fund’s
ability to track the BDC Index may be adversely affected. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. The Fund may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. For tax efficiency purposes, the Fund may
sell certain securities, and such sale may cause the Fund to realize a loss and
deviate from the performance of the BDC Index. In light of the factors discussed
above, the Fund’s return may deviate significantly from the return of the BDC
Index. Changes to the composition of the BDC Index in connection with a
rebalancing or reconstitution of the BDC Index may cause the Fund to experience
increased volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of financial institutions that act as APs, none
of which are obligated to engage in creation and/or redemption transactions. To
the extent that those APs exit the business, or are unable to or choose not to
process creation and/or redemption orders, and no other AP is able to step
forward to create and redeem, there may be a significantly diminished trading
market for Shares or Shares may trade like closed-end funds at a greater
discount (or premium) to NAV and possibly face trading halts and/or de-listing.
The AP concentration risk may be heightened in scenarios where APs have limited
or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in equity securities traded on an exchange, such as market fluctuations
caused by such factors as economic and political developments, changes in
interest rates and perceived trends in security prices. However, because the
Fund is not “actively” managed, unless a specific security is removed from the
BDC Index, the Fund generally would not sell a security because the security’s
issuer was in financial trouble. Additionally, unusual market conditions may
cause the BDC Index provider to postpone a scheduled rebalance or
reconstitution, which could cause the BDC Index to vary from its normal or
expected composition. Therefore, the Fund’s performance could be lower than
funds that may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium
or
discount to the Shares’ NAV may widen. Additionally, in stressed market
conditions, the market for the Fund’s Shares may become less liquid in response
to deteriorating liquidity in the markets for the Fund’s underlying portfolio
holdings. There are various methods by which investors can purchase and sell
Shares. Investors should consult their financial intermediaries before
purchasing or selling Shares of the Fund.
Issuer-Specific
Changes Risk.
The value of individual securities or particular types of securities can be more
volatile than the market as a whole and can perform differently from the value
of the market as a whole, which may have a greater impact if the Fund’s
portfolio is concentrated in a country, group of countries, region, market,
industry, group of industries, sector or asset class. The value of securities of
smaller issuers can be more volatile than that of larger issuers.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the BDC Index concentrates in a particular
sector or sectors or industry or group of industries. To the extent that the
Fund is concentrated in a particular sector or sectors or industry or group of
industries, the Fund will be subject to the risk that economic, political or
other conditions that have a negative effect on those sectors and/or industries
may negatively impact the Fund to a greater extent than if the Fund’s assets
were invested in a wider variety of sectors or industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. All returns
assume reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is available online
atwww.vaneck.com
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total annual return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
18.01% |
1Q
'19 |
Worst
Quarter: |
-14.72% |
4Q
'18 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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VANECK
VECTORS®
BDC INCOME ETF (continued) |
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Past
One Year |
Past
Five Years |
Since
Inception (2/11/2013) |
|
|
VanEck
Vectors BDC Income ETF (return before taxes) |
29.53% |
7.84% |
5.67% |
|
|
VanEck
Vectors BDC Income ETF (return after taxes on distributions) |
24.47% |
3.88% |
2.14% |
|
|
VanEck
Vectors BDC Income ETF (return after taxes on distributions and sale of
Fund Shares) |
17.22% |
4.16% |
2.67% |
|
|
MVIS
US Business Development Companies Index (reflects no deduction for
fees, expenses or taxes) |
28.98% |
7.86% |
6.14% |
|
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S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
31.49% |
11.70% |
13.93% |
|
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
February
2013 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK
VECTORS®
EMERGING MARKETS AGGREGATE BOND
ETF |
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
Emerging Markets Aggregate Bond ETF (the “Fund”) seeks to replicate as closely
as possible, before fees and expenses, the price and yield performance of
MVIS®
EM Aggregate Bond Index (the “EM Aggregate Bond Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your investment)
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Management
Fee |
0.35 |
% |
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|
Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$36 |
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3 |
$113 |
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5 |
$197 |
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10 |
$443 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 17% of the average value of its portfolio.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The EM Aggregate Bond Index is comprised of
emerging market sovereign bonds and corporate bonds denominated in U.S. dollars,
euros or local emerging market currencies. As of [June 30, 2021], emerging
market countries represented in the EM Aggregate Bond Index include EM Aggregate
Bond Index include Angola, Argentina, Azerbaijan, Bahrain, Bangladesh, Barbados,
Belarus, Belize, Bolivia, Bosnia and Herzegovina, Bulgaria, Brazil, Chile,
China, Colombia, Costa Rica, Côte d’Ivoire, Croatia, Czech Republic,
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VANECK
VECTORS®
EMERGING MARKETS AGGREGATE BOND ETF
(continued) |
Dominican
Republic, Ecuador, Egypt, El Salvador, Gabon, Georgia, Ghana, Guatemala,
Honduras, Hong Kong, Hungary, India, Indonesia, Iraq, Israel, Jamaica, Jordan,
Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Malawi, Malaysia, Mexico,
Mongolia, Morocco, Namibia, Nigeria, Oman, Pakistan, Panama, Paraguay, Peru,
Philippines, Poland, Qatar, Romania, Russia, Saudi Arabia, Senegal, Serbia,
South Africa, Sri Lanka, Tanzania, Thailand, Tunisia, Turkey, Ukraine, United
Arab Emirates, Uruguay, Venezuela, Vietnam and Zambia.These countries are
subject to change. The EM Aggregate Bond Index includes both investment grade
and below investment grade rated securities. As of [June 30, 2020], the EM
Aggregate Bond Index included approximately [3,271] bonds of [1,041] issuers and
the weighted average maturity of the EM Aggregate Bond Index was [9.89] years.
The Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the EM Aggregate Bond Index. Unlike many
investment companies that try to “beat” the performance of a benchmark index,
the Fund does not try to “beat” the EM Aggregate Bond Index and does not take
temporary defensive positions that are inconsistent with its investment
objective of seeking to replicate the EM Aggregate Bond Index. Because of the
practical difficulties and expense of purchasing all of the securities in the EM
Aggregate Bond Index, the Fund does not purchase all of the securities in the EM
Aggregate Bond Index. Instead, the Adviser utilizes a “sampling” methodology in
seeking to achieve the Fund’s objective. As such, the Fund may purchase a subset
of the bonds in the EM Aggregate Bond Index in an effort to hold a portfolio of
bonds with generally the same risk and return characteristics of the EM
Aggregate Bond Index.
The
Fund is classified as a non-diversified fund and, therefore, may invest a
greater percentage of its assets in a particular issuer. The Fund may
concentrate its investments in a particular industry or group of industries to
the extent that the EM Aggregate Bond Index concentrates in an industry or group
of industries. [As of April 30, 2020, the Fund was concentrated in the
government sector, and each of the energy and financials sectors represented a
significant portion of the Fund.]
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An
investment in the Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in Foreign Securities. Investments
in the securities of foreign issuers involve risks beyond those associated with
investments in U.S. securities. These additional risks include greater market
volatility, the availability of less reliable financial information, higher
transactional and custody costs, taxation by foreign governments, decreased
market liquidity and political instability. Because certain foreign securities
markets may be limited in size, the activity of large traders may have an undue
influence on the prices of securities that trade in such markets. The Fund
invests in securities of issuers located in countries whose economies are
heavily dependent upon trading with key partners. Any reduction in this trading
may have an adverse impact on the Fund’s investments.
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 also include economies that concentrate in only a few
industries, securities issues that are held by only a few investors, liquidity
issues and limited trading capacity in local exchanges and the possibility that
markets or issues may be manipulated by foreign nationals who have inside
information. 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 the Fund from its investments
and/or the revenues received by the underlying issuer will generally be
denominated in foreign currencies, the Fund’s exposure to foreign currencies and
changes in the value of foreign currencies versus the U.S. dollar may result in
reduced returns for the Fund, and the value of certain foreign currencies may be
subject to a high degree of fluctuation. Moreover, the Fund may incur costs in
connection with conversions between U.S. dollars and foreign currencies.
Special
Risk Considerations of Investing in European Issuers. Investments
in securities of European issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. The
Economic and Monetary Union ("EMU") of the European Union ("EU") requires member
countries to comply with restrictions on inflation rates, deficits, interest
rates, debt levels and fiscal and monetary controls, each of which may
significantly affect every country in Europe. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro,
the
default or threat of default by an EU member country on its sovereign debt,
and/or an economic recession in an EU member country may have a significant
adverse effect on the economies of EU member countries and on major trading
partners outside Europe. The European financial markets have previously
experienced, and may continue to experience, volatility and have been adversely
affected, and may in the future be affected, by concerns about economic
downturns, credit rating downgrades, rising government debt levels and possible
default on or restructuring of government debt in several European countries.
These events have adversely affected, and may in the future affect, the value
and exchange rate of the euro and may continue to significantly affect the
economies of every country in Europe, including EU member countries that do not
use the euro and non-EU member countries. In a referendum held on June 23, 2016,
voters in the UK voted to leave the EU, creating economic and political
uncertainty in its wake. On January 31, 2020, the UK officially withdrew from
the EU and the UK entered a transition period which ended on December 31, 2020.
On December 30, 2020, the EU and UK signed the EU-UK Trade and Cooperation
Agreement ("TCA"), an agreement on the terms governing certain aspects of the
EU's and the UK's relationship following the end of the transition period.
Notwithstanding the TCA, following the transition period, there is likely to be
considerable uncertainty as to the UK's post-transition framework.
Special
Risk Considerations of Investing in Asian Issuers.
Investments in securities of Asian issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Certain Asian economies have experienced over-extension of credit,
currency devaluations and restrictions, high unemployment, high inflation,
decreased exports and economic recessions. Economic events in any one Asian
country can have a significant effect on the entire Asian region as well as on
major trading partners outside Asia, and any adverse effect on some or all of
the Asian countries and regions in which the Fund invests. The securities
markets in some Asian economies are relatively underdeveloped and may subject
the Fund to higher action costs or greater uncertainty than investments in more
developed securities markets. Such risks may adversely affect the value of the
Fund’s investments.
Special
Risk Considerations of Investing in Latin American Issuers.
Investments in securities of Latin American issuers involve special
considerations not typically associated with investments in the U.S. securities
markets. The economies of certain Latin American countries have, at times,
experienced high interest rates, economic volatility, inflation, currency
devaluations and high unemployment rates. In addition, commodities (such as oil,
gas and minerals) represent a significant percentage of the region’s exports and
many economies in this region are particularly sensitive to fluctuations in
commodity prices. Adverse economic events in one country may have a significant
adverse effect on other countries of this region.
Most
Latin American countries have experienced, at one time or another, severe and
persistent levels of inflation, including, in some cases, hyperinflation. This
has, in turn, led to high interest rates, extreme measures by governments to
keep inflation in check, and a generally debilitating effect on economic growth.
Although inflation in many Latin American countries has lessened, there is no
guarantee it will remain at lower levels.
The
political history of certain Latin American countries has been characterized by
political uncertainty, intervention by the military in civilian and economic
spheres, and political corruption. Such events could reverse favorable trends
toward market and economic reform, privatization, and removal of trade barriers,
and could result in significant disruption in securities markets in the
region.
The
economies of Latin American countries are generally considered emerging markets
and can be significantly affected by currency devaluations. Certain Latin
American countries may also have managed currencies which are maintained at
artificial levels relative to the U.S. dollar rather than at levels determined
by the market. This type of system can lead to sudden and large adjustments in
the currency which, in turn, can have a disruptive and negative effect on
foreign investors. Certain Latin American countries also restrict the free
conversion of their currency into foreign currencies, including the U.S. dollar.
There is no significant foreign exchange market for many Latin American
currencies and it would, as a result, be difficult for the Fund to engage in
foreign currency transactions designed to protect the value of the Fund’s
interests in securities denominated in such currencies.
Finally,
a number of Latin American countries are among the largest debtors of developing
countries. There have been moratoria on, and a rescheduling of, repayment with
respect to these debts. Such events can restrict the flexibility of these debtor
nations in the international markets and result in the imposition of onerous
conditions on their economies.
Special
Risk Considerations of Investing in Mexican Issuers. Investments
in securities of Mexican issuers, including issuers located outside of Mexico
that generate significant revenue from Mexico, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. In the past, Mexico has experienced high interest rates, economic
volatility and high unemployment rates. In addition, the Mexican economy may be
significantly affected by the economies of other Central and South American
countries. High interest, inflation, government defaults and unemployment rates
characterize the economies in some Central and South American countries.
Currency devaluations in any Central and South American country can have a
significant effect on the entire region, including Mexico. Because commodities
such as oil and gas, minerals and metals represent a significant percentage of
the region’s exports, the economies of Central and South American countries are
particularly sensitive to fluctuations in commodity prices. As a result, the
economies in many Central and South American countries can experience
significant volatility that adversely affects the Fund’s investments in
securities issues by Mexican issuers.
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VANECK
VECTORS®
EMERGING MARKETS AGGREGATE BOND ETF
(continued) |
Risk
of Investing in the Energy Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, the cost of providing the
specific utility services and other factors that they cannot control. Oil prices
are subject to significant volatility, which has adversely impacted companies
operating in the energy sector. In addition, these companies are at risk of
civil liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. A downturn in the energy sector of the economy, adverse
political, legislative or regulatory developments or other events could have a
larger impact on the Fund than on an investment company that does not invest a
substantial portion of its assets in the energy sector. At times, the
performance of securities of companies in the energy sector may lag the
performance of other sectors or the broader market as a whole. The price of oil,
natural gas and other fossil fuels may decline and/or experience significant
volatility, which could adversely impact companies operating in the energy
sector.
Risk
of Investing in the Financials Sector. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the financials sector. Companies in the financials
sector may be subject to extensive government regulation that affects the scope
of their activities, the prices they can charge and the amount of capital they
must maintain. The profitability of companies in the financials sector may be
adversely affected by increases in interest rates, by loan losses, which usually
increase in economic downturns, and by credit rating downgrades. In addition,
the financials sector is undergoing numerous changes, including continuing
consolidations, development of new products and structures and changes to its
regulatory framework. Furthermore, some companies in the financials sector
perceived as benefitting from government intervention in the past may be subject
to future government-imposed restrictions on their businesses or face increased
government involvement in their operations. Increased government involvement in
the financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk. Debt
securities, such as bonds, are also subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
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.
High
Yield Securities Risk. Securities
rated below investment grade are commonly referred to as high yield securities
or “junk bonds.” High yield securities are often issued by issuers that are
restructuring, are smaller or less creditworthy than other issuers, or are more
highly indebted than other issuers. High yield securities are subject to greater
risk of loss of income and principal than higher rated securities and are
considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for securities that
are high yield securities may be less liquid than the markets for higher quality
securities, and high yield securities issued by non-corporate issuers may be
less liquid than high yield securities issued by corporate issuers, which, in
either instance, may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities. The illiquidity
of the market also could make it difficult for the Fund to sell certain
securities in connection with a rebalancing of the EM Aggregate Bond Index. In
addition, periods of economic uncertainty and change may result in an increased
volatility of market prices of high yield securities and a corresponding
volatility in the Fund’s net asset value (“NAV”).
Sovereign
Bond Risk.
Investments in sovereign bonds involve special risks not present in corporate
bonds. The governmental authority that controls the repayment of the bonds may
be unable or unwilling to make interest payments and/or repay the principal on
its bonds or to otherwise honor its obligations. If an issuer of sovereign bonds
defaults on payments of principal and/
or
interest, the Fund may have limited recourse against the issuer. During periods
of economic uncertainty, the market prices of sovereign bonds, and the Fund’s
NAV, may be more volatile than prices of corporate bonds, which may result in
losses. In the past, certain governments of emerging market countries have
declared themselves unable to meet their financial obligations on a timely
basis, which has resulted in losses for holders of sovereign bonds.
Risk
of Cash Transactions. Unlike
other exchange-traded funds (“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.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the
Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the EM Aggregate Bond Index. As a
result, an adverse development respecting an issuer of securities held by the
Fund could result in a greater decline in NAV than would be the case if the Fund
held all of the securities in the EM Aggregate Bond Index. Conversely, a
positive development relating to an issuer of securities in the EM Aggregate
Bond Index that is not held by the Fund could cause the Fund to underperform the
EM Aggregate Bond Index. To the extent the assets in the Fund are smaller, these
risks will be greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the EM Aggregate Bond Index for a
number of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the EM Aggregate Bond Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the EM
Aggregate Bond Index and raising cash to meet redemptions or deploying cash in
connection with newly created Creation Units (defined herein), which are not
factored into the return of the EM Aggregate Bond Index. Transaction costs,
including brokerage costs, will decrease the Fund’s NAV to the extent not offset
by the transaction fee payable by an Authorized Participant (“AP”). Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the EM Aggregate Bond Index. Errors in the EM Aggregate Bond Index data, the EM
Aggregate Bond Index computations and/or the construction of the EM Aggregate
Bond Index in accordance with its methodology may occur from time to time and
may not be identified and corrected by the EM Aggregate Bond Index provider for
a period of time or at all, which may have an adverse impact on the Fund and its
shareholders. Shareholders should understand that any gains from the EM
Aggregate Bond Index provider's errors will be kept by the Fund and its
shareholders and any losses or costs resulting from the EM Aggregate Bond Index
provider's errors will be borne by the Fund and its shareholders. When the EM
Aggregate Bond Index is rebalanced and the Fund in turn rebalances its portfolio
to attempt to increase the correlation between the Fund’s portfolio and the EM
Aggregate Bond Index, any transaction costs and market exposure arising from
such portfolio rebalancing will be borne directly by the Fund and its
shareholders. The Fund may not be fully invested at times either as a result of
cash flows into the Fund or reserves of cash held by the Fund to meet
redemptions or pay expenses. Apart from scheduled rebalances, the EM Aggregate
Bond Index provider or its agents may not by fully invested at times either as a
result of cash flows into the Fund. Therefore, errors and additional ad hoc
rebalances carried out by the EM Aggregate Bond Index provider or its agents to
the EM Aggregate Bond Index may increase the costs to and the tracking error
risk of the Fund. In addition, the Fund's use of a representative sampling
approach may cause the Fund to not be as well correlated with the return of the
EM Aggregate Bond Index as would be the case if the Fund purchased all of the
securities in the EM Aggregate Bond Index, or invested in them in the exact
proportions in which they are represented in the EM Aggregate Bond Index. The
Fund’s performance may also deviate from the return of the EM Aggregate Bond
Index due to legal restrictions or limitations imposed by the governments of
certain countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). The Fund may value certain of its investments
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the EM Aggregate
Bond Index is based on securities’ closing prices on local foreign markets
( i.e.
,
the value of the EM
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VANECK
VECTORS®
EMERGING MARKETS AGGREGATE BOND ETF
(continued) |
Aggregate
Bond Index is not based on fair value prices), the Fund’s ability to track the
EM Aggregate Bond Index may be adversely affected. When markets are volatile,
the ability to sell securities at fair value prices may be adversely impacted
and may result in additional trading costs and/or increase the index tracking
risk. The Fund may also need to rely on borrowings to meet redemptions, which
may lead to increased expenses. For tax efficiency purposes, the Fund may sell
certain securities, and such sale may cause the Fund to realize a loss and
deviate from the performance of the EM Aggregate Bond Index. In light of the
factors discussed above, the Fund’s return may deviate significantly from the
return of the EM Aggregate Bond Index. Changes to the composition of the EM
Aggregate Bond Index in connection with a rebalancing or reconstitution of the
EM Aggregate Bond Index may cause the Fund to experience increased volatility,
during which time the Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the EM Aggregate Bond Index, the Fund
generally would not sell a security because the security’s issuer was in
financial trouble. Additionally, unusual market conditions may cause the EM
Aggregate Bond Index provider to postpone a scheduled rebalance or
reconstitution, which could cause the EM Aggregate Index to vary from its normal
or expected composition. Therefore, the Fund’s performance could be lower than
funds that may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940, as amended (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.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the EM Aggregate Bond Index concentrates in
a particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. Prior to
December 10, 2013, the Fund sought to replicate as closely as possible, before
fees and expenses, the price and yield performance of an index called the BofA
Merrill Lynch Broad Latin America Bond Index (the “Prior Index”). Therefore,
performance information prior to December 10, 2013 reflects the performance of
the Fund while seeking to track the Prior Index. All returns assume reinvestment
of dividends and distributions. The Fund’s past performance (before and after
taxes) is not necessarily indicative of how the Fund will perform in the future.
Updated performance information is available online at www.vaneck.com.
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total annual return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
7.04% |
1Q
'12 |
Worst
Quarter: |
-6.98% |
2Q
'13 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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VANECK
VECTORS®
EMERGING MARKETS AGGREGATE BOND ETF
(continued) |
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Past
One Year |
Past
Five Years |
Since
Inception (5/11/2011) |
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VanEck
Vectors Emerging Markets Aggregate Bond ETF (return before
taxes) |
12.83% |
4.21% |
3.01% |
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VanEck
Vectors Emerging Markets Aggregate Bond ETF (return after taxes on
distributions) |
11.28% |
3.06% |
1.70% |
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VanEck Vectors Emerging Markets Aggregate Bond ETF
(return after taxes on distributions and sale of Fund shares) |
7.57% |
2.72% |
1.74% |
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MVIS
EM Aggregate Bond Index* (reflects no deduction for fees, expenses or
taxes) |
14.66% |
5.17% |
4.30% |
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Bloomberg
Barclays US Aggregate Bond Index (reflects no deduction for fees,
expenses or taxes) |
8.72% |
3.05% |
3.31% |
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*
Prior
to December 10, 2013, the Fund sought to replicate as closely as possible,
before fees and expenses, the price and yield performance of the Prior Index.
Therefore, performance information prior to December 10, 2013 reflects the
performance of the Fund while seeking to track the Prior Index. Prior to
December 10, 2013, index data reflects that of the Prior Index. From December
10, 2013, the index data reflects that of the EM Aggregate Bond Index.
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager.
The following individual is primarily responsible for the day-to-day management
of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Francis
G. Rodilosso |
Portfolio
Manager |
September
2012 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
Emerging Markets High Yield Bond ETF (the “Fund”) seeks to replicate as closely
as possible, before fees and expenses, the price and yield performance of ICE
BofA Diversified High Yield US Emerging Markets Corporate Plus Index (the
“Emerging Markets High Yield Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.40 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.40 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$41 |
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3 |
$128 |
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5 |
$224 |
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10 |
$505 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 31% of the average value of its portfolio.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The Emerging Markets High Yield Index is
comprised of U.S. dollar denominated bonds issued by non-sovereign emerging
market issuers that have a below investment grade rating and that are issued in
the major domestic and Eurobond markets. In order to qualify for inclusion in
the Emerging Markets High Yield Index, an issuer must have risk exposure to
countries other than members of the FX Group of Ten, all Western European
countries and territories of the United States and Western European countries.
The FX Group of Ten includes all Euro members, Australia, Canada, Japan, New
Zealand, Norway, Sweden, Switzerland, the United Kingdom
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VANECK
VECTORS®
EMERGING MARKETS HIGH YIELD BOND ETF
(continued) |
(“UK”)
and the United States. As of [June 30, 2021], the Emerging Markets High Yield
Index included [791] below investment grade bonds of [419] issuers and the
weighted average maturity of the Emerging Markets High Yield Index was [5.3]
years. As of the same date, approximately [91]% of the Emerging Markets High
Yield Index was comprised of Rule 144A securities. Such bonds may include
quasi-sovereign bonds. The Fund’s 80% investment policy is non-fundamental and
may be changed without shareholder approval upon 60 days’ prior written notice
to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Emerging Markets High Yield Index. Unlike many
investment companies that try to “beat” the performance of a benchmark index,
the Fund does not try to “beat” the Emerging Markets High Yield Index and does
not take temporary defensive positions that are inconsistent with its investment
objective of seeking to replicate the Emerging Markets High Yield Index. Because
of the practical difficulties and expense of purchasing all of the securities in
the Emerging Markets High Yield Index, the Fund does not purchase all of the
securities in the Emerging Markets High Yield Index. Instead, the Adviser
utilizes a “sampling” methodology in seeking to achieve the Fund’s objective. As
such, the Fund may purchase a subset of the bonds in the Emerging Markets High
Yield Index in an effort to hold a portfolio of bonds with generally the same
risk and return characteristics of the Emerging Markets High Yield Index.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Emerging Markets High Yield Index concentrates
in an industry or group of industries. [As of April 30, 2020, the Fund was
concentrated in the financials sector, and each of the basic materials and
energy sectors represented a significant portion of the Fund.]
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.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for securities that
are high yield securities may be less liquid than the markets for higher quality
securities, and high yield securities issued by non-corporate issuers may be
less liquid than high yield securities issued by corporate issuers, which, in
either instance, may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities. The illiquidity
of the market also could make it difficult for the Fund to sell certain
securities in connection with a rebalancing of the Emerging Markets High Yield
Index. In addition, periods of economic uncertainty and change may result in an
increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund’s net asset value (“NAV”).
Special
Risk Considerations of Investing in European Issuers. Investments
in securities of European issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. The
Economic and Monetary Union ("EMU") of the European Union ("EU") requires member
countries to comply with restrictions on inflation rates, deficits, interest
rates, debt levels and fiscal and monetary controls, each of which may
significantly affect every country in Europe. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of EU member countries and on major
trading partners outside Europe. The European financial markets have previously
experienced, and may continue to experience, volatility and have been adversely
affected, and may in the future be affected, by concerns about economic
downturns, credit rating downgrades, rising government debt levels and possible
default on or restructuring of government debt in several European countries.
These events have adversely affected, and may in the future affect, the value
and exchange rate of the euro and may continue to significantly affect the
economies of every country in Europe, including EU member countries that do not
use the euro and non-EU member countries. In a referendum held on June 23, 2016,
voters in the UK voted to leave the EU, creating economic and political
uncertainty in its wake. On January 31, 2020, the UK officially withdrew from
the EU. A transition phase has commenced and is scheduled to conclude on
December 31, 2020. During the transition phase, the UK effectively remains in
the EU from an economic perspective but no longer has any political
representation in the EU parliament. Significant uncertainty exists regarding
the effects such withdrawal will have on the euro, European economies and the
global markets.
Special
Risk Considerations of Investing in Asian Issuers. Investments
in securities of Asian issuers involve risks and special considerations not
typically associated with investment in the U.S. securities markets. Certain
Asian economies have experienced
over-extension
of credit, currency devaluations and restrictions, high unemployment, high
inflation, decreased exports and economic recessions. Economic events in any one
Asian country can have a significant effect on the entire Asian region as well
as on major trading partners outside Asia, and any adverse effect on some or all
of the Asian countries and regions in which the Fund invests. The securities
markets in some Asian economies are relatively underdeveloped and may subject
the Fund to higher action costs or greater uncertainty than investments in more
developed securities markets. Such risks may adversely affect the value of the
Fund’s investments.
Special
Risk Considerations of Investing in Latin American Issuers.
Investments in securities of Latin American issuers involve special
considerations not typically associated with investments in the U.S. securities
markets. The economies of certain Latin American countries have, at times,
experienced high interest rates, economic volatility, inflation, currency
devaluations and high unemployment rates. In addition, commodities (such as oil,
gas and minerals) represent a significant percentage of the region’s exports and
many economies in this region are particularly sensitive to fluctuations in
commodity prices. Adverse economic events in one country may have a significant
adverse effect on other countries of this region.
Most
Latin American countries have experienced, at one time or another, severe and
persistent levels of inflation, including, in some cases, hyperinflation. This
has, in turn, led to high interest rates, extreme measures by governments to
keep inflation in check, and a generally debilitating effect on economic growth.
Although inflation in many Latin American countries has lessened, there is no
guarantee it will remain at lower levels.
The
political history of certain Latin American countries has been characterized by
political uncertainty, intervention by the military in civilian and economic
spheres, and political corruption. Such events could reverse favorable trends
toward market and economic reform, privatization, and removal of trade barriers,
and could result in significant disruption in securities markets in the
region.
The
economies of Latin American countries are generally considered emerging markets
and can be significantly affected by currency devaluations. Certain Latin
American countries may also have managed currencies which are maintained at
artificial levels relative to the U.S. dollar rather than at levels determined
by the market. This type of system can lead to sudden and large adjustments in
the currency which, in turn, can have a disruptive and negative effect on
foreign investors. Certain Latin American countries also restrict the free
conversion of their currency into foreign currencies, including the U.S. dollar.
There is no significant foreign exchange market for many Latin American
currencies and it would, as a result, be difficult for the Fund to engage in
foreign currency transactions designed to protect the value of the Fund’s
interests in securities denominated in such currencies.
Finally,
a number of Latin American countries are among the largest debtors of developing
countries. There have been moratoria on, and a rescheduling of, repayment with
respect to these debts. Such events can restrict the flexibility of these debtor
nations in the international markets and result in the imposition of onerous
conditions on their economies.
Special
Risk Considerations of Investing in Chinese Issuers. Investments
in securities of Chinese issuers, including issuers located outside of China
that generate significant revenues from China, involve certain risks and
considerations not typically associated with investments in the U.S. securities
markets. These risks include, among others, (i) more frequent (and potentially
widespread) trading suspensions and government interventions with respect to
Chinese issuers, (ii) currency revaluations and other currency exchange rate
fluctuations or blockage, (iii) the nature and extent of intervention by the
Chinese government in the Chinese securities markets, whether such intervention
will continue and the impact of such intervention or its discontinuation, (iv)
the risk of nationalization or expropriation of assets, (v) the risk that the
Chinese government may decide not to continue to support economic reform
programs, (vi) limitations on the use of brokers, (vii) higher rates of
inflation, (viii) greater political, economic and social uncertainty, (ix)
market volatility caused by any potential regional or territorial conflicts or
natural disasters and (x) the risk of increased trade tariffs, embargoes and
other trade limitations. In addition, the economy of China differs, often
unfavorably, from the U.S. economy in such respects as structure, general
development, government involvement, wealth distribution, rate of inflation,
growth rate, interest rates, allocation of resources and capital reinvestment,
among others. The Chinese central government has historically exercised
substantial control over virtually every sector of the Chinese economy through
administrative regulation and/or state ownership and actions of the Chinese
central and local government authorities continue to have a substantial effect
on economic conditions in China. In addition, previously the Chinese government
has from time to time taken actions that influence the prices at which certain
goods may be sold, encourage companies to invest or concentrate in particular
industries, induce mergers between companies in certain industries and induce
private companies to publicly offer their securities to increase or continue the
rate of economic growth, control the rate of inflation or otherwise regulate
economic expansion. The Chinese government may do so in the future as well,
potentially having a significant adverse effect on economic conditions in
China.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
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VANECK
VECTORS®
EMERGING MARKETS HIGH YIELD BOND ETF
(continued) |
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 the Fund from its investments
and/or the revenues received by the underlying issuer will generally be
denominated in foreign currencies, the Fund’s exposure to foreign currencies and
changes in the value of foreign currencies versus the U.S. dollar may result in
reduced returns for the Fund, and the value of certain foreign currencies may be
subject to a high degree of fluctuation. Moreover, the Fund may incur costs in
connection with conversions between U.S. dollars and foreign currencies.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk. Debt
securities, such as bonds, are also subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
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.
Restricted
Securities Risk.
Regulation S and Rule 144A securities are restricted securities. Restricted
securities are securities that are not registered under the Securities Act of
1933, as amended (the “Securities Act”). They may be less liquid and more
difficult to value than other investments because such securities may not be
readily marketable. The Fund may not be able to purchase or sell a restricted
security promptly or at a reasonable time or price. Although there may be a
substantial institutional market for these securities, it is not possible to
predict exactly how the market for such securities will develop or whether it
will continue to exist. A restricted security that was liquid at the time of
purchase may subsequently become illiquid and its value may decline as a result.
In addition, transaction costs may be higher for restricted securities than for
more liquid securities. The Fund may have to bear the expense of registering
restricted securities for resale and the risk of substantial delays in effecting
the registration.
Risk
of Investing in the Basic Materials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the basic materials sector. Companies
engaged in the production and distribution of basic materials may be adversely
affected by changes in world events, political and economic conditions, energy
conservation, environmental policies, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.
Risk
of Investing in the Energy Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, the cost of providing the
specific utility services and other factors that they cannot control. Oil prices
are subject to significant volatility, which has adversely impacted companies
operating in the energy sector. In addition, these companies are at risk of
civil liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. A downturn in the energy sector of the economy, adverse
political, legislative or regulatory developments or other events could have a
larger impact on the Fund than on an investment company that does not invest a
substantial portion of its assets in the energy sector. At times, the
performance of securities of
companies
in the energy sector may lag the performance of other sectors or the broader
market as a whole. The price of oil, natural gas and other fossil fuels may
decline and/or experience significant volatility, which could adversely impact
companies operating in the energy sector.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the
Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the Emerging Markets High Yield
Index. As a result, an adverse development respecting an issuer of securities
held by the Fund could result in a greater decline in NAV than would be the case
if the Fund held all of the securities in the Emerging Markets High Yield Index.
Conversely, a positive development relating to an issuer of securities in the
Emerging Markets High Yield Index that is not held by the Fund could cause the
Fund to underperform the Emerging Markets High Yield Index. To the extent the
assets in the Fund are smaller, these risks will be greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the Emerging Markets High Yield Index
for a number of reasons. For example, the Fund incurs a number of operating
expenses, including taxes, not applicable to the Emerging Markets High Yield
Index and incurs costs associated with buying and selling securities, especially
when rebalancing the Fund’s securities holdings to reflect changes in the
composition of the Emerging Markets High Yield Index, which are not factored
into the return of the Emerging Markets High Yield Index. Transaction costs,
including brokerage costs, will decrease the Fund’s NAV to the extent not offset
by the transaction fee payable by an Authorized Participant (“AP”). Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Emerging Markets High Yield Index. Errors in the Emerging Markets High Yield
Index data, the Emerging Markets High Yield Index computations and/or the
construction of the Emerging Markets High Yield Index in accordance with its
methodology may occur from time to time and may not be identified and corrected
by the Emerging Markets High Yield Index provider for a period of time or at
all, which may have an adverse impact on the Fund and its shareholders.
Shareholders should understand that any gains from the Emerging Markets High
Yield Index provider's errors will be kept by the Fund and its shareholders and
any losses or costs resulting from the Emerging Markets High Yield Index
provider's errors will be borne by the Fund and its shareholders. When the
Emerging Markets High Yield Index is rebalanced and the Fund in turn rebalances
its portfolio to attempt to increase the correlation between the Fund’s
portfolio and the Emerging Markets High Yield Index, any transaction costs and
market exposure arising from such portfolio rebalancing will be borne directly
by the Fund and its shareholders. Apart from scheduled rebalances, the Emerging
Markets High Yield Index provider or its agents may carry out additional ad hoc
rebalances to the Emerging Markets High Yield Index. Therefore, errors and
additional ad hoc rebalances carried out by the Emerging Markets High Yield
Index provider or its agents to the Emerging Markets High Yield Index may
increase the costs to and the tracking error risk of the Fund. In addition, the
Fund's use of a representative sampling approach may cause the Fund to not be as
well correlated with the return of the Emerging Markets High Yield Index as
would be the case if the Fund purchased all of the securities in the Emerging
Markets High Yield Index, or invested in them in the exact proportions in which
they are represented in the Emerging Markets High Yield Index. The Fund’s
performance may also deviate from the return of the Emerging Markets High Yield
Index due to legal restrictions or limitations imposed by the governments of
certain countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such
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VANECK
VECTORS®
EMERGING MARKETS HIGH YIELD BOND ETF
(continued) |
securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). The Fund may value certain of its investments
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the Emerging
Markets High Yield Index is based on securities’ closing prices on local foreign
markets ( i.e.
,
the value of the Emerging Markets High Yield Index is not based on fair value
prices), the Fund’s ability to track the Emerging Markets High Yield Index may
be adversely affected. When markets are volatile, the ability to sell securities
at fair value prices may be adversely impacted and may result in additional
trading costs and/or increase the index tracking risk. The Fund may also need to
rely on borrowings to meet redemptions, which may lead to increased expenses.
For tax efficiency purposes, the Fund may sell certain securities, and such sale
may cause the Fund to realize a loss and deviate from the performance of the
Emerging Markets High Yield Index. In light of the factors discussed above, the
Fund’s return may deviate significantly from the return of the Emerging Markets
High Yield Index. Changes to the composition of the Emerging Markets High Yield
Index in connection with a rebalancing or reconstitution of the Emerging Markets
High Yield Index may cause the Fund to experience increased volatility, during
which time the Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Emerging Markets High Yield
Index, the Fund generally would not sell a security because the security’s
issuer was in financial trouble. Additionally, unusual market conditions may
cause the Emerging Markets High Yield Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Emerging Markets High Yield
Index to vary from its normal or expected composition. Therefore, the Fund’s
performance could be lower than funds that may actively shift their portfolio
assets to take advantage of market opportunities or to lessen the impact of a
market decline or a decline in the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Emerging Markets High Yield Index
concentrates in a particular sector or sectors or industry or group of
industries. To the extent that the Fund is concentrated in a particular sector
or sectors or industry or group of industries, the Fund will be subject to the
risk that economic, political or other conditions that have a negative effect on
those sectors and/or industries may negatively impact the Fund to a greater
extent than if the Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. Prior to May
13, 2015, the Fund sought to replicate as closely as possible, before fees and
expenses, the price and yield performance of an index called the BofA Merrill
Lynch Diversified High Yield US Emerging Markets Corporate Plus Index (the
“Prior Index”).Therefore, performance information prior to May 13, 2015 reflects
the performance of the Fund while seeking to track the Prior Index. All returns
assume reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is available online at
www.vaneck.com.
