ck0001137360-20211231
VANECK®
Africa
Index ETF AFK®
Brazil
Small-Cap ETF BRF®
Egypt
Index ETF EGPT®
India
Growth Leaders ETF GLIN
Indonesia
Index ETF IDX®
Israel
ETF ISRA™
Russia
ETF RSX®
Russia
Small-Cap ETF RSXJ®
Vietnam
ETF VNM®
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Principal
U.S. Listing Exchange for AFK, BRF, EGPT, GLIN, IDX and ISRA: NYSE
Arca, Inc. |
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Principal
U.S. Listing Exchange for RSX, RSXJ and VNM: Cboe BZX Exchange,
Inc. |
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The
U.S. Securities and Exchange Commission (“SEC”) has not approved or
disapproved these securities or passed upon the accuracy or adequacy of
this Prospectus. Any representation to the contrary is a criminal
offense. |
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800.826.2333 vaneck.com
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TABLE
OF CONTENTS |
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Summary
Information |
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SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Africa Index ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
GDP Africa Index (the “Africa Index”).
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses |
0.27 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.77 |
% |
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Fee
Waivers and Expense Reimbursement(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.77 |
% |
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(a)
Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.78% of the Fund’s average daily net
assets per year until at least May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
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1 |
$79 |
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3 |
$246 |
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5 |
$428 |
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10 |
$954 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
37% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Africa Index includes securities of African companies. African
companies generally include local listings of companies that are incorporated in
Africa and listings of companies incorporated outside of Africa but that have at
least 50% of their revenues/related assets in Africa.
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Africa Index ETF.
Such
companies may include small- and medium-capitalization companies. Subject to
country and issuer limitations, the country weightings in the Africa Index are
based on their relative gross domestic product (“GDP”) weights as compared to
all other countries represented in the Africa Index. As of December 31, 2021,
the Africa Index included 76 securities of companies with a market
capitalization range of between approximately $1.12 billion and $67.5 billion
and a weighted average market capitalization of $12.56 billion. These amounts
are subject to change. The Fund’s 80% investment policy is non-fundamental and
may be changed without shareholder approval upon 60 days’ prior written notice
to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Africa Index by investing in a portfolio of
securities that generally replicates the Africa Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Africa Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Africa Index.
The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Africa Index concentrates in an industry or group of industries. As of
December 31, 2021, each of the financials, basic materials and communication
services sectors represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in African Issuers.
Investments in securities of African issuers, including issuers 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 outbreak, 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 (defined herein),
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 (“NAV”). 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 NAV. In the case of a period
during which creations are suspended, the Fund could experience substantial
redemptions, which may exacerbate the discount to NAV 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 South African Issuers. Investments
in securities of South African issuers involve risks and special considerations
not typically associated with investments in the U.S. securities markets. South
Africa’s economy exhibits characteristics of both a developed country and a
developing country and has historically experienced extremely uneven
distribution of wealth and income and high rates of unemployment. The securities
markets in South 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. In addition, South Africa’s currency has at times been at risk of
devaluation due to inadequate foreign currency reserve. While economic reforms
have been enacted in recent periods, there can be no assurance that these
reforms will achieve the intended results. Furthermore, adverse social and
economic conditions in a neighboring country may have a significant adverse
effect on South Africa. Additionally, the agriculture and mining sectors of
South Africa’s economy account for a large portion of its exports, and thus the
South African economy is susceptible to fluctuations in these commodity markets.
South 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. Any such event may adversely impact South Africa’s economy
or business operations of companies in South Africa, causing an adverse impact
on the value of the Fund.
Risk
of Investing in Foreign Securities. Investments
in the securities of foreign issuers involve risks beyond those associated with
investments in U.S. securities. These additional risks include greater market
volatility, the availability of less reliable financial information, higher
transactional and custody costs, taxation by foreign governments, decreased
market liquidity and political instability. Because certain foreign securities
markets may be limited in size, the activity of large traders may have an undue
influence on the prices of securities that trade in such markets. The Fund
invests in securities of issuers located in countries whose economies are
heavily dependent upon trading with key partners. Any reduction in this trading
may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging and Frontier Market Issuers.
Most African countries are considered to be emerging and/or “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 frontier market countries are magnified. Investments in
securities of emerging and frontier market issuers are exposed to a number of
risks that may make these investments volatile in price or difficult to trade.
Emerging and/or frontier markets are more likely than developed markets to
experience problems with the clearing and settling of trades, as well as the
holding of securities by local banks, agents and depositories. Political risks
may include unstable governments, nationalization, restrictions on foreign
ownership, laws that prevent investors from getting their money out of a country
and legal systems that do not protect property rights as well as the laws of the
United States. Market risks may also include economies that concentrate in only
a few industries, securities issues that are held by only a few investors,
liquidity issues and limited trading capacity in local exchanges and the
possibility that markets or issues may be manipulated by foreign nationals who
have inside information.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Africa Index, may negatively
affect the Fund’s ability to replicate the performance of the Africa Index. The
issuers of depositary receipts may discontinue issuing new depositary receipts
and withdraw existing depositary receipts at any time, which may result in costs
and delays in the distribution of the underlying assets to the Fund and may
negatively impact the Fund’s performance and the Fund’s ability to
replicate/track the performance of its Index.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its
regulatory
framework. Furthermore, some companies in the financials sector perceived as
benefitting from government intervention in the past may be subject to future
government-imposed restrictions on their businesses or face increased government
involvement in their operations. Increased government involvement in the
financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Risk
of Investing in the Basic Materials Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the basic materials sector. Companies engaged in
the production and distribution of basic materials may be adversely affected by
changes in world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Communication Services Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the communication services sector. Companies in the
communication services sector may be affected by industry competition,
substantial capital requirements, government regulations and obsolescence of
communications products and services due to technological advancement.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Risk
of Cash Transactions.
Unlike other exchange-traded funds (“ETFs”), the Fund expects to effect its
creations and redemptions at least partially for cash, rather than wholly for
in-kind securities. Therefore, it may be required to sell portfolio securities
and subsequently incur brokerage costs and/or recognize gains or losses on such
sales that the Fund might not have recognized if it were to distribute portfolio
securities in kind. As such, investments in Shares may be less tax-efficient
than an investment in a conventional ETF.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the Africa Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Africa Index and incurs costs associated with
buying and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Africa Index, or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units,
which are not factored into the return of the Africa Index. Transaction costs,
including brokerage costs, will decrease the Fund’s NAV to the extent not offset
by the transaction fee payable by an Authorized Participant (“AP”). Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Africa Index. Errors in the Africa Index data, the Africa Index computations
and/or the construction of the Africa Index in accordance with its methodology
may occur from time to time and may not be identified and corrected by the
Africa Index provider for a period of time or at all, which may have an adverse
impact on the Fund and its shareholders. Shareholders should understand that any
gains from the Africa Index provider's errors will be kept by the Fund and its
shareholders and any losses or costs resulting from the Africa Index provider's
errors will be borne by the Fund and its shareholders. When the Africa Index is
rebalanced and the Fund in turn rebalances its portfolio to attempt to increase
the correlation between the Fund’s portfolio and the Africa Index, any
transaction costs and market exposure arising from such portfolio rebalancing
will be borne directly by the Fund and its shareholders. The Fund may not be
fully invested at times either as
a
result of cash flows into the Fund (if the Fund effects creations and
redemptions for cash) or reserves of cash held by the Fund to meet redemptions
or pay expenses. Apart from scheduled rebalances, the Africa Index provider or
its agents may carry out additional ad hoc rebalances to the Africa Index.
Therefore, errors and additional ad hoc rebalances carried out by the Africa
Index provider or its agents to the Africa Index may increase the costs to and
the tracking error risk of the Fund. In addition, the Fund may not be able to
invest in certain securities included in the Africa Index, or invest in them in
the exact proportions in which they are represented in the Africa Index. The
Fund’s performance may also deviate from the return of the Africa Index due to
legal restrictions or limitations imposed by the governments of certain
countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons or legal
restrictions or limitations (such as diversification requirements).
Additionally, the Fund may not invest in certain securities included in the
Africa Index due to limitations or delays in the convertibility or repatriation
of local currencies. The Fund may value certain of its investments, underlying
securities, underlying currencies and/or other assets based on fair value
prices. To the extent the Fund calculates its NAV based on fair value prices and
the value of the Africa Index is based on securities’ closing prices on local
foreign markets (i.e.,
the value of the Africa Index is not based on fair value prices), the Fund’s
ability to track the Africa Index may be adversely affected. In addition, any
issues the Fund encounters with regard to currency convertibility (including the
cost of borrowing funds, if any) and repatriation may also increase the index
tracking risk. In addition, any issues the Fund encounters with regard to
currency convertibility (including the cost of borrowing funds, if any) and
repatriation may also increase the index tracking risk. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. The Fund may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. For tax efficiency purposes, the Fund may
sell certain securities, and such sale may cause the Fund to realize a loss and
deviate from the performance of the Africa Index. In light of the factors
discussed above, the Fund’s return may deviate significantly from the return of
the Africa Index. Changes to the composition of the Africa Index in connection
with a rebalancing or reconstitution of the Africa Index may cause the Fund to
experience increased volatility, during which time the Fund’s index tracking
risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Africa Index, the Fund generally would not sell a security
because the security’s issuer was in financial trouble. Additionally, unusual
market conditions may cause the Africa Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Africa Index to vary from its
normal or expected composition. Therefore, the Fund’s performance could be lower
than funds that may actively shift their portfolio assets to take advantage of
market opportunities or to lessen the impact of a market decline or a decline in
the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may
become
less liquid in response to deteriorating liquidity in the markets for the Fund’s
underlying portfolio holdings. There are various methods by which investors can
purchase and sell Shares. Investors should consult their financial
intermediaries before purchasing or selling Shares of the Fund.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Africa Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to June 24, 2013, the
Fund sought to replicate as closely as possible, before fees and expenses, the
price and yield performance of the Dow Jones Titans IndexSM
(the “Prior Index”). Therefore, performance information prior to June 24, 2013
reflects the performance of the Fund while seeking to track the Prior Index. All
returns assume reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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|
|
|
|
|
|
Best
Quarter: |
28.52% |
2Q
2020 |
Worst
Quarter: |
-37.33% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
|
|
VanEck Africa Index ETF (return before
taxes) |
3.69% |
3.60% |
0.54% |
|
|
VanEck Africa Index ETF (return after
taxes on distributions) |
2.45% |
2.57% |
-0.35% |
|
|
VanEck Africa Index ETF (return after
taxes on distributions and sale of Fund
Shares) |
2.64% |
2.59% |
0.26% |
|
|
MVIS GDP Africa Index (reflects no
deduction for fees, expenses or taxes, except withholding
taxes)* |
4.63% |
4.83% |
1.83% |
|
|
S&P 500® Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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|
|
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|
|
*Prior to June 24, 2013,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Index. Therefore, performance
information prior to June 24, 2013 reflects the performance of the Fund while
seeking to track the Prior Index. Prior to June 24, 2013, index data reflects
that of the Prior Index. From June 24, 2013, the index data reflects that of the
Africa Index.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
July
2008 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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|
PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
BRAZIL SMALL-CAP ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Brazil Small-Cap ETF1
(the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the MVIS®
Brazil Small-Cap Index (the “Brazil Small-Cap
Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses |
0.34 |
% |
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|
|
Total
Annual Fund Operating Expenses(a) |
0.84 |
% |
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|
Fee
Waivers and Expense Reimbursement(a) |
-0.25 |
% |
|
|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.59 |
% |
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|
(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.59% of the Fund’s average daily net
assets per year until at least May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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|
YEAR |
EXPENSES |
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1 |
$60 |
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3 |
$243 |
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5 |
$441 |
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|
10 |
$1,014 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
56% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Brazil Small-Cap Index includes securities of Brazilian
small-capitalization companies. A company is generally considered to be a
Brazilian company if it is incorporated in Brazil or is incorporated outside of
Brazil but has at least 50% of its revenues/related
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Brazil Small-Cap ETF.
assets
in Brazil. As of December 31, 2021, the Brazil Small-Cap Index included 99
securities of companies with a market capitalization range of between
approximately $0.23 billion and $2.19 billion and a weighted average market
capitalization of $0.96 billion. These amounts are subject to change. The Fund’s
80% investment policy is non-fundamental and may be changed without shareholder
approval upon 60 days’ prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Brazil Small-Cap Index by investing in a
portfolio of securities that generally replicates the Brazil Small-Cap Index.
Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Brazil Small-Cap Index and
does not seek temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Brazil Small-Cap
Index.
The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Brazil Small-Cap Index concentrates in an industry or group of industries.
As of December 31, 2021, each of the consumer discretionary, industrials,
consumer staples and utilities sectors represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Brazilian Issuers.
Investments in securities of Brazilian issuers, including issuers located
outside of Brazil that generate significant revenues from Brazil, involve risks
and special considerations not typically associated with investments in the U.S.
securities markets. The Brazilian economy has been characterized by frequent,
and occasionally drastic, interventions by the Brazilian government, including
the imposition of wage and price controls, exchange controls, limiting imports,
blocking access to bank accounts and other measures. The Brazilian government
has often changed monetary, taxation, credit, trade and other policies to
influence the core of Brazil’s economy. Actions taken by the Brazilian
government concerning the economy may have significant effects on Brazilian
companies and on market conditions and prices of Brazilian securities. Such
governmental actions to control inflation and affect other economic policies
have involved, among others, setting of wage and price controls, blocking access
to bank accounts, adjusting of the base interest rates, imposing exchange
controls and limiting imports into Brazil. Brazil’s economy may be subject to
sluggish economic growth due to, among other things, weak consumer spending,
political turmoil, high rates of inflation and low commodity prices. Brazil
suffers from chronic structural public sector deficits. The Brazilian government
has privatized certain entities, which have suffered losses due to, among other
things, the inability to adjust to a competitive environment.
The
market for Brazilian securities is directly influenced by the flow of
international capital, and economic and market conditions of certain countries,
especially emerging market countries. As a result, adverse economic conditions
or developments in other emerging market countries have at times significantly
affected the availability of credit in the Brazilian economy and resulted in
considerable outflows of funds and declines in the amount of foreign currency
invested in Brazil.
Investments
in Brazilian securities may be subject to certain restrictions on foreign
investment. Brazilian law provides that whenever a serious imbalance in Brazil’s
balance of payments exists or is anticipated, the Brazilian government may
impose temporary restrictions on the remittance to foreign investors of the
proceeds of their investment in Brazil and on the conversion of the Brazilian
real into foreign currency.
Brazil
has historically experienced high rates of inflation and a high level of debt,
each of which may constrain economic growth. Brazil suffers from high levels of
corruption, crime and income disparity. The Brazilian economy is also heavily
dependent upon commodity prices and international trade. Unanticipated political
or social developments may result in sudden and significant investment losses.
An increase in prices for commodities, such as petroleum, the depreciation of
the Brazilian real and future governmental measures seeking to maintain the
value of the Brazilian real in relation to the U.S. dollar, may trigger
increases in inflation in Brazil and may slow the rate of growth of the
Brazilian economy. Conversely, appreciation of the Brazilian real relative to
the U.S. dollar may lead to the deterioration of Brazil’s current account and
balance of payments as well as limit the growth of exports.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging Market Issuers. Investments
in securities of emerging market issuers are exposed to a number of risks that
may make these investments volatile in price or difficult to trade. Emerging
markets are more likely than
developed
markets to experience problems with the clearing and settling of trades, as well
as the holding of securities by local banks, agents and depositories. Political
risks may include unstable governments, nationalization, restrictions on foreign
ownership, laws that prevent investors from getting their money out of a country
and legal systems that do not protect property rights as well as the laws of the
United States. Market risks may also include economies that concentrate in only
a few industries, securities issues that are held by only a few investors,
liquidity issues and limited trading capacity in local exchanges and the
possibility that markets or issues may be manipulated by foreign nationals who
have inside information. The frequency, availability and quality of financial
information about investments in emerging markets varies. The Fund has limited
rights and few practical remedies in emerging markets and the ability of U.S.
authorities to bring enforcement actions in emerging markets may be limited, and
the Fund's passive investment approach does not take account of these risks. All
of these factors can make emerging market securities more volatile and
potentially less liquid than securities issued in more developed
markets.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Brazil Small-Cap Index, may
negatively affect the Fund’s ability to replicate the performance of the Brazil
Small-Cap Index. The issuers of depositary receipts may discontinue issuing new
depositary receipts and withdraw existing depositary receipts at any time, which
may result in costs and delays in the distribution of the underlying assets to
the Fund and may negatively impact the Fund’s performance and the Fund’s ability
to replicate/track the performance of its Index.
Risk
of Investing in the Consumer Discretionary Sector.
The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the consumer discretionary sector. The consumer
discretionary sector comprises companies whose businesses are sensitive to
economic cycles, such as manufacturers of high-end apparel and automobile and
leisure companies. Companies engaged in the consumer discretionary sector are
subject to fluctuations in supply and demand. These companies may also be
adversely affected by changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.
Risk
of Investing in the Industrials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the industrials sector. The industrials
sector comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates.
Risk
of Investing in the Consumer Staples Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the consumer staples sector. The consumer
staples sector comprises companies whose businesses are less sensitive to
economic cycles, such as manufacturers and distributors of food and beverages
and producers of non-durable household goods and personal products. Companies in
the consumer staples sector may be adversely affected by changes in the
worldwide economy, consumer spending, competition, demographics and consumer
preferences, exploration and production spending. Companies in this sector are
also affected by changes in government regulation, world events and economic
conditions.
Risk
of Investing in the Utilities Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the utilities sector. Companies in the
utilities sector may be adversely affected by changes in exchange rates,
domestic and international competition, difficulty in raising adequate amounts
of capital and governmental limitation on rates charged to
customers.
Risk
of Investing in Micro-Capitalization Companies. Micro-capitalization
companies are subject to substantially greater risks of loss and price
fluctuations because their earnings and revenues tend to be less predictable
(and some companies may be experiencing significant losses), and their share
prices tend to be more volatile and their markets less liquid than companies
with larger market capitalizations. The shares of micro-capitalization companies
tend to trade less frequently than those of larger, more established companies,
which can adversely affect the pricing of these securities and the future
ability to sell those securities.
Risk
of Investing in Small-Capitalization Companies.
Small-capitalization companies may be more volatile and more likely than medium-
and large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading
volume
and less liquidity than larger more established companies. Returns on
investments in securities of small-capitalization companies could trail the
returns on investments in securities of medium-capitalization and
large-capitalization companies.
Risk
of Cash Transactions.
