ck0000768847-20231231
VanEck
Funds
Emerging Markets Bond
Fund
Class
A: EMBAX / Class I: EMBUX / Class Y:
EMBYX
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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 Bond Fund (Class A, I, Y) |
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II.
Investment Objective, Strategies, Policies, Risks and Other
Information |
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1.
Investment Objective |
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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 Fund 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 BOND FUND (CLASS A, I,
Y) |
I.
SUMMARY INFORMATION
INVESTMENT
OBJECTIVE
The
Emerging Markets Bond Fund seeks total return, consisting of income and capital
appreciation.
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.”
Shareholder
Fees
(fees
paid directly from your investment)
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| Class
A |
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% |
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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 |
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
I |
Class
Y |
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| Management
Fees |
0.80% |
0.80% |
0.80% |
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| Distribution
and/or Service (12b-1) Fees |
0.25% |
0.00% |
0.00% |
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| Other
Expenses |
1.03% |
0.54% |
0.55% |
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| Total
Annual Fund Operating Expenses |
2.08% |
1.34% |
1.35% |
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Fee
Waivers and/or Expense Reimbursements2 |
-0.87% |
-0.48% |
-0.39% |
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Total
Annual Fund Operating Expenses After Fee Waivers and/or Expense
Reimbursements |
1.21% |
0.86% |
0.96% |
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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 1.20% for Class A, 0.85% for Class I, and
0.95% 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 |
$691 |
| $1,110 |
| $1,554 |
| $2,782 |
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| Class
I |
Sold
or Held |
$88 |
| $377 |
| $688 |
| $1,571 |
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| Class
Y |
Sold
or Held |
$98 |
| $389 |
| $702 |
| $1,590 |
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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 238% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
Under
normal conditions, the Fund invests at least 80% of its net assets in emerging
market debt securities. An instrument will qualify as an emerging market debt
security if it is either (i) issued by an emerging market government,
quasi-government or corporate entity (regardless of the currency in which it is
denominated) or (ii) denominated in the currency of an emerging market country
(regardless of the location of the issuer). The Fund may also
invest in non-emerging market debt securities. The Fund may also invest in debt
securities rated below investment grade (“junk bonds”). 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 may engage in active and frequent trading of
portfolio securities.
The
Fund invests in debt issued in emerging market and developed market currencies
by governments and government-owned, controlled, or related entities (and their
agencies and subdivisions), and by corporations. The Fund may invest in
corporate bonds, debentures, notes, commercial paper, time deposits, and
certificates of deposit, as well as debt obligations, which may have a call on a
common stock or commodity by means of a conversion privilege or attached
warrants.
The
Fund may also invest in emerging market or developed market currencies. The Fund
may use derivative instruments denominated in any currency to enhance return,
hedge (or protect) the value of its assets against adverse movements in
commodity prices, currency exchange rates, interest rates and movements in the
securities markets, manage certain investment risks and/or as a substitute for
the purchase or sale of securities, currencies or commodities. The Fund may also
use derivative instruments to implement “cross-hedging” strategies, which
involve the use of one currency to hedge against the decline in the value of
another currency, or to hedge the value of a currency that is embedded in the
value of another currency (for example, the value of the Euro that may be
embedded in the Polish zloty). The Fund expects to use forward currency
contracts; futures on securities, indices, currencies, commodities, swaps and
other investments; options; and interest rate swaps, cross-currency swaps, total
return swaps and credit default swaps. The Fund may also invest in credit-linked
notes. Credit-linked notes are typically issued by a limited purpose trust or
other vehicle that, in turn, invests in a derivative or basket of derivatives
instruments, such as credit default swaps, interest rate swaps and/or other
securities, in order to provide exposure to certain high yield, sovereign debt,
emerging markets, or other fixed income markets. The notional value of a
cash-settled forward currency contract or other derivative instrument on an
emerging market currency (or a currency that is embedded in an emerging market
currency) or security (including any security that is a reference security for a
credit default swap) will be treated as an emerging market debt security for
purposes of complying with the Fund’s policy of investing at least 80% of its
net assets in emerging market debt securities.
The
Adviser has broad discretion to identify countries that it considers to qualify
as emerging markets. The Adviser selects emerging market countries and
currencies 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. The Fund’s investment
strategy normalizes countries’ economic fundamentals and compares them to the
valuations of the relevant asset prices, particularly the relevant currency’s
valuation, the relevant currency’s interest rate, and the relevant hard-currency
security’s credit spread. 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 in instruments whose return is based on the return of an emerging market
security such as a derivative instrument, rather than investing directly in
emerging market securities.
The
Fund’s holdings may include issues denominated in currencies of emerging
countries, investment companies (like country funds) that invest in emerging
countries, depositary receipts, and similar types of investments, representing
emerging market securities. The Fund may purchase securities of any maturity or
duration. Duration is a measure of the expected life of a fixed income security
that is used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will be
to changes in interest rates. Similarly, a fund with a longer average portfolio
duration will be more sensitive to changes in interest rates than a fund with a
shorter average portfolio duration. By way of example, the price of a
bond
fund with an average duration of five years would be expected to fall
approximately 5% if interest rates rose by one percentage point.
The
Fund may invest up to 20% of its net assets in securities issued by other
investment companies (each an “Underlying Fund”), 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.
Credit Risk.
Credit risk refers to the possibility that the issuer or guarantor of
a security will be unable and/or unwilling to honor its payment obligations
and/or default completely on securities. The Fund’s securities are subject to
varying degrees of credit risk, depending on the issuer’s financial
condition and on the terms of the securities, which may be reflected in credit
ratings. There is a possibility that the credit rating of a security may be
downgraded after purchase or the perception of an issuer’s creditworthiness may
decline, which may adversely affect the value of the security. Lower credit
quality may also affect liquidity and make it difficult for the Fund to sell the
security.
Credit-Linked
Notes Risk. When
it buys a credit-linked note, the Fund assumes the risk of default by the issuer
and the underlying reference asset or entity. If the underlying investment
defaults, the payments and principal received by the Fund will be reduced or
eliminated. Also, in the event the issuer defaults or there is a credit event
that relates to the reference asset, the recovery rate generally is less than
the Fund’s initial investment, and the Fund may lose
money.
Currency
Management Strategies Risk.
Currency management strategies, including the use of forward currency contracts
and other derivatives, may substantially change the Fund’s exposure to
currencies and currency exchange rates and could result in losses to the Fund if
currencies do not perform as the Adviser
anticipates.
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.
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.
Energy Sector
Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, and the cost of providing the
specific utility services and other factors that they cannot
control.
The
energy sector is cyclical and is highly dependent on commodity prices; prices
and supplies of energy may fluctuate significantly over short and long periods
of time due to, among other things, national and international political
changes, OPEC policies, changes in relationships among OPEC members and between
OPEC and oil-importing nations, the regulatory environment, taxation policies,
and the economy of the key energy-consuming countries. Commodity prices have
recently been subject to increased volatility and declines, which may negatively
affect companies in which the Fund invests.
Companies
in the energy sector may be adversely affected by terrorism, natural disasters
or other catastrophes. Companies in the energy sector are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Disruptions in the oil industry or shifts in fuel
consumption may significantly impact companies in this sector. Significant oil
and gas deposits are located in emerging markets countries where corruption and
security may raise significant risks, in addition to the other risks of
investing in emerging markets.
Companies
in the energy sector may also be adversely affected by changes in exchange
rates, tax treatment, government regulation and intervention, negative
perception, efforts at energy conservation and world events in the regions in
which the companies operate (e.g.,
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investments and repatriation of capital,
military coups, social unrest, violence or labor unrest). Because a significant
portion of revenues of companies in this sector is derived from a relatively
small number of customers that are largely comprised of governmental entities
and utilities, governmental budget constraints may have a significant impact on
the stock prices of companies in this sector. Entities operating in the energy
sector are subject to significant regulation of nearly every aspect of their
operations by federal, state and local governmental agencies. Such regulation
can change rapidly or over time in both scope and intensity. Stricter laws,
regulations or enforcement policies could be enacted in the future which would
likely increase compliance costs and may materially adversely affect the
financial performance of companies in the energy sector.
A
downturn in the energy sector, adverse political, legislative or regulatory
developments or other events could have a larger impact on the Fund than on an
investment company that does not invest a substantial portion of its assets in
the energy sector. At times, the performance of securities of companies in the
energy sector may lag the performance of other sectors or the broader market as
a whole. The price of oil, natural gas and other fossil fuels may decline and/or
experience significant volatility, which could adversely impact companies
operating in the energy sector.
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.
Hedging
Risk. Losses
or gains generated by a derivative or other instrument or practice used by the
Fund for hedging purposes (including for hedging interest rate risk and credit
risk) should be substantially offset by gains or losses on the hedged
investment. However, the Fund is exposed to the risk that changes in the value
of a hedging instrument will not match those of the investment being
hedged.
High
Portfolio Turnover Risk. The
Fund may engage in active and frequent trading of its portfolio securities,
which will result in increased transaction costs to the Fund, including
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of the securities and on reinvestment in other securities. High portfolio
turnover may also result in higher taxes when Fund Shares are held in a taxable
account. The effects of high portfolio turnover may adversely affect Fund
performance.
High
Yield Securities Risk. Securities rated below investment grade are commonly referred
to as high yield securities or “junk bonds.” High yield securities are often
issued by issuers that are restructuring, are smaller or less creditworthy than
other issuers, or are more highly indebted than other issuers. High yield
securities are subject to greater risk of loss of income and principal than
higher rated securities and are considered speculative. The prices of high yield
securities are likely to be more sensitive to adverse economic changes or
individual issuer developments than higher rated securities, resulting in
increased volatility of their market prices and a corresponding volatility in
the Fund’s net asset value. During an economic downturn or substantial period of
rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for high yield
securities may be less liquid than the markets for higher quality securities,
and high yield securities issued by non-corporate issuers may be less liquid
than high yield securities issued by corporate issuers. Illiquidity may have an
adverse effect on the market prices of and the Fund’s ability to arrive at a
fair value for certain securities when it seeks to do so. In addition, periods
of economic uncertainty and change may result in an increased volatility of
market prices of high yield securities and a corresponding volatility in the
Fund's NAV.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate
risk. Interest rate risk refers to fluctuations in the value of a security
resulting from changes in the general level of interest rates. When the general
level of interest rates goes up, the prices of most debt securities and certain
preferred securities go down. When the general level of interest rates goes
down, the prices of most debt securities go up. Many factors can cause interest
rates to rise, including central bank monetary policy, rising inflation rates
and general economic conditions. Debt securities with longer durations tend to
be more sensitive to interest rate changes, usually making them more volatile
than debt securities, such as bonds, with shorter durations. A substantial
investment by the Fund in debt securities with longer-term maturities during
periods of rising interest rates may cause the value of the Fund’s investments
to decline significantly. Changing interest rates may have unpredictable effects
on markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
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.
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.
Sovereign
Bond Risk.
Investment in sovereign bonds involves special risks not present in corporate
bonds. The governmental authority that controls the repayment of the bond may be
unable or unwilling to make interest payments and/or repay the principal on its
debt or to otherwise honor its obligations. If an issuer of sovereign bonds
defaults on payments of principal and/or interest, the Fund may have limited
recourse against the issuer. During periods of economic uncertainty, the market
prices of sovereign bonds, and the Fund’s net asset value, may be more volatile
than prices of corporate bonds, which may result in losses. In the past, certain
governments of emerging market countries have declared themselves unable to meet
their financial obligations on a timely basis, which has resulted in losses for
holders of sovereign bonds.
Special
Risk Considerations of Investing in African Issuers. Investments
in securities of African issuers, including issuers located outside of Africa
that generate significant revenues from Africa, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Such heightened risks include, among others, expropriation and/or
nationalization of assets, restrictions on and government intervention in
international trade, confiscatory taxation, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, terrorism, infectious disease outbreaks, strained international
relations related to border disputes, the impact on the economy as a result of
civil war, and social instability as a result of religious, ethnic and/or
socioeconomic unrest and, in certain countries, genocidal warfare. Unanticipated
political or social developments may result in sudden and significant investment
losses. Additionally, Africa is located in a part of the world that has
historically been prone to natural disasters, such as droughts, and is
economically sensitive to environmental events.