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total annual return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
5.93% |
1Q
'19 |
Worst
Quarter: |
-7.19% |
4Q
'14 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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VANECK
VECTORS®
EMERGING MARKETS HIGH YIELD BOND ETF
(continued) |
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Past
One Year |
Past
Five Years* |
Since
Inception
(5/8/2012)* |
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VanEck
Vectors Emerging Markets High Yield Bond ETF (return before
taxes) |
12.29% |
6.77% |
5.49% |
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VanEck
Vectors Emerging Markets High Yield Bond ETF (return after taxes on
distributions) |
9.47% |
3.98% |
2.82% |
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VanEck
Vectors Emerging Markets High Yield Bond ETF (return after taxes on
distributions and sale of Fund Shares) |
7.20% |
3.91% |
2.98% |
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ICE
BofA Diversified High Yield US Emerging Markets Corporate Plus Index*
(reflects no deduction for fees, expenses or taxes) |
12.98% |
7.53% |
6.22% |
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Bloomberg
Barclays US Aggregate Bond Index (reflects no deduction for fees,
expenses or taxes) |
8.72% |
3.05% |
2.80% |
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*
Prior
to May 13, 2015, the Fund sought to replicate as closely as possible, before
fees and expenses, the price and yield performance of the Prior Index.
Therefore, performance information prior to May 13, 2015 reflects the
performance of the Fund while seeking to track the Prior Index. Prior to May 13,
2015, index data reflects that of the Prior Index. From May 13, 2015, the index
data reflects that of the Emerging Markets High Yield Index.
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager. The
following individual is primarily responsible for the day-to-day management of
the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Francis
G. Rodilosso |
Portfolio
Manager |
September
2012 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
Fallen Angel High Yield Bond ETF (the “Fund”) seeks to replicate as closely as
possible, before fees and expenses, the price and yield performance of ICE US
Fallen Angel High Yield 10% Constrained Index (the “Fallen Angel
Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.35 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$36 |
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3 |
$113 |
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5 |
$197 |
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10 |
$443 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 27% of the average value of its portfolio.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The Fallen Angel Index is comprised of
below investment grade corporate bonds denominated in U.S. dollars that were
rated investment grade at the time of issuance. Qualifying securities must be
issued in the U.S. domestic market and have a below investment grade rating.
Defaulted securities are removed from the Fallen Angel Index at the end of the
month in which they default. The Fallen Angel Index is comprised of bonds issued
by both U.S. and non-U.S. issuers. The country of risk of qualifying issuers
must be a member of the FX Group of Ten, a Western European nation, or a
territory of the United States or a Western European nation. The FX Group of Ten
includes all Euro members, Australia, Canada, Japan, New Zealand, Norway,
Sweden, Switzerland, the United Kingdom and
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VANECK
VECTORS®
FALLEN ANGEL HIGH YIELD BOND ETF
(continued) |
the
United States. As of [June 30, 2021], the Fallen Angel Index included [330]
below investment grade bonds of [102] issuers and approximately [12]% of the
Fallen Angel Index was comprised of Rule 144A securities. The Fund’s 80%
investment policy is non-fundamental and may be changed without shareholder
approval upon 60 days’ prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Fallen Angel Index by investing in a portfolio
of securities that generally replicates the Fallen Angel Index. Unlike many
investment companies that try to “beat” the performance of a benchmark index,
the Fund does not try to “beat” the Fallen Angel Index and does not take
temporary defensive positions that are inconsistent with its investment
objective of seeking to replicate the Fallen Angel Index.
The
Fund may become "non-diversified" as defined under the Investment Company Act of
1940, as amended (the “1940 Act”), solely as a result of a change in relative
market capitalization or index weighting of one or more constituents of the
Fallen Angel Index. This means that the Fund may invest a greater percentage of
its assets in a limited number of issuers than would be the case if the Fund
were always managed as a diversified management investment company. The Fund
intends to be diversified in approximately the same proportion as the Fallen
Angel Index. Shareholder approval will not be sought when the Fund crosses from
diversified to non-diversified status due solely to a change in the relative
market capitalization or index weighting of one or more constituents of the
Fallen Angel Index.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Fallen Angel Index concentrates in an industry
or group of industries. [As of April 30, 2020, the Fund was concentrated in
the energy sector, and each of the communications, consumer staples and consumer
discretionary sectors represented a significant portion of the Fund.]
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.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for securities that
are high yield securities may be less liquid than the markets for higher quality
securities, and high yield securities issued by non-corporate issuers may be
less liquid than high yield securities issued by corporate issuers, which, in
either instance, may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities. The illiquidity
of the market also could make it difficult for the Fund to sell certain
securities in connection with a rebalancing of the Fallen Angel Index. In
addition, periods of economic uncertainty and change may result in an increased
volatility of market prices of high yield securities and a corresponding
volatility in the Fund’s net asset value (“NAV”).
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s
investments.
Foreign
Currency Risk.
Because all or a portion of the income received by the Fund from its investments
and/or the revenues received by the underlying issuer will generally be
denominated in foreign currencies, the Fund’s exposure to foreign currencies and
changes in the value of foreign currencies versus the U.S. dollar may result in
reduced returns for the Fund, and the value of certain foreign currencies may be
subject to a high degree of fluctuation. Moreover, the Fund may incur costs in
connection with conversions between U.S. dollars and foreign currencies.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating
of
a bond may be downgraded after purchase or the perception of an issuer’s credit
worthiness may decline, which may adversely affect the value of the
security.
Interest
Rate Risk. Debt
securities, such as bonds, are also subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
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.
Restricted
Securities Risk.
Regulation S and Rule 144A securities are restricted securities. Restricted
securities are securities that are not registered under the Securities Act of
1933, as amended (the “Securities Act”). They may be less liquid and more
difficult to value than other investments because such securities may not be
readily marketable. The Fund may not be able to purchase or sell a restricted
security promptly or at a reasonable time or price. Although there may be a
substantial institutional market for these securities, it is not possible to
predict exactly how the market for such securities will develop or whether it
will continue to exist. A restricted security that was liquid at the time of
purchase may subsequently become illiquid and its value may decline as a result.
In addition, transaction costs may be higher for restricted securities than for
more liquid securities. The Fund may have to bear the expense of registering
restricted securities for resale and the risk of substantial delays in effecting
the registration.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An
investment in the Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Call
Risk.
The Fund may invest in callable bonds. If interest rates fall, it is possible
that issuers of callable securities will “call” (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during or following
a period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Risk
of Investing in the Consumer Staples Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the consumer staples sector. The consumer staples
sector comprises companies whose businesses are less sensitive to economic
cycles, such as manufacturers and distributors of food and beverages and
producers of non-durable household goods and personal products. Companies in the
consumer staples sector may be adversely affected by changes in the worldwide
economy, consumer spending, competition, demographics and consumer preferences,
exploration and production spending. Companies in this sector are also affected
by changes in government regulation, world events and economic
conditions.
Risk
of Investing in the Consumer Discretionary Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the consumer discretionary sector. The consumer
discretionary sector comprises companies whose businesses are sensitive to
economic cycles, such as manufacturers of high-end apparel and automobile and
leisure companies. Companies engaged in the consumer discretionary sector are
subject to fluctuations in supply and demand. These companies may also be
adversely affected by changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.
Risk
of Investing in the Energy Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, the cost of providing the
specific utility services and other factors that they cannot control. Oil prices
are subject to significant volatility, which has adversely impacted companies
operating in the energy sector. In addition, these companies are at risk of
civil liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. A downturn in the energy sector of the economy, adverse
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VANECK
VECTORS®
FALLEN ANGEL HIGH YIELD BOND ETF
(continued) |
political,
legislative or regulatory developments or other events could have a larger
impact on the Fund than on an investment company that does not invest a
substantial portion of its assets in the energy sector. At times, the
performance of securities of companies in the energy sector may lag the
performance of other sectors or the broader market as a whole. The price of oil,
natural gas and other fossil fuels may decline and/or experience significant
volatility, which could adversely impact companies operating in the energy
sector.
Risk
of Investing in the Communications Sector.
The Fund will be sensitive to changes in, and its performance may depend to a
greater extent on, the overall condition of the communications sector. Companies
in the communications sector may be affected by industry competition,
substantial capital requirements, government regulations and obsolescence of
communications products and services due to technological advancement.
Index
Tracking Risk. The
Fund’s return may not match the return of the Fallen Angel Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Fallen Angel Index and incurs costs associated with
buying and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Fallen Angel Index, which
are not factored into the return of the Fallen Angel Index. Transaction costs,
including brokerage costs, will decrease the Fund’s NAV to the extent not offset
by the transaction fee payable by an Authorized Participant (“AP”). Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Fallen Angel Index. Errors in the Fallen Angel Index data, the Fallen Angel
Index computations and/or the construction of the Fallen Angel Index in
accordance with its methodology may occur from time to time and may not be
identified and corrected by the Fallen Angel Index provider for a period of time
or at all, which may have an adverse impact on the Fund and its shareholders.
Shareholders should understand that any gains from the Fallen Angel Index
provider's errors will be kept by the Fund and its shareholders and any losses
or costs resulting from the Fallen Angel Index provider's errors will be borne
by the Fund and its shareholders. When the Fallen Angel Index is rebalanced and
the Fund in turn rebalances its portfolio to attempt to increase the correlation
between the Fund’s portfolio and the Fallen Angel Index, any transaction costs
and market exposure arising from such portfolio rebalancing will be borne
directly by the Fund and its shareholders. Apart from scheduled rebalances, the
Fallen Angel Index provider or its agents may carry out additional ad hoc
rebalances to the Fallen Angel Index. Therefore, errors and additional ad hoc
rebalances carried out by the Fallen Angel Index provider or its agents to the
Fallen Angel Index may increase the costs to and the tracking error risk of the
Fund. The Fund’s performance may also deviate from the return of the Fallen
Angel Index due to legal restrictions or limitations imposed by the governments
of certain countries, certain listing standards of the Fund’s listing exchange
(the “Exchange”), a lack of liquidity on stock exchanges in which such
securities trade, potential adverse tax consequences or other regulatory reasons
(such as diversification requirements). The Fund may value certain of its
investments and/or other assets based on fair value prices. To the extent the
Fund calculates its NAV based on fair value prices and the value of the Fallen
Angel Index is based on securities’ closing prices on local foreign markets
( i.e.
,
the value of the Fallen Angel Index is not based on fair value prices), the
Fund’s ability to track the Fallen Angel Index may be adversely affected. When
markets are volatile, the ability to sell securities at fair value prices may be
adversely impacted and may result in additional trading costs and/or increase
the index tracking risk. The Fund may also need to rely on borrowings to meet
redemptions, which may lead to increased expenses. For tax efficiency purposes,
the Fund may sell certain securities, and such sale may cause the Fund to
realize a loss and deviate from the performance of the Fallen Angel Index. In
light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Fallen Angel Index. Changes to the
composition of the Fallen Angel Index in connection with a rebalancing or
reconstitution of the Fallen Angel Index may cause the Fund to experience
increased volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Fallen Angel Index, the Fund
generally would not sell a security because the security’s issuer was in
financial trouble.
Additionally,
unusual market conditions may cause the Fallen Angel Index provider to postpone
a scheduled rebalance or reconstitution, which could cause the Fallen Angel
Index to vary from its normal or expected composition. Therefore, the Fund’s
performance could be lower than funds that may actively shift their portfolio
assets to take advantage of market opportunities or to lessen the impact of a
market decline or a decline in the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversification
Risk. The
Fund may become classified as non-diversified under the 1940 Act solely as a
result of a change in relative market capitalization or index weighting of one
or more constituents of the Fallen Angel Index. If the Fund becomes
non-diversified, it may invest a greater portion of its assets in securities of
a smaller number of individual issuers than a diversified fund. As a result,
changes in the market value of a single investment could cause greater
fluctuations in share price than would occur in a more diversified
fund.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Fallen Angel Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s former benchmark index and a broad measure of market performance. Prior
to February 28, 2020, the Fund sought to replicate as closely as possible,
before fees and expenses, the price and yield performance of the ICE BofA US
Fallen Angel High Yield Index (the "Prior Index"). Therefore, performance
information prior to February 28, 2020 reflects the performance of the Fund
while seeking to track the Prior Index. As a result, the Fund’s future
performance may differ substantially from the performance information shown
below. 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.
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VANECK
VECTORS®
FALLEN ANGEL HIGH YIELD BOND ETF
(continued) |
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
8.86% |
2Q
'16 |
Worst
Quarter: |
-6.32% |
4Q
'18 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception (4/10/2012) |
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VanEck
Vectors Fallen Angel High Yield Bond ETF (return before
taxes) |
16.62% |
8.13% |
8.31% |
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VanEck
Vectors Fallen Angel High Yield Bond ETF (return after taxes on
distributions) |
14.06% |
5.58% |
5.76% |
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VanEck
Vectors Fallen Angel High Yield Bond ETF (return after taxes on
distributions and sale of Fund Shares) |
9.75% |
5.11% |
5.31% |
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ICE
US Fallen Angel High Yield 10% Constrained Index* (reflects no
deduction for fees, expenses or taxes) |
17.33% |
8.50% |
9.43% |
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Bloomberg
Barclays US Aggregate Bond Index (reflects no deduction for fees,
expenses or taxes) |
8.72% |
3.05% |
2.86% |
|
*
Prior to February 28, 2020, the Fund sought to replicate as closely as possible,
before fees and expenses, the price and yield performance of the Prior Index.
Therefore, the performance information included in this table reflects the
performance of the Fund while seeking to track the Prior Index. Additionally,
the index data included in this table reflects that of the Prior Index. From
February 28, 2020, the index data will reflect that of the Fallen Angel
Index.
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager.
The following individual is primarily responsible for the day-to-day management
of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Francis
G. Rodilosso |
Portfolio
Manager |
April
2012 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
Green Bond ETF (the “Fund”) seeks to replicate as closely as possible, before
fees and expenses, the price and yield performance of the S&P Green Bond
U.S. Dollar Select Index (the “Green Bond Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.20 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.20 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$20 |
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3 |
$64 |
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5 |
$113 |
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10 |
$255 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 25% of the average value of its portfolio.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The Green Bond Index is comprised of bonds
issued for qualified “green” purposes and seeks to measure the performance of
U.S. dollar denominated “green”-labeled bonds issued globally. The Green Bond
Index is sponsored by S&P Dow Jones Indices LLC, which is not affiliated
with or sponsored by the Fund or the Adviser. “Green” bonds are bonds whose
proceeds are used principally for climate change mitigation, climate adaptation
or other environmentally beneficial projects, such as, but not limited to, the
development
of clean, sustainable or renewable energy sources, commercial and industrial
energy efficiency, or conservation of natural resources. For a bond to be
eligible for inclusion in the Green Bond Index, the issuer of the bond must
indicate the bond’s “green” label and the rationale behind it, such as the
intended use of proceeds. As an additional filter, the bond must be flagged as
“green” by Climate Bonds Initiative (“CBI”), an international not-for-profit
working to mobilize the bond market for climate change solutions, to be eligible
for inclusion in the Green Bond Index. The Green Bond Index is market
value-weighted and includes supranational, corporate, government-related,
sovereign and securitized “green” bonds issued throughout the world (including
emerging market countries), and may include both investment grade and below
investment grade securities (commonly referred to as high yield securities or
“junk bonds”). “Securitized green bonds” are securities typically collateralized
by a specified pool of assets, such as mortgages, automobile loans or other
consumer receivables. All bonds must be rated by at least one credit rating
agency, except that up to 10% of the Green Bond Index can be invested in unrated
bonds that are issued or guaranteed by a government-sponsored enterprise. The
maximum weight of below investment grade bonds (excluding any unrated bonds that
are issued or guaranteed by a government-sponsored enterprise) in the Green Bond
Index is capped at 20%. No more than 10% of the Green Bond Index can be invested
in a single issuer. Qualifying securities must have a maturity of at least 12
months at the time of issuance and at least one month remaining until maturity
at each rebalancing date.
As
of [June 30, 2021], the Green Bond Index consisted of [216] bonds issued by
[143] issuers and the weighted average maturity of the Green Bond Index was
approximately [7.53] years. As of the same date, approximately [23]% of the
Green Bond Index was comprised of Regulation S securities and [20]% of the Green
Bond Index was comprised of Rule 144A securities. The Green Bond Index is
rebalanced monthly.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Green Bond Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Green Bond Index and does not take temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Green Bond Index. Because of the practical difficulties and
expense of purchasing all of the securities in the Green Bond Index, the Fund
does not purchase all of the securities in the Green Bond Index. Instead, the
Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s
objective. As such, the Fund may purchase a subset of the securities in the
Green Bond Index in an effort to hold a portfolio of bonds with generally the
same risk and return characteristics of the Green Bond Index.
The
Fund is classified as a non-diversified fund and, therefore, may invest a
greater percentage of its assets in a particular issuer. The Fund may
concentrate its investments in a particular industry or group of industries to
the extent that the Green Bond Index concentrates in an industry or group of
industries. [
As
of April 30, 2020, the Fund was concentrated in the financials sector, and
the government and utilities sectors represented a significant portion of the
Fund.]
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An
investment in the Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in “Green” Bonds.
Investments in “green” bonds include bonds whose proceeds are used principally
for climate mitigation, climate adaptation or other environmentally beneficial
projects, such as, but not limited to, the development of clean, sustainable or
renewable energy sources, commercial and industrial energy efficiency, or
conservation of natural resources. Investing in “green” bonds carries the risk
that, under certain market conditions, the Fund may underperform as compared to
funds that invest in a broader range of investments. In addition, some “green”
investments may be dependent on government tax incentives and subsidies and on
political support for certain environmental technologies and companies.
Investing primarily in “green” investments may affect the Fund’s exposure to
certain sectors or types of investments and will impact the Fund’s relative
investment performance depending on whether such sectors or investments are in
or out of favor in the market. The “green” sector may also have challenges such
as a limited number of issuers, limited liquidity in the market and limited
supply of bonds that merit “green” status, each of which may adversely affect
the Fund.
Special
Risk Considerations of Investing in Asian Issuers. Investments
in securities of Asian issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. Certain
Asian economies have experienced over-extension of credit, currency devaluations
and restrictions, high unemployment, high inflation, decreased exports and
economic recessions. Economic events in any one Asian country can have a
significant effect on the entire Asian region as well as on major trading
partners outside Asia, and any adverse effect on some or all of the Asian
countries and regions in which the Fund invests. The securities markets in some
Asian economies are relatively underdeveloped and may subject the Fund to higher
action costs or greater uncertainty than investments in more developed
securities markets. Such risks may adversely affect the value of the Fund’s
investments.
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VANECK
VECTORS®
GREEN BOND ETF (continued) |
Special
Risk Considerations of Investing in Chinese Issuers. Investments
in securities of Chinese issuers, including issuers located outside of China
that generate significant revenues from China, involve certain risks and
considerations not typically associated with investments in the U.S. securities
markets. These risks include, among others, (i) more frequent (and potentially
widespread) trading suspensions and government interventions with respect to
Chinese issuers, (ii) currency revaluations and other currency exchange rate
fluctuations or blockage, (iii) the nature and extent of intervention by the
Chinese government in the Chinese securities markets, whether such intervention
will continue and the impact of such intervention or its discontinuation, (iv)
the risk of nationalization or expropriation of assets, (v) the risk that the
Chinese government may decide not to continue to support economic reform
programs, (vi) limitations on the use of brokers, (vii) higher rates of
inflation, (viii) greater political, economic and social uncertainty, (ix)
market volatility caused by any potential regional or territorial conflicts or
natural disasters and (x) the risk of increased trade tariffs, embargoes and
other trade limitations. In addition, the economy of China differs, often
unfavorably, from the U.S. economy in such respects as structure, general
development, government involvement, wealth distribution, rate of inflation,
growth rate, interest rates, allocation of resources and capital reinvestment,
among others. The Chinese central government has historically exercised
substantial control over virtually every sector of the Chinese economy through
administrative regulation and/or state ownership and actions of the Chinese
central and local government authorities continue to have a substantial effect
on economic conditions in China. In addition, previously the Chinese government
has from time to time taken actions that influence the prices at which certain
goods may be sold, encourage companies to invest or concentrate in particular
industries, induce mergers between companies in certain industries and induce
private companies to publicly offer their securities to increase or continue the
rate of economic growth, control the rate of inflation or otherwise regulate
economic expansion. The Chinese government may do so in the future as well,
potentially having a significant adverse effect on economic conditions in
China.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
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 the Fund from its investments
and/or the revenues received by the underlying issuer will generally be
denominated in foreign currencies, the Fund’s exposure to foreign currencies and
changes in the value of foreign currencies versus the U.S. dollar may result in
reduced returns for the Fund, and the value of certain foreign currencies may be
subject to a high degree of fluctuation. Moreover, the Fund may incur costs in
connection with conversions between U.S. dollars and foreign currencies.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk. Debt
securities, such as bonds, are also subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
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.
Floating
Rate Risk. The
Fund invests in floating-rate securities. A floating-rate security is an
instrument in which the interest rate payable on the obligation fluctuates on a
periodic basis based upon changes in an interest rate benchmark. As a result,
the yield on such a security will generally decline in a falling interest rate
environment, causing the Fund to experience a reduction in the income it
receives from such securities.
Floating
Rate LIBOR Risk. Certain
of the floating-rate securities pay interest based on the London Inter-bank
Offered Rate ("LIBOR"). Due to the uncertainty regarding the future utilization
of LIBOR and the nature of any replacement rate, the potential effect of a
transition away from LIBOR on a fund or the financial instruments in which the
Fund invests cannot yet be determined.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for securities that
are high yield securities may be less liquid than the markets for higher quality
securities, and high yield securities issued by non-corporate issuers may be
less liquid than high yield securities issued by corporate issuers, which, in
either instance, may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities. The illiquidity
of the market also could make it difficult for the Fund to sell certain
securities in connection with a rebalancing of the Green Bond Index. In
addition, periods of economic uncertainty and change may result in an increased
volatility of market prices of high yield securities and a corresponding
volatility in the Fund’s net asset value (“NAV”).
Supranational
Bond Risk.
Investments in supranational bonds are subject to the overall condition of the
supranational entities that issue such bonds. Certain securities in which the
Fund may invest are obligations issued or backed by supranational entities, such
as the European Investment Bank. Obligations of supranational organizations are
subject to the risk that the governments on whose support the entity depends for
its financial backing or repayment may be unable or unwilling to provide that
support. If an issuer of supranational bonds defaults on payments of principal
and/or interest, the Fund may have limited recourse against the issuer. A
supranational entity’s willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its reserves, the relative size of the debt
service burden to the entity as a whole and the political constraints to which a
supranational entity may be subject. During periods of economic uncertainty, the
market prices of supranational bonds, and the Fund’s NAV, may be more volatile
than prices of corporate bonds, which may result in losses. Obligations of a
supranational organization that are denominated in foreign currencies will also
be subject to the risks associated with investment in foreign
currencies.
Government-Related
Bond Risk.
Investments in government-related bonds involve special risks not present in
corporate bonds. The governmental authority or government-related entity that
controls the repayment of the bond may be unable or unwilling to make interest
payments and/or repay the principal on its debt or to otherwise honor its
obligations. If an issuer of government-related bonds defaults on payments of
principal and/or interest, the Fund may have limited recourse against the
issuer. A government-related debtor’s willingness or ability to repay principal
and pay interest in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign currency reserves, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the
government-related debtor’s policy toward international lenders, and the
political constraints to which a government-related debtor may be subject.
During periods of economic uncertainty, the market prices of government-related
bonds, and the Fund’s NAV, may be more volatile than prices of corporate bonds,
which may result in losses. In the past, certain governments of emerging market
countries have declared themselves unable to meet their financial obligations on
a timely basis, which has resulted in losses for holders of government-related
bonds.
Restricted
Securities Risk.
Regulation S and Rule 144A securities are restricted securities. Restricted
securities are securities that are not registered under the Securities Act of
1933, as amended (the “Securities Act”). They may be less liquid and more
difficult to value than other investments because such securities may not be
readily marketable. The Fund may not be able to purchase or sell a restricted
security promptly or at a reasonable time or price. Although there may be a
substantial institutional market for these securities, it is not possible to
predict exactly how the market for such securities will develop or whether it
will continue to exist. A restricted security that was liquid at the time of
purchase may subsequently become illiquid and its value may decline as a result.
In addition, transaction costs may be higher for restricted securities than for
more liquid securities. The Fund may have to bear the expense of registering
restricted securities for resale and the risk of substantial delays in effecting
the registration.
Securitized/Asset-Backed
Securities Risk.
Investments in asset-backed securities, including collateralized mortgage
obligations, are subject to the risk of significant credit downgrades, dramatic
changes in liquidity, and defaults to a greater
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VANECK
VECTORS®
GREEN BOND ETF (continued) |
extent
than many other types of fixed-income investments. During periods of falling
interest rates, asset-backed securities may be called or prepaid, which may
result in the Fund having to reinvest proceeds in other investments at a lower
interest rate. During periods of rising interest rates, the average life of
asset-backed securities may extend, which may lock in a below-market interest
rate, increase the security’s duration and interest rate sensitivity, and reduce
the value of the security. The Fund may invest in asset-backed securities issued
or backed by federal agencies or government sponsored enterprises or that are
part of a government-sponsored program, which may subject the Fund to the risks
noted above. The values of assets or collateral underlying asset-backed
securities may decline and, therefore, may not be adequate to cover underlying
obligations. Enforcing rights against the underlying assets or collateral may be
difficult, and the underlying assets or collateral may be insufficient if the
issuer defaults.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in the Utilities Sector. The
Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the utilities sector. Companies in
the utilities sector may be adversely affected by changes in exchange rates,
domestic and international competition, difficulty in raising adequate amounts
of capital and governmental limitation on rates charged to
customers.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An
investment in the Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Call
Risk. The
Fund may invest in callable bonds. If interest rates fall, it is possible that
issuers of callable securities will “call” (or prepay) their bonds before their
maturity date. If a call were exercised by the issuer during or following a
period of declining interest rates, the Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease the
Fund’s net investment income.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in the Green Bond Index. As a result, an
adverse development respecting an issuer of securities held by the Fund could
result in a greater decline in NAV than would be the case if the Fund held all
of the securities in the Green Bond Index. Conversely, a positive development
relating to an issuer of securities in the Green Bond Index that is not held by
the Fund could cause the Fund to underperform the Green Bond Index. To the
extent the assets in the Fund are smaller, these risks will be
greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the Green Bond Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Green Bond Index and incurs costs associated with
buying and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Green Bond Index, which
are not factored into the return of the Green Bond Index. Transaction costs,
including brokerage costs, will decrease the Fund’s NAV to the extent not offset
by the transaction fee payable by an Authorized Participant (“AP”). Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Green Bond Index. Errors in the Green Bond Index data, the Green Bond Index
computations and/or the construction of the Green Bond Index in accordance with
its methodology may occur from time to time and may not be identified and
corrected by the Green Bond Index provider for a period of time or at all, which
may have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Green Bond Index provider's errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Green Bond Index provider's errors will be borne by the Fund and its
shareholders. When the Green Bond Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the Green Bond Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by the
Fund and its shareholders. Apart from scheduled rebalances, the Green Bond Index
provider or its agents
may
carry out additional ad hoc rebalances to the Green Bond Index. Therefore,
errors and additional ad hoc rebalances carried out by the Green Bond Index
provider or its agents to the Green Bond Index may increase the costs to and the
tracking error risk of the Fund. In addition, the Fund's use of a representative
sampling approach may cause the Fund to not be as well correlated with the
return of the Green Bond Index as would be the case if the Fund purchased all of
the securities in the Green Bond Index, or invested in them in the exact
proportions in which they are represented in the Green Bond Index. The Fund may
value certain of its investments and/or underlying currencies based on fair
value prices. The Fund’s performance may also deviate from the return of the
Green Bond Index due to legal restrictions or limitations imposed by the
governments of certain countries, certain listing standards of the Fund’s
listing exchange (the “Exchange”), a lack of liquidity on stock exchanges in
which such securities trade, potential adverse tax consequences or other
regulatory reasons (such as diversification requirements). The Fund may value
certain of its investments and/or other assets based on fair value prices. To
the extent the Fund calculates its NAV based on fair value prices and the value
of the Green Bond Index is based on securities’ closing prices on local foreign
markets ( i.e.
,
the value of the Green Bond Index is not based on fair value prices), the Fund’s
ability to track the Green Bond Index may be adversely affected. When markets
are volatile, the ability to sell securities at fair value prices may be
adversely impacted and may result in additional trading costs and/or increase
the index tracking risk. The Fund may also need to rely on borrowings to meet
redemptions, which may lead to increased expenses. For tax efficiency purposes,
the Fund may sell certain securities, and such sale may cause the Fund to
realize a loss and deviate from the performance of the Green Bond Index. The
performance of a “green” bond issuer may cause its securities to no longer merit
“green” status, and such securities would no longer be eligible for inclusion in
the Green Bond Index. This could cause the Fund to temporarily hold securities
that are not in the Green Bond Index, which may adversely affect the Fund and
its investments and may increase the risk of Green Bond Index tracking error.
Additionally, there may also be a limited supply of bonds that merit "green"
status, which may increase the risk of index tracking error. In light of the
factors discussed above, the Fund’s return may deviate significantly from the
return of the Green Bond Index. Changes to the composition of the Green Bond
Index in connection with a rebalancing or reconstitution of the Green Bond Index
may cause the Fund to experience increased volatility, during which time the
Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Green Bond Index, the Fund
generally would not sell a security because the security’s issuer was in
financial trouble. Additionally, unusual market conditions may cause the Green
Bond Index provider to postpone a scheduled rebalance or reconstitution, which
could cause the Green Bond Index to vary from its normal or expected
composition. Therefore, the Fund’s performance could be lower than funds that
may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium
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VANECK
VECTORS®
GREEN BOND ETF (continued) |
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 Investment Company
Act of 1940, as amended (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.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Green Bond Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar year shown.
The table below the bar chart shows the Fund’s average annual returns (before
and after taxes). The bar chart and table provide an indication of the risks of
investing in the Fund by comparing the Fund’s performance from year to year and
by showing how the Fund’s average annual returns for the one year, five year,
ten year and/or since inception periods, as applicable, compared with the Fund’s
benchmark index and a broad measure of market performance. Prior to September 1,
2019, the Fund sought to replicate as closely as possible, before fees and
expenses, the price and yield performance of the S&P Green Bond Select Index
(the “Prior Index”). Therefore, performance information prior to September 1,
2019 reflects the performance of the Fund while seeking to track the Prior
Index. All returns assume reinvestment of dividends and distributions. The
Fund’s past performance (before and after taxes) is not necessarily indicative
of how the Fund will perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date
total return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
3.70% |
2Q
'19 |
Worst
Quarter: |
-3.51% |
2Q
'18 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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Past
One Year |
Since
Inception (3/2/2017) |
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VanEck
Vectors Green Bond ETF (return before taxes) |
5.43% |
3.76% |
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VanEck
Vectors Green Bond ETF (return after taxes on distributions) |
4.78% |
3.20% |
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VanEck
Vectors Green Bond ETF (return after taxes on distributions and sale of
Fund Shares) |
3.21% |
2.64% |
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S&P
Green Bond U.S. Dollar Select Index* (reflects no deduction for fees,
expenses or taxes) |
6.31% |
4.55% |
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Bloomberg
Barclays US Aggregate Bond Index (reflects no deduction for fees,
expenses or taxes)
|
8.72% |
4.20% |
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*
Prior
to September 1, 2019, the Fund sought to replicate as closely as possible,
before fees and expenses, the price and yield performance of the Prior Index.
Therefore, performance information prior to September 1, 2019 reflects the
performance of the Fund while seeking to track the Prior Index. Prior to
September 1, 2019, index data reflects that of the Prior Index. From September
1, 2019, the index data reflects that of the Green Bond Index.
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager.
The following individual is primarily responsible for the day-to-day management
of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Francis
G. Rodilosso |
Portfolio
Manager |
March
2017 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
International High Yield Bond ETF (the “Fund”) seeks to replicate as closely as
possible, before fees and expenses, the price and yield performance of ICE BofA
Global ex-US Issuers High Yield Constrained Index (the “International High Yield
Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.40 |
% |
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Other
Expenses |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.40 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$41 |
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3 |
$128 |
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5 |
$224 |
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10 |
$505 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 33% of the average value of its portfolio.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The International High Yield Index is
comprised of below investment grade bonds issued by corporations located
throughout the world (which may include emerging market countries) excluding the
United States, denominated in euros, U.S. dollars, Canadian dollars or pound
sterling and issued in the major domestic or eurobond markets. Qualifying
securities must have a below investment grade rating. As of [June 30, 2021], the
International High Yield Index included [1,753] below investment grade
securities of [828]
issuers
and approximately [89]% of the International High Yield Index was comprised of
Rule 144A securities. The Fund’s 80% investment policy is non-fundamental and
may be changed without shareholder approval upon 60 days’ prior written notice
to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the International High Yield Index. Unlike many
investment companies that try to “beat” the performance of a benchmark index,
the Fund does not try to “beat” the International High Yield Index and does not
take temporary defensive positions that are inconsistent with its investment
objective of seeking to replicate the International High Yield Index. Because of
the practical difficulties and expense of purchasing all of the securities in
the International High Yield Index, the Fund does not purchase all of the
securities in the International High Yield Index. Instead, the Adviser utilizes
a “sampling” methodology in seeking to achieve the Fund’s objective. As such,
the Fund may purchase a subset of the bonds in the International High Yield
Index in an effort to hold a portfolio of bonds with generally the same risk and
return characteristics of the International High Yield Index.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the International High Yield Index concentrates in
an industry or group of industries. [As of April 30, 2020, the Fund was
concentrated in the financials sector, and the communications, consumer
discretionary and energy sectors represented a significant portion of the
Fund.]
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.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for securities that
are high yield securities may be less liquid than the markets for higher quality
securities, and high yield securities issued by non-corporate issuers may be
less liquid than high yield securities issued by corporate issuers, which, in
either instance, may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities. The illiquidity
of the market also could make it difficult for the Fund to sell certain
securities in connection with a rebalancing of the International High Yield
Index. In addition, periods of economic uncertainty and change may result in an
increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund’s net asset value (“NAV”).
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
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 the Fund from its investments
and/or the revenues received by the underlying issuer will generally be
denominated in foreign currencies, the Fund’s exposure to foreign currencies and
changes in the value of foreign currencies versus the U.S. dollar may result in
reduced returns for the Fund, and the value of
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VANECK
VECTORS®
INTERNATIONAL HIGH YIELD BOND ETF
(continued) |
certain
foreign currencies may be subject to a high degree of fluctuation. Moreover, the
Fund may incur costs in connection with conversions between U.S. dollars and
foreign currencies.
Special
Risk Considerations of Investing in European Issuers. Investments
in securities of European issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. The
Economic and Monetary Union ("EMU") of the European Union ("EU") requires member
countries to comply with restrictions on inflation rates, deficits, interest
rates, debt levels and fiscal and monetary controls, each of which may
significantly affect every country in Europe. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of EU member countries and on major
trading partners outside Europe. The European financial markets have previously
experienced, and may continue to experience, volatility and have been adversely
affected, and may in the future be affected, by concerns about economic
downturns, credit rating downgrades, rising government debt levels and possible
default on or restructuring of government debt in several European countries.
These events have adversely affected, and may in the future affect, the value
and exchange rate of the euro and may continue to significantly affect the
economies of every country in Europe, including EU member countries that do not
use the euro and non-EU member countries. In a referendum held on June 23, 2016,
voters in the UK voted to leave the EU, creating economic and political
uncertainty in its wake. On January 31, 2020, the UK officially withdrew from
the EU. A transition phase has commenced and is scheduled to conclude on
December 31, 2020. During the transition phase, the UK effectively remains in
the EU from an economic perspective but no longer has any political
representation in the EU parliament. Significant uncertainty exists regarding
the effects such withdrawal will have on the euro, European economies and the
global markets.
Special
Risk Considerations of Investing in Chinese Issuers. Investments
in securities of Chinese issuers, including issuers located outside of China
that generate significant revenues from China, involve certain risks and
considerations not typically associated with investments in the U.S. securities
markets. These risks include, among others, (i) more frequent (and potentially
widespread) trading suspensions and government interventions with respect to
Chinese issuers, (ii) currency revaluations and other currency exchange rate
fluctuations or blockage, (iii) the nature and extent of intervention by the
Chinese government in the Chinese securities markets, whether such intervention
will continue and the impact of such intervention or its discontinuation, (iv)
the risk of nationalization or expropriation of assets, (v) the risk that the
Chinese government may decide not to continue to support economic reform
programs, (vi) limitations on the use of brokers, (vii) higher rates of
inflation, (viii) greater political, economic and social uncertainty, (ix)
market volatility caused by any potential regional or territorial conflicts or
natural disasters and (x) the risk of increased trade tariffs, embargoes and
other trade limitations. In addition, the economy of China differs, often
unfavorably, from the U.S. economy in such respects as structure, general
development, government involvement, wealth distribution, rate of inflation,
growth rate, interest rates, allocation of resources and capital reinvestment,
among others. The Chinese central government has historically exercised
substantial control over virtually every sector of the Chinese economy through
administrative regulation and/or state ownership and actions of the Chinese
central and local government authorities continue to have a substantial effect
on economic conditions in China. In addition, previously the Chinese government
has from time to time taken actions that influence the prices at which certain
goods may be sold, encourage companies to invest or concentrate in particular
industries, induce mergers between companies in certain industries and induce
private companies to publicly offer their securities to increase or continue the
rate of economic growth, control the rate of inflation or otherwise regulate
economic expansion. The Chinese government may do so in the future as well,
potentially having a significant adverse effect on economic conditions in
China.