Unlike other exchange-traded funds (“ETFs”), the Fund expects to effect its
creations and redemptions at least partially for cash, rather than wholly for
in-kind securities. Therefore, it may be required to sell portfolio securities
and subsequently incur brokerage costs and/or recognize gains or losses on such
sales that the Fund might not have recognized if it were to distribute portfolio
securities in kind. As such, investments in Shares may be less tax-efficient
than an investment in a conventional ETF.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk. The
Fund’s return may not match the return of the Brazil Small-Cap Index for a
number of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Brazil Small-Cap Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the Brazil
Small-Cap Index, or (to the extent the Fund effects creations and redemptions
for cash) raising cash to meet redemptions or deploying cash in connection with
newly created Creation Units, which are not factored into the return of the
Brazil Small-Cap Index. Transaction costs, including brokerage costs, will
decrease the Fund’s net asset value (“NAV’) to the extent not offset by the
transaction fee payable by an Authorized Participant (“AP”). Market disruptions
and regulatory restrictions could have an adverse effect on the Fund’s ability
to adjust its exposure to the required levels in order to track the Brazil
Small-Cap Index. Errors in the Brazil Small-Cap Index data, the Brazil Small-Cap
Index computations and/or the construction of the Brazil Small-Cap Index in
accordance with its methodology may occur from time to time and may not be
identified and corrected by the Brazil Small-Cap Index provider for a period of
time or at all, which may have an adverse impact on the Fund and its
shareholders. Shareholders should understand that any gains from the Brazil
Small-Cap Index provider's errors will be kept by the Fund and its shareholders
and any losses or costs resulting from the Brazil Small-Cap Index provider's
errors will be borne by the Fund and its shareholders. When the Brazil Small-Cap
Index is rebalanced and the Fund in turn rebalances its portfolio to attempt to
increase the correlation between the Fund’s portfolio and the Brazil Small-Cap
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders. The Fund
may not be fully invested at times either as a result of cash flows into the
Fund (if the Fund effects creations and redemptions for cash) or reserves of
cash held by the Fund to meet redemptions or pay expenses. Apart from scheduled
rebalances, the Brazil Small-Cap Index provider or its agents may carry out
additional ad hoc rebalances to the Brazil Small-Cap Index. Therefore, errors
and additional ad hoc rebalances carried out by the Brazil Small-Cap Index
provider or its agents to the Brazil Small-Cap Index may increase the costs to
and the tracking error risk of the Fund. In addition, the Fund may not be able
to invest in certain securities included in the Brazil Small-Cap Index, or
invest in them in the exact proportions in which they are represented in the
Brazil Small-Cap Index. The Fund’s performance may also deviate from the return
of the Brazil Small-Cap Index due to legal restrictions or limitations imposed
by the governments of certain countries, certain listing standards of the Fund’s
listing exchange (the “Exchange”), a lack of liquidity on stock exchanges in
which such securities trade, potential adverse tax consequences or other
regulatory reasons or legal restrictions or limitations (such as diversification
requirements). The Fund may value certain of its investments, underlying
securities, underlying currencies and/or other assets based on fair value
prices. To the extent the Fund calculates its NAV based on fair value prices and
the value of the Brazil Small-Cap Index is based on securities' closing prices
on local foreign markets (i.e.,
the value of the Brazil Small-Cap Index is not based on fair value prices), the
Fund’s ability to track the Brazil Small-Cap Index may be adversely affected. In
addition, any issues the Fund encounters with regard to currency convertibility
(including the cost of borrowing funds, if any) and repatriation may also
increase the index tracking risk. In addition, any issues the Fund encounters
with regard to currency convertibility (including the cost of borrowing funds,
if any) and repatriation may also increase the index tracking risk. When markets
are volatile, the ability to sell securities at fair value prices may be
adversely impacted and may result in additional trading costs and/or increase
the index tracking risk. The Fund may also need to
rely
on borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the Brazil
Small-Cap Index. In light of the factors discussed above, the Fund’s return may
deviate significantly from the return of the Brazil Small-Cap Index. Changes to
the composition of the Brazil Small-Cap Index in connection with a rebalancing
or reconstitution of the Brazil Small-Cap Index may cause the Fund to experience
increased volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Brazil Small-Cap Index, the Fund generally would not sell a
security because the security’s issuer was in financial trouble. Additionally,
unusual market conditions may cause the Brazil Small-Cap Index provider to
postpone a scheduled rebalance or reconstitution, which could cause the Brazil
Small-Cap Index to vary from its normal or expected composition. Therefore, the
Fund’s performance could be lower than funds that may actively shift their
portfolio assets to take advantage of market opportunities or to lessen the
impact of a market decline or a decline in the value of one or more
issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Brazil Small-Cap Index
concentrates in a particular sector or sectors or industry or group of
industries. To the extent that the Fund is concentrated in a particular sector
or sectors or industry or group of industries, the Fund will be subject to the
risk that economic, political or other conditions that have a negative effect on
those sectors and/or industries may negatively impact the Fund to a greater
extent than if the Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
30.76% |
4Q
2020 |
Worst
Quarter: |
-52.13% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
|
|
VanEck Brazil Small-Cap ETF (return
before taxes) |
-21.38% |
3.29% |
-4.85% |
|
|
VanEck Brazil Small-Cap ETF (return
after taxes on distributions) |
-22.22% |
2.18% |
-5.98% |
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|
VanEck Brazil Small-Cap ETF (return
after taxes on distributions and sale of Fund Shares)
|
-12.56% |
2.24% |
-3.83% |
|
|
MVIS Brazil Small-Cap Index (reflects
no deduction for fees, expenses or taxes, except withholding
taxes) |
-20.47% |
4.03% |
-4.17% |
|
|
S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
May
2009 |
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|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Egypt Index ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
Egypt Index (the “Egypt Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
|
|
Other
Expenses |
0.60 |
% |
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|
|
Total
Annual Fund Operating Expenses(a) |
1.10 |
% |
|
|
Fee
Waivers and Expense Reimbursement(a) |
-0.08 |
% |
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|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
1.02 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.94% of the Fund’s average daily net
assets per year until May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
|
|
1 |
$104 |
|
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|
3 |
$342 |
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|
5 |
$598 |
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|
10 |
$1,333 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
73% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund will normally invest at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Egypt Index includes securities of Egyptian companies. A company is
generally considered to be an Egyptian company if it is incorporated in Egypt or
is incorporated outside Egypt but has at least 50% of its revenues/related
assets in Egypt. Such companies may include small- and medium-capitalization
companies. As of December 31, 2021, the Egypt Index included 25
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Egypt Index ETF.
securities
of companies with a market capitalization range of between approximately $0.18
billion and $6.5 billion and a weighted average market capitalization of $1.34
billion. These amounts are subject to change. The Fund’s 80% investment policy
is non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Egypt Index by investing in a portfolio of
securities that generally replicates the Egypt Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Egypt Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Egypt Index.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”), and, therefore, may invest a greater
percentage of its assets in a particular issuer. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Egypt Index concentrates in an industry or group of industries. As of
December 31, 2021, each of the real estate, basic materials, financials and
consumer staples sectors represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Egyptian Issuers.
Investments in securities of Egyptian issuers, including issuers located outside
of Egypt that generate significant revenues from Egypt, involve risks and
special considerations not typically associated with investments in the U.S.
securities markets. Such heightened risks include, among others, the imposition
of capital controls, expropriation and/or nationalization of assets,
confiscatory taxation, regional conflict, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, the impact on the economy as a result of civil unrest and social
instability as a result of religious, ethnic and/or socioeconomic unrest. Poor
living standards, disparities of wealth and limitations on political freedom
have contributed to the unstable environment. Unanticipated or sudden political
or social developments may result in sudden and significant investment losses.
Issuers in Egypt 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. These factors, among others, make investing in issuers
located or operating in Egypt 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.
The
securities markets in Egypt are underdeveloped and may be less correlated to
global economic cycles than those markets located in more developed countries.
Securities markets in Egypt 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 risks could cause the Fund’s shares to trade at a significant
premium or discount to its net asset value (“NAV”). Moreover, trading on
securities markets may be suspended altogether, including the possibility that
securities markets may be closed for an extended period of time due to political
and civil unrest.
The
government in Egypt may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Egypt. These restrictions and/or controls may at times limit or prevent foreign
investment in securities of issuers located or operating in Egypt. For example,
there may be prohibitions or substantial restrictions on foreign investing in
Egypt’s capital markets or in certain sectors or industries. Moreover, Egypt 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 Egypt and/or
impose additional taxes on foreign investors. There may be a risk of loss due to
the imposition of restrictions on repatriation of capital invested.
In
addition, there may be limitations or delays in the convertibility or
repatriation of the Egyptian pound which would adversely affect the U.S. dollar
value and/or liquidity of the Fund’s investments denominated in the Egyptian
pound, 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 (defined herein), 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 NAV. 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 NAV. In the case of a period during which creations
are suspended, the Fund could experience substantial redemptions, which may
exacerbate the discount to NAV 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.
In
Egypt, the marketability of quoted shares is limited due to the restricted
opening hours of stock exchanges, a narrow range of investors and a relatively
high proportion of market value being concentrated in the hands of a relatively
small number of shareholders. In addition, because Egyptian stock exchanges on
which the Fund’s portfolio securities may trade are open when the Exchange is
closed, the Fund may be subject to heightened risk associated with market
movements.
Risk
of Investing in Foreign Securities. Investments
in the securities of foreign issuers involve risks beyond those associated with
investments in U.S. securities. These additional risks include greater market
volatility, the availability of less reliable financial information, higher
transactional and custody costs, taxation by foreign governments, decreased
market liquidity and political instability. Because certain foreign securities
markets may be limited in size, the activity of large traders may have an undue
influence on the prices of securities that trade in such markets. The Fund
invests in securities of issuers located in countries whose economies are
heavily dependent upon trading with key partners. Any reduction in this trading
may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging Market Issuers. Investments
in securities of emerging market issuers are exposed to a number of risks that
may make these investments volatile in price or difficult to trade. Emerging
markets are more likely than developed markets to experience problems with the
clearing and settling of trades, as well as the holding of securities by local
banks, agents and depositories. Political risks may include unstable
governments, nationalization, restrictions on foreign ownership, laws that
prevent investors from getting their money out of a country and legal systems
that do not protect property rights as well as the laws of the United States.
Market risks may also include economies that concentrate in only a few
industries, securities issues that are held by only a few investors, liquidity
issues and limited trading capacity in local exchanges and the possibility that
markets or issues may be manipulated by foreign nationals who have inside
information. The frequency, availability and quality of financial information
about investments in emerging markets varies. The Fund has limited rights and
few practical remedies in emerging markets and the ability of U.S. authorities
to bring enforcement actions in emerging markets may be limited, and the Fund's
passive investment approach does not take account of these risks. All of these
factors can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Egypt Index, may negatively
affect the Fund’s ability to replicate the performance of the Egypt Index. The
issuers of depositary receipts may discontinue issuing new depositary receipts
and withdraw existing depositary receipts at any time, which may result in costs
and delays in the distribution of the underlying assets to the Fund and may
negatively impact the Fund’s performance and the Fund’s ability to
replicate/track the performance of its Index.
Risk
of Investing in the Real Estate Sector.
Companies in the real estate sector include companies that invest in real
estate, such as REITs and real estate management and development companies. The
Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the real estate sector. Companies
that invest in real estate are subject to the risks of owning real estate
directly as well as to risks that relate specifically to the way that such
companies operate, including management risk (such companies are dependent upon
the management skills of a few key individuals and may have limited financial
resources). Adverse economic, business or political developments affecting real
estate could have a major effect on the values of the Fund’s investments.
Investing in real estate is subject to such risks as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent, possible lack of availability of
mortgage financing, market saturation, fluctuations in rental income and the
value of underlying properties and extended vacancies of properties. Certain
real estate securities have a relatively small market capitalization, which may
tend to increase the volatility of the market price of these securities. Real
estate securities have limited diversification and are, therefore, subject to
risks inherent in operating and financing a limited number of projects. Real
estate securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.
Risk
of Investing in the Basic Materials Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the basic materials sector. Companies engaged in
the production and distribution of basic materials may be adversely affected by
changes in world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in the Consumer Staples Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the consumer staples sector. The consumer
staples sector comprises companies whose businesses are less sensitive to
economic cycles, such as manufacturers and distributors of food and beverages
and producers of non-durable household goods and personal products. Companies in
the consumer staples sector may be adversely affected by changes in the
worldwide economy, consumer spending, competition, demographics and consumer
preferences, exploration and production spending. Companies in this sector are
also affected by changes in government regulation, world events and economic
conditions.
Risk
of Investing in Micro-Capitalization Companies. Micro-capitalization
companies are subject to substantially greater risks of loss and price
fluctuations because their earnings and revenues tend to be less predictable
(and some companies may be experiencing significant losses), and their share
prices tend to be more volatile and their markets less liquid than companies
with larger market capitalizations. The shares of micro-capitalization companies
tend to trade less frequently than those of larger, more established companies,
which can adversely affect the pricing of these securities and the future
ability to sell those securities.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Risk
of Cash Transactions.
Unlike other exchange-traded funds (“ETFs”), the Fund expects to effect its
creations and redemptions at least partially for cash, rather than wholly for
in-kind securities. Therefore, it may be required to sell portfolio securities
and subsequently incur brokerage costs and/or recognize gains or losses on such
sales that the Fund might not have recognized if it were to distribute portfolio
securities in kind. As such, investments in Shares may be less tax-efficient
than an investment in a conventional ETF.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the Egypt Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Egypt Index and incurs costs associated with buying
and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Egypt Index, or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units,
which are not factored into the return of the Egypt Index. Transaction costs,
including brokerage costs, will decrease the Fund’s NAV to the extent not offset
by the transaction fee payable
by
an Authorized Participant (“AP”). Market disruptions and regulatory restrictions
could have an adverse effect on the Fund’s ability to adjust its exposure to the
required levels in order to track the Egypt Index. Errors in the Egypt Index
data, the Egypt Index computations and/or the construction of the Egypt Index in
accordance with its methodology may occur from time to time and may not be
identified and corrected by the Egypt Index provider for a period of time or at
all, which may have an adverse impact on the Fund and its shareholders.
Shareholders should understand that any gains from the Egypt Index provider's
errors will be kept by the Fund and its shareholders and any losses or costs
resulting from the Egypt Index provider's errors will be borne by the Fund and
its shareholders. When the Egypt Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the Egypt Index, any transaction costs and market exposure
arising from such portfolio rebalancing will be borne directly by the Fund and
its shareholders. The Fund may not be fully invested at times either as a result
of cash flows into the Fund (if the Fund effects creations and redemptions for
cash) or reserves of cash held by the Fund to meet redemptions or pay expenses.
Apart from scheduled rebalances, the Egypt Index provider or its agents may
carry out additional ad hoc rebalances to the Egypt Index. Therefore, errors and
additional ad hoc rebalances carried out by the Egypt Index provider or its
agents to the Egypt Index may increase the costs to and the tracking error risk
of the Fund. In addition, the Fund may not be able to invest in certain
securities included in the Egypt Index, or invest in them in the exact
proportions in which they are represented in the Egypt Index. The Fund’s
performance may also deviate from the return of the Egypt Index due to legal
restrictions or limitations imposed by the governments of certain countries,
certain listing standards of the Fund’s listing exchange (the “Exchange”), a
lack of liquidity on stock exchanges in which such securities trade, potential
adverse tax consequences or other regulatory reasons or legal restrictions or
limitations (such as diversification requirements). Additionally, the Fund may
not invest in certain securities included in the Egypt Index due to limitations
or delays in the convertibility or repatriation of the Egyptian pound. The Fund
may value certain of its investments, underlying securities, underlying
currencies and/or other assets based on fair value prices. To the extent the
Fund calculates its NAV based on fair value prices and the value of the Egypt
Index is based on securities' closing prices on local foreign markets
(i.e.,
the value of the Egypt Index is not based on fair value prices), the Fund’s
ability to track the Egypt Index may be adversely affected. In addition, any
issues the Fund encounters with regard to currency convertibility (including the
cost of borrowing funds, if any) and repatriation may also increase the index
tracking risk. When markets are volatile, the ability to sell securities at fair
value prices may be adversely impacted and may result in additional trading
costs and/or increase the index tracking risk. The Fund may also need to rely on
borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the Egypt
Index. In light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Egypt Index. Changes to the composition of
the Egypt Index in connection with a rebalancing or reconstitution of the Egypt
Index may cause the Fund to experience increased volatility, during which time
the Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Egypt Index, the Fund generally would not sell a security
because the security’s issuer was in financial trouble. Additionally, unusual
market conditions may cause the Egypt Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Egypt Index to vary from its
normal or expected composition. Therefore, the Fund’s performance could be lower
than funds that may actively shift their portfolio assets to take advantage of
market opportunities or to lessen the impact of a market decline or a decline in
the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading
halt),
as well as other factors, may result in Shares trading at a significant premium
or discount to NAV or to the intraday value of the Fund’s holdings. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may pay significantly more or receive significantly less
than the underlying value of the Shares that were bought or sold or the
shareholder may be unable to sell his or her Shares. The securities held by the
Fund may be traded in markets that close at a different time than the Exchange.
Liquidity in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the Exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the Exchange and
the resulting premium or discount to the Shares’ NAV may widen. Additionally, in
stressed market conditions, the market for the Fund’s Shares may become less
liquid in response to deteriorating liquidity in the markets for the Fund’s
underlying portfolio holdings. There are various methods by which investors can
purchase and sell Shares. Investors should consult their financial
intermediaries before purchasing or selling Shares of the Fund.
Issuer-Specific
Changes Risk. The
value of individual securities or particular types of securities in the Fund’s
portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk because the Egypt Index is comprised of a limited number
of companies.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Egypt Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
33.71% |
1Q
2012 |
Worst
Quarter: |
-30.39% |
4Q
2016 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
|
|
VanEck Egypt Index ETF (return before
taxes) |
8.36% |
2.73% |
-1.08% |
|
|
VanEck Egypt Index ETF (return after
taxes on distributions) |
7.89% |
2.52% |
-1.58% |
|
|
VanEck Egypt Index ETF (return after
taxes on distributions and sale of Fund Shares) |
5.54% |
2.35% |
-0.60% |
|
|
MVIS Egypt Index (reflects no deduction
for fees, expenses or taxes, except withholding
taxes) |
10.80% |
4.49% |
1.91% |
|
|
S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
February
2010 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
INDIA GROWTH LEADERS ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
India Growth Leaders ETF1
(the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the MarketGrader India All-Cap Growth Leaders
Index (the “India Index”).
FUND FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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|
Other
Expenses(a) |
0.50 |
% |
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|
|
Total
Annual Fund Operating Expenses(b) |
1.00 |
% |
|
|
Fee
Waivers and Expense Reimbursement(b)(c) |
-0.18 |
% |
|
|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(b)(c) |
0.82 |
% |
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|
(a)
“Other Expenses” reflects
the expenses of both the Fund and the Fund’s wholly-owned subsidiary (the
“Subsidiary”).
(b) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund and
Subsidiary expenses to the extent necessary to prevent the operating expenses of
the Fund (excluding acquired fund fees and expenses, interest expense, trading
expenses, taxes and extraordinary expenses of the Fund and the Subsidiary) from
exceeding 0.75% of the Fund’s average daily net assets per year until at least
May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
(c)
“Fee Waivers and Expense
Reimbursement” have been restated to reflect the current expense
limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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|
YEAR |
EXPENSES |
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1 |
$84 |
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3 |
$300 |
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|
5 |
$535 |
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|
10 |
$1,208 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
67% of the average value of its
portfolio.
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
India Growth Leaders ETF.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund currently intends to achieve its investment objective by investing
substantially all of its assets in the Subsidiary, a wholly-owned subsidiary
located in the Republic of Mauritius (“Mauritius”). The Subsidiary in turn will
normally invest at least 80% of its total assets in securities that comprise the
Fund’s benchmark index, and depositary receipts based on the securities in the
Fund’s benchmark index. The India Index is comprised of equity securities which
are generally considered by MarketGrader.com Corp. (the “Index Provider”) to
exhibit favorable fundamental characteristics according to the Index Provider’s
proprietary scoring methodology. For each company eligible for the India Index,
the Index Provider creates a numerical score based on indicators measuring four
fundamental characteristics, derived from public company filings and stock
prices. The four fundamental characteristics are growth, value, profitability
and cash flow. The resulting score is a weighted average of these indicators. To
be initially eligible for inclusion in the India Index, companies must be
domiciled in India and listed on an eligible stock exchange, as determined by
the Index Provider. From this universe of companies, the top-ranked names
according to the Index Provider’s proprietary score are included, and then
weighted according to their free-float market capitalization.
