ck0000768847-20231231
VanEck
Funds
Emerging Markets
Fund
Class
A: GBFAX / Class C: EMRCX / Class I:
EMRIX / Class Y: EMRYX / Class Z:
EMRZX
Global Resources
Fund
Class
A: GHAAX / Class C: GHACX / Class I:
GHAIX / Class Y: GHAYX
International Investors
Gold Fund
Class
A: INIVX / Class C: IIGCX / Class I:
INIIX / Class Y: INIYX
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The
U.S. Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal
offense. |
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800.826.2333 vaneck.com
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TABLE
OF CONTENTS |
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I.
Summary Information |
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Emerging
Markets Fund (Class A, C, I, Y, Z) |
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Global
Resources Fund (Class A, C, I, Y) |
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International
Investors Gold Fund (Class A, C, I, Y) |
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II.
Investment Objectives, Strategies, Policies, Risks and Other
Information |
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1.
Investment Objectives |
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2.
Additional Information About Principal Investment Strategies and
Risks |
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3.
Additional Investment Strategies |
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4.
Other Information and Policies |
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III.
Shareholder Information |
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1.
How to Buy, Sell, Exchange or Transfer Shares |
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2.
How to Choose a Class of Shares |
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3.
Sales Charges |
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4.
Householding of Reports and Prospectuses |
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5.
Retirement Plans |
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6.
Federal Income Taxes |
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7.
Dividends and Capital Gains Distributions |
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8.
Management of the Funds and Service Providers |
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IV.
License Agreements and Disclaimers |
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V.
Financial Highlights |
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Appendix
A: Intermediary Sales Charge Discounts and Waivers |
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EMERGING
MARKETS FUND (CLASS A, C, I, Y,
Z) |
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
Emerging Markets Fund seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the
world.
FUND FEES AND
EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. 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.
You may qualify for Class A sales charge
discounts if you and your family (includes spouse and children under age 21)
invest, or agree to invest in the future, at least $25,000,
in the aggregate, in Classes A and C of the VanEck
Funds. More
information about these and other discounts is available from your financial
professional and in the “Shareholder Information-Sales Charges” section of this
prospectus, in the “Availability of Discounts” section of the Fund’s Statement
of Additional Information (“SAI”) and, with respect to purchases of shares
through specific intermediaries, in Appendix A to this prospectus, entitled
“Intermediary Sales Charge Discounts and Waivers”. Investors
may pay commissions and/or other forms of compensation to an intermediary, such
as a broker, for transactions in Class Z shares, which are not reflected in the
table or the example below.
Shareholder
Fees
(fees
paid directly from your investment)
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| Class
A |
Class
C |
Class
I |
Class
Y |
Class
Z |
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Maximum
Sales Charge (load) imposed on purchases (as a percentage of offering
price) |
5.75% |
0.00% |
0.00% |
0.00% |
0.00% |
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Maximum
Deferred Sales Charge (load) (as a percentage of the lesser of the net
asset value or purchase price) |
0.00%¹ |
1.00% |
0.00% |
0.00% |
0.00% |
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Class
A |
Class
C |
Class
I |
Class
Y |
Class
Z |
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| Management
Fees |
0.75% |
0.75% |
0.75% |
0.75% |
0.75% |
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| Distribution
and/or Service (12b-1) Fees |
0.25% |
1.00% |
0.00% |
0.00% |
0.00% |
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| Other
Expenses |
0.59% |
0.83% |
0.48% |
0.48% |
0.43% |
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| Total
Annual Fund Operating Expenses |
1.59% |
2.58% |
1.23% |
1.23% |
1.18% |
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Fee
Waivers and/or Expense Reimbursements2 |
0.00% |
-0.06% |
-0.22% |
-0.12% |
-0.27% |
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Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursements |
1.59% |
2.52% |
1.01% |
1.11% |
0.91% |
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1
A
contingent deferred sales charge for Class A shares of 1.00% for one year
applies to redemptions of qualified commissionable shares purchased at or above
the $1 million breakpoint level.
2
Van
Eck Associates Corporation (the “Adviser”) has agreed to waive fees and/or pay
Fund expenses to the extent necessary to prevent the operating expenses of the
Fund (excluding acquired fund fees and expenses, interest expense, trading
expenses, dividends and interest payments on securities sold short, taxes and
extraordinary expenses) from exceeding 1.60% for Class A, 2.50% for Class C,
1.00% for Class I, 1.10% for Class Y, and 0.90% for Class Z of the Fund’s
average daily net assets per year until May 1,
2025. During such time, the expense limitation is expected to
continue until the Board of Trustees acts to discontinue all or a portion of
such expense limitation.
EXPENSE
EXAMPLE
The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then either redeem all of your shares at the end of these periods
or continue to hold them. The example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, and
applies fee waivers and/or expense reimbursements, if any, for the periods
indicated above under “Annual Fund Operating Expenses.” Although your actual
expenses may be higher or lower, based on these assumptions, your costs would
be:
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| Share
Status |
1
Year |
3
Years |
5
Years |
10
Years |
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| Class
A |
Sold
or Held |
$727 |
| $1,048 |
| $1,391 |
| $2,356 |
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| Class
C |
Sold |
$355 |
| $797 |
| $1,365 |
| $2,910 |
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| Held |
$255 |
| $797 |
| $1,365 |
| $2,910 |
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| Class
I |
Sold
or Held |
$103 |
| $369 |
| $655 |
| $1,469 |
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| Class
Y |
Sold
or Held |
$113 |
| $378 |
| $664 |
| $1,478 |
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| Class
Z |
Sold
or Held |
$93 |
| $348 |
| $623 |
| $1,408 |
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PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate that the Fund pays higher 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, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 11% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
Under normal
conditions, the Fund invests at least 80% of its net assets in securities of
companies that are organized in, maintain at least 50% of their assets in, or
derive at least 50% of their revenues from, emerging market
countries. The Adviser has broad discretion to identify
countries that it considers to qualify as emerging markets. The Adviser selects
emerging market countries that the Fund will invest in based on the Adviser’s
evaluation of economic fundamentals, legal structure, political developments and
other specific factors the Adviser believes to be relevant.
Utilizing
qualitative and quantitative measures, the Adviser seeks to invest in
reasonably-priced companies that have strong structural growth potential. The
Adviser seeks attractive investment opportunities in all areas of emerging
markets, and utilizes a flexible investment approach across all market
capitalizations. The Adviser seeks to (i) integrate financially-material
environmental, social and governance (“ESG”) factors into the Fund’s investment
process and (ii) reduce material exposure to issuers that the Adviser deems
controversial in the ESG universe.
The
Fund’s holdings may include issues denominated in currencies of emerging market
countries, investment companies (like country funds) that invest in emerging
market countries, depositary receipts, and similar types of investments,
representing emerging market securities.
The
Fund may invest up to 20% of its net assets in securities issued by other
investment companies, including exchange-traded funds (“ETFs”). The Fund may
also invest in money market funds, but these investments are not subject to this
limitation. The Fund may invest in ETFs to participate in, or gain exposure to,
certain market sectors, or when direct investments in certain countries are not
permitted or available. The Fund may also invest in restricted securities,
including Rule 144A securities.
PRINCIPAL
RISKS
There
is no assurance that the Fund will achieve its investment objective.
The Fund’s share price and return will fluctuate with changes in
the market value of the Fund’s portfolio securities. Accordingly, an investment
in the Fund involves the risk of losing money.
Active
Management Risk. In managing the Fund’s portfolio, the Adviser will apply
investment techniques and risk analyses in making investment decisions for the
Fund, but there can be no guarantee that these will produce the desired results.
Investment decisions made by the Adviser in seeking to achieve the Fund’s
investment objective may cause a decline in the value of the investments held by
the Fund and, in turn, cause the Fund’s shares to lose value or underperform
other funds with similar investment objectives.
Consumer Discretionary Sector
Risk.
The Fund may 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.
Direct
Investments Risk.
Direct investments may involve a high degree of business and financial risk that
can result in substantial losses. Because of the absence of any public trading
market for these investments, the Fund may take longer to
liquidate
these positions than would be the case for publicly traded securities. Direct
investments are generally considered illiquid and will be aggregated with other
illiquid investments for purposes of the Fund's limitation on illiquid
investments.
Emerging
Market Issuers Risk.
Investments in securities of emerging market issuers involve risks not typically
associated with investments in securities of issuers in more developed countries
that may negatively affect the value of your investment in the Fund. Such
heightened risks may include, among others, expropriation and/or nationalization
of assets, restrictions on and government intervention in international trade,
confiscatory taxation, political instability, including authoritarian and/or
military involvement in governmental decision making, armed conflict, the impact
on the economy as a result of civil war, crime (including drug violence) and
social instability as a result of religious, ethnic and/or socioeconomic unrest.
Issuers in certain emerging 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 the 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 the Fund. This will affect the
rate at which the 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 the Fund may
need to effect securities transactions through these brokerage firms, the Fund
is subject to the risk that these brokerage firms will not be able to fulfill
their obligations to the Fund. This risk is magnified to the extent the Fund
effects securities transactions through a single brokerage firm or a small
number of brokerage firms. In addition, the infrastructure for the safe custody
of securities and for purchasing and selling securities, settling trades,
collecting dividends, initiating corporate actions, and following corporate
activity is not as well developed in emerging 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 the 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
the Fund invests may operate in, or have dealings with, countries subject to
sanctions and/or embargoes imposed by the U.S. Government and the United Nations
and/or countries identified by the U.S. Government as state sponsors of
terrorism. As a result, an issuer may sustain damage to its reputation if it is
identified as an issuer which operates in, or has dealings with, such countries.
The Fund, as an investor in such issuers, will be indirectly subject to those
risks.
The
economies of one or more countries in which the Fund may invest may be in
various states of transition from a planned economy to a more market oriented
economy. The economies of such countries differ from the economies of most
developed countries in many respects, including levels of government
involvement, states of development, growth rates, control of foreign exchange
and allocation of resources. Economic growth in these economies may be uneven
both geographically and among various sectors of their economies and may also be
accompanied by periods of high inflation. Political changes, social instability
and adverse diplomatic developments in these countries could result in the
imposition of additional government restrictions, including expropriation of
assets, confiscatory taxes or nationalization of some or all of the property
held by the underlying issuers of securities of emerging market issuers. 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 the
Fund’s ability to meet its investment objective. In addition, the 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 approval or a license would delay investments in those emerging
market countries, and, as a result, the Fund may not be able to invest in
certain securities while approval is pending. The government of certain emerging
market countries may also withdraw or decline to renew a license that enables
the Fund to invest in such country. These factors make investing in issuers
located or operating in emerging 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 net asset value of the
Fund.
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, the Fund could be adversely affected by delays in, or
a refusal to grant, required governmental approval for repatriation of capital,
as well as by the application to the Fund of any restrictions on investments.
Furthermore, investments in emerging market countries may require the Fund to
adopt special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to the
Fund.
Available
Disclosure About Emerging 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. The
Fund’s assets that are invested in 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.
The
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, the Fund
will compute and expects to distribute its income in U.S. dollars, and the
computation of income will be made on the date that the income is earned by the
Fund at the foreign exchange rate in effect on that date. Therefore, if the
value of the respective emerging market country’s currency falls relative to the
U.S. dollar between the earning of the income and the time at which the Fund
converts the relevant emerging market country’s currency to U.S. dollars, the
Fund may be required to liquidate certain positions in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements under the Internal Revenue Code. The liquidation of
investments, if required, could be at disadvantageous prices or otherwise have
an adverse impact on the Fund’s performance.
Certain
emerging market countries also restrict the free conversion of their currency
into foreign currencies, including the U.S. dollar. There is no significant
foreign exchange market for many such currencies and it would, as a result, be
difficult for the Fund to engage in foreign currency transactions designed to
protect the value of the Fund’s interests in securities denominated in such
currencies. Furthermore, if permitted, the Fund may incur costs in connection
with conversions between U.S. dollars and an emerging market country’s currency.
Foreign exchange dealers realize a profit based on the difference between the
prices at which they are buying and selling various currencies. Thus, a dealer
normally will offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire immediately to resell
that currency to the dealer. The Fund will conduct its foreign currency exchange
transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward, futures or options contracts to purchase or
sell foreign currencies.
Operational
and Settlement Risk. In
addition to having less developed securities markets, emerging market countries
have less developed custody and settlement practices than certain developed
countries. Rules adopted under the Investment Company Act of 1940 permit the
Fund to maintain its foreign securities and cash in the custody of certain
eligible non-U.S. banks and securities depositories. Banks in emerging 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 the Fund to recover assets held in custody by a foreign sub-custodian in the
event of the bankruptcy of the sub-custodian. Because settlement systems in
emerging market countries may be less organized than in other developed markets,
there may be a risk that settlement may be delayed and that cash or securities
of the Fund may be in jeopardy because of failures of or defects in the systems.
Under the laws in many emerging market countries, the Fund may be required to
release local shares before receiving cash payment or may be required to make
cash payment prior to receiving local shares, creating a risk that the Fund may
surrender cash or securities without ever receiving securities or cash from the
other party. Settlement systems in emerging market countries also have a higher
risk of failed trades and back to back settlements may not be
possible.
The
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event that the Fund is not able to
convert the foreign currency to U.S. dollars in time for settlement, which may
occur as a result of the delays described above, the Fund may be required to
liquidate certain investments and/or borrow money in order to fund such
redemption. The liquidation of investments, if required, could be at
disadvantageous prices or otherwise have an adverse impact on the Fund’s
performance (e.g.,
by causing the Fund to overweight foreign currency denominated holdings and
underweight other holdings which were sold to fund redemptions). In addition,
the Fund will incur interest expense on any borrowings and the borrowings will
cause the Fund to be leveraged, which may magnify gains and losses on its
investments.
In
certain emerging market countries, the marketability of investments may be
limited due to the restricted opening hours of trading exchanges, and a
relatively high proportion of market value may be concentrated in the hands of a
relatively small number of investors. In addition, because certain emerging
market countries’ trading exchanges on which the Fund’s portfolio securities may
trade are open when the relevant exchanges are closed, the Fund may be subject
to heightened risk associated with market movements. Trading volume may be lower
on certain emerging market countries’ trading exchanges than on more developed
securities markets and securities may be generally less liquid. The
infrastructure for clearing, settlement and registration on the primary and
secondary markets of certain emerging market countries are less developed than
in certain other markets and under certain circumstances this may result in the
Fund experiencing delays in settling and/or registering transactions in the
markets in which it invests, particularly if the growth of foreign and domestic
investment in certain emerging market countries places an undue burden on such
investment infrastructure. Such delays could affect the speed with which the
Fund can transmit redemption proceeds and may inhibit the initiation and
realization of investment opportunities at optimum times.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer’s securities are predicated on these securities being
blocked from trading at the custodian or sub-custodian level for a period of
time around a shareholder meeting. These
restrictions
have the effect of barring the purchase and sale of certain voting securities
within a specified number of days before and, in certain instances, after a
shareholder meeting where a vote of shareholders will be taken. Share blocking
may prevent the Fund from buying or selling securities for a period of time.
During the time that shares are blocked, trades in such securities will not
settle. The blocking period can last up to several weeks. The process for having
a blocking restriction lifted can be quite onerous with the particular
requirements varying widely by country. In addition, in certain countries, the
block cannot be removed. As a result of the ramifications of voting ballots in
markets that allow share blocking, the Adviser, on behalf of the Fund, reserves
the right to abstain from voting proxies in those
markets.
Corporate
and Securities Laws. Securities
laws in emerging 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
securityholders rights. Accordingly, foreign investors may be adversely affected
by new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging market issuers are subject may be less advanced
than those systems to which issuers located in more developed countries are
subject, and therefore, securityholders of issuers located in emerging market
countries may not receive many of the protections available to securityholders
of issuers located in more developed countries. In circumstances where adequate
laws and securityholders 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. 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.
ESG
Investing Strategy Risk.
The Fund’s ESG strategy could cause it to perform differently compared to funds
that do not have an ESG focus. The Fund’s ESG strategy may result in the Fund
investing in securities or industry sectors that underperform other securities
or underperform the market as a whole. The Fund is also subject to the risk that
the companies represented in the Fund do not operate as expected when addressing
ESG issues. Additionally, the valuation model used for identifying ESG companies
may not perform as intended, which may adversely affect an investment in the
Fund. Regulatory changes or interpretations regarding the definitions and/or use
of ESG criteria could have a material adverse effect on the Fund’s ability to
implement its ESG strategy.
Financials
Sector Risk.
The Fund may 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.
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. The Fund may also (directly or
indirectly) incur costs in connection with conversions between U.S. dollars and
foreign currencies.
Foreign
Securities Risk. Investments in the securities of foreign issuers involve risks beyond
those associated with investments in U.S. securities. These additional risks
include greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Foreign market trading hours, clearance and settlement procedures, and holiday
schedules may limit the Fund's ability to buy and sell
securities.
Industrials
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the industrials sector. The industrials sector
comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates.
Information
Technology Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the information technology sector. Information
technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Information
technology companies may have
limited
product lines, markets, financial resources or personnel. The products of
information technology companies may face product obsolescence due to rapid
technological developments and frequent new product introduction, unpredictable
changes in growth rates and competition for the services of qualified personnel.
Companies in the information technology sector are heavily dependent on patent
protection and the expiration of patents may adversely affect the profitability
of these companies.
Market
Risk. The
prices of securities are subject to the risks associated with investing in the
securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system
failures.
Restricted
Securities Risk.
The Fund may hold securities that are restricted as to resale under the U.S.
Federal securities laws, such as securities in certain privately held companies.
Such securities may be highly illiquid and their values may experience
significant volatility. Restricted securities may be difficult to
value.
Risk
of Investing in Other Funds. The
Fund may invest in shares of other funds, including ETFs. As a result, the Fund
will indirectly be exposed to the risks of an investment in the underlying
funds. As a shareholder in a fund, the Fund would bear its ratable share of that
entity’s expenses. At the same time, the Fund would continue to pay its own
investment management fees and other expenses. As a result, the Fund and its
shareholders will be absorbing additional levels of fees with respect to
investments in other funds, including
ETFs.
Small-
and Medium-Capitalization Companies Risk.
The Fund may invest in small- and medium-capitalization companies and, therefore
will be subject to certain risks associated with small- and medium-
capitalization companies. These companies are often subject to less analyst
coverage and may be in early and less predictable periods of their corporate
existences, with little or no record of profitability. In addition, these
companies often have greater price volatility, lower trading volume and less
liquidity than larger more established companies. These companies tend to have
smaller revenues, narrower product lines, less management depth and experience,
smaller shares of their product or service markets, fewer financial resources
and less competitive strength than large-capitalization companies. Returns on
investments in securities of small- and medium-capitalization companies could
trail the returns on investments in securities of larger
companies.
Special
Purpose Acquisition Companies Risk.
Equity securities in which the Fund invests include stock, rights,
warrants, and other interests in special purpose acquisition companies (“SPACs”)
or similar special purpose entities. A SPAC is typically a publicly traded
company that raises investment capital via an initial public offering for the
purpose of acquiring one or more existing companies (or interests therein) via
merger, combination, acquisition or other similar transactions. If the Fund
purchases shares of a SPAC in an initial public offering it will generally bear
a sales commission, which may be significant. The shares of a SPAC are often
issued in “units” that include one share of common stock and one right or
warrant (or partial right or warrant) conveying the right to purchase additional
shares or partial shares. In some cases, the rights and warrants may be
separated from the common stock at the election of the holder, after which they
may become freely tradeable. After going public and until a transaction is
completed, a SPAC generally invests the proceeds of its initial public offering
(less a portion retained to cover expenses) in U.S. Government securities, money
market securities and cash. To the extent the SPAC is invested in cash or
similar securities, this may impact the Fund’s ability to meet its investment
objective. If a SPAC does not complete a transaction within a specified period
of time after going public, the SPAC is typically dissolved, at which point the
invested funds are returned to the SPAC’s shareholders (less certain permitted
expenses) and any rights or warrants issued by the SPAC expire worthless. SPACs
generally provide their investors with the option of redeeming an investment in
the SPAC at or around the time of effecting a transaction. In some cases, the
Fund may forfeit its right to receive additional warrants or other interests in
the SPAC if it redeems its interest in the SPAC in connection with a
transaction. Because SPACs often do not have an operating history or ongoing
business other than seeking a transaction, the value of their securities may be
particularly dependent on the quality of its management and on the ability of
the SPAC’s management to identify and complete a profitable transaction. Some
SPACs may pursue transactions only within certain industries or regions, which
may increase the volatility of an investment in them. In addition, the
securities issued by a SPAC, which may be traded in the over-the-counter market,
may become illiquid and/or may be subject to restrictions on resale. Other risks
of investing in SPACs include that a significant portion of the monies raised by
the SPAC may be expended during the search for a target transaction; an
attractive transaction may not be identified at all (or any requisite approvals
may not be obtained) and the SPAC may be required to return any remaining monies
to shareholders; a transaction once identified or effected may prove
unsuccessful and an investment in the SPAC may lose value; the warrants or other
rights with respect to the SPAC held by the Fund may expire worthless or may be
repurchased or retired by the SPAC at an unfavorable price; and an investment in
a SPAC may be diluted by additional later offerings of interests in the SPAC or
by other investors exercising existing rights to purchase shares of the
SPAC.
Special
Risk Considerations of Investing in Brazilian Issuers. Investments
in securities of Brazilian issuers, including issuers located outside of Brazil
that generate significant revenues from Brazil, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Brazilian economy has been characterized by frequent, and
occasionally drastic, interventions by the Brazilian government, including the
imposition of wage and price controls, exchange controls, limiting imports,
blocking access to bank accounts and other measures. The Brazilian government
has often changed monetary, taxation, credit, trade and other policies to
influence the core of Brazil’s economy. Actions taken by the Brazilian
government concerning the economy may have significant effects on Brazilian
companies and on market conditions and prices of Brazilian securities. Brazil’s
economy may be subject to sluggish economic growth due to, among other things,
weak consumer spending, political turmoil, high rates of inflation and low
commodity prices. Brazil suffers from chronic structural public sector deficits.
The Brazilian government has privatized certain entities, which have suffered
losses due to, among other things, the inability to adjust to a competitive
environment.
The
market for Brazilian securities is directly influenced by the flow of
international capital, and economic and market conditions of certain countries,
especially emerging market countries. As a result, adverse economic conditions
or developments in other emerging market countries have at times significantly
affected the availability of credit in the Brazilian economy and resulted in
considerable outflows of funds and declines in the amount of foreign currency
invested in Brazil.