Credit
Risk. Bonds
are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk. Debt
securities, such as bonds, are also subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
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.
Restricted
Securities Risk.
Regulation S and Rule 144A securities are restricted securities. Restricted
securities are securities that are not registered under the Securities Act of
1933, as amended (the “Securities Act”). They may be less liquid and more
difficult
to value than other investments because such securities may not be readily
marketable. The Fund may not be able to purchase or sell a restricted security
promptly or at a reasonable time or price. Although there may be a substantial
institutional market for these securities, it is not possible to predict exactly
how the market for such securities will develop or whether it will continue to
exist. A restricted security that was liquid at the time of purchase may
subsequently become illiquid and its value may decline as a result. In addition,
transaction costs may be higher for restricted securities than for more liquid
securities. The Fund may have to bear the expense of registering restricted
securities for resale and the risk of substantial delays in effecting the
registration.
Risk
of Investing in the Communications Sector.
The Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the communications sector. Companies
in the communications sector may be affected by industry competition,
substantial capital requirements, government regulations and obsolescence of
communications products and services due to technological
advancement.
Risk
of Investing in the Consumer Discretionary Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the consumer discretionary sector. The consumer
discretionary sector comprises companies whose businesses are sensitive to
economic cycles, such as manufacturers of high-end apparel and automobile and
leisure companies. Companies engaged in the consumer discretionary sector are
subject to fluctuations in supply and demand. These companies may also be
adversely affected by changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.
Risk
of Investing in the Energy Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, the cost of providing the
specific utility services and other factors that they cannot control. Oil prices
are subject to significant volatility, which has adversely impacted companies
operating in the energy sector. In addition, these companies are at risk of
civil liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. A downturn in the energy sector of the economy, adverse
political, legislative or regulatory developments or other events could have a
larger impact on the Fund than on an investment company that does not invest a
substantial portion of its assets in the energy sector. At times, the
performance of securities of companies in the energy sector may lag the
performance of other sectors or the broader market as a whole. The price of oil,
natural gas and other fossil fuels may decline and/or experience significant
volatility, which could adversely impact companies operating in the energy
sector. A downturn in the energy sector of the economy, adverse political,
legislative or regulatory developments or other events could have a larger
impact on the Fund than on an investment company that does not invest a
substantial portion of its assets in the energy sector. At times, the
performance of securities of companies in the energy sector may lag the
performance of other sectors or the broader market as a whole. The price of oil,
natural gas and other fossil fuels may decline and/or experience significant
volatility, which could adversely impact companies operating in the energy
sector.
Risk
of Investing in the Financials Sector. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the financials sector. Companies in the financials
sector may be subject to extensive government regulation that affects the scope
of their activities, the prices they can charge and the amount of capital they
must maintain. The profitability of companies in the financials sector may be
adversely affected by increases in interest rates, by loan losses, which usually
increase in economic downturns, and by credit rating downgrades. In addition,
the financials sector is undergoing numerous changes, including continuing
consolidations, development of new products and structures and changes to its
regulatory framework. Furthermore, some companies in the financials sector
perceived as benefitting from government intervention in the past may be subject
to future government-imposed restrictions on their businesses or face increased
government involvement in their operations. Increased government involvement in
the financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An
investment in the Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Call
Risk. The
Fund may invest in callable bonds. If interest rates fall, it is possible that
issuers of callable securities will “call” (or prepay) their bonds before their
maturity date. If a call were exercised by the issuer during or following a
period of declining
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VANECK
VECTORS®
INTERNATIONAL HIGH YIELD BOND ETF
(continued) |
interest
rates, the Fund is likely to have to replace such called security with a lower
yielding security or securities with greater risks or other less favorable
features. If that were to happen, it would decrease the Fund’s net investment
income.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the International High Yield Index.
As a result, an adverse development respecting an issuer of securities held by
the Fund could result in a greater decline in NAV than would be the case if the
Fund held all of the securities in the International High Yield Index.
Conversely, a positive development relating to an issuer of securities in the
International High Yield Index that is not held by the Fund could cause the Fund
to underperform the International High Yield Index. To the extent the assets in
the Fund are smaller, these risks will be greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the International High Yield Index for
a number of reasons. For example, the Fund incurs a number of operating
expenses, including taxes, not applicable to the International High Yield Index
and incurs costs associated with buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the International High Yield Index, which are not factored into the return of
the International High Yield Index. Transaction costs, including brokerage
costs, will decrease the Fund’s NAV to the extent not offset by the transaction
fee payable by an Authorized Participant (“AP”). Market disruptions and
regulatory restrictions could have an adverse effect on the Fund’s ability to
adjust its exposure to the required levels in order to track the International
High Yield Index. Errors in the International High Yield Index data, the
International High Yield Index computations and/or the construction of the
International High Yield Index in accordance with its methodology may occur from
time to time and may not be identified and corrected by the International High
Yield Index provider for a period of time or at all, which may have an adverse
impact on the Fund and its shareholders. Shareholders should understand that any
gains from the International High Yield Index provider's errors will be kept by
the Fund and its shareholders and any losses or costs resulting from the
International High Yield Index provider's errors will be borne by the Fund and
its shareholders. When the International High Yield Index is rebalanced and the
Fund in turn rebalances its portfolio to attempt to increase the correlation
between the Fund’s portfolio and the International High Yield Index, any
transaction costs and market exposure arising from such portfolio rebalancing
will be borne directly by the Fund and its shareholders. Apart from scheduled
rebalances, the International High Yield Index provider or its agents may carry
out additional ad hoc rebalances to the International High Yield Index.
Therefore, errors and additional ad hoc rebalances carried out by the
International High Yield Index provider or its agents to the International High
Yield Index may increase the costs to and the tracking error risk of the Fund.
In addition, the Fund's use of a representative sampling approach may cause the
Fund to not be as well correlated with the return of the International High
Yield Index as would be the case if the Fund purchased all of the securities in
the International High Yield Index, or invested in them in the exact proportions
in which they are represented in the International High Yield Index. The Fund’s
performance may also deviate from the return of the International High Yield
Index due to legal restrictions or limitations imposed by the governments of
certain countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). The Fund may value certain of its investments
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the International
High Yield Index is based on securities’ closing prices on local foreign markets
( i.e.
,
the value of the International High Yield Index is not based on fair value
prices), the Fund’s ability to track the International High Yield Index may be
adversely affected. When markets are volatile, the ability to sell securities at
fair value prices may be adversely impacted and may result in additional trading
costs and/or increase the index tracking risk. The Fund may also need to rely on
borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the
International High Yield Index. In light of the factors discussed above, the
Fund’s return may deviate significantly from the return of the International
High Yield Index. Changes to the composition of the International High Yield
Index in connection with a rebalancing or reconstitution of the International
High Yield Index may cause the Fund to experience increased volatility, during
which time the Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused
by extraordinary market volatility pursuant to the Exchange’s “circuit breaker”
rules. There can be no assurance that the requirements of the Exchange necessary
to maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the International High Yield Index,
the Fund generally would not sell a security because the security’s issuer was
in financial trouble. Additionally, unusual market conditions may cause the
International High Yield Index provider to postpone a scheduled rebalance or
reconstitution, which could cause the International High Yield Index to vary
from its normal or expected composition .
Therefore,
the Fund’s performance could be lower than funds that may actively shift their
portfolio assets to take advantage of market opportunities or to lessen the
impact of a market decline or a decline in the value of one or more
issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the International High Yield Index
concentrates in a particular sector or sectors or industry or group of
industries. To the extent that the Fund is concentrated in a particular sector
or sectors or industry or group of industries, the Fund will be subject to the
risk that economic, political or other conditions that have a negative effect on
those sectors and/or industries may negatively impact the Fund to a greater
extent than if the Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. 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.
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VANECK
VECTORS®
INTERNATIONAL HIGH YIELD BOND ETF
(continued) |
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
5.86% |
1Q
'19 |
Worst
Quarter: |
-4.52% |
3Q
'14 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception (4/2/2012) |
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VanEck
Vectors International High Yield Bond ETF (return before
taxes) |
12.75% |
5.20% |
5.36% |
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VanEck
Vectors International High Yield Bond ETF (return after taxes on
distributions) |
10.61% |
3.47% |
3.39% |
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VanEck
Vectors International High Yield Bond ETF (return after taxes on
distributions and sale of Fund Shares) |
7.49% |
3.20% |
3.24% |
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ICE
BofA Global ex-US Issuers High Yield Constrained Index (reflects no
deduction for fees, expenses or taxes) |
13.50% |
5.83% |
6.13% |
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Bloomberg
Barclays US Aggregate Bond Index (reflects no deduction for fees,
expenses or taxes) |
8.72% |
3.05% |
2.95% |
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See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager. The
following individual is primarily responsible for the day-to-day management of
the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Francis
G. Rodilosso |
Portfolio
Manager |
April
2012 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
Investment Grade Floating Rate ETF (the “Fund”) seeks to replicate as closely as
possible, before fees and expenses, the price and yield performance of the
MVIS®
US Investment Grade Floating Rate Index (the “Floating Rate
Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.14 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.14 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$14 |
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3 |
$45 |
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5 |
$79 |
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10 |
$179 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 72% of the average value of its portfolio.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The Floating Rate Index is comprised of
U.S. dollar-denominated floating rate notes issued by corporate entities or
similar commercial entities that are public reporting companies in the United
States and rated investment grade. The Fund may invest a significant portion of
its assets in Rule 144A securities. As of [June 30, 2021], the Floating Rate
Index included [312] notes of [129] issuers and approximately [21.2]% of the
Floating Rate Index was comprised of Rule 144A securities. The Fund’s 80%
investment policy is non-fundamental and may be changed without shareholder
approval upon 60 days’ prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Floating Rate Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Floating Rate Index and does not take temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Floating Rate Index. Because of the practical difficulties and
expense of purchasing all of the securities in the Floating Rate Index, the Fund
does not purchase all of the securities in the Floating Rate Index. Instead, the
Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s
objective. As such, the Fund may purchase a subset of the bonds in the Floating
Rate Index in an effort to hold a portfolio of bonds with generally the same
risk and return characteristics of the Floating Rate Index.
The
Fund is classified as a non-diversified fund and, therefore, may invest a
greater percentage of its assets in a particular issuer. The Fund may
concentrate its investments in a particular industry or group of industries to
the extent that the Floating Rate Index concentrates in an industry or group of
industries. [As of April 30, 2020, the Fund was concentrated in the
financials sector.]
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An
investment in the Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in Foreign Securities. Investments
in the securities of foreign issuers involve risks beyond those associated with
investments in U.S. securities. These additional risks include greater market
volatility, the availability of less reliable financial information, higher
transactional and custody costs, taxation by foreign governments, decreased
market liquidity and political instability. Because certain foreign securities
markets may be limited in size, the activity of large traders may have an undue
influence on the prices of securities that trade in such markets. The Fund
invests in securities of issuers located in countries whose economies are
heavily dependent upon trading with key partners. Any reduction in this trading
may have an adverse impact on the Fund’s investments.
Foreign
Currency Risk.
Because all or a portion of the income received by the Fund from its investments
and/or the revenues received by the underlying issuer will generally be
denominated in foreign currencies, the Fund’s exposure to foreign currencies and
changes in the value of foreign currencies versus the U.S. dollar may result in
reduced returns for the Fund, and the value of certain foreign currencies may be
subject to a high degree of fluctuation. Moreover, the Fund may incur costs in
connection with conversions between U.S. dollars and foreign currencies.
Special
Risk Considerations of Investing in Japanese Issuers .
Investments in securities of Japanese issuers, including issuers located outside
of Japan that generate significant revenues from Japan, involve risks and
special considerations not typically associated with investments in the U.S.
securities markets.The Fund’s performance is expected to be closely tied to
social, political, and economic conditions within Japan and to be more volatile
than the performance of more geographically diversified funds. The risks of
investing in the securities of Japanese issuers also include risks of lack of
natural resources, fluctuations or shortages in the commodity markets, new trade
regulations, decreasing U.S. imports and changes in the U.S. dollar exchange
rates. In addition, Japan is located in a part of the world that has
historically been prone to natural disasters such as earthquakes, volcanoes and
tsunamis and is economically sensitive to environmental events. Any such event
could result in a significant adverse impact on the Japanese economy. In
addition, such disasters, and the resulting damage, could have a severe and
negative impact on the Fund’s investment portfolio and, in the longer term,
could impair the ability of issuers in which the Fund invests to conduct their
businesses in the manner normally conducted.
Because
the Fund’s assets will be invested primarily in securities of Japanese issuers,
a significant portion of its assets will be denominated in Japanese yen. The
Fund’s exposure to the Japanese yen and changes in value of the Japanese yen
versus the U.S. dollar may result in reduced returns for the Fund. Moreover, the
Fund may incur costs in connection with conversions between U.S. dollars and
Japanese yen.
Special
Risk Considerations of Investing in United Kingdom Issuers. Investments
in securities of United Kingdom (“UK”), including issuers located outside of
Egypt that generate significant revenues from issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The UK has one of the largest economies in Europe, and the United
States and other European countries are substantial trading partners of the UK.
As a result, the British economy may be impacted by changes to the economic
condition of the United States and other European countries. In a referendum
held on June 23, 2016, voters in the UK voted to leave the EU, creating economic
and political uncertainty in its wake. On January 31, 2020, the UK officially
withdrew from the EU. A transition phase has commenced and is scheduled to
conclude on December 31, 2020. During the transition phase, the UK effectively
remains in the EU from an economic perspective but no longer has any political
representation in the EU parliament. Significant uncertainty exists regarding
the timing of the UK’s withdrawal from the EU and the effects such withdrawal
will have on the euro, European economies and the global markets.
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
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VANECK
VECTORS®
INVESTMENT GRADE FLOATING RATE ETF
(continued) |
obligations
and/or default completely. Bonds are subject to varying degrees of credit risk,
depending on the issuer’s financial condition and on the terms of the
securities, which may be reflected in credit ratings. There is a possibility
that the credit rating of a bond may be downgraded after purchase or the
perception of an issuer’s credit worthiness may decline, which may adversely
affect the value of the security.
Interest
Rate Risk. Debt
securities, such as bonds, are also subject to interest rate risk. Interest rate
risk refers to fluctuations in the value of a bond resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
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.
Floating
Rate Risk. The
Fund invests in floating-rate securities. A floating-rate security is an
instrument in which the interest rate payable on the obligation fluctuates on a
periodic basis based upon changes in an interest rate benchmark. As a result,
the yield on such a security will generally decline in a falling interest rate
environment, causing the Fund to experience a reduction in the income it
receives from such securities.
Floating
Rate LIBOR Risk. Certain
of the floating-rate securities pay interest based on the London Inter-bank
Offered Rate ("LIBOR"). Due to the uncertainty regarding the future utilization
of LIBOR and the nature of any replacement rate, the potential effect of a
transition away from LIBOR on a fund or the financial instruments in which the
Fund invests cannot yet be determined.
Restricted
Securities Risk.
Regulation S and Rule 144A securities are restricted securities. Restricted
securities are securities that are not registered under the Securities Act of
1933, as amended (the “Securities Act”). They may be less liquid and more
difficult to value than other investments because such securities may not be
readily marketable. The Fund may not be able to purchase or sell a restricted
security promptly or at a reasonable time or price. Although there may be a
substantial institutional market for these securities, it is not possible to
predict exactly how the market for such securities will develop or whether it
will continue to exist. A restricted security that was liquid at the time of
purchase may subsequently become illiquid and its value may decline as a result.
In addition, transaction costs may be higher for restricted securities than for
more liquid securities. The Fund may have to bear the expense of registering
restricted securities for resale and the risk of substantial delays in effecting
the registration.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An
investment in the Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Sampling
Risk.
The Fund’s use of a representative sampling approach will result in its holding
a smaller number of securities than are in the Floating Rate Index. As a result,
an adverse development respecting an issuer of securities held by the Fund could
result in a greater decline in net asset value (“NAV”) than would be the case if
the Fund held all of the securities in the Floating Rate Index. Conversely, a
positive development relating to an issuer of securities in the Floating Rate
Index that is not held by the Fund could cause the Fund to underperform the
Floating Rate Index. To the extent the assets in the Fund are smaller, these
risks will be greater.
Index
Tracking Risk. The
Fund’s return may not match the return of the Floating Rate Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Floating Rate Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the Floating
Rate Index, which are not factored into the return of the Floating Rate Index.
Transaction costs, including brokerage costs, will decrease the Fund’s NAV to
the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the Floating Rate Index. Errors in the Floating Rate
Index data, the Floating Rate Index computations and/or the construction of the
Floating Rate Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the Floating Rate Index provider
for a period of time or at all, which may have an adverse impact on the Fund and
its shareholders. Shareholders should understand that any gains from the
Floating Rate Index provider's errors will be kept by the Fund and its
shareholders and any losses or costs resulting from the Floating Rate Index
provider's errors will be borne by the Fund and its shareholders. When the
Floating Rate Index is rebalanced and the Fund in turn rebalances its portfolio
to attempt to increase the correlation between the Fund’s portfolio and the
Floating Rate Index, any transaction costs and market exposure arising from such
portfolio rebalancing will be borne directly by the Fund and its shareholders.
Apart from scheduled rebalances, the Floating Rate Index provider or its agents
may carry out additional ad hoc rebalances to the Floating Rate Index.
Therefore, errors and additional ad hoc rebalances carried out by the Floating
Rate Index provider or its agents to the Floating Rate Index may increase the
costs to and the tracking error risk of the Fund. In addition, the Fund's use of
a representative sampling approach may cause the Fund to not be as well
correlated with the return of the Floating Rate Index as would be the case if
the Fund purchased all of the securities in the Floating Rate Index, or invested
in them in the exact proportions in which they are represented in the Floating
Rate Index. The Fund’s performance may also deviate from the return of the
Floating Rate Index due to legal restrictions or limitations imposed by the
governments of certain countries, certain listing standards of the Fund’s
listing exchange (the “Exchange”), a lack of liquidity on stock exchanges in
which such securities trade, potential adverse tax consequences or other
regulatory reasons (such as diversification requirements). The Fund may value
certain of its investments and/or underlying currencies based on fair value
prices. To the extent the Fund calculates its NAV based on fair value prices and
the value of the Floating Rate Index is based on securities’ closing prices
( i.e.
,
the value of the Floating Rate Index is not based on fair value prices), the
Fund’s ability to track the Floating Rate Index may be adversely affected. When
markets are volatile, the ability to sell securities at fair value prices may be
adversely impacted and may result in additional trading costs and/or increase
the index tracking risk. The Fund may also need to rely on borrowings to meet
redemptions, which may lead to increased expenses. For tax efficiency purposes,
the Fund may sell certain securities, and such sale may cause the Fund to
realize a loss and deviate from the performance of the Floating Rate Index. In
light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Floating Rate Index. Changes to the
composition of the Floating Rate Index in connection with a rebalancing or
reconstitution of the Floating Rate Index may cause the Fund to experience
increased volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in bonds, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. However, because the Fund is not “actively” managed,
unless a specific security is removed from the Floating Rate Index, the Fund
generally would not sell a security because the security’s issuer was in
financial trouble. Additionally, unusual market conditions may cause the
Floating Rate Index provider to postpone a scheduled rebalance or
reconstitution, which could cause the Floating Rate Index to vary from its
normal or expected composition. Therefore, the Fund’s performance could be lower
than funds that may actively shift their portfolio assets to take advantage of
market opportunities or to lessen the impact of a market decline or a decline in
the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
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VANECK
VECTORS®
INVESTMENT GRADE FLOATING RATE ETF
(continued) |
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 Investment Company
Act of 1940, as amended (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.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Floating Rate Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. All returns
assume reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is available online at
www.vaneck.com.
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
3.77% |
1Q
'12 |
Worst
Quarter: |
-1.53% |
4Q
'18 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception (4/25/2011) |
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VanEck
Vectors Investment Grade Floating Rate ETF (return before
taxes) |
5.43% |
2.15% |
1.60% |
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VanEck
Vectors Investment Grade Floating Rate ETF (return after taxes on
distributions) |
4.09% |
1.38% |
1.03% |
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VanEck
Vectors Investment Grade Floating Rate ETF (return after taxes on
distributions and sale of Fund Shares) |
3.20% |
1.31% |
0.98% |
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MVIS
US Investment Grade Floating Rate Index (reflects no deduction for
fees, expenses or taxes) |
5.57% |
2.52% |
2.03% |
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Bloomberg
Barclays US Aggregate Bond Index (reflects no deduction for fees,
expenses or taxes) |
8.72% |
3.05% |
3.42% |
|
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Manager.
The following individual is primarily responsible for the day-to-day management
of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Francis
G. Rodilosso |
Portfolio
Manager |
September
2012 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
Mortgage REIT Income ETF (the “Fund”) seeks to replicate as closely as possible,
before fees and expenses, the price and yield performance of the
MVIS®
US Mortgage REITs Index (the “Mortgage REITs Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.40 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.40 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$41 |
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3 |
$128 |
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5 |
$224 |
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10 |
$505 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 31% of the average value of its portfolio.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The Mortgage REIT Index is comprised of
publicly traded U.S. real estate investment trusts (“REITs”) that derive at
least 50% of their revenues from (or, where applicable, have at least 50% of
their assets related to) mortgage-related activity. A mortgage REIT makes loans
to developers and owners of properties and invests primarily in mortgages and
similar real estate interests, and includes companies or trusts that are
primarily engaged in the purchasing or servicing of commercial or residential
mortgage loans or mortgage-related securities. The Mortgage REITs Index may
include small-, medium- and large-capitalization companies. As of [June 30,
2021], the
Mortgage
REITs Index included [25] securities of companies with a market capitalization
range of between approximately $[312] million and $[9.4] billion and a weighted
average market capitalization of $[3.9] billion. The Fund’s 80% investment
policy is non-fundamental and may be changed without shareholder approval upon
60 days’ prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Mortgage REITs Index by investing in a
portfolio of securities that generally replicates the Mortgage REITs Index.
Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Mortgage REITs Index and
does not take temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Mortgage REITs Index.
The
Fund is classified as a non-diversified fund and, therefore, may invest a
greater percentage of its assets in a particular issuer. The Fund may
concentrate its investments in a particular industry or group of industries to
the extent that the Mortgage REITs Index concentrates in an industry or group of
industries. [As of April 30, 2020, the Fund was concentrated in the
financials sector.]
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An
investment in the Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in Mortgage REITs.
Mortgage REITs are exposed to the risks specific to the real estate market as
well as the risks that relate specifically to the way in which mortgage REITs
are organized and operated. Mortgage REITs receive principal and interest
payments from the owners of the mortgaged properties. Accordingly, mortgage
REITs are subject to the credit risk of the borrowers. Credit risk refers to the
possibility that the borrower will be unable and/or unwilling to make timely
interest payments and/or repay the principal on the loan to a mortgage REIT when
due. To the extent that a mortgage REIT invests in mortgage-backed securities
offered by private issuers, such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers and other
secondary market issuers, the mortgage REIT may be subject to additional risks.
Timely payment of interest and principal of non-governmental issuers may be
supported by various forms of private insurance or guarantees, including
individual loan, title, pool and hazard insurance purchased by the issuer.
However, there can be no assurance that the private insurers can or will meet
their obligations under such policies. Unexpected high rates of default on the
mortgages held by a mortgage pool may adversely affect the value of a
mortgage-backed security and could result in losses to a mortgage REIT. The risk
of such defaults is generally higher in the case of mortgage pools that include
subprime mortgages. To the extent that a mortgage REIT’s portfolio is exposed to
lower-rated, unsecured or subordinated instruments, the risk of loss may
increase, which may have a negative impact on the Fund. Mortgage REITs also are
subject to the risk that the value of mortgaged properties may be less than the
amounts owed on the properties. If a mortgage REIT is required to foreclose on a
borrower, the amount recovered in connection with the foreclosure may be less
than the amount owed to the mortgage REIT.
Mortgage
REITs are subject to significant interest rate risk. Interest rate risk refers
to fluctuations in the value of a mortgage REIT’s investment in fixed rate
obligations resulting from changes in the general level of interest rates. When
the general level of interest rates goes up, the value of a mortgage REIT’s
investment in fixed rate obligations goes down.
Mortgage
REITs typically use leverage and many are highly leveraged, which exposes them
to leverage risk and the risks generally associated with debt financing.
Leverage risk refers to the risk that leverage created from borrowing may impair
a mortgage REIT’s liquidity, cause it to liquidate positions at an unfavorable
time and increase the volatility of the values of securities issued by the
mortgage REIT. The use of leverage may not be advantageous to a mortgage REIT.
The success of using leverage is dependent on whether the return earned on the
investments made using the proceeds of leverage exceed the cost of using
leverage. To the extent that a mortgage REIT incurs significant leverage, it may
incur substantial losses if its borrowing costs increase. Borrowing costs may
increase for any of the following reasons: short-term interest rates increase;
the market value of a mortgage REIT’s assets decrease; interest rate volatility
increases; or the availability of financing in the market decreases. During
periods of adverse market conditions, downturns in the economy or deterioration
in the conditions of the REIT’s mortgage-related assets, the use of leverage may
cause a mortgage REIT to lose more money that would have been the case if
leverage was not used.
Mortgage
REITs are subject to prepayment risk, which is the risk that borrowers may
prepay their mortgage loans at faster than expected rates. Prepayment rates
generally increase when interest rates fall and decrease when interest rates
rise. These faster than expected payments may adversely affect a mortgage REIT’s
profitability because the mortgage REIT may be forced to replace investments
that have been redeemed or repaid early with other investments having a lower
yield. Additionally, rising interest rates rise may cause the duration of a
mortgage REIT’s investments to be longer than anticipated and increase such
investments’ interest rate sensitivity.
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VANECK
VECTORS®
MORTGAGE REIT INCOME ETF
(continued) |
REITs
are subject to special U.S. federal tax requirements. A REIT’s failure to comply
with these requirements may negatively affect its performance.
Mortgage
REITs may be dependent upon the management skills and may have limited financial
resources. Mortgage REITs are generally not diversified and may be subject to
heavy cash flow dependency, default by borrowers and self-liquidation. In
addition, transactions between mortgage REITs and their affiliates may be
subject to conflicts of interest which may adversely affect a mortgage REIT’s
shareholders.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An
investment in the Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk. The
Fund’s return may not match the return of the Mortgage REITs Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Mortgage REITs Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the Mortgage
REITs Index, which are not factored into the return of the Mortgage REITs Index.
Transaction costs, including brokerage costs, will decrease the Fund’s NAV to
the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the Mortgage REITs Index. Errors in the Mortgage REITs
Index data, the Mortgage REITs Index computations and/or the construction of the
Mortgage REITs Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the Mortgage REITs Index
provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders. Shareholders should understand that any gains from
the Mortgage REITs Index provider's errors will be kept by the Fund and its
shareholders and any losses or costs resulting from the Mortgage REITs Index
provider's errors will be borne by the Fund and its shareholders. When the
Mortgage REITs Index is rebalanced and the Fund in turn rebalances its portfolio
to attempt to increase the correlation between the Fund’s portfolio and the
Mortgage REITs Index, any transaction costs and market exposure arising from
such portfolio rebalancing will be borne directly by the Fund and its
shareholders. Apart from scheduled rebalances, the Mortgage REITs Index provider
or its agents may carry out additional ad hoc rebalances to the Mortgage REITs
Index. Therefore, errors and additional ad hoc rebalances carried out by the
Mortgage REITs Index provider or its agents to the Mortgage REITs Index may
increase the costs to and the tracking error risk of the Fund. In addition, the
Fund may not be able to invest in certain securities included in the Mortgage
REITs Index, or invest in them in the exact proportions they represent of
the
Mortgage REITs Index, due to certain listing standards of the Fund's listing
exchange (the "Exchange") or legal restrictions or limitations (such as
diversification requirements). The Fund may value certain of its investments
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the Mortgage
REITs Index is based on securities’ closing prices ( i.e.
,
the value of the Mortgage REITs Index is not based on fair value prices), the
Fund’s ability to track the Mortgage REITs Index may be adversely affected. When
markets are volatile, the ability to sell securities at fair value prices may be
adversely impacted and may result in additional trading costs and/or increase
the index tracking risk. The Fund may also need to rely on borrowings to meet
redemptions, which may lead to increased expenses. For tax efficiency purposes,
the Fund may sell certain securities, and such sale may cause the Fund to
realize a loss and deviate from the performance of the Mortgage REITs Index. In
light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Mortgage REITs Index. Changes to the
composition of the Mortgage REITs Index in connection with a rebalancing or
reconstitution of the Mortgage REITs Index may cause the Fund to experience
increased volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in equity securities traded on an exchange, such as market fluctuations
caused by such factors as economic and political developments, changes in
interest rates and perceived trends in security prices. However, because the
Fund is not “actively” managed, unless a specific security is removed from the
Mortgage REITs Index, the Fund generally would not sell a security because the
security’s issuer was in financial trouble. Additionally, unusual market
conditions may cause the Mortgage REITs Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Mortgage REITs Index to vary
from its normal or expected composition. Therefore, the Fund’s performance could
be lower than funds that may actively shift their portfolio assets to take
advantage of market opportunities or to lessen the impact of a market decline or
a decline in the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Issuer-Specific
Changes Risk.
The value of individual securities or particular types of securities can be more
volatile than the market as a whole and can perform differently from the value
of the market as a whole, which may have a greater impact if the Fund’s
portfolio is concentrated in a country, group of countries, region, market,
industry, group of industries, sector or asset class. The value of securities of
smaller issuers can be more volatile than that of larger issuers.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940, as amended (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
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VANECK
VECTORS®
MORTGAGE REIT INCOME ETF
(continued) |
may
have a greater impact on the Fund’s NAV and may make the Fund more volatile than
more diversified funds. The Fund may be particularly vulnerable to this risk
because the Mortgage REITs Index it seeks to replicate is comprised of
securities of a very limited number of companies.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Mortgage REITs Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. All returns
assume reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is available online at
www.vaneck.com.
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
22.07% |
1Q
'13 |
Worst
Quarter: |
-14.23% |
2Q
'13 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
August
2011 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck
Vectors®
Preferred Securities ex Financials ETF (the “Fund”) seeks to replicate as
closely as possible, before fees and expenses, the price and yield performance
of the ICE Exchange-Listed Fixed & Adjustable Rate Non-Financial Preferred
Securities Index (the “Preferred Securities Index”).
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and examples below.
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Shareholder
Fees (fees paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.40 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.40 |
% |
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(a)
Van
Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund,
except for the fee payment under the investment management agreement, acquired
fund fees and expenses, interest expense, offering costs, trading expenses,
taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has
agreed to pay the offering costs until at least September 1, 2022.
(b)“Other
Expenses” have been restated to reflect current fees.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell 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 |
$41 |
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3 |
$128 |
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5 |
$224 |
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10 |
$505 |
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was approximately 36% of the average value of its
portfolio. In addition, as a result of the change in the Fund’s benchmark index,
the Fund will experience additional portfolio turnover, which may cause the Fund
to incur additional transaction costs and may result in higher taxes when Fund
Shares are held in a taxable account.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund normally invests at least 80% of its total assets in securities that
comprise the Fund’s benchmark index. The Preferred Securities Index is comprised
of U.S. exchange-listed hybrid debt, preferred stock and convertible preferred
stock issued by non-financial corporations (collectively, "Preferred
Securities"). Hybrid debt securities are securities that have characteristics of
both
equity securities and debt securities. Hybrid securities usually pay interest or
dividends and, in the event of an issuer's bankruptcy or default, holders of
hybrid securities typically have claims that are senior to holders of the
issuer's equity securities but subordinate to holders of the issuer's debt
securities.
Preferred
Securities generally pay fixed or variable rate distributions to preferred
shareholders and such shareholders have preference over common shareholders in
the payment of distributions and in the event of a liquidation of the issuer’s
assets, but are junior to most other forms of debt, including senior and
subordinated debt. Preferred Securities may be subject to redemption or call
provisions and may include those issued by small- and medium-capitalization
companies. As of [April 30, 2021], the Preferred Securities Index included [134]
U.S.-listed securities of [72] issuers. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders. The Index is reconstituted and rebalanced
monthly.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Preferred Securities Index by investing in a
portfolio of securities that generally replicates the Preferred Securities
Index. Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Preferred Securities Index
and does not seek temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Preferred Securities Index.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as
amended (the “1940 Act”) and,
therefore, may invest a greater percentage of its assets in a particular issuer.
The Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Preferred Securities Index concentrates in an
industry or group of industries. [As of April 30, 2021, each of the
communications, real estate and utilities sectors represented a significant
portion of the Preferred Securities Index.]
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An
investment in the Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Preferred
Securities Risk.
Preferred Securities are essentially contractual obligations that entail rights
to distributions declared by the issuer’s board of directors but may permit the
issuer to defer or suspend distributions for a certain period of time. If the
Fund owns a Preferred Security whose issuer has deferred or suspended
distributions, the Fund may be required to account for the distribution that has
been deferred or suspended for tax purposes, even though it may not have
received this income in cash. Further, Preferred Securities may lose substantial
value if distributions are deferred, suspended or not declared. Preferred
Securities may also permit the issuer to convert Preferred Securities into the
issuer’s common stock. Preferred Securities that are convertible to common stock
may decline in value if the common stock into which Preferred Securities may be
converted declines in value. Preferred Securities are subject to greater credit
risk than traditional fixed income securities because the rights of holders of
Preferred Securities are subordinated to the rights of the bond and debt holders
of an issuer.
Convertible
Securities Risk.
Convertible securities are subject to risks associated with both fixed income
securities and common stocks. Depending on the convertible security’s conversion
value, the price of a convertible security will be influenced by interest rates
(i.e.,
its price generally will increase when interest rates fall and decrease when
interest rates rise) or will tend to fluctuate directly with the price of the
equity security into which the security can be converted.
Hybrid
Securities Risk. Hybrid
securities are typically subordinated to an issuer's senior debt instruments;
therefore, they are subject to greater credit risk than those senior debt
instruments. Many hybrid securities are subject to provisions permitting their
issuers to skip or defer distributions under specified circumstances. Hybrid
securities may have limited or no voting rights and may have substantially lower
overall liquidity than many other securities.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Credit
Risk.
Preferred Securities are subject to certain risks associated with fixed income
securities, including 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 distributions of dividends and/or default completely on securities.
Preferred 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 Preferred 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.
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VANECK
VECTORS®
PREFERRED SECURITIES EX FINANCIALS ETF
(continued) |
Interest
Rate Risk. Preferred
Securities are also subject to interest rate risk. Interest rate risk refers to
fluctuations in the value of a Preferred Security resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the prices of Preferred Securities may go down. When the general level of
interest rates goes down, the prices of Preferred Securities may go up. The
historically low interest rate environment increases the risk associated with
rising interest rates, including the potential for periods of volatility and
increased redemptions. 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.
Floating
Rate Risk. The
Fund invests in floating-rate securities. A floating-rate security is an
instrument in which the interest rate payable on the obligation fluctuates on a
periodic basis based upon changes in an interest rate benchmark. As a result,
the yield on such a security will generally decline in a falling interest rate
environment, causing the Fund to experience a reduction in the income it
receives from such securities.
Floating
Rate LIBOR Risk. Certain
of the floating-rate securities pay interest based on the London Inter-bank
Offered Rate ("LIBOR"). Due to the uncertainty regarding the future utilization
of LIBOR and the nature of any replacement rate, the potential effect of a
transition away from LIBOR on a fund or the financial instruments in which the
Fund invests cannot yet be determined.
Risk
of Subordinated Obligations.
Payments under some Preferred Securities may be structurally subordinated to all
existing and future liabilities and obligations of each of the respective
subsidiaries and associated companies of an issuer of Preferred Securities.
Claims of creditors of such subsidiaries and associated companies will have
priority as to the assets of such subsidiaries and associated companies over the
issuer and its creditors, including the Fund, who seek to enforce the terms of
Preferred Securities. Certain Preferred Securities do not contain any
restrictions on the ability of the subsidiaries of the issuers to incur
additional unsecured indebtedness.
Risk
of Investing in REITs.
Investing in REITs exposes investors to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which REITs
are organized and operated. REITs generally invest directly in real estate, in
mortgages or in some combination of the two. Operating REITs requires
specialized management skills and the Fund indirectly bears management expenses
along with the direct expenses of the Fund. Individual REITs may own a limited
number of properties and may concentrate in a particular region or property
type. REITs may also be subject to heavy cash flow dependency, default by
borrowers or tenants and self-liquidation. REITs also must satisfy specific
requirements of the Internal Revenue Code of 1986, as amended (the “Internal
Revenue Code”), in order to qualify for tax-free pass-through income. The
failure of a company to qualify as a REIT could have adverse consequences for
the Fund, including significantly reducing the return to the Fund on its
investment in such company. In addition, REITs, like exchange-traded funds
(“ETFs”), have expenses, including management and administration fees, that are
paid by their shareholders. As a result, shareholders will absorb their
proportionate share of duplicate levels of fees when the Fund invests in
REITs.
Risk
of Investing in Small- and Medium-Capitalization Companies. Small-
and medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of small- and medium-capitalization companies could
trail the returns on investments in securities of large-capitalization
companies.
Risk
of Investing in the Communications Sector.
The Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the communications sector. Companies
in the communications sector may be affected by industry competition,
substantial capital requirements, government regulations and obsolescence of
communications products and services due to technological
advancement.
Risk
of Investing in the Real Estate Sector.