The
securities markets in Africa are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries or geographic regions. A subset of African emerging market
countries are considered to be “frontier markets.” Frontier market countries
generally have smaller economies and less developed capital markets than
traditional emerging markets, and, as a result, the risks of investing in
emerging market countries are magnified in frontier market countries. As a
result, securities markets in Africa 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. There may also be a high concentration of trading volume in a
small number of issuers, investors and financial intermediaries representing a
limited number of sectors or industries. Moreover, trading on securities markets
may be suspended altogether.
Certain
economies in African countries depend to a significant degree upon exports of
primary commodities such as agricultural products, gold, silver, copper,
diamonds and oil. These economies therefore are vulnerable to changes in
commodity prices, which in turn may be affected by a variety of
factors.
Certain
governments in Africa may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
those countries. These restrictions and/or controls may at times limit or
prevent foreign investment in securities of issuers located or operating in
countries in Africa. Moreover, certain countries in Africa 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 and may limit such foreign investment to a
certain class of securities of an issuer that may have less advantageous rights
than the classes available for purchase by domiciliaries of those countries
and/or impose additional taxes on foreign investors. These factors, among
others, make investing in issuers located or operating in countries in Africa
significantly riskier than investing in issuers located or operating in more
developed countries, and any one of them could cause a decline in the value of
the Fund’s Shares.
There
may be a risk of loss due to the imposition of restrictions on repatriation of
capital invested. In addition, certain African countries have currencies pegged
to the U.S. dollar. If such currency pegs are abandoned, such abandonment could
cause sudden and significant currency adjustments, which could impact the Fund’s
investment returns in those countries. There may be limitations or delays in the
convertibility or repatriation of certain African currencies, which would
adversely affect the U.S. dollar value and/or liquidity of the Fund’s
investments denominated in such African currencies, may impair the Fund’s
ability to achieve its investment objective and/or may impede the Fund’s ability
to satisfy redemption requests in a timely manner. For these or other reasons,
the Fund could seek to suspend redemptions of Creation Units, including in the
event that an emergency exists in which it is not reasonably practicable for the
Fund to dispose of its securities or to determine its net asset value. The Fund
could also, among other things, limit or suspend creations of Creation Units.
During the period that creations or redemptions are affected, the Fund’s shares
could trade at a significant premium or discount to their net asset value. In
the case of a period during which creations are suspended, the Fund could
experience substantial redemptions, which may exacerbate the discount to net
asset
value at which the Fund’s shares trade, cause the Fund to experience
increased transaction costs, and cause the Fund to make greater taxable
distributions to shareholders of the Fund. When the Fund holds illiquid
investments, its portfolio may be harder to value.
Special
Risk Considerations of Investing in Asian Issuers. Investments
in securities of Asian issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. Many Asian
economies have experienced rapid growth and industrialization in recent years,
but there is no assurance that this growth rate will be maintained. Certain
Asian economies have experienced over-extension of credit, currency devaluations
and restrictions, high unemployment, high inflation, decreased exports and
economic recessions. Geopolitical hostility, political instability, as well as
economic or environmental events in any one Asian country can have a significant
effect on the entire Asian region as well as on major trading partners outside
Asia, and any adverse effect on some or all of the Asian countries and regions
in which the Fund invests. The securities markets in some Asian economies are
relatively underdeveloped and may subject the Fund to higher action costs or
greater uncertainty than investments in more developed securities markets. Such
risks may adversely affect the value of the Fund’s investments. Certain Asian
countries have also developed increasingly strained relationships with the U.S.,
and if these relations were to worsen, they could adversely affect Asian issuers
that rely on the U.S. for trade.
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.
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
|
|
|
|
|
|
|
| |
Best
Quarter: |
+22.09% |
2Q 2020 |
Worst
Quarter: |
-20.02% |
1Q
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Average
Annual Total Returns as of 12/31/2023 |
1
Year |
5
Years |
10
Years |
| |
|
Class
A Shares
(7/9/12) |
|
|
|
| |
| Before
Taxes |
4.53% |
2.92% |
1.20% |
| |
|
After
Taxes on Distributions1 |
2.68% |
1.05% |
-0.35% |
| |
|
After Taxes
on Distributions and Sale of Fund Shares |
2.71% |
1.45% |
0.22% |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Class
I Shares
(7/9/12) |
|
|
|
| |
| Before
Taxes |
10.97% |
4.46% |
2.10% |
| |
|
Class
Y Shares
(7/9/12) |
|
|
|
| |
| Before
Taxes |
11.03% |
4.39% |
2.03% |
| |
|
50%
J.P. Morgan Emerging Market Bond Index Global Diversified Index/50% J.P.
Morgan Government Bond Index-Emerging Markets Global
Diversified
Index
(reflects no deduction for fees, expenses or
taxes) |
11.95% |
1.46% |
1.71% |
| |
|
ICE
BofA Global Broad Market Plus Index (reflects
no deduction for fees, expenses or taxes)2 |
5.63% |
-0.61% |
0.30% |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
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.
2
Effective May 1, 2024 the ICE BofA Global Broad Market
Plus Index replaced the 50% J.P. Morgan Emerging Market Bond Index
Global
Diversified
Index/50% J.P. Morgan Government Bond Index-Emerging Markets Global Diversified
Index as the Fund’s broad-based
benchmark
index. The Fund changed its broad-based benchmark index as it believes the ICE
BofA Global Broad Market Plus Index is
more
representative of broad-based global bond
exposure.
See
“License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation
Portfolio
Managers.
Eric
Fine has been Portfolio Manager of the Fund since 2012. David Austerweil has
been Deputy Portfolio Manager of the Fund since 2014.
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 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 monthly and net realized capital
gains, if any, to shareholders at least 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 OBJECTIVE, STRATEGIES, POLICIES, RISKS AND OTHER
INFORMATION |
This
section states the 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 the Fund.
1.
INVESTMENT OBJECTIVE
The
Emerging Markets Bond Fund seeks total return, consisting of income and capital
appreciation.
The
Fund’s investment objective is non-fundamental and may be changed by the Board
of Trustees (the “Board”) without shareholder approval. To the extent
practicable, the Fund will provide shareholders with 60 days’ prior written
notice before changing its investment objective.
2.
ADDITIONAL INFORMATION ABOUT PRINCIPAL INVESTMENT STRATEGIES AND
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.
Credit Risk.
Credit risk refers to the possibility that the issuer or guarantor of
a security will be unable and/or unwilling to honor its payment obligations
and/or default completely on securities. The Fund’s securities are subject to
varying degrees of credit risk, depending on the issuer’s financial
condition and on the terms of the securities, which may be reflected in credit
ratings. There is a possibility that the credit rating of a security may be
downgraded after purchase or the perception of an issuer’s creditworthiness may
decline, which may adversely affect the value of the security. Lower credit
quality may also affect liquidity and make it difficult for the Fund to sell the
security.
Credit-Linked
Notes Risk. When
it buys a credit-linked note, the Fund assumes the risk of default by the issuer
and the underlying reference asset or entity. If the underlying investment
defaults, the payments and principal received by the Fund will be reduced or
eliminated. Also, in the event the issuer defaults or there is a credit event
that relates to the reference asset, the recovery rate generally is less than
the Fund’s initial investment, and the Fund may lose money.
Currency
Management Strategies Risk.
This strategy is generally used in an attempt to reduce the risk and impact of
adverse currency movements to protect the value of, or seek to mitigate the
currency exposure associated with, an investment (including, for example,
mitigating the exposure to the Euro that may be embedded in the Polish
zloty).
Currency
management strategies, including the use of forward currency contracts and
cross-hedging, may substantially change the Fund’s exposure to currency exchange
rates and could result in losses to the Fund if currencies do not perform as the
Adviser anticipates. In addition, currency management strategies, to the extent
that such strategies reduce the Fund’s exposure to currency risks, may also
reduce the Fund’s ability to benefit from favorable changes in currency exchange
rates. There is no assurance that the Adviser’s use of currency management
strategies will benefit the Fund or that they will be, or can be, used at
appropriate times. Furthermore, there may not be a perfect correlation between
the amount of exposure to a particular currency and the amount of securities in
the portfolio denominated in that currency or exposed to that currency. Currency
markets are generally less regulated than securities markets. Derivatives
transactions, especially forward currency contracts, currency-related futures
contracts and swap agreements, may involve significant amounts of currency
management strategies risk. Because the Fund may utilize these types of
instruments to a significant extent, it will be especially subject to currency
management strategies risk.
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.
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.
Energy Sector
Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, and the cost of providing the
specific utility services and other factors that they cannot
control.
The
energy sector is cyclical and is highly dependent on commodity prices; prices
and supplies of energy may fluctuate significantly over short and long periods
of time due to, among other things, national and international political
changes, OPEC policies, changes in relationships among OPEC members and between
OPEC and oil-importing nations, the regulatory environment, taxation policies,
and the economy of the key energy-consuming countries. Commodity prices have
recently been subject to increased volatility and declines, which may negatively
affect companies in which the Fund invests.
Companies
in the energy sector may be adversely affected by terrorism, natural disasters
or other catastrophes. Companies in the energy sector are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Disruptions in the oil industry or shifts in fuel
consumption may significantly impact companies in this sector. Significant oil
and gas deposits are located in emerging markets countries where corruption and
security may raise significant risks, in addition to the other risks of
investing in emerging markets.
Companies
in the energy sector may also be adversely affected by changes in exchange
rates, tax treatment, government regulation and intervention, negative
perception, efforts at energy conservation and world events in the regions in
which the companies operate (e.g.,
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investments and repatriation of capital,
military coups, social unrest, violence or labor unrest). Because a significant
portion of revenues of companies in this sector is derived from a relatively
small number of customers that are largely comprised of governmental entities
and utilities, governmental budget constraints may have a significant impact on
the stock prices of companies in this sector. Entities operating in the energy
sector are subject to significant regulation of nearly every aspect of their
operations by federal, state and local governmental agencies. Such regulation
can change rapidly or over time in both scope and intensity. Stricter laws,
regulations or enforcement policies could be enacted in the future which would
likely increase compliance costs and may materially adversely affect the
financial performance of companies in the energy sector.
A
downturn in the energy sector, adverse political, legislative or regulatory
developments or other events could have a larger impact on the Fund than on an
investment company that does not invest a substantial portion of its assets in
the energy sector. At times, the performance of securities of companies in the
energy sector may lag the performance of other sectors or the broader market as
a whole. The price of oil, natural gas and other fossil fuels may decline and/or
experience significant volatility, which could adversely impact companies
operating in the energy sector.
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.
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.
Hedging
Risk. Hedging
is a strategy in which a derivative or other instrument or practice is used to
offset the risks associated with other Fund holdings or the risk associated with
the Fund temporarily not being fully invested because of significant cash
in-flows.
Losses
generated by a derivative or other instrument or practice used by the Fund for
hedging purposes (including for hedging interest rate risk and credit risk)
should be substantially offset by gains on the hedged investment. However,
although hedging can reduce or eliminate losses, it can also reduce or eliminate
gains. In addition, the Fund is exposed to the risk that changes in the value of
a hedging instrument will not match those of the investment being hedged. The
Adviser may not be able to predict correctly the direction of securities prices,
interest rates and other economic factors, which could cause the Fund’s hedges
to lose value. There can be no assurance that the Fund’s hedging transactions
will be effective.
High
Portfolio Turnover Risk. The
Fund may engage in active and frequent trading of its portfolio securities,
which will result in increased transaction costs to the Fund, including
brokerage commissions, dealer mark-ups and other transaction costs on the sale
of the securities and on reinvestment in other securities. High portfolio
turnover may also result in higher taxes when Fund Shares are held in a taxable
account. The effects of high portfolio turnover may adversely affect Fund
performance.