Investments
in Brazilian securities may be subject to certain restrictions on foreign
investment. Although Brazilian law has provided greater certainty with respect
to the free exchange of currency than in the past, any restrictions or
restrictive exchange control policies in the future could have the effect of
preventing or restricting access to foreign currency and could affect the Fund’s
ability to operate and to qualify for the favorable tax treatment afforded to
regulated investment companies for U.S. federal income tax purposes.
Brazil
has historically experienced high rates of inflation, a high level of debt, and
high crime rates, each of which may constrain economic growth. Brazil suffers
from high levels of corruption, crime and income disparity. The Brazilian
economy is also heavily dependent upon commodity prices and international trade.
Unanticipated political or social developments may result in sudden and
significant investment losses. An increase in prices for commodities, such as
petroleum, the depreciation of the Brazilian real and future governmental
measures seeking to maintain the value of the Brazilian real in relation to the
U.S. dollar, may trigger increases in inflation in Brazil and may slow the rate
of growth of the Brazilian economy. Conversely, appreciation of the Brazilian
real relative to the U.S dollar may lead to the deterioration of Brazil’s
current account of balance of payments as well as limit the growth of
exports.
Special
Risk Considerations of Investing in Chinese Issuers. Investments
in securities of Chinese issuers, including issuers outside of China that
generate significant revenues from China, involve certain risks and
considerations not typically associated with investments in U.S securities.
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 or other 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 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. In addition, 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 Indian Issuers.
Investments in securities of Indian issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Such heightened risks include, among others, greater government control
over the economy, including the risk that the Indian government may decide not
to continue to support economic reform programs, political and legal
uncertainty, competition from low-cost issuers of other emerging economies in
Asia, currency fluctuations or blockage of foreign currency exchanges and the
risk of nationalization or expropriation of assets. Issuers in India 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. India is
also located in a part of the world that has historically been prone to natural
disasters, such as earthquakes and tsunamis. Any such natural disaster could
cause a significant impact on the Indian economy and could impact
operations
of the Fund, causing an adverse impact on the Fund. In addition, religious and
border disputes persist in India. Moreover, India has experienced civil unrest
and hostilities with neighboring countries, including Pakistan, and the Indian
government has confronted separatist movements in several Indian states. India
has experienced acts of terrorism that has targeted foreigners. Such acts of
terrorism have had a negative impact on tourism, an important sector of the
Indian economy.
The
securities market of India is considered an emerging market characterized by a
small number of listed companies with significantly smaller market
capitalizations, greater price volatility and substantially less liquidity than
developed markets, such as the United States. These factors, coupled with
restrictions on foreign investment and other factors, limit the supply of
securities available for investment by the Fund. This will affect the rate at
which the Fund is able to invest in India, 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. Certain
restrictions on foreign investment may decrease the liquidity of the Fund’s
portfolio or inhibit the Fund’s ability to pursue its investment objective. In
addition, the Reserve Bank of India, the Indian counterpart of the Federal
Reserve Bank in the United States, imposes certain limits on the foreign
ownership of Indian securities. These restrictions and/or controls may at times
limit or prevent foreign investment in securities of issuers located or
operating in India and may inhibit the Fund’s ability to pursue its investment
objective.
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 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 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 Taiwanese Issuers.
Investments in securities of Taiwanese issuers, including issuers located
outside of Taiwan that generate significant revenues from Taiwan, involve risks
and special considerations not typically associated with investments in the U.S.
securities markets. To the extent the Fund continues to invest in securities
issued by Taiwanese issuers, the Fund may be subject to the risk of investing in
such issuers. Investments in Taiwanese issuers may subject the Fund to legal,
regulatory, political, currency and economic risks that are specific to Taiwan.
Specifically, Taiwan’s geographic proximity and history of political contention
with China have resulted in ongoing tensions between the two countries. These
tensions may materially affect the Taiwanese economy and its securities market.
Taiwan’s economy is export-oriented, so it depends on an open world trade regime
and remains vulnerable to fluctuations in the world
economy.
Stock
Connect Risk.
The Fund may invest in A-shares listed and traded on the Shanghai Stock Exchange
and the Shenzhen Stock Exchange through Stock Connect, or on such other stock
exchanges that participate in Stock Connect from time to time or in the future.
Trading through Stock Connect is subject to a number of restrictions that may
affect the Fund’s investments and returns. For example, trading through Stock
Connect is subject to daily quotas that limit the maximum daily net purchases on
any particular day, which may restrict or preclude the Fund’s ability to invest
in Stock Connect A-shares. In addition, investments made through Stock Connect
are subject to trading, clearance and settlement procedures that are relatively
untested in the PRC, which could pose risks to the Fund. Furthermore, securities
purchased via Stock Connect will be held via a book entry omnibus account in the
name of HKSCC, Hong Kong’s clearing entity, at the CSDCC. The Fund’s ownership
interest in Stock Connect securities will not be reflected directly in book
entry with CSDCC and will instead only be reflected on the books of its Hong
Kong sub-custodian. The Fund may therefore depend on HKSCC’s ability or
willingness as record-holder of Stock Connect securities to
enforce
the Fund’s shareholder rights. PRC law did not historically recognize the
concept of beneficial ownership; while PRC regulations and the Hong Kong Stock
Exchange have issued clarifications and guidance supporting the concept of
beneficial ownership via Stock Connect, the interpretation of beneficial
ownership in the PRC by regulators and courts may continue to evolve. Moreover,
Stock Connect A-shares generally may not be sold, purchased or otherwise
transferred other than through Stock Connect in accordance with applicable
rules.
A
primary feature of Stock Connect is the application of the home market’s laws
and rules applicable to investors in A-shares. Therefore, the Fund’s investments
in Stock Connect A-shares are generally subject to PRC securities regulations
and listing rules, among other restrictions. The Fund will not benefit from
access to Hong Kong investor compensation funds, which are set up to protect
against defaults of trades, when investing through Stock Connect. Stock Connect
is only available on days when markets in both the PRC and Hong Kong are open,
which may limit the Fund’s ability to trade when it would be otherwise
attractive to do so. Since the inception of Stock Connect, foreign investors
(including the Fund) investing in A-shares through Stock Connect have been
temporarily exempt from the PRC corporate income tax and value-added tax on the
gains on disposal of such A-shares. Dividends are subject to PRC corporate
income tax on a withholding basis at 10%, unless reduced under a double tax
treaty with China upon application to and obtaining approval from the competent
tax authority. Aside from these temporary measures, uncertainties in permanent
PRC tax rules governing taxation of income and gains from investments in Stock
Connect A-shares could result in unexpected tax liabilities for the
Fund.
The
Stock Connect program is a relatively new program and may be subject to further
interpretation and guidance. There can be no assurance as to the program’s
continued existence or whether future developments regarding the program may
restrict or adversely affect the Fund’s investments or returns. In addition, the
application and interpretation of the laws and regulations of Hong Kong and the
PRC, and the rules, policies or guidelines published or applied by relevant
regulators and exchanges in respect of the Stock Connect program are uncertain,
and they may have a detrimental effect on the Fund’s investments and
returns.
PERFORMANCE
The following
chart and table provide some indication of the risks of investing in the Fund by
showing changes in the Fund’s performance from year to year and by showing how
the Fund’s average annual total returns compare with those of a broad measure of
market performance. The Fund’s past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future. The annual returns in the bar chart
are for the Fund’s Class A shares and do not reflect sales loads. If sales loads
were reflected, returns would be lower than those
shown.
Additionally, large purchases and/or redemptions of shares of a
class, relative to the amount of assets represented by the class, may cause the
annual returns for each class to differ. Updated performance information for the
Fund is available on the VanEck website at vaneck.com.
CLASS A: Annual Total
Returns (%) as of 12/31
|
|
|
|
|
|
|
| |
Best
Quarter: |
+25.07% |
2Q
2020 |
Worst
Quarter: |
-25.90% |
1Q
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Average Annual
Total Returns as of 12/31/2023 |
1
Year |
5
Years |
10
Years |
Life
of Class |
|
|
Class
A Shares
(12/20/93) |
|
|
|
| |
| Before
Taxes |
4.26% |
0.65% |
0.21% |
— |
|
|
After
Taxes on Distributions1 |
4.14% |
0.02% |
-0.07% |
— |
|
|
After Taxes
on Distributions and Sale of Fund Shares |
2.90% |
0.60% |
0.25% |
— |
|
|
Class
C Shares
(10/3/03) |
|
|
|
| |
| Before
Taxes |
8.55% |
1.00% |
-0.02% |
— |
|
|
Class
I Shares
(12/31/07) |
|
|
|
| |
| Before
Taxes |
11.26% |
2.36% |
1.32% |
— |
|
|
Class
Y Shares
(4/30/10) |
|
|
|
| |
| Before
Taxes |
11.17% |
2.28% |
1.21% |
— |
|
|
Class
Z Shares
(9/16/19) |
|
|
|
| |
| Before
Taxes |
11.34% |
— |
— |
-1.67% |
|
|
MSCI
Emerging Markets Investable Markets Index
(reflects
no deduction for fees, expenses or taxes, except withholding
taxes) |
11.67% |
4.46% |
3.00% |
— |
|
|
|
|
|
|
| |
1 After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
These returns are shown for
one class of shares only; after-tax returns for the other classes may
vary. Actual after-tax returns depend on your individual tax
situation and may differ from those shown in the preceding table. The
after-tax return information shown above does not apply to Fund shares held
through a tax-advantaged account, such as a 401(k) plan or Investment Retirement
Account.
See
“License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation
Portfolio
Managers.
Ola
El-Shawarby has been Portfolio Manager of the Fund since May 2024. Ms.
El-Shawarby previously served as Deputy Portfolio Manager of the Fund since May
2023. Ms. El-Shawarby has worked at the Adviser as a Senior Analyst since 2017.
Angus Shillington has been Deputy Portfolio Manager of the Fund since 2014. Mr.
Shillington has worked at the Adviser as a Senior Analyst since
2009.
David
Semple, former Portfolio Manager of the Fund, currently serves as a Strategic
Adviser to the investment team.
PURCHASE
AND SALE OF FUND SHARES
In
general, shares of the Fund may be purchased or redeemed on any business day,
primarily through financial representatives such as brokers or advisers, or
directly by eligible investors through the Fund’s transfer agent. Purchase
minimums for Classes A, C and Y shares are $1,000 for an initial purchase and
$100 for a subsequent purchase, with no purchase minimums for any purchase
through a retirement or pension plan account, for any “wrap fee” account and
similar programs offered without a sales charge by certain financial
institutions and third-party recordkeepers and/or administrators, and for any
account using the Automatic Investment Plan, or for any other periodic purchase
program. Class Z shares have no initial or subsequent purchase minimums,
although financial intermediaries may have their own minimums. Purchase minimums
for Class I shares are $1 million for an initial purchase and no minimum for a
subsequent purchase; the initial minimum may be reduced or waived at the
Adviser’s discretion.
TAX
INFORMATION
The
Fund normally distributes net investment income and net realized capital gains,
if any, to shareholders annually. These distributions are generally taxable to
you as ordinary income or capital gains, unless you are investing through a tax
advantaged retirement account, such as a 401(k) plan or an individual retirement
account (IRA), in which case your distributions may be taxed as ordinary income
when withdrawn from such account.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Fund and/or its affiliates may pay the intermediary for
the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your financial professional to recommend the Fund over another investment. Ask
your financial professional or visit your financial intermediary’s website for
more information.
|
| |
GLOBAL
RESOURCES FUND (CLASS A, C, I,
Y) |
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
Global Resources Fund seeks long-term capital appreciation by investing
primarily in global resource securities. Income is a
secondary consideration.
FUND FEES AND
EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. 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.
You may qualify
for Class A sales charge discounts if you and your family (includes spouse and
children under age 21) invest, or agree to invest in the future, at least
$25,000,
in the aggregate, in Classes A and C of the VanEck
Funds. More information about these and other
discounts is available from your financial professional and in the “Shareholder
Information-Sales Charges” section of this prospectus, in the “Availability of
Discounts” section of the Fund’s SAI and, with respect to purchases of shares
through specific intermediaries, in Appendix A to this prospectus, entitled
“Intermediary Sales Charge Discounts and
Waivers”.
Shareholder
Fees
(fees
paid directly from your investment)
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| Class
A |
Class
C |
Class
I |
Class
Y |
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Maximum
Sales Charge (load) imposed on purchases (as a percentage of offering
price) |
5.75% |
0.00% |
0.00% |
0.00% |
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Maximum
Deferred Sales Charge (load) (as a percentage of the lesser of the net
asset value or purchase price) |
0.00%¹ |
1.00% |
0.00% |
0.00% |
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Class
A |
Class
C |
Class
I |
Class
Y |
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| Management
Fees |
1.00% |
1.00% |
1.00% |
1.00% |
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| Distribution
and/or Service (12b-1) Fees |
0.25% |
1.00% |
0.00% |
0.00% |
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| Other
Expenses |
0.25% |
0.50% |
0.13% |
0.16% |
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| Total
Annual Fund Operating Expenses |
1.50% |
2.50% |
1.13% |
1.16% |
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Fee
Waivers and/or Expense Reimbursements2 |
-0.12% |
-0.30% |
-0.18% |
-0.03% |
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Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursements |
1.38% |
2.20% |
0.95% |
1.13% |
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1
A
contingent deferred sales charge for Class A shares of 1.00% for one year
applies to redemptions of qualified commissionable shares purchased at or above
the $1 million breakpoint level.
2
Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, dividends
and interest payments on securities sold short, taxes and extraordinary
expenses) from exceeding 1.38% for Class A, 2.20% for Class C, 0.95% for Class
I, and 1.13% for Class Y of the Fund’s average daily net assets per year until
May 1,
2025. During such time, the expense limitation is expected to
continue until the Board of Trustees acts to discontinue all or a portion of
such expense limitation.
EXPENSE
EXAMPLE
The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then either redeem all of your shares at the end of these periods
or continue to hold them. The example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses remain the same, and
applies fee waivers and/or expense reimbursements, if any, for the periods
indicated above under “Annual Fund Operating Expenses.” Although your actual
expenses may be higher or lower, based on these assumptions, your costs would
be:
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| Share
Status |
1
Year |
3
Years |
5
Years |
10
Years |
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| Class
A |
Sold
or Held |
$707 |
| $1,011 |
| $1,336 |
| $2,253 |
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| Class
C |
Sold |
$323 |
| $750 |
| $1,304 |
| $2,813 |
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| Held |
$223 |
| $750 |
| $1,304 |
| $2,813 |
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| Class
I |
Sold
or Held |
$97 |
| $341 |
| $605 |
| $1,359 |
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| Class
Y |
Sold
or Held |
$115 |
| $366 |
| $635 |
| $1,406 |
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PORTFOLIO
TURNOVER
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate that the Fund pays higher 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, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 44% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
Under normal
conditions, the Fund invests at least 80% of its net assets in securities of
“global resource” companies and instruments that derive their value from “global
resources”. Global resources include precious metals (including gold), base and
industrial metals, energy, natural resources and other
commodities. A global resource company is a company that
derives, directly or indirectly, at least 50% of its revenues from exploration,
development, production, distribution or facilitation of processes relating to
global resources. The Fund concentrates its investments in the securities of
global resource companies and instruments that derive their value from global
resources.
The
Fund may invest without limitation in any one global resources sector and is not
required to invest any portion of its assets in any one global resources sector.
The Fund may invest in securities of companies located anywhere in the world,
including the U.S. Under ordinary circumstances, the Fund will invest in
securities of issuers from a number of different countries, and may invest any
amount of its assets in emerging markets. The Fund may invest in securities of
companies of any capitalization range. Utilizing qualitative and quantitative
measures, the Fund’s investment management team selects equity securities of
companies that it believes represent value opportunities and/or that have growth
potential. Candidates for the Fund’s portfolio are evaluated based on their
relative desirability using a wide range of criteria and are regularly reviewed
to ensure that they continue to offer absolute and relative desirability. The
analysis of financially material risks and opportunities related to ESG (i.e.
Environmental, Social and Governance) factors is a component of the overall
investment process. ESG considerations can affect the Adviser’s fundamental
assessment of a company or country.
The
Fund may use derivative instruments, such as structured notes, warrants,
currency forwards, futures contracts, options and swap agreements, to gain or
hedge exposure to global resources, global resource companies and other assets.
The Fund may enter into foreign currency transactions to attempt to moderate the
effect of currency fluctuations. The Fund may write covered call options on
portfolio securities to the extent that the value of all securities with respect
to which covered calls are written does not exceed 10% of the Fund’s net asset
value. The Fund may also invest up to 20% of its net assets in securities issued
by other investment companies, including exchange-traded funds (“ETFs”). The
Fund may also invest in money market funds, but these investments are not
subject to this limitation. The Fund may invest in ETFs to participate in, or
gain exposure to, certain market sectors, or when direct investments in certain
countries are not permitted or available.
PRINCIPAL
RISKS
There
is no assurance that the Fund will achieve its investment objective.
The Fund’s share price and return will fluctuate with changes in
the market value of the Fund’s portfolio securities. Accordingly, an investment
in the Fund involves the risk of losing money.
Active
Management Risk. In managing the Fund’s portfolio, the Adviser will apply
investment techniques and risk analyses in making investment decisions for the
Fund, but there can be no guarantee that these will produce the desired results.
Investment decisions made by the Adviser in seeking to achieve the Fund’s
investment objective may cause a decline in the value of the investments held by
the Fund and, in turn, cause the Fund’s shares to lose value or underperform
other funds with similar investment objectives.
Agriculture
Companies Risk. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the agriculture companies. Economic forces
affecting agricultural companies and related industries, including forces
affecting the agricultural commodity prices, labor costs, and energy and
financial markets, could adversely affect the Fund’s portfolio companies and
thus, the Fund’s financial situation and profitability. Agricultural and
livestock production and trade flows are significantly affected by government
policies and regulations. In addition, these companies are also subject to risks
associated with cyclicality of revenues and earnings, currency fluctuations,
changing consumer tastes, extensive competition, consolidation,
and
excess capacity. In addition, agriculture companies must comply with a broad
range of environmental health, food safety and worker safety laws and
regulations which could adversely affect the Fund. Additional or more stringent
environmental and food safety laws and regulations may be enacted in the future
and such changes could have a material adverse effect on the business of the
agriculture companies.
Commodities
and Commodity-Linked Instruments Risk.
Commodities include, among other things, energy products, agricultural products,
industrial metals, precious metals and livestock. The commodities markets may
fluctuate widely based on a variety of factors, including overall market
movements, economic events and policies, changes in interest rates or inflation
rates, changes in monetary and exchange control programs, war, acts of
terrorism, natural disasters and technological developments. Variables such as
disease, drought, floods, weather, trade, embargoes, tariffs and other political
events, in particular, may have a larger impact on commodity prices than on
traditional securities. These additional variables may create additional
investment risks that subject the Fund’s investments to greater volatility than
investments in traditional securities. The prices of commodities can also
fluctuate widely due to supply and demand disruptions in major producing or
consuming regions. Because certain commodities may be produced in a limited
number of countries and may be controlled by a small number of producers,
political, economic and supply-related events in such countries could have a
disproportionate impact on the prices of such commodities. These factors may
affect the value of the Fund’s investments in varying ways, and different
factors may cause the values and the volatility of the Fund’s investments to
move in inconsistent directions at inconsistent rates. Because the value of a
commodity-linked derivative instrument and structured note typically are based
upon the price movements of physical commodities, the value of these securities
will rise or fall in response to changes in the underlying commodities or
related index of investment.
Commodities
and Commodity-Linked Instruments Tax Risk. The
tax treatment of commodity-linked derivative instruments may be adversely
affected by changes in legislation, regulations or other legally binding
authority. If, as a result of any such adverse action, the income of the Fund
from certain commodity-linked derivatives were treated as non- qualifying
income, the Fund might fail to qualify as a regulated investment company and/or
be subject to federal income tax at the Fund level. The uncertainty surrounding
the treatment of certain derivative instruments under the qualification tests
for a regulated investment company may limit the Fund’s use of such derivative
instruments.
The
Fund may be required, for federal income tax purposes, to mark-to-market and
recognize as income for each taxable year any net unrealized gains and losses on
certain futures contracts and option contracts as of the end of the year as well
as those actually realized during the year. Gain or loss from futures contracts
required to be marked-to-market will be 60% long-term and 40% short-term capital
gain or loss if held directly by the Fund. The Fund may be required to defer the
recognition of losses on futures contracts or certain option contracts to the
extent of any unrecognized gains on related positions held by the
Fund.
Derivatives
Risk.
Derivatives and other similar instruments (referred to collectively as
“derivatives”) are financial instruments whose values are based on the value of
one or more reference assets or indicators, such as a security, currency,
interest rate, or index. The Fund’s use of derivatives involves risks different
from, and possibly greater than, the risks associated with investing directly in
securities and other more traditional investments. Moreover, although the value
of a derivative is based on an underlying asset or indicator, a derivative
typically does not carry the same rights as would be the case if the Fund
invested directly in the underlying securities, currencies or other
assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it is contractually
entitled to receive). Counterparty risk also refers to the related risks of
having concentrated exposure to such a counterparty. A liquid secondary market
may not always exist for the Fund’s derivative positions at any time, and the
Fund may not be able to initiate or liquidate a swap position at an advantageous
time or price, which may result in significant losses. The Fund may also face
the risk that it may not be able to meet margin and payment requirements and
maintain a derivatives position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Direct
Investments Risk.
Direct investments may involve a high degree of business and financial risk that
can result in substantial losses. Because of the absence of any public trading
market for these investments, the Fund may take longer to
liquidate
these positions than would be the case for publicly traded securities. Direct
investments are generally considered illiquid and will be aggregated with other
illiquid investments for purposes of the Fund's limitation on illiquid
investments.
Emerging
Market Issuers Risk.
Investments in securities of emerging market issuers involve risks not typically
associated with investments in securities of issuers in more developed countries
that may negatively affect the value of your investment in the Fund. Such
heightened risks may include, among others, expropriation and/or nationalization
of assets, restrictions on and government intervention in international trade,
confiscatory taxation, political instability, including authoritarian and/or
military involvement in governmental decision making, armed conflict, the impact
on the economy as a result of civil war, crime (including drug violence) and
social instability as a result of religious, ethnic and/or socioeconomic unrest.