Companies in the real estate sector include companies that invest in real
estate, such as REITs and real estate management and development companies. The
Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the real estate sector. Companies
that invest in real estate are subject to the risks of owning real estate
directly as well as to risks that relate specifically to the way that such
companies operate, including management risk (such companies are dependent upon
the management skills of a few key individuals and may have limited financial
resources). Adverse economic, business or political developments affecting real
estate could have a major effect on the values of the Fund’s investments.
Investing in real estate is subject to such risks as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent, possible lack of availability of
mortgage financing, market saturation, fluctuations in rental income and the
value of underlying properties and extended vacancies of properties. Certain
real estate securities have a relatively small market capitalization, which may
tend to increase the volatility of the market price of these securities. Real
estate securities have limited diversification and are, therefore, subject to
risks inherent in operating and financing a limited number of projects. Real
estate securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.
Risk
of Investing in the Utilities Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the utilities sector. Companies in the utilities
sector may be adversely affected by changes in exchange rates, domestic and
international competition, difficulty in raising adequate amounts of capital and
governmental limitation on rates charged to customers.
Market
Risk. The
prices of the securities in the Fund are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An
investment in the Fund may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Call
Risk. The
Fund may invest in callable Preferred Securities. If interest rates fall, it is
possible that issuers of callable Preferred Securities will “call” (or prepay)
their securities before their maturity date. If a call were exercised by the
issuer during or following a period of declining interest rates, the Fund is
likely to have to replace such called Preferred Security with a lower yielding
security or securities with greater risks or other less favorable features. If
that were to happen, it would decrease the Fund’s net investment
income.
High
Portfolio Turnover Risk.
The Fund will experience increased portfolio turnover in connection with the
change in the Fund’s investment objective and benchmark index and the Fund’s
repositioning, which will result in increased transaction costs to the Fund,
including brokerage commissions, dealer mark-ups and other transaction costs on
the sale of the securities and on reinvestment in other securities.
Index
Tracking Risk. The
Fund’s return may not match the return of the Preferred Securities Index for a
number of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Preferred Securities Index and incurs
costs associated with buying and selling securities, especially when rebalancing
the Fund’s securities holdings to reflect changes in the composition of the
Preferred Securities Index, or (to the extent the Fund effects creations and
redemptions for cash) raising cash to meet redemptions or deploying cash in
connection with newly created Creation Units, which are not factored into the
return of the Preferred Securities Index. Transaction costs, including brokerage
costs, will decrease the Fund’s NAV to the extent not offset by the transaction
fee payable by an Authorized Participant (“AP”). Market disruptions and
regulatory restrictions could have an adverse effect on the Fund’s ability to
adjust its exposure to the required levels in order to track the Preferred
Securities Index. Errors in the Preferred Securities Index data, the Preferred
Securities Index computations and/or the construction of the Preferred
Securities Index in accordance with its methodology may occur from time to time
and may not be identified and corrected by the Preferred Securities Index
provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders. Shareholders should understand that any gains from
the Preferred Securities Index provider's errors will be kept by the Fund and
its shareholders and any losses or costs resulting from the Preferred Securities
Index provider's errors will be borne by the Fund and its shareholders. When the
Preferred Securities Index is rebalanced and the Fund in turn rebalances its
portfolio to attempt to increase the correlation between the Fund’s portfolio
and the Preferred Securities Index, any transaction costs and market exposure
arising from such portfolio rebalancing will be borne directly by the Fund and
its shareholders. Apart from scheduled rebalances, the Preferred Securities
Index provider or its agents may carry out additional ad hoc rebalances to the
Preferred Securities Index. Therefore, errors and additional ad hoc rebalances
carried out by the Preferred Securities Index provider or its agents to the
Preferred Securities Index may increase the costs to and the tracking error risk
of the Fund. The Fund may not be fully invested at times, either as a result of
cash flows into the Fund (if the Fund effects creations and redemptions for
cash) or reserves of cash held by the Fund to pay expenses or meet redemptions.
In addition, the Fund may not be able to invest in certain securities included
in the Preferred Securities Index, or invest in them in the exact proportions in
which they are represented in the Preferred Securities Index. The Fund’s
performance may also deviate from the return of the Preferred Securities Index
due to legal restrictions or limitations imposed by the governments of certain
countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). The Fund may value certain of its investments,
underlying securities and/or other assets based on fair value prices. To the
extent the Fund calculates its NAV based on fair value prices and the value of
the Preferred Securities Index is based on securities’ closing prices (
i.e.
,
the value of the Preferred Securities Index is not based on fair value prices),
the Fund’s ability to track the Preferred Securities Index may be adversely
affected. When markets are volatile, the ability to sell securities at fair
value prices may be adversely impacted and may result in additional trading
costs and/or increase the index tracking risk. The Fund may also need to rely on
borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the
Preferred Securities Index. In light of the factors discussed above, the Fund’s
return may deviate significantly from the return of the Preferred Securities
Index. Changes to the composition of the
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VANECK
VECTORS®
PREFERRED SECURITIES EX FINANCIALS ETF
(continued) |
Preferred
Securities Index in connection with a rebalancing or reconstitution of the
Preferred Securities Index may cause the Fund to experience increased
volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk. An
investment in the Fund involves risks similar to those of investing in any fund
invested in equity securities traded on an exchange, such as market fluctuations
caused by such factors as economic and political developments, changes in
interest rates and perceived trends in security prices. However, because the
Fund is not “actively” managed, unless a specific security is removed from the
Preferred Securities Index, the Fund generally would not sell a security because
the security’s issuer was in financial trouble. Additionally, unusual market
conditions may cause the Preferred Securities Index provider to postpone a
scheduled rebalance or reconstitution, which could cause the Preferred
Securities Index to vary from its normal or expected composition. Therefore, the
Fund’s performance could be lower than funds that may actively shift their
portfolio assets to take advantage of market opportunities or to lessen the
impact of a market decline or a decline in the value of one or more
issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the 1940 Act.
Therefore, the Fund may invest a relatively high percentage of its assets in a
smaller number of issuers or may invest a larger proportion of its assets in a
single issuer. Moreover, the gains and losses on a single investment may have a
greater impact on the Fund’s NAV and may make the Fund more volatile than more
diversified funds.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Preferred Securities Index concentrates
in a particular sector or sectors or industry or group of industries. To the
extent that the Fund is concentrated in a particular sector or sectors or
industry or group of industries, the Fund will be subject to the risk that
economic, political or other conditions that have a negative effect on those
sectors and/or industries may negatively impact the Fund to a greater extent
than if the Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart and table provide an indication of the
risks of investing in the Fund by comparing the Fund’s performance from year to
year and by showing how the Fund’s average annual returns for the one year, five
year, ten year and/or since inception periods, as applicable, compared with the
Fund’s benchmark index and a broad measure of market performance. Prior to June
1, 2021, the Fund sought to replicate as closely as possible, before fees
and
expenses, the price and yield performance of the Wells Fargo® Hybrid and
Preferred Securities ex Financials Index (the “Prior Index”). Therefore,
performance information prior to June 1, 2021 reflects the performance of the
Fund tracking the Prior Index. All returns assume reinvestment of dividends and
distributions. All returns assume reinvestment of dividends and distributions.
The Fund’s past performance (before and after taxes) is not necessarily
indicative of how the Fund will perform in the future. Updated performance
information is available online at www.vaneck.com.
Annual
Total Returns (%)—Calendar Years
[TO
BE UPDATED]
The
year-to-date total return as of June 30, 2021 was [ ]%.
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Best
Quarter: |
11.43% |
1Q
'19 |
Worst
Quarter: |
-7.13% |
4Q
'18 |
Average
Annual Total Returns for the Periods Ended December 31, 2020
The
after-tax returns presented in the table below are calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Your actual after-tax returns will depend on
your specific tax situation and may differ from those shown below. After-tax
returns are not relevant to investors who hold Shares of the Fund through
tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
[TO
BE UPDATED]
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Past
One Year |
Past
Five Years |
Since
Inception (7/16/2012) |
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VanEck
Vectors Preferred Securities ex Financials ETF (return before
taxes) |
20.16% |
5.60% |
5.96% |
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VanEck
Vectors Preferred Securities ex Financials ETF (return after taxes on
distributions) |
17.85% |
3.28% |
3.65% |
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VanEck
Vectors Preferred Securities ex Financials ETF (return after taxes on
distributions and sale of Fund Shares) |
12.14% |
3.32% |
3.62% |
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ICE
Exchange-Listed Fixed & Adjustable Rate Non-Financial Preferred
Securities Index (reflects no deduction for fees, expenses or
taxes)* |
20.69% |
5.59% |
6.08% |
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S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
31.49% |
11.70% |
14.73% |
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*Prior
to June 1, 2021, the Fund sought to replicate as closely as possible, before
fees and expenses, the price and yield performance of the Prior Index.
Therefore, performance information prior to June 1, 2021 reflects the
performance of the Fund seeking to replicate the Prior Index. Prior to June 1,
2021, index data reflects that of the Prior Index. From June 1, 2021, the index
data will reflect that of the ICE Exchange-Listed Fixed & Adjustable Rate
Non-Financial Preferred Securities Index.
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VANECK
VECTORS®
PREFERRED SECURITIES EX FINANCIALS ETF
(continued) |
See
“License Agreements and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
July
2012 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information, and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information about Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of a Fund may only be purchased and sold in secondary market transactions
through a broker or dealer at a market price. Shares of the Funds are listed on
the Exchange, and because Shares trade at market prices rather than NAV, Shares
of the Funds may trade at a price greater than NAV ( i.e.
,
a "premium") or less than NAV ( i.e.
,
a "discount").
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of a Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid/ask spread”).
Recent
information, including information about each Fund’s NAV, market price, premiums
and discounts, and bid/ask spreads, is included on the Fund’s website at
www.vaneck.com.
TAX
INFORMATION
Each
Fund’s distributions are taxable and will generally be taxed as ordinary income
or capital gains.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
PRINCIPAL
INVESTMENT STRATEGIES
Each
Fund, except for VanEck Vectors BDC Income ETF, VanEck Vectors Fallen Angel High
Yield Bond ETF, VanEck Vectors Mortgage REIT Income ETF and
VanEck Vectors Preferred Securities ex Financials ETF, uses a sampling approach
in seeking to achieve its investment objective. Sampling means that the Adviser
uses quantitative analysis to select a representative sample of securities that
the Adviser believes collectively have an investment profile similar to each
Fund’s Index. The Adviser seeks to select securities that will have, in the
aggregate, investment characteristics (based on factors such as market
capitalization and industry weightings), fundamental characteristics (such as
return variability, duration, maturity or credit ratings and yield) and
liquidity measures similar to those of a Fund’s Index. The quantity of holdings
in a Fund will be based on a number of factors, including asset size of such
Fund. The Adviser generally expects a Fund to hold less than the total number of
securities in its Index, but reserves the right to hold as many securities as it
believes necessary to achieve the Fund’s investment objective. In addition, from
time to time, securities are added to or removed from the applicable Index. Each
Fund may sell securities that are represented in its Index, or purchase
securities that are not yet represented in its Index, in anticipation of their
removal from or addition to such Index. Further, the Adviser may choose to
underweight or overweight securities, purchase or sell securities not in an
Index, or utilize various combinations of other available investment techniques,
in seeking to track a Fund’s Index.
The
Adviser anticipates that, generally, VanEck Vectors BDC Income ETF, VanEck
Vectors Fallen Angel High Yield Bond ETF, VanEck Vectors
Mortgage REIT Income ETF and VanEck Vectors Preferred Securities ex
Financials ETF will hold or gain exposure to all of the securities that comprise
each Fund’s respective Index in proportion to their weightings in such Index.
However, under various circumstances, it may not be possible or practicable to
purchase all of those securities in those weightings. In these circumstances,
VanEck Vectors BDC Income ETF, VanEck Vectors Fallen Angel High Yield Bond ETF,
VanEck Vectors Mortgage REIT Income ETF and VanEck Vectors
Preferred Securities ex Financials ETF may purchase a sample of securities in
its Index. There also may be instances in which the Adviser may choose to
underweight or overweight a security in a Fund’s Index, purchase securities not
in the Fund’s Index that the Adviser believes are appropriate to substitute for
certain securities in such Index or utilize various combinations of other
available investment techniques in seeking to replicate as closely as possible,
before fees and expenses, the price and yield performance of the Fund’s Index.
VanEck Vectors BDC Income ETF, VanEck Vectors Fallen Angel High Yield Bond ETF,
VanEck Vectors Mortgage REIT Income ETF and VanEck Vectors
Preferred Securities ex Financials ETF may sell securities that are represented
in their Index in anticipation of their removal from the their respective Index
or purchase securities not represented in their Index in anticipation of their
addition to the their respective Index. VanEck Vectors BDC Income ETF, VanEck
Vectors Fallen Angel High Yield Bond ETF, VanEck Vectors
Mortgage REIT Income ETF and VanEck Vectors Preferred Securities ex
Financials ETF may also, in order to comply with the tax diversification
requirements of the Internal Revenue Code, temporarily invest in securities not
included in its Index that are expected to be highly correlated with the
securities included in its Index.
FUNDAMENTAL
AND NON-FUNDAMENTAL POLICIES
Each
Fund’s investment objective and each of its other investment policies are
non-fundamental policies that may be changed by the Board of Trustees without
shareholder approval, except as noted in this Prospectus or the Statement of
Additional Information (“SAI”) under the section entitled “Investment Policies
and Restrictions—Investment Restrictions.”
RISKS
OF INVESTING IN THE FUNDS
The
following section provides additional information regarding the principal risks
identified under “Principal Risks of Investing in the Fund” in each Fund’s
“Summary Information” section followed by additional risk information. The risks
listed below are applicable to each Fund unless otherwise noted.
Investors
in a Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
a Fund involves a substantial degree of risk. An investment in a Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in a Fund, each of which
could significantly and adversely affect the value of an investment in a
Fund.
Credit
Risk.
(All Funds except VanEck Vectors BDC Income ETF and VanEck
Vectors Mortgage REIT Income ETF.) Debt securities, such as bonds, and
Preferred Securities are subject to credit risk. Credit risk refers to the
possibility that the issuer or guarantor of a security will be unable and/or
unwilling to make timely interest payments and/or repay the principal on its
debt or to otherwise honor its obligations and/or default completely on
securities. Debt securities and Preferred 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 or a Preferred Security
may be downgraded after purchase or the perception of an issuer’s credit
worthiness may decline, which may adversely affect the value of the security.
Lower credit quality may also affect liquidity and make it difficult for a Fund
to sell the security.
Interest
Rate Risk.
(All Funds except VanEck Vectors BDC Income ETF and VanEck
Vectors Mortgage REIT Income ETF.) Debt securities, such as bonds, and
Preferred Securities 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 and certain Preferred Securities go down.
When the general level of interest rates goes down, the prices of most debt
securities go up. Many factors can cause interest rates to rise, including
central bank monetary policy,
rising
inflation rates and general economic conditions. The prevailing historically low
interest rate environment increases the 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, such as bonds, with shorter durations. To the extent the Fund
invests a substantial portion of its assets in debt securities with longer-term
maturities, rising interest rates may cause the value of the Fund’s investments
to decline significantly.
In
addition, in response to the COVID-19 pandemic, as with other serious economic
disruptions, governmental authorities and regulators are enacting significant
fiscal and monetary policy changes, including providing direct capital infusions
into companies, creating new monetary programs and lowering interest rates.
These actions present heightened risks to debt instruments, and such risks could
be even further heightened if these actions are unexpectedly or suddenly
reversed or are ineffective in achieving their desired outcomes.
High
Yield Securities Risk.
(VanEck Vectors Emerging Markets Aggregate Bond ETF, VanEck Vectors Emerging
Markets High Yield Bond ETF, VanEck Vectors Fallen Angel High Yield Bond ETF,
VanEck Vectors Green Bond ETF and VanEck Vectors International High Yield Bond
ETF only.) Securities rated below investment grade are commonly referred to as
high yield securities or “junk bonds.” High yield securities are often issued by
issuers that are restructuring, are smaller or less creditworthy than other
issuers, or are more highly indebted than other issuers. High yield securities
are subject to greater risk of loss of income and principal than higher rated
securities and are considered speculative. The prices of high yield securities
are likely to be more sensitive to adverse economic changes or individual issuer
developments than higher rated securities. During an economic downturn or
substantial period of rising interest rates, high yield security issuers may
experience financial stress that would adversely affect their ability to service
their principal and interest payment obligations, to meet their projected
business goals or to obtain additional financing. In the event of a default, a
Fund may incur additional expenses to seek recovery. The secondary market for
securities that are high yield securities may be less liquid than the markets
for higher quality securities, and high yield securities issued by non-corporate
issuers may be less liquid than high yield securities issued by corporate
issuers, which, in either instance, may have an adverse effect on the market
prices of and a Fund’s ability to arrive at a fair value for certain securities.
The illiquidity of the market also could make it difficult for a Fund to sell
certain securities in connection with a rebalancing of its Index. In addition,
periods of economic uncertainty and change may result in an increased volatility
of market prices of high yield securities and a corresponding volatility in the
Fund’s NAV.
Hybrid
Securities Risk.
(VanEck Vectors Preferred Securities ex Financials ETF only.) Hybrid securities
are typically subordinated to an issuer's senior debt instruments; therefore,
they are subject to greater credit risk than those senior debt instruments. Many
hybrid securities are subject to provisions permitting their issuers to skip or
defer distributions under specified circumstances. Hybrid securities may have
limited or no voting rights and may have substantially lower overall liquidity
than many other securities.
Restricted
Securities Risk.
(VanEck Vectors Emerging Markets High Yield Bond ETF, VanEck Vectors Fallen
Angel High Yield Bond ETF, VanEck Vectors Green Bond ETF, VanEck Vectors
International High Yield Bond ETF and VanEck Vectors Investment Grade Floating
Rate ETF only.) Regulation S securities and Rule 144A securities are restricted
securities. Restricted securities are securities that are not registered under
the Securities Act. They may be less liquid and more difficult to value than
other investments because such securities may not be readily marketable. A Fund
may not be able to purchase or sell a restricted security promptly or at a
reasonable time or price. Although there may be a substantial institutional
market for these securities, it is not possible to predict exactly how the
market for such securities will develop or whether it will continue to exist. A
restricted security that was liquid at the time of purchase may subsequently
become illiquid and its value may decline as a result. Restricted securities
that are deemed illiquid will count towards a Fund’s limitation on illiquid
securities. In addition, transaction costs may be higher for restricted
securities than for more liquid securities. A Fund may have to bear the expense
of registering restricted securities for resale and the risk of substantial
delays in effecting the registration.
Floating
Rate Risk. (VanEck
Vectors Green Bond ETF, VanEck Vectors Investment Grade Floating Rate ETF and
VanEck Vectors Preferred Securities Ex Financials ETF only.) The Fund invests in
floating-rate securities. A floating-rate security is an instrument in which the
interest rate payable on the obligation fluctuates on a periodic basis based
upon changes in an interest rate benchmark. As a result, the yield on such a
security will generally decline in a falling interest rate environment, causing
the Fund to experience a reduction in the income it receives from such
securities.
Floating
Rate LIBOR Risk. (VanEck
Vectors Green Bond ETF, VanEck Vectors Investment Grade Floating Rate ETF and
VanEck Vectors Preferred Securities Ex Financials ETF only.) Certain of the
floating-rate securities pay interest based on the London Inter-bank Offered
Rate ("LIBOR"). Due to the uncertainty regarding the future utilization of LIBOR
and the nature of any replacement rate, the potential effect of a transition
away from LIBOR on a fund or the financial instruments in which the Fund invests
cannot yet be determined.
Risk
of Investing in Mortgage REITs.
(VanEck Vectors Mortgage REIT Income ETF only.) Mortgage
real estate investment trusts (“REITs”) are exposed to the risks specific to the
real estate market as well as the risks that relate specifically to the way in
which mortgage REITs are organized and operated. Mortgage REITs receive
principal and interest payments from the owners of the mortgaged properties.
Accordingly, mortgage REITs are exposed to the credit risk of the borrowers.
Credit risk refers to the possibility that the borrower will be unable and/or
unwilling to make timely interest payments and/or repay the principal on the
loan
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to
the mortgage REIT when they are due. Mortgage REITs are also subject to risks of
delinquency and foreclosure and risks of loss. In the event of any default of a
mortgage loan, the mortgage REIT bears the risk of loss of principal to the
extent of any deficiency between the value of the collateral and the principal
and accrued interest of the loan.
A
mortgage REIT may invest in mortgage-backed securities issued or guaranteed by
Fannie Mae, Freddie Mac or the Federal Home Loan Banks, which are not backed by
the full faith and credit of the United States. Because these securities are not
backed by the full faith and credit of the United States, there is a risk that
the U.S. Government will not provide financial support to these agencies if it
is not obligated to do so. The maximum potential liability of such entities may
greatly exceed their current resources, and it is possible that they will not be
able to meet their obligations in the future. Concerns about Freddie Mac’s and
Fannie Mae’s solvency during the volatility and disruption that impacted the
capital and credit markets during late 2008 and into 2009 led to Freddie Mac and
Fannie Mae being placed under the conservatorship of the Federal Housing Finance
Agency (“FHFA”) and receiving a capital infusion from the U.S. Treasury. The
value of the mortgage-backed securities issued or guaranteed by Freddie Mac or
Fannie Mae held by a mortgage REIT may be affected by future actions taken by
the FHFA, the U.S. Treasury or the U.S. Government with respect to these
entities and market perceptions. In addition, the financials sector is
undergoing numerous changes, including continuing consolidations, development of
new products and structures and changes to its regulatory framework.
Furthermore, increased government involvement in the financials sector,
including measures such as mortgage loan modification and refinance programs,
could affect the value of a mortgage REIT’s investments. The Dodd Frank Wall
Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) imposes
significant regulatory restrictions on the origination of residential mortgage
loans and will impact the formation of new issuances of mortgage-backed
securities. While the full impact of the Dodd-Frank Act and the role of the
Consumer Financial Protection Bureau cannot be assessed until all implementing
regulations are released, the Dodd-Frank Act’s extensive requirements may have a
significant effect on the financial markets, and may affect the availability or
terms of financing or terms of mortgage-backed securities, both of which may
have an adverse effect on the value of a mortgage REIT’s investments. Recent
developments in the credit markets may cause companies operating in the
financials sector to incur large losses, experience declines in the value of
their assets and even cease operations.
To
the extent that a mortgage REIT invests in mortgage-backed securities offered by
private issuers, such as commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers and other secondary
market issuers, the mortgage REIT may be subject to additional risks. Timely
payment of interest and principal of non-governmental issuers may be supported
by various forms of private insurance or guarantees, including individual loan,
title, pool and hazard insurance purchased by the issuer. However, there can be
no assurance that the private insurers can or will meet their obligations under
such policies. Unexpected high rates of default on the mortgages held by a
mortgage pool may adversely affect the value of a mortgage-backed security and
could result in losses to a mortgage REIT. The risk of such defaults is
generally higher in the case of mortgage pools that include subprime mortgages.
To the extent that a mortgage REIT’s portfolio is exposed to lower-rated,
unsecured or subordinated instruments, the risk of loss may increase, which may
have a negative impact on the Fund. Mortgage REITs also are subject to the risk
that the value of mortgaged properties may be less than the amounts owed on the
properties. If a mortgage REIT is required to foreclose on a borrower, the
amount recovered in connection with the foreclosure may be less than the amount
owed to the mortgage REIT.
Mortgage
REITs are subject to significant interest rate risk. Interest rate risk refers
to fluctuations in the value of a mortgage REIT’s investment in fixed rate
obligations resulting from changes in the general level of interest rates. When
the general level of interest rates goes up, the value of a mortgage REIT’s
investment in fixed rate obligations goes down. In addition, rising interest
rates generally reduce the demand for consumer credit, including mortgage loans,
due to the higher cost of borrowing. This could cause the value of a mortgage
REIT’s investments to decline. A mortgage REIT’s investment in adjustable rate
obligations may react differently to interest rate changes than an investment in
fixed rate obligations. As interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT’s investment in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Mortgage
REITs typically use leverage and many are highly leveraged, which exposes them
to leverage risk and the risks generally associated with debt financing.
Leverage risk refers to the risk that leverage created from borrowing may impair
a mortgage REIT’s liquidity, cause it to liquidate positions at an unfavorable
time, reduce dividends paid by the mortgage REIT and increase the volatility of
the values of securities issued by the mortgage REIT. The use of leverage may
not be advantageous to a mortgage REIT. The success of using leverage is
dependent on whether the return earned on the investments made using the
proceeds of leverage exceed the cost of using leverage. To the extent that a
mortgage REIT incurs significant leverage, it may incur substantial losses if
its borrowing costs increase. Borrowing costs may increase for any of the
following reasons: short-term interest rates increase; the market value of a
mortgage REIT’s assets decreases; interest rate volatility increases; or the
availability of financing in the market decreases. During periods of adverse
market conditions, downturns in the economy or deterioration in the conditions
of the REIT’s mortgage-related assets the use of leverage may cause a mortgage
REIT to lose more money than would have been the case if leverage was not used.
To the extent that a mortgage REIT uses significant leverage, it may incur
substantial losses if its borrowing costs increase.
Mortgage
REITs are subject to prepayment risk, which is the risk that borrowers may
prepay their mortgage loans at faster than expected rates. Prepayment rates
generally increase when interest rates fall and decrease when interest rates
rise. These faster than expected payments may adversely affect a mortgage REIT’s
profitability. Prepayments can also occur when borrowers default on their
mortgages and the mortgages are prepaid from the proceeds of a foreclosure sale
of the property, or when borrowers sell the property and use the sale proceeds
to prepay the mortgage as part of a physical relocation. Prepayment rates may be
affected by conditions in the housing and financial markets, increasing defaults
on residential mortgage loans, general economic conditions and the relative
interest rates on loans.
REITs
are subject to special U.S. federal tax requirements. Unlike corporations, REITs
do not have to pay income taxes if they meet certain requirements set forth in
the Internal Revenue Code. To qualify, a REIT must distribute at least 90% of
its taxable income to its shareholders and receive at least 75% of that income
from rents, mortgages and sales of property. A REIT’s failure to comply with
these requirements may subject it to U.S. federal income taxation. This may
adversely affect the REIT’s performance as well as the Fund’s
performance.
Mortgage
REITs may be dependent upon the management skills of a few individuals and may
have limited financial resources. The managers of mortgage REITs may employ
hedging strategies designed to mitigate certain risks, including interest rate
risk. Poorly designed strategies or improperly executed transactions could
significantly increase the mortgage REIT’s risk and lead to material losses.
Mortgage REITs are generally not diversified and may be subject to heavy cash
flow dependency, default by borrowers and self-liquidation. In addition,
transactions between mortgage REITs and their affiliates may be subject to
conflicts of interest which may adversely affect a mortgage REIT’s
shareholders.
Risk
of Investing in REITs.
(VanEck Vectors Mortgage REIT Income ETF and VanEck Vectors
Preferred Securities ex Financials ETF only.) Investing in REITs exposes
investors to the risks of owning real estate directly, as well as to risks that
relate specifically to the way in which REITs are organized and operated. REITs
generally invest directly in real estate, in mortgages or in some combination of
the two. Operating REITs requires specialized management skills and the Fund
indirectly bears management expenses along with the direct expenses of the Fund.
Individual REITs may own a limited number of properties and may concentrate in a
particular region or property type. REITs may also be subject to heavy cash flow
dependency, default by borrowers or tenants and self-liquidation. REITs
typically use leverage to acquire assets, which increases the risk of investing
in REITs and can cause the values of the Fund’s investments in REITs to be more
volatile and to decline if interest rates increase. REITs also must satisfy
specific requirements of the Internal Revenue Code in order to qualify for
tax-free pass-through income. The failure of a company to qualify as a REIT
could have adverse consequences for the Fund, including significantly reducing
the return to the Fund on its investment in such company. In addition, REITs,
like mutual funds, have expenses, including management and administration fees,
that are paid by their shareholders. As a result, shareholders will absorb their
proportionate share of duplicate levels of fees when the Fund invests in
REITs.
Tax
reform legislation commonly known as the Tax Cuts and Jobs Act (the “Act’) was
enacted on December 22, 2017. Section 199A, enacted as part of the Act of 2017,
allows a deduction of up to 20% on taxable ordinary dividends from REITs and
certain other types of business income for non-corporate taxpayers. The IRS has
recently issued final regulations permitting a regulated investment company to
pass through to its shareholders qualified REIT dividends eligible for the 20%
deduction. VanEck Vectors Mortgage REIT Income ETF and
VanEck Vectors Preferred Securities ex Financials ETF expect that some portion
of their distributions may be taxable ordinary dividends from REITs.
Risk
of Investing in the Real Estate Sector.
(VanEck Vectors Preferred Securities Ex Financials ETF only.) Companies in the
real estate sector include companies that invest in real estate, such as REITs
and real estate management and development companies. The Fund will be sensitive
to changes in, and its performance will depend to a greater extent on, the
overall condition of the real estate sector. Companies that invest in real
estate are subject to the risks of owning real estate directly as well as to
risks that relate specifically to the way that such companies operate, including
management risk (such companies are dependent upon the management skills of a
few key individuals and may have limited financial resources). Adverse economic,
business or political developments affecting real estate could have a major
effect on the values of a Fund’s investments. Investing in real estate is
subject to such risks as decreases in real estate values, overbuilding,
increased competition and other risks related to local or general economic
conditions, increases in operating costs and property taxes, changes in zoning
laws, casualty or condemnation losses, possible environmental liabilities,
regulatory limitations on rent, possible lack of availability of mortgage
financing, market saturation, fluctuations in rental income and the value of
underlying properties and extended vacancies of properties. Certain real estate
securities have a relatively small market capitalization, which may tend to
increase the volatility of the market price of these securities. Real estate
securities have limited diversification and are, therefore, subject to risks
inherent in operating and financing a limited number of projects. Real estate
securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.
Risk
of Subordinated Obligations.
(VanEck
Vectors Preferred Securities ex Financials ETF only.) Payments under some bonds
may be structurally subordinated to all existing and future liabilities and
obligations of each of the respective subsidiaries and associated companies of
an issuer of the bond. Claims of creditors of such subsidiaries and associated
companies will have priority as to the assets of such subsidiaries and
associated companies over the issuer and its creditors, including the Fund, who
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seek
to enforce the terms of the bond. Certain bonds do not contain any restrictions
on the ability of the subsidiaries of the issuers to incur additional unsecured
indebtedness.
Risk
of Investing in “Green” Bonds.
(VanEck Vectors Green Bond ETF only.) Investments in “green” bonds includes
bonds whose proceeds are used principally for climate mitigation, climate
adaptation or other environmentally beneficial projects, such as, but not
limited to, the development of clean, sustainable or renewal energy sources,
commercial and industrial energy efficiency, or conservation of natural
resources. Investing in “green” bonds carries the risk that, under certain
market conditions, the Fund may underperform as compared to funds that invest in
a broader range of investments. In addition, some “green” investments may be
dependent on government tax incentives and subsidies and on political support
for certain environmental technologies and companies. Investing primarily in
“green” investments may affect the Fund’s exposure to certain sectors or types
of investments and will impact the Fund’s relative investment performance
depending on whether such sectors or investments are in or out of favor in the
market. The “green” sector may also have challenges such as a limited number of
issuers and limited liquidity in the market. Additionally, there may also be a
limited supply of bonds that merit “green” status, which may adversely affect
the Fund.
Supranational
Bond Risk.
(VanEck Vectors Green Bond ETF only.) To the extent that the Fund invests in
supranational bonds, the Fund will be sensitive to changes in, and its
performance may depend to a greater extent on, the overall condition of the
supranational entities that issue such bonds. Certain securities in which the
Fund may invest are obligations issued or backed by supranational entities, such
as the European Investment Bank. Obligations of supranational organizations are
subject to the risk that the governments on whose support the entity depends for
its financial backing or repayment may be unable or unwilling to provide that
support. If an issuer of supranational bonds defaults on payments of principal
and/or interest, the Fund may have limited recourse against the issuer. A
supranational entity’s willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its reserves, the relative size of the debt
service burden to the entity as a whole and the political constraints to which a
supranational entity may be subject. During periods of economic uncertainty, the
market prices of supranational bonds, and the Fund’s NAV, may be more volatile
than prices of corporate bonds, which may result in losses. Obligations of a
supranational organization that are denominated in foreign currencies will also
be subject to the risks associated with investment in foreign
currencies.
Government-Related
Bond Risk.
(VanEck Vectors Green Bond ETF only.) Investments in government-related bonds
involve special risks not present in corporate bonds. The governmental authority
or government-related entity that controls the repayment of the bond may be
unable or unwilling to make interest payments and/or repay the principal on its
debt or to otherwise honor its obligations. If an issuer of government-related
bonds defaults on payments of principal and/or interest, the Fund may have
limited recourse against the issuer. A government-related debtor’s willingness
or ability to repay principal and pay interest in a timely manner may be
affected by, among other factors, its cash flow situation, the extent of its
foreign currency reserves, the availability of sufficient foreign exchange on
the date a payment is due, the relative size of the debt service burden to the
economy as a whole, the government-related debtor’s policy toward international
lenders, and the political constraints to which a government-related debtor may
be subject. During periods of economic uncertainty, the market prices of
government-related bonds, and the Fund’s NAV, may be more volatile than prices
of corporate bonds, which may result in losses. In the past, certain governments
of emerging market countries have declared themselves unable to meet their
financial obligations on a timely basis, which has resulted in losses for
holders of government-related bonds.
Sovereign
Bond Risk.
(VanEck Vectors Emerging Markets Aggregate Bond ETF only.) Investment in
sovereign bonds involves special risks not present in corporate bonds. The
governmental authority that controls the repayment of the bond may be unable or
unwilling to make interest payments and/or repay the principal on its debt or to
otherwise honor its obligations. If an issuer of sovereign bonds defaults on
payments of principal and/or interest, the Fund may have limited recourse
against the issuer. During periods of economic uncertainty, the market prices of
sovereign bonds, and the Fund’s NAV, may be more volatile than prices of
corporate bonds, which may result in losses. In the past, certain governments of
emerging market countries have declared themselves unable to meet their
financial obligations on a timely basis, which has resulted in losses for
holders of sovereign bonds.
Government-Sponsored
Enterprise/Program Risk.
(VanEck Vectors Green Bond ETF only.) The Fund may invest in securities issued
or backed by certain government-sponsored enterprises whose obligations are not
direct obligations of the U.S. Treasury. Although U.S. government-sponsored
enterprises such as Federal Home Loan Banks, Federal Farm Credit Banks, Federal
Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage
Association (Fannie Mae) may be chartered or sponsored by Congress, they are not
funded by Congressional appropriations, and their securities are not issued by
the U.S. Treasury, and are not supported by the full faith and credit of the
U.S. government. Investments in government-sponsored enterprises involve
increased credit risks because there is no guarantee the U.S. government will
guarantee or support the agencies if they are unable to meet their
obligations.
Securitized/Asset-Backed
Securities Risk.
(VanEck Vectors Green Bond ETF only.) Investments in asset-backed securities,
including collateralized mortgage obligations, are subject to the risk of
significant credit downgrades, dramatic changes in liquidity, and defaults to a
greater extent than many other types of fixed-income investments. During periods
of falling interest rates, asset-backed securities may be called or prepaid,
which may result in the Fund having to reinvest proceeds in other investments at
a lower interest rate. During periods of rising interest rates, the average life
of asset-backed securities may extend, which may lock
in
a below-market interest rate, increase the security’s duration and interest rate
sensitivity, and reduce the value of the security. The Fund may invest in
asset-backed securities issued or backed by federal agencies or government
sponsored enterprises or that are part of a government-sponsored program, which
may subject the Fund to the risks noted above. The values of assets or
collateral underlying asset-backed securities may decline and, therefore, may
not be adequate to cover underlying obligations. Enforcing rights against the
underlying assets or collateral may be difficult, and the underlying assets or
collateral may be insufficient if the issuer defaults.
State
Securities Risk. (VanEck
Vectors Green Bond ETF only.) The Fund may invest in taxable securities issued
or backed by state governments. Consequently, the Fund may be affected by
political, economic, regulatory and other developments within such state and by
the financial condition of that state’s political subdivisions, agencies,
instrumentalities and public authorities.
Sampling
Risk.
(All Funds except VanEck Vectors BDC Income ETF, VanEck Vectors Fallen Angel
High Yield Bond ETF, VanEck Vectors Mortgage REIT Income
ETF and VanEck Vectors Preferred Securities ex Financials ETF.) A Fund’s use
of a representative sampling approach will result in its holding a smaller
number of securities than are in its respective Index. As a result, an adverse
development respecting an issuer of securities held by a Fund could result in a
greater decline in NAV than would be the case if the Fund held all of the
securities in its Index. Conversely, a positive development relating to an
issuer of securities in an Index that is not held by the Fund could cause the
Fund to underperform its respective Index. To the extent the assets in a Fund
are smaller, these risks will be greater.
Call
Risk. (VanEck
Vectors Emerging Markets Aggregate Bond ETF, VanEck Vectors Emerging Markets
High Yield Bond ETF, VanEck Vectors Fallen Angel High Yield Bond ETF, VanEck
Vectors Green Bond ETF, VanEck Vectors International High Yield Bond ETF and
VanEck Vectors Preferred Securities ex Financials ETF only.) A Fund may invest
in callable securities. If interest rates fall, it is possible that issuers of
callable securities will “call” (or prepay) their securities before their
maturity date. If a call were exercised by the issuer during or following a
period of declining interest rates, a Fund is likely to have to replace such
called security with a lower yielding security or securities with greater risks
or other less favorable features. If that were to happen, it would decrease a
Fund’s net investment income. A Fund also may fail to recover additional amounts
(i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Market
Risk. The
prices of the securities in the Funds are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. Overall securities
values could decline generally or could underperform other investments. An
investment in the Funds may lose money.