High
Yield Securities Risk. Securities
rated below investment grade are commonly referred to as high yield securities
or “junk bonds.” High yield securities are often issued by issuers that are
restructuring, are smaller or less creditworthy than other issuers, or are more
highly indebted than other issuers. High yield securities are subject to greater
risk of loss of income and principal than higher rated securities and are
considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities, resulting in increased volatility of their market
prices and a corresponding volatility in the Fund’s net asset value. During an
economic downturn or substantial period of rising interest rates, high yield
security issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet their projected business goals or to obtain additional financing. In the
event of a default, the Fund may incur additional expenses to seek recovery. The
secondary market for high yield securities may be less liquid than the markets
for higher quality securities, and high yield securities issued by non-corporate
issuers may be less liquid than high yield securities issued by corporate
issuers. Illiquidity may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities when it seeks to
do so. In addition, periods of economic uncertainty and change may result in an
increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund's NAV.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
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.
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.
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.
Sovereign
Bond Risk.
Investment in sovereign bonds involves special risks not present in corporate
bonds. The governmental authority that controls the repayment of the bond may be
unable or unwilling to make interest payments and/or repay the principal on its
debt or to otherwise honor its obligations. If an issuer of sovereign bonds
defaults on payments of principal and/or interest, the Fund may have limited
recourse against the issuer. During periods of economic uncertainty, the market
prices of sovereign bonds, and the Fund’s net asset value, may be more volatile
than prices of corporate bonds, which may result in losses. In the past, certain
governments of emerging market countries have declared themselves unable to meet
their financial obligations on a timely basis, which has resulted in losses for
holders of sovereign bonds.
Special
Risk Considerations of Investing in African Issuers. Investments
in securities of African issuers, including issuers located outside of Africa
that generate significant revenues from Africa, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Such heightened risks include, among others, expropriation and/or
nationalization of assets, restrictions on and government intervention in
international trade, confiscatory taxation, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, terrorism, infectious disease outbreaks, strained international
relations related to border disputes, the impact on the economy as a result of
civil war, and social instability as a result of religious, ethnic and/or
socioeconomic unrest and, in certain countries, genocidal warfare. Unanticipated
political or social developments may result in sudden and significant investment
losses. Additionally, Africa is located in a part of the world that has
historically been prone to natural disasters, such as droughts, and is
economically sensitive to environmental events.
The
securities markets in Africa are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries or geographic regions. A subset of African emerging market
countries are considered to be “frontier markets.” Frontier market countries
generally have smaller economies and less developed capital markets than
traditional emerging markets, and, as a result, the risks of investing in
emerging market countries are magnified in frontier market countries. In
addition, there may be no single centralized securities exchange on which
securities are traded. As a result, securities markets in Africa 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. Additionally, certain countries in
Africa generally have less developed capital markets than traditional emerging
market countries and, consequently, the risks of investing in foreign securities
are magnified in such countries. There may also be a high concentration of
trading volume in a small number of issuers, investors and financial
intermediaries representing a limited number of sectors or industries. Brokers
may be fewer in number and less well capitalized than brokers in more developed
regions. Moreover, trading on securities markets may be suspended
altogether.
Certain
economies in African countries depend to a significant degree upon exports of
primary commodities such as agricultural products, gold, silver, copper,
diamonds and oil. These economies therefore are vulnerable to changes in
commodity prices, which in turn may be affected by a variety of factors.
Additionally, certain issuers 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. As a result, an issuer may sustain
damage to its reputation if it is identified as an issuer which operates in, or
had dealings with, such countries. The Fund, as an investor in such issuers,
will be indirectly subject to those risks.
Certain
governments in Africa may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
those countries. These restrictions and/or controls may at times limit or
prevent foreign investment in securities of issuers located or operating in
countries in Africa. For example, there may be prohibitions or substantial
restrictions on foreign investing in the capital markets of certain countries in
Africa or in certain sectors or industries of such countries. Moreover, certain
countries in Africa 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 and may limit such
foreign investment to a certain class of securities of an issuer that may have
less advantageous rights than the classes available for purchase by
domiciliaries of those countries and/or impose additional taxes on foreign
investors. A delay in obtaining a government approval or a license would delay
investments in a particular country, and, as a result, the Fund may not be able
to invest in certain securities while approval is pending. The government of a
particular country may also withdraw or decline to renew a license that enables
the Fund to invest in such country.
The
governments of certain countries in Africa may exercise substantial influence
over many aspects of the private sector and may own or control many companies.
Future government actions could have a significant effect on the economic
conditions in such countries, which could have a negative impact on private
sector companies. There is also the possibility of diplomatic developments that
could adversely affect investments in certain countries in Africa. Some
countries in Africa may be affected by a greater degree of public corruption and
crime.
Some
investors have suffered losses due to the inability of the newly privatized
entities to adjust quickly to a competitive environment or to changing
regulatory and legal standards. Additionally, certain African countries, such as
South Africa, are characterized by a two-tiered economy, with one rivaling
developed countries and the other exhibiting many characteristics of developing
countries. This accounts for an uneven distribution of wealth and income and
high rates of unemployment. Although economic reforms have been enacted to
promote growth and foreign investments, there can be no assurance that these
programs will achieve the desired results.
Investing
in certain African countries involves risks of less uniformity in accounting and
reporting requirements, less reliable securities valuation, and greater risk
associated with custody of securities than investing in developed countries.
Less information may be available about companies in which the Fund invests
because many African companies are not subject to uniform accounting, auditing
and financial reporting standards, or to other regulatory practices and
requirements required of U.S. companies. These factors, among others, make
investing in issuers located or operating in countries in Africa significantly
riskier than investing in issuers located or operating in more developed
countries, and any one of them could cause a decline in the value of the Fund’s
Shares.
There
may be a risk of loss due to the imposition of restrictions on repatriation of
capital invested. In addition, certain African countries have currencies pegged
to the U.S. dollar. If such currency pegs are abandoned, such abandonment could
cause sudden and significant currency adjustments, which could impact the Fund’s
investment returns in those countries. There may be limitations or delays in the
convertibility or repatriation of certain African currencies, which would
adversely affect the U.S. dollar value and/or liquidity of the Fund’s
investments denominated in such African currencies, may impair the Fund’s
ability to achieve its investment objective and/or may impede the Fund’s ability
to satisfy redemption requests in a timely manner. For these or other reasons,
the Fund could seek to suspend redemptions of Creation Units, including in the
event that an emergency exists in which it is not reasonably practicable for the
Fund to dispose of its securities or to determine its net asset value. The Fund
could also, among other things, limit or suspend creations of Creation Units.
During the period that creations or redemptions are affected, the Fund’s shares
could trade at a significant premium or discount to their net asset value. In
the case of a period during which creations are suspended, the Fund could
experience substantial redemptions, which may exacerbate the discount to net
asset value at which the Fund’s shares trade, cause the Fund to experience
increased transaction costs, and cause the Fund to make greater taxable
distributions to shareholders of the Fund. When the Fund holds illiquid
investments, its portfolio may be harder to value. Political and social unrest
in certain regions of Africa may negatively affect the value of an investment in
the Fund.
Special
Risk Considerations of Investing in Asian Issuers. Investments
in securities of Asian issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. Many Asian
economies have experienced rapid growth and industrialization in recent years,
but there is no assurance that this growth rate will be maintained. Certain
Asian economies have experienced over-extension of credit, currency devaluations
and restrictions, high unemployment, high inflation, decreased exports and
economic recessions. Geopolitical hostility, political instability, as well as
economic or environmental events in any one Asian country can have a significant
effect on the entire Asian region as well as on major trading partners outside
Asia, and any adverse effect on some or all of the Asian countries and regions
in which the Fund invests. The securities markets in some Asian economies are
relatively underdeveloped and may subject the Fund to higher action costs or
greater
uncertainty than investments in more developed securities markets. Such risks
may adversely affect the value of the Fund’s investments. Certain Asian
countries have also developed increasingly strained relationships with the U.S.,
and if these relations were to worsen, they could adversely affect Asian issuers
that rely on the U.S. for trade.
Governments
of many Asian countries have implemented significant economic reforms in order
to liberalize trade policy, promote foreign investment in their economies,
reduce government control of the economy and develop market mechanisms. There
can be no assurance these reforms will continue or that they will be effective.
Despite recent reform and privatizations, significant regulation of investment
and industry is still pervasive in many Asian countries and may restrict foreign
ownership of domestic corporations and repatriation of assets, which may
adversely affect the Fund’s investments. Governments in some Asian countries are
authoritarian in nature, have been installed or removed as a result of military
coups or have periodically used force to suppress civil dissent. Disparities of
wealth, the pace and success of democratization, and ethnic, religious and
racial disaffection have led to social turmoil, violence and labor unrest in
some countries. Unanticipated or sudden political or social developments may
result in sudden and significant investment losses. Investing in certain Asian
countries involves risk of loss due to expropriation, nationalization, or
confiscation of assets and property or the imposition of restrictions on foreign
investments and on repatriation of capital invested. In addition, several
countries in Asia may be impacted by the occurrence of global events such as
war, terrorism, environmental disasters, natural disasters or events, country
instability, and infectious disease epidemics and pandemics.
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.
3.
ADDITIONAL INVESTMENT STRATEGIES
ADDITIONAL
REGULATORY CONSIDERATIONS
With
respect to the Fund, the Adviser has claimed an exclusion from the definition of
a “commodity pool operator" (“CPO") under the Commodity Exchange Act of 1936
(“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 the 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 the 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 Fund intend to comply with the terms of the CPO exclusion,
the 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 Fund is not intended as a vehicle 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 Fund,
its investment strategies or this prospectus.
INVESTING
DEFENSIVELY
The
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. The Fund may
not achieve its investment objective while it is investing
defensively.
SECURITIES
LENDING
The
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 the
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.
The
Fund could experience delays and costs in recovering the securities loaned or in
gaining access to the securities lending collateral. If the 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.
INVESTING
IN CHINESE BONDS
Bond
Connect is relatively new. Laws, rules, regulations, policies, notices,
circulars or guidelines relating to the program as published or applied by the
relevant authorities of the PRC are untested and are subject to change from time
to time. There can be no assurance that Bond Connect will not be restricted,
suspended or abolished. If such event occurs, the Fund’s ability to invest in
the China interbank bond market through Bond Connect will be adversely affected,
and if the Fund is unable to adequately access the CIBM through other means, the
Fund’s ability to achieve its investment objective will be adversely
affected.
The
Fund’s investments through Bond Connect are generally subject to Mainland China
securities laws and listing requirements, among other restrictions. Such
securities may lose their eligibility at any time, in which case they could be
sold but could no longer be purchased through Bond Connect. 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 Bond Connect. Bond
Connect is only available on days when markets in both Mainland China and Hong
Kong are open. As a result, prices of Bond Connect Securities may fluctuate at
times when the Fund is unable to add to or exit its position and, therefore, may
limit the Fund’s ability to trade when it would otherwise do so.
Under
the prevailing PRC regulations, eligible foreign investors who wish to
participate in Bond Connect may do so through an offshore custody agent,
registration agent or other third parties. These agents would be responsible for
making the relevant filings and account opening with the relevant authorities.
The Fund is therefore subject to the risk of default or errors on the part of
such agents. The Fund may also incur losses due to the acts or omissions of the
onshore settlement agent in the process of settling any transactions. As a
result, the value of the relevant Fund may be adversely affected.
Trading
through Bond Connect is performed through newly developed trading platforms and
operational systems. There is no assurance that such systems will function
properly (in particular, under extreme market conditions) or will continue to be
adapted to changes and developments in the market. In the event that the
relevant systems fails to function properly, trading through Bond Connect may be
disrupted. The Fund’s ability to trade through Bond Connect (and hence to pursue
its investment strategy) may therefore be adversely affected. In addition, where
the Fund invests in the China interbank bond market through Bond Connect, it may
be subject to risks of delays inherent in the order placing and/or
settlement.