Issuers in certain emerging 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 the 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 the Fund. This will affect the
rate at which the 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 the Fund may
need to effect securities transactions through these brokerage firms, the Fund
is subject to the risk that these brokerage firms will not be able to fulfill
their obligations to the Fund. This risk is magnified to the extent the Fund
effects securities transactions through a single brokerage firm or a small
number of brokerage firms. In addition, the infrastructure for the safe custody
of securities and for purchasing and selling securities, settling trades,
collecting dividends, initiating corporate actions, and following corporate
activity is not as well developed in emerging 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 the 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
the Fund invests may operate in, or have dealings with, countries subject to
sanctions and/or embargoes imposed by the U.S. Government and the United Nations
and/or countries identified by the U.S. Government as state sponsors of
terrorism. As a result, an issuer may sustain damage to its reputation if it is
identified as an issuer which operates in, or has dealings with, such countries.
The Fund, as an investor in such issuers, will be indirectly subject to those
risks.
The
economies of one or more countries in which the Fund may invest may be in
various states of transition from a planned economy to a more market oriented
economy. The economies of such countries differ from the economies of most
developed countries in many respects, including levels of government
involvement, states of development, growth rates, control of foreign exchange
and allocation of resources. Economic growth in these economies may be uneven
both geographically and among various sectors of their economies and may also be
accompanied by periods of high inflation. Political changes, social instability
and adverse diplomatic developments in these countries could result in the
imposition of additional government restrictions, including expropriation of
assets, confiscatory taxes or nationalization of some or all of the property
held by the underlying issuers of securities of emerging market issuers. 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 the
Fund’s ability to meet its investment objective. In addition, the 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 approval or a license would delay investments in those emerging
market countries, and, as a result, the Fund may not be able to invest in
certain securities while approval is pending. The government of certain emerging
market countries may also withdraw or decline to renew a license that enables
the Fund to invest in such country. These factors make investing in issuers
located or operating in emerging 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 net asset value of the
Fund.
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, the Fund could be adversely affected by delays in, or
a refusal to grant, required governmental approval for repatriation of capital,
as well as by the application to the Fund of any restrictions on investments.
Furthermore, investments in emerging market countries may require the Fund to
adopt special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to the
Fund.
Available
Disclosure About Emerging 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. The
Fund’s assets that are invested in 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.
The
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, the Fund
will compute and expects to distribute its income in U.S. dollars, and the
computation of income will be made on the date that the income is earned by the
Fund at the foreign exchange rate in effect on that date. Therefore, if the
value of the respective emerging market country’s currency falls relative to the
U.S. dollar between the earning of the income and the time at which the Fund
converts the relevant emerging market country’s currency to U.S. dollars, the
Fund may be required to liquidate certain positions in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements under the Internal Revenue Code. The liquidation of
investments, if required, could be at disadvantageous prices or otherwise have
an adverse impact on the Fund’s performance.
Certain
emerging market countries also restrict the free conversion of their currency
into foreign currencies, including the U.S. dollar. There is no significant
foreign exchange market for many such currencies and it would, as a result, be
difficult for the Fund to engage in foreign currency transactions designed to
protect the value of the Fund’s interests in securities denominated in such
currencies. Furthermore, if permitted, the Fund may incur costs in connection
with conversions between U.S. dollars and an emerging market country’s currency.
Foreign exchange dealers realize a profit based on the difference between the
prices at which they are buying and selling various currencies. Thus, a dealer
normally will offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire immediately to resell
that currency to the dealer. The Fund will conduct its foreign currency exchange
transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward, futures or options contracts to purchase or
sell foreign currencies.
Operational
and Settlement Risk.
In addition to having less developed securities markets, emerging market
countries have less developed custody and settlement practices than certain
developed countries. Rules adopted under the Investment Company Act of 1940
permit the Fund to maintain its foreign securities and cash in the custody of
certain eligible non-U.S. banks and securities depositories. Banks in emerging
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 the Fund to recover assets held in custody by a foreign
sub-custodian in the event of the bankruptcy of the sub-custodian. Because
settlement systems in emerging market countries may be less organized than in
other developed markets, there may be a risk that settlement may be delayed and
that cash or securities of the Fund may be in jeopardy because of failures of or
defects in the systems. Under the laws in many emerging market countries, the
Fund may be required to release local shares before receiving cash payment or
may be required to make cash payment prior to receiving local shares, creating a
risk that the Fund may surrender cash or securities without ever receiving
securities or cash from the other party. Settlement systems in emerging market
countries also have a higher risk of failed trades and back to back settlements
may not be possible.
The
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event that the Fund is not able to
convert the foreign currency to U.S. dollars in time for settlement, which may
occur as a result of the delays described above, the Fund may be required to
liquidate certain investments and/or borrow money in order to fund such
redemption. The liquidation of investments, if required, could be at
disadvantageous prices or otherwise have an adverse impact on the Fund’s
performance (e.g.,
by causing the Fund to overweight foreign currency denominated holdings and
underweight other holdings which were sold to fund redemptions). In addition,
the Fund will incur interest expense on any borrowings and the borrowings will
cause the Fund to be leveraged, which may magnify gains and losses on its
investments.
In
certain emerging market countries, the marketability of investments may be
limited due to the restricted opening hours of trading exchanges, and a
relatively high proportion of market value may be concentrated in the hands of a
relatively small number of investors. In addition, because certain emerging
market countries’ trading exchanges on which the Fund’s portfolio securities may
trade are open when the relevant exchanges are closed, the Fund may be subject
to heightened risk associated with market movements. Trading volume may be lower
on certain emerging market countries’ trading exchanges than on more developed
securities markets and securities may be generally less liquid. The
infrastructure for clearing, settlement and registration on the primary and
secondary markets of certain emerging market countries are less developed than
in certain other markets and under certain circumstances this may result in the
Fund experiencing delays in settling and/or registering transactions in the
markets in which it invests, particularly if the growth of foreign and domestic
investment in certain emerging market countries places an undue burden on such
investment infrastructure. Such delays could affect the speed with which the
Fund can transmit redemption proceeds and may inhibit the initiation and
realization of investment opportunities at optimum times.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer’s securities are predicated on these securities being
blocked from trading at the custodian or sub-custodian level for a period of
time around a shareholder meeting. These
restrictions
have the effect of barring the purchase and sale of certain voting securities
within a specified number of days before and, in certain instances, after a
shareholder meeting where a vote of shareholders will be taken. Share blocking
may prevent the Fund from buying or selling securities for a period of time.
During the time that shares are blocked, trades in such securities will not
settle. The blocking period can last up to several weeks. The process for having
a blocking restriction lifted can be quite onerous with the particular
requirements varying widely by country. In addition, in certain countries, the
block cannot be removed. As a result of the ramifications of voting ballots in
markets that allow share blocking, the Adviser, on behalf of the Fund, reserves
the right to abstain from voting proxies in those
markets.
Corporate
and Securities Laws. Securities
laws in emerging 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
securityholders rights. Accordingly, foreign investors may be adversely affected
by new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging market issuers are subject may be less advanced
than those systems to which issuers located in more developed countries are
subject, and therefore, securityholders of issuers located in emerging market
countries may not receive many of the protections available to securityholders
of issuers located in more developed countries. In circumstances where adequate
laws and securityholders 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. 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.
ESG
Investing Strategy Risk.
The
Fund’s ESG strategy could cause it to perform differently compared to funds that
do not have an ESG focus. The Fund’s ESG strategy may result in the Fund
investing in securities or industry sectors that underperform other securities
or underperform the market as a whole. The Fund is also subject to the risk that
the companies represented in the Fund do not operate as expected when addressing
ESG issues. Additionally, the valuation model used for identifying ESG companies
may not perform as intended, which may adversely affect an investment in the
Fund. Regulatory changes or interpretations regarding the definitions and/or use
of ESG criteria could have a material adverse effect on the Fund’s ability to
implement its ESG strategy.
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. The Fund may also (directly or
indirectly) incur costs in connection with conversions between U.S. dollars and
foreign currencies.
Foreign
Securities Risk. Investments in the securities of foreign issuers involve risks beyond
those associated with investments in U.S. securities. These additional risks
include greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Foreign market trading hours, clearance and settlement procedures, and holiday
schedules may limit the Fund's ability to buy and sell
securities.
Global
Resources Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the global resources sector. The Fund concentrates
its investments (i.e., invests 25% or more of its total assets) in the
securities of global resource companies and instruments that derive their value
from global resources. The Fund may be subject to greater risks and market
fluctuations than a fund whose portfolio has exposure to a broader range of
sectors. The Fund may be susceptible to financial, economic, political or market
events, as well as government regulation, impacting the global resources sectors
(such as the energy and metals sectors). Precious metals and natural resources
securities are at times volatile and there may be sharp fluctuations in prices,
even during periods of rising prices.
Market
Risk. The
prices of securities are subject to the risks associated with investing in the
securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system
failures.
Risk
of Investing in Other Funds. The
Fund may invest in shares of other funds, including ETFs. As a result, the Fund
will indirectly be exposed to the risks of an investment in the underlying
funds. As a shareholder in a fund, the Fund would bear its
ratable
share of that entity’s expenses. At the same time, the Fund would continue to
pay its own investment management fees and other expenses. As a result, the Fund
and its shareholders will be absorbing additional levels of fees with respect to
investments in other funds, including ETFs.
Small-
and Medium-Capitalization Companies Risk. The Fund may invest in small- and medium-capitalization companies
and, therefore will be subject to certain risks associated with small- and
medium- capitalization companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences, with little or no record of profitability. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. These companies tend to
have smaller revenues, narrower product lines, less management depth and
experience, smaller shares of their product or service markets, fewer financial
resources and less competitive strength than large-capitalization companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of larger
companies.
Special
Purpose Acquisition Companies Risk.
Equity
securities in which the Fund invests include stock, rights, warrants, and other
interests in special purpose acquisition companies (“SPACs”) or similar special
purpose entities. A SPAC is typically a publicly traded company that raises
investment capital via an initial public offering for the purpose of acquiring
one or more existing companies (or interests therein) via merger, combination,
acquisition or other similar transactions. If the Fund purchases shares of a
SPAC in an initial public offering it will generally bear a sales commission,
which may be significant. The shares of a SPAC are often issued in “units” that
include one share of common stock and one right or warrant (or partial right or
warrant) conveying the right to purchase additional shares or partial shares. In
some cases, the rights and warrants may be separated from the common stock at
the election of the holder, after which they may become freely tradeable. After
going public and until a transaction is completed, a SPAC generally invests the
proceeds of its initial public offering (less a portion retained to cover
expenses) in U.S. Government securities, money market securities and cash. To
the extent the SPAC is invested in cash or similar securities, this may impact
the Fund’s ability to meet its investment objective. If a SPAC does not complete
a transaction within a specified period of time after going public, the SPAC is
typically dissolved, at which point the invested funds are returned to the
SPAC’s shareholders (less certain permitted expenses) and any rights or warrants
issued by the SPAC expire worthless. SPACs generally provide their investors
with the option of redeeming an investment in the SPAC at or around the time of
effecting a transaction. In some cases, the Fund may forfeit its right to
receive additional warrants or other interests in the SPAC if it redeems its
interest in the SPAC in connection with a transaction. Because SPACs often do
not have an operating history or ongoing business other than seeking a
transaction, the value of their securities may be particularly dependent on the
quality of its management and on the ability of the SPAC’s management to
identify and complete a profitable transaction. Some SPACs may pursue
transactions only within certain industries or regions, which may increase the
volatility of an investment in them. In addition, the securities issued by a
SPAC, which may be traded in the over-the-counter market, may become illiquid
and/or may be subject to restrictions on resale. Other risks of investing in
SPACs include that a significant portion of the monies raised by the SPAC may be
expended during the search for a target transaction; an attractive transaction
may not be identified at all (or any requisite approvals may not be obtained)
and the SPAC may be required to return any remaining monies to shareholders; a
transaction once identified or effected may prove unsuccessful and an investment
in the SPAC may lose value; the warrants or other rights with respect to the
SPAC held by the Fund may expire worthless or may be repurchased or retired by
the SPAC at an unfavorable price; and an investment in a SPAC may be diluted by
additional later offerings of interests in the SPAC or by other investors
exercising existing rights to purchase shares of the
SPAC.
Special
Risk Considerations of Investing in Canadian Issuers. Investments
in securities of Canadian issuers, including issuers located outside of Canada
that generate significant revenue from Canada, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Canadian economy is very dependent on the demand for, and supply
and price of, natural resources. The Canadian market is relatively concentrated
in issuers involved in the production and distribution of natural resources.
There is a risk that any changes in natural resources sectors could have an
adverse impact on the Canadian economy. Additionally, the Canadian economy is
heavily dependent on relationships with certain key trading partners, including
the United States, countries in the European Union and China. Because the United
States is Canada’s largest trading partner and foreign investor, the Canadian
economy is dependent on and may be significantly affected by the U.S. economy.
Reduction in spending on Canadian products and services or changes in the U.S.
economy may adversely impact the Canadian economy. Trade agreements may further
increase Canada’s dependency on the U.S. economy, and uncertainty as to the
future of such trade agreements may cause a decline in the value of the Fund’s
Shares. Past periodic demands by the Province of Quebec for sovereignty have
significantly affected equity valuations and foreign currency movements in the
Canadian market and such demands may have this effect in the future. In
addition, certain sectors of Canada’s economy may be subject to foreign
ownership limitations. This may negatively impact the Fund’s ability to
invest in Canadian issuers and to pursue its investment
objective.
PERFORMANCE
The following
chart and table provide some indication of the risks of investing in the Fund by
showing changes in the Fund’s performance from year to year and by showing how
the Fund’s average annual total returns compare with those of a broad measure of
market performance and one or more other performance measures.
The Fund’s
past performance (before and after
taxes) is not necessarily an indication of how the Fund will perform
in the future. The annual returns in the bar chart
are for the Fund’s Class A shares and do not reflect sales loads. If sales loads
were reflected, returns would be lower than those
shown.
Additionally, large purchases and/or redemptions of shares of a
class, relative to the amount of assets represented by the class, may cause the
annual returns for each class to differ. Updated performance information for the
Fund is available on the VanEck website at vaneck.com.
CLASS A: Annual Total
Returns (%) as of 12/31
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Best
Quarter: |
+33.29% |
2Q
2020 |
Worst
Quarter: |
-40.01% |
1Q
2020 |
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| Average Annual
Total Returns as of 12/31/2023 |
1
Year |
5
Years |
10
Years |
| |
|
Class
A Shares
(11/2/94) |
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|
| |
| Before
Taxes |
-9.42% |
8.93% |
-1.97% |
| |
|
After
Taxes on Distributions1 |
-9.92% |
8.54% |
-2.16% |
| |
|
After Taxes
on Distributions and Sale of Fund Shares |
-5.23% |
7.05% |
-1.47% |
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|
Class
C Shares
(11/2/94) |
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| Before
Taxes |
-5.60% |
9.33% |
-2.17% |
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Class
I Shares
(5/1/06) |
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| Before
Taxes |
-3.47% |
10.70% |
-0.98% |
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|
Class
Y Shares
(4/30/10) |
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| Before
Taxes |
-3.63% |
10.50% |
-1.14% |
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S&P®
Global Natural Resources Index (reflects
no deduction for fees, expenses or taxes, except withholding
taxes) |
4.08% |
11.15% |
5.15% |
| |
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MSCI
AC World Index
(reflects no deduction for fees, expenses or taxes, except withholding
taxes) |
22.20% |
11.72% |
7.93% |
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1
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates and do not reflect the impact of state and local
taxes. These returns are shown for
one class of shares only; after-tax returns for the other classes may
vary. Actual after-tax returns depend on your individual tax
situation and may differ from those shown in the preceding table. The
after-tax return information shown above does not apply to Fund shares held
through a tax-advantaged account, such as a 401(k) plan or Investment Retirement
Account.
See
“License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation
Portfolio
Managers.
Shawn
Reynolds has been Portfolio Manager of the Fund since 2010. Charles T. Cameron
has been Deputy Portfolio Manager of the Fund since 2016 and a member of the
investment team since 1995. Mr. Cameron has also been an investment team member
on various funds managed by the Adviser since 1995.
PURCHASE
AND SALE OF FUND SHARES
In
general, shares of the Fund may be purchased or redeemed on any business day,
primarily through financial representatives such as brokers or advisers, or
directly by eligible investors through the Fund’s transfer agent. Purchase
minimums for Classes A, C and Y shares are $1,000 for an initial purchase and
$100 for a subsequent purchase, with no purchase minimums for any purchase
through a retirement or pension plan account, for any “wrap fee” account and
similar programs offered without a sales charge by certain financial
institutions and third-party recordkeepers and/or administrators, and for any
account using the Automatic Investment Plan, or for any other periodic purchase
program.
Purchase
minimums for Class I shares are $1 million for an initial purchase and no
minimum for a subsequent purchase; the initial minimum may be reduced or waived
at the Adviser’s discretion.
TAX
INFORMATION
The
Fund normally distributes net investment income and net realized capital gains,
if any, to shareholders annually. These distributions are generally taxable to
you as ordinary income or capital gains, unless you are investing through a tax
advantaged retirement account, such as a 401(k) plan or an individual retirement
account (IRA), in which case your distributions may be taxed as ordinary income
when withdrawn from such account.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Fund and/or its affiliates may pay the intermediary for
the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your financial professional to recommend the Fund over another investment. Ask
your financial professional or visit your financial intermediary’s website for
more information.
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INTERNATIONAL
INVESTORS GOLD FUND (CLASS A, C, I,
Y) |
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
International Investors Gold Fund seeks long-term capital appreciation by
investing in common stocks of gold-mining companies. The Fund may take current
income into consideration when choosing
investments.
FUND FEES AND
EXPENSES
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. 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.
You may qualify
for Class A sales charge discounts if you and your family (includes spouse and
children under age 21) invest, or agree to invest in the future, at least
$25,000,
in the aggregate, in Classes A and C of the VanEck
Funds. More information about these and other
discounts is available from your financial professional and in the “Shareholder
Information-Sales Charges” section of this prospectus, in the “Availability of
Discounts” section of the Fund’s SAI and, with respect to purchases of shares
through specific intermediaries, in Appendix A to this prospectus, entitled
“Intermediary Sales Charge Discounts and
Waivers.”
Shareholder
Fees
(fees
paid directly from your investment)
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| Class
A |
Class
C |
Class
I |
Class
Y |
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Maximum
Sales Charge (load) imposed on purchases (as a percentage of offering
price) |
5.75% |
0.00% |
0.00% |
0.00% |
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Maximum
Deferred Sales Charge (load) (as a percentage of the lesser of the net
asset value or purchase price) |
0.00%¹ |
1.00% |
0.00% |
0.00% |
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Class
A |
Class
C |
Class
I |
Class
Y |
|
| Management
Fees |
0.72% |
0.72% |
0.72% |
0.72% |
|
| Distribution
and/or Service (12b-1) Fees |
0.25% |
1.00% |
0.00% |
0.00% |
|
| Other
Expenses |
0.46% |
0.53% |
0.40% |
0.41% |
|
| Total
Annual Fund Operating Expenses |
1.43% |
2.25% |
1.12% |
1.13% |
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|
Fee
Waivers and/or Expense Reimbursements2 |
0.00% |
-0.05% |
-0.12% |
-0.03% |
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Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursements |
1.43% |
2.20% |
1.00% |
1.10% |
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1
A
contingent deferred sales charge for Class A shares of 1.00% for one year
applies to redemptions of qualified commissionable shares purchased at or above
the $1 million breakpoint level.
2
Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, dividends
and interest payments on securities sold short, taxes and extraordinary
expenses) from exceeding 1.45% for Class A, 2.20% for Class C, 1.00% for Class
I, and 1.10% for Class Y of the Fund’s average daily net assets per year until
May 1,
2025. During such time, the expense limitation is expected to
continue until the Board of Trustees acts to discontinue all or a portion of
such expense limitation.
EXPENSE
EXAMPLE
The
following example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the Fund for the time periods indicated and then either
redeem all of your shares at the end of these periods or continue to hold them.
The example also assumes that your investment has a 5% return each year and that
the Fund’s operating expenses remain the same, and applies fee waivers and/or
expense reimbursements, if any, for the periods indicated above under “Annual
Fund Operating Expenses.” Although your actual expenses may be higher or lower,
based on these assumptions, your costs would be:
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| Share
Status |
1
Year |
3
Years |
5
Years |
10
Years |
|
| Class
A |
Sold
or Held |
$712 |
| $1,001 |
| $1,312 |
| $2,190 |
| |
| Class
C |
Sold |
$323 |
| $698 |
| $1,200 |
| $2,581 |
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| Held |
$223 |
| $698 |
| $1,200 |
| $2,581 |
| |
| Class
I |
Sold
or Held |
$102 |
| $344 |
| $605 |
| $1,352 |
| |
| Class
Y |
Sold
or Held |
$112 |
| $356 |
| $619 |
| $1,372 |
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PORTFOLIO
TURNOVER
The Fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate that the Fund pays higher 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, 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
Under normal
conditions, the Fund invests at least 80% of its net assets in securities of
companies principally engaged in gold-related activities, instruments that
derive their value from gold, gold coins and bullion. A company
principally engaged in gold-related activities is one that derives at least 50%
of its revenues from gold-related activities, including the exploration, mining
or processing of or dealing in gold. The Fund concentrates its investments in
the gold-mining industry and therefore invests 25% or more of its total assets
in such industry. The Fund is considered to be “non-diversified” which means
that it may invest a larger portion of its assets in a single
issuer.
The
Fund invests in securities of companies with economic ties to countries
throughout the world, including the U.S. Under ordinary circumstances, the Fund
will invest in securities of issuers from a number of different countries, which
may include emerging market countries. The Fund may invest in non-U.S. dollar
denominated securities, which are subject to fluctuations in currency exchange
rates, and securities of companies of any capitalization range. The Fund
primarily invests in companies that the portfolio manager believes represent
value opportunities and/or that have growth potential within their market niche,
through their ability to increase production capacity at reasonable cost or make
gold discoveries around the world. The portfolio manager utilizes both a
macro-economic examination of gold market themes and a fundamental analysis of
prospective companies in the search for value and growth opportunities. The
analysis of financially material risks and opportunities related to ESG (i.e.
Environmental, Social and Governance) factors is a component of the overall
investment process. ESG considerations can affect the Adviser’s fundamental
assessment of a company or country.
The
Fund may invest up to 25% of its net assets, as of the date of the investment,
in gold and silver coins, gold, silver, platinum and palladium bullion and
exchange-traded funds (“ETFs”) that invest primarily in such coins and bullion
and derivatives on the foregoing. The Fund’s investments in coins and bullion
will not earn income, and the sole source of return to the Fund from these
investments will be from gains or losses realized on the sale of such
investments.