Operational
Risk.
Each Fund is exposed to operational risk arising from a number of factors,
including but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third-parties,
failed or inadequate processes and technology or system failures.
Risk
of Investing in Foreign Securities.
(All Funds except VanEck Vectors BDC Income ETF and VanEck
Vectors Mortgage REIT Income ETF only.) Investments in the securities of
foreign issuers involve risks beyond those associated with investments in U.S.
securities. These additional risks include greater market volatility, the
availability of less reliable financial information, higher transactional and
custody costs, taxation by foreign governments, decreased market liquidity and
political instability. Because certain foreign securities markets may be limited
in size, the activity of large traders may have an undue influence on the prices
of securities that trade in such markets. Certain foreign markets that have
historically been considered relatively stable may become volatile in response
to changed conditions or new developments. Increased interconnectivity of world
economies and financial markets increases the possibility that adverse
developments and conditions in one country or region will affect the stability
of economies and financial markets in other countries or regions. The Fund
invests in securities of issuers located in countries whose economies are
heavily dependent upon trading with key partners. Any reduction in this trading
may have an adverse impact on the Fund’s investments. Because certain Funds may
invest in securities denominated in foreign currencies and some of the income
received by each Fund may be in foreign currency, changes in currency exchange
rates may negatively impact the Fund's return. The risks of investing in
emerging market countries are greater than risks associated with investments in
foreign developed countries.
Foreign
issuers are often subject to less stringent requirements regarding accounting,
auditing, financial reporting and record keeping than are U.S. issuers, and
therefore, not all material information may be available or reliable. Securities
exchanges or foreign governments may adopt rules or regulations that may
negatively impact a Fund’s ability to invest in foreign securities or may
prevent the Fund from repatriating its investments. In addition, each Fund may
not receive shareholder communications or be permitted to vote the securities
that it holds, as the issuers may be under no legal obligation to distribute
shareholder communications.
Certain
foreign markets may rely heavily on particular industries or foreign capital and
are more vulnerable to diplomatic developments, the imposition of economic
sanctions against a particular country or countries, organizations, entities
and/or individuals, changes in international trade patterns, trade barriers, and
other protectionist or retaliatory measures. The United
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States
and other nations or international organizations may impose economic sanctions
or take other actions that may adversely affect issuers of specific countries.
Economic sanctions could, among other things, effectively restrict or eliminate
each Fund’s ability to purchase or sell securities or groups of securities for a
substantial period of time, and may make each Fund’s investments in such
securities harder to value. These sanctions, any future sanctions or other
actions, or even the threat of future sanctions or other actions, may negatively
affect the value and liquidity of a Fund.
Also,
certain issuers located in foreign countries in which a Fund invests may operate
in, or have dealings with, countries subject to sanctions and/or embargoes
imposed by the U.S. Government and the United Nations and/or countries
identified by the U.S. Government as state sponsors of terrorism. As a result,
an issuer may sustain damage to its reputation if it is identified as an issuer
which operates in, or has dealings with, such countries. Each Fund, as an
investor in such issuers, will be indirectly subject to those
risks.
Risk
of Investing in Emerging Market Issuers.
(VanEck Vectors Emerging Markets Aggregate Bond ETF, VanEck Vectors Emerging
Markets High Yield Bond ETF, VanEck Vectors Green Bond ETF and VanEck Vectors
International High Yield Bond ETF only.) Investment in securities of emerging
market issuers involves risks not typically associated with investments in
securities of issuers in more developed countries that may negatively affect the
value of your investment in a Fund. Such heightened risks may include, among
others, expropriation and/or nationalization of assets, restrictions on and
government intervention in international trade, confiscatory taxation, political
instability, including authoritarian and/or military involvement in governmental
decision making, armed conflict, the impact on the economy as a result of civil
war, crime (including drug violence) and social instability as a result of
religious, ethnic and/or socioeconomic unrest. Issuers in certain emerging
market countries are subject to less stringent requirements regarding
accounting, auditing, financial reporting and record keeping than are issuers in
more developed markets, and therefore, all material information may not be
available or reliable. Emerging markets are also 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. Low
trading volumes and volatile prices in less developed markets may make trades
harder to complete and settle, and governments or trade groups may compel local
agents to hold securities in designated depositories that may not be subject to
independent evaluation. Local agents are held only to the standards of care of
their local markets. In general, the less developed a country’s securities
markets are, the greater the likelihood of custody problems. Additionally, each
of the factors described below could have a negative impact on a Fund’s
performance and increase the volatility of the Fund.
Securities
Markets.
Securities markets in emerging market countries are underdeveloped and are often
considered to be less correlated to global economic cycles than those markets
located in more developed countries. Securities markets in emerging market
countries are subject to greater risks associated with market volatility, lower
market capitalization, lower trading volume, illiquidity, inflation, greater
price fluctuations, uncertainty regarding the existence of trading markets,
governmental control and heavy regulation of labor and industry. These factors,
coupled with restrictions on foreign investment and other factors, limit the
supply of securities available for investment by a Fund. This will affect the
rate at which a Fund is able to invest in emerging market countries, the
purchase and sale prices for such securities and the timing of purchases and
sales. Emerging markets can experience high rates of inflation, deflation and
currency devaluation. The prices of certain securities listed on securities
markets in emerging market countries have been subject to sharp fluctuations and
sudden declines, and no assurance can be given as to the future performance of
listed securities in general. Volatility of prices may be greater than in more
developed securities markets. Moreover, securities markets in emerging market
countries may be closed for extended periods of time or trading on securities
markets may be suspended altogether due to political or civil unrest. Market
volatility may also be heightened by the actions of a small number of investors.
Brokerage firms in emerging market countries may be fewer in number and less
established than brokerage firms in more developed markets. Since a Fund may
need to effect securities transactions through these brokerage firms, the Fund
is subject to the risk that these brokerage firms will not be able to fulfill
their obligations to the Fund. This risk is magnified to the extent a Fund
effects securities transactions through a single brokerage firm or a small
number of brokerage firms. In addition, the infrastructure for the safe custody
of securities and for purchasing and selling securities, settling trades,
collecting dividends, initiating corporate actions, and following corporate
activity is not as well developed in emerging market countries as is the case in
certain more developed markets.
Political
and Economic Risk. Certain
emerging market countries have historically been subject to political
instability and their prospects are tied to the continuation of economic and
political liberalization in the region. Instability may result from factors such
as government or military intervention in decision making, terrorism, civil
unrest, extremism or hostilities between neighboring countries. Any of these
factors, including an outbreak of hostilities could negatively impact a Fund’s
returns. Limited political and democratic freedoms in emerging market countries
might cause significant social unrest. These factors may have a significant
adverse effect on an emerging market country’s economy.
Many
emerging market countries may be heavily dependent upon international trade and,
consequently, may continue to be negatively affected by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which it
trades. They also have been, and may continue to be, adversely affected by
economic conditions in the countries with which they trade.
In
addition, commodities (such as oil, gas and minerals) represent a significant
percentage of certain emerging market countries’ exports and these economies are
particularly sensitive to fluctuations in commodity prices. Adverse economic
events in one country may have a significant adverse effect on other countries
of this region. In addition, most emerging market countries have experienced, at
one time or another, severe and persistent levels of inflation, including, in
some cases, hyperinflation. This has, in turn, led to high interest rates,
extreme measures by governments to keep inflation in check, and a generally
debilitating effect on economic growth. Although inflation in many countries has
lessened, there is no guarantee it will remain at lower levels. The political
history of certain emerging market countries has been characterized by political
uncertainty, intervention by the military in civilian and economic spheres, and
political corruption. Such events could reverse favorable trends toward market
and economic reform, privatization, and removal of trade barriers, and result in
significant disruption in securities markets in the region.
Also,
from time to time, certain issuers located in emerging market countries in which
a Fund invests may operate in, or have dealings with, countries subject to
sanctions and/or embargoes imposed by the U.S. Government and the United Nations
and/or countries identified by the U.S. Government as state sponsors of
terrorism. As a result, an issuer may sustain damage to its reputation if it is
identified as an issuer which operates in, or has dealings with, such countries.
Each Fund, as an investor in such issuers, may be indirectly subject to those
risks.
A
portion of the Fund’s investments may be in Russian securities and instruments.
Investment in securities of Russian issuers involves risks not typically
associated with investments in securities of issuers in more developed countries
that may negatively affect the value of your investment in the Fund. Such
heightened risks include, among others, expropriation and/or nationalization of
assets, restrictions on and government intervention in international trade,
confiscatory or punitive taxation, regional conflict, political instability,
including authoritarian and/or military involvement in governmental decision
making, armed conflict, the imposition of economic sanctions by other nations,
the impact on the economy as a result of civil war, and social instability as a
result of religious, ethnic and/or socioeconomic unrest. As a result of certain
events, the United States and the European Union have in the past imposed and
may in the future impose, sanctions on certain Russian entities and individuals
and certain sectors of Russia’s economy, which may result in, among other
things, the devaluation of Russian currency, a downgrade in the country’s credit
rating, and/or a decline in the value and liquidity of Russian securities,
property or interests. The United States and other nations or international
organizations may impose additional economic sanctions or take other actions
that may adversely affect Russian-related issuers, including companies in
various sectors of the Russian economy, including, but not limited to, the
financials, energy, metals and mining, engineering, and defense and
defense-related materials sectors. These sanctions, any future sanctions or
other actions, or even the threat of further sanctions or other actions, may
negatively affect the value and liquidity of the Fund’s portfolio. For example,
the Fund may be prohibited from investing in securities issued by companies
subject to such sanctions. In addition, the sanctions may require the Fund to
freeze its existing investments in Russian companies, prohibiting the Fund from
buying, selling or otherwise transacting in these investments. Russia has
undertaken and may undertake additional countermeasures or retaliatory actions
which may further impair the value and liquidity of the Fund’s portfolio and
potentially disrupt its operations. Such events or any future events may have an
adverse impact on the economies and debts of other emerging markets as
well.
The
economies of one or more countries in which a Fund may invest may be in various
states of transition from a planned economy to a more market oriented economy.
The economies of such countries differ from the economies of most developed
countries in many respects, including levels of government involvement, states
of development, growth rates, control of foreign exchange and allocation of
resources. Economic growth in these economies may be uneven both geographically
and among various sectors of their economies and may also be accompanied by
periods of high inflation. Political changes, social instability and adverse
diplomatic developments in these countries could result in the imposition of
additional government restrictions including expropriation of assets,
confiscatory taxes or nationalization of some or all of the property held by the
underlying issuers of securities included in a Fund’s Index. There is no
guarantee that the governments of these countries will not revert back to some
form of planned or non-market oriented economy, and such governments continue to
be active participants in many economic sectors through ownership positions and
regulation. The allocation of resources in such countries is subject to a high
level of government control. Such countries’ governments may strictly regulate
the payment of foreign currency denominated obligations and set monetary policy.
Through their policies, these governments may provide preferential treatment to
particular industries or companies. The policies set by the government of one of
these countries could have a substantial effect on that country’s
economy.
Investment
and Repatriation Restrictions.
The government in an emerging market country may restrict or control to varying
degrees the ability of foreign investors to invest in securities of issuers
located or operating in such emerging market countries. These restrictions
and/or controls may at times limit or prevent foreign investment in securities
of issuers located or operating in emerging market countries and may inhibit a
Fund’s ability to track its Index. In addition, a Fund may not be able to buy or
sell securities or receive full value for such securities. Moreover, certain
emerging market countries may require governmental approval or special licenses
prior to investments by foreign investors and may limit the amount of
investments by foreign investors in a particular industry and/or issuer; may
limit such foreign investment to a certain class of securities of an issuer that
may have less advantageous rights than the classes available for purchase by
domiciliaries of such emerging market countries; and/or may impose additional
taxes on foreign investors. A delay in obtaining a required government
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approval
or a license would delay investments in those emerging market countries, and, as
a result, a Fund may not be able to invest in certain securities while approval
is pending. The government of certain emerging market countries may also
withdraw or decline to renew a license that enables a Fund to invest in such
country. These factors make investing in issuers located or operating in
emerging market countries significantly riskier than investing in issuers
located or operating in more developed countries, and any one of them could
cause a decline in the value of a Fund’s Shares.
Additionally,
investments in issuers located in certain emerging market countries may be
subject to a greater degree of risk associated with governmental approval in
connection with the repatriation of investment income, capital or the proceeds
of sales of securities by foreign investors. Moreover, there is the risk that if
the balance of payments in an emerging market country declines, the government
of such country may impose temporary restrictions on foreign capital
remittances. Consequently, a Fund could be adversely affected by delays in, or a
refusal to grant, required governmental approval for repatriation of capital, as
well as by the application to the Fund of any restrictions on investments.
Furthermore, investments in emerging market countries may require a Fund to
adopt special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to the Fund.
Available
Disclosure About Emerging Market Issuers. Issuers
located or operating in emerging market countries are not subject to the same
rules and regulations as issuers located or operating in more developed
countries. Therefore, there may be less financial and other information publicly
available with regard to issuers located or operating in emerging market
countries and such issuers are not subject to the uniform accounting, auditing
and financial reporting standards applicable to issuers located or operating in
more developed countries.
Foreign
Currency Considerations.
A Fund’s assets that are invested in fixed income securities of issuers in
emerging market countries will generally be denominated in foreign currencies,
and the proceeds received by the Fund from these investments will be principally
in foreign currencies. The value of an emerging market country’s currency may be
subject to a high degree of fluctuation. This fluctuation may be due to changes
in interest rates, the effects of monetary policies issued by the United States,
foreign governments, central banks or supranational entities, the imposition of
currency controls or other national or global political or economic
developments. The economies of certain emerging 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 can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors.
A
Fund’s exposure to an emerging market country’s currency and changes in value of
such foreign currencies versus the U.S. dollar may reduce the Fund’s investment
performance and the value of your investment in the Fund. Meanwhile, a Fund will
compute and expects to distribute its income in U.S. dollars, and the
computation of income will be made on the date that the income is earned by the
Fund at the foreign exchange rate in effect on that date. Therefore, if the
value of the respective emerging market country’s currency falls relative to the
U.S. dollar between the earning of the income and the time at which a Fund
converts the relevant emerging market country’s currency to U.S. dollars, the
Fund may be required to liquidate certain positions in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements under the Internal Revenue Code. The liquidation of
investments, if required, could be at disadvantageous prices or otherwise have
an adverse impact on a Fund’s performance.
Certain
emerging market countries also restrict the free conversion of their currency
into foreign currencies, including the U.S. dollar. There is no significant
foreign exchange market for many such currencies and it would, as a result, be
difficult for a Fund to engage in foreign currency transactions designed to
protect the value of the Fund’s interests in securities denominated in such
currencies. Furthermore, if permitted, a Fund may incur costs in connection with
conversions between U.S. dollars and an emerging market country’s currency.
Foreign exchange dealers realize a profit based on the difference between the
prices at which they are buying and selling various currencies. Thus, a dealer
normally will offer to sell a foreign currency to a Fund at one rate, while
offering a lesser rate of exchange should the Fund desire immediately to resell
that currency to the dealer. A Fund will conduct its foreign currency exchange
transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward, futures or options contracts to purchase or
sell foreign currencies.
Operational
and Settlement Risk.
In addition to having less developed securities markets, emerging market
countries have less developed custody and settlement practices than certain
developed countries. Rules adopted under the 1940 Act permit a Fund to maintain
its foreign securities and cash in the custody of certain eligible non-U.S.
banks and securities depositories. Banks in emerging market countries that are
eligible foreign sub-custodians may be recently organized or otherwise lack
extensive operating experience. In addition, in certain emerging market
countries there may be legal restrictions or limitations on the ability of a
Fund to recover assets held in custody by a foreign sub-custodian in the event
of the bankruptcy of the sub-custodian. Because settlement systems in emerging
market countries may be less organized than in other developed markets, there
may be a risk that settlement may be delayed and that cash or securities of a
Fund may be in jeopardy because of failures of or defects in the systems. Under
the laws in many emerging market countries, a Fund may be required to release
local shares before receiving cash payment or may be required to make cash
payment prior to receiving local
shares,
creating a risk that the Fund may surrender cash or securities without ever
receiving securities or cash from the other party. Settlement systems in
emerging market countries also have a higher risk of failed trades and back to
back settlements may not be possible.
A
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event of a redemption request from
an AP, a Fund will be required to deliver U.S. dollars to the AP on the
settlement date. In the event that a Fund is not able to convert the foreign
currency to U.S. dollars in time for settlement, which may occur as a result of
the delays described above, the Fund may be required to liquidate certain
investments and/or borrow money in order to fund such redemption. The
liquidation of investments, if required, could be at disadvantageous prices or
otherwise have an adverse impact on a Fund’s performance (e.g.,
by causing the Fund to overweight foreign currency denominated holdings and
underweight other holdings which were sold to fund redemptions). In addition, a
Fund will incur interest expense on any borrowings and the borrowings will cause
the Fund to be leveraged, which may magnify gains and losses on its
investments.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer’s securities are predicated on these securities being
blocked from trading at the custodian or sub-custodian level for a period of
time around a shareholder meeting. These restrictions have the effect of barring
the purchase and sale of certain voting securities within a specified number of
days before and, in certain instances, after a shareholder meeting where a vote
of shareholders will be taken. Share blocking may prevent a Fund from buying or
selling securities for a period of time. During the time that shares are
blocked, trades in such securities will not settle. The blocking period can last
up to several weeks. The process for having a blocking restriction lifted can be
quite onerous with the particular requirements varying widely by country. In
addition, in certain countries, the block cannot be removed. As a result of the
ramifications of voting ballots in markets that allow share blocking, the
Adviser, on behalf of a Fund, reserves the right to abstain from voting proxies
in those markets.
Corporate
and Securities Laws.
Securities laws in emerging market countries are relatively new and unsettled
and, consequently, there is a risk of rapid and unpredictable change in laws
regarding foreign investment, securities regulation, title to securities and
rights of bondholders. Accordingly, foreign investors may be adversely affected
by new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging market issuers are subject may be less advanced
than those systems to which issuers located in more developed countries are
subject, and therefore, bondholders of issuers located in emerging market
countries may not receive many of the protections available to bondholders of
issuers located in more developed countries. In circumstances where adequate
laws and bondholder rights exist, it may not be possible to obtain swift and
equitable enforcement of the law. In addition, the enforcement of systems of
taxation at federal, regional and local levels in emerging market countries may
be inconsistent and subject to sudden change. A Fund has limited rights and few
practical remedies in emerging markets and the ability of U.S. authorities to
bring enforcement actions in emerging markets may be limited.
Foreign
Currency Risk. (VanEck
Vectors Emerging Markets Aggregate Bond ETF, VanEck Vectors Emerging Markets
High Yield Bond ETF, VanEck Vectors Fallen Angel High Yield Bond ETF, VanEck
Vectors Green Bond ETF, VanEck Vectors International High Yield Bond ETF and
VanEck Vectors Investment Grade Floating Rate ETF only.) Because all or a
portion of the income received by the Fund from its investments and/or the
revenues received by the underlying issuers will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, a Fund may incur costs in connection with
conversions between U.S. dollars and foreign currencies.
Several
factors may affect the price of euros and the British pound sterling, including
the debt level and trade deficit of the EMU and the UK, inflation and interest
rates of the EMU and the UK and investors’ expectations concerning inflation and
interest rates and global or regional political, economic or financial events
and situations. The European financial markets have experienced, and may
continue to experience, volatility and have been adversely affected by concerns
about economic downturns, credit rating downgrades, rising government debt
levels and possible default on or restructuring of government debt in several
European countries. These events have adversely affected, and may in the future
affect, the value and exchange rate of the euro and may continue to
significantly affect the economies of every country in Europe, including EU
member countries that do not use the euro and non-EU member countries. In a
referendum held on June 23, 2016, voters in the United Kingdom (“UK”) voted to
leave the EU, creating economic and political uncertainty in its wake. On
January 31, 2020, the UK officially withdrew from the EU and the UK entered a
transition period which ended on December 31, 2020. On December 30, 2020, the EU
and UK signed the EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on
the terms governing certain aspects of the EU's and the UK's relationship
following the end of the transition period. Notwithstanding the TCA, following
the transition period, there is likely to be considerable uncertainty as to the
UK's post-transition framework. Significant uncertainty exists regarding the
effects such withdrawal will have on the euro, European economies and the global
markets. In addition, one or more countries may abandon the euro and the impact
of these actions, especially if conducted in a disorderly manner, may have
significant and far-reaching consequences on the euro.
The
value of certain emerging market countries’ currencies may be subject to a high
degree of fluctuation. This fluctuation may be due to changes in interest rates,
investors’ expectations concerning inflation and interest rates, the emerging
market country’s
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debt
levels and trade deficit, the effects of monetary policies issued by the United
States, foreign governments, central banks or supranational entities, the
imposition of currency controls or other national or global political or
economic developments. For example, certain emerging market countries have
experienced economic challenges and liquidity issues with respect to their
currency. The economies of certain emerging market countries can be
significantly affected by currency devaluations. Certain emerging market
countries may also have managed currencies which are maintained at artificial
levels relative to the U.S. dollar rather than at levels determined by the
market. This type of system could lead to sudden and large adjustments in the
currency, which in turn, may have a negative effect on a Fund and its
investments.
Special
Risk Considerations of Investing in Asian Issuers. (VanEck
Vectors Emerging Markets Aggregate Bond ETF, VanEck Vectors Emerging Markets
High Yield Bond ETF and VanEck Vectors Green Bond ETF only.) Investments in
securities of Asian issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. Certain
Asian economies have experienced over-extension of credit, currency devaluations
and restrictions, high unemployment, high inflation, decreased exports and
economic recessions. Economic events in any one Asian country can have a
significant effect on the entire Asian region as well as on major trading
partners outside Asia, and any adverse effect on some or all of the Asian
countries and regions in which the Fund invests. The securities markets in some
Asian economies are relatively underdeveloped and may subject the Fund to higher
action costs or greater uncertainty than investments in more developed
securities markets. Such risks may adversely affect the value of the Fund’s
investments.
Governments
of many Asian countries have implemented significant economic reforms in order
to liberalize trade policy, promote foreign investment in their economies,
reduce government control of the economy and develop market mechanisms. There
can be no assurance these reforms will continue or that they will be effective.
Despite recent reform and privatizations, significant regulation of investment
and industry is still pervasive in many Asian countries and may restrict foreign
ownership of domestic corporations and repatriation of assets, which may
adversely affect the Fund’s investments. Governments in some Asian countries are
authoritarian in nature, have been installed or removed as a result of military
coups or have periodically used force to suppress civil dissent. Disparities of
wealth, the pace and success of democratization, and ethnic, religious and
racial disaffection have led to social turmoil, violence and labor unrest in
some countries. Unanticipated or sudden political or social developments may
result in sudden and significant investment losses. Investing in certain Asian
countries involves risk of loss due to expropriation, nationalization, or
confiscation of assets and property or the imposition of restrictions on foreign
investments and on repatriation of capital invested.
Special
Risk Considerations of Investing in Chinese Issuers. (VanEck
Vectors Emerging Markets High Yield Bond ETF, VanEck Vectors Green Bond ETF and
VanEck Vectors International High Yield Bond ETF only.) Investments in
securities of Chinese issuers, including issuers outside of China involve
certain risks and considerations not typically associated with investments in
the U.S. securities markets. These risks include, among others, (i) more
frequent (and potentially widespread) trading suspensions and government
interventions with respect to Chinese issuers resulting in a lack of liquidity
and in price volatility, (ii) currency revaluations and other currency exchange
rate fluctuations or blockage, (iii) the nature and extent of intervention by
the Chinese government in the Chinese securities markets, whether such
intervention will continue and the impact of such intervention or its
discontinuation, (iv) the risk of nationalization or expropriation of assets,
(v) the risk that the Chinese government may decide not to continue to support
economic reform programs, (vi) limitations on the use of brokers, (vii) higher
rates of inflation, (viii) greater political, economic and social uncertainty,
(ix) market volatility caused by any potential regional or territorial conflicts
or natural disasters and (x) the risk of increased trade tariffs, embargoes,
sanctions, investment restrictions and other trade limitations. Certain
securities are, or may in the future become restricted, and the Fund may be
forced to sell such restricted securities and incur a loss as a result. In
addition, the economy of China differs, often unfavorably, from the U.S. economy
in such respects as structure, general development, government involvement,
wealth distribution, rate of inflation, growth rate, interest rates, allocation
of resources and capital reinvestment, among others. The Chinese central
government has historically exercised substantial control over virtually every
sector of the Chinese economy through administrative regulation and/or state
ownership and actions of the Chinese central and local government authorities
continue to have a substantial effect on economic conditions in China. Certain
securities are, or may in future become restricted, and the Fund may be forced
to sell such restricted securities and incur a loss as a result. In addition,
previously the Chinese government has from time to time taken actions that
influence the prices at which certain goods may be sold, encourage companies to
invest or concentrate in particular industries, induce mergers between companies
in certain industries and induce private companies to publicly offer their
securities to increase or continue the rate of economic growth, control the rate
of inflation or otherwise regulate economic expansion. The Chinese government
may do so in the future as well, potentially having a significant adverse effect
on economic conditions in China.
Special
Risk Considerations of Investing in European Issuers. (VanEck
Vectors Emerging Markets Aggregate Bond ETF, VanEck Vectors Emerging Markets
High Yield Bond ETF, VanEck Vectors Fallen Angel High Yield Bond ETF and VanEck
Vectors International High Yield Bond ETF only.) Investments in securities of
European issuers involve risks and special considerations not typically
associated with investments in the U.S. securities markets. The EMU of the EU
requires member countries to comply with restrictions on inflation rates,
deficits, interest rates, debt levels and fiscal and monetary controls, each of
which may significantly affect every country in Europe. Decreasing imports or
exports, changes in governmental or EU regulations on trade, changes in the
exchange rate of the euro, the default or threat of default by an EU member
country on its sovereign debt, and/or an economic
recession
in an EU member country may have a significant adverse effect on the economies
of EU member countries and on major trading partners outside Europe. The
European financial markets have previously experienced, and may continue to
experience, volatility and have been adversely affected, and may in the future
be affected, by concerns about economic downturns, credit rating downgrades,
rising government debt levels and possible default on or restructuring of
government debt in several European countries. These events have adversely
affected, and may in the future affect, the value and exchange rate of the euro
and may continue to significantly affect the economies of every country in
Europe, including EU member countries that do not use the euro and non-EU member
countries. In a referendum held on June 23, 2016, voters in the UK voted to
leave the EU, creating economic and political uncertainty in its wake. On
January 31, 2020, the UK officially withdrew from the EU and the UK entered a
transition period which ended on December 31, 2020. On December 30, 2020, the EU
and UK signed the EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on
the terms governing certain aspects of the EU's and the UK's relationship
following the end of the transition period. Notwithstanding the TCA, following
the transition period, there is likely to be considerable uncertainty as to the
UK's post-transition framework.
Responses
to the financial problems by European governments, central banks and others,
including austerity measures and reforms, may not work, may result in social
unrest and may limit future growth and economic recovery or have other
unintended consequences. Further defaults or restructurings by governments and
other entities of their debt could have additional adverse effects on economies,
financial markets and asset valuations around the world. In addition, one or
more countries may abandon the euro and/or withdraw from the EU. The impact of
these actions, especially if they occur in a disorderly fashion, is not clear
but could be significant and far-reaching.
Special
Risk Considerations of Investing in Latin American Issuers.
(VanEck Vectors Emerging Markets Aggregate Bond ETF and VanEck Vectors Emerging
Markets High Yield Bond ETF only.) Investments in securities of Latin American
issuers involve special considerations not typically associated with investments
in securities of issuers located in the United States. The economies of certain
Latin American countries have, at times, experienced high interest rates,
economic volatility, inflation, currency devaluations and high unemployment
rates. In addition, commodities (such as oil, gas and minerals) represent a
significant percentage of the region’s exports and many economies in this region
are particularly sensitive to fluctuations in commodity prices. Adverse economic
events in one country may have a significant adverse effect on other countries
of this region.
Most
Latin American countries have experienced, at one time or another, severe and
persistent levels of inflation, including, in some cases, hyperinflation. This
has, in turn, led to high interest rates, extreme measures by governments to
keep inflation in check, and a generally debilitating effect on economic growth.
Although inflation in many Latin American countries has lessened, there is no
guarantee it will remain at lower levels.
The
political history of certain Latin American countries has been characterized by
political uncertainty, intervention by the military in civilian and economic
spheres, and political corruption. Such events could reverse favorable trends
toward market and economic reform, privatization, and removal of trade barriers,
and could result in significant disruption in securities markets in the
region.
The
economies of Latin American countries are generally considered emerging markets
and can be significantly affected by currency devaluations. Certain Latin
American countries may also have managed currencies which are maintained at
artificial levels relative to the U.S. dollar rather than at levels determined
by the market. This type of system can lead to sudden and large adjustments in
the currency which, in turn, can have a disruptive and negative effect on
foreign investors. Certain Latin American countries also restrict the free
conversion of their currency into foreign currencies, including the U.S. dollar.
There is no significant foreign exchange market for many Latin American
currencies and it would, as a result, be difficult for the Fund to engage in
foreign currency transactions designed to protect the value of the Fund’s
interests in securities denominated in such currencies.
Finally,
a number of Latin American countries are among the largest debtors of developing
countries. There have been moratoria on, and a rescheduling of, repayment with
respect to these debts. Such events can restrict the flexibility of these debtor
nations in the international markets and result in the imposition of onerous
conditions on their economies.
Special
Risk Considerations of Investing in Mexican Issuers. (VanEck
Vectors Emerging Markets Aggregate Bond ETF only.) To the extent the Fund
continues to invest in securities issued by Mexican issuers, including issuers
located outside of Mexico that generate significant revenues from Mexico, the
Fund may be subject to the risk of investing in such issuers. Investment
exposure to Mexican issuers involves risks that are specific to Mexico,
including regulatory, political and economic risks. The Mexican economy, among
other things, is dependent upon external trade with other economies,
specifically with the United States and certain Latin American countries. As a
result, Mexico is dependent on, among other things, the U.S. economy and any
change in the price or demand for Mexican exports may have an adverse impact on
the Mexican economy. Recently, Mexico has experienced an outbreak of violence
related to drug trafficking. Incidents involving Mexico’s security may have an
adverse effect on the Mexican economy and cause uncertainty in its financial
markets. In the past, Mexico has experienced high interest rates, economic
volatility and high unemployment rates.
Political
and Social Risk. Mexico
has been destabilized by local insurrections, social upheavals, drug related
violence, and the recent public health crisis related to the H1N1 influenza
outbreak. Recurrence of these or similar conditions may adversely impact
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the
Mexican economy. In addition, Mexico has had one political party dominating
government until the elections of 2000. Recently, Mexican elections have been
contentious and have been very closely decided. Changes in political parties or
other Mexican political events may affect the economy and cause
instability.
Currency
Instability Risk. Historically,
Mexico has experienced substantial economic instability resulting from, among
other things, periods of very high inflation and significant devaluations of the
Mexican currency, the peso.
Special
Risk Considerations of Investing in Japanese Issuers. (VanEck
Vectors Investment Grade Floating Rate ETF only.) Investments in securities of
Japanese issuers, including issuers located outside of Japan that generate
significant revenues from Japan, involve risks and special considerations not
typically associated with investments in the U.S. securities markets. Investment
in securities of Japanese issuers, including issuers located outside of Japan
that generate significant revenues from Japan, involves risks that may
negatively affect the value of your investment in the Fund. The risks of
investing in the securities of Japanese issuers also includes lack of natural
resources, fluctuations or shortages in the commodity markets, new trade
regulations, decreasing U.S. imports and changes in the U.S. dollar exchange
rates. Japan is located in a part of the world that has historically been prone
to natural disasters such as earthquakes, volcanoes and tsunamis and is
economically sensitive to environmental events. Any such event could result in a
significant adverse impact on the Japanese economy. In addition, such disasters,
and the resulting damage, could impair the long-term ability of issuers in which
the Fund invests to conduct their businesses in the manner normally conducted.
Special
Risk Considerations of Investing in United Kingdom Issuers. (VanEck
Vectors Investment Grade Floating Rate ETF only.) Investments in securities of
UK issuers, including issuers located outside of the UK that generate
significant revenues form the UK, involve risks and special considerations not
typically associated with investments in the U.S. securities markets.
Investments in UK issuers may subject a Fund to regulatory, political, currency,
security and economic risks specific to the UK. The British economy relies
heavily on the export of financials to the United States and other European
countries. A prolonged slowdown in the financials sector may have a negative
impact on the British economy. In the past, the UK has been a target of
terrorism. Acts of terrorism in the UK or against British interests abroad may
cause uncertainty in the British financial markets and adversely affect the
performance of the issuers to which the Fund has exposure. The British economy,
along with the United States and certain other EU economies, experienced a
significant economic slowdown during the recent financial crisis. In a
referendum held on June 23, 2016, voters in the UK voted to leave the EU,
creating economic and political uncertainty in its wake. On January 31, 2020,
the UK officially withdrew from the EU and the UK entered a transition period
which ended on December 31, 2020. On December 30, 2020, the EU and UK signed the
EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on the terms
governing certain aspects of the EU's and the UK's relationship following the
end of the transition period. Notwithstanding the TCA, following the transition
period, there is likely to be considerable uncertainty as to the UK's
post-transition framework.
Risk
of Investing in BDCs.
(VanEck Vectors BDC Income ETF only.) BDCs generally invest in less mature U.S.
private companies or thinly traded U.S. public companies which involve greater
risk than well-established publicly-traded companies. While the BDCs that
comprise the BDC Index are expected to generate income in the form of dividends,
certain BDCs during certain periods of time may not generate such income. The
Fund will indirectly bear its proportionate share of any management fees and
other operating expenses incurred by the BDCs and of any performance-based or
incentive fees payable by the BDCs in which it invests, in addition to the
expenses paid by the Fund. A BDC’s incentive fee may be very high, vary from
year to year and be payable even if the value of the BDC’s portfolio declines in
a given time period. Incentive fees may create an incentive for a BDC’s manager
to make investments that are risky or more speculative than would be the case in
the absence of such compensation arrangements, and may also encourage the BDC’s
manager to use leverage to increase the return on the BDC’s investments. Any
incentive fee payable by a BDC that relates to its net investment income may be
computed and paid on income that may include interest that has been accrued but
not yet received. If a portfolio company defaults on a loan that is structured
to provide accrued interest income, it is possible that accrued interest income
previously included in the calculation of the incentive fee will become
uncollectible. A BDC’s manager may not be obligated to reimburse the BDC’s
shareholder for any part of the incentive fee it received that was based on
accrued interest income that was never received as a result of a subsequent
default, and such circumstances would result in the BDC’s shareholders
(including the Fund) paying an incentive fee on income that was never received
by the BDC. Such incentive fees may also create an incentive for a BDC’s manager
to make investments in securities with deferred interest features. The use of
leverage by BDCs magnifies gains and losses on amounts invested and increases
the risks associated with investing in BDCs. A BDC may make investments with a
larger amount of risk of volatility and loss of principal than other investment
options and may also be highly speculative and aggressive.
The
1940 Act imposes certain constraints upon the operations of a BDC. For example,
BDCs are required to invest at least 70% of their total assets primarily in
securities of U.S. private companies or thinly traded U.S. public companies,
cash, cash equivalents, U.S. government securities and high quality debt
investments that mature in one year or less. Generally, little public
information exists for private and thinly traded companies and there is a risk
that investors and the Index Provider (as defined herein) may not be able to
make a fully informed evaluation of a BDC and its portfolio of investments. With
respect to investments in debt instruments, there is a risk that the issuers of
such instruments may default on their payments or declare bankruptcy.
Additionally, a BDC may only incur indebtedness in amounts such that the BDC’s
asset coverage ratio of total assets to total senior securities equals at least
150% after such incurrence. These limitations on asset mix and leverage may
affect the way that the BDC raises
capital.
BDCs compete with other entities for the types of investments they make, and
such entities are not necessarily subject to the same investment constraints as
BDCs.
Investments
made by BDCs are generally subject to legal and other restrictions on resale and
are otherwise less liquid than publicly-traded securities. The illiquidity of
these investments may make it difficult to sell such investments if the need
arises, and if there is a need for a BDC in which the Fund invests to liquidate
its portfolio quickly, it may realize a loss on its investments. BDCs may have
relatively concentrated investment portfolios, consisting of a relatively small
number of holdings. A consequence of this limited number of investments is that
the aggregate returns realized may be disproportionately impacted by the poor
performance of a small number of investments, or even a single investment,
particularly if a company experiences the need to write down the value of an
investment. Since BDCs rely on access to short-term money markets, longer-term
capital markets and the bank markets as significant sources of liquidity, if
BDCs are not able to access capital at competitive rates, their ability to
implement certain financial strategies will be negatively impacted. Market
disruptions, including a downturn in capital markets in general or a downgrade
of the credit rating of a BDC held by the Fund, may increase the cost of
borrowing to that BDC and adversely impact its returns. Credit downgrades may
also result in requirements on a BDC to provide additional support in the form
of letters of credit or cash or other collateral to various
counterparties.
Certain
BDCs may be difficult to value. Since many of the assets of BDCs do not have
readily ascertainable market values, such assets are most often recorded at fair
value, in good faith, in accordance with valuation procedures adopted by such
companies. A fair value determination requires that judgment be applied to the
specific facts and circumstances. Due to the absence of a readily ascertainable
market value, and because of the inherent uncertainty of fair valuation, the
fair value assigned to a BDC’s investments may differ significantly from the
values that would be reflected if the assets were traded in an established
market, potentially resulting in material differences between a BDC’s NAV per
share and its market value.