Bond
Connect trades are settled in onshore RMB (CNY) and investors must have timely
access to a reliable supply of CNY in Hong Kong, which may incur conversion
costs and cannot be guaranteed. Moreover, Bond Connect Securities generally may
not be sold, purchased or otherwise transferred other than through Bond Connect
in accordance with applicable rules.
The
Fund’s investments through Bond Connect will be held on behalf of the Fund via a
book entry omnibus account in the name of the Central Money markets Unit of Hong
Kong maintained with a Mainland China-based custodian. The Fund’s ownership
interest in investments through Bond Connect will not be reflected directly in
book entry with a Mainland China-based custodian and will instead only be
reflected on the books of its Hong Kong sub-custodian. Therefore, the Fund is
subject to the risks regarding the exercise and the enforcement of beneficial
ownership rights over such bonds in the courts in China.
“Bond
Connect Authorities” refers to the exchanges, trading systems, settlement
systems, governmental, regulatory or tax bodies which provide services and/or
regulate Bond Connect and activities relating to Bond Connect.
4.
OTHER INFORMATION AND POLICIES
BENEFICIARIES
OF CONTRACTUAL ARRANGEMENTS
VanEck
Funds (the “Trust”) enters into contractual arrangements with various parties,
including, among others, the Fund’s investment adviser, administrator and
distributor, who provide services to the Fund. Shareholders of the Fund 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 Fund that you
should consider in determining whether to purchase shares of the 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
Fund 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
THE FUND’S 80% POLICY
The
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
without a shareholder vote, as long as shareholders are given 60 days notice of
the change.
CYBER
SECURITY
The
Fund and its 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 Fund and its service providers use to service
the Fund’s operations; and operational disruption or failures in the physical
infrastructure or operating systems that support the Fund and its service
providers. Cyber attacks against or security breakdowns of the Fund or its
service providers may adversely impact the Fund and its shareholders,
potentially resulting in, among other things, financial losses; the inability of
Fund shareholders to transact business and the Fund to process transactions; the
inability to calculate the Fund’s 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 Fund 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 Fund invests, which may cause the Fund’s investments
in such issuers to lose value. There can be no assurance that the Fund or its
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 Fund’s and the Adviser’s policy that no current or potential investor,
including any Fund shareholder, shall be provided information about the Fund’s
portfolio on a preferential basis in advance of the provision of that
information to other investors. A complete description of the Fund’s policies
and procedures with respect to the disclosure of the Fund’s portfolio securities
is available in the Fund’s SAI.
Portfolio
holdings information for the Fund is available to all investors on the VanEck
website at vaneck.com. Information regarding the Fund’s 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. The 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 the 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
The
Fund offers Class A, Class I and Class Y 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
and Class I shares directly through SS&C by mail or telephone, as stated
below. For Class Y shares, shareholders must open accounts and transact business
through a financial intermediary.
The
Fund’s 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 Fund,
but may invest through their broker or agent.
To
telephone the Fund 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 Fund reserves 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 VanEck Funds of the same Class without any additional sales charge. 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
The
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 the Fund may take longer than the time the 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. The Fund
generally expects to satisfy redemption requests from available cash holdings
and sale of portfolio securities. On a less regular basis, the Fund also may
draw on a bank line of credit to meet redemption requests. In stressed market
conditions or for a particularly large redemption, the Fund also reserves the
right to meet redemption requests through a “redemption in kind” as described
below.
Redemption
in Kind
The
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 Fund. The 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 the Fund
The
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
the 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 the Fund, commonly referred to as “market timing,” because
such activities may be disruptive to the management of the Fund’s portfolio and
may increase the Fund’s expenses and negatively impact the Fund’s performance.
As such, the 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. The Fund discourages and does not accommodate
frequent trading of shares by its shareholders.
The
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”). The 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. The 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 the Fund’s net
asset value will immediately reflect changes in market conditions.
The
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, the 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 the 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
the 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, the 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 Fund 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 Fund, 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. 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. 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 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 Internal Revenue Code of 1986, as amended (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.”
ACCOUNT
VALUE AND REDEMPTION
If
the value of your account falls below $1,000 for Class A and Class Y shares and
below $500,000 for Class I shares after the initial purchase, the 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
The
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. The 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. The Fund may invest in certain
securities which are listed on foreign exchanges that trade on weekends or other
days when the Fund does not price its shares. As a result, the NAV of the Fund’s
shares may change on days when shareholders will not be able to purchase or
redeem shares.
The
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, the Fund will use the security’s or asset’s “fair value” as
determined in good faith in accordance with the Fund’s 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 the Fund might reasonably expect to receive for the security or asset upon
its current sale. The Fund’s 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 the 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 Fund invests may be traded in markets that close
before the time that the 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 Fund’s 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 Fund could purchase or sell a portfolio security or
other asset at the price used to calculate the Fund’s NAV. Because of the
inherent uncertainty in fair valuations, and the various factors considered in
determining value pursuant to the Fund’s 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
Fund offers three classes of shares with different sales charges and 12b-1 fee
schedules, designed to provide you with different purchase options according to
your investment needs. Class A shares are offered to the general public and
differ in terms of sales charges and ongoing expenses. Class I shares are
offered to eligible investors primarily through certain financial intermediaries
that have entered into a Class I Agreement with VanEck. The Fund reserves 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.
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
I Shares
are offered with no sales charges on purchases, no contingent deferred
redemption charge (“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 the 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.
Financial
intermediaries may offer their clients more than one class of shares of the
Fund. Shareholders who own shares of one class of the 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 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 I and Class Y
do not have an initial sales charge. Class A does charge a contingent deferred
sales charge as set forth below.
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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| 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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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.
CONTINGENT
DEFERRED SALES CHARGE FOR CLASS A SHARES
Class
A shares purchased at or above the $1 million breakpoint in accordance with the
sales load schedule identified above (referred to as “commissionable” shares)
that are redeemed within one year of purchase will be subject to a contingent
deferred sales charge (“CDSC”) in the amount of 1.00% of the lesser of the
current value of the shares redeemed or the original purchase price of such
shares. The CDSC will be paid to the Distributor as reimbursement for any
Finder’s Fee previously paid by the Distributor to an eligible broker or agent
at the time the commissionable shares were purchased and may be waived by the
Distributor if the original purchase did not result in the payment of a Finder’s
Fee. For purposes of calculating the CDSC, shares will be redeemed in the
following order: (1) first shares that are not subject to the CDSC (e.g.,
dividend reinvestment shares and other non-commissionable shares) and (2) then
other shares on a first in, first out basis. A CDSC will not be charged in
connection with an exchange of Class A shares into Class A shares of another
VanEck Fund; however, the shares received upon an exchange will be subject to
the CDSC if they are subsequently redeemed within one year of the date of the
original purchase (subject to the same terms and conditions described above).
For further details regarding eligibility for the $1 million breakpoint, please
see Section 3. “Sales Charges—Reduced or Waived Sales Charges”
below.
REDUCED
OR WAIVED SALES CHARGES
You
may qualify for a reduced or waived sales charge as stated below, or under other
appropriate circumstances. You (or your broker or agent) must notify SS&C or
VanEck at the time of each purchase or redemption whenever a reduced or waived
sales charge is applicable. The term “purchase” refers to a single purchase by
an individual (including spouse and children under age 21), corporation,
partnership, trustee, or other fiduciary for a single trust, estate, or
fiduciary account. For further details, see the SAI. The value of shares owned
by an individual in Class A and Class C of each of the VanEck Funds may be
combined for a reduced sales charge in Class A shares only.
In
order to obtain a reduced sales charge (i.e.,
breakpoint discount) or to meet an eligibility minimum, it will be necessary at
the time of purchase for you to inform your broker or agent (or SS&C or
VanEck, as applicable), of the existence of other accounts in which there are
holdings eligible to be aggregated to meet the sales load breakpoints or
eligibility minimums and of any facts qualifying the purchaser for sales charge
discounts or waivers.
The
Fund makes available information regarding applicable sales loads, breakpoint
discounts, reduced or waived sales charges and eligibility minimums, on their
website at vaneck.com, free of charge.
FOR
CLASS A SHARES
Right
of Accumulation
When
you buy shares, the amount you purchase will be combined with the value, at
current offering price, of any existing Fund shares you own. This total will
determine the sales charge level for which you qualify.
Your
purchases eligible for Right of Accumulation reduced sales charge (i.e.
breakpoint discount) include Class A shares purchased for individual accounts
registered in the name of:
■ You,
individually;
■ Your
“family member,” defined as your spouse (by marriage or by common law
marriage/civil union as recognized by applicable state or federal law) and your
children/step-children if under the age of 21;
■ You,
when you own shares jointly with another individual(s) who is a non-family
member;
■ You
or a family member acting as the trustee, custodian, or other acting fiduciary
title for a single trust, estate, or fiduciary account;
■ Your
sole ownership business or the sole ownership business of a family member on
which you or a family member are the authorized signer;
■ Trust
Grantor (a trust established by you or a family member who is acting as the
grantor of the trust);
■ Trust
Beneficiary (a trust established by you or a family member who is the beneficial
owner of the trust);
■ A
single corporation or partnership.
Combined
Purchases
The
combined amounts of your multiple purchases in the Fund on a single day
determines the sales charge level for which you qualify.
Letter
of Intent
If
you plan to make purchases of the Fund that are eligible for a right of
accumulation discount, as described above, within a 13 month period in Class A
shares that total an amount equal to a reduced sales charge level, you can
establish a Letter of Intent (LOI) for that amount. Under the LOI, your initial
and subsequent purchases during that period receive the sales charge level
applicable to that total amount. The amount of a purchase not originally made
pursuant to the LOI may be included under a backdated LOI executed within 90
days of such purchase (“accumulation credit”) to fulfill the LOI. For LOIs, out
of an initial purchase (or subsequent purchases if necessary), 5% of the
specified dollar amount of an LOI will be held in escrow by SS&C in a
shareholder’s account until the shareholder’s total purchases of the Fund
pursuant to the LOI plus a shareholder’s accumulation credit (if any) equal the
amount specified in the Letter. For further details, see the Application and the
SAI.
Persons
Affiliated with VanEck
Trustees,
officers, and full-time employees (and their families) of the Fund, Adviser or
Distributor may buy without a sales charge. Also, employees (and their spouses
and children under age 21) of a brokerage firm or bank that has a selling
agreement with VanEck, and other affiliates and agents, may buy without a sales
charge.
Load-waived
Programs Through Financial Intermediaries
Financial
intermediaries may offer shares without a sales charge if they: (i) are
compensated by their clients on a fee-only basis, including but not limited to
Investment Advisors, Financial Planners, and Bank Trust Departments; or (ii)
have entered into an agreement with VanEck to offer Class A shares at net asset
value through a no-load network or platform, or through a self-directed
investment brokerage account program that may or may not charge a transaction
fee to its clients.
Institutional
Retirement Programs
Certain
financial institutions and third-party recordkeepers and/or administrators who
have agreements with VanEck to offer Class A shares at net asset value may buy
shares without a sales charge for their accounts on behalf of investors in
retirement plans and deferred compensation plans.
Reinstatement
Privilege
You
have the right, once a year, to reinvest (“buy back”) proceeds of a redemption
from Class A shares of the Fund into the Fund or Class A shares of another fund
of the VanEck Funds within 60 days without a sales charge. If you invest into
the same Fund
within
30 days before or after you redeem your shares at a loss, the “wash sale” rules
apply to disallow for tax purposes a loss realized upon redemption.
FOR
CLASS I AND CLASS Y SHARES
No
initial sales charge, or CDRC fee is imposed on Class I or Class Y shares. Class
I and Class Y are no-load share classes.
PLAN
OF DISTRIBUTION (12b-1 PLAN)
The
Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Act
that allows the Fund to pay distribution fees for the sale and distribution of
its shares. Of the amounts expended under the plan for the fiscal year ended
December 31, 2023 for all VanEck Funds, approximately 93% was paid to Brokers
and Agents who sold shares or serviced accounts of Fund shareholders. The
remaining 7% was retained by the Distributor to pay expenses such as printing
and mailing prospectuses and sales material. Because these fees are paid out of
the Fund’s assets on an on- going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges. Class I and Class Y shares do not have 12b-1 fees. For a complete
description of the Plan of Distribution, please see “Plan of Distribution (12b-1
Plan)” in the SAI.