As
of December 31, 2021, the India Index included 78 securities of companies with a
market capitalization range of between approximately $0.3 billion and $183.5
billion and a weighted average market capitalization of $26.7 billion. These
amounts are subject to change. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Adviser serves as investment adviser to both the Fund and the Subsidiary. Except
where otherwise indicated, the term “Fund,” as used throughout this Summary
Section, refers to the Fund and/or the Subsidiary, as applicable.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the India Index by investing in a portfolio of
securities that generally replicates the India Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the India Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the India Index.
The
Fund may become “non-diversified” as defined under the Investment Company Act of
1940, as amended (the “1940 Act”), solely as a result of a change in relative
market capitalization or index weighting of one or more constituents of the
India Index. This means that the Fund may invest a greater percentage of its
assets in a limited number of issuers than would be the case if the Fund were
always managed as a diversified management investment company. The Fund intends
to be diversified in approximately the same proportion as the India Index.
Shareholder approval will not be sought when the Fund crosses from diversified
to non-diversified status due solely to a change in the relative market
capitalization or index weighting of one or more constituents of the India
Index.
The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the India Index concentrates in an industry or group of industries. As of
December 31, 2021, each of the information technology, basic materials and
health care sectors represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Indian Issuers.
Investments in securities of Indian issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Such heightened risks include, among others, greater government control
over the economy, including the risk that the Indian government may decide not
to continue to support economic reform programs, political and legal
uncertainty, competition from low-cost issuers of other emerging economies in
Asia, currency fluctuations or blockage of foreign currency exchanges and the
risk of nationalization or expropriation of assets. Issuers in India are subject
to less stringent requirements regarding accounting, auditing, financial
reporting and record keeping than are issuers in more developed markets, and
therefore, all material information may not be available or reliable. India is
also located in a part of the world that has historically been prone to natural
disasters, such as earthquakes and tsunamis. Any such natural disaster could
cause a significant impact on the Indian economy and could impact operations of
the Subsidiary, causing an adverse impact on the Fund. In addition, religious
and border disputes persist in India. Moreover, India has experienced civil
unrest and hostilities with neighboring countries, including Pakistan, and the
Indian government has confronted separatist movements in several Indian states.
India has experienced acts of terrorism that has targeted foreigners. Such acts
of terrorism have had a negative impact on tourism, an important sector of the
Indian economy.
The
securities market of India is considered an emerging market characterized by a
small number of listed companies with significantly smaller market
capitalizations, greater price volatility and substantially less liquidity than
developed markets, such as the United States. These factors, coupled with
restrictions on foreign investment and other factors, limit the supply of
securities available for investment by the Fund. This will affect the rate at
which the Fund is able to invest in India, the purchase and sale prices for such
securities and the timing of purchases and sales. Emerging markets can
experience high rates of inflation, deflation
and
currency devaluation. Certain restrictions on foreign investment may decrease
the liquidity of the Fund’s portfolio or inhibit the Fund’s ability to track the
India Index. In addition, the Reserve Bank of India (“RBI”), the Indian
counterpart of the Federal Reserve Bank in the United States, imposes certain
limits on the foreign ownership of Indian securities. These restrictions and/or
controls may at times limit or prevent foreign investment in securities of
issuers located or operating in India and may inhibit the Fund’s ability to
track the India Index.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging Market Issuers. Investments
in securities of emerging market issuers are exposed to a number of risks that
may make these investments volatile in price or difficult to trade. Emerging
markets are more likely than developed markets to experience problems with the
clearing and settling of trades, as well as the holding of securities by local
banks, agents and depositories. Political risks may include unstable
governments, nationalization, restrictions on foreign ownership, laws that
prevent investors from getting their money out of a country and legal systems
that do not protect property rights as well as the laws of the United States.
Market risks may also include economies that concentrate in only a few
industries, securities issues that are held by only a few investors, liquidity
issues and limited trading capacity in local exchanges and the possibility that
markets or issues may be manipulated by foreign nationals who have inside
information. The frequency, availability and quality of financial information
about investments in emerging markets varies. The Fund has limited rights and
few practical remedies in emerging markets and the ability of U.S. authorities
to bring enforcement actions in emerging markets may be limited, and the Fund's
passive investment approach does not take account of these risks. All of these
factors can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the India Index, may negatively
affect the Fund’s ability to replicate the performance of the India Index. The
issuers of depositary receipts may discontinue issuing new depositary receipts
and withdraw existing depositary receipts at any time, which may result in costs
and delays in the distribution of the underlying assets to the Fund and may
negatively impact the Fund’s performance and the Fund’s ability to
replicate/track the performance of its Index.
Risk
of Investing in the Information Technology Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the information technology sector.
Information technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Information
technology companies may have limited product lines, markets, financial
resources or personnel. The products of information technology companies may
face product obsolescence due to rapid technological developments and frequent
new product introduction, unpredictable changes in growth rates and competition
for the services of qualified personnel. Companies in the information technology
sector are heavily dependent on patent protection and the expiration of patents
may adversely affect the profitability of these companies.
Risk
of Investing in the Basic Materials Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the basic materials sector. Companies engaged in
the production and distribution of basic materials may be adversely affected by
changes in world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Health Care Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the health care sector. Companies in the
health care sector may be affected by extensive government regulation,
restrictions on government reimbursement for medical expenses, rising costs of
medical products and services, pricing pressure, an increased emphasis on
outpatient services, limited number of products, industry innovation, changes in
technologies and other market developments. Many health care companies are
heavily dependent on patent protection and are subject to extensive litigation
based on product liability and similar claims.
Risk
of Investing in Micro-Capitalization Companies. Micro-capitalization
companies are subject to substantially greater risks of loss and price
fluctuations because their earnings and revenues tend to be less predictable
(and some companies may be experiencing significant losses), and their share
prices tend to be more volatile and their markets less liquid than companies
with larger market capitalizations. The shares of micro-capitalization companies
tend to trade less frequently than those of larger, more established companies,
which can adversely affect the pricing of these securities and the future
ability to sell those securities.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Risk
of Cash Transactions.
Unlike other exchange-traded funds (“ETFs”), the Fund expects to effect its
creations and redemptions at least partially for cash, rather than wholly for
in-kind securities. Therefore, it may be required to sell portfolio securities
and subsequently incur brokerage costs and/or recognize gains or losses on such
sales that the Fund might not have recognized if it were to distribute portfolio
securities in kind. As such, investments in Shares may be less tax-efficient
than an investment in a conventional ETF.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the India Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the India Index and incurs costs associated with buying
and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the India Index, or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units,
which are not factored into the return of the India Index. Transaction costs,
including brokerage costs, will decrease the Fund’s net asset value (“NAV”) to
the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the India Index. Errors in the India Index data, the
India Index computations and/or the construction of the India Index in
accordance with its methodology may occur from time to time and may not be
identified and corrected by the India Index provider for a period of time or at
all, which may have an adverse impact on the Fund and its shareholders.
Shareholders should understand that any gains from the India Index provider's
errors will be kept by the Fund and its shareholders and any losses or costs
resulting from the India Index provider's errors will be borne by the Fund and
its shareholders. When the India Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the India Index, any transaction costs and market exposure
arising from such portfolio rebalancing will be borne directly by the Fund and
its shareholders. The Fund may not be fully invested at times either as a result
of cash flows into the Fund (if the Fund effects creations and redemptions for
cash) or reserves of cash held by the Fund to meet redemptions or pay expenses.
Apart from scheduled rebalances, the India Index provider or its agents may
carry out additional ad hoc rebalances to the India Index. Therefore, errors and
additional ad hoc rebalances carried out by the India Index provider or its
agents to the India Index may increase the costs to and the tracking error risk
of the Fund. In addition, the Fund may not be able to invest in certain
securities included in the India Index, or invest in them in the exact
proportions in which they are represented in the India Index. The Fund’s
performance may also deviate from the return of the India Index due to legal
restrictions or limitations imposed by the governments of certain countries,
certain listing standards of the Fund’s listing exchange (the “Exchange”), a
lack of liquidity on stock exchanges in which such securities trade, potential
adverse
tax
consequences or other regulatory reasons or legal restrictions or limitations
(such as diversification requirements). The Fund may value certain of its
investments, underlying securities, underlying currencies and/or other assets
based on fair value prices. To the extent the Fund calculates its NAV based on
fair value prices and the value of the India Index is based on securities’
closing prices on local foreign markets (i.e.,
the
value of the India Index is not based on fair value prices), the Fund’s ability
to track the India Index may be adversely affected. In addition, any issues the
Fund encounters with regard to currency convertibility (including the cost of
borrowing funds, if any) and repatriation may also increase the index tracking
risk. When markets are volatile, the ability to sell securities at fair value
prices may be adversely impacted and may result in additional trading costs
and/or increase the index tracking risk. The Fund may also need to rely on
borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the India
Index. In light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the India Index. Changes to the composition of
the India Index in connection with a rebalancing or reconstitution of the India
Index may cause the Fund to experience increased volatility, during which time
the Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the India Index, the Fund generally would not sell a security
because the security’s issuer was in financial trouble. Additionally, unusual
market conditions may cause the India Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the India Index to vary from its
normal or expected composition. Therefore, the Fund’s performance could be lower
than funds that may actively shift their portfolio assets to take advantage of
market opportunities or to lessen the impact of a market decline or a decline in
the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversification
Risk.
The Fund may become classified as
non-diversified under the Investment Company Act of 1940, as amended, solely as
a result of a change in relative market capitalization or index weighting of one
or more constituents of the India Index. If the Fund becomes non-diversified, it
may invest a greater portion of assets in securities of a smaller number of
individual issuers than a diversified fund. As a result, changes in the market
value of a single investment could cause greater fluctuations in share price
than would occur in a more diversified
fund.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the India Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by showing
the Fund’s performance from year to year and by showing how the Fund’s average
annual returns for the one year, five year, ten year and/or since inception
periods, as applicable, compared with the Fund’s benchmark index and a broad
measure of market performance. Prior to May 1, 2020, the Fund
sought to replicate as closely as possible, before fees and expenses, the price
and yield performance of the MVIS® India
Small-Cap Index (the “Prior Index”). Therefore, performance information prior to
May 1, 2020 reflects the performance of the Fund while seeking to track the
Prior Index. As a result, the Fund’s future performance may differ
substantially from the performance information shown below. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after income taxes) is not necessarily indicative of how the Fund
will perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
43.41% |
2Q
2014 |
Worst
Quarter: |
-38.49% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
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|
VanEck India Growth Leaders ETF (return
before taxes) |
29.15% |
1.08% |
2.68% |
|
|
VanEck India Growth Leaders ETF (return
after taxes on distributions) |
29.15% |
1.01% |
2.45% |
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VanEck India Growth Leaders ETF (return
after taxes on distributions and sale of Fund
Shares) |
17.26% |
0.83% |
2.05% |
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MarketGrader India All-Cap Growth
Leaders Index (reflects no deduction for fees, expenses or taxes, except
withholding taxes)* |
31.20% |
2.08% |
3.46% |
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S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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*Prior to May 1, 2020, the
Fund sought to replicate as closely as possible, before fees and expenses, the
price and yield performance of the Prior Index. Therefore, the performance
information prior to May 1, 2020 reflects the performance of the Fund while
seeking to track the Prior Index. Prior to May 1, 2020, the index data included
in this table reflects that of the Prior Index. From May 1, 2020, the index data
reflects that of the India Index.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
August
2010 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
INDONESIA INDEX ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Indonesia Index ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
Indonesia Index (the “Indonesia Index”).
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses |
0.32 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.82 |
% |
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Fee
Waivers and Expense Reimbursement(a) |
-0.25 |
% |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.57 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.57% of the Fund’s average daily net
assets per year until at least May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
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1 |
$58 |
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3 |
$237 |
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5 |
$430 |
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10 |
$990 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
36% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Indonesia Index includes securities of Indonesian companies. A
company is generally considered to be an Indonesian company if it is
incorporated in Indonesia or is incorporated outside of Indonesia but has at
least 50% of its revenues/related assets in Indonesia. Such companies may
include small- and medium-capitalization companies. As of December 31, 2021, the
Indonesia Index
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Indonesia Index ETF.
included
53 securities of companies with a market capitalization range of between
approximately $0.7 billion and $63.14 billion and a weighted average market
capitalization of $16.5 billion. These amounts are subject to change. The Fund’s
80% investment policy is non-fundamental and may be changed without shareholder
approval upon 60 days’ prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Indonesia Index by investing in a portfolio of
securities that generally replicates the Indonesia Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Indonesia Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Indonesia Index.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”), and, therefore, may invest a greater
percentage of its assets in a particular issuer. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Indonesia Index concentrates in an industry or group of industries. As of
December 31, 2021, each of the financials, basic materials, communication
services and consumer staples sectors represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Indonesian Issuers.
Investments in securities of Indonesian issuers, including issuers located
outside of Indonesia that generate significant revenues from Indonesia, 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, currency
devaluations, high rates of inflation, corruption, political instability,
including authoritarian and/or military involvement in governmental decision
making, sectarian and separatist violence, armed conflict, acts of terrorism,
the impact on the economy as a result of civil war, and social instability as a
result of religious, ethnic and/or socioeconomic unrest. In addition, the
Indonesian economy is dependent upon trade with other nations, including China,
Japan, Singapore and the United States. Adverse conditions or changes in
relationships with Indonesia’s major trading partners may significantly impact
the Indonesian economy. Indonesia has experienced acts of terrorism that have
targeted foreigners. Such acts of terrorism have had a negative impact on
tourism, an important sector of the Indonesian economy.
The
securities markets of Indonesia are characterized by a small number of company
listings and are underdeveloped and often considered to be less correlated to
global economic cycles than those markets located in more developed countries.
As a result, securities markets in Indonesia 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. Moreover, trading on securities markets may be
suspended altogether.
The
government in Indonesia may restrict or control to varying degrees the ability
of foreign investors to invest in securities of issuers located or operating in
Indonesia. These restrictions and/or controls may at times limit or prevent
foreign investment in securities of issuers located or operating in Indonesia.
Moreover, governmental approval or special licenses may be required 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 Indonesia and/or impose additional taxes on foreign investors.
Indonesia’s securities laws are unsettled and judicial enforcement of contracts
with foreign entities is inconsistent and, as a result of pervasive corruption,
is subject to the risk that cases will not be judged impartially. These factors,
among others, make investing in issuers located or operating in Indonesia
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.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging Market Issuers. Investments
in securities of emerging market issuers are exposed to a number of risks that
may make these investments volatile in price or difficult to trade. Emerging
markets are more likely than developed markets to experience problems with the
clearing and settling of trades, as well as the holding of securities by local
banks, agents and depositories. Political risks may include unstable
governments, nationalization, restrictions on foreign
ownership,
laws that prevent investors from getting their money out of a country and legal
systems that do not protect property rights as well as the laws of the United
States. Market risks may also include economies that concentrate in only a few
industries, securities issues that are held by only a few investors, liquidity
issues and limited trading capacity in local exchanges and the possibility that
markets or issues may be manipulated by foreign nationals who have inside
information. The frequency, availability and quality of financial information
about investments in emerging markets varies. The Fund has limited rights and
few practical remedies in emerging markets and the ability of U.S. authorities
to bring enforcement actions in emerging markets may be limited, and the Fund's
passive investment approach does not take account of these risks. All of these
factors can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Indonesia Index, may
negatively affect the Fund’s ability to replicate the performance of the
Indonesia Index. The issuers of depositary receipts may discontinue issuing new
depositary receipts and withdraw existing depositary receipts at any time, which
may result in costs and delays in the distribution of the underlying assets to
the Fund and may negatively impact the Fund’s performance and the Fund’s ability
to replicate/track the performance of its Index.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in the Basic Materials Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the basic materials sector. Companies engaged in
the production and distribution of basic materials may be adversely affected by
changes in world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Communication Services Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the communication services sector. Companies in the
communication services sector may be affected by industry competition,
substantial capital requirements, government regulations and obsolescence of
communications products and services due to technological advancement.
Risk
of Investing in the Consumer Staples Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the consumer staples sector. The consumer
staples sector comprises companies whose businesses are less sensitive to
economic cycles, such as manufacturers and distributors of food and beverages
and producers of non-durable household goods and personal products. Companies in
the consumer staples sector may be adversely affected by changes in the
worldwide economy, consumer spending, competition, demographics and consumer
preferences, exploration and production spending. Companies in this sector are
also affected by changes in government regulation, world events and economic
conditions.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific
issuers in which the Fund invests. Equity securities are subordinated to
preferred securities and debt in a company’s capital structure with respect to
priority in right to a share of corporate income, and therefore will be subject
to greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the Indonesia Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Indonesia Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the
Indonesia Index, or (to the extent the Fund effects creations and redemptions
for cash) raising cash to meet redemptions or deploying cash in connection with
newly created Creation Units, which are not factored into the return of the
Indonesia Index. Transaction costs, including brokerage costs, will decrease the
Fund’s net asset value (“NAV”) to the extent not offset by the transaction fee
payable by an Authorized Participant (“AP”). Market disruptions and regulatory
restrictions could have an adverse effect on the Fund’s ability to adjust its
exposure to the required levels in order to track the Indonesia Index. Errors in
the Indonesia Index data, the Indonesia Index computations and/or the
construction of the Indonesia Index in accordance with its methodology may occur
from time to time and may not be identified and corrected by the Indonesia Index
provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders. Shareholders should understand that any gains from
the Indonesia Index provider's errors will be kept by the Fund and its
shareholders and any losses or costs resulting from the Indonesia Index
provider's errors will be borne by the Fund and its shareholders. When the
Indonesia Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the
Indonesia Index, any transaction costs and market exposure arising from such
portfolio rebalancing will be borne directly by the Fund and its shareholders.
The Fund may not be fully invested at times either as a result of cash flows
into the Fund (if the Fund effects creations and redemptions for cash) or
reserves of cash held by the Fund to meet redemptions or pay expenses. Apart
from scheduled rebalances, the Indonesia Index provider or its agents may carry
out additional ad hoc rebalances to the Indonesia Index. Therefore, errors and
additional ad hoc rebalances carried out by the Indonesia Index provider or its
agents to the Indonesia Index may increase the costs to and the tracking error
risk of the Fund. In addition, the Fund may not be able to invest in certain
securities included in the Indonesia Index, or invest in them in the exact
proportions in which they are represented in the Indonesia Index. The Fund’s
performance may also deviate from the return of the Indonesia Index due to legal
restrictions or limitations imposed by the governments of certain countries,
certain listing standards of the Fund’s listing exchange (the “Exchange”), a
lack of liquidity on stock exchanges in which such securities trade, potential
adverse tax consequences or other regulatory reasons or legal restrictions or
limitations (such as diversification requirements). The Fund may value certain
of its investments, underlying securities, underlying currencies and/or other
assets based on fair value prices. To the extent the Fund calculates its NAV
based on fair value prices and the value of the Indonesia Index is based on
securities’ closing prices on local foreign markets (i.e.,
the
value of the Indonesia Index is not based on fair value prices), the Fund’s
ability to track the Indonesia Index may be adversely affected. In addition, any
issues the Fund encounters with regard to currency convertibility (including the
cost of borrowing funds, if any) and repatriation may also increase the index
tracking risk. When markets are volatile, the ability to sell securities at fair
value prices may be adversely impacted and may result in additional trading
costs and/or increase the index tracking risk. The Fund may also need to rely on
borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the
Indonesia Index. In light of the factors discussed above, the Fund’s return may
deviate significantly from the return of the Indonesia Index. Changes to the
composition of the Indonesia Index in connection with a rebalancing or
reconstitution of the Indonesia Index may cause the Fund to experience increased
volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Indonesia Index, the Fund generally would not sell a security
because the security’s issuer was in financial trouble. Additionally, unusual
market conditions may cause the Indonesia Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Indonesia Index to vary from
its normal or expected composition. Therefore, the Fund’s performance could be
lower than funds that may actively shift their portfolio assets to take
advantage of market opportunities or to lessen the impact of a market decline or
a decline in the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified funds.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Indonesia Index concentrates
in a particular sector or sectors or industry or group of industries. To the
extent that the Fund is concentrated in a particular sector or sectors or
industry or group of industries, the Fund will be subject to the risk that
economic, political or other conditions that have a negative effect on those
sectors and/or industries may negatively impact the Fund to a greater extent
than if the Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
30.40% |
4Q
2020 |
Worst
Quarter: |
-43.35% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
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VanEck Indonesia Index ETF (return
before taxes) |
-1.65% |
0.43% |
-1.59% |
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VanEck Indonesia Index ETF (return
after taxes on distributions) |
-1.70% |
0.32% |
-1.89% |
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VanEck Indonesia Index ETF (return
after taxes on distributions and sale of Fund
Shares) |
-0.60% |
0.66% |
-1.04% |
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MVIS Indonesia Index (reflects no
deduction for fees, expenses or taxes, except withholding
taxes) |
-1.66% |
0.67% |
-1.11% |
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S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
January
2009 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Israel ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the BlueStar Israel Global
Index®
(the “Israel Index”).