Many
BDCs invest in mezzanine and other debt securities of privately held companies,
including senior secured loans. Mezzanine investments typically are structured
as subordinated loans (with or without warrants) that carry a fixed rate of
interest. Many debt investments in which a BDC may invest will not be rated by a
credit rating agency and will be below investment grade quality. These
investments are commonly referred to as “junk bonds” and have predominantly
speculative characteristics with respect to an issuer’s capacity to make
payments of interest and principal. Although lower grade securities are
potentially higher yielding, they are also characterized by high risk. In
addition, the secondary market for lower grade securities may be less liquid
than that of higher rated securities. Issuers of lower rated securities have a
currently identifiable vulnerability to default or may currently be in default.
Lower-rated securities may react more strongly to real or perceived adverse
economic and competitive industry conditions than higher grade securities. If
the issuer of lower-rated securities defaults, a BDC may incur additional
expenses to seek recovery.
Risk
of Investing in Small- and Medium-Capitalization Companies.
(VanEck Vectors BDC Income ETF, VanEck Vectors Mortgage REIT
Income ETF and VanEck Vectors Preferred Securities ex Financials ETF only.)
Each Fund may invest in small- and medium-capitalization companies and,
therefore will be subject to certain risks associated with small- and medium-
capitalization companies. These companies are often subject to less analyst
coverage and may be in early and less predictable periods of their corporate
existences, with little or no record of profitability. In addition, these
companies often have greater price volatility, lower trading volume and less
liquidity than larger more established companies. These companies tend to have
smaller revenues, narrower product lines, less management depth and experience,
smaller shares of their product or service markets, fewer financial resources
and less competitive strength than large-capitalization companies. Returns on
investments in securities of small- and medium-capitalization companies could
trail the returns on investments in securities of larger companies.
Risk
of Investing in the Basic Materials Sector. (VanEck
Vectors Emerging Markets High Yield Bond ETF only.) The Fund will be sensitive
to, and its performance may depend to a greater extent on, the overall condition
of the basic materials sector. Companies engaged in the production and
distribution of basic materials may be adversely affected by changes in world
events, political and economic conditions, energy conservation, environmental
policies, commodity price volatility, changes in exchange rates, imposition of
import controls, increased competition, depletion of resources and labor
relations.
Risk
of Investing in the Consumer Discretionary Sector .
(VanEck
Vectors Fallen Angel High Yield Bond ETF and VanEck Vectors International High
Yield Bond ETF only.) The Fund will be sensitive to, and its performance may
depend to a greater extent on, the overall condition of the consumer
discretionary sector. The consumer discretionary sector comprises companies
whose businesses are sensitive to economic cycles, such as manufacturers of
high-end apparel and automobile and leisure companies. Companies in the consumer
discretionary sector are subject to fluctuations in supply and demand. These
companies may also be adversely affected by changes in consumer spending as a
result of world events, political and economic conditions, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources and labor relations.
Risk
of Investing in the Consumer Staples Sector. (VanEck
Vectors Fallen Angel High Yield Bond ETF only.) The Fund will be sensitive to,
and its performance may depend to a greater extent on, the overall condition of
the consumer staples sector. The consumer staples sector comprises companies
whose businesses are less sensitive to economic cycles, such as manufacturers
and distributors of food and beverages and producers of non-durable household
goods and personal products. Companies in the consumer staples sector may be
adversely affected by changes in the worldwide economy, consumer spending,
competition,
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demographics
and consumer preferences, exploration and production spending. Companies in this
sector are also affected by changes in government regulation, world events and
economic conditions.
Risk
of Investing in the Energy Sector. (VanEck
Vectors Emerging Markets Aggregate Bond ETF, VanEck Vectors Emerging Markets
High Yield Bond ETF, VanEck Vectors Fallen Angel High Yield Bond ETF and VanEck
Vectors International High Yield Bond ETF only.) The Fund will be sensitive to
changes in, and its performance will depend to a greater extent on, the overall
condition of the energy sector. Companies operating in the energy sector are
subject to risks including, but not limited to, economic growth, worldwide
demand, political instability in the regions that the companies operate,
government regulation stipulating rates charged by utilities, interest rate
sensitivity, oil price volatility, energy conservation, environmental policies,
depletion of resources, and the cost of providing the specific utility services
and other factors that they cannot control.
The
energy sector is cyclical and is highly dependent on commodity prices; prices
and supplies of energy may fluctuate significantly over short and long periods
of time due to, among other things, national and international political
changes, Organization of Petroleum Exporting Countries (“OPEC”) policies,
changes in relationships among OPEC members and between OPEC and oil-importing
nations, the regulatory environment, taxation policies, and the economy of the
key energy-consuming countries. Commodity prices have recently been subject to
increased volatility and declines, which may negatively affect companies in
which the Fund invests.
Companies
in the energy sector may be adversely affected by terrorism, natural disasters
or other catastrophes. Companies in the energy sector are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims. Disruptions in the oil industry
or shifts in fuel consumption may significantly impact companies in this sector.
Significant oil and gas deposits are located in emerging markets countries where
corruption and security may raise significant risks, in addition to the other
risks of investing in emerging markets.
Companies
in the energy sector may also be adversely affected by changes in exchange
rates, tax treatment, government regulation and intervention, negative
perception, efforts at energy conservation and world events in the regions in
which the companies operate (e.g.,
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investments and repatriation of capital,
military coups, social unrest, violence or labor unrest). Because a significant
portion of revenues of companies in this sector is derived from a relatively
small number of customers that are largely comprised of governmental entities
and utilities, governmental budget constraints may have a significant impact on
the stock prices of companies in this sector. The energy sector is highly
regulated. Entities operating in the energy sector are subject to significant
regulation of nearly every aspect of their operations by federal, state and
local governmental agencies. Such regulation can change rapidly or over time in
both scope and intensity. Stricter laws, regulations or enforcement policies
could be enacted in the future which would likely increase compliance costs and
may materially adversely affect the financial performance of companies in the
energy sector.
A
downturn in the energy sector of the economy, adverse political, legislative or
regulatory developments or other events could have a larger impact on the Fund
than on an investment company that does not invest a substantial portion of its
assets in the energy sector. At times, the performance of securities of
companies in the energy sector may lag the performance of other sectors or the
broader market as a whole. The price of oil, natural gas and other fossil fuels
may decline and/or experience significant volatility, which could adversely
impact companies operating in the energy sector.
Risk
of Investing in the Financials Sector. (All
Funds except VanEck Vectors Preferred Securities ex Financials ETF.) The Fund
will be sensitive to, and its performance may depend to a greater extent on, the
overall condition of the financials sector. Companies in the financials sector
may be subject to extensive government regulation that affects the scope of
their activities, the prices they can charge and the amount of capital they must
maintain. The profitability of companies in the financials sector may be
adversely affected by increases in interest rates, by loan losses, which usually
increase in economic downturns, and by credit rating downgrades. In addition,
the financials sector is undergoing numerous changes, including continuing
consolidations, development of new products and structures and changes to its
regulatory framework. Furthermore, some companies in the financials sector
perceived as benefiting from government intervention in the past may be subject
to future government-imposed restrictions on their businesses or face increased
government involvement in their operations. Increased government involvement in
the financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Risk
of Investing in the Communications Sector.
(VanEck
Vectors Fallen Angel High Yield Bond ETF, VanEck Vectors International High
Yield Bond ETF and VanEck Vectors Preferred Securities ex Financials ETF only.)
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the communications sector. Companies in the
communications sector may be affected by industry competition, substantial
capital requirements, government regulations and obsolescence of communications
products and services due to technological advancement.
Risk
of Investing in the Utilities Sector.
(VanEck Vectors Green Bond ETF and VanEck Vectors Preferred Securities ex
Financials ETF only.) The Fund will be sensitive to, and its performance will
depend to a greater extent on, the overall condition of the utilities sector.
Issuers in the utilities sector are subject to a variety of factors that may
adversely affect their business or operations, including high interest costs in
connection with capital construction and improvement programs, difficulty in
raising
capital
in adequate amounts on reasonable terms in periods of high inflation and
unsettled capital markets, and the effects of effects of economic slowdowns and
surplus capacity. Companies in the utilities sector are subject to extensive
regulation, including governmental regulation of rates charged to customers, and
may face difficulty in obtaining regulatory approval of new technologies. The
effects of a U.S. national energy policy and lengthy delays and greatly
increased costs and other problems associated with the design, construction,
licensing, regulation and operation of nuclear facilities for electric
generation, including, among other considerations, the problems associated with
the use of radioactive materials and the disposal of radioactive wastes, may
adversely affect companies in the utilities sector. Certain companies in the
utilities sector may be inexperienced and may suffer potential losses resulting
from a developing deregulatory environment. Technological innovations may render
existing plants, equipment or products obsolete. Companies in the utilities
sector may face increased competition from other providers of utility services.
The potential impact of terrorist activities on companies in the utilities
sector and its customers and the impact of natural or man-made disasters may
adversely affect the utilities sector. Issuers in the utilities sector also may
be subject to regulation by various governmental authorities and may be affected
by the imposition of special tariffs and changes in tax laws, regulatory
policies and accounting standards.
Equity
Securities Risk.
(VanEck Vectors BDC Income ETF and VanEck Vectors Mortgage REIT
Income ETF only.) The value of the equity securities held by a Fund may fall
due to general market and economic conditions, perceptions regarding the markets
in which the issuers of securities held by the Fund participate, or factors
relating to specific issuers in which the Fund invests. For example, an adverse
event, such as an unfavorable earnings report, may result in a decline in the
value of equity securities of an issuer held by the Fund; the price of the
equity securities of an issuer may be particularly sensitive to general
movements in the securities markets; or a drop in the securities markets may
depress the price of most or all of the equities securities held by the Fund. In
addition, the equity securities of an issuer in a Fund’s portfolio may decline
in price if the issuer fails to make anticipated dividend payments. Equity
securities are subordinated to preferred securities and debt in a company’s
capital structure with respect to priority in right to a share of corporate
income, and therefore will be subject to greater dividend risk than preferred
securities or debt instruments. In addition, while broad market measures of
equity securities have historically generated higher average returns than fixed
income securities, equity securities have generally also experienced
significantly more volatility in those returns, although under certain market
conditions fixed income securities may have comparable or greater price
volatility. A change in the financial condition, market perception or the credit
rating of an issuer of securities included in a Fund’s Index may cause the value
of its securities to decline.
Issuer-Specific
Changes Risk. (VanEck
Vectors BDC Income ETF and VanEck Vectors Mortgage REIT Income
ETF only.) The value of individual securities or particular types of
securities in a Fund’s portfolio can be more volatile than the market as a whole
and can perform differently from the value of the market as a whole, which may
have a greater impact if the Fund’s portfolio is concentrated in a country,
group of countries, region, market, industry, group of industries, sector or
asset class. The value of securities of smaller issuers can be more volatile
than that of larger issuers. A change in the financial condition, market
perception or credit rating of an issuer of securities included in a Fund’s
Index may cause the value of its securities to decline.
Risk
of Investment Restrictions.
(VanEck Vectors BDC Income ETF only.) The Fund is subject to the conditions set
forth in the Exemptive Relief 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 BDC. The Fund and its
affiliates may not acquire “control” of a BDC, which is presumed once ownership
of a BDC’s outstanding voting securities exceeds 25%. This limitation could
inhibit the Fund’s ability to purchase one or more BDCs in the BDC Index in the
proportions represented in the BDC Index. In these circumstances, the Fund would
be required to use sampling techniques, which could increase the risk of
tracking error.
Preferred
Securities Risk.
(VanEck Vectors Preferred Securities ex Financials ETF only.) Preferred
Securities are essentially contractual obligations that entail rights to
distributions declared by the issuer’s board of directors but may permit the
issuer to defer or suspend distributions for a certain period of time. Preferred
Securities, which generally pay fixed or adjustable rate dividends or interest
to investors, have preference over common stock in the payment of dividends or
interest and the liquidation of a company’s assets, which means that a company
typically must pay dividends or interest on its Preferred Securities before
paying any dividends on its common stock. On the other hand, preferred
securities are junior to the company’s debt, including both senior and
subordinated debt. Because of their subordinated position in the capital
structure of an issuer, the ability to defer dividend or interest payments for
extended periods of time without triggering an event of default for the issuer,
and certain other features, Preferred Securities are often treated as
equity-like instruments by both issuers and investors, as their quality and
value are heavily dependent on the profitability and cash flows of the issuer
rather than on any legal claims to specific assets.
If
the Fund owns a Preferred Security whose issuer has deferred or suspended
distributions, the Fund may be required to account for the distribution that has
been deferred or suspended for tax purposes, even though it may not have
received this income in cash. Further, Preferred Securities may lose substantial
value if distributions are deferred, suspended or not declared. Preferred
Securities may also permit the issuer to convert Preferred Securities into the
issuer’s common stock. Preferred Securities that are convertible into common
stock may decline in value if the common stock to which Preferred Securities may
be converted declines in value. Preferred Securities may be less liquid than
such securities as common stocks and do not convey the same rights as common
stock to the holder of Preferred Securities, such as voting rights (except in
certain situations relating to distributions of preferred dividends). Preferred
Securities are subject to greater credit risk than traditional fixed income
securities because the rights of holders of Preferred Securities are
subordinated to the rights of the bond and debtholders of an issuer. If an
issuer of
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Preferred
Securities encounters financial difficulties, the issuer’s board of directors
may not declare a distribution and the value of Preferred Securities may decline
as a result. The board of directors of an issuer of Preferred Securities may not
declare distributions even if such payments have come due.
Convertible
Securities Risk. (VanEck
Vectors Preferred Securities ex Financials ETF only.) Convertible securities are
subject to risks associated with both fixed income securities and common stocks.
Depending on the convertible security’s conversion value, the price of a
convertible security will be influenced by interest rates (i.e.,
its price generally will increase when interest rates fall and decrease when
interest rates rise) or will tend to fluctuate directly with the price of the
equity security into which the security can be converted. Convertible securities
are usually subordinated to comparable nonconvertible securities. Moreover, many
convertible securities have credit ratings that are below investment grade and
are subject to the same risks as lower-rated debt securities. Convertible
securities generally do not participate directly in any dividend increases or
decreases of the underlying securities, although the market prices of
convertible securities may be affected by any dividend changes or other changes
in the underlying securities.
Index
Tracking Risk. Each
Fund’s return may not match the return of its Index for a number of reasons. For
example, a Fund incurs a number of operating expenses, including taxes, not
applicable to its Index and incurs costs associated with buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of its Index and (to the extent creations and
redemptions are effected in cash) raising cash to meet redemptions or deploying
cash in connection with newly created Creation Units (defined herein), which are
not factored into the return of its Index. Transaction costs, including
brokerage costs, will decrease the Fund’s NAV to the extent not offset by the
transaction fee payable by an AP. Market disruptions and regulatory restrictions
could have an adverse effect on the Fund’s ability to adjust its exposure to the
required levels in order to track its Index. Unusual market conditions may cause
the Fund's Index Provider to postpone a scheduled rebalance, which could cause
the Index to vary from its normal or expected composition. There is no assurance
that the Fund’s Index Provider (defined herein) or any agents that may act on
its behalf will compile the Fund’s Index accurately, or that the Index will be
determined, composed or calculated accurately. Errors in respect of the quality,
accuracy and completeness of the data used to compile the Index may occur from
time to time and may not be identified and corrected by the Index Provider for a
period of time or at all, particularly where the indices are less commonly used
as benchmarks by funds or managers. Therefore, gains, losses or costs associated
with errors of the Index Provider or its agents will generally be borne by the
Fund and its shareholders. For example, during a period where the Fund’s Index
contains incorrect constituents, the Fund would have market exposure to such
constituents and would be underexposed to the Index’s other constituents. Such
errors may negatively or positively impact the Fund and its shareholders. Any
gains due to the Index Provider’s or others’ errors will be kept by the Fund and
its shareholders and any losses resulting from the Index Provider’s or others’
errors will be borne by the Fund and its shareholders. When a Fund’s Index is
rebalanced and the Fund in turn rebalances its portfolio to attempt to increase
the correlation between the Fund’s portfolio and its respective Index, any
transaction costs and market exposure arising from such portfolio rebalancing
will be borne directly by the applicable Fund and its shareholders. In addition,
each Fund’s (except for VanEck Vectors BDC Income ETF, VanEck Vectors Fallen
Angel High Yield Bond ETF, VanEck Vectors Mortgage REIT Income
ETF and VanEck Vectors Preferred Securities ex Financials ETF) use of a
representative sampling approach may cause the Fund’s returns to not be as
closely correlated with the return of its Index as would be the case if the Fund
purchased all of the securities in its Index. Each Fund may not be fully
invested at times either as a result of cash flows into the Fund (to the extent
creations and redemptions are effected in cash) or reserves of cash held by the
Fund to pay expenses and (to the extent creations and redemptions are effected
in cash) meet redemptions. In addition, a Fund may not be able to invest in
certain securities included in its Index, or invest in them in the exact
proportions in which they are represented in its Index, due to legal
restrictions or limitations imposed by the governments of certain countries,
certain Exchange listing standards, a lack of liquidity in markets in which
securities trade, potential adverse tax consequences or other regulatory reasons
(such as diversification requirements). A lack of liquidity may be due to
various events, including markets events, economic conditions or investor
perceptions. Illiquid securities may be difficult to value and their value may
be lower than the market price of comparable liquid securities, which would
negatively affect the Fund's performance. Moreover, a Fund may be delayed in
purchasing or selling securities included in its Index. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. Certain Funds may encounter issues with regard to currency
convertibility (including the cost of borrowing funds, if any) or repatriation,
which may also increase index tracking risk. Certain Funds may also need to rely
on borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, a Fund may sell certain securities, and such sale may cause
the Fund to realize a loss and deviate from the performance of its Index. With
respect to VanEck Vectors Green Bond ETF, the performance of a “green” bond
issuer may cause its securities to no longer merit “green” status, and such
securities would no longer be eligible for inclusion in the Index. This could
cause the Fund to temporarily hold securities that are not in the Index, which
may adversely affect the Fund and its investments and may increase the risk of
Index tracking error. Additionally, there may also be a limited supply of bonds
that merit “green” status, which may increase the risk of index tracking
error.
Certain
Funds may accept cash in connection with a purchase of Creation Units or effect
its redemptions in cash rather than in-kind and, as a result, the Fund’s ability
to match the return of its Index will be affected.
Certain
Funds may fair value certain of the foreign securities and/or underlying
currencies or other assets it holds, except those securities primarily traded on
exchanges that close at the same time the Fund calculates its NAV. To the extent
a Fund calculates
its
NAV based on fair value prices and the value of its Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of its Index is not based on fair value prices) or if the Fund
otherwise calculates its NAV based on prices that differ from those used in
calculating its Index, the Fund’s ability to track its Index may be adversely
affected. The need to comply with the tax diversification and other requirements
of the Internal Revenue Code may also impact the Fund’s ability to replicate the
performance of its Index. In addition, if a Fund utilizes depositary receipts
not included in its respective Index and other derivative instruments, its
return may not correlate as well with the return of its Index as would be the
case if the Fund purchased all the securities in its Index directly. Actions
taken in response to proposed corporate actions could result in increased
tracking error. VanEck Vectors Emerging Markets Aggregate Bond ETF, VanEck
Vectors Emerging Markets High Yield Bond ETF and VanEck Vectors International
High Yield Bond ETF may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. In light of the factors discussed above,
each Fund’s return may deviate significantly from the return of its
Index.
Apart
from scheduled rebalances, the Index Provider or its agents may carry out
additional ad hoc rebalances to the Index in order, for example, to correct an
error in the selection of index constituents. When the Index is rebalanced and
the Fund in turn rebalances its portfolio to attempt to increase the correlation
between the Fund’s portfolio and the Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by the
Fund and its shareholders. Therefore, errors and additional ad hoc rebalances
carried out by the Index Provider to the Index may increase the costs to and the
tracking error risk of the Fund. Index tracking risk may be heightened during
times of increased market volatility or other unusual market conditions. Changes
to the composition of a Fund’s Index in connection with a rebalancing or
reconstitution of the Index may cause the Fund to experience increased
volatility, during which time the Fund’s index tracking risk may be
heightened.
Risk
of Cash Transactions.
Unlike other ETFs, VanEck Vectors Emerging Markets Aggregate Bond ETF effects
its creations and redemptions at least partially for cash, rather than wholly
for in-kind securities. Because the Funds currently intend to effect all or a
portion of redemptions for cash, rather than in-kind distributions, they may be
required to sell portfolio securities in order to obtain the cash needed to
distribute redemption proceeds, which involves transaction costs that the Funds
may not have incurred had they effected redemptions entirely in-kind. These
costs may include brokerage costs or taxable losses or gains, which may be
imposed on the Funds and decrease the Funds’ NAV to the extent such costs are
not offset by a transaction fee payable by an Authorized Participant (“AP”). If
the Funds recognize a gain on these sales, this generally will cause the Funds
to recognize a gain they might not otherwise have recognized if they 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 Funds 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 Funds generally intend to distribute these gains to shareholders to avoid
being taxed on these gains at the Fund level and otherwise comply with the
special tax rules that apply to them. 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.
Passive
Management Risk. Unlike
many investment companies, the Funds are not “actively” managed. Therefore,
unless a specific security is removed from its Index, a Fund generally would not
sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from a Fund’s Index, the Fund may be forced to sell
such security at an inopportune time or for prices other than at current market
values. An investment in a Fund involves risks similar to those of investing in
any fund that invests in bonds or equity securities traded on an exchange, such
as market fluctuations caused by such factors as economic and political
developments, changes in interest rates and perceived trends in security prices.
Each Fund’s Index may not contain the appropriate or a diversified mix of
securities for any particular economic cycle. The timing of changes in the
securities of a Fund’s portfolio in seeking to replicate its Index could have a
negative effect on the Fund. Unlike with an actively managed fund, the Adviser
does not use techniques or defensive strategies designed to lessen the effects
of market volatility or to reduce the impact of periods of market decline.
Additionally, unusual market conditions may cause a Fund’s Index Provider to
postpone a scheduled rebalance or reconstitution, which could cause a Fund’s
Index to vary from its normal or expected composition.This means that, based on
market and economic conditions, a Fund’s performance could be lower than funds
that may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Authorized
Participant (“AP”) Concentration Risk.
A Fund may have a limited number of financial institutions that act as APs, none
of which are obligated to engage in creation and/or redemption transactions. To
the extent that those APs exit the business, or are unable to or choose not to
process creation and/or redemption orders, and no other AP is able to step
forward to create and redeem, there may be a significantly diminished trading
market for Shares or Shares may trade like closed-end funds at a greater
discount (or premium) to NAV and possibly face trading halts and/or de-listing.
The AP concentration risk may be heightened in scenarios where APs have limited
or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in a
Fund’s market price from its NAV. Van Eck Securities Corporation, the
distributor of the Shares (the “Distributor”), does not
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maintain
a secondary market in the Shares. Investors purchasing and selling Shares in the
secondary market may not experience investment results consistent with those
experienced by those APs creating and redeeming directly with a
Fund.
Decisions
by market makers or APs to reduce their role or “step away” from these
activities in times of market stress could inhibit the effectiveness of the
arbitrage process in maintaining the relationship between the underlying value
of a Fund’s portfolio securities and the Fund’s market price. This reduced
effectiveness could result in Fund Shares trading at a price which differs
materially from NAV and also in greater than normal intraday bid/ask spreads for
Fund Shares.
Trading
Issues.
Trading in Shares on 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 an 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 an Exchange occurs, a
shareholder may be unable to purchase or sell Shares of a Fund. There can be no
assurance that the requirements of an Exchange necessary to maintain the listing
of a Fund will continue to be met or will remain unchanged.
Shareholder
Risk.
Certain shareholders, including other funds advised by the Adviser, may from
time to time own a substantial amount of a Fund’s Shares. In addition, a third
party investor, the Adviser or an affiliate of the Adviser, an AP, a market
maker, or another entity may invest in a Fund and hold its investment for a
limited period of time. There can be no assurance that any large shareholder
would not redeem its investment. Redemptions by shareholders could have a
negative impact on a Fund. In addition, transactions by large shareholders may
account for a large percentage of the trading volume on 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 a Fund’s
holdings. The NAV of the Shares will fluctuate with changes in the market value
of a Fund’s securities holdings. The market price of Shares may fluctuate, in
some cases materially, in accordance with changes in NAV and the intraday value
of a Fund’s holdings, as well as supply and demand on the Exchange. The Adviser
cannot predict whether Shares will trade below, at or above their NAV. Given the
fact that Shares can be created and redeemed by APs in Creation Units, the
Adviser believes that large discounts or premiums to the NAV of Shares should
not be sustained in the long-term. While the creation/redemption feature is
designed to make it likely that Shares normally will trade close to the value of
a Fund’s holdings, market prices are not expected to correlate exactly to the
Fund’s NAV due to timing reasons, supply and demand imbalances and other
factors. The price differences may be due, in large part, to the fact that
supply and demand forces at work in the secondary trading market for Shares may
be closely related to, but not necessarily identical to, the same forces
influencing the prices of the securities of a Fund’s portfolio of investments
trading individually or in the aggregate at any point in time. If a shareholder
purchases Shares at a time when the market price is at a premium to the NAV or
sells Shares at a time when the market price is at a discount to the NAV, the
shareholder may pay significantly more or receive significantly less than the
underlying value of the Shares that were bought or sold or the shareholder may
be unable to sell his or her Shares. Any of these factors, discussed above and
further below, may lead to the Shares trading at a premium or discount to a
Fund’s NAV. In addition, because certain of a Fund’s underlying securities trade
on exchanges that are closed when the Exchange (i.e.,
the exchange that Shares of the Fund trade on) is open, there are likely to be
deviations between the expected value of an underlying security and the closing
security’s price (i.e.,
the last quote from its closed foreign market) resulting in premiums or
discounts to NAV that may be greater than those experienced by other ETFs. In
addition, the securities held by a Fund may be traded in markets that close at a
different time than the Exchange. Liquidity in those securities may be reduced
after the applicable closing times. Accordingly, during the time when the
Exchange is open but after the applicable market closing, fixing or settlement
times, bid/ask spreads and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
When
you buy or sell Shares of a Fund through a broker, you will likely incur a
brokerage commission or other charges imposed by brokers. In addition, the
market price of Shares, like the price of any exchange-traded security, includes
a bid/ask spread charged by the market makers or other participants that trade
the particular security. The spread of a Fund’s Shares varies over time based on
the Fund’s trading volume and market liquidity and may increase if the Fund’s
trading volume, the spread of the Fund’s underlying securities, or market
liquidity decrease. In times of severe market disruption, including when trading
of a Fund’s holdings may be halted, the bid/ask spread may increase
significantly. This means that Shares may trade at a discount to the Fund’s NAV,
and the discount is likely to be greatest during significant market
volatility.
Non-Diversified
Risk.
Each Fund is a separate investment portfolio of the Trust, which is an open-end
investment company registered under the 1940 Act. Each Fund, except for VanEck
Vectors BDC Income ETF, VanEck Vectors Emerging Markets High Yield Bond ETF,
VanEck Vectors Fallen Angel High Yield Bond ETF and VanEck Vectors International
High Yield Bond ETF, is classified as a “non-diversified” fund under the 1940
Act. Moreover, each Fund is subject to the risk that it will be more volatile
than a diversified fund because the Fund may invest its assets in a smaller
number of issuers or may invest a larger proportion of its assets in a single
issuer. Moreover, the gains and losses on a single investment may have a greater
impact on a Fund’s NAV
and
may make the Fund more volatile than more diversified funds. VanEck Vectors Mortgage REIT Income ETF may be particularly
vulnerable to this risk because the Index is comprised of securities of a
limited number of companies.
Non-Diversification
Risk. The
VanEck Vectors Fallen Angel High Yield Bond ETF may become classified as
non-diversified under the 1940 Act solely as a result of a change in relative
market capitalization or index weighting of one or more constituents of the
Fallen Angel Index. If the Fund becomes non-diversified, it may invest a greater
portion of its assets in securities of a smaller number of individual issuers
than a diversified fund. As a result, changes in the market value of a single
investment could cause greater fluctuations in share price than would occur in a
more diversified fund.
Concentration
Risk. Each
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent that its respective Index concentrates in a
particular sector or sectors or industry or group of industries. The securities
of many or all of the companies in the same sector or industry may decline in
value due to developments adversely affecting such sector or industry. By
concentrating its assets in a particular sector or sectors or industry or group
of industries, a Fund is subject to the risk that economic, political or other
conditions that have a negative effect on those sectors and/or industries may
negatively impact the Fund to a greater extent than if the Fund’s assets were
invested in a wider variety of sectors or industries.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
Each
Fund may invest in securities not included in its respective Index, money market
instruments, including repurchase agreements or other funds which invest
exclusively in money market instruments, convertible securities, structured
notes (notes on which the amount of principal repayment and interest payments
are based on the movement of one or more specified factors, such as the movement
of a particular stock or stock index and certain derivatives, which the Adviser
believes will help a Fund track its Index. VanEck Vectors Green Bond ETF will
not use derivatives for purposes of meeting the requirement that the Fund invest
at least 80% of its total assets in securities that comprise the Fund’s
benchmark index. Convertible securities and depositary receipts not included in
a Fund’s Index may be used by the Fund in seeking performance that corresponds
to its respective Index, and in managing cash flows, and may count towards
compliance with the Fund’s 80% policy. Certain Funds may also utilize
participation notes to seek performance that corresponds to their Index. Each
Fund may also invest, to the extent permitted by the 1940 Act, or, in the case
of VanEck Vectors BDC Income ETF, the Exemptive Relief, in other affiliated and
unaffiliated funds, such as open-end or closed-end management investment
companies, including other ETFs.
BORROWING
MONEY
Each
Fund may borrow money from a bank up to a limit of one-third of the market value
of its assets. Each Fund has entered into or intends to enter into a credit
facility to borrow money for temporary, emergency or other purposes, including
the funding of shareholder redemption requests, trade settlements and as
necessary to distribute to shareholders any income required to maintain the
Fund’s status as a RIC. To the extent that a Fund borrows money, it may be
leveraged; at such times, the Fund will appreciate or depreciate in value more
rapidly than its Index. Leverage generally has the effect of increasing the
amount of loss or gain a Fund might realize, and may increase volatility in the
value of a Fund’s investments.
LENDING
PORTFOLIO SECURITIES
Each
Fund may lend its portfolio securities to brokers, dealers and other financial
institutions desiring to borrow securities to complete transactions and for
other purposes. In connection with such loans, a Fund receives cash, U.S.
government securities and stand-by letters of credit not issued by the Fund’s
bank lending agent equal to at least 102% of the value of the portfolio
securities being loaned. This collateral is marked-to-market on a daily basis.
Although a Fund will receive collateral in connection with all loans of its
securities holdings, the Fund would be exposed to a risk of loss should a
borrower fail to return the borrowed securities (e.g.,
the Fund would have to buy replacement securities and the loaned securities may
have appreciated beyond the value of the collateral held by the Fund) or become
insolvent. A Fund may pay fees to the party arranging the loan of securities. In
addition, a Fund will bear the risk that it may lose money because the borrower
of the loaned securities fails to return the securities in a timely manner or at
all. Each Fund could also lose money in the event of a decline in the value of
any cash collateral or in the value of investments made with the cash
collateral. These events could trigger adverse tax consequences for the Funds.
Substitute payments for dividends received by a Fund for securities loaned out
by a Fund will not be considered qualified dividend income.
ADDITIONAL
NON-PRINCIPAL RISKS
Risk
of Investing in Derivatives. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Funds’ use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if a Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that
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changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and a Fund could lose more than the amount
it invests. The use of derivatives may increase the amount and affect the timing
and character of taxes payable by shareholders of a Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of a Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, a Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it is contractually
entitled to receive). A liquid secondary market may not always exist for a
Fund’s derivative positions at any time, and the Fund may not be able to
initiate or liquidate a swap position at an advantageous time or price, which
may result in significant losses.
In
October 2020, the Securities and Exchange Commission (the "SEC") adopted a final
rule related to the use of derivatives, short sales, reverse repurchase
agreements and certain other transactions by registered investment companies
that will rescind and withdraw the guidance of the SEC and its staff regarding
asset segregation and cover transactions. The final rule requires funds to trade
derivatives and other transactions that create future payment or delivery
obligations (except reverse repurchase agreements and similar financing
transactions) subject to a value-at-risk (“VaR”) leverage limit, certain
derivatives risk management program and reporting requirements. Generally, these
requirements apply unless a fund qualifies as a “limited derivatives user,” as
defined in the final rule. Under the final rule, when a fund trades reverse
repurchase agreements or similar financing transactions, including certain
tender option bonds, it needs to aggregate the amount of indebtedness associated
with the reverse repurchase agreements or similar financing transactions with
the aggregate amount of any other senior securities representing indebtedness
when calculating the fund’s asset coverage ratio or treat all such transactions
as derivatives transactions. Reverse repurchase agreements or similar financing
transactions aggregated with other indebtedness do not need to be included in
the calculation of whether a fund is a limited derivatives user, but for funds
subject to the VaR testing, reverse repurchase agreements and similar financing
transactions must be included for purposes of such testing whether treated as
derivatives transactions or not. The SEC also provided guidance in connection
with the newrule regarding use of securities lending collateral that may limit a
fund's securities lending activities. Compliance with these new requirements
will be required after an eighteen-month transition period. Following the
compliance date, these requirements may limit the ability of a fund to use
derivatives and reverse repurchase agreements and similar financing transactions
as part of its investment strategies. These requirements may increase the cost
of a fund’s investments and cost of doing business, which could adversely affect
investors.
Risk
of Investing in Chinese Bonds.
(VanEck Vectors Emerging Markets Aggregate Bond ETF only.) Each Fund may invest
in Renminbi (“RMB”)-denominated bonds issued in the People’s Republic of China
(“PRC”) by Chinese credit, government and quasi-governmental issuers (“RMB
Bonds”). RMB Bonds are available on the China interbank bond market (“CIBM”) to
eligible foreign investors through the CIBM Direct Access Program and through
the “Mutual Bond Market Access between Mainland China and Hong Kong” (“Bond
Connect”) program. A Fund’s investments in bonds through either program will be
subject to a number of additional risks and restrictions that may affect the
Fund’s investments and returns.
The
Bond Connect program and the CIBM Direct Access Program are relatively new.
Laws, rules, regulations, policies, notices, circulars or guidelines relating to
the programs as published or applied by the relevant authorities of the PRC are
untested and are subject to change from time to time. There can be no assurance
that the Bond Connect program and/or the CIBM Direct Access Program will not be
restricted, suspended or abolished.
Under
the prevailing PRC regulations, eligible foreign investors who wish to
participate in the Bond Connect program may do so through an offshore custody
agent, registration agent or other third parties (as the case may be), who would
be responsible for making the relevant filings and account opening with the
relevant authorities. A Fund is therefore subject to the risk of default or
errors on the part of such agents.
Under
the prevailing PRC regulations, eligible foreign institutional investors who
wish to invest directly in CIBM through the CIBM Direct Access Program may do so
through an onshore settlement agent, who would be responsible for making the
relevant filings and account opening with the relevant authorities. A Fund is
therefore subject to the risk of default or errors on the part of such
agent.
Trading
through the Bond Connect program is performed through newly developed trading
platforms and operational systems. There is no assurance that such systems will
function properly (in particular, under extreme market conditions) or will
continue to be adapted to changes and developments in the market. In addition,
where a Fund invests in the CIBM through the Bond Connect program, it may be
subject to risks of delays inherent in the order placing and/or
settlement.
Investing
in RMB Bonds involves additional risks, including, but not limited to, the fact
that the economy of China differs, often unfavorably, from the U.S. economy,
including, among other things, in terms of currency revaluation, structure,
general development, government involvement, wealth distribution, rate of
inflation, growth rate, allocation of resources and capital
reinvestment.
The
RMB is currently not a freely convertible currency. The Chinese government
places strict regulation on the RMB and sets the value of the RMB to levels
dependent on the value of the U.S. dollar. The Chinese government’s imposition
of restrictions on the
repatriation
of RMB out of mainland China may limit the depth of the offshore RMB market and
reduce the liquidity of a Fund’s investments.
Zero-Coupon
and Payment-in-Kind Securities Risk. (VanEck
Vectors Emerging Markets High Yield Bond ETF, VanEck Vectors Fallen Angel High
Yield Bond ETF, VanEck Vectors Green Bond ETF and VanEck Vectors International
High Yield Bond ETF only.) Zero-coupon securities are securities that are sold
at a discount to par value and on which interest payments are not made during
the life of the security. Upon maturity, the holder is entitled to receive the
par value of the security. Payment-in-kind securities are securities that have
interest payable by delivery of additional securities. Upon maturity, the holder
is entitled to receive the aggregate par value of the securities. The market
prices of zero-coupon and payment-in-kind securities are generally more volatile
than the market prices of interest bearing securities and are likely to respond
to a greater degree to changes in interest rates than interest bearing
securities having similar maturities and credit quality. A Fund accrues income
with respect to zero-coupon and payment-in-kind securities prior to the receipt
of cash payments. Even though periodic interest payments in cash are not made on
such securities, tax rules require the Fund to distribute accrued income, which
may require the Fund to liquidate securities at unfavorable prices or borrow
money in order to make these distributions. Additionally, if the issuer of such
securities defaults, the Fund may obtain no return at all on its investment.
Leverage
Risk.