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| VanEck
Funds Annual 12b-1 Schedule |
Fee
to Fund |
Payment
to Dealer |
|
| Emerging
Markets Bond Fund-A |
0.25% |
0.25% |
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4.
HOUSEHOLDING OF REPORTS AND PROSPECTUSES
If
more than one member of your household is a shareholder of any of the funds in
the VanEck Funds, regulations allow us, subject to certain requirements, to
deliver single copies of your shareholder reports, prospectuses and prospectus
supplements to a shared address for multiple shareholders. For example, a
husband and wife with separate accounts in the same fund who have the same
shared address generally receive two separate envelopes containing the same
report or prospectus. Under the system, known as “householding,” only one
envelope containing one copy of the same report or prospectus will be mailed to
the shared address for the household. You may benefit from this system in two
ways, a reduction in mail you receive and a reduction in fund expenses due to
lower fund printing and mailing costs. However, if you prefer to continue to
receive separate shareholder reports and prospectuses for each shareholder
living in your household now or at any time in the future, please call Account
Assistance at 800-544-4653.
5.
RETIREMENT PLANS
Fund
shares may be invested in tax-advantaged retirement plans sponsored by VanEck or
other financial organizations. Retirement plans sponsored by VanEck use UMB Bank
n.a. as custodian and must receive investments directly by check or wire using
the appropriate VanEck retirement plan application. Confirmed trades through a
broker or agent cannot be accepted. To obtain applications and helpful
information on VanEck retirement plans, contact your broker or agent or Account
Assistance.
Retirement
Plans Sponsored by VanEck:
Traditional
IRA
Roth
IRA
SEP
IRA
6.
FEDERAL INCOME TAXES
TAXATION
OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS YOU RECEIVE
The
Fund intends to qualify each year as a regulated investment company under the
Code. As a regulated investment company, the Fund generally pays no federal
income tax on the income and gains it distributes to you.
For
tax-reportable accounts, dividends and capital gains distributions are normally
taxable even if they are reinvested. Fund distributions of short-term capital
gains are taxed as ordinary income. Fund distributions of long-term capital
gains are taxed at long-term capital gain rates no matter how long you have
owned your fund shares. Certain income dividends are treated as qualified
dividend income, taxable at long-term capital gain rates provided certain
holding period requirements are met. Tax laws and regulations are subject to
change.
At
the time you purchase your Fund shares, the Fund’s NAV may reflect undistributed
income, undistributed capital gains, or net unrealized appreciation in the value
of portfolio securities held by the Fund. For taxable investors, a subsequent
distribution to you of such amounts, although constituting a return of your
investment, would be taxable. Buying shares in the Fund just before it declares
an income dividend or capital gains distribution is sometimes known as “buying a
dividend.”
TAXATION
OF SHARES YOU SELL
For
tax-reportable accounts, when you redeem your shares you may incur a capital
gain or loss on the proceeds. The amount of gain or loss, if any, is the
difference between the amount you paid for your shares (including reinvested
dividends and capital gains distributions) and the amount you receive from your
redemption. Be sure to keep your regular statements; they contain the
information necessary to calculate the capital gain or loss. An exchange of
shares from one Fund to another will be treated as a sale and purchase of Fund
shares. It is therefore a taxable event.
COST
BASIS REPORTING
As
required by law, for shares purchased on and after January 1, 2012 in accounts
eligible for IRS Tax Form 1099-B tax reporting by VanEck Funds for which tax
basis information is available (“covered shares”), the VanEck Funds will provide
cost basis information to you and the IRS for shares using the IRS Tax Form
1099-B. Generally, cost basis is the dollar amount paid to purchase shares,
including purchases of shares made by reinvestment of dividends and capital
gains distributions, adjusted for various items, such as sales charges and
transaction fees, wash sales, and returns of capital.
The
cost basis of your shares will be calculated using the Fund’s default cost basis
method of Average Cost, and the Fund will deplete your oldest shares first,
unless you instruct the Fund to use a different cost basis method. You may elect
the cost basis method that best fits your specific tax situation using VanEck’s
Cost Basis Election Form. It is important that any such election be received in
writing from you by the VanEck Funds before you redeem any covered shares since
the cost basis in effect at the time of redemption, as required by law, will be
reported to you and the IRS. Particularly, any election or revocation of the
Average Cost method must be received in writing by the VanEck Funds before you
redeem covered shares. The VanEck Funds will process any of your future
redemptions by depleting your oldest shares first (FIFO). If you elect a cost
basis method other than Average Cost, the method you chose will not be utilized
until shares held prior to January 1, 2012 are liquidated. Cost basis reporting
for non-covered shares will be calculated and reported separately from covered
shares. You should carefully review the cost basis information provided by the
Fund and make any additional cost basis, holding period, or other adjustments
that are required when reporting these amounts on your federal, state, and local
income tax returns. For tax advice specific to your situation, please contact
your tax advisor and visit the IRS website at IRS.gov. The VanEck Funds cannot
and do not provide any advice, including tax advice.
To
obtain VanEck’s Cost Basis Election Form and to learn more about the cost basis
elections offered by the VanEck Funds, please go to our website at vaneck.com or
call VanEck Account Services at 800-544-4653.
BACKUP
WITHHOLDING
By
law, if you do not provide the Fund with your proper taxpayer identification
number and certain required certifications, you may be subject to backup
withholding on any distributions of income, capital gains, or proceeds from the
sale of your shares. The Fund also must withhold if the IRS instructs it to do
so. When withholding is required, the amount will be 24% of any distributions or
proceeds paid.
STATE
AND LOCAL TAXES
Fund
distributions and gains from the sale or exchange of your Fund shares generally
are subject to state and local taxes.
NON-RESIDENT
ALIENS
Dividends
and short-term capital gains, if any, paid to non-resident aliens generally are
subject to the maximum withholding tax (or lower tax treaty rates for certain
countries). The IRS considers these dividends U.S. source income. Exemptions
from U.S. withholding tax are provided for certain capital gain dividends paid
by the Fund from net long-term capital gains, interest-related dividends paid by
the Fund from its qualified net interest income from U.S. sources and short-
term capital gain dividends, if such amounts are reported by the Fund. However,
notwithstanding such exemptions from U.S. withholding at the source, any such
dividends and distributions of income and capital gains will be subject to
backup withholding at a rate of 24% if you fail to properly certify that you are
not a U.S. person.
As
part of the Foreign Account Tax Compliance Act, (“FATCA”), the Fund is required
to withhold a 30% federal tax on income dividends paid by the Fund to (i)
foreign financial institutions (“FFIs”), including non-U.S. investment funds,
unless they agree to collect and disclose to the IRS information regarding their
direct and indirect U.S. account holders and (ii) certain nonfinancial foreign
entities (“NFFEs”), unless they certify certain information regarding their
direct and indirect U.S. owners. After December 31, 2018, FATCA withholding also
would have applied to certain capital gain distributions, return of capital
distributions and the proceeds arising from the sale of Fund shares; however,
based on proposed regulations issued by the IRS, which can be relied on
currently, such withholding is no longer required unless final regulations
provide otherwise (which is not expected). To avoid possible withholding, FFIs,
other than FFIs subject to special treatment under certain intergovernmental
agreements, will need to enter into agreements with the IRS which state that
they will provide the IRS information, including the names, account numbers and
balances, addresses and taxpayer identification numbers of U.S. account holders
and comply with due diligence procedures with respect to the identification of
U.S. accounts as well as agree to withhold tax on certain types of withholdable
payments made to non-compliant foreign financial institutions or to applicable
foreign account holders who fail to provide the required information to the IRS,
or similar account information and required documentation to a local revenue
authority, should an applicable intergovernmental agreement be implemented.
NFFEs will need to provide certain information regarding each substantial U.S.
owner
or certifications of no substantial U.S. ownership, unless certain exceptions
apply, or agree to provide certain information to the IRS.
The
Fund may be subject to the FATCA withholding obligation, and also will be
required to perform due diligence reviews to classify foreign entity investors
for FATCA purposes. Investors are required to agree to provide information
necessary to allow the Fund to comply with the FATCA rules. If the Fund is
required to withhold amounts from payments pursuant to FATCA, investors will
receive distributions that are reduced by such withholding amounts.
Because
everyone’s tax situation is unique, you should consult your tax professional
about federal, state, local, or foreign tax consequences before making an
investment in the Fund.
7.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The
Fund makes distributions of all of its net investment income to shareholders as
dividends monthly. The Fund makes distributions of any net capital gains at
least annually, in December. See your tax adviser for details. Occasionally, a
dividend and/or capital gain distribution may be made outside of the normal
schedule.
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| Dividends
and Capital Gains Distribution Schedule |
|
| Fund |
Dividends |
Distribution
of Short-Term and Long-Term Capital Gains |
|
| Emerging
Markets Bond Fund |
Monthly |
December |
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Dividends
and Capital Gains Distributions Reinvestment Plan
Dividends
and/or distributions are automatically reinvested into your account without a
sales charge, unless you elect a cash payment. You may elect cash payment either
on your original Account Application, or by calling Account Assistance at
800-544-4653.
Divmove
You
can have your cash dividends from a Class A Fund automatically invested in Class
A shares of another VanEck Fund. Cash dividends are invested on the payable
date, without a sales charge. For details and an Application, call Account
Assistance.
8.
MANAGEMENT OF THE FUND AND SERVICE PROVIDERS
INFORMATION
ABOUT FUND MANAGEMENT
INVESTMENT
ADVISER
Van
Eck Associates Corporation (the “Adviser”), 666 Third Avenue, New York, New York
10017, is the Adviser to the Fund. The Adviser has been an investment adviser
since 1955 and also acts as adviser or sub-adviser to other mutual funds,
exchange-traded funds, other pooled investment vehicles and separate
accounts.
Jan
F. van Eck and members of his family own 100% of the voting stock of the
Adviser. As of December 31, 2023, the Adviser’s assets under management were
approximately $89.47 billion.
Fees
paid to the Adviser:
Pursuant to the advisory agreement between the Adviser and the Trust (the
“Advisory Agreement”), the Fund pays the Adviser a monthly fee at the annual
rate of: (i) 0.80% of the first $1.5 billion of average daily net assets of the
Fund and (ii) 0.75% of average daily net assets in excess of $1.5 billion. This
includes the fee paid to the Adviser for accounting and administrative
services.
The
Adviser has agreed to waive fees and/or pay expenses for the Fund 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 1.20% for Class A, 0.85% for Class I, and 0.95% 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 acts to
discontinue all or a portion of such expense limitation.
The
Adviser also has agreed to waive fees and/or pay expenses for the Fund to the
extent necessary to prevent the operating expenses of the Fund’s Class Y shares
from exceeding the operating expenses of the Fund’s Class A shares.
For
the Fund’s most recent fiscal year, the advisory fee paid to the Adviser was as
follows:
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| |
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| |
| VanEck
Funds |
As
a % of average daily net assets |
|
| Emerging
Markets Bond Fund |
0.80% |
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The
Adviser may hire and terminate sub-advisers in accordance with the terms of an
exemptive order obtained by the Fund and the Adviser from the SEC under which
the Adviser is permitted, subject to supervision and approval of the Board, to
enter into and materially amend sub-advisory agreements without seeking
shareholder approval. The Adviser will furnish shareholders of the Fund with
information regarding a new sub-adviser within 90 days of the hiring of the new
sub-adviser. Currently, the Adviser has not hired a sub-adviser to assist with
the portfolio management of the Fund.
A
discussion regarding the basis for the Board’s approval of the Advisory
Agreement is available in the Fund’s semi- annual report to shareholders for the
period ended June 30, 2023.