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses |
0.21 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.71 |
% |
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Fee
Waivers and Expense Reimbursement(a) |
-0.12 |
% |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.59 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.59% of the Fund’s average daily net
assets per year until at least May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
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1 |
$60 |
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3 |
$215 |
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|
5 |
$383 |
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10 |
$871 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
32% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Israel Index is comprised of equity securities, which may include
depositary receipts, of publicly traded companies that are generally considered
by MV Index Solutions GmbH (“MVIS” or the “Index Provider”) to be Israeli
companies. The Index Provider considers a range of factors such as domicile,
country of company formation/founding, primary location of management,
operations and/or
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Israel ETF.
research
and development facilities, tax status, location of revenues and employees,
among others, when determining whether a company will be included in the Israel
Index. The Israel Index generally only includes the largest and most liquid
companies as well as medium-capitalization and small-capitalization companies
that display sufficient liquidity for global investors, as determined by the
Index Provider. The Fund may also utilize depositary receipts to seek
performance that corresponds to the Fund’s benchmark index. Investments in
depositary receipts of Israeli companies whose securities are represented in the
Israel Index will count towards satisfaction of the Fund’s 80% investment
policy. As of December 31, 2021, the Israel Index included 111 securities of
companies with a market capitalization range of between approximately $0.36
billion and $19.16 billion and a weighted average market capitalization of $8.27
billion. These amounts are subject to change. The Fund’s 80% investment policy
is non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Israel Index by investing in a portfolio of
securities that generally replicates the Israel Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Israel Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Israel Index.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”), and, therefore, may invest a greater
percentage of its assets in a particular issuer. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Israel Index concentrates in an industry or group of industries. As of
December 31, 2021, each of the information technology and financials sectors
represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Israeli Issuers.
Investments in securities of Israeli issuers, including issuers located outside
of Israel that generate significant revenues from Israel, involve risks and
special considerations not typically associated with investments in the U.S.
securities markets. Among other things, Israel’s economy depends on imports of
certain key items, such as crude oil, natural gas, coal, grains, raw materials,
and military equipment. Israel’s relations with the Palestinian Authority and
certain neighboring countries such as Lebanon, Syria and Iran, among others,
have at times been strained due to territorial disputes, historical animosities
or security concerns, which may cause uncertainty in the Israeli markets and
adversely affect the overall economy. The Israeli economy is also dependent upon
external trade with other economies, notably the United States, China, Japan,
Canada and European Union (“EU”) countries. Any reduction in these trade flows
may have an adverse impact on the Fund’s investments.
Israel
has experienced a history of hostile relations with several countries in the
Middle-East region. Israel and its citizens have also been the target of
periodic acts of terrorism that have the potential to disrupt economic activity
in the country, and certain terrorist groups are committed to violence against
Israel. Current hostilities and the potential for future hostilities may
diminish the value of companies whose principal operations or headquarters are
located in Israel. Actual hostilities or the threat of future hostilities may
cause significant volatility in the share price of companies based in or having
significant operations in Israel.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Israel Index, may negatively
affect the Fund’s ability to replicate the performance of the Israel Index. The
issuers of depositary receipts may discontinue issuing new depositary receipts
and withdraw existing depositary receipts at any time,
which
may result in costs and delays in the distribution of the underlying assets to
the Fund and may negatively impact the Fund’s performance and the Fund’s ability
to replicate/track the performance of its Index.
Risk
of Investing in the Information Technology Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the information technology sector.
Information technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Information
technology companies may have limited product lines, markets, financial
resources or personnel. The products of information technology companies may
face product obsolescence due to rapid technological developments and frequent
new product introduction, unpredictable changes in growth rates and competition
for the services of qualified personnel. Companies in the information technology
sector are heavily dependent on patent protection and the expiration of patents
may adversely affect the profitability of these companies.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in Micro-Capitalization Companies.
Micro-capitalization companies are subject to substantially greater risks of
loss and price fluctuations because their earnings and revenues tend to be less
predictable (and some companies may be experiencing significant losses), and
their share prices tend to be more volatile and their markets less liquid than
companies with larger market capitalizations. The shares of micro-capitalization
companies tend to trade less frequently than those of larger, more established
companies, which can adversely affect the pricing of these securities and the
future ability to sell those securities.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the Israel Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Israel Index and incurs costs associated with
buying and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Israel Index, or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units,
which are not factored into the return of the Israel Index. Transaction costs,
including brokerage costs, will decrease the Fund’s net asset value (“NAV”) to
the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse
effect
on the Fund’s ability to adjust its exposure to the required levels in order to
track the Israel Index. Errors in the Israel Index data, the Israel Index
computations and/or the construction of the Israel Index in accordance with its
methodology may occur from time to time and may not be identified and corrected
by the Israel Index Provider for a period of time or at all, which may have an
adverse impact on the Fund and its shareholders. Shareholders should understand
that any gains from the Israel Index provider's errors will be kept by the Fund
and its shareholders and any losses or costs resulting from the Israel Index
provider's errors will be borne by the Fund and its shareholders. When the
Israel Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the Israel
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders. The Fund
may not be fully invested at times either as a result of cash flows into the
Fund (if the Fund effects creations and redemptions for cash) or reserves of
cash held by the Fund to meet redemptions or pay expenses. Apart from scheduled
rebalances, the Israel Index provider or its agents may carry out additional ad
hoc rebalances to the Israel Index. Therefore, errors and additional ad hoc
rebalances carried out by the Israel Index provider or its agents to the Israel
Index may increase the costs to and the tracking error risk of the Fund. In
addition, the Fund may not be able to invest in certain securities included in
the Israel Index, or invest in them in the exact proportions in which they are
represented in the Israel Index. The Fund’s performance may also deviate from
the return of the Israel Index due to legal restrictions or limitations imposed
by the governments of certain countries, certain listing standards of the Fund’s
listing exchange (the “Exchange”), a lack of liquidity on stock exchanges in
which such securities trade, potential adverse tax consequences or other
regulatory reasons or legal restrictions or limitations (such as diversification
requirements). The Fund may value certain of its investments, underlying
securities, underlying currencies and/or other assets based on fair value
prices. To the extent the Fund calculates its NAV based on fair value prices and
the value of the Israel Index is based on securities’ closing prices on local
foreign markets (i.e.,
the value of the Israel Index is not based on fair value prices), the Fund’s
ability to track the Israel Index may be adversely affected. In addition, any
issues the Fund encounters with regard to currency convertibility (including the
cost of borrowing funds, if any) and repatriation may also increase the index
tracking risk. When markets are volatile, the ability to sell securities at fair
value prices may be adversely impacted and may result in additional trading
costs and/or increase the index tracking risk. The Fund may also need to rely on
borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the Israel
Index. In light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Israel Index. Changes to the composition of
the Israel Index in connection with a rebalancing or reconstitution of the
Israel Index may cause the Fund to experience increased volatility, during which
time the Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Israel Index, the Fund generally would not sell a security
because the security’s issuer was in financial trouble. Additionally, unusual
market conditions may cause the Israel Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Israel Index to vary from its
normal or expected composition. Therefore, the Fund’s performance could be lower
than funds that may actively shift their portfolio assets to take advantage of
market opportunities or to lessen the impact of a market decline or a decline in
the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive
significantly
less than the underlying value of the Shares that were bought or sold or the
shareholder may be unable to sell his or her Shares. The securities held by the
Fund may be traded in markets that close at a different time than the Exchange.
Liquidity in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the Exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the Exchange and
the resulting premium or discount to the Shares’ NAV may widen. Additionally, in
stressed market conditions, the market for the Fund’s Shares may become less
liquid in response to deteriorating liquidity in the markets for the Fund’s
underlying portfolio holdings. There are various methods by which investors can
purchase and sell Shares. Investors should consult their financial
intermediaries before purchasing or selling Shares of the Fund.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified funds.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Israel Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
25.66% |
4Q
2020 |
Worst
Quarter: |
-20.04% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Since
Inception (6/25/2013) |
|
|
VanEck Israel ETF (return before
taxes) |
10.20% |
13.85% |
9.42% |
|
|
VanEck Israel ETF (return after taxes
on distributions) |
10.17% |
13.75% |
9.16% |
|
|
VanEck Israel ETF (return after taxes
on distributions and sale of Fund Shares) |
6.57% |
11.26% |
7.64% |
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|
BlueStar
Israel Global Index®
(reflects no deduction for fees,
expenses
or taxes, except withholding taxes) |
10.88% |
14.31% |
9.88% |
|
|
S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.02% |
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See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
June
2013 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Russia ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
Russia Index (the “Russia Index”).
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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|
Other
Expenses(b) |
0.47 |
% |
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|
|
Total
Annual Fund Operating Expenses(a) |
0.97 |
% |
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|
Fee
Waivers and Expense Reimbursement(a) |
-0.27 |
% |
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|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.70 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, depositary receipt fees up to
0.10% of the Fund’s average daily net assets, trading expenses, taxes and
extraordinary expenses) from exceeding 0.62% of the Fund’s average daily net
assets per year until at least May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
(b) “Other Expenses” have been
restated to reflect current fees.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
|
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1 |
$72 |
|
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3 |
$282 |
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5 |
$510 |
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10 |
$1,165 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
20% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Russia Index includes securities, which may include depositary
receipts, of Russian companies. A company is generally considered to be a
Russian company if it is incorporated in Russia or is incorporated outside of
Russia but has at least 50% of its revenues/related
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Russia ETF.
assets
in Russia. Such companies may include medium-capitalization companies. The Fund
may utilize depositary receipts to seek performance that corresponds to the
Fund’s benchmark index. Investments in depositary receipts of Russian companies
whose securities are represented in the Russia Index, and investments in
securities of Russian companies for which the Russia Index holds depositary
receipts, will count towards the Fund’s 80% investment policy. As of December
31, 2021, the Russia Index included 28 securities of companies with a market
capitalization range of between approximately $2.64 billion and $109 billion and
a weighted average market capitalization of $39.76 billion. These amounts are
subject to change. The Fund’s 80% investment policy is non-fundamental and may
be changed without shareholder approval upon 60 days’ prior written notice to
shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Russia Index by investing in a portfolio of
securities that generally replicates the Russia Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Russia Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Russia Index.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”), and, therefore, may invest a greater
percentage of its assets in a particular issuer. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Russia Index concentrates in an industry or group of industries. As of
December 31, 2021, each of the energy, basic materials and financials sectors
represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Russian Issuers.
Investments in securities of Russian issuers, including issuers located outside
of Russia that generate significant revenues from Russia, 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 or punitive taxation, regional conflict,
political instability, including authoritarian and/or military involvement in
governmental decision making, armed conflict, the imposition of economic
sanctions by other nations, the impact on the economy as a result of civil
unrest, and social instability as a result of religious, ethnic and/or
socioeconomic unrest.
The
securities markets of Russia are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Russia are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, inflation, greater price fluctuations, uncertainty
regarding the existence of trading markets, governmental control and heavy
regulation of labor and industry. Securities markets in Russia are subject to
additional risks relating to the settlement, clearing and registration of
securities transactions. Additionally, certain investments in Russia may become
less liquid in response to market developments or adverse investor perceptions,
or become illiquid after purchase by the Fund, particularly during periods of
market turmoil. When the Fund holds illiquid investments, its portfolio may be
harder to value, especially in changing markets. Moreover, trading on securities
markets in Russia may be suspended altogether.
The
government in Russia may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Russia. These restrictions and/or controls may at times limit or prevent foreign
investment in securities of issuers located or operating in Russia. Moreover,
governmental approval or special licenses may be required 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
Russia and/or impose additional taxes on foreign investors. Less information may
be available about companies in which the Fund invests because many companies
that are tied economically to Russia are not subject to accounting, auditing and
financial reporting standards or to other regulatory practices required by U.S.
companies. These factors, among others, make investing in issuers located or
operating in Russia 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.
As
a result of events involving Russia, the United States and the European Union
(“EU”) have imposed sanctions on certain Russian entities and individuals and
certain sectors of Russia’s economy, which may result in, among other things,
the devaluation of Russian currency, a downgrade in the country’s credit rating,
and/or a decline in the value and liquidity of Russian securities, property or
interests. Sanctions may also include banning Russia from global payments
systems that facilitate cross-border payments. The United States and other
nations or international organizations may impose additional economic sanctions
or take other actions in the future that may adversely affect Russia-exposed
issuers and companies in various sectors of the Russian economy, including, but
not limited to, the financials, energy, metals and mining, engineering, and
defense and defense-related materials sectors. These sanctions, any future
sanctions or other actions, the threat of further sanctions or other actions or
actions by the United States to modify or ease sanctions may negatively affect
the value and/or liquidity of the Fund’s portfolio, may affect the Fund’s
ability to operate and to qualify for the favorable tax treatment afforded to
regulated investment companies for U.S.
federal
income tax purposes, and may impair the Fund’s ability to achieve its investment
objective. For example, the Fund may be prohibited from investing in securities
issued by companies subject to such sanctions. In addition, the sanctions may
require the Fund to freeze its existing investments in Russian companies,
prohibit the Fund from buying, selling or otherwise transacting in these
investments, or significantly delay or prevent the settlement of securities
transactions. Any retaliatory actions by Russia may further impair the value and
liquidity of the Fund’s portfolio and potentially disrupt its operations.
Uncertainty as to future relations between Russia and the United States or EU
countries may also cause a decline in the value of the Fund’s
Shares.
Current
or future sanctions may result in Russia taking counter measures or retaliatory
actions, which may further impair the value and liquidity of Russian securities.
These retaliatory measures may include the immediate freeze of Russian assets
held by a Fund. In the event of such a freeze of any Fund assets, including
depositary receipts, a Fund may need to liquidate non-restricted assets in order
to satisfy any Fund redemption orders. The liquidation of Fund assets during
this time may also result in a Fund receiving substantially lower prices for its
securities. In addition, Russia is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign
governments.
For
these or other reasons, the Fund could seek to suspend redemptions of Creation
Units (defined herein), 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 (“NAV”). 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 NAV. In the case of a period during which creations
are suspended, the Fund could experience substantial redemptions, which may
exacerbate the discount to NAV 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. The Fund may also change its
investment objective by, for example, seeking to track an alternative index, or
the Fund could liquidate all or a portion of its assets, which may be at
unfavorable prices.
The
Russian government continues to control a large share of economic activity in
the region. The Russian government owns shares in corporations in a range of
sectors including banking, energy production and distribution, automotive,
transportation and telecommunications. Additionally, because Russia produces and
exports large volumes of oil and gas, the Russian economy is particularly
sensitive to the price of oil and gas on the world market, and a decline in the
price of oil and gas could have a significant negative impact on the Russian
economy. Political and economic events in Russia may have significant adverse
effects on the Russian ruble and on the value and liquidity of the Fund’s
investments.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging Market Issuers. Investments
in securities of emerging market issuers are exposed to a number of risks that
may make these investments volatile in price or difficult to trade. Emerging
markets are more likely than developed markets to experience problems with the
clearing and settling of trades, as well as the holding of securities by local
banks, agents and depositories. Political risks may include unstable
governments, nationalization, restrictions on foreign ownership, laws that
prevent investors from getting their money out of a country and legal systems
that do not protect property rights as well as the laws of the United States.
Market risks may also include economies that concentrate in only a few
industries, securities issues that are held by only a few investors, liquidity
issues and limited trading capacity in local exchanges and the possibility that
markets or issues may be manipulated by foreign nationals who have inside
information. The frequency, availability and quality of financial information
about investments in emerging markets varies. The Fund has limited rights and
few practical remedies in emerging markets and the ability of U.S. authorities
to bring enforcement actions in emerging markets may be limited, and the Fund's
passive investment approach does not take account of these risks. All of these
factors can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Russia Index, may negatively
affect the Fund’s ability to replicate the performance of the Russia Index. The
issuers of depositary receipts may discontinue issuing new depositary receipts
and withdraw existing depositary receipts at any
time,
which may result in costs and delays in the distribution of the underlying
assets to the Fund and may negatively impact the Fund’s performance and the
Fund’s ability to replicate/track the performance of its Index.
Risk
of Investing in the Energy Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the energy sector. Companies operating in
the energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, the cost of providing the
specific utility services and other factors that they cannot control. In
addition, these companies are at risk of civil liability from accidents
resulting in injury, loss of life or property, pollution or other environmental
damage claims and risk of loss from terrorism and natural disasters. A downturn
in the energy sector of the economy, adverse political, legislative or
regulatory developments or other events could have a larger impact on the Fund
than on an investment company that does not invest a substantial portion of its
assets in the energy sector. At times, the performance of securities of
companies in the energy sector may lag the performance of other sectors or the
broader market as a whole. The price of oil, natural gas and other fossil fuels
may decline and/or experience significant volatility, which could adversely
impact companies operating in the energy sector.
Risk
of Investing in the Basic Materials Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the basic materials sector. Companies engaged in
the production and distribution of basic materials may be adversely affected by
changes in world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in Medium-Capitalization Companies.
Medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of medium-capitalization companies could trail the
returns on investments in securities of large-capitalization
companies.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk. The
Fund’s return may not match the return of the Russia Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Russia Index and incurs costs associated with
buying and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Russia Index, or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or
deploying
cash in connection with newly created Creation Units, which are not factored
into the return of the Russia Index. Transaction costs, including brokerage
costs, will decrease the Fund’s NAV to the extent not offset by the transaction
fee payable by an Authorized Participant (“AP”). Market disruptions and
regulatory restrictions could have an adverse effect on the Fund’s ability to
adjust its exposure to the required levels in order to track the Russia Index.
Errors in the Russia Index data, the Russia Index computations and/or the
construction of the Russia Index in accordance with its methodology may occur
from time to time and may not be identified and corrected by the Russia Index
provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders. Shareholders should understand that any gains from
the Russia Index provider's errors will be kept by the Fund and its shareholders
and any losses or costs resulting from the Russia Index provider's errors will
be borne by the Fund and its shareholders. When the Russia Index is rebalanced
and the Fund in turn rebalances its portfolio to attempt to increase the
correlation between the Fund’s portfolio and the Russia Index, any transaction
costs and market exposure arising from such portfolio rebalancing will be borne
directly by the Fund and its shareholders. The Fund may not be fully invested at
times either as a result of cash flows into the Fund (if the Fund effects
creations and redemptions for cash) or reserves of cash held by the Fund to meet
redemptions or pay expenses. Apart from scheduled rebalances, the Russia Index
provider or its agents may carry out additional ad hoc rebalances to the Russia
Index. Therefore, errors and additional ad hoc rebalances carried out by the
Russia Index provider or its agents to the Russia Index may increase the costs
to and the tracking error risk of the Fund. In addition, the Fund may not be
able to invest in certain securities included in the Russia Index, or invest in
them in the exact proportions in which they are represented in the Russia Index.