The
Fund may gain exposure to gold bullion and other metals by investing up to 25%
of the Fund’s total assets in a wholly owned subsidiary of the Fund (the
“Subsidiary”). The Subsidiary primarily invests in gold bullion, gold futures
and other instruments that provide direct or indirect exposure to gold,
including ETFs, and also may invest in silver, platinum and palladium bullion
and futures. The Subsidiary (unlike the Fund) may invest without limitation in
these investments. The Fund will “look-through” the Subsidiary to the
Subsidiary’s underlying investments for determining compliance with the Fund’s
investment policies. For tax reasons, it may be advantageous for the Fund to
create and maintain its exposure to the commodity markets, in whole or in part,
by investing in the Subsidiary. The portfolio of the Subsidiary is managed by
the Adviser for the exclusive benefit of the Fund.
The
Fund may use derivative instruments, such as structured notes, futures, options,
warrants, currency forwards and swap agreements, to gain or hedge exposure. The
Fund may invest up to 20% of its net assets in securities issued by other
investment companies, including ETFs. The Fund may also invest in money market
funds, but these investments are not subject to this limitation. The Fund may
invest in ETFs to participate in, or gain exposure to, certain market sectors,
or when direct investments in certain countries are not permitted or
available.
PRINCIPAL
RISKS
There
is no assurance that the Fund will achieve its investment objective.
The Fund’s share price and return will fluctuate with changes in
the market value of the Fund’s portfolio securities. Accordingly, an investment
in the Fund involves the risk of losing money.
Active
Management Risk. In managing the Fund’s portfolio, the Adviser will apply
investment techniques and risk analyses in making investment decisions for the
Fund, but there can be no guarantee that these will produce the desired results.
Investment decisions made by the Adviser in seeking to achieve the Fund’s
investment objective may cause a decline in the value of the investments held by
the Fund and, in turn, cause the Fund’s shares to lose value or underperform
other funds with similar investment objectives.
Commodities
and Commodity-Linked Instruments Risk.
Commodities include, among other things, energy products, agricultural products,
industrial metals, precious metals and livestock. The commodities markets may
fluctuate widely based on a variety of factors, including overall market
movements, economic events and policies, changes in interest rates or inflation
rates, changes in monetary and exchange control programs, war, acts of
terrorism, natural disasters and technological developments. Variables such as
disease, drought, floods, weather, trade, embargoes, tariffs and other political
events, in particular, may have a larger impact on commodity prices than on
traditional securities. These additional variables may create additional
investment risks that subject the Fund’s investments to greater volatility than
investments in traditional securities. The prices of commodities can also
fluctuate widely due to supply and demand disruptions in major producing or
consuming regions. Because certain commodities may be produced in a limited
number of countries and may be controlled by a small number of producers,
political, economic and supply-related events in such countries could have a
disproportionate impact on the prices of such commodities. These factors may
affect the value of the Fund’s investments in varying ways, and different
factors may cause the values and the volatility of the Fund’s investments to
move in inconsistent directions at inconsistent rates. Because the value of a
commodity-linked derivative instrument and structured note typically are based
upon the price movements of physical commodities, the value of these securities
will rise or fall in response to changes in the underlying commodities or
related index of investment.
Commodities
and Commodity-Linked Instruments Tax Risk. The
tax treatment of commodity-linked derivative instruments may be adversely
affected by changes in legislation, regulations or other legally binding
authority. If, as a result of any such adverse action, the income of the Fund
from certain commodity-linked derivatives were treated as non- qualifying
income, the Fund might fail to qualify as a regulated investment company and/or
be subject to federal income tax at the Fund level. The uncertainty surrounding
the treatment of certain derivative instruments under the qualification tests
for a regulated investment company may limit the Fund’s use of such derivative
instruments.
The
Fund may be required, for federal income tax purposes, to mark-to-market and
recognize as income for each taxable year any net unrealized gains and losses on
certain futures contracts and option contracts as of the end of the year as well
as those actually realized during the year. Gain or loss from futures contracts
required to be marked-to-market will be 60% long-term and 40% short-term capital
gain or loss if held directly by the Fund, but if held by the Subsidiary, as is
expected, such gains will be recognized as ordinary income by the Fund to the
extent of the Subsidiary’s annual net earnings if any. Application of this rule
may alter the timing and character of distributions to shareholders. The Fund
may be required to defer the recognition of losses on futures contracts or
certain option contracts to the extent of any unrecognized gains on related
positions held by the Fund.
Derivatives
Risk.
Derivatives
and other similar instruments (referred to collectively as “derivatives”) are
financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it is contractually
entitled to receive). Counterparty risk also refers to the related risks of
having concentrated exposure to such a counterparty. A liquid secondary market
may not always exist for the Fund’s derivative positions at any time, and the
Fund may not be able to initiate or liquidate a swap position at an advantageous
time or price, which may result in significant losses. The Fund may also face
the risk that it may not be able to meet margin and payment requirements and
maintain a derivatives position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Direct
Investments Risk.
Direct investments may involve a high degree of business and financial risk that
can result in substantial losses. Because of the absence of any public trading
market for these investments, the Fund may take longer to liquidate these
positions than would be the case for publicly traded securities. Direct
investments are generally considered illiquid and will be aggregated with other
illiquid investments for purposes of the Fund's limitation on illiquid
investments.
Emerging
Market Issuers Risk.
Investments in securities of emerging market issuers involve risks not typically
associated with investments in securities of issuers in more developed countries
that may negatively affect the value of your investment in the Fund. Such
heightened risks may include, among others, expropriation and/or nationalization
of assets, restrictions on and government intervention in international trade,
confiscatory taxation, political instability, including authoritarian and/or
military involvement in governmental decision making, armed conflict, the impact
on the economy as a result of civil war, crime (including drug violence) and
social instability as a result of religious, ethnic and/or socioeconomic unrest.
Issuers in certain emerging 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 the 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 the Fund. This will affect the
rate at which the 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 the Fund may
need to effect securities transactions through these brokerage firms, the Fund
is subject to the risk that these brokerage firms will not be able to fulfill
their obligations to the Fund. This risk is magnified to the extent the Fund
effects securities transactions through a single brokerage firm or a small
number of brokerage firms. In addition, the infrastructure for the safe custody
of securities and for purchasing and selling securities, settling trades,
collecting dividends, initiating corporate actions, and following corporate
activity is not as well developed in emerging 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 the 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
the Fund invests may operate in, or have dealings with, countries subject to
sanctions and/or embargoes imposed by the U.S. Government and the United Nations
and/or countries identified by the U.S. Government as state sponsors of
terrorism. As a result, an issuer may sustain damage to its reputation if it is
identified as an issuer which operates in, or has dealings with, such countries.
The Fund, as an investor in such issuers, will be indirectly subject to those
risks.
The
economies of one or more countries in which the Fund may invest may be in
various states of transition from a planned economy to a more market oriented
economy. The economies of such countries differ from the economies of most
developed countries in many respects, including levels of government
involvement, states of development, growth rates, control of foreign exchange
and allocation of resources. Economic growth in these economies may be uneven
both geographically and among various sectors of their economies and may also be
accompanied by periods of high inflation. Political changes, social instability
and adverse diplomatic developments in these countries could result in the
imposition of additional government restrictions, including expropriation of
assets, confiscatory taxes or nationalization of some or all of the property
held by the underlying issuers of securities of emerging market issuers. 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 the
Fund’s ability to meet its investment objective. In addition, the 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 approval or a license would delay investments in those emerging
market countries, and, as a result, the Fund may not be able to invest in
certain securities while approval is pending. The government of certain emerging
market countries may also withdraw or decline to renew a license that enables
the Fund to invest in such country. These factors make investing in issuers
located or operating in emerging 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 net asset value of the
Fund.
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, the Fund could be adversely affected by delays in, or
a refusal to grant, required governmental approval for repatriation of capital,
as well as by the application to the Fund of any restrictions on investments.
Furthermore, investments in emerging market countries may require the Fund to
adopt special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to the
Fund.
Available
Disclosure About Emerging 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. The
Fund’s assets that are invested in 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.
The
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, the Fund
will compute and expects to distribute its income in U.S. dollars, and the
computation of income will be made on the date that the income is earned by the
Fund at the foreign exchange rate in effect on that date. Therefore, if the
value of the respective emerging market country’s currency falls relative to the
U.S. dollar between the earning of the income and the time at which the Fund
converts the relevant emerging market country’s currency to U.S. dollars, the
Fund may be required to liquidate certain positions in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements under the Internal Revenue Code. The liquidation of
investments, if required, could be at disadvantageous prices or otherwise have
an adverse impact on the Fund’s performance.
Certain
emerging market countries also restrict the free conversion of their currency
into foreign currencies, including the U.S. dollar. There is no significant
foreign exchange market for many such currencies and it would, as a result, be
difficult for the Fund to engage in foreign currency transactions designed to
protect the value of the Fund’s interests in securities denominated in such
currencies. Furthermore, if permitted, the Fund may incur costs in connection
with conversions between U.S. dollars and an emerging market country’s currency.
Foreign exchange dealers realize a profit based on the difference between the
prices at which they are buying and selling various currencies. Thus, a dealer
normally will offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire immediately to resell
that currency to the dealer. The Fund will conduct its foreign currency exchange
transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward, futures or options contracts to purchase or
sell foreign currencies.
Operational
and Settlement Risk.
In addition to having less developed securities markets, emerging market
countries have less developed custody and settlement practices than certain
developed countries. Rules adopted under the Investment Company Act of 1940
permit the Fund to maintain its foreign securities and cash in the custody of
certain eligible non-U.S. banks and securities depositories. Banks in emerging
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 the Fund to recover assets held in custody by a foreign
sub-custodian in the event of the bankruptcy of the sub-custodian. Because
settlement systems in emerging market countries may be less organized than in
other developed markets, there may be a risk that settlement may be delayed and
that cash or securities of the Fund may be in jeopardy because of failures of or
defects in the systems. Under the laws in many emerging market countries, the
Fund may be required to release local shares before receiving cash payment or
may be required to make cash payment prior to receiving local shares, creating a
risk that the Fund may surrender cash or securities without ever receiving
securities or cash from the other party. Settlement systems in emerging market
countries also have a higher risk of failed trades and back to back settlements
may not be possible.
The
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event that the Fund is not able to
convert the foreign currency to U.S. dollars in time for settlement, which may
occur as a result of the delays described above, the Fund may be required to
liquidate certain investments and/or borrow money in order to fund such
redemption. The liquidation of investments, if required, could be at
disadvantageous prices or otherwise have an adverse impact on the Fund’s
performance (e.g.,
by causing the Fund to overweight foreign currency denominated holdings and
underweight other holdings which were sold to fund redemptions). In addition,
the Fund will incur interest expense on any borrowings and the borrowings will
cause the Fund to be leveraged, which may magnify gains and losses on its
investments.
In
certain emerging market countries, the marketability of investments may be
limited due to the restricted opening hours of trading exchanges, and a
relatively high proportion of market value may be concentrated in the hands of a
relatively small number of investors. In addition, because certain emerging
market countries’ trading exchanges on which the Fund’s portfolio securities may
trade are open when the relevant exchanges are closed, the Fund may be subject
to heightened risk associated with market movements. Trading volume may be lower
on certain emerging market countries’ trading exchanges than on more developed
securities markets and securities may be generally less liquid. The
infrastructure for clearing, settlement and registration on the primary and
secondary markets of certain emerging market countries are less developed than
in certain other markets and under certain circumstances this may result in the
Fund experiencing delays in settling and/or registering transactions in the
markets in which it invests, particularly if the growth of foreign and domestic
investment in certain emerging market countries places an undue burden on such
investment infrastructure. Such delays could affect the speed with which the
Fund can transmit redemption proceeds and may inhibit the initiation and
realization of investment opportunities at optimum times.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer’s securities are predicated on these securities being
blocked
from trading at the custodian or sub-custodian level for a period of time around
a shareholder meeting. These restrictions have the effect of barring the
purchase and sale of certain voting securities within a specified number of days
before and, in certain instances, after a shareholder meeting where a vote of
shareholders will be taken. Share blocking may prevent the Fund from buying or
selling securities for a period of time. During the time that shares are
blocked, trades in such securities will not settle. The blocking period can last
up to several weeks. The process for having a blocking restriction lifted can be
quite onerous with the particular requirements varying widely by country. In
addition, in certain countries, the block cannot be removed. As a result of the
ramifications of voting ballots in markets that allow share blocking, the
Adviser, on behalf of the Fund, reserves the right to abstain from voting
proxies in those markets.
Corporate
and Securities Laws. Securities
laws in emerging 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
securityholders rights. Accordingly, foreign investors may be adversely affected
by new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging market issuers are subject may be less advanced
than those systems to which issuers located in more developed countries are
subject, and therefore, securityholders of issuers located in emerging market
countries may not receive many of the protections available to securityholders
of issuers located in more developed countries. In circumstances where adequate
laws and securityholders 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. 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.
ESG
Investing Strategy Risk. The
Fund’s ESG strategy could cause it to perform differently compared to funds that
do not have an ESG focus. The Fund’s ESG strategy may result in the Fund
investing in securities or industry sectors that underperform other securities
or underperform the market as a whole. The Fund is also subject to the risk that
the companies represented in the Fund do not operate as expected when addressing
ESG issues. Additionally, the valuation model used for identifying ESG companies
may not perform as intended, which may adversely affect an investment in the
Fund. Regulatory changes or interpretations regarding the definitions and/or use
of ESG criteria could have a material adverse effect on the Fund’s ability to
implement its ESG strategy.
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. The Fund may also (directly or
indirectly) incur costs in connection with conversions between U.S. dollars and
foreign currencies.
Foreign
Securities Risk. Investments in the securities of foreign issuers involve risks
beyond those associated with investments in U.S. securities. These additional
risks include greater market volatility, the availability of less reliable
financial information, higher transactional and custody costs, taxation by
foreign governments, decreased market liquidity and political instability.
Because certain foreign securities markets may be limited in size, the activity
of large traders may have an undue influence on the prices of securities that
trade in such markets. The Fund invests in securities of issuers located in
countries whose economies are heavily dependent upon trading with key partners.
Any reduction in this trading may have an adverse impact on the Fund’s
investments. Foreign market trading hours, clearance and settlement procedures,
and holiday schedules may limit the Fund's ability to buy and sell
securities.
Gold
and Silver Mining Companies Risk.
The Fund invests in stocks and depositary receipts of U.S. and foreign companies
that are involved in the gold mining and silver mining industries, which are
considered speculative and are affected by a variety of factors. Competitive
pressures may have a significant effect on the financial condition of gold
mining and silver mining companies. Also, gold and silver mining companies are
highly dependent on the price of gold bullion and silver bullion, respectively,
but may also be adversely affected by a variety of worldwide economic, financial
and political factors. The price of gold and silver may fluctuate substantially
over short periods of time so the Fund’s Share price may be more volatile than
other types of investments. Fluctuation in the prices of gold and silver may be
due to a number of factors, including changes in inflation, changes in currency
exchange rates and changes in industrial and commercial demand for metals
(including fabricator demand). Additionally, increased environmental or labor
costs may depress the value of metal
investments.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and
losses
on a single investment may have a greater impact on the Fund’s net asset value
and may make the Fund more volatile than more diversified funds. The Fund may be
particularly vulnerable to this risk if it is comprised of a limited number of
investments.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system
failures.
Regulatory
Risk.
Changes
in the laws or regulations of the United States, including any changes to
applicable tax laws and regulations, could impair the ability of the Fund to
achieve its investment objective and could increase the operating expenses of
the Fund. The Adviser is registered as a commodity pool operator under the U.S.
Commodity Exchange Act and the rules of the U.S. Commodity Futures Trading
Commission (“CFTC”) and is subject to CFTC regulation with respect to the Fund.
The CFTC has adopted rules regarding the disclosure, reporting and recordkeeping
requirements that will apply with respect to the Fund as a result of the
Adviser’s registration as a commodity pool operator. Generally, these rules
allow for substituted compliance with CFTC disclosure and shareholder reporting
requirements, based on the Adviser’s compliance with comparable Securities and
Exchange Commission requirements. This means that for most of the CFTC’s
disclosure and shareholder reporting applicable to the Adviser as the Fund’s
commodity pool operator, the Adviser’s compliance with Securities and Exchange
Commission disclosure and shareholder reporting will be deemed to fulfill the
Adviser’s CFTC compliance obligations. However, as a result of CFTC regulation
with respect to the Fund, the Fund may incur additional compliance and other
expenses. The Adviser is also registered as a “commodity trading advisor”
(“CTA”) but relies on an exemption with respect to the Fund from CTA regulations
available for a CTA that also serves as the Fund’s commodity pool operator. The
CFTC has neither reviewed nor approved the Fund, their investment strategies, or
this Prospectus.
Risk
of Investing in Other Funds.
The Fund may invest in shares of other funds, including ETFs. As a result, the
Fund will indirectly be exposed to the risks of an investment in the underlying
funds. As a shareholder in a fund, the Fund would bear its ratable share of that
entity’s expenses. At the same time, the Fund would continue to pay its own
investment management fees and other expenses. As a result, the Fund and its
shareholders will be absorbing additional levels of fees with respect to
investments in other funds, including
ETFs.
Small-
and Medium-Capitalization Companies Risk.
The
Fund may invest in small- and medium-capitalization companies and, therefore
will be subject to certain risks associated with small- and medium-
capitalization companies. These companies are often subject to less analyst
coverage and may be in early and less predictable periods of their corporate
existences, with little or no record of profitability. In addition, these
companies often have greater price volatility, lower trading volume and less
liquidity than larger more established companies. These companies tend to have
smaller revenues, narrower product lines, less management depth and experience,
smaller shares of their product or service markets, fewer financial resources
and less competitive strength than large-capitalization companies. Returns on
investments in securities of small- and medium-capitalization companies could
trail the returns on investments in securities of larger
companies.
Special
Risk Considerations of Investing in Australian Issuers.
Investments in securities of Australian issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Australian economy is heavily dependent on exports from the
agricultural and mining sectors. As a result, the Australian economy is
susceptible to fluctuations in the commodity markets. The Australian economy is
also dependent on trading with key trading
partners.
Special
Risk Considerations of Investing in Canadian Issuers. Investments
in securities of Canadian issuers, including issuers located outside of Canada
that generate significant revenue from Canada, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Canadian economy is very dependent on the demand for, and supply
and price of, natural resources. The Canadian market is relatively concentrated
in issuers involved in the production and distribution of natural resources.
There is a risk that any changes in natural resources sectors could have an
adverse impact on the Canadian economy. Additionally, the Canadian economy is
heavily dependent on relationships with certain key trading partners, including
the United States, countries in the European Union and China. Because the United
States is Canada’s largest trading partner and foreign investor, the Canadian
economy is dependent on and may be significantly affected by the U.S. economy.
Reduction in spending on Canadian products and services or changes in the U.S.
economy may adversely impact the Canadian economy. Trade agreements may further
increase Canada’s dependency on the U.S. economy, and uncertainty as to the
future of such trade agreements may cause a decline in the value of the Fund’s
Shares. Past periodic demands by the Province of Quebec for sovereignty have
significantly affected equity valuations and foreign currency movements in the
Canadian market and such demands may have this effect in the future. In
addition, certain sectors of Canada’s economy may be subject to foreign
ownership limitations. This may negatively impact the Fund’s ability to
invest in Canadian issuers and to pursue its investment
objective.
Subsidiary
Investment Risk. Changes
in the laws of the United States and/or the Cayman Islands, under which the Fund
and the Subsidiary are organized, respectively, could result in the inability of
the Fund to operate as intended and could negatively affect the Fund and its
shareholders. The Subsidiary is not registered under the Investment Company Act
of 1940 and is not subject to the investor protections of the Investment Company
Act of 1940. Thus, the Fund, as an investor in the Subsidiary, will not have all
the protections offered to investors in registered investment
companies.
Tax
Risk (with respect to investments in the Subsidiary). The
Fund must derive at least 90% of its gross income from certain qualifying
sources of income in order to qualify as a regulated investment company under
the Internal Revenue Code of 1986. The Internal Revenue Service issued a revenue
ruling in December 2005, which concluded that income and gains from certain
commodity-linked derivatives are not qualifying income under Subchapter M of the
Internal Revenue Code of 1986. As a result, the Fund’s ability to invest
directly in commodity-linked futures contracts or swaps or in certain
exchange-traded trusts that hold commodities as part of its investment strategy
is limited by the requirement that it receive no more than ten percent (10%) of
its gross income from such investments. The Fund expects to invest its assets in
the Subsidiary, consistent with applicable law and the advice of counsel, in a
manner that should permit the Fund to treat income allocable from the Subsidiary
as qualifying income. The Internal Revenue Service has issued regulations that
treat a fund’s income inclusion with respect to an investment in a non-U.S.
company generating investment income as qualifying income only if there is a
current-year distribution out of the earnings and profits of the non-U.S.
company that are attributable to such income inclusion or if the income from the
Subsidiary is related to the Fund's business of investing. The Fund intends to
treat its income from the Subsidiary as qualifying income. There can be no
assurance that the Internal Revenue Service will not change its position with
respect to some or all of these issues or if the Internal Revenue Service did
so, that a court would not sustain the Internal Revenue Service’s position.
Furthermore, the tax treatment of the Fund’s investments in the Subsidiary may
be adversely affected by future legislation, court decisions, future Internal
Revenue Service guidance or Treasury regulations.
PERFORMANCE
The following
chart and table provide some indication of the risks of investing in the Fund by
showing changes in the Fund’s performance from year to year and by showing how
the Fund’s average annual total returns compare with those of a broad measure of
market performance and one or more other performance measures.
The Fund’s past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future. The annual returns in the bar chart
are for the Fund’s Class A shares and do not reflect sales loads. If sales loads
were reflected, returns would be lower than those
shown.
Additionally, large purchases and/or redemptions of shares of a
class, relative to the amount of assets represented by the class, may cause the
annual returns for each class to differ. Updated performance information for the
Fund is available on the VanEck website at vaneck.com.