PORTFOLIO
MANAGERS
Eric
Fine, Portfolio Manager of the Fund, is primarily responsible for the day-to-day
portfolio management of the Fund.
Eric
Fine.
Mr. Fine is Portfolio Manager of the Fund. He has been with the Adviser since
2009 and has conducted business in emerging markets for over 30
years.
David
Austerweil.
Mr. Austerweil is Deputy Portfolio Manager of the Fund. He has been with the
Adviser since 2012 and has over 20 years’ experience in the financial markets.
The
SAI provides additional information about the above Portfolio Managers, their
compensation, other accounts they manage, and their securities ownership in the
Fund.
THE
TRUST
For
more information on the VanEck Funds (the “Trust”), the Trustees and the
Officers of the Trust, see “General Information,” “Description of the Trust” and
“Trustees and Officers” in the SAI.
THE
DISTRIBUTOR
Van
Eck Securities Corporation, 666 Third Avenue, New York, NY 10017 (the
“Distributor”), a wholly owned subsidiary of the Adviser, has entered into a
Distribution Agreement with the Trust for distributing shares of the
Fund.
The
Distributor generally sells and markets shares of the Fund through
intermediaries, such as broker-dealers. The intermediaries may be compensated by
the Fund for providing various services.
In
addition, the Distributor or the Adviser may pay certain intermediaries, out of
its own resources and not as an expense of the Fund, additional cash or non-cash
compensation as an incentive to intermediaries to promote and sell shares of the
Fund and other mutual funds distributed by the Distributor. These payments are
commonly known as “revenue sharing”. The benefits that the Distributor or the
Adviser may receive when each of them makes these payments include, among other
things, placing the Fund on the intermediary’s sales system and/or preferred or
recommended fund list, offering the Fund through the intermediary’s advisory or
other specialized programs, and/or access (in some cases on a preferential basis
over other competitors) to individual members of the intermediary’s sales force.
Such payments may also be used to compensate intermediaries for a variety of
administrative and shareholders services relating to investments by their
customers in the Fund.
The
fees paid by the Distributor or the Adviser to intermediaries may be calculated
based on the gross sales price of shares sold by an intermediary, the net asset
value of shares held by the customers of the intermediary, or otherwise. These
fees may, but are not normally expected to, exceed in the aggregate 0.50% of the
average net assets of the Fund attributable to a particular intermediary on an
annual basis.
The
Distributor or the Adviser may also provide intermediaries with additional cash
and non-cash compensation, which may include financial assistance to
intermediaries in connection with conferences, sales or training programs for
their employees, seminars for the public and advertising campaigns, technical
and systems support, attendance at sales meetings and reimbursement of ticket
charges. In some instances, these incentives may be made available only to
intermediaries whose representatives have sold or may sell a significant number
of shares.
Intermediaries
may receive different payments, based on a number of factors including, but not
limited to, reputation in the industry, sales and asset retention rates, target
markets, and customer relationships and quality of service. No one factor is
determinative of the type or amount of additional compensation to be provided.
Financial intermediaries that sell the Fund’s shares may also act as a broker or
dealer in connection with execution of transactions for the Fund’s portfolio.
The Fund and the Adviser have adopted procedures to ensure that the sales of the
Fund’s shares by an intermediary will not affect the selection of brokers for
execution of portfolio transactions.
Not
all intermediaries are paid the same to sell mutual funds. Differences in
compensation to intermediaries may create a financial interest for an
intermediary to sell shares of a particular mutual fund, or the mutual funds of
a particular family of mutual funds. Before purchasing shares of the Fund, you
should ask your intermediary or its representative about the compensation in
connection with the purchase of such shares, including any revenue sharing
payments it receives from the Distributor.
THE
CUSTODIAN
State
Street Bank & Trust Company
One
Lincoln Street
Boston,
MA 02111
THE
TRANSFER AGENT
SS&C
GIDS, Inc.
210
West 10th Street, 8th Floor
Kansas
City, MO 64105
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers
LLP
300
Madison Avenue
New
York, NY 10017
COUNSEL
Stradley
Ronon Stevens and Young, LLP
2005
Market Street, Suite 2600
Philadelphia,
PA 19103
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IV.
LICENSE AGREEMENTS AND DISCLAIMERS |
Each
of the indices that comprise the 50% J.P. Morgan Emerging Market Bond Index
Global Diversified Index/50% J.P. Morgan Government Bond Index-Emerging Markets
Global Diversified Index included in the Fund’s performance table is a product
of J.P. Morgan Chase & Co. (“J.P. Morgan”), and/or its affiliates and has
been licensed for use by the Adviser. Redistribution or reproduction in whole or
in part are prohibited without written permission of J.P. Morgan. For more
information on any of the J.P. Morgan indices please visit www.jpmorgan.com.
Neither J.P. Morgan, their affiliates nor their third party licensors make any
representation or warranty, express or implied, as to the ability of any index
to accurately represent the asset class or market sector that it purports to
represent and neither J.P. Morgan, their affiliates nor their third party
licensors shall have any liability for any errors, omissions, or interruptions
of any index or the data included therein.
Information
has been obtained from sources believed to be reliable but J.P. Morgan does not
warrant its completeness or accuracy. The Index is used with permission. The
Index may not be copied, used, or distributed without J.P. Morgan's prior
written approval. Copyright 2024, J.P. Morgan Chase & Co. All rights
reserved.
The
ICE BofA Global Broad Market Plus Index included in the Fund’s performance table
is a product of ICE Data Indices, LLC. (“ICE Data”), and/or its affiliates and
has been licensed for use by the Adviser. Redistribution or reproduction in
whole or in part are prohibited without written permission of ICE Data. For more
information on any of the ICE Data indices please visit www.indices.ice.com.
Neither ICE Data, their affiliates nor their third party licensors make any
representation or warranty, express or implied, as to the ability of any index
to accurately represent the asset class or market sector that it purports to
represent and neither ICE Data, their affiliates nor their third party licensors
shall have any liability for any errors, omissions, or interruptions of any
index or the data included therein.
Source
ICE Data Indices, LLC (“ICE Data”) is used with permission.
THE
ICE BOFA GLOBAL BROAD MARKET PLUS INDEX (THE “INDEX”) INCLUDED IN THE FUND’S
PERFORMANCE TABLE IS A PRODUCT OF ICE DATA INDICES, LLC (“ICE DATA”) AND IS USED
WITH PERMISSION. ICE®
IS A REGISTERED TRADEMARK OF ICE DATA OR ITS AFFILIATES, AND BOFA®
IS A REGISTERED TRADEMARK OF BANK OF AMERICA CORPORATION LICENSED BY BANK OF
AMERICA CORPORATION AND ITS AFFILIATES ("BOFA") AND MAY NOT BE USED WITHOUT
BOFA'S PRIOR WRITTEN APPROVAL. ICE DATA, ITS AFFILIATES AND THEIR RESPECTIVE
THIRD PARTY SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS,
EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY DATA
INCLUDED IN, RELATED TO, OR DERIVED THEREFROM. NEITHER ICE DATA, ITS AFFILIATES
NOR THEIR RESPECTIVE THIRD PARTY SUPPLIERS SHALL BE SUBJECT TO ANY DAMAGES OR
LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF
THE INDICES OR THE INDEX DATA OR ANY COMPONENT THEREOF, AND THE INDICES AND
INDEX DATA AND ALL COMPONENTS THEREOF ARE PROVIDED ON AN “AS IS” BASIS AND YOUR
USE IS AT YOUR OWN RISK. INCLUSION OF A SECURITY WITHIN AN INDEX IS NOT A
RECOMMENDATION BY ICE DATA TO BUY, SELL, OR HOLD SUCH SECURITY, NOR IS IT
CONSIDERED TO BE INVESTMENT ADVICE. ICE DATA, ITS AFFILIATES AND THEIR
RESPECTIVE THIRD PARTY SUPPLIERS DO NOT SPONSOR, ENDORSE, OR RECOMMEND VAN ECK
ASSOCIATES CORPORATION, OR ANY OF ITS PRODUCTS OR SERVICES.
The
financial highlights tables that follow are intended to help you understand the
Fund’s financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The information for the fiscal years ended December 31, 2022 and
December 31, 2023 has been audited by PricewaterhouseCoopers LLP, the Funds’
independent registered public accounting firm, whose report, along with the
Funds’ financial statements are included in the Funds’ annual report, which is
available upon request. The information for periods prior to the fiscal year
ended December 31, 2022 has been audited by another independent registered
public accounting firm.