The Fund’s performance may also deviate from the return of the Russia Index due
to legal restrictions or limitations imposed by the governments of certain
countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons or legal
restrictions or limitations (such as diversification requirements). The Fund may
value certain of its investments, underlying securities, underlying currencies
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the Russia Index
is based on securities’ closing prices on local foreign markets (i.e.,
the value of the Russia Index is not based on fair value prices), the Fund’s
ability to track the Russia Index may be adversely affected. In the event
economic sanctions are imposed by the United States against certain Russian
companies, the Fund may not be able to fully replicate the Russia Index by
investing in the relevant securities, which may lead to increased tracking
error. In addition, any issues the Fund encounters with regard to currency
convertibility (including the cost of borrowing funds, if any) and repatriation
may also increase the index tracking risk. When markets are volatile, the
ability to sell securities at fair value prices may be adversely impacted and
may result in additional trading costs and/or increase the index tracking risk.
The Fund may also need to rely on borrowings to meet redemptions, which may lead
to increased expenses. For tax efficiency purposes, the Fund may sell certain
securities, and such sale may cause the Fund to realize a loss and deviate from
the performance of the Russia Index. In light of the factors discussed above,
the Fund’s return may deviate significantly from the return of the Russia Index.
Changes to the composition of the Russia Index in connection with a rebalancing
or reconstitution of the Russia Index may cause the Fund to experience increased
volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Russia Index, the Fund generally would not sell a security
because the security’s issuer was in financial trouble. Additionally, unusual
market conditions may cause the Russia Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Russia Index to vary from its
normal or expected composition. Therefore, the Fund’s performance could be lower
than funds that may actively shift their portfolio assets to take advantage of
market opportunities or to lessen the impact of a market decline or a decline in
the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified funds.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Russia Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The
bar chart that follows shows how the Fund performed for the calendar years
shown. The table below the bar chart shows the Fund’s average annual returns
(before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 19, 2012,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the DAXglobal® Russia+Index (the “Prior Index”).
Therefore, performance information prior to March 19, 2012 reflects the
performance of the Fund while seeking to track the Prior Index. All returns
assume reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
23.90% |
2Q
2020 |
Worst
Quarter: |
-32.68% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
|
|
VanEck Russia ETF (return before
taxes) |
18.74% |
9.98% |
4.05% |
|
|
VanEck Russia ETF (return after taxes
on distributions) |
17.76% |
9.07% |
3.17% |
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VanEck Russia ETF (return after taxes
on distributions and sale of Fund Shares) |
12.72% |
8.02% |
3.03% |
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|
MVIS Russia Index (reflects no
deduction for fees, expenses or taxes, except withholding
taxes)* |
19.18% |
10.44% |
4.15% |
|
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S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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*Prior to March 19, 2012,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Index. Therefore, performance
information prior to March 19, 2012 reflects the performance of the Fund while
seeking to track the Prior Index. Prior to March 19, 2012, index data reflects
that of the Prior Index. From March 19, 2012, the index data reflects that of
the Russia Index.
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
April
2007 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
RUSSIA SMALL-CAP ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Russia Small-Cap ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
Russia Small-Cap Index (the “Russia Small-Cap
Index”).
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses(b) |
1.45 |
% |
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Total
Annual Fund Operating Expenses(a) |
1.95 |
% |
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Fee
Waivers and Expense Reimbursement(a) |
-1.28 |
% |
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|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.67 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, depositary receipt fees up to
0.08% of the Fund’s average daily net assets, trading expenses, taxes and
extraordinary expenses) from exceeding 0.67% of the Fund’s average daily net
assets per year until at least May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
(b) “Other Expenses” have been
restated to reflect current fees.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
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1 |
$68 |
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3 |
$488 |
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5 |
$933 |
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10 |
$2,171 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
47% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Russia Small-Cap Index includes securities of Russian
small-capitalization companies. A company is generally considered to be a
Russian
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Russia Small-Cap ETF.
company
if it is incorporated in Russia or is incorporated outside of Russia but has at
least 50% of its revenues/related assets in Russia. The Fund will normally
invest at least 80% of its total assets in securities of small-capitalization
Russian companies. The Fund may utilize depositary receipts to seek performance
that corresponds to the Fund’s benchmark index. Investments in depositary
receipts of Russian companies whose securities are represented in the Russia
Small-Cap Index, and investments in securities of Russian companies for which
the Russia Small-Cap Index holds depositary receipts, will count towards the
Fund’s 80% investment policy. As of December 31, 2021, the Russia Small-Cap
Index included 25 securities of companies with a market capitalization range of
between approximately $0.21 billion and $4.27 billion and a weighted average
market capitalization of $1.96 billion. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Russia Small-Cap Index by investing in a
portfolio of securities that generally replicates the Russia Small-Cap Index.
Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Russia Small-Cap Index and
does not seek temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Russia Small-Cap Index.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”), and, therefore, may invest a greater
percentage of its assets in a particular issuer. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Russia Small-Cap Index concentrates in an industry or group of industries.
As of December 31, 2021, each of the industrials, basic materials and consumer
discretionary sectors represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Russian Issuers.
Investments in securities of Russian issuers, including issuers located outside
of Russia that generate significant revenues from Russia, 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 or punitive taxation, regional conflict,
political instability, including authoritarian and/or military involvement in
governmental decision making, armed conflict, the imposition of economic
sanctions by other nations, the impact on the economy as a result of civil
unrest, and social instability as a result of religious, ethnic and/or
socioeconomic unrest.
The
securities markets of Russia are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Russia are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, inflation, greater price fluctuations, uncertainty
regarding the existence of trading markets, governmental control and heavy
regulation of labor and industry. Securities markets in Russia are subject to
additional risks relating to the settlement, clearing and registration of
securities transactions. Additionally, certain investments in Russia may become
less liquid in response to market developments or adverse investor perceptions,
or become illiquid after purchase by the Fund, particularly during periods of
market turmoil. When the Fund holds illiquid investments, its portfolio may be
harder to value, especially in changing markets. Moreover, trading on securities
markets in Russia may be suspended altogether.
The
government in Russia may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Russia. These restrictions and/or controls may at times limit or prevent foreign
investment in securities of issuers located or operating in Russia. Moreover,
governmental approval or special licenses may be required 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
Russia and/or impose additional taxes on foreign investors. Less information may
be available about companies in which the Fund invests because many companies
that are tied economically to Russia are not subject to accounting, auditing and
financial reporting standards or to other regulatory practices required by U.S.
companies. These factors, among others, make investing in issuers located or
operating in Russia 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.
As
a result of events involving Russia, the United States and the European Union
(“EU”) have imposed sanctions on certain Russian entities and individuals and
certain sectors of Russia’s economy, which may result in, among other things,
the devaluation of Russian currency, a downgrade in the country’s credit rating,
and/or a decline in the value and liquidity of Russian securities, property or
interests. Sanctions may also include banning Russia from global payments
systems that facilitate cross-border payments. The United States and other
nations or international organizations may impose additional economic sanctions
or take other actions in the future that may adversely affect Russia-exposed
issuers and companies in various sectors of the Russian
economy,
including, but not limited to, the financials, energy, metals and mining,
engineering, and defense and defense-related materials sectors. These sanctions,
any future sanctions or other actions, the threat of further sanctions or other
actions, or actions by the United States to modify or ease sanctions may
negatively affect the value and/or liquidity of the Fund’s portfolio, may affect
the Fund’s ability to operate and to qualify for the favorable tax treatment
afforded to regulated investment companies for U.S. federal income tax purposes,
and may impair the Fund’s ability to achieve its investment objective. For
example, the Fund may be prohibited from investing in securities issued by
companies subject to such sanctions. In addition, the sanctions may require the
Fund to freeze its existing investments in Russian companies, prohibit the Fund
from buying, selling or otherwise transacting in these investments, or
significantly delay or prevent the settlement of securities transactions. Any
retaliatory actions by Russia may further impair the value and liquidity of the
Fund’s portfolio and potentially disrupt its operations. Uncertainty as to
future relations between Russia and the United States or EU countries may also
cause a decline in the value of the Fund’s Shares.
Current
or future sanctions may result in Russia taking counter measures or retaliatory
actions, which may further impair the value and liquidity of Russian securities.
These retaliatory measures may include the immediate freeze of Russian assets
held by a Fund. In the event of such a freeze of any Fund assets, including
depositary receipts, a Fund may need to liquidate non-restricted assets in order
to satisfy any Fund redemption orders. The liquidation of Fund assets during
this time may also result in a Fund receiving substantially lower prices for its
securities. In addition, Russia is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign
governments.
For
these or other reasons, the Fund could seek to suspend redemptions of Creation
Units (defined herein), 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 (“NAV”). 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 NAV. In the case of a period during which creations
are suspended, the Fund could experience substantial redemptions, which may
exacerbate the discount to NAV 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. The Fund may also change its
investment objective by, for example, seeking to track an alternative index, or
the Fund could liquidate all or a portion of its assets, which may be at
unfavorable prices.
The
Russian government continues to control a large share of economic activity in
the region. The Russian government owns shares in corporations in a range of
sectors including banking, energy production and distribution, automotive,
transportation and telecommunications. Additionally, because Russia produces and
exports large volumes of oil and gas, the Russian economy is particularly
sensitive to the price of oil and gas on the world market, and a decline in the
price of oil and gas could have a significant negative impact on the Russian
economy. Political and economic events in Russia may have significant adverse
effects on the Russian ruble and on the value and liquidity of the Fund’s
investments.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging Market Issuers. Investments
in securities of emerging market issuers are exposed to a number of risks that
may make these investments volatile in price or difficult to trade. Emerging
markets are more likely than developed markets to experience problems with the
clearing and settling of trades, as well as the holding of securities by local
banks, agents and depositories. Political risks may include unstable
governments, nationalization, restrictions on foreign ownership, laws that
prevent investors from getting their money out of a country and legal systems
that do not protect property rights as well as the laws of the United States.
Market risks may also include economies that concentrate in only a few
industries, securities issues that are held by only a few investors, liquidity
issues and limited trading capacity in local exchanges and the possibility that
markets or issues may be manipulated by foreign nationals who have inside
information. The frequency, availability and quality of financial information
about investments in emerging markets varies. The Fund has limited rights and
few practical remedies in emerging markets and the ability of U.S. authorities
to bring enforcement actions in emerging markets may be limited, and the Fund's
passive investment approach does not take account of these risks. All of these
factors can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by
banks
or trust companies that entitle the holder to all dividends and capital gains
that are paid out on the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Russia Small-Cap Index, may
negatively affect the Fund’s ability to replicate the performance of the Russia
Small-Cap Index. The issuers of depositary receipts may discontinue issuing new
depositary receipts and withdraw existing depositary receipts at any time, which
may result in costs and delays in the distribution of the underlying assets to
the Fund and may negatively impact the Fund’s performance and the Fund’s ability
to replicate/track the performance of its Index.
Risk
of Investing in the Industrials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the industrials sector. The industrials
sector comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates.
Risk
of Investing in the Basic Materials Sector. The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the basic materials sector. Companies engaged in
the production and distribution of basic materials may be adversely affected by
changes in world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Consumer Discretionary Sector.
The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the consumer discretionary sector. The consumer
discretionary sector comprises companies whose businesses are sensitive to
economic cycles, such as manufacturers of high-end apparel and automobile and
leisure companies. Companies engaged in the consumer discretionary sector are
subject to fluctuations in supply and demand. These companies may also be
adversely affected by changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.
Risk
of Investing in Micro-Capitalization Companies. Micro-capitalization
companies are subject to substantially greater risks of loss and price
fluctuations because their earnings and revenues tend to be less predictable
(and some companies may be experiencing significant losses), and their share
prices tend to be more volatile and their markets less liquid than companies
with larger market capitalizations. The shares of micro-capitalization companies
tend to trade less frequently than those of larger, more established companies,
which can adversely affect the pricing of these securities and the future
ability to sell those securities.
Risk
of Investing in Small-Capitalization Companies.
Small-capitalization companies may be more volatile and more likely than medium-
and large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small-capitalization companies could
trail the returns on investments in securities of medium- and
large-capitalization companies.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk. The
Fund’s return may not match the return of the Russia Small-Cap Index for a
number of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Russia Small-Cap Index and incurs costs
associated with buying and selling securities, especially when rebalancing the
Fund’s securities holdings to reflect changes in the composition of the Russia
Small-Cap Index, or (to the extent the Fund effects creations and redemptions
for cash)
raising
cash to meet redemptions or deploying cash in connection with newly created
Creation Units, which are not factored into the return of the Russia Small-Cap
Index. Transaction costs, including brokerage costs, will decrease the Fund’s
NAV to the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the Russia Small-Cap Index. Errors in the Russia
Small-Cap Index data, the Russia Small-Cap Index computations and/or the
construction of the Russia Small-Cap Index in accordance with its methodology
may occur from time to time and may not be identified and corrected by the
Russia Small-Cap Index provider for a period of time or at all, which may have
an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Russia Small-Cap Index provider's errors will
be kept by the Fund and its shareholders and any losses or costs resulting from
the Russia Small-Cap Index provider's errors will be borne by the Fund and its
shareholders. When the Russia Small-Cap Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the Russia Small-Cap Index, any transaction costs and
market exposure arising from such portfolio rebalancing will be borne directly
by the Fund and its shareholders. The Fund may not be fully invested at times
either as a result of cash flows into the Fund (if the Fund effects creations
and redemptions for cash) or reserves of cash held by the Fund to meet
redemptions or pay expenses. Apart from scheduled rebalances, the Russia
Small-Cap Index provider or its agents may carry out additional ad hoc
rebalances to the Russia Small-Cap Index. Therefore, errors and additional ad
hoc rebalances carried out by the Russia Small-Cap Index provider or its agents
to the Russia Small-Cap Index may increase the costs to and the tracking error
risk of the Fund. In addition, the Fund may not be able to invest in certain
securities included in the Russia Small-Cap Index, or invest in them in the
exact proportions in which they are represented in the Russia Small-Cap Index.
The Fund’s performance may also deviate from the return of the Russia Small-Cap
Index due to legal restrictions or limitations imposed by the governments of
certain countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons or legal
restrictions or limitations (such as diversification requirements). The Fund may
value certain of its investments, underlying securities, underlying currencies
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the Russia
Small-Cap Index is based on securities’ closing prices on local foreign markets
(i.e.,
the value of the Russia Small-Cap Index is not based on fair value prices), the
Fund’s ability to track the Russia Small-Cap Index may be adversely affected. In
the event economic sanctions are imposed by the United States against certain
Russian companies, the Fund may not be able to fully replicate the Russia
Small-Cap Index by investing in the relevant securities, which may lead to
increased tracking error. In addition, any issues the Fund encounters with
regard to currency convertibility (including the cost of borrowing funds, if
any) and repatriation may also increase the index tracking risk. When markets
are volatile, the ability to sell securities at fair value prices may be
adversely impacted and may result in additional trading costs and/or increase
the index tracking risk. The Fund may also need to rely on borrowings to meet
redemptions, which may lead to increased expenses. For tax efficiency purposes,
the Fund may sell certain securities, and such sale may cause the Fund to
realize a loss and deviate from the performance of the Russia Small-Cap Index.
In light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Russia Small-Cap Index. Changes to the
composition of the Russia Small-Cap Index in connection with a rebalancing or
reconstitution of the Russia Small-Cap Index may cause the Fund to experience
increased volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Russia Small-Cap Index, the Fund generally would not sell a
security because the security’s issuer was in financial trouble. Additionally,
unusual market conditions may cause the Russia Small-Cap Index provider to
postpone a scheduled rebalance or reconstitution, which could cause the Russia
Small-Cap Index to vary from its normal or expected composition. Therefore, the
Fund’s performance could be lower than funds that may actively shift their
portfolio assets
to
take advantage of market opportunities or to lessen the impact of a market
decline or a decline in the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading halt), as well as other factors, may result in Shares trading
at a significant premium or discount to NAV or to the intraday value of the
Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the NAV or sells Shares at a time when the market price
is at a discount to the NAV, the shareholder may pay significantly more or
receive significantly less than the underlying value of the Shares that were
bought or sold or the shareholder may be unable to sell his or her Shares. The
securities held by the Fund may be traded in markets that close at a different
time than the Exchange. Liquidity in those securities may be reduced after the
applicable closing times. Accordingly, during the time when the Exchange is open
but after the applicable market closing, fixing or settlement times, bid/ask
spreads on the Exchange and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for the
Fund’s Shares may become less liquid in response to deteriorating liquidity in
the markets for the Fund’s underlying portfolio holdings. There are various
methods by which investors can purchase and sell Shares. Investors should
consult their financial intermediaries before purchasing or selling Shares of
the Fund.
Issuer-Specific
Changes Risk. The
value of individual securities or particular types of securities in the Fund’s
portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk because the Russia Small-Cap Index is comprised of a
limited number of companies.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Russia Small-Cap Index concentrates in
a particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
29.43% |
2Q
2020 |
Worst
Quarter: |
-32.97% |
4Q
2014 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past
Ten Years |
|
|
VanEck Russia Small-Cap ETF (return
before taxes) |
-3.28% |
1.76% |
-0.28% |
|
|
VanEck Russia Small-Cap ETF (return
after taxes on distributions) |
-4.55% |
0.62% |
-1.18% |
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VanEck Russia Small-Cap ETF (return
after taxes on distributions and sale of Fund
Shares) |
-0.97% |
1.24% |
-0.39% |
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|
MVIS Russia Small-Cap Index (reflects
no deduction for fees, expenses or taxes, except withholding
taxes) |
-2.66% |
2.41% |
0.14% |
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S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
April
2011 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Vietnam ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
Vietnam Index (the “Vietnam Index”).
FUND FEES AND EXPENSES
The following tables describe
the fees and expenses that you may pay if you buy, hold and sell shares of the
Fund (“Shares”). You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and examples below.
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Shareholder
Fees (fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses |
0.09 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.59 |
% |
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Fee
Waivers and Expense Reimbursement(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.59 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.76% of the Fund’s average daily net
assets per year until at least May 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
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YEAR |
EXPENSES |
|
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1 |
$60 |
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3 |
$189 |
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5 |
$329 |
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|
10 |
$738 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
57% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The Vietnam Index includes securities of Vietnamese companies. A company
is generally considered to be a Vietnamese company if it is incorporated in
Vietnam or is incorporated outside of Vietnam but has at least 50% of its
revenues/related assets in Vietnam. Such companies may include small- and
medium-capitalization companies. As of December 31, 2021, the Vietnam Index
included 50
________________________________________
1Prior
to September 1, 2021, the Fund's name was VanEck Vectors®
Vietnam ETF.
securities
of companies with a market capitalization range of between approximately $0.17
billion and $16.36 billion and a weighted average market capitalization of $6.27
billion. The Fund’s 80% investment policy is non-fundamental and may be changed
without shareholder approval upon 60 days’ prior written notice to
shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Vietnam Index by investing in a portfolio of
securities that generally replicates the Vietnam Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Vietnam Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Vietnam Index.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “1940 Act”), and, therefore, may invest a greater
percentage of its assets in a particular issuer. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Vietnam Index concentrates in an industry or group of industries. As of
December 31, 2021, each of the real estate, consumer staples, industrials,
financials and consumer discretionary sectors represented a significant portion
of the Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Special
Risk Considerations of Investing in Vietnamese Issuers.