CLASS A: Annual Total
Returns (%) as of 12/31
|
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Best
Quarter: |
+73.76% |
2Q
2020 |
Worst
Quarter: |
-28.61% |
2Q
2022 |
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| Average
Annual Total Returns as of 12/31/2023 |
1
Year |
5
Years |
10
Years |
| |
|
Class
A Shares
(2/10/56) |
|
|
|
| |
| Before
Taxes |
3.37% |
8.31% |
4.37% |
| |
|
After
Taxes on Distributions1 |
3.45% |
6.57% |
2.96% |
| |
|
After Taxes
on Distributions and Sale of Fund Shares |
2.12% |
5.92% |
2.84% |
| |
|
Class
C Shares
(10/3/03) |
|
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| |
| Before
Taxes |
7.90% |
8.80% |
4.20% |
| |
|
Class
I Shares
(10/2/06) |
|
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| |
| Before
Taxes |
10.26% |
10.05% |
5.44% |
| |
|
Class
Y Shares
(4/30/10) |
|
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| |
| Before
Taxes |
10.13% |
9.95% |
5.32% |
| |
|
NYSE
Arca Gold Miners Index
(reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
10.60% |
9.80% |
5.25% |
| |
|
MSCI
AC World Index
(reflects no deduction for fees, expenses or taxes, except withholding
taxes) |
22.20% |
11.72% |
7.93% |
| |
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| |
1
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates and do not reflect the impact of state and local
taxes. These returns are shown for
one class of shares only; after-tax returns for the other classes may
vary. Actual after-tax returns depend on your individual tax
situation and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-advantaged account, such as a 401(k) plan or Investment Retirement
Account.
See
“License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation
Portfolio
Manager.
Imaru
Casanova has been Portfolio Manager of the Fund since May 2023 and a member of
the investment team since 2011.
Additionally,
Joseph M. Foster, former Portfolio Manager of the Fund, serves as Gold
Strategist.
PURCHASE
AND SALE OF FUND SHARES
In
general, shares of the Fund may be purchased or redeemed on any business day,
primarily through financial representatives such as brokers or advisers, or
directly by eligible investors through the Fund’s transfer agent. Purchase
minimums for Classes A, C and Y shares are $1,000 for an initial purchase and
$100 for a subsequent purchase, with no purchase minimums for any purchase
through a retirement or pension plan account, for any “wrap fee” account and
similar programs offered without a sales charge by certain financial
institutions and third-party recordkeepers and/or administrators, and for any
account using the Automatic Investment Plan, or for any other periodic purchase
program.
Purchase
minimums for Class I shares are $1 million for an initial purchase and no
minimum for a subsequent purchase; the initial minimum may be reduced or waived
at the Adviser’s discretion.
TAX
INFORMATION
The
Fund normally distributes net investment income and net realized capital gains,
if any, to shareholders annually. These distributions are generally taxable to
you as ordinary income or capital gains, unless you are investing through a tax
advantaged retirement account, such as a 401(k) plan or an individual retirement
account (IRA), in which case your distributions may be taxed as ordinary income
when withdrawn from such account.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If
you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Fund and/or its affiliates may pay the intermediary for
the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your financial professional to recommend the Fund over another investment. Ask
your financial professional or visit your financial intermediary’s website for
more information.
|
| |
II.
INVESTMENT OBJECTIVES, STRATEGIES, POLICIES, RISKS AND OTHER
INFORMATION |
This
section states each Fund’s investment objective and describes certain strategies
and policies that the Fund may utilize in pursuit of its investment objective.
This section also provides additional information about the principal risks
associated with investing in each Fund.
1.
INVESTMENT OBJECTIVES
Fund Emerging
Markets Fund
Objective The
Emerging Markets Fund seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the
world.
Fund Global
Resources Fund
Objective The
Global Resources Fund seeks long-term capital appreciation by investing
primarily in global resource securities. Income is a secondary
consideration.
Fund International
Investors Gold Fund
Objective The
International Investors Gold Fund seeks long-term capital appreciation by
investing in common stocks of gold-mining companies. The Fund may take current
income into consideration when choosing investments.
Each
of the Emerging Markets Fund, Global Resources Fund and International Investors
Gold Fund's investment objective is fundamental and may only be changed with
shareholder approval.
2.
ADDITIONAL INFORMATION ABOUT PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
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 and additional risks, including non-principal
risks, if applicable. The risks checked in the chart below apply to each Fund as
indicated. For a description of the risks listed in the chart, please see
"Glossary – Investment Risks" below the chart. See also the Funds' Statement of
Additional Information for information on certain other investments in which
each Fund may invest and other investment techniques in which each Fund may
engage from time to time and related risks.
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| Risk |
| Emerging
Markets Fund |
|
| Global
Resources Fund |
International
Investors Gold Fund |
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| |
| √
Principal Risk | X Additional Non-Principal Risk |
| Active
Management Risk |
| √ |
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| √ |
√ |
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| Agriculture
Companies Risk |
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| √ |
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| Commodities
and Commodity-Linked Instruments Risk |
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| √ |
√ |
|
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| Commodities
and Commodity-Linked Tax Risk |
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| √ |
√ |
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| Consumer
Discretionary Sector Risk |
| √ |
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| Derivatives
Risk |
| X |
|
| √ |
√ |
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| |
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| Direct
Investments Risk |
| √ |
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| √ |
√ |
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| Emerging
Market Issuers Risk |
| √ |
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| √ |
√ |
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| Equity
Securities Risk |
| √ |
|
| √ |
√ |
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| |
| ESG
Investing Strategy Risk |
| √ |
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| √ |
√ |
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| Financials
Sector Risk |
| √ |
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| Risk |
| Emerging
Markets Fund |
|
| Global
Resources Fund |
International
Investors Gold Fund |
|
| |
| √
Principal Risk | X Additional Non-Principal Risk |
| Foreign
Currency Risk |
| √ |
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| √ |
√ |
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| Foreign
Securities Risk |
| √ |
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| √ |
√ |
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| Global
Resources Sector Risk |
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| √ |
X |
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| Gold
and Silver Mining Companies Risk |
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| √ |
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| Industrials
Sector Risk |
| √ |
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| Information
Technology Sector Risk |
| √ |
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| Large-Capitalization
Companies Risk |
| √ |
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| √ |
√ |
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| Leverage
Risk |
| X |
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| X |
X |
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| Market
Risk |
| √ |
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| √ |
√ |
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| Medium-Capitalization
Companies Risk |
| √ |
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| √ |
√ |
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| Money
Market Funds Risk |
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| √ |
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| Non-Diversified
Risk |
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| √ |
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| Operational
Risk |
| √ |
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| √ |
√ |
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| Regulatory
Risk |
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| √ |
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| Restricted
Securities Risk |
| √ |
|
| X |
X |
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| Risk
of Investing in Other Funds |
| √ |
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| √ |
√ |
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| Small-
and Medium-Capitalization Companies Risk |
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| Special
Purpose Acquisition Companies Risk |
| √ |
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| √ |
X |
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| Special
Risk Considerations of Investing in Australian Issuers |
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| Special
Risk Considerations of Investing in Brazilian Issuers |
| √ |
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| Special
Risk Considerations of Investing in Canadian Issuers |
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| √ |
√ |
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| Special
Risk Considerations of Investing in Chinese Issuers |
| √ |
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| Special
Risk Considerations of Investing in Indian Issuers |
| √ |
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| Risk |
| Emerging
Markets Fund |
|
| Global
Resources Fund |
International
Investors Gold Fund |
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| √
Principal Risk | X Additional Non-Principal Risk |
| Special
Risk Considerations of Investing in Latin American Issuers |
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| Special
Risk Considerations of Investing in Taiwanese Issuers |
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| Stock
Connect Risk |
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| Subsidiary
Investment Risk |
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| Tax
Risk (with respect to investments in the Subsidiary) |
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GLOSSARY
- INVESTMENT RISKS
Active
Management Risk.
In managing the Fund’s portfolio, the Adviser will apply investment techniques
and risk analyses in making investment decisions for the Fund, but there can be
no guarantee that these will produce the desired results. Investment decisions
made by the Adviser in seeking to achieve the Fund’s investment objective may
cause a decline in the value of the investments held by the Fund and, in turn,
cause the Fund’s shares to lose value or underperform other funds with similar
investment objectives.
Agriculture
Companies Risk. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the agriculture companies. Economic forces
affecting agricultural companies and related industries, including forces
affecting the agricultural commodity prices, labor costs, and energy and
financial markets, could adversely affect the Fund’s portfolio companies and
thus, the Fund’s financial situation and profitability. Agricultural and
livestock production and trade flows are significantly affected by government
policies and regulations. Such policies and regulations include subsidy policies
and the imposition of taxes, tariffs, duties and import and export restrictions,
and can affect the planting/raising of certain crops/livestock versus other uses
of resources, the location and site of crop and livestock production, whether
processed or unprocessed commodity products are traded and the volume and types
of imports and exports. Agriculture companies may be subject to the risk of
liability for environmental damage, worker safety, depletion of resources,
mandated expenditures for safety and pollution control devices, and litigation.
An increased competitive landscape, caused by increased availability of food and
other agricultural commodities, economic recession, labor difficulties or
changing consumer tastes and spending, may lead to a decrease in demand for the
products and services provided by companies involved in agriculture.
Furthermore, companies involved in agriculture are particularly sensitive to
changing weather conditions and other natural disasters, including floods,
droughts and disease outbreaks. In addition, these companies are also subject to
risks associated with cyclicality of revenues and earnings, currency
fluctuations, changing consumer tastes, extensive competition, consolidation,
and excess capacity. In addition, agriculture companies must comply with a broad
range of environmental health, food safety and worker safety laws and
regulations which could adversely affect the Fund. Additional or more stringent
environmental and food safety laws and regulations may be enacted in the future
and such changes could have a material adverse effect on the business of the
agriculture companies.
Commodities
and Commodity-Linked Instruments Risk. Commodities
include, among other things, energy products, agricultural products, industrial
metals, precious metals and livestock. The commodities markets may fluctuate
widely based on a variety of factors, including overall market movements,
economic events and policies, changes in interest rates or inflation rates,
changes in monetary and exchange control programs, war, acts of terrorism,
natural disasters and technological developments. Variables such as disease,
drought, floods, weather, trade, embargoes, tariffs and other political events,
in particular, may have a larger impact on commodity prices than on traditional
securities. These additional variables may create additional investment risks
that subject the Fund’s investments to greater volatility than investments in
traditional securities. The prices of commodities can also fluctuate widely due
to supply and demand disruptions in major producing or consuming regions.
Because certain commodities may be produced in a limited number of countries and
may be controlled by a small number of producers, political, economic and
supply-related events in such countries could have a disproportionate impact on
the prices of such commodities. These factors may affect the value of the Fund’s
investments in varying ways, and different factors may cause the values and the
volatility of the Fund’s investments to move in inconsistent directions at
inconsistent rates. Because the value of a commodity-linked derivative
instrument and structured note typically are based upon the price movements of
physical commodities, the value of these securities will rise or fall in
response to changes in the underlying commodities or related index of
investment.
Commodities
and Commodity-Linked Instruments Tax Risk. The
tax treatment of commodity-linked derivative instruments may be adversely
affected by changes in legislation, regulations or other legally binding
authority. If, as a result of any such adverse action, the income of the Fund
from certain commodity-linked derivatives were treated as non- qualifying
income, the Fund might fail to qualify as a regulated investment company and/or
be subject to federal income tax at the Fund level. The uncertainty surrounding
the treatment of certain derivative instruments under the qualification tests
for a regulated investment company may limit the Fund’s use of such derivative
instruments.
The
Fund may be required, for federal income tax purposes, to mark-to-market and
recognize as income for each taxable year any net unrealized gains and losses on
certain futures contracts and option contracts as of the end of the year as well
as those actually realized during the year. Gain or loss from futures contracts
required to be marked-to-market will be 60% long-term and 40% short-term capital
gain or loss if held directly by the Fund. If applicable, for Funds that have a
Subsidiary, if held by such Subsidiary, as is expected, such gains will be
recognized as ordinary income by such Fund to the extent of the Subsidiary’s
annual net earnings, if any. Application of this rule may alter the timing and
character of distributions to shareholders. The Fund may be required to defer
the recognition of losses on futures contracts or certain option contracts to
the extent of any unrecognized gains on related positions held by the
Fund.
Consumer Discretionary Sector
Risk.
The Fund may 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.
Derivatives
Risk. Derivatives
and other similar instruments (referred to collectively as “derivatives”) are
financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it is contractually
entitled to receive). Counterparty risk also refers to the related risks of
having concentrated exposure to such a counterparty. A liquid secondary market
may not always exist for the Fund’s derivative positions at any time, and the
Fund may not be able to initiate or liquidate a swap position at an advantageous
time or price, which may result in significant losses. The Fund may also face
the risk that it may not be able to meet margin and payment requirements and
maintain a derivatives position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Direct
Investments Risk.
Direct investments are investments made directly with an enterprise not through
publicly traded shares or interests. The Fund will not invest more than 10% of
its total assets in direct investments. Direct investments may involve a high
degree of business and financial risk that can result in substantial losses.
Because of the absence of any public trading market for these investments, the
Fund may take longer to liquidate these positions than would be the case for
publicly traded securities. Although these securities may be resold in privately
negotiated transactions, the prices on these sales could be less than those
originally paid by the Fund. Issuers whose securities are not publicly traded
may not be subject to public disclosure and other investor protection
requirements applicable to publicly traded securities. Direct investments are
generally considered illiquid and will be aggregated with other illiquid
investments for purposes of the limitation on illiquid investments.
Emerging
Market Issuers Risk.
Investments in securities of emerging market issuers involve risks not typically
associated with investments in securities of issuers in more developed countries
that may negatively affect the value of your investment in the
Fund.
Such heightened risks may include, among others, expropriation and/or
nationalization of assets, restrictions on and government intervention in
international trade, confiscatory taxation, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, the impact on the economy as a result of civil war, crime (including
drug violence) and social instability as a result of religious, ethnic and/or
socioeconomic unrest. Issuers in certain emerging 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 the 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 the Fund. This will affect the
rate at which the 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 the Fund may
need to effect securities transactions through these brokerage firms, the Fund
is subject to the risk that these brokerage firms will not be able to fulfill
their obligations to the Fund. This risk is magnified to the extent the Fund
effects securities transactions through a single brokerage firm or a small
number of brokerage firms. In addition, the infrastructure for the safe custody
of securities and for purchasing and selling securities, settling trades,
collecting dividends, initiating corporate actions, and following corporate
activity is not as well developed in emerging 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 the 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
the Fund invests may operate in, or have dealings with, countries subject to
sanctions and/or embargoes imposed by the U.S. Government and the United Nations
and/or countries identified by the U.S. Government as state sponsors of
terrorism. As a result, an issuer may
sustain
damage to its reputation if it is identified as an issuer which operates in, or
has dealings with, such countries. The Fund, as an investor in such issuers,
will be indirectly subject to those risks.
The
economies of one or more countries in which the Fund may invest may be in
various states of transition from a planned economy to a more market oriented
economy. The economies of such countries differ from the economies of most
developed countries in many respects, including levels of government
involvement, states of development, growth rates, control of foreign exchange
and allocation of resources. Economic growth in these economies may be uneven
both geographically and among various sectors of their economies and may also be
accompanied by periods of high inflation. Political changes, social instability
and adverse diplomatic developments in these countries could result in the
imposition of additional government restrictions, including expropriation of
assets, confiscatory taxes or nationalization of some or all of the property
held by the underlying issuers of securities of emerging market issuers. 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 the
Fund’s ability to meet its investment objective. In addition, the 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 approval or a license would delay investments in those emerging
market countries, and, as a result, the Fund may not be able to invest in
certain securities while approval is pending. The government of certain emerging
market countries may also withdraw or decline to renew a license that enables
the Fund to invest in such country. These factors make investing in issuers
located or operating in emerging 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 net asset value of the
Fund.
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, the Fund could be adversely affected by delays in, or
a refusal to grant, required governmental approval for repatriation of capital,
as well as by the application to the Fund of any restrictions on investments.
Furthermore, investments in emerging market countries may require the Fund to
adopt special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to the Fund.
Available
Disclosure About Emerging 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. The
Fund’s assets that are invested in 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.
The
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, the Fund
will compute and expects to distribute its income in U.S. dollars, and the
computation of income will be made
on
the date that the income is earned by the Fund at the foreign exchange rate in
effect on that date. Therefore, if the value of the respective emerging market
country’s currency falls relative to the U.S. dollar between the earning of the
income and the time at which the Fund converts the relevant emerging market
country’s currency to U.S. dollars, the Fund may be required to liquidate
certain positions in order to make distributions if the Fund has insufficient
cash in U.S. dollars to meet distribution requirements under the Internal
Revenue Code. The liquidation of investments, if required, could be at
disadvantageous prices or otherwise have an adverse impact on the Fund’s
performance.
Certain
emerging market countries also restrict the free conversion of their currency
into foreign currencies, including the U.S. dollar. There is no significant
foreign exchange market for many such currencies and it would, as a result, be
difficult for the Fund to engage in foreign currency transactions designed to
protect the value of the Fund’s interests in securities denominated in such
currencies. Furthermore, if permitted, the Fund may incur costs in connection
with conversions between U.S. dollars and an emerging market country’s currency.
Foreign exchange dealers realize a profit based on the difference between the
prices at which they are buying and selling various currencies. Thus, a dealer
normally will offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire immediately to resell
that currency to the dealer. The Fund will conduct its foreign currency exchange
transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward, futures or options contracts to purchase or
sell foreign currencies.
Operational
and Settlement Risk. In
addition to having less developed securities markets, emerging market countries
have less developed custody and settlement practices than certain developed
countries. Rules adopted under the Investment Company Act of 1940 permit the
Fund to maintain its foreign securities and cash in the custody of certain
eligible non-U.S. banks and securities depositories. Banks in emerging 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 the Fund to recover assets held in custody by a foreign sub-custodian in the
event of the bankruptcy of the sub-custodian. Because settlement systems in
emerging market countries may be less organized than in other developed markets,
there may be a risk that settlement may be delayed and that cash or securities
of the Fund may be in jeopardy because of failures of or defects in the systems.
Under the laws in many emerging market countries, the Fund may be required to
release local shares before receiving cash payment or may be required to make
cash payment prior to receiving local shares, creating a risk that the Fund may
surrender cash or securities without ever receiving securities or cash from the
other party. Settlement systems in emerging market countries also have a higher
risk of failed trades and back to back settlements may not be
possible.
The
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event that the Fund is not able to
convert the foreign currency to U.S. dollars in time for settlement, which may
occur as a result of the delays described above, the Fund may be required to
liquidate certain investments and/or borrow money in order to fund such
redemption. The liquidation of investments, if required, could be at
disadvantageous prices or otherwise have an adverse impact on the Fund’s
performance (e.g.,
by causing the Fund to overweight foreign currency denominated holdings and
underweight other holdings which were sold to fund redemptions). In addition,
the Fund will incur interest expense on any borrowings and the borrowings will
cause the Fund to be leveraged, which may magnify gains and losses on its
investments.
In
certain emerging market countries, the marketability of investments may be
limited due to the restricted opening hours of trading exchanges, and a
relatively high proportion of market value may be concentrated in the hands of a
relatively small number of investors. In addition, because certain emerging
market countries’ trading exchanges on which the Fund’s portfolio securities may
trade are open when the relevant exchanges are closed, the Fund may be subject
to heightened risk associated with market movements. Trading volume may be lower
on certain emerging market countries’ trading exchanges than on more developed
securities markets and securities may be generally less liquid. The
infrastructure for clearing, settlement and registration on the primary and
secondary markets of certain emerging market countries are less developed than
in certain other markets and under certain circumstances this may result in the
Fund experiencing delays in settling and/or registering transactions in the
markets in which it invests, particularly if the growth of foreign and domestic
investment in certain emerging market countries places an undue burden on such
investment infrastructure. Such delays could affect the speed with which the
Fund can transmit redemption proceeds and may inhibit the initiation and
realization of investment opportunities at optimum times.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer’s securities are predicated on these securities being
blocked from trading at the custodian or sub-custodian level for a period of
time around a shareholder meeting. These restrictions have the effect of barring
the purchase and sale of certain voting securities within a specified number of
days before and, in certain instances, after a shareholder meeting where a vote
of shareholders will be taken. Share blocking may prevent the Fund from buying
or selling securities for a period of time. During the time that shares are
blocked, trades in such securities will not settle. The blocking period can last
up to several weeks. The process for having a blocking restriction lifted can be
quite onerous with the particular requirements varying widely by country. In
addition, in
certain
countries, the block cannot be removed. As a result of the ramifications of
voting ballots in markets that allow share blocking, the Adviser, on behalf of
the Fund, reserves the right to abstain from voting proxies in those
markets.
Corporate
and Securities Laws. Securities
laws in emerging 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
securityholders rights. Accordingly, foreign investors may be adversely affected
by new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging market issuers are subject may be less advanced
than those systems to which issuers located in more developed countries are
subject, and therefore, securityholders of issuers located in emerging market
countries may not receive many of the protections available to securityholders
of issuers located in more developed countries. In circumstances where adequate
laws and securityholders 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. 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.
Equity Securities Risk. The
value of the equity securities held by the Fund may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by the Fund participate, or factors relating to specific
issuers in which the Fund invests. For example, an adverse event, such as an
unfavorable earnings report, may result in a decline in the value of equity
securities of an issuer held by the Fund; the price of the equity securities of
an issuer may be particularly sensitive to general movements in the securities
markets; or a drop in the securities markets may depress the price of most or
all of the equities securities held by the Fund. In addition, the equity
securities of an issuer in the Fund’s portfolio may decline in price if the
issuer fails to make anticipated dividend payments. Equity securities are
subordinated to preferred securities and debt in a company’s capital structure
with respect to priority to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns.
ESG
Investing Strategy Risk.
The Fund’s ESG strategy could cause it to perform differently compared to funds
that do not have an ESG focus. The Fund’s ESG strategy may result in the Fund
investing in securities or industry sectors that underperform other securities
or underperform the market as a whole. The Fund is also subject to the risk that
the companies represented in the Fund do not operate as expected when addressing
ESG issues. Additionally, the valuation model used for identifying ESG companies
may not perform as intended, which may adversely affect an investment in the
Fund. Regulatory changes or interpretations regarding the definitions and/or use
of ESG criteria could have a material adverse effect on the Fund’s ability to
implement its ESG strategy.
Financials
Sector Risk.
The Fund may 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.
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. The Fund may also (directly or indirectly) incur
costs in connection with conversions between U.S. dollars and foreign
currencies.
Several
factors may affect the price of euros and the British pound sterling, including
the debt level and trade deficit of the Economic and Monetary Union and the
United Kingdom, inflation and interest rates of the Economic and Monetary Union
and the United Kingdom and investors’ expectations concerning inflation and
interest rates and global or regional political, economic or financial events
and situations. The European financial markets have experienced, and may
continue to experience, volatility and have been adversely affected by concerns
about economic downturns, credit rating downgrades, rising government debt
levels and possible default on or restructuring of government debt in several
European countries. These events have adversely affected, and may in the future
affect, the value and exchange rate of the euro and may continue to
significantly affect the economies of every country in Europe, including
European Union member countries that do not use the euro and non-European Union
member countries. Notwithstanding the EU-UK Trade and Cooperation Agreement,
following the United Kingdom’s withdrawal from the European Union and the
subsequent transition period, there is likely to be considerable uncertainty as
to the United Kingdom’s post-transition framework. Significant uncertainty
exists regarding the effects such withdrawal will have on the euro, European
economies
and the global markets. In addition, one or more countries may abandon the euro
and the impact of these actions, especially if conducted in a disorderly manner,
may have significant and far-reaching consequences on the euro.