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EMERGING
MARKETS BOND FUND |
FINANCIAL
HIGHLIGHTS
For
a share outstanding throughout each year:
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| Class
A |
|
| Year
Ended December 31, |
|
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
|
|
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| |
Net
asset value, beginning of year |
$ |
5.21 |
|
| $ |
6.07 |
|
| $ |
6.67 |
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| $ |
6.44 |
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| $ |
6.15 |
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| |
Net
investment income (a) |
0.36 |
|
| 0.39 |
|
| 0.31 |
|
| 0.39 |
|
| 0.47 |
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| |
Net
realized and unrealized gain (loss) on |
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| |
investments |
0.18 |
|
| (0.87) |
|
| (0.60) |
|
| 0.26 |
|
| 0.28 |
|
|
|
|
| |
Total
from investment operations |
0.54 |
|
| (0.48) |
|
| (0.29) |
|
| 0.65 |
|
| 0.75 |
|
|
|
|
| |
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income |
(0.25) |
|
| (0.19) |
|
| (0.23) |
|
| (0.31) |
|
| (0.40) |
|
|
|
|
| |
Return
of capital |
(0.12) |
|
| (0.19) |
|
| (0.08) |
|
| (0.11) |
|
| (0.06) |
|
|
|
|
| |
Total
distributions |
(0.37) |
|
| (0.38) |
|
| (0.31) |
|
| (0.42) |
|
| (0.46) |
|
|
|
|
| |
Net
asset value, end of year |
$ |
5.38 |
|
| $ |
5.21 |
|
| $ |
6.07 |
|
| $ |
6.67 |
|
| $ |
6.44 |
|
|
|
|
| |
Total
return (b) |
10.70 |
| % |
(7.73) |
| % |
(4.43) |
| % |
11.24 |
| % |
12.61 |
| % |
|
|
| |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses |
2.08 |
| % |
2.55 |
| % |
2.33 |
| % |
2.30 |
| % |
2.69 |
| % |
|
|
| |
Net
expenses |
1.23 |
| % |
1.27 |
| % |
1.28 |
| % |
1.25 |
| % |
1.26 |
| % |
|
|
| |
Net
expenses excluding interest and taxes |
1.22 |
| % |
1.25 |
| % |
1.25 |
| % |
1.25 |
| % |
1.25 |
| % |
|
|
| |
Net
investment income |
6.85 |
| % |
7.32 |
| % |
4.81 |
| % |
6.40 |
| % |
7.37 |
| % |
|
|
| |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
assets, end of year (in millions) |
$9 |
|
| $5 |
|
| $6 |
|
| $7 |
|
| $5 |
|
|
|
|
| |
Portfolio
turnover rate |
238 |
| % |
322 |
| % |
218 |
| % |
253 |
| % |
302 |
| % |
|
|
| |
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
|
| |
EMERGING
MARKETS BOND FUND |
FINANCIAL
HIGHLIGHTS
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Class
I |
| Year
Ended December 31, |
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
|
|
|
| |
Net
asset value, beginning of year |
$ |
5.26 |
|
| $ |
6.15 |
|
| $ |
6.77 |
|
| $ |
6.53 |
|
| $ |
6.25 |
|
|
|
|
| |
Net
investment income (a) |
0.38 |
|
| 0.42 |
|
| 0.33 |
|
| 0.45 |
|
| 0.53 |
|
|
|
|
| |
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
|
|
| |
investments |
0.17 |
|
| (0.88) |
|
| (0.61) |
|
| 0.23 |
|
| 0.27 |
|
|
|
|
| |
Total
from investment operations |
0.55 |
|
| (0.46) |
|
| (0.28) |
|
| 0.68 |
|
| 0.80 |
|
|
|
|
| |
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income |
(0.24) |
|
| (0.21) |
|
| (0.25) |
|
| (0.32) |
|
| (0.45) |
|
|
|
|
| |
Return
of capital |
(0.13) |
|
| (0.22) |
|
| (0.09) |
|
| (0.12) |
|
| (0.07) |
|
|
|
|
| |
Total
distributions |
(0.37) |
|
| (0.43) |
|
| (0.34) |
|
| (0.44) |
|
| (0.52) |
|
|
|
|
| |
Net
asset value, end of year |
$ |
5.44 |
|
| $ |
5.26 |
|
| $ |
6.15 |
|
| $ |
6.77 |
|
| $ |
6.53 |
|
|
|
|
| |
Total
return (b) |
10.97 |
| % |
(7.21) |
| % |
(4.30) |
| % |
11.60 |
| % |
13.09 |
| % |
|
|
| |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses |
1.34 |
| % |
2.51 |
| % |
1.74 |
| % |
1.73 |
| % |
2.18 |
| % |
|
|
| |
Net
expenses |
0.88 |
| % |
0.97 |
| % |
0.96 |
| % |
0.95 |
| % |
0.96 |
| % |
|
|
| |
Net
expenses excluding interest and taxes |
0.88 |
| % |
0.95 |
| % |
0.95 |
| % |
0.95 |
| % |
0.95 |
| % |
|
|
| |
Net
investment income |
7.22 |
| % |
7.69 |
| % |
5.01 |
| % |
7.31 |
| % |
8.27 |
| % |
|
|
| |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
assets, end of year (in millions) |
$29 |
|
| $2 |
|
| $6 |
|
| $16 |
|
| $18 |
|
|
|
|
| |
Portfolio
turnover rate |
238 |
| % |
322 |
| % |
218 |
| % |
253 |
| % |
302 |
| % |
|
|
| |
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
|
| |
EMERGING
MARKETS BOND FUND |
FINANCIAL
HIGHLIGHTS
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Class
Y |
| Year
Ended December 31, |
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
|
|
|
| |
Net
asset value, beginning of year |
$ |
5.26 |
|
| $ |
6.12 |
|
| $ |
6.73 |
|
| $ |
6.49 |
|
| $ |
6.23 |
|
|
|
|
| |
Net
investment income (a) |
0.38 |
|
| 0.40 |
|
| 0.32 |
|
| 0.46 |
|
| 0.47 |
|
|
|
|
| |
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
|
|
| |
investments |
0.18 |
|
| (0.87) |
|
| (0.60) |
|
| 0.22 |
|
| 0.32 |
|
|
|
|
| |
Total
from investment operations |
0.56 |
|
| (0.47) |
|
| (0.28) |
|
| 0.68 |
|
| 0.79 |
|
|
|
|
| |
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income |
(0.25) |
|
| (0.19) |
|
| (0.25) |
|
| (0.32) |
|
| (0.46) |
|
|
|
|
| |
Return
of capital |
(0.12) |
|
| (0.20) |
|
| (0.08) |
|
| (0.12) |
|
| (0.07) |
|
|
|
|
| |
Total
distributions |
(0.37) |
|
| (0.39) |
|
| (0.33) |
|
| (0.44) |
|
| (0.53) |
|
|
|
|
| |
Net
asset value, end of year |
$ |
5.45 |
|
| $ |
5.26 |
|
| $ |
6.12 |
|
| $ |
6.73 |
|
| $ |
6.49 |
|
|
|
|
| |
Total
return (b) |
11.03 |
| % |
(7.44) |
| % |
(4.33) |
| % |
11.59 |
| % |
13.05 |
| % |
|
|
| |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses |
1.35 |
| % |
2.91 |
| % |
2.51 |
| % |
2.78 |
| % |
2.60 |
| % |
|
|
| |
Net
expenses |
0.97 |
| % |
1.02 |
| % |
1.03 |
| % |
1.00 |
| % |
1.02 |
| % |
|
|
| |
Net
expenses excluding interest and taxes |
0.96 |
| % |
1.00 |
| % |
1.00 |
| % |
1.00 |
| % |
1.00 |
| % |
|
|
| |
Net
investment income |
7.12 |
| % |
7.51 |
| % |
4.99 |
| % |
7.42 |
| % |
7.34 |
| % |
|
|
| |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
assets, end of year (in millions) |
$47 |
|
| $2 |
|
| $3 |
|
| $3 |
|
| $3 |
|
|
|
|
| |
Portfolio
turnover rate |
238 |
| % |
322 |
| % |
218 |
| % |
253 |
| % |
302 |
| % |
|
|
| |
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
ck0000768847-20231231
VANECK
FUNDS
APPENDIX
A: INTERMEDIARY SALES CHARGE DISCOUNTS AND WAIVERS
Dated
May 1, 2024
EMERGING
MARKETS BOND FUND
CLASS
A: EMBAX / CLASS I: EMBUX / CLASS Y: EMBYX
This
Appendix A is not a prospectus. It should be read in conjunction with the
prospectus dated May 1, 2024 (the “Prospectus”) for VanEck Funds (the “Trust”),
relating to Emerging Markets Bond Fund (the “Fund”), as it may be revised from
time to time. A copy of the Prospectus for the Trust, relating to the Fund, may
be obtained without charge by visiting the VanEck website at vaneck.com, by
calling toll free 800.826.1115 or by writing to the Trust or Van Eck Securities
Corporation, the Fund’s distributor (the “Distributor”). The information
disclosed in this Appendix A is part of, and incorporated in, the Prospectus.
Capitalized terms used herein that are not defined have the same meaning as in
the Prospectus, unless otherwise noted. For the avoidance of doubt, for purposes
of this Appendix A, references to a CDSC below also include the contingent
deferred redemption charge (“CDRC”) as defined in the Prospectus.
Specific
intermediaries may have different policies and procedures regarding the
availability of front-end sales load waivers or contingent deferred sales charge
(“CDSC”) waivers, which are discussed below. In addition, please see the section
of the Prospectus entitled “Shareholder Information-Sales Charges” for more
information on sales charges and waivers available for different classes. In all
instances, it is the purchaser’s responsibility to notify the Funds or the
purchaser’s financial intermediary at the time of purchase of any facts
qualifying the purchaser for sales charge discounts or waivers.
A. Purchases
or sales of front-end (i.e. Class A) or level-load (i.e., Class C) mutual fund
shares through a Merrill platform or account will be eligible only for the
following sales load waivers (front-end, contingent deferred, or back-end
waivers) and discounts, which differ from those disclosed elsewhere in this
Fund’s prospectus. Purchasers will have to buy mutual fund shares directly from
the mutual fund company or through another intermediary to be eligible for
waivers or discounts not listed below.
It
is the client’s responsibility to notify Merrill at the time of purchase or sale
of any relationship or other facts that qualify the transaction for a waiver or
discount. A Merrill representative may ask for reasonable documentation of such
facts and Merrill may condition the granting of a waiver or discount on the
timely receipt of such documentation.
Additional
information on waivers and discounts is available in the Merrill Sales Load
Waiver and Discounts Supplement (the “Merrill SLWD Supplement”) and in the
Mutual Fund Investing at Merrill pamphlet at ml.com/funds. Clients are
encouraged to review these documents and speak with their financial advisor to
determine whether a transaction is eligible for a waiver or discount.
|
| |
Front-end
Load Waivers Available at Merrill |
Shares
of mutual funds available for purchase by employer-sponsored retirement,
deferred compensation, and employee benefit plans (including health
savings accounts) and trusts used to fund those plans provided the shares
are not held in a commission-based brokerage account and shares are held
for the benefit of the plan. For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs,
SAR-SEPs or Keogh plans |
Shares
purchased through a Merrill investment advisory program |
Brokerage
class shares exchanged from advisory class shares due to the holdings
moving from a Merrill investment advisory program to a Merrill brokerage
account |
Shares
purchased through the Merrill Edge Self-Directed platform |
Shares
purchased through the systematic reinvestment of capital gains
distributions and dividend reinvestment when purchasing shares of the same
mutual fund in the same account |
Shares
exchanged from level-load shares to front-end load shares of the same
mutual fund in accordance with the description in the Merrill SLWD
Supplement |
Shares
purchased by eligible employees of Merrill or its affiliates and their
family members who purchase shares in accounts within the employee’s
Merrill Household (as defined in the Merrill SLWD Supplement) |
Shares
purchased by eligible persons associated with the fund as defined in this
prospectus (e.g. the fund’s officers or trustees) |
Shares
purchased from the proceeds of a mutual fund redemption in front-end load
shares provided (1) the repurchase is in a mutual fund within the same
fund family; (2) the repurchase occurs within 90 calendar days from the
redemption trade date, and (3) the redemption and purchase occur in the
same account (known as Rights of Reinstatement). Automated transactions
(i.e. systematic purchases and withdrawals) and purchases made after
shares are automatically sold to pay Merrill’s account maintenance fees
are not eligible for Rights of Reinstatement |
Contingent
Deferred Sales Charge (“CDSC”) Waivers on Front-end, Back-end, and Level
Load Shares Available at Merrill |
Shares
sold due to the client’s death or disability (as defined by Internal
Revenue Code Section 22e(3)) |
Shares
sold pursuant to a systematic withdrawal program subject to Merrill’s
maximum systematic withdrawal limits as described in the Merrill SLWD
Supplement |
Shares
sold due to return of excess contributions from an IRA
account |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the investor reaching the qualified age based on
applicable IRS regulation |
Front-end
or level-load shares held in commission-based, non-taxable retirement
brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs, Simple
IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts
or platforms and exchanged for a lower cost share class of the same mutual
fund |
Front-end
Load Discounts Available at Merrill: Breakpoints, Rights of Accumulation
& Letters of Intent |
Breakpoint
discounts, as described in this prospectus, where the sales load is at or
below the maximum sales load that Merrill permits to be assessed to a
front-end load purchase, as described in the Merrill SLWD
Supplement |
Rights
of Accumulation (ROA), as described in the Merrill SLWD Supplement, which
entitle clients to breakpoint discounts based on the aggregated holdings
of mutual fund family assets held in accounts in their Merrill
Household |
Letters
of Intent (LOI), which allow for breakpoint discounts on eligible new
purchases based on anticipated future eligible purchases within a fund
family at Merrill, in accounts within your Merrill Household, as further
described in the Merrill SLWD Supplement |
B. Shareholders
purchasing Fund shares through a Morgan Stanley Wealth Management transactional
brokerage account will be eligible only for the following front-end sales charge
waivers with respect to Class A shares, which may differ from and may be more
limited than those disclosed elsewhere in this Fund’s Prospectus or
SAI.
|
| |
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth
Management |
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh
plans |
Morgan
Stanley employee and employee-related accounts according to MSSB’s account
linking rules |
Shares
purchased through reinvestment of dividends and capital gains
distributions when purchasing shares of the same fund |
Shares
purchased through a Morgan Stanley self-directed brokerage
account |
Class
C (i.e., level-load) shares that are no longer subject to a contingent
deferred sales charge and are converted to Class A shares of the same fund
pursuant to Morgan Stanley Wealth Management’s share class conversion
program |
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (i) the repurchase occurs within 90 days following the
redemption, (ii) the redemption and purchase occur in the same account,
and (iii) redeemed shares were subject to a front-end or deferred sales
charge. |
C. Shareholders
purchasing Fund shares through a Raymond James platform or account will be
eligible only for the following load waivers (front-end sales charge waivers and
contingent deferred, or back-end, sales charge waivers) and discounts, which may
differ from those disclosed elsewhere in this Fund’s Prospectus or
SAI.
|
| |
Front-end
sales load waivers on Class A shares available at Raymond
James |
Shares
purchased in an investment advisory program. |
Shares
purchased within the same fund family through a systematic reinvestment of
capital gains and dividend distributions. |
Employees
and registered representatives of Raymond James or its affiliates and
their family members as designated by Raymond James. |
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and
(3) redeemed shares were subject to a front-end or deferred sales load
(known as Rights of Reinstatement). |
A
shareholder in the Fund’s Class C shares will have their shares converted
at net asset value to Class A shares (or the appropriate share class) of
the Fund if the shares are no longer subject to a CDSC and the conversion
is in line with the policies and procedures of Raymond
James. |
|
| |
CDSC
Waivers on Classes A, B and C shares available at Raymond
James |
Death
or disability of the shareholder. |
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
prospectus. |
Return
of excess contributions from an IRA Account. |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based on
applicable IRS regulations as described in the fund’s
prospectus. |
Shares
sold to pay Raymond James fees but only if the transaction is initiated by
Raymond James. |
Shares
acquired through a right of
reinstatement. |
|
| |
Front-end
load discounts available at Raymond James: breakpoints, and/or rights of
accumulation, and letters of intent |
Breakpoints
as described in this prospectus. |
Rights
of accumulation which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family
assets held by accounts within the purchaser’s household at Raymond James.