Investments in securities of Vietnamese issuers, including issuers located
outside of Vietnam that generate significant revenues from Vietnam, involve
risks and special considerations not typically associated with investments in
the U.S. securities markets. Such heightened risks include, among others,
expropriation and/or nationalization of assets, restrictions on and government
intervention in international trade, confiscatory taxation, political
instability, including authoritarian and/or military involvement in governmental
decision making, armed conflict, the impact on the economy as a result of civil
war, and social instability as a result of religious, ethnic and/or
socioeconomic unrest. Vietnam is dependent on trading relationships with certain
key trading partners, including the United States, China and Japan, and as a
result may be adversely affected if demand for Vietnam’s exports in those
nations decline.
The
securities markets in Vietnam are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Vietnam are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, illiquidity, greater price fluctuations, uncertainty
regarding the existence of trading markets, governmental control, heavy
regulation of labor and industry and inflation. Vietnam has experienced, and may
in the future experience, a high inflation rate, which is at least partially a
result of the country’s large trade deficit. Due to governmental focus on
economic growth at the expense of currency stability, the inflation rate may
continue at a high level and economic stability could be threatened. Moreover,
trading on securities markets may be suspended altogether.
Regulations
in Vietnam may require the Fund to execute trades of securities of Vietnamese
companies through a single broker. As a result, the Adviser will have less
flexibility to choose among brokers on behalf of the Fund than is typically the
case for investment managers. In addition, because the process of purchasing
securities in Vietnam requires that payment to the local broker occur prior to
receipt of securities, failure of the broker to deliver the securities will
adversely affect the Fund.
The
government in Vietnam may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Vietnam. These restrictions and/or controls may at times limit or prevent
foreign investment in securities of issuers located or operating in Vietnam.
Moreover, Vietnam may require governmental approval or special licenses prior to
investments by foreign investors and may also require governmental approval in
connection with the repatriation of capital by foreign investors. The Vietnamese
government may limit the amount of investments by foreign investors in a
particular industry and/or issuer and may limit such foreign investment to a
certain class of securities of an issuer that may have less advantageous rights
than the classes available for purchase by domiciliaries of Vietnam and/or
impose additional taxes on foreign investors. These factors, among others, make
investing in issuers located or operating in Vietnam significantly riskier than
investing in issuers located or operating in more developed countries, and any
one of them could cause a decline in the value of the Fund’s
Shares.
Special
Risk Considerations of Investing in Taiwanese Issuers.
Investments in securities of Taiwanese issuers, including issuers located
outside of Taiwan region that generate significant revenues from Taiwan region,
involve risks and special considerations not typically associated with
investments in the U.S. securities markets. To the extent the Fund continues to
invest in securities issued by Taiwanese issuers, the Fund may be subject to the
risk of investing in such issuers. Investments in Taiwanese issuers may subject
the Fund to legal, regulatory, political, currency and economic risks that are
specific to Taiwan region. Specifically, Taiwan region’s geographic proximity
and history of political contention with China have resulted in ongoing tensions
between the two countries. These tensions may materially affect the Taiwanese
economy and its securities market. Taiwan region’s economy is export-oriented,
so it depends on an open world trade regime and remains vulnerable to
fluctuations in the world economy.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Risk
of Investing in Frontier Market Issuers.
Vietnam is considered to be a “frontier market.” Frontier market countries
generally have smaller economies and less developed capital markets than
traditional emerging markets, and, as a result, the risks of investing in
frontier market countries are magnified. Investments in securities of frontier
market issuers are exposed to a number of risks that may make these investments
volatile in price or difficult to trade. Frontier markets are more likely than
developed markets to experience problems with the clearing and settling of
trades, as well as the holding of securities by local banks, agents and
depositories. Political risks may include unstable governments, nationalization,
restrictions on foreign ownership, laws that prevent investors from getting
their money out of a country and legal systems that do not protect property
rights as well as the laws of the United States. Market risks may also include
economies that concentrate in only a few industries, securities issues that are
held by only a few investors, liquidity issues and limited trading capacity in
local exchanges and the possibility that markets or issues may be manipulated by
foreign nationals who have inside information.
Foreign
Currency Risk. Because
all or a portion of the income received by the Fund from its investments and/or
the revenues received by the underlying issuer will generally be denominated in
foreign currencies, the Fund’s exposure to foreign currencies and changes in the
value of foreign currencies versus the U.S. dollar may result in reduced returns
for the Fund, and the value of certain foreign currencies may be subject to a
high degree of fluctuation. Moreover, the Fund may incur costs in connection
with conversions between U.S. dollars and foreign currencies.
Risk
of Investing in Depositary Receipts.
The
Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. Investments
in depositary receipts may be less liquid than the underlying shares in their
primary trading market and, if not included in the Vietnam Index, may negatively
affect the Fund’s ability to replicate the performance of the Vietnam Index. The
issuers of depositary receipts may discontinue issuing new depositary receipts
and withdraw existing depositary receipts at any time, which may result in costs
and delays in the distribution of the underlying assets to the Fund and may
negatively impact the Fund’s performance and the Fund’s ability to
replicate/track the performance of its Index.
Risk
of Investing in the Real Estate Sector.
Companies in the real estate sector include companies that invest in real
estate, such as REITs and real estate management and development companies. The
Fund will be sensitive to changes in, and its performance will depend to a
greater extent on, the overall condition of the real estate sector. Companies
that invest in real estate are subject to the risks of owning real estate
directly as well as to risks that relate specifically to the way that such
companies operate, including management risk (such companies are dependent upon
the management skills of a few key individuals and may have limited financial
resources). Adverse economic, business or political developments affecting real
estate could have a major effect on the values of the Fund’s investments.
Investing in real estate is subject to such risks as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent, possible lack of availability of
mortgage financing, market saturation, fluctuations in rental income and the
value of underlying properties and extended vacancies of properties. Certain
real estate securities have a relatively small market capitalization, which may
tend to increase the volatility of the market price of these securities. Real
estate securities have limited diversification and are, therefore, subject to
risks inherent in operating and financing a limited number of projects. Real
estate securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.
Risk
of Investing in the Consumer Staples Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the consumer staples sector. The consumer
staples sector comprises companies whose businesses are less sensitive to
economic cycles, such as manufacturers and distributors of food and beverages
and producers of non-durable household goods and personal products. Companies in
the consumer staples sector may be adversely affected by changes in the
worldwide economy, consumer spending, competition, demographics and consumer
preferences, exploration and production spending. Companies in this sector are
also affected by changes in government regulation, world events and economic
conditions.
Risk
of Investing in the Industrials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the industrials sector. The industrials
sector comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates.
Risk
of Investing in the Financials Sector.
The Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the financials sector. Companies in the
financials sector may be subject to extensive government regulation that affects
the scope of their activities, the prices they can charge and the amount of
capital they must maintain. The profitability of companies in the financials
sector may be adversely affected by increases in interest rates, by loan losses,
which usually increase in economic downturns, and by credit rating downgrades.
In addition, the financials sector is undergoing numerous changes, including
continuing consolidations, development of new products and structures and
changes to its regulatory framework. Furthermore, some companies in the
financials sector perceived as benefitting from government intervention in the
past may be subject to future government-imposed restrictions on their
businesses or face increased government involvement in their operations.
Increased government involvement in the financials sector, including measures
such as taking ownership positions in financial institutions, could result in a
dilution of the Fund’s investments in financial institutions.
Risk
of Investing in the Consumer Discretionary Sector.
The
Fund will be sensitive to, and its performance will depend to a greater extent
on, the overall condition of the consumer discretionary sector. The consumer
discretionary sector comprises companies whose businesses are sensitive to
economic cycles, such as manufacturers of high-end apparel and automobile and
leisure companies. Companies engaged in the consumer discretionary sector are
subject to fluctuations in supply and demand. These companies may also be
adversely affected by changes in consumer spending as a result of world events,
political and economic conditions, commodity price volatility, changes in
exchange rates, imposition of import controls, increased competition, depletion
of resources and labor relations.
Risk
of Investing in Small- and Medium-Capitalization Companies.
Small- and medium-capitalization companies may be more volatile and more likely
than large-capitalization companies to have narrower product lines, fewer
financial resources, less management depth and experience and less competitive
strength. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of
large-capitalization companies.
Risk
of Cash Transactions.
Unlike other exchange-traded funds (“ETFs”), the Fund expects to effect its
creations and redemptions at least partially for cash, rather than wholly for
in-kind securities. Therefore, it may be required to sell portfolio securities
and subsequently incur brokerage costs and/or recognize gains or losses on such
sales that the Fund might not have recognized if it were to distribute portfolio
securities in kind. As such, investments in Shares may be less tax-efficient
than an investment in a conventional ETF.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the Vietnam Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Vietnam Index and incurs costs associated with
buying and selling securities, especially when rebalancing the Fund’s securities
holdings to reflect changes in the composition of the Vietnam Index, or (to the
extent the Fund effects creations and redemptions for cash) raising cash to meet
redemptions or deploying cash in connection with newly created Creation Units,
which are not factored into the return of the Vietnam Index.
Transaction
costs, including brokerage costs, will decrease the Fund’s net asset value
(“NAV”) to the extent not offset by the transaction fee payable by an Authorized
Participant (“AP”). Market disruptions and regulatory restrictions could have an
adverse effect on the Fund’s ability to adjust its exposure to the required
levels in order to track the Vietnam Index. Errors in the Vietnam Index data,
the Vietnam Index computations and/or the construction of the Vietnam Index in
accordance with its methodology may occur from time to time and may not be
identified and corrected by the Vietnam Index provider for a period of time or
at all, which may have an adverse impact on the Fund and its shareholders.
Shareholders should understand that any gains from the Vietnam Index provider's
errors will be kept by the Fund and its shareholders and any losses or costs
resulting from the Vietnam Index provider's errors will be borne by the Fund and
its shareholders. When the Vietnam Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the Vietnam Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by the
Fund and its shareholders. The Fund may not be fully invested at times either as
a result of cash flows into the Fund (if the Fund effects creations and
redemptions for cash) or reserves of cash held by the Fund to meet redemptions
or pay expenses. Apart from scheduled rebalances, the Vietnam Index provider or
its agents may carry out additional ad hoc rebalances to the Vietnam Index.
Therefore, errors and additional ad hoc rebalances carried out by the Vietnam
Index provider or its agents to the Vietnam Index may increase the costs to and
the tracking error risk of the Fund. In addition, the Fund may not be able to
invest in certain securities included in the Vietnam Index, or invest in them in
the exact proportions in which they are represented in the Vietnam Index. The
Fund’s performance may also deviate from the return of the Vietnam Index due to
legal restrictions or limitations imposed by the governments of certain
countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons or legal
restrictions or limitations (such as diversification requirements). The Fund may
value certain of its investments, underlying securities, underlying currencies
and/or other assets based on fair value prices. To the extent the Fund
calculates its NAV based on fair value prices and the value of the Vietnam Index
is based on securities’ closing prices on local foreign markets (i.e.,
the value of the Vietnam Index is not based on fair value prices), the Fund’s
ability to track the Vietnam Index may be adversely affected. In addition, any
issues the Fund encounters with regard to currency convertibility (including the
cost of borrowing funds, if any) and repatriation may also increase the index
tracking risk. When markets are volatile, the ability to sell securities at fair
value prices may be adversely impacted and may result in additional trading
costs and/or increase the index tracking risk. The Fund may also need to rely on
borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, the Fund may sell certain securities, and such sale may
cause the Fund to realize a loss and deviate from the performance of the Vietnam
Index. In light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Vietnam Index. Changes to the composition
of the Vietnam Index in connection with a rebalancing or reconstitution of the
Vietnam Index may cause the Fund to experience increased volatility, during
which time the Fund’s index tracking risk may be heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of financial institutions that act as APs,
none of which are obligated to engage in creation and/or redemption
transactions. To the extent that those APs exit the business, or are unable to
or choose not to process creation and/or redemption orders, and no other AP is
able to step forward to create and redeem, there may be a significantly
diminished trading market for Shares or Shares may trade like closed-end funds
at a greater discount (or premium) to NAV and possibly face trading halts and/or
de-listing. The AP concentration risk may be heightened in scenarios where APs
have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its NAV.
Trading
Issues.
Trading in Shares on the Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on the Exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the Exchange’s “circuit
breaker” rules. There can be no assurance that the requirements of the Exchange
necessary to maintain the listing of the Fund will continue to be met or will
remain unchanged.
Passive
Management Risk.
An investment in the Fund involves risks similar to those of investing in any
fund invested in equity securities traded on an exchange, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. However,
because the Fund is not “actively” managed, unless a specific security is
removed from the Vietnam Index, the Fund generally would not sell a security
because the security’s issuer was in financial trouble. Additionally, unusual
market conditions may cause the Vietnam Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Vietnam Index to vary from
its normal or expected composition. Therefore, the Fund’s performance could be
lower than funds that may actively shift their portfolio assets to take
advantage of market opportunities or to lessen the impact of a market decline or
a decline in the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s NAV, the
intraday value of the Fund’s holdings and supply and demand for Shares. The
Adviser cannot predict whether Shares will trade above, below, or at their most
recent NAV. Disruptions to creations and redemptions, the existence of market
volatility or potential lack of an active trading market for Shares (including
through a trading
halt),
as well as other factors, may result in Shares trading at a significant premium
or discount to NAV or to the intraday value of the Fund’s holdings. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may pay significantly more or receive significantly less
than the underlying value of the Shares that were bought or sold or the
shareholder may be unable to sell his or her Shares. The securities held by the
Fund may be traded in markets that close at a different time than the Exchange.
Liquidity in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the Exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the Exchange and
the resulting premium or discount to the Shares’ NAV may widen. Additionally, in
stressed market conditions, the market for the Fund’s Shares may become less
liquid in response to deteriorating liquidity in the markets for the Fund’s
underlying portfolio holdings. There are various methods by which investors can
purchase and sell Shares. Investors should consult their financial
intermediaries before purchasing or selling Shares of the Fund.
Issuer-Specific
Changes Risk. The
value of individual securities or particular types of securities in the Fund’s
portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified”
fund under the 1940 Act. Therefore, the Fund may invest a relatively high
percentage of its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. Moreover, the gains and losses on a
single investment may have a greater impact on the Fund’s NAV and may make the
Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk because the Vietnam Index is comprised of a limited
number of companies.
Concentration
Risk.
The Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent the Vietnam Index concentrates in
a particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar years shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. All returns assume
reinvestment of dividends and distributions. The Fund’s past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.vaneck.com.
Annual Total Returns (%)—Calendar
Years
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Best
Quarter: |
29.34% |
1Q
2012 |
Worst
Quarter: |
-34.24% |
1Q
2020 |
Average Annual Total Returns for the Periods
Ended December 31, 2021
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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Past One
Year |
Past Five
Years |
Past Ten
Years |
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VanEck Vietnam ETF (return before
taxes) |
22.52% |
11.27% |
5.62% |
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VanEck Vietnam ETF (return after taxes
on distributions) |
22.34% |
11.04% |
4.94% |
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VanEck Vietnam ETF (return after taxes
on distributions and sale of Fund Shares) |
13.39% |
8.91% |
4.16% |
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MVIS Vietnam Index (reflects no
deduction for fees, expenses or taxes, except withholding
taxes) |
24.12% |
12.20% |
6.66% |
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S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
28.71% |
18.47% |
16.55% |
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See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
August
2009 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
March
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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SUMMARY
INFORMATION ABOUT PURCHASES AND SALES OF FUND SHARES, TAXES AND PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL
INTERMEDIARIES |
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of a Fund may only be purchased and sold in secondary market transactions
through a broker or dealer at a market price. Shares of the Funds are listed on
the Exchange, and because Shares trade at market prices rather than NAV, Shares
of the Funds may trade at a price greater than NAV (i.e.,
a “premium”) or less than NAV (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of a Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid/ask spread”).
Recent
information, including information about each Fund’s NAV, market price, premiums
and discounts, and bid/ask spreads, is included on the Fund’s website at
www.vaneck.com.
TAX
INFORMATION
Each
Fund’s distributions are taxable and will generally be taxed as ordinary income
or capital gains.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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ADDITIONAL
INFORMATION ABOUT THE FUNDS’ INVESTMENT STRATEGIES AND
RISKS |
PRINCIPAL
INVESTMENT STRATEGIES
The
Adviser anticipates that, generally, each Fund will hold or gain exposure to all
of the securities that comprise its benchmark index (the “Index”) in proportion
to their weightings in such Index. However, under various circumstances, it may
not be possible or practicable to purchase all of those securities in those
weightings. In these circumstances, a Fund may purchase a sample of securities
in its Index. There also may be instances in which the Adviser may choose to
underweight or overweight a security in a Fund’s Index, purchase securities not
in the Fund’s Index that the Adviser believes are appropriate to substitute for
certain securities in such Index or utilize various combinations of other
available investment techniques in seeking to replicate as closely as possible,
before fees and expenses, the price and yield performance of the Fund’s Index.
Each Fund may sell securities that are represented in its Index in anticipation
of their removal from its Index or purchase securities not represented in its
Index in anticipation of their addition to such Index. Each Fund may also, in
order to comply with the tax diversification requirements of the Internal
Revenue Code of 1986, as amended (the “Code”), temporarily invest in securities
not included in its Index that are expected to be highly correlated with the
securities included in its Index.
FUNDAMENTAL
AND NON-FUNDAMENTAL POLICIES
Each
Fund’s investment objective and each of its other investment policies are
non-fundamental policies that may be changed by the Board of Trustees of the
Trust (the “Board of Trustees”) without shareholder approval, except as noted in
this Prospectus or the Statement of Additional Information (“SAI”) under the
section entitled “Investment Policies and Restrictions—Investment
Restrictions.”
RISKS
OF INVESTING IN THE FUNDS
The
following section provides additional information regarding the principal risks
identified under “Principal Risks of Investing in the Fund” in each Fund’s
“Summary Information” section followed by additional risk information. The risks
listed below are applicable for each Fund unless otherwise noted.
Investors
in the Funds should be willing to accept a high degree of volatility in the
price of the Funds’ Shares and the possibility of significant losses. An
investment in the Funds involves a substantial degree of risk. An investment in
the Funds is not a deposit with a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Therefore,
you should consider carefully the following risks before investing in the Funds,
each of which could significantly and adversely affect the value of an
investment in a Fund.
Special
Risk Considerations of Investing in African Issuers.
(VanEck Africa Index ETF only.) 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. Securities laws in many countries in Africa
are relatively new and unsettled and, consequently, there is a risk of rapid and
unpredictable change in laws regarding foreign investment, securities
regulation, title to securities and shareholder rights. Shareholders of issuers
located in African countries may not receive many of the protections available
to shareholders of issuers located in more developed countries. Even in
circumstances where adequate laws and shareholder rights exist, it may not be
possible to obtain swift and equitable enforcement of the law.
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 NAV. 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 NAV. In the case of a period
during which creations are suspended, the Fund could experience substantial
redemptions, which may exacerbate the discount to NAV 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 Brazilian Issuers.
(VanEck Brazil Small-Cap ETF only.) Investments in securities of Brazilian
issuers, including issuers located outside of Brazil that generate significant
revenues from Brazil, involve risks and special considerations not typically
associated with investments in the U.S. securities markets. Such risks include,
among others, a high level of price volatility in the Brazilian equity and
currency markets, chronic structural public sector deficits, a rising
unemployment rate and disparities of wealth. The Brazilian economy has been
characterized by frequent, and occasionally drastic, interventions by the
Brazilian government, including the imposition of wage and price controls,
exchange controls, limiting imports, blocking access to bank accounts and other
measures. The Brazilian government has often changed monetary, taxation, credit,
trade and other policies to influence the core of Brazil’s economy.