The
value of certain emerging market countries’ currencies may be subject to a high
degree of fluctuation. This fluctuation may be due to changes in interest rates,
investors’ expectations concerning inflation and interest rates, the emerging
market country’s debt levels and trade deficit, the effects of monetary policies
issued by the United States, foreign governments, central banks or supranational
entities, the imposition of currency controls or other national or global
political or economic developments. For example, certain emerging market
countries have experienced economic challenges and liquidity issues with respect
to their currency. The economies of certain emerging market countries can be
significantly affected by currency devaluations. Certain emerging market
countries may also have managed currencies which are maintained at artificial
levels relative to the U.S. dollar rather than at levels determined by the
market. This type of system could lead to sudden and large adjustments in the
currency, which in turn, may have a negative effect on the Fund and its
investments.
Foreign
Securities Risk. Investments
in the securities of foreign issuers involve risks beyond those associated with
investments in U.S. securities. These additional risks include greater market
volatility, the availability of less reliable financial information, higher
transactional and custody costs, taxation by foreign governments, decreased
market liquidity and political instability. Because certain foreign securities
markets may be limited in size, the activity of large traders may have an undue
influence on the prices of securities that trade in such markets. The Fund
invests in securities of issuers located in countries whose economies are
heavily dependent upon trading with key partners. Any reduction in this trading
may have an adverse impact on the Fund’s investments. Foreign market trading
hours, clearance and settlement procedures, and holiday schedules may limit the
Fund's ability to buy and sell securities.
Certain
foreign markets that have historically been considered relatively stable may
become volatile in response to changed conditions or new developments. Increased
interconnectivity of world economies and financial markets increases the
possibility that adverse developments and conditions in one country or region
will affect the stability of economies and financial markets in other countries
or regions. Because the Fund may invest in securities denominated in foreign
currencies and some of the income received by the Fund may be in foreign
currencies, changes in currency exchange rates may negatively impact the Fund’s
return.
Foreign
issuers are often subject to less stringent requirements regarding accounting,
auditing, financial reporting and record keeping than are U.S. issuers, and
therefore, not all material information may be available or reliable. Securities
exchanges or foreign governments may adopt rules or regulations that may
negatively impact the Fund’s ability to invest in foreign securities or may
prevent the Fund from repatriating its investments. The Fund may also invest in
depositary receipts which involve similar risks to those associated with
investments in foreign securities. In addition, the Fund may not receive
shareholder communications or be permitted to vote the securities that it holds,
as the issuers may be under no legal obligation to distribute shareholder
communications.
Certain
foreign markets may rely heavily on particular industries or foreign capital and
are more vulnerable to diplomatic developments, the imposition of economic
sanctions against a particular country or countries, organizations, entities
and/or individuals, changes in international trade patterns, trade barriers, and
other protectionist or retaliatory measures. The United States and other nations
or international organizations may impose economic sanctions or take other
actions that may adversely affect issuers of specific countries. Economic
sanctions could, among other things, effectively restrict or eliminate the
Fund’s ability to purchase or sell securities or groups of securities for a
substantial period of time, and may make the Fund’s investments in such
securities harder to value. These sanctions, any future sanctions or other
actions, or even the threat of further sanctions or other actions, may
negatively affect the value and liquidity of the Fund.
Also,
certain issuers located in foreign countries in which the Fund invests may
operate in, or have dealings with, countries subject to sanctions and/or
embargoes imposed by the U.S. Government and the United Nations and/or countries
identified by the U.S. Government as state sponsors of terrorism. As a result,
an issuer may sustain damage to its reputation if it is identified as an issuer
which operates in, or has dealings with, such countries. The Fund, as an
investor in such issuers, will be indirectly subject to those
risks.
Global
Resources Sector Risk. The
Fund may be sensitive to, and its performance may depend to a greater extent on,
the overall condition of the global resources sector. The Fund concentrates its
investments (i.e., invests 25% or more of its total assets) in the securities of
global resource companies and instruments that derive their value from global
resources. Global resources include precious metals (including gold), base and
industrial metals, energy, natural resources, and other commodities. Investments
in global resources companies can be significantly affected by events relating
to this industry, including international political and economic developments,
embargoes, tariffs, inflation, weather and natural disasters, livestock
diseases, limits on exploration, rapid changes in the supply of and demand for
natural resources and other factors. The Fund’s portfolio securities may
experience substantial price fluctuations as a result of these factors, and may
move independently of the trends of other operating companies. Companies engaged
in global resources may be adversely affected by changes in government policies
and regulations, technological advances and/or obsolescence, environmental
damage claims, energy conservation efforts, the success of exploration projects,
limitations on the liquidity of certain natural resources and commodities and
competition from new market entrants. Political risks and the other risks to
which foreign securities are subject may also affect domestic global resource
companies
if they have significant operations or investments in foreign countries. Changes
in general economic conditions, including commodity price volatility, changes in
exchange rates, imposition of import controls, rising interest rates, prices of
raw materials and other commodities, depletion of resources and labor relations,
could adversely affect the Fund’s portfolio companies. The highly cyclical
nature of the global resources sector may affect the earnings or operating cash
flows of global resources companies.
The
Fund may be subject to greater risks and market fluctuations than a fund whose
portfolio has exposure to a broader range of sectors. The Fund may be
susceptible to financial, economic, political or market events, as well as
government regulation (including environmental regulation), impacting the global
resources sectors. Specifically, the energy sector can be affected by changes in
the prices of and supplies of oil and other energy fuels, energy conservation,
the success of exploration projects, the risks generally associated with the
extraction of natural resources, such as the risks of mining and drilling, and
tax and other government regulations. The metals sector can be affected by sharp
price volatility over short periods caused by global economic, financial and
political factors, resource availability, government regulation, economic
cycles, changes in inflation, interest rates, currency fluctuations, metal sales
by governments, central banks or international agencies, investment speculation
and fluctuations in industrial and commercial supply and demand. Precious metals
and natural resources securities are at times volatile and there may be sharp
fluctuations in prices, even during periods of rising prices. Additionally,
companies engaged in the production and distribution of global resources 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.
Gold
and Silver Mining Companies Risk. The
Fund invests in stocks and depositary receipts of U.S. and foreign companies
that are involved in the gold mining and silver mining industries, which are
considered speculative and are affected by a variety of factors. Competitive
pressures may have a significant effect on the financial condition of gold
mining and silver mining companies. Also, gold and silver mining companies are
highly dependent on the price of gold bullion and silver bullion, respectively,
but may also be adversely affected by a variety of worldwide economic, financial
and political factors. The price of gold and silver may fluctuate substantially
over short periods of time so the Fund’s Share price may be more volatile than
other types of investments. Fluctuation in the prices of gold and silver may be
due to a number of factors, including changes in inflation, changes in currency
exchange rates and changes in industrial and commercial demand for metals
(including fabricator demand). Additionally, increased environmental or labor
costs may depress the value of metal investments.
The
securities of gold or silver mining companies may under- or over-perform
commodities themselves over the short-term or long-term. Gold bullion and silver
bullion prices may fluctuate substantially over short periods of time, even
during periods of rising prices, so the Fund’s Share price may be more volatile
than other types of investments. To the extent the Fund invests in gold bullion,
such investments may incur higher storage and custody costs as compared to
purchasing, holding and selling more traditional investments. A drop in the
price of gold and/or silver bullion would particularly adversely affect the
profitability of small- and medium- capitalization mining companies and their
ability to secure financing. Mining operations have varying expected life spans,
and companies that have mines with short expected life spans may experience more
stock price volatility. A significant number of the companies in the Fund may be
early stage mining companies that are in the exploration stage only or that hold
properties that might not ultimately produce gold or silver. The exploration and
development of mineral deposits involve significant financial risks over a
significant period of time which even a combination of careful evaluation,
experience and knowledge may not eliminate. Few properties which are explored
are ultimately developed into producing mines. Major expenditures may be
required to establish reserves by drilling and to construct mining and
processing facilities at a site. In addition, many early stage miners operate at
a loss and are dependent on securing equity and/or debt financing, which might
be more difficult to secure for an early stage mining company than for a more
established counterpart. Furthermore, companies that are only in the exploration
stage are typically unable to adopt specific strategies for controlling the
impact of the price of gold or silver.
The
prices of gold and precious metals operation companies are affected by the price
of gold or other precious metals such as platinum, palladium and silver, as well
as other prevailing market conditions. These prices may be volatile, fluctuating
substantially over short periods of time. The prices of precious metals may also
be influenced by macroeconomic conditions, including confidence in the global
monetary system and the relative strength of various currencies, as well as
demand in the industrial and jewelry sectors. In times of significant inflation
or great economic uncertainty, gold, silver and other precious metals may
outperform traditional investments such as bonds and stocks. However, in times
of stable economic growth, traditional equity and debt investments could offer
greater appreciation potential and the value of gold, silver and other precious
metals may be adversely affected, which could in turn affect the Fund’s returns.
Gold-related investments as a group have not performed as well as the stock
market in general during periods when the U.S. dollar is strong, inflation is
low and general economic conditions are stable. Additionally, returns on
gold-related investments have traditionally been more volatile than investments
in broader equity or debt markets. In addition, some gold and precious metals
mining companies have hedged, to varying degrees, their exposure to decreases in
the prices of gold or precious metals by selling forward future production,
which could limit the company’s benefit from future rises in the prices of gold
or precious metals or increase the risk that the company could fail to meet its
contractual obligations.
A
significant portion of the world’s gold reserves are held by governments,
central banks and related institutions. The production, purchase and sale of
precious metals by governments or central banks or other larger holders can be
negatively affected by
various
economic, financial, social and political factors, which may be unpredictable
and may have a significant adverse impact on the supply and prices of precious
metals.
The
principal supplies of metal industries also may be concentrated in a small
number of countries and regions, the governments of which may pass laws or
regulations limiting metal investments for strategic or other policy reasons.
Economic, social and political conditions in those countries that are the
largest producers of gold and silver may have a direct negative effect on the
production and marketing of gold and silver and on sales of central bank gold
holdings. Some gold, silver and precious metals mining operation companies may
hedge their exposure to declines in gold, silver and precious metals prices by
selling forward future production, which may result in lower returns during
periods when the prices of gold, silver and precious metals
increase.
The
gold, silver and precious metals industries can be significantly adversely
affected by events relating to international political developments, the success
of exploration projects, commodity prices, tax and government regulations and
intervention (including government restrictions on private ownership of gold and
mining land), changes in inflation or expectations regarding inflation in
various countries and investment speculation. If a natural disaster or other
event with a significant economic impact occurs in a region where the companies
in which the Fund invests operate, such disaster or event could negatively
affect the profitability of such companies and, in turn, the Fund’s investment
in them. Gold and silver mining companies may also be significantly adversely
affected by import controls, worldwide competition, environmental hazards,
liability for environmental damage, depletion of resources, industrial
accidents, underground fires, seismic activity, labor disputes, unexpected
geological formations, availability of appropriately skilled persons,
unanticipated ground and water conditions and mandated expenditures for safety
and pollution control devices.
Industrials
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the industrials sector. The industrials sector
comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates.
The
stock prices of companies in the industrials sector are affected by supply and
demand both for their specific product or service and for industrial sector
products in general. The products of manufacturing companies may face product
obsolescence due to rapid technological developments and frequent new product
introduction. In addition, the industrials sector may also be adversely affected
by changes or trends in commodity prices, which may be influenced or
characterized by unpredictable factors.
Information
Technology Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the information technology sector. Information
technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Information
technology companies may have limited product lines, markets, financial
resources or personnel. The products of information technology companies may
face product obsolescence due to rapid technological developments and frequent
new product introduction, unpredictable changes in growth rates and competition
for the services of qualified personnel. Companies in the information technology
sector are heavily dependent on patent protection and the expiration of patents
may adversely affect the profitability of these companies.
Large-Capitalization
Companies Risk. Securities
of large-capitalization companies (generally companies with market
capitalization greater than $10 billion) could fall out of favor with the market
and underperform securities of small- or medium-capitalization companies.
Larger, more established companies may be slow to respond to challenges and may
grow more slowly than smaller companies.
Leverage
Risk.
To the extent that the Fund borrows money or utilizes certain derivatives, it
may be leveraged. Leveraging generally exaggerates the effect on net asset value
of any increase or decrease in the market value of the Fund’s portfolio
securities. The Fund is required to comply with the derivatives rule when it
engages in transactions that create future Fund payment or delivery obligations.
The Fund is required to comply with the asset coverage requirements under the
Investment Company Act of 1940 when it engages in borrowings and/or transactions
treated as borrowings.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Medium-Capitalization
Companies Risk. The
Fund may invest in medium-capitalization companies and, therefore will be
subject to certain risks associated with medium- capitalization companies. These
companies are often subject to less analyst coverage and may be in early and
less predictable periods of their corporate existences, with little or no record
of profitability. In addition, these companies often have greater price
volatility, lower trading volume and less liquidity than larger more established
companies. These companies tend to have smaller revenues, narrower product
lines, less management depth and experience,
smaller
shares of their product or service markets, fewer financial resources and less
competitive strength than large-capitalization companies. Returns on investments
in securities of medium-capitalization companies could trail the returns on
investments in securities of larger companies.
Money
Market Funds Risk. Although
a money market fund is designed to be a relatively low risk investment, it is
subject to certain risks. An investment in a money market fund is not a bank
account and is not insured or guaranteed by a Federal Deposit Insurance
Corporation or any other government agency. Although money market funds seek to
maintain a net asset value of $1.00 per share, it is possible that the Fund may
lose money by investing in a money market fund.
Non-Diversified
Risk. The
Fund is classified as a “non-diversified” fund under the Investment Company Act
of 1940. The Fund is subject to the risk that it will be more volatile than a
diversified fund because the Fund may invest a relatively high percentage of its
assets in a smaller number of issuers or may invest a larger proportion of its
assets in a single issuer. Moreover, the gains and losses on a single investment
may have a greater impact on the Fund’s net asset value and may make the Fund
more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Regulatory
Risk. Changes
in the laws or regulations of the United States, including any changes to
applicable tax laws and regulations, could impair the ability of the Fund to
achieve its investment objective and could increase the operating expenses of
the Fund. The Adviser is registered as a commodity pool operator under Commodity
Exchange Act and the rules of the CFTC and is subject to CFTC regulation with
respect to the Fund. The CFTC has adopted rules regarding the disclosure,
reporting and recordkeeping requirements that will apply with respect to the
Fund as a result of the Adviser’s registration as a commodity pool operator.
Generally, these rules allow for substituted compliance with CFTC disclosure and
shareholder reporting requirements, based on the Adviser’s compliance with
comparable Securities and Exchange Commission requirements. This means that for
most of the CFTC’s disclosure and shareholder reporting applicable to the
Adviser as the Fund’s commodity pool operator, the Adviser’s compliance with
Securities and Exchange Commission disclosure and shareholder reporting will be
deemed to fulfill the Adviser’s CFTC compliance obligations. However, as a
result of CFTC regulation with respect to the Fund, the Fund may incur
additional compliance and other expenses. The Adviser is also registered as a
CTA but relies on an exemption with respect to the Fund from CTA regulations
available for a CTA that also serves as the Fund’s commodity pool operator. The
CFTC has neither reviewed nor approved the Fund, their investment strategies, or
this Prospectus.
Restricted
Securities Risk.
Regulation S securities and Rule 144A securities are restricted securities that
are not registered under the Securities Act of 1933. 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.
Restricted securities that are deemed illiquid will count towards the Fund’s
limitation on illiquid securities. 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 Other Funds.
The Fund may invest in shares of other funds, including ETFs. As a result, the
Fund will indirectly be exposed to the risks of an investment in the underlying
funds. Shares of other funds have many of the same risks as direct investments
in common stocks or bonds. In addition, the market value of such funds’ shares
is expected to rise and fall as the value of the underlying securities rise and
fall. If the shares of such funds are traded on a secondary market, the market
value of such funds’ shares may differ from the net asset value of the
particular fund. As a shareholder in a fund, the Fund will bear its ratable
share of the underlying fund’s expenses. At the same time, the Fund will
continue to pay its own investment management fees and other expenses. As a
result, the Fund and its shareholders will be absorbing duplicate levels of fees
with respect to investments in other funds, including ETFs. The expenses of such
underlying funds will not, however, be counted towards the Fund’s expense cap.
The Fund is subject to the conditions set forth in provisions of the Investment
Company Act of 1940 that limit the amount that the Fund and its affiliates, in
the aggregate, can invest in the outstanding voting securities of any one
investment company.
Small-
and Medium-Capitalization Companies Risk.
The Fund may invest in small- and medium-capitalization companies and, therefore
will be subject to certain risks associated with small- and medium-
capitalization companies. These companies are often subject to less analyst
coverage and may be in early and less predictable periods of their corporate
existences, with little or no record of profitability. In addition, these
companies often have greater price volatility, lower trading volume and less
liquidity than larger more established companies. These companies tend to have
smaller revenues, narrower product lines, less management depth and experience,
smaller shares of their product or service markets, fewer financial resources
and less competitive strength than large-capitalization companies. Returns on
investments in securities of small- and medium-capitalization companies could
trail the returns on investments in securities of larger companies.
Special
Purpose Acquisition Companies Risk. Equity
securities in which the Fund invests include stock, rights, warrants, and other
interests in special purpose acquisition companies (“SPACs”) or similar special
purpose entities. A SPAC is typically a publicly traded company that raises
investment capital via an initial public offering for the purpose of acquiring
one or more existing companies (or interests therein) via merger, combination,
acquisition or other similar transactions. If the Fund purchases shares of a
SPAC in an initial public offering it will generally bear a sales commission,
which may be significant. The shares of a SPAC are often issued in “units” that
include one share of common stock and one right or warrant (or partial right or
warrant) conveying the right to purchase additional shares or partial shares. In
some cases, the rights and warrants may be separated from the common stock at
the election of the holder, after which they may become freely tradeable. After
going public and until a transaction is completed, a SPAC generally invests the
proceeds of its initial public offering (less a portion retained to cover
expenses) in U.S. Government securities, money market securities and cash. To
the extent the SPAC is invested in cash or similar securities, this may impact
the Fund’s ability to meet its investment objective. If a SPAC does not complete
a transaction within a specified period of time after going public, the SPAC is
typically dissolved, at which point the invested funds are returned to the
SPAC’s shareholders (less certain permitted expenses) and any rights or warrants
issued by the SPAC expire worthless. SPACs generally provide their investors
with the option of redeeming an investment in the SPAC at or around the time of
effecting a transaction. In some cases, the Fund may forfeit its right to
receive additional warrants or other interests in the SPAC if it redeems its
interest in the SPAC in connection with a transaction. Because SPACs often do
not have an operating history or ongoing business other than seeking a
transaction, the value of their securities may be particularly dependent on the
quality of its management and on the ability of the SPAC’s management to
identify and complete a profitable transaction. Some SPACs may pursue
transactions only within certain industries or regions, which may increase the
volatility of an investment in them. In addition, the securities issued by a
SPAC, which may be traded in the over-the-counter market, may become illiquid
and/or may be subject to restrictions on resale. Other risks of investing in
SPACs include that a significant portion of the monies raised by the SPAC may be
expended during the search for a target transaction; an attractive transaction
may not be identified at all (or any requisite approvals may not be obtained)
and the SPAC may be required to return any remaining monies to shareholders; a
transaction once identified or effected may prove unsuccessful and an investment
in the SPAC may lose value; the warrants or other rights with respect to the
SPAC held by the Fund may expire worthless or may be repurchased or retired by
the SPAC at an unfavorable price; and an investment in a SPAC may be diluted by
additional later offerings of interests in the SPAC or by other investors
exercising existing rights to purchase shares of the SPAC.
Special
Risk Considerations of Investing in Australian Issuers. Investments
in securities of Australian issuers, including issuers located outside of
Australia that generate significant revenues from Australia, involve risks
and special considerations not typically associated with investments in the U.S.
securities markets. Investments in Australian issuers may subject the Fund to
regulatory, political, currency, security, and economic risk specific to
Australia. The Australian economy is heavily dependent on exports from the
agricultural and mining sectors. As a result, the Australian economy is
susceptible to fluctuations in the commodity markets. The Australian economy is
also becoming increasingly dependent on its growing services industry. The
Australian economy is dependent on trading with key trading partners, including
the United States, China, Japan, Singapore and certain European countries.
Reduction in spending on Australian products and services, or changes in any of
the economies, may cause an adverse impact on the Australian
economy.
Additionally,
Australia is located in a part of the world that has historically been prone to
natural disasters, such as hurricanes, droughts and bushfires, and is
economically sensitive to environmental events. Any such event may adversely
impact the Australian economy, causing an adverse impact on the value of the
Fund.
Special
Risk Considerations of Investing in Brazilian Issuers. Investments
in securities of Brazilian issuers, including issuers located outside of Brazil
that generate significant revenues from Brazil, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Such risks include, among others, a high level of price volatility in
the Brazilian markets, chronic structural public sector deficits, a rising
unemployment rate and disparities of wealth. The Brazilian economy has been
characterized by frequent, and occasionally drastic, interventions by the
Brazilian government, including the imposition of wage and price controls,
exchange controls, limiting imports, blocking access to bank accounts and other
measures. The Brazilian government has often changed monetary, taxation, credit,
trade and other policies to influence the core of Brazil’s economy.
Additionally, Brazilian accounting, auditing and financial standards and
requirements differ from those in the United States, and this may affect the tax
consequences with respect to and valuation of investments in the
Fund.
Actions
taken by the Brazilian government concerning the economy may have significant
effects on Brazilian companies and on market conditions and prices of Brazilian
securities. Brazil’s economy may be subject to sluggish economic growth due to,
among other things, weak consumer spending, political turmoil, high rates of
inflation and low commodity prices. Brazil suffers from chronic structural
public sector deficits. Additionally, the process of privatizing certain
entities by the Brazilian government may cause privatized entities to suffer
losses due to, among other things, the inability to adjust to a competitive
environment.