Eligible fund family assets not held at Raymond James may be included in
the calculation of rights of accumulation calculation only if the
shareholder notifies his or her financial advisor about such
assets. |
Letters
of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family, over a 13-month time period. Eligible fund
family assets not held at Raymond James may be included in the calculation
of letters of intent only if the shareholder notifies his or her financial
advisor about such assets. |
D.
Shareholders purchasing Fund shares through a Janney Montgomery Scott LLC
(“Janney”) brokerage account will be eligible for the following load waivers
(front-end sales charge waivers and contingent deferred sales charge ("CDSC"),
or back-end sales charge, waivers) and discounts, which may differ from those
disclosed elsewhere in this Fund’s Prospectus or SAI.
|
| |
Front-end
sales charge* waivers on Class A shares available at Janney |
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other
fund within the fund family). |
Shares
purchased by employees and registered representatives of Janney or its
affiliates and their family members as designated by Janney. |
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within ninety (90) days following the
redemption, (2) the redemption and purchase occur in the same account, and
(3) redeemed shares were subject to a front-end or deferred sales load
(i.e., right of reinstatement). |
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh
plans. |
Shares
acquired through a right of reinstatement. |
Class
C shares that are no longer subject to a contingent deferred sales charge
and are converted to Class A shares of the same fund pursuant to Janney’s
policies and procedures. |
|
| |
CDSC
waivers on Class A and C shares available at Janney |
Shares
sold upon the death or disability of the shareholder. |
Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus. |
Shares
purchased in connection with a return of excess contributions from an IRA
account. |
Shares
sold as part of a required minimum distribution for IRA and other
retirement accounts if the redemption is taken in or after the year the
shareholder reaches qualified age based on applicable IRS regulations.
|
Shares
sold to pay Janney fees but only if the transaction is initiated by
Janney. |
Shares
acquired through a right of reinstatement. |
Shares
exchanged into the same share class of a different
fund. |
|
| |
Front-end
sales charge* discounts available at Janney: breakpoints, rights of
accumulation, and/or letters of intent |
Breakpoints
as described in the fund’s Prospectus. |
Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint
discounts, will be automatically calculated based on the aggregated
holding of fund family assets held by accounts within the purchaser’s
household at Janney. Eligible fund family assets not held at Janney may be
included in the ROA calculation only if the shareholder notifies his or
her financial advisor about such assets. |
Letters
of intent which allow for breakpoint discounts based on anticipated
purchases within a fund family, over a 13-month time period. Eligible fund
family assets not held at Janney Montgomery Scott may be included in the
calculation of letters of intent only if the shareholder notifies his or
her financial advisor about such assets. |
*Also
referred to as an “initial sales charge.”
E.
Shareholders purchasing Fund shares through a Baird platform or account will
only be eligible for the following sales charge waivers (front-end sales charge
waivers and CDSC waivers) and discounts, which may differ from those disclosed
elsewhere in this Fund's Prospectus or the SAI.
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Front-End
Sales Charge Waivers on Class A shares Available at Baird |
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund. |
Shares
purchased by employees and registered representatives of Baird or its
affiliate and their family members as designated by Baird. |
Shares
purchased from the proceeds of redemptions from another VanEck Fund,
provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and
(3) the redeemed shares were subject to a front-end or deferred sales
charge (known as rights of reinstatement). |
A
shareholder in the Fund's Class C Shares will have their shares converted
at net asset value to Class A shares of the Fund if the shares are no
longer subject to CDSC and the conversion is in line with the policies and
procedures of Baird. |
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage
account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined
benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
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CDSC
Waivers on Class A and C shares Available at Baird |
Shares
sold due to death or disability of the shareholder. |
Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
Prospectus. |
Shares
bought due to returns of excess contributions from an IRA
Account. |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching age based on applicable Internal
Revenue Service regulations as described in the Fund’s
prospectus. |
Shares
sold to pay Baird fees but only if the transaction is initiated by
Baird. |
Shares
acquired through a right of
reinstatement. |
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Front-End
Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of
Accumulations |
Breakpoints
as described in this Prospectus. |
Rights
of accumulations which entitle shareholders to breakpoint discounts will
be automatically calculated based on the aggregated holding of VanEck Fund
assets held by accounts within the purchaser’s household at Baird.
Eligible VanEck Fund assets not held at Baird may be included in the
rights of accumulations calculation only if the shareholder notifies his
or her financial advisor about such assets. |
Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated
purchases of VanEck Fund shares through Baird, over a 13-month period of
time. |
F.
Shareholders purchasing or holding fund shares, including existing fund
shareholders, through a Stifel, Nicolaus & Company, Incorporated or
affiliated platform that provides trade execution, clearance, and/or custody
services, will be eligible for the following sales charge load waivers
(including front-end sales charge waivers and contingent deferred, or back-end,
("CDSC") sales charge waivers) and discounts, which may differ from those
disclosed elsewhere in the Fund's Prospectus or SAI.
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Class
A Shares |
As
described elsewhere in this prospectus, Stifel may receive compensation
out of the front-end sales charge if you purchase Class A shares through
Stifel. |
Rights
of accumulation |
Rights
of accumulation (“ROA”) that entitle shareholders to breakpoint discounts
on front-end sales charges will be calculated by Stifel based on the
aggregated holding of all assets in all classes of shares of VanEck Funds
held by accounts within the purchaser’s household at Stifel. Eligible fund
family assets not held at Stifel may be included in the calculation of ROA
only if the shareholder notifies his or her financial advisor about such
assets. |
The
employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to
establish or change ROA for the IRA accounts associated with the plan to a
plan-level grouping as opposed to including all share classes at a
shareholder or pricing group level. |
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Front-end
sales charge waivers on Class A shares available at Stifel |
Sales
charges may be waived for the following shareholders and in the following
situations: |
Class
C shares that have been held for more than seven (7) years may be
converted to Class A or other Front-end share class(es) shares of the same
fund pursuant to Stifel's policies and procedures. To the extent that this
prospectus elsewhere provides for a waiver with respect to the exchange or
conversion of such shares following a shorter holding period, those
provisions shall continue to apply. |
Shares
purchased by employees and registered representatives of Stifel or its
affiliates and their family members as designated by Stifel. |
Shares
purchased in an Stifel fee-based advisory program, often referred to as a
“wrap” program. |
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same or other fund within the
fund family. |
Shares
purchased from the proceeds of redeemed shares of the same fund family so
long as the proceeds are from the sale of shares from an account with the
same owner/beneficiary within 90 days of the purchase. For the absence of
doubt, shares redeemed through a Systematic Withdrawal Plan are not
eligible for rights of reinstatement. |
Shares
from rollovers into Stifel from retirement plans to IRAs. |
Shares
exchanged into Class A shares from another share class so long as the
exchange is into the same fund and was initiated at the direction of
Stifel. Stifel is responsible for any remaining CDSC due to the fund
company, if applicable. Any future purchases are subject to the applicable
sales charge as disclosed in the prospectus. |
Purchases
of Class 529-A shares through a rollover from another 529
plan. |
Purchases
of Class 529-A shares made for reinvestment of refunded
amounts. |
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Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs or SAR-SEPs. |
All
other sales charge waivers and reductions described elsewhere in the
fund’s prospectus or SAI still apply. |
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Contingent
Deferred Sales Charges Waivers on Class A and C Shares |
Death
or disability of the shareholder or, in the case of 529 plans, the account
beneficiary. |
Shares
sold as part of a systematic withdrawal plan not to exceed 12%
annually. |
Return
of excess contributions from an IRA Account. |
Shares
sold as part of a required minimum distribution for IRA and retirement
accounts due to the shareholder reaching the qualified age based on
applicable IRS regulations. |
Shares
acquired through a right of reinstatement. |
Shares
sold to pay Stifel fees or costs in such cases where the transaction is
initiated by Stifel. |
Shares
exchanged or sold in a Stifel fee-based program. |
All
other sales charge waivers and reductions described elsewhere in the
fund’s prospectus or SAI still apply. |
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Share
Class Conversions in Advisory Accounts |
Stifel
continually looks to provide our clients with the lowest cost share class
available based on account type. Stifel reserves the right to convert
shares to the lowest cost share class available at Stifel upon transfer of
shares into an advisory program. |
G.
Shareholders purchasing Fund shares through an Ameriprise Financial brokerage
account are eligible for the following front-end sales charge waivers, which may
differ from those disclosed elsewhere in this Fund’s prospectus or
SAI.
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Front-End
Sales Charge Waivers on Class A shares Available at Ameriprise
Financial |
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs or SAR-SEPs. |
Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same Fund (but not any other
fund within the same fund family). |
Shares
exchanged from Class C shares of the same fund in the month of or
following the 7-year anniversary of the purchase date. To the extent that
this prospectus elsewhere provides for a waiver with respect to exchanges
of Class C shares or conversion of Class C shares following a shorter
holding period, that waiver will apply. |
Employees
and registered representatives of Ameriprise Financial or its affiliates
and their immediate family members. |
Shares
purchased by or through qualified accounts (including IRAs, Coverdell
Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and
defined benefit plans) that are held by a covered family member, defined
as an Ameriprise financial advisor and/or the advisor’s spouse, advisor’s
lineal ascendant (mother, father, grandmother, grandfather, great
grandmother, great grandfather), advisor’s lineal descendant (son,
step-son, daughter, step-daughter, grandson, granddaughter, great
grandson, great granddaughter) or any spouse of a covered family member
who is a lineal descendant. |
Shares
purchased from the proceeds of redemptions within the same fund family,
provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and
(3) redeemed shares were subject to a front-end or deferred sales load
(i.e. Rights of Reinstatement). |
For
more detailed information, see the Statement of Additional Information (SAI),
which is legally a part of and is incorporated by reference into this
prospectus. The SAI includes information regarding, among other things: the Fund
and its investment policies and risks; management of the Fund, investment
advisory and other services, the Fund’s Board of Trustees, and tax matters
related to the Fund.
Additional
information about the investments is available in the Fund’s annual and
semi-annual reports to shareholders. In the Fund’s annual report, you will find
a discussion of the market conditions and investment strategies that
significantly affected the Fund’s performance during its last fiscal
year.
▪Call
VanEck at 800.826.2333, or visit the VanEck website at vaneck.com to request,
free of charge, the annual or semi-annual reports, the SAI, information
regarding applicable sales loads, breakpoint discounts, reduced or waived sales
charges and eligibility minimums, or other information about the
Fund.
▪Reports
and other information about the Fund are available on the EDGAR Database on the
SEC’s Internet site at http://www.sec.gov. In addition, copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following e-mail address: [email protected].
▪For
more information about the different sales load variations imposed by financial
intermediaries, see Appendix A, “Intermediary Sales Charge Discounts and
Waivers,” which is incorporated herein by reference and is legally a part of
this prospectus.
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Transfer
Agent:
SS&C
GIDS, Inc.
P.O.
Box 218407
Kansas
City, Missouri 64121-8407
SEC
Registration Number: 811-04297
|
800.826.2333 vaneck.com |
EMBPRO |