Additionally, Brazilian accounting, auditing and financial standards and
requirements differ from those in the United States, and this may affect the tax
consequences with respect to and valuation of investments in the
Fund.
Actions
taken by the Brazilian government concerning the economy may have significant
effects on Brazilian companies and on market conditions and prices of Brazilian
securities. Such governmental actions to control inflation and affect other
economic policies have involved, among others, setting of wage and price
controls, blocking access to bank accounts, adjusting of the base
interest
rates, imposing exchange controls and limiting imports into Brazil. Brazil’s
economy may be subject to sluggish economic growth due to, among other things,
weak consumer spending, political turmoil, high rates of inflation and low
commodity prices. Brazil suffers from chronic structural public sector deficits.
Additionally, the process of privatizing certain entities by the Brazilian
government may cause privatized entities to suffer losses due to, among other
things, the inability to adjust to a competitive environment.
The
market for Brazilian securities is directly influenced by the flow of
international capital, and economic and market conditions of certain countries,
especially emerging market countries. As a result, adverse economic conditions
or developments in other emerging market countries have at times significantly
affected the availability of credit in the Brazilian economy and resulted in
considerable outflows of funds and declines in the amount of foreign currency
invested in Brazil. In addition, currency devaluations and economic or political
developments in any Central and South American country could have a significant
adverse effect on the entire region, including Brazil.
Investments
in Brazilian securities may be subject to certain restrictions on foreign
investment. Brazilian law provides that whenever a serious imbalance in Brazil’s
balance of payments exists or is anticipated, the Brazilian government may
impose temporary restrictions on the remittance to foreign investors of the
proceeds of their investment in Brazil and on the conversion of the Brazilian
real into foreign currency. The likelihood of such restrictions may be affected
by the extent of Brazil’s foreign currency revenues, the size of Brazil’s debt
service burden relative to the economy as a whole, and political constraints to
which Brazil may be subject. Brazilian investment and repatriation controls
could also affect the Fund’s ability to operate and to qualify for the favorable
tax treatment afforded to regulated investment companies for U.S. federal income
tax purposes.
Brazil
has historically experienced high rates of inflation and a high level of debt,
each of which may constrain economic growth. Brazil suffers from high levels of
corruption, crime and income disparity. The Brazilian economy and Brazilian
companies may also be adversely affected by significant public health concerns
and associated declines in tourism.
The
Brazilian economy is heavily dependent upon commodity prices and international
trade. The Brazilian securities markets are smaller, less liquid and more
volatile than U.S. securities markets and the market for Brazilian securities is
influenced by economic and market conditions of certain countries, especially
emerging market countries in Central and South America. Unanticipated political
or social developments may result in sudden and significant investment losses.
An increase in prices for commodities, such as petroleum, the depreciation of
the Brazilian real and future governmental measures seeking to maintain the
value of the Brazilian real in relation to the U.S. dollar, may trigger
increases in inflation in Brazil and may slow the rate of growth of the
Brazilian economy. Conversely, appreciation of the Brazilian real relative to
the U.S. dollar may lead to the deterioration of Brazil’s current account and
balance of payments as well as limit the growth of exports.
Because
the Fund’s assets will be invested primarily in equity securities of Brazilian
issuers, the income received by the Fund will be principally in Brazilian real.
The Fund’s exposure to the Brazilian real and changes in value of the Brazilian
real versus the U.S. dollar may result in reduced returns for the Fund.
Moreover, the Fund may incur costs in connection with conversions between U.S.
dollars and Brazilian real.
Special
Risk Considerations of Investing in Egyptian Issuers.
(VanEck Egypt Index ETF only.) Investments in securities of Egyptian issuers,
including issuers located outside of Egypt that generate significant revenue
from Egypt, involve risks and special considerations not typically associated
with investments in the U.S. securities markets. Such heightened risks include,
among others, the imposition of capital controls, expropriation and/or
nationalization of assets, confiscatory taxation, regional conflict, political
instability, including authoritarian and/or military involvement in governmental
decision making, armed conflict, the impact on the economy as a result of civil
unrest and social instability as a result of religious, ethnic and/or
socioeconomic unrest. Poor living standards, disparities of wealth and
limitations on political freedom have contributed to the unstable environment.
Unanticipated or sudden political or social developments may result in sudden
and significant investment losses. Issuers in Egypt 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. These factors, among
others, make investing in issuers located or operating in Egypt 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.
The
securities markets in Egypt are underdeveloped and may be less correlated to
global economic cycles than those markets located in more developed countries.
Securities markets in Egypt 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 risks could cause the Fund’s shares to trade at a significant
premium or discount to its NAV. Moreover, trading on securities markets may be
suspended altogether, including the possibility that securities markets may be
closed for an extended period of time due to political and civil
unrest.
The
government in Egypt may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Egypt. These restrictions and/or controls may at times limit or prevent foreign
investment in securities of issuers located or operating in Egypt. For example,
there may be prohibitions or substantial restrictions on foreign investing in
Egypt’s capital markets or in certain sectors or industries. Moreover, Egypt 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 Egypt and/or impose additional taxes on foreign
investors. There may be a risk of loss due to the imposition of restrictions on
repatriation of capital invested.
Egypt
entered into a bilateral investment treaty with the United States, designed to
encourage and protect U.S. investment in Egypt. However, there may be a risk of
loss due to expropriation and/or nationalization of assets, confiscation of
assets and property or the imposition of restrictions on foreign investments and
on repatriation of capital invested, particularly if the bilateral investment
treaty with the United States is not fully implemented or fails in its purpose.
Other diplomatic developments could adversely affect investments in Egypt,
particularly as Egypt is involved in negotiations for various regional
conflicts.
Egypt’s
economy is dependent on trade with certain key trading partners, including the
United States. Reduction in spending by these economies on Egyptian products and
services or negative changes in any of these economies may cause an adverse
impact on Egypt’s economy. The Egyptian economy is also heavily dependent on
tourism, export of oil and gas, and shipping services revenues from the Suez
Canal. Tourism receipts are vulnerable to terrorism, spillovers from conflicts
in the region, and potential political instability. Political unrest and
terrorist attacks has, in the past, and may, in the future, hurt tourism. As
Egypt produces and exports oil and gas, any acts of terrorism or armed conflict
causing disruptions of oil and gas exports could affect the Egyptian economy
and, thus, adversely affect the financial condition, results of operations or
prospects of companies in which a may invest. Furthermore, any acts of terrorism
or armed conflict in Egypt or regionally could divert demand for the use of the
Suez Canal, thereby reducing revenues from the Suez Canal.
In
addition, there may be limitations or delays in the convertibility or
repatriation of the Egyptian pound which would adversely affect the U.S. dollar
value and/or liquidity of the Fund’s investments denominated in the Egyptian
pound, 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.
When the Fund holds illiquid investments, its portfolio may be harder to
value.
In
Egypt, the marketability of quoted shares is limited due to the restricted
opening hours of stock exchanges, a narrow range of investors and a relatively
high proportion of market value being concentrated in the hands of a relatively
small number of shareholders. In addition, because Egyptian stock exchanges on
which the Fund’s portfolio securities may trade are open when the Exchange is
closed, the Fund may be subject to heightened risk associated with market
movements.
Special
Risk Considerations of Investing in Indian Issuers.
(VanEck India Growth Leaders ETF only.) Investments in securities of Indian
issuers involve risks and special considerations not typically associated with
investments in the U.S. securities markets. Such heightened risks include, among
others, greater government control over the economy, political and legal
uncertainty, competition from low-cost issuers of other emerging economies in
Asia, currency fluctuations or blockage of foreign currency exchanges and the
risk of nationalization or expropriation of assets. Large portions of many
Indian companies remain in the hands of individuals and corporate governance
standards of Indian companies may be weaker and less transparent, which may
increase the risk of loss and unequal treatment of investors. In addition,
religious and border disputes persist in India. India has experienced civil
unrest and hostilities with neighboring countries, including Pakistan, and the
Indian government has confronted separatist movements in several Indian states.
India has also experienced acts of terrorism that have targeted foreigners,
which have had a negative impact on tourism, an important sector of the Indian
economy. India has tested nuclear arms, and the threat of deployment of such
weapons could hinder development of the Indian economy and escalating tensions
could impact the broader region.
The
Indian securities markets are smaller and less liquid than securities markets in
more developed economies and are subject to greater price volatility. Issuers in
India are subject to less stringent requirements regarding accounting, auditing
and financial reporting than are issuers in more developed markets, and
therefore, all material information may not be available or reliable. India also
has less developed clearance and settlement procedures, and there have been
times when settlements have been unable to keep pace with the volume of
securities and have been significantly delayed. Indian stock exchanges have
experienced problems such as temporary exchange closures, broker defaults,
settlement delays and strikes by brokers that have affected the market price and
liquidity of the securities of Indian companies. In addition, the governing
bodies of the Indian stock exchanges have from time to time restricted
securities from trading, limited price movements and restricted margin
requirements. Further, from time to time, disputes have occurred between listed
companies and the Indian stock exchanges and other regulatory bodies that, in
some cases, have had a negative effect on market sentiment. In addition,
inflation in India may be at very high levels. High inflation may lead to the
adoption of corrective measures designed to moderate growth, regulate prices of
staples and other commodities and otherwise contain inflation. Such measures
could inhibit economic activity in India. Additionally, each of the factors
described below could have a negative impact on the Fund’s performance and
increase the volatility of the Fund.
Economic
Risk.
The Indian government has exercised and continues to exercise significant
influence over many aspects of the economy, and the number of public sector
enterprises in India is substantial. Accordingly, Indian government actions in
the future could have a significant effect on the Indian economy. The Indian
government has experienced chronic structural public sector deficits. High
amounts of debt and public spending could have an adverse impact on India’s
economy. Services are the major source of economic growth, accounting for half
of India’s output with less than one quarter of its labor force. Additionally,
the Indian economy may be dependent upon agriculture. About two-thirds of the
workforce is in agriculture. The Fund’s investments may be susceptible to
adverse weather changes including the threat of monsoons and other natural
disasters.
Despite strong growth, the World Bank and others express concern about the
combined state and federal budget deficit.
Regulatory
Risk.
Under the Foreign Portfolio Investors Regulations, 2019 (“FPI Regulations”) of
the Securities and Exchange Board of India (“SEBI”), a foreign portfolio
investor (“FPI”), is subject to certain restrictions on buying, selling or
otherwise dealing in securities.
The
Subsidiary, a wholly owned subsidiary located in the Republic of Mauritius, is
registered as an FPI with SEBI in order to obtain the ability to make and
dispose of investments. There can be no assurance that the Subsidiary will
continue to qualify for the FPI license. Loss of the FPI registration could
adversely impact the ability of the Fund to make investments in India. In the
event that this registration is terminated, the Fund might be required to
liquidate its positions in Indian securities at an inopportune time or upon
disadvantageous terms. Further, any investigations of, or actions against, the
Fund or any of its shareholders initiated by the SEBI or any other Indian
regulatory authority may impose restrictions, including a ban, on the investment
and trading activities of the Fund.
SEBI
imposes certain limitations on participation in an FPI by Non-Resident Indians
(“NRI”), Overseas Citizens of India (“OCI”) or Resident Indians (“RI”). The Fund
may compulsorily redeem units held by such investor(s) or take other actions in
order to comply with applicable Indian law.
The
Subsidiary’s investments will be made in accordance with investment restrictions
prescribed under the FPI Regulations. If new policy announcements or regulations
in India are made, including potential policies with retroactive effect which
require changes in the structure or operations of the Fund, the performance of
the Fund may be adversely impacted.
In
addition, FPIs that are domiciled in countries which are classified as
“high-risk” jurisdictions or that are monitored by the Financial Action Task
Force may be subject to additional compliance requirements and/or increased
monitoring by the designated depository participant and/or the SEBI. These
policies are constantly evolving and could have an adverse impact on the
Fund.
Investment
and Repatriation Restrictions. The
Central Government and the RBI impose certain limits on the foreign ownership of
Indian securities, generally, up to 49% of the paid up capital on a fully
diluted basis of the Indian company or the sectoral or statutory cap, whichever
is lower, under the automatic route (i.e. without any Government approval or
compliance of sectoral conditions) if such investment does not result in
transfer of ownership and control of the resident Indian company from resident
Indian citizens or transfer of ownership or control to persons resident outside
India. The aggregate holding of a single FPI, whether directly or through
offshore derivative instruments (“ODIs”) or a combination thereof, in an Indian
issuer must be less than 10% of the total paid-up equity capital on a fully
diluted basis of such Indian issuer. SEBI, the Indian counterpart of the SEC in
the United States, monitors foreign holdings and periodically announces current
foreign ownership limitations and changes to such limits. These restrictions
and/or controls may at times limit or prevent foreign investment in securities
of issuers located or operating in India and may inhibit the Fund’s ability to
track the India Index.
In
the case of an ultimate beneficial owner who has direct or indirect common
shareholding/beneficial ownership/beneficial interest of more than 50% in an FPI
and an ODI subscriber entity or two or more FPIs/ODI subscribers, the
participation through ODIs would be aggregated with the direct holding of FPIs
or the other concerned ODI subscribers while determining whether the above
investment cap in an Indian company has been triggered.
Tax
Risk.
The Subsidiary is a wholly-owned subsidiary of the Trust in Mauritius. The tax
risks relevant in this regard are:
Indirect
Transfer Risk:
Where Shares are sold by investors/redeemed by the Fund, gains from such
transfer could be subject to tax in India if certain thresholds are met. For
more information about this issue, please see “Taxation of Indirect Transfer of
Indian Assets” below.
Exposure
to Permanent Establishment (“PE”):
While the Fund believes that the activities of the Subsidiary or the Adviser
should not create a PE of the Subsidiary or the Adviser in India, the Indian tax
authorities may claim that these activities have resulted in a PE of the Adviser
and/or the Subsidiary in India. Under such circumstances, the profits of the
Subsidiary to the extent attributable to the PE would be subject to taxation in
India.
General
Anti-Avoidance Rules (“GAAR”):
GAAR in the Indian Income Tax Act, 1961 (“ITA 1961”), effective April 1, 2017,
empowers the tax authorities to investigate and declare any arrangement as an
“impermissible avoidance arrangement.” For additional details on GAAR, please
refer to “GAAR” under “India-Mauritius Double Tax Avoidance Treaty”
below.
Renegotiation
of the India-Mauritius Double Taxation Avoidance Treaty (Treaty):
On May 10, 2016, India and Mauritius entered into the 2016 Protocol, which
amended the Treaty. The 2016 Protocol allows India to tax capital gains which
arise from alienation of shares of an Indian resident company acquired by a
Mauritian tax resident. For more information about this issue, please see “Tax
Information—India-Mauritius Double Tax Avoidance Treaty.” There can be no
assurance that (i) the terms of the Treaty will continue to be upheld by the
Supreme Court of India and will not be amended or subject to a different
interpretation in the future or (ii) the Subsidiary will continue to be deemed a
tax resident by Mauritius. Any change in the provisions of the Treaty or in its
applicability to the Subsidiary could result in the
imposition
of withholding and other taxes on the Subsidiary by India, which would reduce
the return to the Fund on its investments.
The
Fund intends to elect to “pass-through” to the Fund’s shareholders as a
deduction or credit the amount of foreign taxes paid by the Fund. The taxes
passed through to shareholders are included in each shareholder’s income.
Certain shareholders, including some non-U.S. shareholders, are not entitled to
the benefit of a deduction or credit with respect to foreign taxes paid by the
Fund. Foreign capital gain taxes will likely be associated with U.S. source
income, not foreign source income, thereby restricting the usability of such
taxes for U.S. foreign tax credit purposes. Other foreign taxes, such as
transfer taxes, may be imposed on the Fund, but would not give rise to a credit,
or be eligible to be passed through to shareholders.
Subsidiary
Risks.
The Fund may cease utilizing the Subsidiary in the future. Ceasing to utilize
the Subsidiary could result in realized gains for the Fund, capital gains tax
liability and other tax liability in India and Mauritius and in other associated
liabilities.
Limitations
on the Subsidiary’s Ability to Make Distributions or Pay Redemption Proceeds to
the Fund.
Under applicable laws in Mauritius, the Subsidiary can only make distributions
if the value of its assets is greater than the sum of the value of its
liabilities and its stated capital. In addition, the Subsidiary is subject to
limitations under applicable laws in Mauritius on payments of redemption
proceeds depending on its accumulated losses for accounting purposes. These
limitations may adversely affect the ability of the Subsidiary to make
distributions or pay redemption proceeds to the Fund, which may negatively
affect the Fund.
Special
Risk Considerations of Investing in Indonesian Issuers.
(VanEck Indonesia Index ETF only.) Investments in securities of Indonesian
issuers, including issuers located outside of Indonesia that generate
significant revenues from Indonesia, 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, currency devaluations, high rates of inflation,
corruption, political instability, including authoritarian and/or military
involvement in governmental decision making, sectarian and separatist violence,
armed conflict, acts of terrorism, the impact on the economy as a result of
civil war, and social instability as a result of religious, ethnic and/or
socioeconomic unrest. In addition, the Indonesian economy is dependent upon
trade with other nations, including China, Japan, Singapore and the United
States. Adverse conditions or changes in relationships with Indonesia’s major
trading partners may significantly impact the Indonesian economy. Indonesia is
particularly vulnerable to the effects of an economic slowdown in China, which
has been a major source of demand growth for Indonesia’s commodity exports.
Indonesia is also vulnerable to economic weakness in Japan, which remains one of
Indonesia’s largest single export markets. Indonesia has experienced acts of
terrorism that have targeted foreigners. Such acts of terrorism have had a
negative impact on tourism, an important sector of the Indonesian
economy.
Indonesia
has, in the past, applied prudent macroeconomic efforts and policy reforms that
have led to growth in recent years, but many economic development problems
remain, including poverty and unemployment, corruption, inadequate
infrastructure, a complex regulatory environment and unequal resource
distribution among regions. Additionally, Indonesia has faced violent separatist
movements, as well as outbreaks of violence amongst religious and ethnic groups.
A history of discrimination, official persecution, and populist violence
continues to heighten the risk of economic disruption in Indonesia.
Indonesia
is considered an emerging market and its securities markets are characterized by
a small number of company listings and are underdeveloped and often considered
to be less correlated to global economic cycles than those markets located in
more developed countries. As a result, securities markets in Indonesia 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 investment by foreigners, 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 Indonesian securities, the purchase and sale
prices for such securities and the timing of purchases and sales. Moreover,
trading on securities markets may be suspended altogether.
The
government in Indonesia may restrict or control to varying degrees the ability
of foreign investors to invest in securities of issuers located or operating in
Indonesia. These restrictions and/or controls may at times limit or prevent
foreign investment in securities of issuers located or operating in Indonesia.
Moreover, governmental approval or special licenses may be required 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 Indonesia and/or impose additional taxes on foreign investors.
Indonesia’s securities laws are unsettled and judicial enforcement of contracts
with foreign entities is inconsistent and, as a result of pervasive corruption,
is subject to the risk that cases will not be judged impartially. Indonesia has
employed a program of monetary loosening through reductions in interest rates
and implemented a number of reforms to encourage investment. Although
Indonesia’s central bank has continued to utilize monetary policies to promote
growth, there can be no guarantee such efforts will be sufficient or that
additional stimulus policies will not be necessary in the future.