The
market for Brazilian securities is directly influenced by the flow of
international capital, and economic and market conditions of certain countries,
especially emerging market countries. As a result, adverse economic conditions
or developments in other emerging market countries have at times significantly
affected the availability of credit in the Brazilian economy and resulted in
considerable outflows of funds and declines in the amount of foreign currency
invested in Brazil. In addition, currency devaluations
and
economic or political developments in any Central and South American country
could have a significant adverse effect on the entire region, including
Brazil.
Investments
in Brazilian securities may be subject to certain restrictions on foreign
investment. Although Brazilian law has provided greater certainty with respect
to the free exchange of currency than in the past, any restrictions or
restrictive exchange control policies in the future could have the effect of
preventing or restricting access to foreign currency and could affect the Fund’s
ability to operate and to qualify for the favorable tax treatment afforded to
regulated investment companies for U.S. federal income tax
purposes.
Brazil
has historically experienced high rates of inflation, a high level of debt, and
high crime rates, each of which may constrain economic growth. Brazil suffers
from high levels of corruption, crime and income disparity. The Brazilian
economy and Brazilian companies may also be adversely affected by significant
public health concerns and associated declines in tourism.
The
Brazilian economy is heavily dependent upon commodity prices and international
trade. The Brazilian securities markets are smaller, less liquid and more
volatile than U.S. securities markets and the market for Brazilian securities is
influenced by economic and market conditions of certain countries, especially
emerging market countries in Central and South America. Unanticipated political
or social developments may result in sudden and significant investment losses.
An increase in prices for commodities, such as petroleum, the depreciation of
the Brazilian real and future governmental measures seeking to maintain the
value of the Brazilian real in relation to the U.S. dollar, may trigger
increases in inflation in Brazil and may slow the rate of growth of the
Brazilian economy. Conversely, appreciation of the Brazilian real relative to
the U.S. dollar may lead to the deterioration of Brazil’s current account and
balance of payments as well as limit the growth of exports.
Because
the Fund’s assets will be invested primarily in securities of Brazilian issuers,
the income received by the Fund will be principally in Brazilian real. The
Fund’s exposure to the Brazilian real and changes in value of the Brazilian real
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
Brazilian real.
Special
Risk Considerations of Investing in Canadian Issuers. Investments
in securities of Canadian issuers, including issuers located outside of Canada
that generate significant revenue from Canada, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Canadian economy is very dependent on the demand for, and supply
and price of, natural resources. The Canadian market is relatively concentrated
in issuers involved in the production and distribution of natural resources.
There is a risk that any changes in natural resources sectors could have an
adverse impact on the Canadian economy. Additionally, the Canadian economy is
heavily dependent on relationships with certain key trading partners, including
the United States, countries in the European Union and China. Because the United
States is Canada’s largest trading partner and foreign investor, the Canadian
economy is dependent on and may be significantly affected by the U.S. economy.
Reduction in spending on Canadian products and services or changes in the U.S.
economy may adversely impact the Canadian economy. Trade agreements may further
increase Canada’s dependency on the U.S. economy, and uncertainty as to the
future of such trade agreements may cause a decline in the value of the Fund’s
Shares. Past periodic demands by the Province of Quebec for sovereignty have
significantly affected equity valuations and foreign currency movements in the
Canadian market and such demands may have this effect in the future. In
addition, certain sectors of Canada’s economy may be subject to foreign
ownership limitations. This may negatively impact the Fund’s ability to
invest in Canadian issuers and to pursue its investment objective.
Special
Risk Considerations of Investing in Chinese Issuers. Investments
in securities of Chinese issuers, including issuers outside of China that
generate significant revenues from China, involve certain risks and
considerations not typically associated with investments in U.S securities.
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 or other 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 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. In addition, 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 Indian Issuers.
Investments in securities of Indian issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Such heightened risks include, among others, greater government control
over the economy, political and legal uncertainty, competition from low-cost
issuers of other emerging economies in Asia, currency fluctuations or blockage
of foreign currency exchanges and the risk of nationalization or expropriation
of assets. Large portions of many Indian companies remain in the hands of
individuals and corporate governance standards of Indian companies may be weaker
and less transparent, which may increase the risk of loss and unequal treatment
of investors. In addition, religious and border disputes persist in India. India
has experienced civil unrest and hostilities with neighboring countries,
including Pakistan, and the Indian government has confronted separatist
movements in several Indian states. India has also experienced acts of terrorism
that have targeted foreigners, which have had a negative impact on tourism, an
important sector of the Indian economy. India has tested nuclear arms, and the
threat of deployment of such weapons could hinder development of the Indian
economy and escalating tensions could impact the broader region.
The
Indian securities markets are smaller and less liquid than securities markets in
more developed economies and are subject to greater price volatility. Issuers in
India are subject to less stringent requirements regarding accounting, auditing
and financial reporting than are issuers in more developed markets, and
therefore, all material information may not be available or reliable. India also
has less developed clearance and settlement procedures, and there have been
times when settlements have been unable to keep pace with the volume of
securities and have been significantly delayed. Indian stock exchanges have
experienced problems such as temporary exchange closures, broker defaults,
settlement delays and strikes by brokers that have affected the market price and
liquidity of the securities of Indian companies. In addition, the governing
bodies of the Indian stock exchanges have from time to time restricted
securities from trading, limited price movements and restricted margin
requirements. Further, from time to time, disputes have occurred between listed
companies and the Indian stock exchanges and other regulatory bodies that, in
some cases, have had a negative effect on market sentiment. In addition,
inflation in India may be at very high levels. High inflation may lead to the
adoption of corrective measures designed to moderate growth, regulate prices of
staples and other commodities and otherwise contain inflation. Such measures
could inhibit economic activity in India. Additionally, each of the factors
described below could have a negative impact on the Fund’s performance and
increase the volatility of the Fund.
Economic
Risk. The
Indian government has exercised and continues to exercise significant influence
over many aspects of the economy, and the number of public sector enterprises in
India is substantial. Accordingly, Indian government actions in the future could
have a significant effect on the Indian economy. The Indian government has
experienced chronic structural public sector deficits. High amounts of debt and
public spending could have an adverse impact on India’s economy. Services are
the major source of economic growth, accounting for half of India’s output with
less than one quarter of its labor force. Additionally, the Indian economy may
be dependent upon agriculture. About two-thirds of the workforce is in
agriculture. The Fund’s investments may be susceptible to adverse weather
changes including the threat of monsoons and other natural disasters. Despite
strong growth, the World Bank and others express concern about the combined
state and federal budget deficit.
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 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 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 Taiwanese Issuers.
Investments in securities of Taiwanese issuers, including issuers located
outside of Taiwan that generate significant revenues from Taiwan, involve risks
and special considerations not typically associated with investments in the U.S.
securities markets. To the extent the Fund continues to invest in securities
issued by Taiwanese issuers, the Fund may be subject to the risk of investing in
such issuers. Investments in Taiwanese issuers may subject the Fund to legal,
regulatory, political, currency and economic risks that are specific to Taiwan.
Specifically, Taiwan’s geographic proximity and history of political contention
with China have resulted in ongoing tensions between the two countries. These
tensions may materially affect the Taiwanese economy and its securities market.
Taiwan’s economy is export-oriented, so it depends on an open world trade regime
and remains vulnerable to fluctuations in the world economy.
Stock
Connect Risk.
The Fund may invest in A-shares listed and traded on the Shanghai Stock Exchange
and the Shenzhen Stock Exchange through Stock Connect, or on such other stock
exchanges that participate in Stock Connect from time to time or in the future.
Trading through Stock Connect is subject to a number of restrictions that may
affect the Fund’s investments and returns. For example, trading through Stock
Connect is subject to daily quotas that limit the maximum daily net purchases on
any particular day, which may restrict or preclude the Fund’s ability to invest
in Stock Connect A-shares. In addition, investments made through Stock Connect
are subject to trading, clearance and settlement procedures that are relatively
untested in the PRC, which could pose risks to the Fund. Furthermore, securities
purchased via Stock Connect will be held via a book entry omnibus account in the
name of HKSCC, Hong Kong’s clearing entity, at the CSDCC. The Fund’s ownership
interest in Stock Connect securities will not be reflected directly in book
entry with CSDCC and will instead only be reflected on the books of its Hong
Kong sub-custodian. The Fund may therefore depend on HKSCC’s ability or
willingness as record-holder of Stock Connect securities to enforce the Fund’s
shareholder rights. PRC law did not historically recognize the concept of
beneficial ownership; while PRC regulations and the Hong Kong Stock Exchange
have issued clarifications and guidance supporting the concept of beneficial
ownership via Stock Connect, the interpretation of beneficial ownership in the
PRC by regulators and courts may continue to evolve. Moreover, Stock Connect
A-shares generally may not be sold, purchased or otherwise transferred other
than through Stock Connect in accordance with applicable rules.
A
primary feature of Stock Connect is the application of the home market’s laws
and rules applicable to investors in A-shares. Therefore, the Fund’s investments
in Stock Connect A-shares are generally subject to PRC securities regulations
and listing rules, among other restrictions. The Fund will not benefit from
access to Hong Kong investor compensation funds, which are set up to protect
against defaults of trades, when investing through Stock Connect. Stock Connect
is only available on days when markets in both the PRC and Hong Kong are open,
which may limit the Fund’s ability to trade when it would be otherwise
attractive to do so. Since the inception of Stock Connect, foreign investors
(including the Fund) investing in A-shares through Stock Connect have been
temporarily exempt from the PRC corporate income tax and value-added tax on the
gains on disposal of such A-shares. Dividends are subject to PRC corporate
income tax on a withholding basis at 10%, unless reduced under a double tax
treaty with China upon application to and obtaining approval from the competent
tax authority. Aside from these temporary measures, uncertainties in permanent
PRC tax rules governing taxation of income and gains from investments in Stock
Connect A-shares could result in unexpected tax liabilities for the
Fund.
The
Stock Connect program is a relatively new program and may be subject to further
interpretation and guidance. There can be no assurance as to the program’s
continued existence or whether future developments regarding the program may
restrict or adversely affect the Fund’s investments or returns. In addition, the
application and interpretation of the laws and regulations of Hong Kong and the
PRC, and the rules, policies or guidelines published or applied by relevant
regulators and exchanges in respect of the Stock Connect program are uncertain,
and they may have a detrimental effect on the Fund’s investments and
returns.
Subsidiary
Investment Risk. Changes
in the laws of the United States and/or the Cayman Islands, under which the Fund
and the Subsidiary are organized, respectively, could result in the inability of
the Fund to operate as intended and could negatively affect the Fund and its
shareholders. The Subsidiary is not registered under the Investment Company Act
of 1940 and is not subject to the investor protections of the Investment Company
Act of 1940. Thus, the Fund, as an investor in the Subsidiary, will not have all
the protections offered to investors in registered investment
companies.
Tax
Risk (with respect to investments in the Subsidiary).
The Fund must derive at least 90% of its gross income from certain qualifying
sources of income in order to qualify as a regulated investment company under
the Internal Revenue Code of 1986. The Internal Revenue Service issued a revenue
ruling in December 2005, which concluded that income and gains from certain
commodity-linked derivatives are not qualifying income under Subchapter M of the
Internal Revenue Code of 1986. As a result, the Fund’s ability to invest
directly in commodity-linked futures contracts or swaps or in certain
exchange-traded trusts that hold commodities as part of its investment strategy
is limited by the requirement that it receive no more than ten percent (10%) of
its gross income from such investments. However, in Revenue Ruling 2006-31, the
Internal Revenue Service indicated that income from alternative investment
instruments that create commodity exposure may be considered qualifying income
under the Internal Revenue Code of 1986. The Internal Revenue Service
subsequently issued private letter rulings to other taxpayers in which the
Internal
Revenue Service specifically concluded that that income derived from a fund’s
investment in a controlled foreign corporation also will constitute qualifying
income to the fund, even if the controlled foreign corporation itself owns
commodity-linked futures contracts or swaps. The Fund expects to invest its
assets in the Subsidiary, consistent with applicable law and the advice of
counsel, in a manner that should permit the Fund to treat income allocable from
the Subsidiary as qualifying income. The Internal Revenue Service has issued
regulations that treat a fund’s income inclusion with respect to an investment
in a non-U.S. company generating investment income as qualifying income if there
is a current-year distribution out of the earnings and profits of the non-U.S.
company that are attributable to such income inclusion or if the income from the
Subsidiary is related to the Fund's business of investing. The Fund intends to
treat its income from the Subsidiary as qualifying income. There can be no
assurance that the Internal Revenue Service will not change its position with
respect to some or all of these issues or if the Internal Revenue Service did
so, that a court would not sustain the Internal Revenue Service’s position.
Furthermore, the tax treatment of the Fund’s investments in the Subsidiary may
be adversely affected by future legislation, court decisions, future Internal
Revenue Service guidance or Treasury regulations. If the Internal Revenue
Service were to change its position or otherwise determine that income derived
from the Fund’s investment in the Subsidiary does not constitute qualifying
income and if such positions were upheld, or if future legislation, court
decisions, future Internal Revenue Service guidance or Treasury regulations were
to adversely affect the tax treatment of such investments, the Fund might cease
to qualify as a regulated investment company and would be required to reduce its
exposure to such investments which could result in difficulty in implementing
its investment strategy. If the Fund did not qualify as a regulated investment
company for any taxable year, the Fund’s taxable income would be subject to tax
at the Fund level at regular corporate tax rates (without reduction for
distributions to shareholders) and to a further tax at the shareholder level
when such income is distributed. In such event, in order to re-qualify for
taxation as a regulated investment company, the Fund may be required to
recognize unrealized gains, pay substantial taxes and interest and make certain
distributions.
3.
ADDITIONAL INVESTMENT STRATEGIES
ADDITIONAL
REGULATORY CONSIDERATIONS
With
respect to each Fund, the Adviser has claimed an exclusion from the definition
of a “commodity pool operator” (“CPO”) under the U.S. Commodity Exchange Act of
1936, as amended (“CEA”), and the rules of the U.S. Commodity Futures Trading
Commission (“CFTC”) and, therefore, is not subject to CFTC registration or
regulation as a CPO. In addition, with respect to each Fund, the Adviser is
relying upon a related exclusion from the definition of a “commodity trading
advisor” (“CTA”) under the CEA and the rules of the CFTC. The terms of the CPO
exclusion require a Fund, among other things, to adhere to certain limits on its
investments in “commodity interests.” Commodity interests include commodity
futures, commodity options and swaps, which in turn include non-deliverable
currency forward contracts. Because the Adviser and the Funds intend to comply
with the terms of the CPO exclusion, a Fund may, in the future, need to adjust
its investment strategies, consistent with its investment objective to limit its
investments in these types of instruments. The Funds are not intended as
vehicles for trading in the commodity futures, commodity options or swaps
markets. The CFTC has neither reviewed nor approved the Adviser's reliance on
these exclusions, or the Funds, the Subsidiary, their investment strategies or
this prospectus.
INVESTMENTS
IN OTHER EQUITY AND FIXED INCOME SECURITIES
The
investments of the Funds may include, but not be limited to, common stocks,
preferred stocks (either convertible or non-convertible), rights, warrants,
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises, convertible debt instruments and special
classes of shares available only to foreigners in markets that restrict
ownership of certain shares or classes to their own nationals or
residents.
INVESTING
DEFENSIVELY
Each
Fund may take temporary defensive positions that are inconsistent with the
Fund’s principal investment strategies in anticipation of or in an attempt to
respond to adverse market, economic, political or other conditions. A Fund may
not achieve its investment objective while it is investing
defensively.
SECURITIES
LENDING
Each
Fund may lend its securities as permitted under the Investment Company Act of
1940 (the “1940 Act”), including by participating in securities lending programs
managed by broker-dealers or other institutions. Securities lending allows a
Fund to retain ownership of the securities loaned and, at the same time, earn
additional income. The borrowings must be collateralized in full with cash, U.S.
government securities or high-quality letters of credit.
A
Fund could experience delays and costs in recovering the securities loaned or in
gaining access to the securities lending collateral. If a Fund is not able to
recover the securities loaned, the Fund may sell the collateral and purchase a
replacement investment in the market. The value of the collateral could decrease
below the value of the replacement investment by the time the replacement
investment is purchased. Cash received as collateral and which is invested is
subject to market appreciation and depreciation.
4.
OTHER INFORMATION AND POLICIES
BENEFICIARIES
OF CONTRACTUAL ARRANGEMENTS
VanEck
Funds (the “Trust”) enters into contractual arrangements with various parties,
including, among others, the Funds’ investment adviser, administrator and
distributor, who provide services to the Funds. Shareholders of the Funds are
not parties to, or intended (or “third-party”) beneficiaries of, any of those
contractual arrangements, and those contractual arrangements are not intended to
create in any individual shareholder or group of shareholders any right to
enforce such contractual arrangements against the service providers or to seek
any remedy under such contractual arrangements against the service providers,
either directly or on behalf of the Trust.
This
prospectus provides information concerning the Trust and the Funds that you
should consider in determining whether to purchase shares of a Fund. None of
this prospectus, the Statement of Additional Information (“SAI”) or any document
filed as an exhibit to the Trust’s registration statement, is intended to, nor
does it, give rise to an agreement or contract between the Trust or the Funds
and any investor, or give rise to any contract or other rights in any individual
shareholder, group of shareholders or other person other than any rights
conferred explicitly by federal or state securities laws that may not be
waived.
CHANGING
A FUND’S 80% POLICY
A
Fund’s policy of investing “at least 80% of its net assets” (which includes net
assets plus any borrowings for investment purposes) may be changed by the Board
of Trustees the (“Board”) without a shareholder vote, as long as shareholders
are given 60 days notice of the change.
CYBER
SECURITY
The
Funds and their service providers are susceptible to cyber security risks that
include, among other things, theft, unauthorized monitoring, release, misuse,
loss, destruction or corruption of confidential and highly restricted data;
denial of service attacks; unauthorized access to relevant systems; compromises
to networks or devices that the Funds and their service providers use to service
the Funds’ operations; and operational disruption or failures in the physical
infrastructure or operating systems that support the Funds and their service
providers. Cyber attacks against or security breakdowns of the Funds or their
service providers may adversely impact the Funds and their shareholders,
potentially resulting in, among other things, financial losses; the inability of
Fund shareholders to transact business and the Funds to process transactions;
the inability to calculate the Funds’ net asset value; violations of applicable
privacy and other laws; regulatory fines, penalties, reputational damage,
reimbursement or other compensation costs; and/or additional compliance costs.
The Funds may incur additional costs for cyber security risk management and
remediation purposes. In addition, cyber security risks may also impact issuers
of securities in which the Funds invest, which may cause the Funds’ investments
in such issuers to lose value. There can be no assurance that the Funds or their
service providers will not suffer losses relating to cyber attacks or other
information security breaches in the future.
PORTFOLIO
HOLDINGS INFORMATION
Generally,
it is the Funds’ and Adviser’s policy that no current or potential investor,
including any Fund shareholder, shall be provided information about the Funds’
portfolio on a preferential basis in advance of the provision of that
information to other investors. A complete description of the Funds’ policies
and procedures with respect to the disclosure of the Funds’ portfolio securities
is available in the Funds’ SAI.
Portfolio
holdings information for the Funds is available to all investors on the VanEck
website at vaneck.com. Information regarding the Funds’ top holdings and country
and sector weightings, updated as of each month-end, is also located on this
website. Generally, this information is posted to the website within 10 business
days of the end of the applicable month. This information generally remains
available on the website until new information is posted. Each Fund reserves the
right to exclude any portion of these portfolio holdings from publication when
deemed in the best interest of the Fund, and to discontinue the posting of
portfolio holdings information at any time, without prior notice.
PORTFOLIO
INVESTMENTS
The
percentage limitations relating to the composition of a Fund’s portfolio apply
at the time the Fund acquires an investment. A subsequent increase or decrease
in percentage resulting from a change in the value of portfolio securities or
the total or net assets of the Fund will not be considered a violation of the
restriction.
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III.
SHAREHOLDER INFORMATION |
1.
HOW TO BUY, SELL, EXCHANGE OR TRANSFER SHARES
Each
of Global Resources Fund and International Investors Fund offers Class A, Class
C, Class I and Class Y shares. Emerging Markets Fund offers Class A, Class C,
Class I, Class Y and Class Z shares. Information related to how to buy, sell,
exchange and transfer shares is discussed below. See the “Minimum Purchase”
section for information related to initial and subsequent minimum investment
amounts. The minimum investment amounts vary by share class.
Through
a Financial Intermediary
Primarily,
accounts are opened through a financial intermediary (broker, bank, adviser or
agent). Please contact your financial intermediary for details.
Through
the Transfer Agent, SS&C GIDS, Inc. (SS&C)
You
may buy (purchase), sell (redeem), exchange, or transfer ownership of Class A,
Class C and Class I shares directly through SS&C by mail or telephone, as
stated below. For Class Y and Z shares, shareholders must open accounts and
transact business through a financial intermediary.
The
Funds’ mailing address at SS&C is:
VanEck
Funds
P.O.
Box 218407
Kansas
City, MO 64121-8407
For
overnight delivery:
VanEck
Funds
430
W 7th St., Suite 218407
Kansas
City, MO 64105-1407
Non-resident
aliens cannot make a direct investment to establish a new account in the Funds,
but may invest through their broker or agent.
To
telephone the Funds at SS&C, call VanEck Account Assistance at
800-544-4653.
Purchase
by Mail
To
make an initial purchase, complete the VanEck Account Application and mail it
with your check made payable to VanEck Funds. Subsequent purchases can be made
by check with the remittance stub of your account statement. You cannot make a
purchase by telephone. We cannot accept third party checks, starter checks,
money orders, travelers checks, cashier checks, checks drawn on a foreign bank,
or checks not in U.S. dollars. There are separate applications for VanEck
retirement accounts (see “Retirement Plans” for details). For further details,
see the application or call Account Assistance.
Telephone
Redemption-Proceeds by Check 800-544-4653
If
your account has the optional Telephone Redemption Privilege, you can redeem up
to $50,000 per day. The redemption check must be payable to the registered
owner(s) at the address of record (which cannot have been changed within the
past 30 days). You automatically get the Telephone Redemption Privilege (for
eligible accounts) unless you specifically refuse it on your Account
Application, on broker/agent settlement instructions, or by written notice to
SS&C. All accounts are eligible for the privilege except those registered in
street, nominee, or corporate name and custodial accounts held by a financial
institution, including VanEck sponsored retirement plans.
Expedited
Redemption-Proceeds by Wire 800-544-4653
If
your account has the optional Expedited Redemption Privilege, you can redeem a
minimum of $1,000 or more per day by telephone or written request with the
proceeds wired to your designated bank account. The Funds reserve the right to
waive the minimum amount. This privilege must be established in advance by
Application. For further details, see the Application or call Account
Assistance.