To the extent that a Fund borrows money or utilizes certain derivatives, it may
be leveraged. Leveraging generally exaggerates the effect on NAV of any increase
or decrease in the market value of the Fund’s portfolio securities. To manage
the risk associated with leveraging, each Fund may segregate liquid assets, or
otherwise “cover” its derivatives position in a manner consistent with the 1940
Act and the rules and SEC interpretations thereunder. A Fund may modify its
asset segregation policies at any time to comply with any changes in the SEC’s
positions regarding asset segregation.
Unlike
many conventional mutual funds which are only bought and sold at closing NAVs,
the Shares of certain Funds have been designed to be tradable in a secondary
market on an intra-day basis and to be redeemed principally in-kind, except for
VanEck Vectors Emerging Markets Aggregate Bond ETF whose Shares are redeemed at
least partially for cash, in Creation Units at each day’s market close. These
in-kind arrangements are designed to mitigate the adverse effects on a Fund’s
portfolio that could arise from frequent cash redemption transactions that
affect the NAV of the Fund. Moreover, in contrast to conventional mutual funds,
where frequent redemptions can have an adverse tax impact on taxable
shareholders because of the need to sell portfolio securities which, in turn,
may generate taxable gain, the in-kind redemption mechanism of certain Funds, to
the extent used, generally is not expected to lead to a tax event for
shareholders whose Shares are not being redeemed.
A
description of each Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio securities is available in the Funds’
SAI.
Board
of Trustees.
The
Board of Trustees of the Trust has responsibility for the general oversight of
the management of the Funds, including general supervision of the Adviser and
other service providers, but is not involved in the day-to-day management of the
Trust. A list of the Trustees and the Trust officers, and their present
positions and principal occupations, is provided in the Funds’ SAI.
Investment
Adviser. Under
the terms of an investment management agreement between the Trust and Van Eck
Associates Corporation with respect to the Funds (the “Investment Management
Agreement”), Van Eck Associates Corporation serves as the adviser to each Fund
and, subject to the supervision of the Board of Trustees, is responsible for the
day-to-day investment management of each Fund. As of [June 30, 2021], the
Adviser managed approximately $[55.4] billion in assets. The Adviser has been an
investment adviser since 1955 and also acts as adviser or sub-adviser to mutual
funds, other ETFs, other pooled investment vehicles and separate accounts. The
Adviser’s principal business address is 666 Third Avenue, 9th Floor, New York,
New York 10017. A discussion regarding the Board of Trustees’ approval of the
Investment Management Agreement with respect to each Fund will be available in
the Trust’s annual report for the period ended April 30, 2021.
Pursuant
to the Investment Management Agreement, the Adviser is responsible for all
expenses of the Funds, including the costs of transfer agency, custody, fund
administration, legal, audit and other services, except for the fee payment
under the Investment Management Agreement, acquired fund fees and expenses,
interest expense, offering costs, trading expenses, taxes and extraordinary
expenses. For its services to each Fund, each Fund has agreed to pay the Adviser
an annual unitary management fee equal to 0.40% (with respect to VanEck Vectors
BDC Income ETF, VanEck Vectors Emerging Markets High Yield Bond ETF, VanEck
Vectors International High Yield Bond ETF, VanEck Vectors
Mortgage REIT Income ETF and VanEck Vectors Preferred Securities ex
Financials ETF), 0.35% (with respect to VanEck Vectors Emerging Markets
Aggregate Bond ETF and VanEck Vectors Fallen Angel High Yield Bond ETF), 0.20%
(with respect to VanEck Vectors Green Bond ETF), and 0.14% (with respect to
VanEck Vectors Investment Grade Floating Rate ETF) of its average daily net
assets. Offering costs excluded from the annual unitary management fee are: (a)
legal fees pertaining to a Fund’s Shares offered for sale; (b) SEC and state
registration fees; and (c) initial fees paid for Shares of a Fund to be listed
on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay all
such offering costs until at least September 1, 2022 with respect to each
Fund.
Prior
to May 1, 2021, for the services provided to each Fund under the Investment
Management Agreement, each Fund pays the Adviser monthly fees based on a
percentage of each Fund’s average daily net assets at the annual rate of 0.35%
(with respect to VanEck Vectors Emerging Markets Aggregate Bond ETF, VanEck
Vectors Green Bond ETF and VanEck Vectors Investment Grade Floating Rate ETF)
and 0.40% (with respect to VanEck Vectors BDC Income ETF, VanEck Vectors
Emerging Markets High Yield Bond ETF, VanEck Vectors Fallen Angel High Yield
Bond ETF, VanEck Vectors International High Yield Bond ETF, VanEck Vectors Mortgage REIT Income ETF and VanEck Vectors
Preferred Securities ex Financials ETF).
Manager
of Managers Structure.
With respect to VanEck Vectors BDC Income ETF, VanEck Vectors Emerging Markets
High Yield Bond ETF, VanEck Vectors Fallen Angel High Yield Bond ETF, VanEck
Vectors Green Bond ETF and VanEck Vectors International High Yield Bond ETF, the
Adviser and the Trust may rely on an exemptive order (the “Order”) from the SEC
that permits the Adviser to enter into investment sub-advisory agreements with
unaffiliated sub-advisers without obtaining shareholder approval. The Adviser,
subject to the review and approval of the Board of Trustees, may select one or
more sub-advisers for the Funds 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 Funds and
their 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 a Fund’s assets for management among any other sub-adviser(s) and
itself. This means that the Adviser would be able to reduce the sub-advisory
fees and retain a larger portion of the management fee, or increase the
sub-advisory fees and retain a smaller portion of the management fee. The
Adviser would compensate each sub-adviser out of its management fee.
Administrator,
Custodian and Transfer Agent. Van
Eck Associates Corporation is the administrator for the Funds (the
“Administrator”), and State Street Bank and Trust Company is the custodian of
each Fund’s assets and provides transfer agency and fund accounting services to
the Funds. The Administrator is responsible for certain clerical, recordkeeping
and/or bookkeeping services which are required to be provided pursuant to the
Investment Management Agreement.
Distributor.
Van
Eck Securities Corporation is the distributor of the Shares (the "Distributor").
The Distributor will not distribute Shares in less than a specified number of
Shares, each called a "Creation Unit," and does not maintain a secondary market
in the Shares. The Shares are traded in the secondary market.
The
portfolio manager who is currently responsible for the day-to-day management of
each of VanEck Vectors Emerging Markets Aggregate Bond ETF’s, VanEck Vectors
Emerging Markets High Yield Bond ETF’s, VanEck Vectors Fallen Angel High Yield
Bond ETF’s, VanEck Vectors Green Bond ETF’s, VanEck Vectors International High
Yield Bond ETF’s, VanEck Vectors Investment Grade Floating Rate ETF’s portfolios
is Francis G. Rodilosso. The portfolio managers who currently share joint
responsibility for the day-to-day management of each of VanEck Vectors BDC
Income ETF’s, VanEck Vectors Mortgage REIT Income ETF’s and
VanEck Vectors Preferred Securities ex Financials ETF’s portfolios are Peter H.
Liao and Guo Hua (Jason) Jin.
Mr.
Rodilosso has been employed by the Adviser as a portfolio manager since March
2012. Mr. Rodilosso graduated from Princeton University in 1990 with a Bachelor
of Arts and from the Wharton School of Business in 1993 with a Masters of
Business Administration.
Mr.
Liao has been employed by the Adviser as an analyst since the summer of 2004 and
has been a portfolio manager since 2006. Mr. Liao graduated from New York
University in 2004 with a Bachelor of Arts in Economics and Mathematics.
Mr.
Jin has been employed by the Adviser as an analyst since January 2007 and has
been a portfolio manager since 2018. Mr. Jin graduated from the State University
of New York at Buffalo in 2004 with a Bachelor of Science degree in Business
Administration with a concentration in Financial Analysis.
Each
of Messrs. Jin, Liao and Rodilosso serve as a portfolio manager of other funds
of the Trust. Messrs. Liao and Rodilosso also serve as portfolio managers for
certain other investment companies and pooled investment vehicles advised by the
Adviser. See the Funds’ SAI for additional information about the portfolio
managers’ compensation, other accounts managed by the portfolio managers and
their respective ownership of Shares of each Fund.
DETERMINATION
OF NAV
The
NAV per Share for each Fund is computed by dividing the value of the net assets
of the Fund (i.e., the value of its total assets less total liabilities) by the
total number of Shares outstanding. Expenses and fees, including the management
fee, are accrued daily and taken into account for purposes of determining NAV.
The NAV of each Fund is determined each business day as of the close of trading
(ordinarily 4:00 p.m., Eastern time) on the New York Stock Exchange.
The
values of each Fund’s portfolio securities are based on the securities’ closing
prices on the markets on which the securities trade, when available. Due to the
time differences between the United States and certain countries in which
certain Funds invest, securities on these exchanges may not trade at times when
Shares of the Fund will trade. In the absence of a last reported sales price, or
if no sales were reported, and for other assets for which market quotes are not
readily available, values may be based on quotes obtained from a quotation
reporting system, established market makers or by an outside independent pricing
service. Debt instruments with remaining maturities of more than 60 days are
valued at the evaluated mean price provided by an outside independent pricing
service. If an outside independent pricing service is unable to provide a
valuation, the instrument is valued at the mean of the highest bid and the
lowest asked quotes obtained from one or more brokers or dealers selected by the
Adviser. Prices obtained by an outside independent pricing service may use
information provided by market makers or estimates of market values obtained
from yield data related to investments or securities with similar
characteristics and may use a computerized grid matrix of securities and its
evaluations in determining what it believes is the fair value of the portfolio
securities. Short-term debt instruments having a maturity of 60 days or less are
valued at amortized cost. Any assets or liabilities denominated in currencies
other than the U.S. dollar are converted into U.S. dollars at the current market
rates on the date of valuation as quoted by one or more sources. If a market
quotation for a security or other asset is not readily available or the Adviser
believes it does not otherwise accurately reflect the market value of the
security or asset at the time a Fund calculates its NAV, the security or asset
will be fair valued by the Adviser in accordance with the Trust’s valuation
policies and procedures approved by the Board of Trustees. Each Fund may also
use fair value pricing in a variety of circumstances, including but not limited
to, situations when the value of a security in the Fund’s portfolio has been
materially affected by events occurring after the close of the market on which
the security is principally traded (such as a corporate action or other news
that may materially affect the price of a security) or trading in a security has
been suspended or halted. In addition, each Fund that holds foreign equity
securities currently expects that it will fair value certain of the foreign
equity securities held by the Fund each day the Fund calculates its NAV, except
those securities principally traded on exchanges that close at the same time the
Fund calculates its NAV.
Accordingly,
a Fund’s NAV may reflect certain portfolio securities’ fair values rather than
their market prices at the time the exchanges on which they principally trade
close. Fair value pricing involves subjective judgments and it is possible that
a fair value determination for a security or other asset is materially different
than the value that could be realized upon the sale of such security or asset.
In addition, fair value pricing could result in a difference between the prices
used to calculate a Fund’s NAV and the prices used by such Fund’s respective
Index. This may adversely affect a Fund’s ability to track its Index. With
respect to securities that are principally traded on foreign exchanges, the
value of a Fund’s portfolio securities may change on days when you will not be
able to purchase or sell your Shares.
INTRADAY
VALUE
The
trading prices of the Funds’ Shares in the secondary market generally differ
from the Funds’ daily NAV and are affected by market forces such as the supply
of and demand for Fund Shares and underlying securities held by each Fund,
economic conditions and other factors. Information regarding the intraday value
of the Funds’ Shares (“IIV”) is disseminated every 15 seconds 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 each Fund at a particular point in time or the best possible
valuation of the current portfolio. Therefore, the IIV should not be viewed as a
“real-time” update of the Funds’ NAV, which is computed only once a day. The IIV
is generally determined by using current market quotations and/or price
quotations obtained from broker-dealers and other market intermediaries that may
trade in the portfolio securities held by each Fund and valuations based on
current market rates. The quotations and/or valuations of certain Fund holdings
may not be updated during U.S. trading hours if such holdings do not trade in
the United States. Each Fund is not involved in, or responsible for, the
calculation or dissemination of the IIV and makes no warranty as to its
accuracy.
RULE
144A AND OTHER UNREGISTERED SECURITIES
An
AP (i.e., a person eligible to place orders with the Distributor to create or
redeem Creation Units of a Fund) that is not a “qualified institutional buyer,”
as such term is defined under Rule 144A of the Securities Act of 1933, as
amended (the “Securities Act”), will not be able to receive, as part of a
redemption, restricted securities eligible for resale under Rule 144A or other
unregistered securities.
BUYING
AND SELLING EXCHANGE-TRADED SHARES
The
Shares of the Funds are listed on the Exchange. If you buy or sell Shares in the
secondary market, you will incur customary brokerage commissions and charges and
may pay some or all of the “spread,” which is any difference between the bid
price and the ask price. The spread varies over time for a Fund’s Shares based
on a Fund’s trading volume and market liquidity, and is generally lower if the
Funds have high trading volume and market liquidity, and generally higher if the
Funds have little trading volume and market liquidity (which is often the case
for funds that are newly launched or small in size). In times of severe market
disruption
or low trading volume in a Fund’s Shares, this spread can increase
significantly. It is anticipated that the Shares will trade in the secondary
market at prices that may differ to varying degrees from the NAV of the Shares.
During periods of disruptions to creations and redemptions or the existence of
extreme market volatility, the market prices of Shares are more likely to differ
significantly from the Shares’ NAV.
The
Depository Trust Company (“DTC”) serves as securities depository for the Shares.
(The Shares may be held only in book-entry form; stock certificates will not be
issued.) DTC, or its nominee, is the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on the records
of DTC or its participants (described below). Beneficial owners of Shares are
not entitled to have Shares registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and are
not considered the registered holder thereof. Accordingly, to exercise any
rights of a holder of Shares, each beneficial owner must rely on the procedures
of: (i) DTC; (ii) “DTC Participants,” i.e.,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives) own
DTC; and (iii) “Indirect Participants,” i.e.,
brokers, dealers, banks and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly,
through which such beneficial owner holds its interests. The Trust understands
that under existing industry practice, in the event the Trust requests any
action of holders of Shares, or a beneficial owner desires to take any action
that DTC, as the record owner of all outstanding Shares, is entitled to take,
DTC would authorize the DTC Participants to take such action and that the DTC
Participants would authorize the Indirect Participants and beneficial owners
acting through such DTC Participants to take such action and would otherwise act
upon the instructions of beneficial owners owning through them. As described
above, the Trust recognizes DTC or its nominee as the owner of all Shares for
all purposes. For more information, see the section entitled “Book Entry Only
System” in the Funds’ SAI.
Each
Exchange is open for trading Monday through Friday and is closed on weekends and
the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Because non-U.S. exchanges may be open on days when a Fund
does not price its Shares, the value of the securities in the Fund’s portfolio
may change on days when shareholders will not be able to purchase or sell a
Fund’s Shares.
The
right of redemption 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 a Fund or determination of its NAV
is not reasonably practicable; or (4) in such other circumstance as is permitted
by the SEC.
Market
Timing and Related Matters.
The
Funds impose no restrictions on the frequency of purchases and redemptions.
Frequent purchases and redemptions of Fund Shares may attempt to take advantage
of a potential arbitrage opportunity presented by a lag between a change in the
value of a Fund’s portfolio securities after the close of the primary markets
for a Fund’s portfolio securities and the reflection of that change in a Fund’s
NAV (“market timing”). The Board of Trustees considered the nature of each Fund
(i.e., a fund whose shares are expected to trade intraday), that the Adviser
monitors the trading activity of APs for patterns of abusive trading, that the
Funds reserve the right to reject orders that may be disruptive to the
management of or otherwise not in the Funds’ best interests, and that each Fund
may fair value certain of its securities. Given this structure, the Board of
Trustees determined that it is not necessary to impose restrictions on the
frequency of purchases and redemptions for the Funds at the present time.
DISTRIBUTIONS
Net
Investment Income and Capital Gains.
As a Fund shareholder, you are entitled to your share of such Fund’s
distributions of net investment income and net realized capital gains on its
investments. Each Fund pays out substantially all of its net earnings to its
shareholders as “distributions.”
Each
Fund typically earns income dividends from stocks and interest from debt
securities. These amounts, net of expenses, are typically passed along to Fund
shareholders as dividends from net investment income. Each Fund realizes capital
gains or losses whenever it sells securities. Net capital gains are distributed
to shareholders as “capital gain distributions.” Distributions from a 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 a Fund are taxable as long-term capital gains.
Net
investment income, if any, is typically distributed to shareholders monthly by
each Fund (quarterly with respect to VanEck Vectors BDC Income ETF and VanEck Vectors Mortgage REIT Income ETF) while net realized
capital gains, if any, are typically distributed to shareholders at least
annually. Dividends may be declared and paid more frequently to improve index
tracking or to comply with the distribution requirements of the Internal Revenue
Code. In addition, in situations where a Fund acquires investment securities
after the beginning of a dividend period, the Funds may elect to distribute at
least annually amounts representing the full dividend yield net of expenses on
the underlying investment securities, as if the Funds owned the underlying
investment securities for the entire dividend period. If a Fund so elects, some
portion of each distribution may result in a return of capital, which, for tax
purposes, is treated as a return on your investment in Shares. You will be
notified regarding the portion of the distribution which represents a return of
capital.
Distributions
in cash may be reinvested automatically in additional Shares of a Fund only if
the broker through which you purchased Shares makes such option
available.
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SHAREHOLDER
INFORMATION (continued) |
TAX
INFORMATION
As
with any investment, you should consider how your Fund investment will be taxed.
The tax information in this Prospectus is provided as general information. You
should consult your own tax professional about the tax consequences of an
investment in the Funds, including the possible application of foreign, state
and local taxes. Unless your investment in a Fund is through a tax-exempt entity
or tax-deferred retirement account, such as a 401(k) plan, you need to be aware
of the possible tax consequences when: (i) a Fund makes distributions; (ii) you
sell Shares in the secondary market or (iii) you create or redeem Creation
Units.
Taxes
on Distributions. As
noted above, each Fund expects to distribute net investment income, if any,
monthly (quarterly with respect to VanEck Vectors BDC Income ETF and VanEck Vectors Mortgage REIT Income ETF), and any net realized
long-term or short-term capital gains, if any, annually. Each Fund may also pay
a special distribution at any time to comply with U.S. federal tax
requirements.
Distributions
from a Fund’s net investment income, including any net short-term gains, if any,
are taxable to you as ordinary income. In general, your distributions are
subject to U.S. federal income tax when they are paid, whether you take them in
cash or reinvest them in a Fund. Distributions from a Fund’s net investment
income, including net short-term capital 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 a Fund owned the investments
that generated them, rather than how long you have owned your Shares.
Distributions of net short-term capital gain 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 (but the 25% capital gain
tax rate will remain applicable to 25% rate gain distributions received by VanEck Vectors Mortgage REIT Income ETF).
The
Funds, except for VanEck Vectors BDC Income ETF, VanEck Vectors
Mortgage REIT Income ETF and VanEck Vectors Preferred Securities ex
Financials ETF, do not expect that any of their distributions will be qualified
dividends eligible for lower tax rates or for the corporate dividends received
deduction. In the event that VanEck Vectors BDC Income ETF, VanEck Vectors Mortgage REIT Income ETF and VanEck Vectors
Preferred Securities ex Financials ETF receive such a dividend and report the
distribution of such dividend as a qualified dividend, the dividend may be taxed
at maximum capital gains rates of 15% or 20%, provided holding period and other
requirements are met at both the shareholder and the Fund level. There can be no
assurance that any significant portion of the VanEck Vectors BDC Income ETF’s,
VanEck Vectors Mortgage REIT Income ETF or VanEck Vectors
Preferred Securities ex Financials ETF’s distributions will be eligible for
qualified dividend treatment.
Distributions
in excess of a Fund’s current and accumulated earnings and profits are treated
as a tax-free return of your investment to the extent of your basis in the
Shares, and generally as capital gain thereafter. A return of capital, which for
tax purposes is treated as a return of your investment, reduces your basis in
Shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition of Shares. A distribution will reduce a Fund’s NAV per Share and may
be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of
capital.
Dividends,
interest and gains from non-U.S. investments of the Funds may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may, in some cases, reduce or
eliminate such taxes.
If
more than 50% of a Fund’s total assets at the end of its taxable year consist of
foreign securities, the Fund may elect to “pass through” to its investors
certain foreign income taxes paid by the Fund, with the result that each
investor will (i) include in gross income, even though not actually received,
the investor’s pro rata share of the Fund’s foreign income taxes, and (ii)
either deduct (in calculating U.S. taxable income) or credit (in calculating
U.S. federal income), subject to certain holding period and other limitations,
the investor’s pro rata share of the Fund’s foreign income taxes. It is expected
that more than 50% of each Fund’s assets will consist of foreign securities,
except for VanEck Vectors BDC Income ETF, VanEck Vectors
Mortgage REIT Income ETF, VanEck Vectors Fallen Angel High Yield Bond ETF,
VanEck Vectors Investment Grade Floating Rate ETF and VanEck Vectors Preferred
Securities ex Financials ETF.
Backup
Withholding. A
Fund may be required to withhold a percentage of your distributions and proceeds
if you have not provided a taxpayer identification number or social security
number or otherwise established a basis for exemption from backup withholding.
The backup withholding rate for individuals is currently 24%. This is not an
additional tax and may be refunded, or credited against your U.S. federal income
tax liability, provided certain required information is furnished to the
Internal Revenue Service.
Taxes
on the Sale or Cash Redemption of Exchange Listed Shares. Currently,
any capital gain or loss realized upon a sale of Shares is generally treated as
long term capital gain or loss if the Shares have been held for more than one
year and as a short term capital gain or loss if held for one year or less.
However, any capital loss on a sale of Shares held for six months or less is
treated as long-term capital loss to the extent that capital gain dividends were
paid with respect to such Shares. The ability to deduct capital losses may be
limited. To the extent that a Fund’s shareholder’s Shares are redeemed for cash,
this is normally treated as a sale for tax purposes.
Taxes
on Creations and Redemptions of Creation Units.
A person who exchanges securities for Creation Units generally will recognize a
gain or loss. The gain or loss will be equal to the difference between the
market value of the Creation Units at the time of exchange and the sum of the
exchanger’s aggregate basis in the securities surrendered and the amount of any
cash paid for such Creation Units. A person who exchanges Creation Units for
securities will generally recognize a gain or loss equal to the difference
between the exchanger’s basis in the Creation Units and the sum of the aggregate
market value of the securities received. The IRS, however, may assert that a
loss realized upon an exchange of primarily securities for Creation Units cannot
be deducted currently under the rules governing “wash sales,” or on the basis
that there has been no significant change in economic position. Persons
exchanging securities for Creation Units or redeeming Creation Units should
consult their own tax adviser with respect to whether wash sale rules apply and
when a loss might be deductible and the tax treatment of any creation or
redemption transaction.
Under
current U.S. federal income tax laws, any capital gain or loss realized upon a
redemption (or creation) of Creation Units held as capital assets is generally
treated as long-term capital gain or loss if the Shares (or securities
surrendered) have been held for more than one year and as a short-term capital
gain or loss if the Shares (or securities surrendered) have been held for one
year or less.
If
you create or redeem Creation Units, you will be sent a confirmation statement
showing how many Shares you created or sold and at what price.
Medicare
Tax.
An additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
Non-U.S.
Shareholders.
Dividends paid by a Fund to non-U.S. shareholders are generally subject to
withholding tax at a 30% rate or a reduced rate specified by an applicable
income tax treaty to the extent derived from investment income and short-term
capital gains. Dividends paid by a Fund from net tax-exempt income or long-term
capital gains are generally not subject to such withholding tax.
Properly-reported dividends are generally exempt from U.S. federal withholding
tax where they (i) are paid in respect of a Fund’s “qualified net interest
income” (generally, a Fund’s U.S. source interest income, other than certain
contingent interest and interest from obligations of a corporation or
partnership in which a Fund is at least a 10% shareholder, reduced by expenses
that are allocable to such income); or (ii) are paid in respect of a Fund’s
“qualified short-term capital gains” (generally, the excess of a Fund’s net
short-term capital gain over a Fund’s long-term capital loss for such taxable
year). However, depending on its circumstances, a Fund may report all, some or
none of its potentially eligible dividends as such qualified net interest income
or as qualified short-term capital gains and/or treat such dividends, in whole
or in part, as ineligible for this exemption from withholding.
Any
capital gain realized by a Non-U.S. shareholder upon a sale of Shares of a Fund
will generally not be subject to U.S. federal income or withholding tax unless
(i) the gain is effectively connected with the shareholder’s trade or business
in the United States, or in the case of a shareholder who is a nonresident alien
individual, the shareholder is present in the United States for 183 days or more
during the taxable year and certain other conditions are met or (ii) the Fund is
or has been a U.S. real property holding corporation, as defined below, at any
time within the five-year period preceding the date of disposition of the Fund’s
Shares or, if shorter, within the period during which the Non-U.S. shareholder
has held the Shares. Generally, a corporation is a U.S. real property holding
corporation if the fair market value of its U.S. real property interests, as
defined in the Code and applicable regulations, equals or exceeds 50% of the
aggregate fair market value of its worldwide real property interests and its
other assets used or held for use in a trade or business. A Fund may be, or may
prior to a Non-U.S. shareholder’s disposition of Shares become, a U.S. real
property holding corporation. If a Fund is or becomes a U.S. real property
holding corporation, so long as the Fund’s Shares are regularly traded on an
established securities market, only a Non-U.S. shareholder who holds or held (at
any time during the shorter of the five year period preceding the date of
disposition or the holder’s holding period) more than 5% (directly or indirectly
as determined under applicable attribution rules of the Code) of the Fund’s
Shares will be subject to United States federal income tax on the disposition of
Shares.
As
part of the Foreign Account Tax Compliance Act (“FATCA”), a Fund may be required
to withhold 30% tax on certain types of U.S. sourced income (e.g.,
dividends, interest, and other types of passive income) paid to (i) foreign
financial institutions (“FFIs”), including non-U.S. investment funds, unless
they agree to collect and disclose to the IRS information regarding their direct
and indirect U.S. account holders and (ii) certain nonfinancial foreign entities
(“NFFEs”), unless they certify certain information regarding their direct and
indirect U.S. owners. To avoid possible withholding, FFIs will need to enter
into agreements with the IRS which state that they will provide the IRS
information, including the names, account numbers and balances, addresses and
taxpayer identification numbers of U.S. account holders and comply with due
diligence procedures with respect to the identification of U.S. accounts as well
as agree to withhold tax on certain types of withholdable payments made to
non-compliant foreign financial institutions or to applicable foreign account
holders who fail to provide the required information to the IRS, or similar
account information and required documentation to a local revenue authority,
should an applicable intergovernmental agreement be implemented. NFFEs will need
to provide certain information regarding each substantial U.S. owner or
certifications of no substantial U.S. ownership, unless certain exceptions
apply, or agree to provide certain information to the IRS.
|
|
|
SHAREHOLDER
INFORMATION (continued) |
A
Fund may be subject to the FATCA withholding obligation, and also will be
required to perform due diligence reviews to classify foreign entity investors
for FATCA purposes. Investors are required to agree to provide information
necessary to allow a Fund to comply with the FATCA rules. If a Fund is required
to withhold amounts from payments pursuant to FATCA, investors will receive
distributions that are reduced by such withholding amounts.
Non-U.S.
shareholders are advised to consult their tax advisors with respect to the
particular tax consequences to them of an investment in the Funds, including the
possible applicability of the U.S. estate tax.
The
foregoing discussion summarizes some of the consequences under current U.S.
federal income tax law of an investment in a Fund. It is not a substitute for
personal tax advice. Consult your own tax advisor about the potential tax
consequences of an investment in a Fund under all applicable tax laws. Changes
in applicable tax authority could materially affect the conclusions discussed
above and could adversely affect a Fund, and such changes often
occur.
The
BDC Index, EM Aggregate Bond Index, Floating Rate Index and Mortgage REITs Index
are published by MV Index Solutions GmbH (“MVIS”), which is an indirectly wholly
owned subsidiary of the Adviser. The Emerging Markets High Yield Index, Fallen
Angel Index, International High Yield Index and Preferred Securities Index are
published by ICE Data Indices, LLC (“ICE
Data”) and
its affiliates. The Green Bond Index is published by S&P Dow Jones Indices
LLC ("S&P Dow Jones"). MVIS, ICE Data and S&P Dow Jones are referred to
herein as the “Index Providers.” The Index Providers do not sponsor, endorse, or
promote the Funds and bear no liability with respect to the Funds or any
security.
The
BDC Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
BDCs. To be eligible for the BDC Index and qualify as a BDC, a company must be
organized under the laws of, and have its principal place of business in, the
United States, be registered with the SEC and have elected to be regulated as a
BDC under the 1940 Act.
To
be eligible for addition to the BDC Index, stocks must have a market
capitalization of greater than $150 million as of the end of the month prior to
the month in which a rebalancing date occurs. Stocks must have a three-month
average daily trading volume value of at least $1 million at a review and also
at the previous two reviews to be eligible for the BDC Index and issuers of such
stocks must have traded at least 250,000 shares each month over the last six
months at a review and also at the previous two reviews.
The
BDC Index is calculated and maintained by Solactive AG on behalf of MVIS.
The
BDC Index is reconstituted and rebalanced quarterly. MVIS may delay or change a
scheduled rebalancing or reconstitution of the BDC Index or the implementation
of certain rules at its sole discretion.
The
EM Aggregate Bond Index is comprised of emerging markets sovereign bonds and
corporate bonds denominated in U.S. dollars, euros or local emerging market
currencies. The EM Aggregate Bond Index includes both investment grade and below
investment grade rated securities.
The
EM Aggregate Bond Index uses a modified market cap weighting methodology, which
involves categorizing each bond in the EM Aggregate Bond Index into one of the
following categories: (1) U.S. dollar or Euro-denominated corporate and
quasi-sovereign bonds; (2) local currency-denominated corporate and
quasi-sovereign bonds; (3) U.S. dollar or Euro-denominated sovereign bonds; and
(4) local-currency-denominated sovereign bonds (each, a “Currency Category”).
Weightings are capped at 3.00% maximum per issuer of corporate bonds and
quasi-sovereign debt, 10.00% maximum per country (of risk), or equal weight if
there are fewer than ten countries, within each Currency Category and 50.00%
maximum per Currency Category.
The
EM Aggregate Bond Index is calculated and maintained by Solactive AG on behalf
of MVIS.
The
EM Aggregate Bond Index is reconstituted and rebalanced monthly. MVIS may delay
or change a scheduled rebalancing or reconstitution of the EM Aggregate Bond
Index or the implementation of certain rules at its sole discretion.
The
Emerging Markets High Yield Index is comprised of U.S. dollar denominated bonds
issued by non-sovereign emerging market issuers that have a below investment
grade rating (in accordance with ICE Data’s methodology) and that are issued in
the major domestic and Eurobond markets. In order to qualify for inclusion in
the Emerging Markets High Yield Index, an issuer must have risk exposure to
countries other than members of the FX Group of Ten, all Western European
countries and territories of the United States and Western European countries.
The FX Group of Ten includes all Euro members, Australia, Canada, Japan, New
Zealand, Norway, Sweden, Switzerland, the United Kingdom and the United States.
The
Emerging Markets High Yield Index includes corporate and quasi-government bonds
of qualifying countries, but excludes sovereign and supranational bonds.
The
Emerging Markets High Yield Index constituents are capitalization-weighted based
on their current amount outstanding times the market price plus accrued
interest, subject to a 10% country of risk cap and a 3% issuer cap.
The
Emerging Markets High Yield Index is rebalanced on the last calendar day of each
month. ICE Data may delay or change a scheduled rebalancing or reconstitution of
the Emerging Markets High Yield Index or the implementation of certain rules at
its sole discretion.
The
Fallen Angel Index is comprised of below investment grade corporate bonds
denominated in U.S. dollars that were rated investment grade at the time of
issuance. Qualifying securities must be issued in the U.S. domestic market and
have a below investment grade rating (in accordance with the ICE Data’s
methodology). The Fallen Angel Index includes bonds issued by both U.S. and
non-U.S. issuers. The country of risk of qualifying issuers must be a member of
the FX Group of Ten, a western European nation, or a territory of the U.S. or a
Western European nation. The FX Group of Ten includes all Euro members,
Australia, Canada, Japan, New Zealand, Norway, Sweden, Switzerland, the United
Kingdom and the United States.
A
single issuer may not comprise more than 10% of the Fallen Angel Index. The
Fallen Angel Index constituents are capitalization-weighted, subject to the
issuer cap, based on their current amount outstanding.
The
Fallen Angel Index is rebalanced on the last calendar day of the month. ICE Data
may delay or change a scheduled rebalancing or reconstitution of the Fallen
Angel Index or the implementation of certain rules at its sole
discretion.
The
Green Bond Index is designed to measure the performance of U.S.
dollar-denominated, green-labeled bonds. The Green Bond Index is comprised of
bonds issued for qualified “green” purposes and seeks to measure the performance
of U.S. dollar-denominated “green”- labeled bonds issued globally. For a bond to
be eligible for inclusion in the Green Bond Index, the issuer of the bond must
indicate the bond’s “green” label and the rationale behind it, such as the
intended use of proceeds. As an additional filter, the bond must be flagged as
“green” by Climate Bonds Initiative (“CBI”) to be eligible for inclusion in the
Green Bond Index. The Green Bond Index includes supranational, corporate,
government related, sovereign and securitized “green” bonds issued throughout
the world (including emerging market countries), and may include both investment
grade and below investment grade securities (commonly referred to as high yield
securities or “junk bonds”).
The
Green Bond Index is a market-value weighted index (subject to issuer and credit
rating caps). The Green Bond Index includes bonds across sectors, countries and
maturities.
The
Green Bond Index is market value weighted subject to the following
constraints:
1.
Issuers are capped at 10%.
2.
If the high yield portion of the Green Bond Index exceeds 20%, a 20% cap is
applied. The excess weight is redistributed proportionally to qualifying
securities that do not carry a high yield rating.
Qualifying
securities must have (1) a maturity of at least 12 months at the time of
issuance to be included, (2) at least one month remaining until maturity at each
rebalancing date, and (3) a minimum par amount outstanding of $200 million, to
be included in the Index. All bonds must be rated by at least one credit rating
agency, except that non-rated bonds issued by U.S. government sponsored
enterprises are eligible for inclusion up to a maximum of 10%.
The
composition of the Green Bond Index is rebalanced monthly. Bonds that have
defaulted are removed from the Green Bond Index at the next rebalancing.
S&P
Dow Jones may delay or change a scheduled rebalancing or reconstitution of the
Green Bond Index or the implementation of certain rules at its sole
discretion.
The
International High Yield Index tracks the performance of below investment grade
debt issued by corporations located throughout the world (which may include
emerging market countries) excluding the United States, denominated in euros,
U.S. dollars, Canadian dollars or pound sterling and issued in the major
domestic or eurobond markets. Qualifying securities must have a below investment
grade rating (in accordance with the ICE Data’s methodology).
International
High Yield Index constituents are capitalization-weighted, based on their
current amount outstanding multiplied by the market price plus accrued interest,
provided the total allocation to an individual issuer does not exceed
3%.
The
International High Yield Index is rebalanced on the last calendar day of the
month. ICE Data may delay or change a scheduled rebalancing or reconstitution of
the International High Yield Index or the implementation of certain rules at its
sole discretion.
The
Floating Rate Index is designed to track the performance of U.S. investment
grade floating rate notes with outstanding issue sizes of greater than or equal
to $500 million. The Floating Rate Index is comprised of U.S. dollar-denominated
floating rate notes issued by corporate entities or similar commercial entities
that are public reporting companies in the United States. Floating Rate Index
securities must have an investment grade rating (in accordance with the MVIS’s
methodology).
To
be eligible for inclusion in the Floating Rate Index, investment grade floating
rate notes must be issued by issuers that are formed as corporations, limited
liability companies and similar types of entities that are engaged in a
financial or commercial enterprise. Notes issued by governments, sovereigns,
quasi-sovereigns, not-for-profit entities and government backed entities are not
eligible.
Securities
included in the Floating Rate Index must have a minimum of 0.5 years remaining
to maturity.
The
Floating Rate Index is calculated and maintained by Solactive AG on behalf of
MVIS.
The
weight of any single constituent is capped at 2.00%. The Floating Rate Index is
reconstituted and rebalanced monthly. MVIS may delay or change a scheduled
rebalancing or reconstitution of the Floating Rate Index or the implementation
of certain rules at its sole discretion.
The
Mortgage REITs Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of publicly traded U.S. REITs that derive at least 50% of their
revenues from mortgage-related activity. Mortgage-related activity includes
companies or trusts that are primarily engaged in the purchase or service of
commercial or residential mortgage loans or mortgage related securities.
To
be initially eligible for addition to the Mortgage REITs Index, (i) companies
must generate at least 50% of their revenues from (or, in certain circumstances,
have at least 50% of their assets related to) mortgage-related activity (as
defined above) and (ii) stocks must have a market capitalization of greater than
$150 million as of the end of the month prior to the month in which a
rebalancing date occurs. Stocks must have a three month average daily trading
volume value of at least $1 million at a review and also at the previous two
reviews to be eligible for the Mortgage REITs Index and issuers of such stocks
must have traded at least 250,000 shares each month over the last six months at
a review and also at the previous two reviews. The Mortgage REITs Index includes
stocks of publicly traded U.S. REITs that meet the eligibility requirements
described above. Only REITs that are listed and incorporated in the United
States will be eligible for inclusion in the Mortgage REITs Index.
The
Mortgage REITs Index is calculated and maintained by Solactive AG on behalf of
MVIS.