Written
Redemption
Your
written redemption (sale) request must include:
■ Fund
and account number.
■ Number
of shares or dollar amount to be redeemed, or a request to sell “all shares.”
■ Signatures
of all registered account holders, exactly as those names appear on the account
registration, including any additional documents concerning authority and
related matters in the case of estates, trusts, guardianships, custodianships,
partnerships and corporations, as requested by SS&C.
■ Special
instructions, including bank wire information or special payee or address.
A
signature guarantee for each account holder will be required if:
■ The
redemption is for $50,000 or more.
■ The
redemption amount is wired.
■ The
redemption amount is paid to someone other than the registered owner.
■ The
redemption amount is sent to an address other than the address of record.
■ The
address of record has been changed within the past 30 days.
Institutions
eligible to provide signature guarantees include banks, brokerages, trust
companies, and some credit unions.
Telephone
Exchange 800-544-4653
If
your account has the optional Telephone Exchange Privilege, you can exchange
between Funds of the same Class without any additional sales charge. Exchanges
of Class C shares are exempt from the Class C contingent deferred redemption
charge (CDRC). The new Class C shares received via the exchange will be charged
the CDRC applicable to the original Class C shares upon redemption. All accounts
are eligible except for omnibus accounts or those registered in street name and
certain custodial retirement accounts held by a financial institution other than
VanEck. For further details regarding exchanges, please see the application,
“Limits and Restrictions” and “Unauthorized Telephone Requests” below, or call
Account Assistance.
Written
Exchange
Written
requests for exchange must include:
■ The
fund and account number to be exchanged out of.
■ The
fund to be exchanged into.
■ Directions
to exchange “all shares” or a specific number of shares or dollar amount.
■ Signatures
of all registered account holders, exactly as those names appear on the account
registration, including any additional documents concerning authority and
related matters in the case of estates, trusts, guardianships, custodianships,
partnerships and corporations, as requested by SS&C.
For
further details regarding exchanges, please see the applicable information in
“Telephone Exchange.”
Certificates
Certificates
are not issued for new or existing shares.
Transfer
of Ownership
Requests
must be in writing and provide the same information and legal documentation
necessary to redeem and establish an account, including the social security or
tax identification number of the new owner.
Redemption
Liquidity
Each
Fund expects to make redemption payments to the shareholder, or shareholder’s
financial intermediary, within 1 to 2 business days following the Fund’s receipt
of the redemption transaction from the shareholder, or shareholder’s financial
intermediary. The financial intermediary acts on behalf of the shareholder and
is responsible for transmitting redemption proceeds to the shareholder. Payment
of redemption proceeds by a Fund may take longer than the time a Fund typically
expects and may take up to 7 days as permitted by the 1940 Act.
Typically,
redemption payments of Fund shares will be made in U.S. dollars. Each Fund
generally expects to satisfy redemption requests from available cash holdings
and sale of portfolio securities. On a less regular basis, a Fund also may draw
on a bank line of credit to meet redemption requests. In stressed market
conditions or for a particularly large redemption, a Fund also reserves the
right to meet redemption requests through a “redemption in kind” as described
below.
Redemption
in Kind
Each
Fund reserves the right to satisfy redemption requests by making payment in
securities (known as a redemption in kind). Redemptions in kind are not
routinely used by the Funds. A Fund may, however, use redemptions in kind during
particularly stressed market conditions or to manage the impact of a large
redemption on the Fund. In such case, the Fund may pay all or part of the
redemption in securities of equal value as permitted under the 1940 Act, and the
rules thereunder. The redeeming shareholder should expect to incur transaction
costs upon the disposition of the securities received and will bear any market
risks associated with such securities until they are converted into cash. A
redemption in kind is treated as a taxable transaction and a sale of the
redeemed shares, generally resulting in capital gain or loss to the redeeming
shareholder subject to certain loss limitation rules.
Redemptions
Initiated by a Fund
Each
Fund reserves the right to redeem your shares in the Fund if the Fund’s Board
determines that the failure to so redeem may have materially adverse
consequences to the shareholders of the Fund. For additional information, please
see “Additional Purchase and Redemption Information-Redemptions Initiated by a
Fund” in the SAI.
LIMITS
AND RESTRICTIONS
Frequent
Trading Policy
The
Board has adopted policies and procedures reasonably designed to deter frequent
trading in shares of each Fund, commonly referred to as “market timing,” because
such activities may be disruptive to the management of each Fund’s portfolio and
may increase a Fund’s expenses and negatively impact the Fund’s performance. As
such, each Fund may reject a purchase or exchange transaction or restrict an
account from investing in the Fund for any reason if the Adviser, in its sole
discretion, believes that a shareholder is engaging in market timing activities
that may be harmful to the Fund. Each Fund discourages and does not accommodate
frequent trading of shares by its shareholders.
Each
Fund invests portions of its assets in securities of foreign issuers, and
consequently may be subject to an increased risk of frequent trading activities
because frequent traders may attempt to take advantage of time zone differences
between the foreign markets in which the Fund’s portfolio securities trade and
the time as of which the Fund’s net asset value is calculated (“time-zone
arbitrage”). Each Fund’s investments in other types of securities may also be
susceptible to frequent trading strategies. These investments include securities
that are, among other things, thinly traded, traded infrequently, or relatively
illiquid, which have the risk that the current market price for the securities
may not accurately reflect current market values. Each Fund has adopted fair
valuation policies and procedures intended to reduce the Fund’s exposure to
potential price arbitrage. However, there is no guarantee that a Fund’s net
asset value will immediately reflect changes in market conditions.
Each
Fund uses a variety of techniques to monitor and detect abusive trading
practices, such as monitoring purchases, redemptions and exchanges that meet
certain criteria established by the Fund, and making inquiries with respect to
such trades. If a transaction is rejected or an account restricted due to
suspected market timing, the investor or his or her financial adviser will be
notified.
With
respect to trades that occur through omnibus accounts at intermediaries, such as
broker-dealers and third party administrators, each Fund requires all such
intermediaries to agree to cooperate in identifying and restricting market
timers in accordance with the Fund’s policies and will periodically request
customer trading activity in the omnibus accounts based on certain criteria
established by the Fund. There is no assurance that a Fund will request such
information with sufficient frequency to detect or deter excessive trading or
that review of such information will be sufficient to detect or deter excessive
trading in omnibus accounts effectively.
Although
each Fund will use reasonable efforts to prevent market timing activities in the
Fund’s shares, there can be no assurances that these efforts will be successful.
As some investors may use various strategies to disguise their trading
practices, a Fund’s ability to detect frequent trading activities by investors
that hold shares through financial intermediaries may be limited by the ability
and/or willingness of such intermediaries to monitor for these
activities.
For
further details, contact Account Assistance.
Unauthorized
Telephone Requests
Like
most financial organizations, VanEck, the Funds and SS&C may only be liable
for losses resulting from unauthorized transactions if reasonable procedures
designed to verify the caller’s identity and authority to act on the account are
not followed.
If
you do not want to authorize the Telephone Exchange or Redemption privilege on
your eligible account, you must refuse it on the Account Application,
broker/agent settlement instructions, or by written notice to SS&C. VanEck,
the Funds, and SS&C reserve the right to reject a telephone redemption,
exchange, or other request without prior notice either during or after the call.
For further details, contact Account Assistance.
AUTOMATIC
SERVICES
Automatic
Investment Plan
You
may authorize SS&C to periodically withdraw a specified dollar amount from
your bank account and buy shares in your Fund account. For further details and
to request an Application, contact Account Assistance.
Automatic
Exchange Plan
You
may authorize SS&C to periodically exchange a specified dollar amount for
your account from one Fund to another Fund. Class C shares are not eligible. For
further details and to request an Application, contact Account
Assistance.
Automatic
Withdrawal Plan
You
may authorize SS&C to periodically withdraw (redeem) a specified dollar
amount from your Fund account and mail a check to you for the proceeds. Your
Fund account must be valued at $10,000 or more at the current offering price to
establish the Plan. Class C shares are not eligible except for automatic
withdrawals for the purpose of retirement account distributions. For further
details and to request an Application, contact Account Assistance.
MINIMUM
PURCHASE
Each
class can set its own transaction minimums and may vary with respect to expenses
for distribution, administration and shareholder services.
For
Class A, Class C and Class Y shares, an initial purchase of $1,000 and
subsequent purchases of $100 or more are required for non-retirement accounts.
There are no purchase minimums for any retirement or pension plan account, for
any account using the Automatic Investment Plan, or for any other periodic
purchase program. Minimums may be waived for initial and subsequent purchases
through “wrap fee” and similar programs offered without a sales charge by
certain financial institutions and third-party recordkeepers and/or
administrators.
For
Class I shares, an initial purchase by an eligible investor of $1 million is
required. The minimum initial investment requirement may be waived or aggregated
among investors, in the Adviser’s discretion, for investors in certain
fee-based, wrap or other no-load investment programs, and for an eligible
Employer-Sponsored Retirement Plan with plan assets of $3 million or more,
sponsored by financial intermediaries that have entered into a Class I agreement
with VanEck, as well as for other categories of investors. An
“Employer-Sponsored Retirement Plan” includes (a) an employer sponsored pension
or profit sharing plan that qualifies (a “Qualified Plan”) under section 401(a)
of the Code, including Code section 401(k), money purchase pension, profit
sharing and defined benefit plans; (b) an ERISA-covered 403(b) plan; and (c)
certain non-qualified deferred compensation arrangements that operate in a
similar manner to a Qualified Plan, such as 457 plans and executive deferred
compensation arrangements, but not including employer-sponsored IRAs. In
addition, members of the Boards of Trustees of VanEck Funds and VanEck VIP Trust
and each officer, director and employee of VanEck may purchase Class I shares
without being subject to the $1 million minimum initial investment requirement.
There are no minimum investment requirements for subsequent purchases to
existing accounts. To be eligible to purchase Class I shares, you must also
qualify as specified in “How to Choose a Class of Shares.”
Class
Z shares have no initial and subsequent purchase minimums, although financial
intermediaries may impose their own minimums. To be eligible to purchase Class Z
shares, you must also qualify as specified in “How to Choose a Class of Shares”
below.
ACCOUNT
VALUE AND REDEMPTION
If
the value of your account falls below $1,000 for Class A, Class C and Class Y
shares and below $500,000 for Class I shares after the initial purchase, each
Fund reserves the right to redeem your shares after 30 days notice to you.
This
does not apply to accounts exempt from purchase minimums as described
above.
HOW
THE FUND SHARES ARE PRICED
Each
Fund buys or sells its shares at its net asset value, or NAV, per share next
determined after receipt of a purchase or redemption plus any applicable sales
charge. Each Fund calculates its NAV per share class every day the New York
Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE,
which is normally 4:00 p.m. Eastern Time.
You
may enter a buy or sell order when the NYSE is closed for weekends or holidays.
If that happens, your price will be the NAV calculated as of the close of the
next regular trading session of the NYSE. Each Fund may invest in certain
securities which are listed on foreign exchanges that trade on weekends or other
days when the Funds do not price their shares. As a result, the NAV of each
Fund’s shares may change on days when shareholders will not be able to purchase
or redeem shares.
Each
Fund’s investments are generally valued based on market quotations which may be
based on quotes obtained from a quotation reporting system, established market
makers, broker dealers or by an independent pricing service. Short-term debt
investments having a maturity of 60 days or less are valued at amortized cost,
which approximates the fair value of the security. 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. When market quotations are not readily available for a portfolio
security or other asset, or, in the opinion of the Adviser, are deemed
unreliable, a Fund will use the security’s or asset’s “fair value” as determined
in good faith in accordance with the Funds’ Fair Value Pricing Policies and
Procedures, which have been approved by the Board. As a general principle, the
current fair value of a security or other asset is the amount which a Fund might
reasonably expect to receive for the security or asset upon its current
sale.
The
Funds’ Pricing Committee, whose members are selected by the senior management of
the Adviser and reported to the Board, is responsible for recommending fair
value procedures to the Board and for administering the process used to arrive
at fair value prices.
Factors
that may cause a Fund’s Pricing Committee to fair value a security include, but
are not limited to: (1) market quotations are not readily available because a
portfolio security is not traded in a public market, trading in the security has
been suspended, or the principal market in which the security trades is closed,
(2) trading in a portfolio security is limited or suspended and not resumed
prior to the time at which the Fund calculates its NAV, (3) the market for the
relevant security is thin, or the price for the security is “stale” because its
price has not changed for five consecutive business days, (4) the Adviser
determines that a market quotation is not reliable, for example, because price
movements are highly volatile and cannot be verified by a reliable alternative
pricing source, or (5) a significant event affecting the value of a portfolio
security is determined to have occurred between the time of the market quotation
provided for a portfolio security and the time at which the Fund calculates its
NAV.
In
determining the fair value of securities, the Pricing Committee will consider,
among other factors, the fundamental analytical data relating to the security,
the nature and duration of any restrictions on the disposition of the security,
and the forces influencing the market in which the security is
traded.
Foreign
equity securities in which the Funds invest may be traded in markets that close
before the time that each Fund calculates its NAV. Foreign equity securities are
normally priced based upon the market quotation of such securities as of the
close of their respective principal markets, as adjusted to reflect the
Adviser’s determination of the impact of events, such as a significant movement
in the U.S. markets occurring subsequent to the close of such markets but prior
to the time at which the Fund calculates its NAV. In such cases, the Pricing
Committee may apply a fair valuation formula to those foreign equity securities
based on the Committee’s determination of the effect of the U.S. significant
event with respect to each local market.
Certain
of the Funds’ portfolio securities are valued by an independent pricing service
approved by the Board. The independent pricing service may utilize an automated
system incorporating a model based on multiple parameters, including a
security’s local closing price (in the case of foreign securities), relevant
general and sector indices, currency fluctuations, and trading in depositary
receipts and futures, if applicable, and/or research evaluations by its staff,
in determining what it believes is the fair valuation of the portfolio
securities valued by such independent pricing service.
There
can be no assurance that the Funds could purchase or sell a portfolio security
or other asset at the price used to calculate the Funds’ NAV. Because of the
inherent uncertainty in fair valuations, and the various factors considered in
determining value pursuant to the Funds’ fair value procedures, there can be
material differences between a fair value price at which a portfolio security or
other asset is being carried and the price at which it is purchased or
sold.
Furthermore,
changes in the fair valuation of portfolio securities or other assets may be
less frequent, and of greater magnitude, than changes in the price of portfolio
securities or other assets valued by an independent pricing service, or based on
market quotations.
2.
HOW TO CHOOSE A CLASS OF SHARES
The
Funds offer four classes of shares (five with respect to Emerging Markets Fund)
with different sales charges and 12b-1 fee schedules, designed to provide you
with different purchase options according to your investment needs. Class A and
Class C shares are offered to the general public and differ in terms of sales
charges and ongoing expenses. Class C shares automatically convert to Class A
shares eight years after each individual purchase. Class I shares are offered to
eligible investors primarily through certain financial intermediaries that have
entered into a Class I Agreement with VanEck. The Funds reserve the right to
accept direct investments by eligible investors. Class Y shares are offered only
to investors through “wrap fee” and similar programs offered without a sales
charge by certain financial intermediaries and third-party recordkeepers and/or
administrators that have entered into a Class Y agreement with VanEck. Class Z
shares are only offered through financial intermediaries that have entered into
a Class Z Agreement with VanEck and that make Class Z shares available to their
and/or their clients’ programs or plans (e.g., retirement plans). For Class Z
shares, investors in programs or plans offered by financial intermediaries may
be charged fees or commissions by those financial intermediaries. For additional
information, please contact your financial intermediary.
Financial
intermediaries making Fund shares available to their clients determine which
share class(es) to make available. Your financial intermediary may receive
different compensation for selling one class of shares than for selling another
class, which may depend on, among other things, the type of investor account and
the policies, procedures and practices adopted by your financial intermediary.
You should review these arrangements with your financial
intermediary.
■ CLASS
A Shares
are offered at net asset value plus an initial sales charge at time of purchase
of up to 5.75% of the public offering price. The initial sales charge is reduced
for purchases of $25,000 or more. For further information regarding sales
charges, breakpoints and other discounts, please see below. The 12b-1 fee is
0.25% annually.
■ CLASS
C Shares
are offered at net asset value with no initial sales charge, but are subject to
a contingent deferred redemption charge (“CDRC”) of 1.00% on all redemptions
during the first 12 months after purchase. The CDRC may be waived under certain
circumstances; please see “Telephone Exchange” and below. The 12b-1 fee is 1.00%
annually.
■ CLASS
I Shares
are offered with no sales charges on purchases, no CDRC, and no 12b-1 fee. To be
eligible to purchase Class I (Institutional) shares, you must be an eligible
investor that is making or has made a minimum initial investment of at least $1
million (which may be reduced or waived under certain circumstances) in Class I
shares of a Fund. Eligible investors in Class I shares include corporations,
foundations, family offices and other institutional organizations; high net
worth individuals; persons purchasing through certain financial intermediaries
or a bank, trust company or similar institution investing for its own account or
for the account of a client when such institution has entered into a Class I
agreement with VanEck and makes Class I shares available to the client’s program
or plan.
■ CLASS
Y Shares
are offered with no sales charges on purchases, no CDRC, and no 12b-1 fee. To be
eligible to purchase Class Y shares, you must be an eligible investor in a
“wrap-fee” or other fee-based program, including an Employer-Sponsored
Retirement Plan, offered through a financial intermediary that has entered into
a Class Y Agreement with VanEck, and makes Class Y shares available to that
program or plan. An “Employer-Sponsored Retirement Plan” includes (a) an
employer sponsored pension or profit sharing plan
that
qualifies (a “Qualified Plan”) under section 401(a) of the Code, including Code
section 401(k), money purchase pension, profit sharing and defined benefit
plans; (b) an ERISA-covered 403(b) plan; and (c) certain non-qualified deferred
compensation arrangements that operate in a similar manner to a Qualified Plan,
such as 457 plans and executive deferred compensation arrangements, but not
including employer-sponsored IRAs.
■ CLASS
Z Shares
are only offered through financial intermediaries that have entered into a Class
Z agreement with VanEck and that make Class Z shares available to their and/ or
their clients’ programs or plans. Such financial intermediaries may trade and
hold Class Z shares on behalf of other financial intermediaries (including
third-party retirement plan recordkeepers). Financial intermediaries determine
which of their and/or their clients’ programs or plans may use Class Z shares,
and may establish certain minimum investment amounts and/or other criteria.
Investors in plans or programs offered by financial intermediaries may be
charged fees or commissions by those financial intermediaries. For additional
information, please contact your financial intermediary.
Financial
intermediaries may offer their clients more than one class of shares of a Fund.
Shareholders who own shares of one class of a Fund and who are eligible to
invest in another class of the same Fund may be eligible to convert their shares
from one class to the other. Shareholders no longer participating in a fee-based
program may be subject to conversion of their current class of shares by their
financial intermediary to another class of shares of the Fund having expenses
that may be higher than the expenses of their current class of shares. The
timing and implementation of such conversions are at the discretion of the
shareholder’s financial intermediary. For additional information, please contact
your financial intermediary or see “Class Conversions” in the SAI. Investors
should consider carefully a Fund’s share class expenses and applicable sales
charges and fees plus any separate transaction and other fees charged by such
intermediaries in connection with investing in each available share class before
selecting a share class. It is the responsibility of the financial intermediary
and the investor to choose the proper share class and notify SS&C or VanEck
of that share class at the time of each purchase. More information regarding
share class eligibility is available in the “How to Buy, Sell, Exchange, or
Transfer Shares” section of the prospectus and in “Purchase of Shares” in the
SAI.
3.
SALES CHARGES
Unless
you are eligible for a waiver, the public offering price you pay when you buy
Class A shares of the Fund is the net asset value (NAV) of the shares plus an
initial sales charge. A sales charge means that a portion of your initial
investment goes toward the sales charge and is not invested. The initial sales
charge varies depending upon the size of your purchase, as set forth below, and
a percentage is paid to the financial intermediary who sells your Class A
shares. No sales charge is imposed where Class A or Class C shares are issued to
you pursuant to the automatic investment of income dividends or capital gains
distribution. It is the responsibility of the financial intermediary to ensure
that the investor obtains the proper “breakpoint” discount. Class C, Class I and
Class Y do not have an initial sales charge. Class A does charge a contingent
deferred sales charge and Class C does charge a contingent deferred redemption
charge as set forth below. For Class Z shares, investors in programs or plans
offered by financial intermediaries may be charged fees or commissions by those
financial intermediaries. For additional information, please contact your
financial intermediary.
Different
intermediaries may impose different sales charges (including potential
reductions in or waivers of sales charges) other than those listed below. Such
intermediary-specific sales charge variations are described in Appendix A to
this prospectus, entitled “Intermediary Sales Charge Discounts and Waivers.”
Appendix A is incorporated herein by reference (is legally a part of this
prospectus). Such intermediary-specific sales charge discounts and waivers may
not be available to purchasers whose accounts are not held at and traded by
their intermediary.
In
all instances, it is the purchaser’s responsibility to notify the Fund or the
purchaser’s financial intermediary at the time of purchase of any facts
qualifying the purchaser for sales charge discounts or waivers.
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| Class
A Shares Sales Charges |
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| |
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| Sales
Charge as a Percentage of |
| |
| Dollar
Amount of Purchase |
Offering Price |
Net
Amount Invested |
Percentage
to Brokers or Agents1 |
|
| Less
than $25,000 |
5.75% |
6.10% |
5.00% |
|
| $25,000
to less than $50,000 |
5.00% |
5.30% |
4.25% |
|
| $50,000
to less than $100,000 |
4.50% |
4.70% |
3.90% |
|
| $100,000
to less than $250,000 |
3.00% |
3.10% |
2.60% |
|
| $250,000
to less than $500,000 |
2.50% |
2.60% |
2.20% |
|
| $500,000
to less than $1,000,000 |
2.00% |
2.00% |
1.75% |
|
| $1,000,000
and over |
None2 |
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| |
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1 Brokers
or Agents who receive substantially all of the sales charge for shares they sell
may be deemed to be statutory underwriters.
2 The
Distributor may pay a Finder’s Fee of 1.00% to eligible brokers and agents on
qualified commissionable shares purchased at or above the $1 million breakpoint
level. Such shares may be subject to a 1.00% contingent deferred sales charge if
redeemed within one year from the date of purchase. For additional information,
see “Contingent Deferred Sales Charge for Class A Shares” below or contact the
Distributor or your financial intermediary.
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| Class
C Shares Sales Charges |
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| Year
Since Purchase |
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