The
Mortgage REITs Index is reconstituted and rebalanced quarterly. MVIS may delay
or change a scheduled rebalancing or reconstitution of the Mortgage REITs Index
or the implementation of certain rules at its sole discretion.
The
Preferred Securities Index tracks the performance of exchange-listed US dollar
denominated hybrid debt, preferred stock and convertible preferred stock
publicly issued by non-financial corporations in the US domestic market. It
includes both rated and unrated securities, and securities with either a fixed
or floating rate coupon or dividend. Qualifying securities must be exchange
listed and have either the NASDAQ or NYSE ®
as
their primary exchange in order to be included in the index. In addition,
qualifying securities must have at least $250 million face amount outstanding
and at least one day remaining to maturity and at least 250,000 average monthly
trading volume over the previous six-month period.
The
Preferred Securities Index constituents are capitalization-weighted and the
index is rebalanced on the last calendar day of the month. ICE Data, as the
Preferred Securities Index Administrator, may at any time delay or change a
scheduled rebalancing or reconstitution of the Preferred Securities Index or the
implementation of certain rules at its sole discretion.
The
Adviser has entered into a licensing agreement with each Index Provider to use
each Fund’s respective Index. Each Fund is entitled to use its respective Index
pursuant to a sublicensing arrangement with the Adviser.
The
Adviser has entered into a licensing agreement with MVIS to use each of the BDC
Index, EM Aggregate Bond Index, Floating Rate Index and Mortgage REITs Index
(each an "MVIS Index," and together, the "MVIS Indices"). Each of VanEck Vectors
BDC Income ETF, VanEck Vectors Emerging Markets Aggregate Bond ETF, VanEck
Vectors Investment Grade Floating Rate ETF and VanEck Vectors
Mortgage REIT Income ETF (each an "MVIS Index ETF," and together, the "MVIS
Index ETFs") is entitled to use its Index pursuant to a sub-licensing
arrangement with the Adviser.
Shares
of the MVIS Index ETFs are not sponsored, endorsed, sold or promoted by MVIS.
MVIS makes no representation or warranty, express or implied, to the owners of
Shares of the MVIS Index ETFs or any member of the public regarding the
advisability of investing in securities generally or in the Shares of the MVIS
Index ETFs particularly or the ability of the MVIS Indices to track the
performance of its respective securities market. MVIS’s only relationship to the
Adviser is the licensing of certain service marks and trade names and of the
MVIS Indices that is determined, composed and calculated by MVIS without regard
to the Adviser or the Shares of the MVIS Index ETFs. MVIS has no obligation to
take the needs of the Adviser or the owners of Shares of the MVIS Index ETFs
into consideration in determining, composing or calculating the MVIS Indices.
MVIS is not responsible for and has not participated in the determination of the
timing of, prices at, or quantities of the Shares of the MVIS Index ETFs to be
issued or in the determination or calculation of the equation by which the
Shares of the MVIS Index ETFs are to be converted into cash. MVIS has no
obligation or liability in connection with the administration, marketing or
trading of the Shares of the MVIS Index ETFs.
MVIS
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE MVIS INDICES OR
ANY DATA INCLUDED THEREIN AND MVIS SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. MVIS MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE MVIS INDEX
ETFS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE MVIS INDICES OR ANY DATA
INCLUDED THEREIN. MVIS MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE MVIS INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MVIS HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Shares
of the MVIS Index ETFs are not sponsored, promoted, sold or supported in any
other manner by Solactive AG nor does Solactive AG offer any express or implicit
guarantee or assurance either with regard to the results of using the MVIS
Indices and/or its trade mark or its price at any time or in any other respect.
The MVIS Indices are calculated and maintained by Solactive AG. Solactive AG
uses its best efforts to ensure that the MVIS Indices are calculated correctly.
Irrespective of its obligations towards MVIS, Solactive AG has no obligation to
point out errors in the MVIS Indices to third parties including but not limited
to investors and/or financial intermediaries of the MVIS Index ETFs. Neither
publication of the MVIS Indices by Solactive AG nor the licensing of the MVIS
Indices or its trade mark for the purpose of use in connection with the MVIS
Index ETFs constitutes a recommendation by Solactive AG to invest capital in the
MVIS Index ETFs nor does it in any way represent an assurance or opinion of
Solactive AG with regard to any investment in the MVIS Index ETFs. Solactive AG
is not responsible for fulfilling the legal requirements concerning the accuracy
and completeness of the prospectus of the MVIS Index ETFs.
Source
ICE Data Indices, LLC (“ICE Data”), is used with permission. BofA ®
is
a registered trademark of Bank of America Corporation licensed by Bank of
America Corporation and its affiliates ("BofA"), and may not be used without
BofA's prior written approval. ICE and NYSE are service/trademarks of ICE Data
or its affiliates. Such trademarks have been licensed, along with the ICE BofA
Diversified High Yield US Emerging Markets Corporate Plus Index, ICE US Fallen
Angel High Yield 10% Constrained Index, ICE BofA Global Ex-US Issuers High Yield
Constrained Index, ICE Exchange-Listed Fixed & Adjustable Rate Non-Financial
Preferred Securities Index (collectively, the “Indices”) for use by Van Eck
Associates Corporation in connection with VanEck Vectors Emerging Markets High
Yield Bond ETF, VanEck Vectors Fallen Angel High Yield Bond ETF, VanEck Vectors
International High Yield Bond ETF and VanEck Preferred Securities ex Finanicals
ETF (collectively, the “Products”). Neither Van Eck Associates Corporation (the
“Licensee”) nor the Products, as applicable, are sponsored, endorsed, sold or
promoted by ICE Data, its affiliates or its Third Party Suppliers (“ICE Data and
its Suppliers”). ICE Data and its Suppliers make no representations or
warranties regarding the advisability of investing in securities generally, in
the Products particularly, the Licensee or the ability of the Indices to track
general stock market performance. ICE Data’s only relationship to the Licensee
is the licensing of certain trademarks and trade names and the Indices or
components thereof. The Indices are determined, composed and calculated by ICE
Data without regard to the Licensee or the Products or its holders. ICE Data has
no obligation to take the needs of the Licensee or the holders of the Products
into consideration in determining, composing or calculating the Indices. ICE
Data is not responsible for and has not participated in the determination of the
timing of, prices of, or quantities of the Products to be issued or in the
determination or calculation of the equation by which the Products are to be
priced, sold, purchased, or redeemed. Except for certain custom index
calculation services, all information provided by ICE Data is general in nature
and not tailored to the needs of the Licensee or any other person, entity or
group of persons. ICE Data has no obligation or liability in connection with the
administration, marketing, or trading of the Products. ICE Data is not an
investment advisor. Inclusion of a security within an index is not a
recommendation by ICE Data to buy, sell, or hold such security, nor is it
considered to be investment advice.
ICE
DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS,
EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY
INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE
DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH
RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND
THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR
OWN RISK.
The
Green Bond Index is a product of S&P Dow Jones Indices LLC or its affiliates
(“SPDJI”), and has been licensed for use by the Adviser. S&P ®
is
a registered trademark of Standard & Poor’s Financial Services LLC
(“S&P”) and Dow Jones ®
is
a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).
The
trademarks have been licensed to SPDJI and have been sublicensed for use for
certain purposes by the Adviser. VanEck Vectors Green Bond ETF is not sponsored,
endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective
affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones
Indices does not make any representation or warranty, express or implied, to the
owners of VanEck Vectors Green Bond ETF or any member of the public regarding
the advisability of investing in securities generally or in VanEck Vectors Green
Bond ETF particularly or the ability of the Green Bond Index to track general
market performance. S&P Dow Jones Indices’ only relationship to the Adviser
with respect to the Green Bond Index is the licensing of the Green Bond Index
and certain trademarks, service marks and/or trade names of S&P Dow Jones
Indices and/or its licensors. The Green Bond Index is determined, composed and
calculated by S&P Dow Jones Indices without regard to the Adviser or VanEck
Vectors Green Bond ETF. S&P Dow Jones Indices has no obligation to take the
needs of the Adviser or the owners of VanEck Vectors Green Bond ETF into
consideration in determining, composing or calculating the Green Bond Index.
S&P Dow Jones Indices is not responsible for and have not participated in
the determination of the prices, and amount of VanEck Vectors Green Bond ETF or
the timing of the issuance or sale of VanEck Vectors Green Bond ETF or in the
determination or calculation of the equation by which VanEck Vectors Green Bond
ETF is to be converted into cash, surrendered or redeemed, as the case may be.
S&P Dow Jones Indices has no obligation or liability in connection with the
administration, marketing or trading of VanEck Vectors Green Bond ETF. There is
no assurance that investment products based on the Green Bond Index will
accurately track index performance or provide positive investment returns.
S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a
security within an index is not a recommendation by S&P Dow Jones Indices to
buy, sell, or hold such security, nor is it considered to be investment
advice.
The
S&P 500 Index is a product of S&P Dow Jones Indices LLC and/or its
affiliates and has been licensed for use by VanEck Associates Corporation.
Copyright © 2020 S&P Dow Jones Indices LLC, a division of S&P Global,
Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction
in whole or in part are prohibited without written permission of S&P Dow
Jones Indices LLC. For more information on any of S&P Dow Jones Indices
LLC’s indices please visit www.spdji.com. S&P ®
is
a registered trademark of S&P Global and Dow Jones ®
is
a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow
Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their
third party licensors make any representation or warranty, express or implied,
as to the ability of any index to accurately represent the asset class or market
sector that it purports to represent and neither S&P Dow Jones Indices LLC,
Dow Jones Trademark Holdings LLC, their affiliates nor their third party
licensors shall have any liability for any errors, omissions, or interruptions
of any index or the data included therein.
S&P
DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR
THE COMPLETENESS OF THE GREEN BOND INDEX OR ANY DATA RELATED THERETO OR ANY
COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION
(INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES
INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS,
OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY
THE ADVISER, OWNERS OF VANECK VECTORS GREEN BOND ETF, OR ANY OTHER PERSON OR
ENTITY FROM THE USE OF THE GREEN BOND INDEX OR WITH RESPECT TO ANY DATA RELATED
THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL
S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF
PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY,
OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR
ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE ADVISER, OTHER THAN THE
LICENSORS OF S&P DOW JONES INDICES.
[TO
BE UPDATED]
|
|
|
FINANCIAL
HIGHLIGHTS (continued) |
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BDC
Income ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year |
$ |
16.55 |
|
|
$ |
16.10 |
|
|
$ |
19.17 |
|
|
$ |
16.43 |
|
|
$ |
18.56 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
1.54 |
|
(a) |
1.59 |
|
(a) |
1.52 |
|
(a) |
1.54 |
|
|
1.59 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(5.86) |
|
|
0.41 |
|
|
(3.04) |
|
|
2.67 |
|
|
(2.20) |
|
|
Total
from investment operations |
(4.32) |
|
|
2.00 |
|
|
(1.52) |
|
|
4.21 |
|
|
(0.61) |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(1.48) |
|
|
(1.55) |
|
|
(1.55) |
|
|
(1.47) |
|
|
(1.52) |
|
|
Net
asset value, end of year |
$ |
10.75 |
|
|
$ |
16.55 |
|
|
$ |
16.10 |
|
|
$ |
19.17 |
|
|
$ |
16.43 |
|
|
Total
return (b) |
(27.77) |
|
% |
13.27 |
|
% |
(8.08) |
|
% |
26.67 |
|
% |
(2.98) |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$169,799 |
|
|
$206,815 |
|
|
$177,926 |
|
|
$183,067 |
|
|
$85,454 |
|
|
Ratio
of gross expenses to average net assets |
0.48 |
|
% |
0.47 |
|
% |
0.49 |
|
% |
0.52 |
|
% |
0.58 |
|
% |
Ratio
of net expenses to average net assets |
0.41 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
9.95 |
|
% |
9.73 |
|
% |
8.85 |
|
% |
9.12 |
|
% |
9.87 |
|
% |
Portfolio
turnover rate (c) |
22 |
|
% |
13 |
|
% |
19 |
|
% |
23 |
|
% |
23 |
|
% |
(a) Calculated
based upon average shares outstanding
(b) Total
return is calculated assuming an initial investment made at the net asset value
at the beginning of year, reinvestment of any dividends and distributions at net
asset value on the dividend/distributions payment date and a redemption at the
net asset value on the last day of the year. The return does not reflect the
deduction of taxes that a shareholder would pay on Fund dividends/distributions
or the redemption of Fund shares.
(c) Portfolio
turnover rates exclude securities received or delivered as a result of
processing in-kind capital share transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging
Markets Aggregate Bond ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year |
$ |
20.80 |
|
|
$ |
21.42 |
|
|
$ |
21.64 |
|
|
$ |
21.68 |
|
|
$ |
22.41 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
1.00 |
|
(a) |
1.00 |
|
(a) |
0.96 |
|
(a) |
0.98 |
|
|
0.95 |
|
|
Net
realized and unrealized loss on |
|
|
|
|
|
|
|
|
|
|
investments |
(1.33) |
|
|
(0.63) |
|
|
(0.15) |
|
|
(0.08) |
|
|
(0.70) |
|
|
Total
from investment operations |
(0.33) |
|
|
0.37 |
|
|
0.81 |
|
|
0.90 |
|
|
0.25 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(0.86) |
|
|
(0.48) |
|
|
(0.71) |
|
|
(0.62) |
|
|
(0.37) |
|
|
Return
of capital |
(0.15) |
|
|
(0.51) |
|
|
(0.32) |
|
|
(0.32) |
|
|
(0.61) |
|
|
Total
dividends and distributions |
(1.01) |
|
|
(0.99) |
|
|
(1.03) |
|
|
(0.94) |
|
|
(0.98) |
|
|
Net
asset value, end of year |
$ |
19.46 |
|
|
$ |
20.80 |
|
|
$ |
21.42 |
|
|
$ |
21.64 |
|
|
$ |
21.68 |
|
|
Total
return (b) |
(1.83) |
|
% |
1.91 |
|
% |
3.78 |
|
% |
4.27 |
|
% |
1.33 |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$14,593 |
|
|
$14,558 |
|
|
$14,993 |
|
|
$15,150 |
|
|
$15,179 |
|
|
Ratio
of gross expenses to average net assets |
1.49 |
|
% |
0.92 |
|
% |
1.12 |
|
% |
1.26 |
|
% |
1.21 |
|
% |
Ratio
of net expenses to average net assets |
0.35 |
|
% |
0.36 |
|
% |
0.49 |
|
% |
0.49 |
|
% |
0.49 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.35 |
|
% |
0.36 |
|
% |
0.49 |
|
% |
0.49 |
|
% |
0.49 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
4.75 |
|
% |
4.85 |
|
% |
4.38 |
|
% |
4.60 |
|
% |
4.61 |
|
% |
Portfolio
turnover rate (c) |
12 |
|
% |
25 |
|
% |
20 |
|
% |
11 |
|
% |
13 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging
Markets High Yield Bond ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year |
$ |
23.34 |
|
|
$ |
23.83 |
|
|
$ |
24.86 |
|
|
$ |
23.37 |
|
|
$ |
24.51 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
1.42 |
|
(a) |
1.33 |
|
(a) |
1.33 |
|
(a) |
1.46 |
|
|
1.64 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(2.77) |
|
|
(0.46) |
|
|
(1.01) |
|
|
1.50 |
|
|
(1.13) |
|
|
Total
from investment operations |
(1.35) |
|
|
0.87 |
|
|
0.32 |
|
|
2.96 |
|
|
0.51 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(1.45) |
|
|
(1.36) |
|
|
(1.35) |
|
|
(1.47) |
|
|
(1.65) |
|
|
Net
asset value, end of year |
$ |
20.54 |
|
|
$ |
23.34 |
|
|
$ |
23.83 |
|
|
$ |
24.86 |
|
|
$ |
23.37 |
|
|
Total
return (b) |
(6.27) |
|
% |
3.93 |
|
% |
1.28 |
|
% |
13.04 |
|
% |
2.38 |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$308,093 |
|
|
$261,456 |
|
|
$371,678 |
|
|
$372,926 |
|
|
$247,709 |
|
|
Ratio
of gross expenses to average net assets |
0.47 |
|
% |
0.46 |
|
% |
0.45 |
|
% |
0.47 |
|
% |
0.50 |
|
% |
Ratio
of net expenses to average net assets |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
6.19 |
|
% |
5.81 |
|
% |
5.43 |
|
% |
6.13 |
|
% |
6.93 |
|
% |
Portfolio
turnover rate (c) |
28 |
|
% |
27 |
|
% |
40 |
|
% |
39 |
|
% |
42 |
|
% |
(a) Calculated
based upon average shares outstanding
(b) Total
return is calculated assuming an initial investment made at the net asset value
at the beginning of year, reinvestment of any dividends and distributions at net
asset value on the dividend/distributions payment date and a redemption at the
net asset value on the last day of the year. The return does not reflect the
deduction of taxes that a shareholder would pay on Fund dividends/distributions
or the redemption of Fund shares.
(c) Portfolio
turnover rates exclude securities received or delivered as a result of
processing in-kind capital share transactions.
For
a share outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fallen
Angel High Yield Bond ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year |
$ |
29.00 |
|
|
$ |
29.19 |
|
|
$ |
29.65 |
|
|
$ |
27.14 |
|
|
$ |
27.66 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
1.54 |
|
(a) |
1.64 |
|
(a) |
1.54 |
|
(a) |
1.56 |
|
|
1.39 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(2.16) |
|
|
(0.24) |
|
|
(0.40) |
|
|
2.62 |
|
|
(0.51) |
|
|
Total
from investment operations |
(0.62) |
|
|
1.40 |
|
|
1.14 |
|
|
4.18 |
|
|
0.88 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(1.54) |
|
|
(1.59) |
|
|
(1.51) |
|
|
(1.58) |
|
|
(1.34) |
|
|
Distributions
from net realized capital gains |
— |
|
|
— |
|
|
(0.09) |
|
|
(0.09) |
|
|
(0.06) |
|
|
Total
dividends and distributions |
(1.54) |
|
|
(1.59) |
|
|
(1.60) |
|
|
(1.67) |
|
|
(1.40) |
|
|
Net
asset value, end of year |
$ |
26.84 |
|
|
$ |
29.00 |
|
|
$ |
29.19 |
|
|
$ |
29.65 |
|
|
$ |
27.14 |
|
|
Total
return (b) |
(2.38) |
|
% |
5.04 |
|
% |
3.86 |
|
% |
15.86 |
|
% |
3.59 |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$1,682,792 |
|
|
$975,916 |
|
|
$1,223,107 |
|
|
$855,380 |
|
|
$145,182 |
|
|
Ratio
of gross expenses to average net assets |
0.43 |
|
% |
0.45 |
|
% |
0.44 |
|
% |
0.46 |
|
% |
0.65 |
|
% |
Ratio
of net expenses to average net assets |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.40 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.40 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
5.35 |
|
% |
5.76 |
|
% |
5.16 |
|
% |
5.61 |
|
% |
6.27 |
|
% |
Portfolio
turnover rate (c) |
68 |
|
% |
29 |
|
% |
20 |
|
% |
32 |
|
% |
39 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Green
Bond ETF |
|
For
the Year Ended April 30, |
|
For
the Period March 3, 2017(d) through April 30, 2017 |
|
2020 |
|
2019 |
|
2018 |
|
Net
asset value, beginning of period |
$ |
25.87 |
|
|
$ |
26.54 |
|
|
$ |
25.44 |
|
|
$ |
24.75 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
Net
investment income |
0.58 |
|
(a) |
0.34 |
|
(a) |
0.29 |
|
(a) |
0.04 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
investments |
1.00 |
|
|
(0.68) |
|
|
1.16 |
|
|
0.67 |
|
|
Total
from investment operations |
1.58 |
|
|
(0.34) |
|
|
1.45 |
|
|
0.71 |
|
|
Less: |
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(0.50) |
|
|
(0.29) |
|
|
(0.35) |
|
|
(0.02) |
|
|
Distributions
from net realized capital gains |
— |
|
|
— |
|
|
0.00 |
|
(g) |
— |
|
|
Return
of capital |
(0.10) |
|
|
(0.04) |
|
|
— |
|
|
— |
|
|
Total
dividends and distributions |
(0.60) |
|
|
(0.33) |
|
|
(0.35) |
|
|
(0.02) |
|
|
Net
asset value, end of period |
$ |
26.85 |
|
|
$ |
25.87 |
|
|
$ |
26.54 |
|
|
$ |
25.44 |
|
|
Total
return (b) |
6.17 |
|
% |
(1.25) |
|
% |
5.72 |
|
% |
2.86 |
|
%(e) |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
Net
assets, end of period (000’s) |
$32,225 |
|
|
$25,870 |
|
|
$17,254 |
|
|
$5,088 |
|
|
Ratio
of gross expenses to average net assets |
0.83 |
|
% |
1.02 |
|
% |
1.56 |
|
% |
5.49 |
|
%(f) |
Ratio
of net expenses to average net assets |
0.23 |
|
% |
0.33 |
|
% |
0.40 |
|
% |
0.40 |
|
%(f) |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
excluding
interest expense |
0.23 |
|
% |
0.33 |
|
% |
0.40 |
|
% |
0.40 |
|
%(f) |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
assets |
2.17 |
|
% |
1.32 |
|
% |
1.10 |
|
% |
1.03 |
|
%(f) |
Portfolio
turnover rate (c) |
83 |
|
% |
28 |
|
% |
26 |
|
% |
0 |
|
%(e) |
Please
see next page for corresponding footnotes.
|
|
|
FINANCIAL
HIGHLIGHTS (continued) |
(a) Calculated
based upon average shares outstanding
(b)Total
return is calculated assuming an initial investment made at the net asset value
at the beginning of period, reinvestment of any dividends and distributions at
net asset value on the dividend/distributions payment date and a redemption at
the net asset value on the last day of the period. The return does not reflect
the deduction of taxes that a shareholder would pay on Fund
dividends/distributions or the redemption of Fund shares.
(c)Portfolio
turnover rates exclude securities received or delivered as a result of
processing in-kind capital share transactions.
(d)Commencement
of operations
(e)Not
Annualized
(f)Annualized
(g)Amount
represents less than $0.005 per share.
|
|
|
FINANCIAL
HIGHLIGHTS (continued) |
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
High Yield Bond ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year |
$ |
24.54 |
|
|
$ |
25.20 |
|
|
$ |
24.90 |
|
|
$ |
24.20 |
|
|
$ |
25.00 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
1.26 |
|
(a) |
1.13 |
|
(a) |
1.07 |
|
(a) |
1.24 |
|
|
1.30 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(2.33) |
|
|
(0.65) |
|
|
0.39 |
|
|
0.65 |
|
|
(0.80) |
|
|
Total
from investment operations |
(1.07) |
|
|
0.48 |
|
|
1.46 |
|
|
1.89 |
|
|
0.50 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(1.17) |
|
|
(1.08) |
|
|
(1.02) |
|
|
(0.83) |
|
|
(1.00) |
|
|
Return
of capital |
(0.09) |
|
|
(0.06) |
|
|
(0.14) |
|
|
(0.36) |
|
|
(0.30) |
|
|
Total
dividends and distributions |
(1.26) |
|
|
(1.14) |
|
|
(1.16) |
|
|
(1.19) |
|
|
(1.30) |
|
|
Net
asset value, end of year |
$ |
22.21 |
|
|
$ |
24.54 |
|
|
$ |
25.20 |
|
|
$ |
24.90 |
|
|
$ |
24.20 |
|
|
Total
return (b) |
(4.67) |
|
% |
2.08 |
|
% |
5.91 |
|
% |
8.04 |
|
% |
2.29 |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$88,833 |
|
|
$112,878 |
|
|
$171,358 |
|
|
$129,478 |
|
|
$130,686 |
|
|
Ratio
of gross expenses to average net assets |
0.62 |
|
% |
0.54 |
|
% |
0.52 |
|
% |
0.54 |
|
% |
0.61 |
|
% |
Ratio
of net expenses to average net assets |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
5.17 |
|
% |
4.66 |
|
% |
4.19 |
|
% |
4.95 |
|
% |
5.48 |
|
% |
Portfolio
turnover rate (c) |
37 |
|
% |
32 |
|
% |
41 |
|
% |
34 |
|
% |
20 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Grade Floating Rate ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year |
$ |
25.25 |
|
|
$ |
25.32 |
|
|
$ |
25.14 |
|
|
$ |
24.77 |
|
|
$ |
24.94 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
0.68 |
|
(a) |
0.77 |
|
(a) |
0.52 |
|
(a) |
0.33 |
|
|
0.20 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(0.61) |
|
|
(0.10) |
|
|
0.13 |
|
|
0.36 |
|
|
(0.18) |
|
|
Total
from investment operations |
0.07 |
|
|
0.67 |
|
|
0.65 |
|
|
0.69 |
|
|
0.02 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(0.71) |
|
|
(0.74) |
|
|
(0.47) |
|
|
(0.32) |
|
|
(0.19) |
|
|
Distributions
from net realized capital gains |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Total
dividends and distributions |
(0.71) |
|
|
(0.74) |
|
|
(0.47) |
|
|
(0.32) |
|
|
(0.19) |
|
|
Net
asset value, end of year |
$ |
24.61 |
|
|
$ |
25.25 |
|
|
$ |
25.32 |
|
|
$ |
25.14 |
|
|
$ |
24.77 |
|
|
Total
return (b) |
0.26 |
|
% |
2.71 |
|
% |
2.59 |
|
% |
2.80 |
|
% |
0.10 |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$461,416 |
|
|
$541,507 |
|
|
$377,199 |
|
|
$148,322 |
|
|
$79,273 |
|
|
Ratio
of gross expenses to average net assets |
0.40 |
|
% |
0.40 |
|
% |
0.41 |
|
% |
0.46 |
|
% |
0.48 |
|
% |
Ratio
of net expenses to average net assets |
0.14 |
|
% |
0.14 |
|
% |
0.14 |
|
% |
0.14 |
|
% |
0.14 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.14 |
|
% |
0.14 |
|
% |
0.14 |
|
% |
0.14 |
|
% |
0.14 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
2.70 |
|
% |
3.05 |
|
% |
2.06 |
|
% |
1.40 |
|
% |
0.81 |
|
% |
Portfolio
turnover rate (c) |
40 |
|
% |
30 |
|
% |
28 |
|
% |
46 |
|
% |
36 |
|
% |
(a)Calculated
based upon average shares outstanding
(b)Total
return is calculated assuming an initial investment made at the net asset value
at the beginning of year, reinvestment of any dividends and distributions at net
asset value on the dividend/distributions payment date and a redemption at the
net asset value on the last day of the year. The return does not reflect the
deduction of taxes that a shareholder would pay on Fund dividends/distributions
or the redemption of Fund shares.
(c)Portfolio
turnover rates exclude securities received or delivered as a result of
processing in-kind capital share transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage
REIT Income ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year. |
$ |
23.63 |
|
|
$ |
22.71 |
|
|
$ |
24.49 |
|
|
$ |
20.03 |
|
|
$ |
23.59 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
1.45 |
|
(a) |
1.68 |
|
(a) |
1.70 |
|
(a) |
1.81 |
|
|
2.12 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments
|
(11.90) |
|
|
0.94 |
|
|
(1.59) |
|
|
4.38 |
|
|
(3.71) |
|
|
Total
from investment operations |
(10.45) |
|
|
2.62 |
|
|
0.11 |
|
|
6.19 |
|
|
(1.59) |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(1.45) |
|
|
(1.67) |
|
|
(1.81) |
|
|
(1.73) |
|
|
(1.90) |
|
|
Return
of capital |
(0.31) |
|
|
(0.03) |
|
|
(0.08) |
|
|
— |
|
|
(0.07) |
|
|
Total
dividends and distributions |
(1.76) |
|
|
(1.70) |
|
|
(1.89) |
|
|
(1.73) |
|
|
(1.97) |
|
|
Net
asset value, end of year |
$ |
11.42 |
|
|
$ |
23.63 |
|
|
$ |
22.71 |
|
|
$ |
24.49 |
|
|
$ |
20.03 |
|
|
Total
return (b) |
(46.63) |
|
% |
12.00 |
|
% |
0.32 |
|
% |
32.15 |
|
% |
(6.66) |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$119,303 |
|
|
$174,871 |
|
|
$131,732 |
|
|
$148,143 |
|
|
$96,150 |
|
|
Ratio
of gross expenses to average net assets |
0.50 |
|
% |
0.49 |
|
% |
0.49 |
|
% |
0.54 |
|
% |
0.57 |
|
% |
Ratio
of net expenses to average net assets |
0.41 |
|
% |
0.42 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
6.70 |
|
% |
7.19 |
|
% |
7.13 |
|
% |
8.25 |
|
% |
10.27 |
|
% |
Portfolio
turnover rate (c) |
16 |
|
% |
35 |
|
% |
21 |
|
% |
24 |
|
% |
16 |
|
% |
(a)
Calculated
based upon average shares outstanding
(b)
Total
return is calculated assuming an initial investment made at the net asset value
at the beginning of year, reinvestment of any dividends and distributions at net
asset value on the dividend/distributions payment date and a redemption at the
net asset value on the last day of the year. The return does not reflect the
deduction of taxes that a shareholder would pay on Fund dividends/distributions
or the redemption of Fund shares.
(c)
Portfolio
turnover rates exclude securities received or delivered as a result of
processing in-kind capital share transactions.
# On
October 26, 2018, The Fund effected a 1 for 2 reverse share split (See Note 11).
Per share data prior to October 26, 2018 has been adjusted to reflect the
reverse share split.
|
|
|
FINANCIAL
HIGHLIGHTS (continued) |
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Securities ex Financials ETF |
|
|
For
the Year Ended April 30, |
|
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
|
Net
asset value, beginning of year |
$ |
19.37 |
|
|
$ |
19.09 |
|
|
$ |
20.12 |
|
|
$ |
20.34 |
|
|
$ |
20.75 |
|
|
Income
from investment operations: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
1.06 |
|
(a) |
1.13 |
|
(a) |
1.10 |
|
(a) |
1.15 |
|
|
1.20 |
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(1.12) |
|
|
0.32 |
|
|
(0.98) |
|
|
(0.19) |
|
|
(0.48) |
|
|
Total
from investment operations |
(0.06) |
|
|
1.45 |
|
|
0.12 |
|
|
0.96 |
|
|
0.72 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
(1.08) |
|
|
(1.17) |
|
|
(1.14) |
|
|
(1.18) |
|
|
(1.13) |
|
|
Return
of capital |
— |
|
|
— |
|
|
(0.01) |
|
|
— |
|
|
— |
|
|
Total
dividends and distributions |
(1.08) |
|
|
(1.17) |
|
|
(1.15) |
|
|
(1.18) |
|
|
(1.13) |
|
|
Net
asset value, end of year |
$ |
18.23 |
|
|
$ |
19.37 |
|
|
$ |
19.09 |
|
|
$ |
20.12 |
|
|
$ |
20.34 |
|
|
Total
return (b) |
(0.54) |
|
% |
7.90 |
|
% |
0.57 |
|
% |
4.88 |
|
% |
3.77 |
|
% |
Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000’s) |
$689,029 |
|
|
$584,116 |
|
|
$498,248 |
|
|
$437,716 |
|
|
$310,138 |
|
|
Ratio
of gross expenses to average net assets |
0.44 |
|
% |
0.46 |
|
% |
0.45 |
|
% |
0.46 |
|
% |
0.49 |
|
% |
Ratio
of net expenses to average net assets |
0.41 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
0.41 |
|
% |
Ratio
of net expenses to average net assets |
|
|
|
|
|
|
|
|
|
|
excluding
interest expense |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
Ratio
of net investment income to average net |
|
|
|
|
|
|
|
|
|
|
assets |
5.41 |
|
% |
5.92 |
|
% |
5.57 |
|
% |
5.70 |
|
% |
6.05 |
|
% |
Portfolio
turnover rate (c) |
45 |
|
% |
31 |
|
% |
47 |
|
% |
31 |
|
% |
27 |
|
% |
(a)Calculated
based upon average shares outstanding
(b)Total
return is calculated assuming an initial investment made at the net asset value
at the beginning of year, reinvestment of any dividends and distributions at net
asset value on the dividend/distributions payment date and a redemption at the
net asset value on the last day of the year. The return does not reflect the
deduction of taxes that a shareholder would pay on Fund dividends/distributions
or the redemption of Fund shares.
(c)Portfolio
turnover rates exclude securities received or delivered as a result of
processing in-kind capital share transactions.
Information
regarding how often the closing trading price of the Shares of each Fund was
above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund
for the most recently completed calendar year and the most recently completed
calendar quarter(s) since that year (or the life of the Fund, if shorter) can be
found at www.vaneck.com.
CONTINUOUS
OFFERING
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Trust on an ongoing basis, a “distribution,” as such term is used in the
Securities Act, may occur at any point. Broker dealers and other persons are
cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery and liability provisions of the Securities Act.
For
example, a broker dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent Shares, and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker
dealers who are not “underwriters” but are participating in a distribution (as
contrasted to ordinary secondary trading transactions), and thus dealing with
Shares that are part of an “unsold allotment” within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
This is because the prospectus delivery exemption in Section 4(a)(3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the 1940 Act. As a result, broker dealer firms should note that
dealers who are not underwriters but are participating in a distribution (as
contrasted with ordinary secondary market transactions) and thus dealing with
the Shares that are part of an overallotment within the meaning of Section
4(a)(3)(A) of the Securities Act would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
Firms that incur a prospectus delivery obligation with respect to Shares are
reminded that, under Rule 153 of the Securities Act, a prospectus delivery
obligation under Section 5(b)(2) of the Securities Act owed to an exchange
member in connection with a sale on the Exchange is satisfied by the fact that
the prospectus is available at the Exchange upon request. The prospectus
delivery mechanism provided in Rule 153 is only available with respect to
transactions on an exchange.
In
addition, certain affiliates of the Funds and the Adviser may purchase and
resell Fund shares pursuant to this Prospectus.
OTHER
INFORMATION
The
Trust was organized as a Delaware statutory trust on March 15, 2001. Its
Declaration of Trust currently permits the Trust to issue an unlimited number of
Shares of beneficial interest. If shareholders are required to vote on any
matters, each Share outstanding would be entitled to one vote. Annual meetings
of shareholders will not be held except as required by the 1940 Act and other
applicable law. See the Funds’ SAI for more information concerning the Trust’s
form of organization. Section 12(d)(1) of the 1940 Act restricts investments by
investment companies in the securities of other investment companies, including
Shares of a Fund (except VanEck Vectors BDC Income ETF). Registered investment
companies are permitted to invest in the Funds (except VanEck Vectors BDC Income
ETF) beyond the limits set forth in Section 12(d)(1) subject to certain terms
and conditions set forth in an SEC exemptive order issued to the Trust,
including that such investment companies enter into an agreement with such
Fund.
The
Prospectus, SAI and any other Fund communication do not create any contractual
obligations between the Fund’s shareholders and the Trust, the Fund, the Adviser
and/or the Trustees. Further, shareholders are not intended third-party
beneficiaries of any contracts entered into by (or on behalf of) any Fund,
including contracts with the Adviser or other parties who provide services to
the Fund.
Dechert
LLP serves as counsel to the Trust, including the Funds. [ ] serves as the
Trust’s independent registered public accounting firm and will audit the Fund’s
financial statements annually.
ADDITIONAL
INFORMATION
This
Prospectus does not contain all the information included in the Registration
Statement filed with the SEC with respect to the Funds’ Shares. The Funds’
Registration Statement, including this Prospectus, the Funds’ SAI and the
exhibits are available on the EDGAR database at the SEC’s website
(http://www.sec.gov), and copies may be obtained, after paying a duplicating
fee, by electronic request at the following email address: [email protected].
The
SAI for the Funds, which has been filed with the SEC, provides more information
about the Funds. The SAI for the Funds is incorporated herein by reference and
is legally part of this Prospectus. Additional information about the Funds’
investments is available in each Fund’s annual and semi-annual reports to
shareholders. In each Fund’s annual report, you will find a discussion
of
the market conditions and investment strategies that significantly affected the
Fund’s performance during its last fiscal year. The SAI and the Funds’ annual
and semi-annual reports may be obtained without charge by writing to the Funds
at Van Eck Securities Corporation, the Funds’ Distributor, at 666 Third Avenue,
9th Floor, New York, New York 10017 or by calling the distributor at the
following number: Investor Information: 800.826.2333.
Shareholder
inquiries may be directed to the Funds in writing to 666 Third Avenue, 9th
Floor, New York, New York 10017 or by calling 800.826.2333.
The
Funds’ SAI is available at www.vaneck.com.
(Investment
Company Act file no. 811-10325)
For
more detailed information about the Funds, see the SAI dated September 1, 2020,
as may be supplemented from time to time. Additional information about the
Funds’ investments is or will be available in each Fund’s annual and semi-annual
reports to shareholders. In each Fund’s annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund’s performance during its last fiscal year.
Call
VanEck at 800.826.2333 to request, free of charge, the annual or semi-annual
reports, the SAI, or other information about the Funds or to make shareholder
inquiries. You may also obtain the SAI or a Fund’s annual or semi-annual reports
by visiting the VanEck website at www.vaneck.com.
Reports
and other information about the Funds are available on the EDGAR Database on the
SEC’s internet site at http://www.sec.gov. In addition, copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following email address: [email protected].
|
|
|
|
|
|
|
|
Transfer
Agent: State Street Bank and Trust Company SEC Registration Number:
333-123257 1940 Act Registration Number: 811-10325 |
800.826.2333 vaneck.com |
INCOMEPRO |
|