Indonesia
is located in a part of the world that has historically been prone to natural
disasters such as tsunamis, earthquakes, volcanoes, and typhoons, and is
economically sensitive to environmental events. Natural disasters may become
more frequent and severe as a result of global climate change. Any such event
could result in a significant adverse impact on Indonesia’s economy. Given the
particular vulnerability of Indonesia to the effects of climate change,
disruptions in international efforts to address climate-related issues may have
a disproportionate impact on a fund’s investments in the country. These factors,
among others, make investing in issuers located or operating in Indonesia
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
each Fund’s Shares.
Special
Risk Considerations of Investing in Israeli Issuers.
(VanEck Israel ETF only.) Investments in securities of Israeli issuers,
including issuers located outside of Israel that generate significant revenues
from Israel, involve risks and special considerations that are not typically
associated with investments in the U.S. securities markets. Israel’s economy
depends on imports of certain key items such as crude oil, natural gas, coal,
grains, raw materials and military equipment. Israel’s economy is also dependent
upon external trade with other economies, including the United States, China,
Japan, Canada, the United Kingdom and EU countries. Any reduction in trade flows
or in spending on Israeli products and services or changes in any of these other
economies may adversely impact the Fund. The government of Israel may change the
way in which Israeli companies are taxed, or may impose taxes on foreign
investments. Such actions could have a negative impact on the overall market for
Israeli securities and on the Fund. Israel’s relations with the Palestinian
Authority and its neighboring countries Lebanon, Syria and Iran, among others,
have at times been strained due to territorial disputes, historical animosities
or security concerns, which may cause uncertainty in the Israeli markets and
adversely affect the overall economy.
Israel
has experienced a history of hostile relations with several countries in the
Middle-East region. Israel and its citizens have also been the target of
periodic acts of terrorism that have the potential to disrupt economic activity
in the country, and certain terrorist groups are committed to violence against
Israel. U.S.-designated terrorist groups, such as Hezbollah and Hamas, operate
in close proximity to Israel’s borders and frequently threaten Israel with
attack. Current hostilities and the potential for future hostilities may
diminish the value of companies whose principal operations or headquarters are
located in Israel. Actual hostilities or the threat of future hostilities may
cause significant volatility in the share price of companies based in or having
significant operations in Israel.
Due
to political or civil unrest in Israel, the Israeli securities market may be
closed for extended periods of time or trading on the Israeli securities market
may be suspended altogether. In addition, the Israeli government may restrict or
control to varying degrees the ability of foreign investors to invest in
securities of issuers located or operating in Israel. These restrictions and/or
controls may at times limit or prevent foreign investment in securities of
issuers located or operating in Israel and may inhibit the Fund’s ability to
track the Israel Index. There may also be less information concerning the
securities of Israeli companies available to the public than the securities of
U.S. companies. There is also potential difficulty in obtaining or enforcing a
court judgment, and the unique characteristics of securities of Israeli
companies and the Israeli securities market may have a negative impact on the
Fund.
The
Fund’s investments in the securities of Israeli issuers may experience more
rapid and extreme changes in value than funds with investments solely in
securities of U.S. companies or funds that invest across a larger spectrum of
the foreign market. This is because the securities market in Israel is
relatively small, with a limited number of companies representing a smaller
number of industries. Israeli issuers are not subject to the same degree of
regulation as U.S. issuers. Furthermore, shares and dividends of Israeli
Companies are often Israeli new shekel (“ILS”)-denominated. Changes in the
relationship of the ILS to the U.S. dollar and other currencies could have a
negative impact on the Fund.
Special
Risk Considerations of Investing in Russian Issuers.
(VanEck Russia ETF and VanEck Russia Small-Cap ETF only.) Investments in
securities of Russian issuers, including issuers located outside of Russia that
generate significant revenues from Russia, 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 or punitive taxation, regional conflict,
political instability, including authoritarian and/or military involvement in
governmental decision making, armed conflict, the imposition of economic
sanctions by other nations, the impact on the economy as a result of civil war,
and social instability as a result of religious, ethnic and/or socioeconomic
unrest. Additionally, because Russia produces and exports large volumes of oil
and gas, the Russian economy is particularly sensitive to the price of oil and
gas on the world market, and a decline in the price of oil and gas could have a
significant negative impact on the Russian economy.
Investments
in securities of Russian issuers also includes the risk of delays in settling
portfolio transactions and the risk of loss arising out of the system of share
registration and custody used in Russia. Additionally, there are risks in
connection with the maintenance of a Fund’s portfolio securities and cash with
foreign sub-custodians and securities depositories, including the risk that
appropriate sub-custody arrangements will not be available to the Fund. There is
also the risk that a Fund’s ownership rights in portfolio securities could be
lost through fraud or negligence because ownership in shares of Russian
companies is recorded by the companies themselves and by registrars, rather than
by a central registration system. In addition, the risk that a Fund may not be
able to pursue claims on behalf of its shareholders because of the system of
share registration and custody, and because Russian banking institutions and
registrars are not guaranteed by the Russian government.
The
securities markets of Russia are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Russia are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, inflation, greater price fluctuations, uncertainty
regarding the existence of trading markets, governmental control and heavy
regulation of labor and industry. Securities markets in Russia are subject to
additional risks relating to the settlement, clearing and registration of
securities transactions. Additionally, certain investments in Russia may become
less liquid in response to market developments or adverse investor perceptions,
or become illiquid after purchase by the Fund, particularly during periods of
market turmoil. When the Fund holds illiquid investments, its portfolio may be
harder to value, especially in changing markets. Moreover, trading on securities
markets in Russia may be suspended altogether.
The
Russian economy is heavily dependent upon the export of a range of commodities,
including industrial metals, forestry products, oil and gas. Accordingly, it is
strongly affected by international commodity prices and is particularly
vulnerable to any weakening in global demand for these products. Any decline in
the price of oil and gas could have a significant negative impact on the Russian
economy. Foreign investors also face a high degree of currency risk when
investing in Russian securities and a lack of available currency hedging
instruments. In addition, Eastern European markets remain relatively
underdeveloped and can be particularly sensitive to political and economic
developments; adverse events in Eastern European countries may greatly impact
the Russian economy.
The
government in Russia may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Russia. These restrictions and/or controls may at times limit or prevent foreign
investment in securities of issuers located or operating in Russia. Moreover,
governmental approval or special licenses may be required 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
Russia and/or impose additional taxes on foreign investors. Less information may
be available about companies in which the Fund invests because many companies
that are tied economically to Russia are not subject to accounting, auditing and
financial reporting standards or to other regulatory practices required by U.S.
companies. These factors, among others, make investing in issuers located or
operating in Russia 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 each Fund’s Shares.
Russia’s
government has taken bolder steps, including use of the military, to re-assert
its regional geopolitical influence, as it did with Georgia in the summer of
2008 and the Ukraine since 2014. These steps may increase tensions between its
neighbors and Western countries, which may adversely affect its economic growth.
As
a result of events involving Russia, the United States and the EU have imposed
sanctions on certain Russian entities and individuals and certain sectors of
Russia’s economy, which may result in, among other things, the devaluation of
Russian currency, a downgrade in the country’s credit rating, and/or a decline
in the value and liquidity of Russian securities, property or interests.
Sanctions may also include banning Russia from global payments systems that
facilitate cross-border payments. The United States and other nations or
international organizations may impose additional economic sanctions or take
other actions in the future that may adversely affect Russia-exposed issuers and
companies in various sectors of the Russian economy, including, but not limited
to, the financials, energy, metals and mining, engineering, and defense and
defense- related materials sectors. These sanctions, any future sanctions or
other actions, or even the threat of further sanctions or other actions or
actions by the United States to modify or ease sanctions, may negatively affect
the value and/or liquidity of a Fund’s portfolio, may affect the Fund’s ability
to operate and to qualify for the favorable tax treatment afforded to regulated
investment companies for U.S. federal income tax purposes, and may impair a
Fund’s ability to achieve its investment objective. For example, a Fund may be
prohibited from investing in securities issued by companies subject to such
sanctions. In addition, the sanctions may require a Fund to freeze its existing
investments in Russian companies, prohibit a Fund from buying, selling or
otherwise transacting in these investments, or significantly delay or prevent
the settlement of securities transactions. Any retaliatory actions by Russia may
further impair the value and liquidity of a Fund’s portfolio and potentially
disrupt its operations. Uncertainty as to future relations between Russia and
the United States or EU countries may also cause a decline in the value of each
Fund’s Shares. Such events or any future events may have an adverse impact on
the economies and debts of other markets as well.
Current
or future sanctions may result in Russia taking counter measures or retaliatory
actions, which may further impair the value and liquidity of Russian securities.
These retaliatory measures may include the immediate freeze of Russian assets
held by a Fund. In the event of such a freeze of any Fund assets, including
depositary receipts, a Fund may need to liquidate non-restricted assets in order
to satisfy any Fund redemption orders. The liquidation of Fund assets during
this time may also result in a Fund receiving substantially lower prices for its
securities. In addition, Russia is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign
governments.
For
these or other reasons, a 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 NAV. A Fund could also, among other things, limit or suspend creations of
Creation Units. During the period that creations or redemptions are affected, a
Fund’s shares could trade at a significant premium or discount to their NAV. In
the case of a period during which creations are suspended, a 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. A Fund may also change its investment objective by, for example, seeking
to track an alternative index, or the Fund could liquidate all or a portion of
its assets, which may be at unfavorable prices.
Many
Eastern European countries, including Russia, continue to move toward market
economies at different paces with different characteristics. Most Eastern
European securities markets, including the Russian securities market, suffer
from thin trading activity, dubious investor protections and often a dearth of
reliable corporate information. Information and transaction costs, differential
taxes and sometimes political or transfer risk give a comparative advantage to
the domestic investor rather than the foreign investor. The Russian government
continues to control a large share of economic activity in the region. Political
and economic reforms are too recent to establish a definite trend away from
centrally planned economics and state- owned industries. Many of Russia’s
businesses have failed to mobilize the available factors of production because
the country’s privatization program virtually ensured the predominance of the
old management teams that are largely non-market- oriented in their management
approach. In addition, there is the risk that the Russian tax system will not be
reformed to prevent inconsistent, retroactive, and/or exorbitant taxation, or,
in the alternative, the risk that a reformed tax system may result in the
inconsistent and unpredictable enforcement of the new tax laws. The Russian
government owns shares in corporations in a range of sectors including banking,
energy production and distribution, automotive, transportation and
telecommunications. Additionally, because Russia produces and exports large
volumes of oil and gas, the Russian economy is particularly sensitive to the
price of oil and gas on the world market, and a decline in the price of oil and
gas could have a significant negative impact on the Russian economy. Political
and economic events in Russia may have significant adverse effects on the
Russian Ruble and on the value and liquidity of each Fund’s
investments.
Special
Risk Considerations of Investing in South African Issuers.
(VanEck Africa Index ETF only.) Investments in securities of South African
issuers involve risks and special considerations not typically associated with
investments in the U.S. securities markets. South Africa’s economy exhibits
characteristics of both a developed country and a developing country and has
historically experienced extremely uneven distribution of wealth and income and
high rates of unemployment. The securities markets in South 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 of
a large share of the economy and heavy regulation of labor and industry. In
addition, South Africa’s currency has at times been at risk of devaluation due
to inadequate foreign currency reserve. While economic reforms have been enacted
in recent periods, there can be no assurance that these reforms will achieve the
intended results. Furthermore, adverse social and economic conditions in a
neighboring country may have a significant adverse effect on South Africa.
Additionally, the agriculture and mining sectors of South Africa’s economy
account for a large portion of its exports, and thus the South African economy
is susceptible to fluctuations in these commodity markets. South 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. Any such event may adversely impact South Africa’s economy or business
operations of companies in South Africa, causing an adverse impact on the value
of the Fund.
Special
Risk Considerations of Investing in Taiwanese Issuers.
(VanEck Vietnam ETF only.) Investments in securities of Taiwanese issuers,
including issuers located outside of Taiwan region that generate significant
revenues from Taiwan region, involve risks and special considerations not
typically associated with investments in the U.S. securities markets. To the
extent the Fund continues to invest in securities issued by Taiwanese issuers,
the Fund may be subject to the risk of investing in such issuers. Investments in
Taiwanese issuers may subject the Fund to legal, regulatory, political, currency
and economic risks that are specific to Taiwan region. Specifically, Taiwan
region’s geographic proximity and history of political contention with China
have resulted in ongoing tensions between the two countries. These tensions may
materially affect the Taiwanese economy and its securities market. Taiwan
region’s economy is export-oriented, so it depends on an open world trade regime
and remains vulnerable to fluctuations in the world economy.
Special
Risk Considerations of Investing in Vietnamese Issuers.
(VanEck Vietnam ETF only.) Investments in securities of Vietnamese issuers,
including issuers located outside of Vietnam that generate significant revenues
from Vietnam, involve risks and special considerations not typically associated
with investments in the U.S. securities markets. Such heightened risks include,
among others, expropriation and/or nationalization of assets, restrictions on
and government intervention in international trade, confiscatory taxation,
political instability, including authoritarian and/or military involvement in
governmental decision making, armed conflict, the impact on the economy as a
result of civil war, and social instability as a result of religious, ethnic
and/or socioeconomic unrest. Vietnam is dependent on trading relationships with
certain key trading partners, including the United States, China and Japan, and
as a result may be adversely affected if demand for Vietnam’s exports in those
nations decline. Vietnam may be heavily dependent upon international trade and,
consequently, Vietnam may be negatively affected by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which it
trades. The economy may also be adversely affected by economic conditions in the
countries with which it trades. Vietnam is also subject to certain environmental
risks, including typhoons and floods, as well as rapid environmental degradation
due to industrialization and lack of regulation, which may negatively impact the
value of investments in Vietnam.
The
securities markets in Vietnam are underdeveloped and are often considered to be
less correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Vietnam are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, illiquidity, greater price fluctuations, uncertainty
regarding the existence of trading markets, governmental control, heavy
regulation of labor and industry and inflation. Vietnam has experienced, and may
in the future experience, a high inflation rate, which is at least partially a
result of the country’s large trade deficit. Due to governmental focus on
economic growth at the expense of currency stability, the inflation rate may
continue at a high level and economic stability could be threatened. Moreover,
trading on securities markets may be suspended altogether. The Vietnamese
economy also suffers from excessive intervention by the Communist government.
Many companies listed on the exchanges are still partly state-owned and have a
degree of state influence in their operations. State owned and operated
companies tend to be less efficient than privately owned companies, due to lack
of market competition.
Regulations
in Vietnam may require the Fund to execute trades of securities of Vietnamese
companies through a single broker. As a result, the Adviser will have less
flexibility to choose among brokers on behalf of the Fund than is typically the
case for investment managers. In addition, because the process of purchasing
securities in Vietnam requires that payment to the local broker occur prior to
receipt of securities, failure of the broker to deliver the securities will
adversely affect the Fund.
The
government in Vietnam may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
Vietnam. These restrictions and/or controls may at times limit or prevent
foreign investment in securities of issuers located or operating in Vietnam.
Moreover, Vietnam may require governmental approval or special licenses prior to
investments by foreign investors and may also require governmental approval in
connection with the repatriation of capital by foreign investors. The Vietnamese
government may limit the amount of investments by foreign investors in a
particular industry and/or issuer and may limit such foreign investment to a
certain class of securities of an issuer that may have less advantageous rights
than the classes available for purchase by domiciliaries of Vietnam and/or
impose additional taxes on foreign investors. In addition, there is the risk
that if Vietnam’s balance of payments declines, Vietnam may impose temporary
restrictions on foreign capital remittances. Additionally, investments in
Vietnam may require the Fund to adopt special procedures, seek local government
approvals or take other actions, each of which may involve additional costs to
the Fund. These factors, among others, make investing in issuers located or
operating in Vietnam significantly riskier than investing in issuers located or
operating in more developed countries, and any one of them could cause a decline
in the value of the Fund’s Shares.
Special
Risk Considerations of Investing in European Issuers.
(VanEck Russia ETF and VanEck Russia Small-Cap ETF only.) Investments in
securities of European issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. The EMU of
the EU requires member countries to comply with restrictions on inflation rates,
deficits, interest rates, debt levels and fiscal and monetary controls, each of
which may significantly affect every country in Europe. Decreasing imports or
exports, changes in governmental or EU regulations on trade, changes in the
exchange rate of the euro, the default or threat of default by an EU member
country on its sovereign debt, and/or an economic recession in an EU member
country may have a significant adverse effect on the economies of EU member
countries and on major trading partners outside Europe. If any member country
exits the EMU, the departing country would face the risks of currency
devaluation and its trading partners and banks and others around the world that
hold the departing country’s debt would face the risk of significant losses. The
European financial markets have previously experienced, and may continue to
experience, volatility and have been adversely affected, and may in the future
be affected, by concerns about economic downturns, credit rating downgrades,
rising government debt levels and possible default on or restructuring of
government debt in several European countries. These events have adversely
affected, and may in the future affect, the value and exchange rate of the euro
and may continue to significantly affect the economies of every country in
Europe, including EU member countries that do not use the euro and non-EU member
countries. In a referendum held on June 23, 2016, voters in the UK voted to
leave the EU, creating economic and political uncertainty in its wake. On
January 31, 2020, the UK officially withdrew from the EU and the UK entered a
transition period which ended on December 31, 2020. On December 30, 2020, the EU
and UK signed the EU-UK Trade and Cooperation Agreement (“TCA”), an agreement on
the terms governing certain aspects of the EU's and the UK's relationship
following the end of the transition period. Notwithstanding the TCA, following
the transition period, there is likely to be considerable uncertainly as to the
UK's post-transition framework.
Responses
to the financial problems by European governments, central banks and others,
including austerity measures and reforms, may not work, may result in social
unrest and may limit future growth and economic recovery or have other
unintended consequences. The governments of EU countries may be subject to
change and such countries may experience social and political unrest.
Unanticipated or sudden political or social developments may result in sudden
and significant investment losses. The occurrence of terrorist incidents,
outbreaks of war or ongoing regional armed conflict throughout Europe also could
impact financial markets. Further defaults or restructurings by governments and
other entities of their debt could have additional adverse effects on economies,
financial markets and asset valuations around the world. In addition, one or
more countries may abandon the euro and/or withdraw from the EU. The impact of
these actions, especially if they occur in a disorderly fashion, is not clear
but could be significant and far-reaching.
Risk
of Investing in Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political
instability.
Because certain foreign securities markets may be limited in size, the activity
of large traders may have an undue influence on the prices of securities that
trade in such markets. Certain foreign markets that have historically been
considered relatively stable may become volatile in response to changed
conditions or new developments. Increased interconnectivity of world economies
and financial markets increases the possibility that adverse developments and
conditions in one country or region will affect the stability of economies and
financial markets in other countries or regions. Each 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 a Fund’s investments. Because each Fund may invest in securities
denominated in foreign currencies and some of the income received by each Fund
may be in foreign currencies, changes in currency exchange rates may negatively
impact each Fund’s return. The risks of investing in emerging and frontier
market countries are greater than risks associated with investments in foreign
developed countries.
Foreign
issuers are often subject to less stringent requirements regarding accounting,
auditing, financial reporting and record keeping than are U.S. issuers, and
therefore, not all material information may be available or reliable. Securities
exchanges or foreign governments may adopt rules or regulations that may
negatively impact a Fund’s ability to invest in foreign securities or may
prevent the Fund from repatriating its investments. A Fund may also invest in
depositary receipts which involve similar risks to those associated with
investments in foreign securities. In addition, a 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 a 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 a Fund.
Also,
certain issuers located in foreign countries in which a Fund invests may operate
in, or have dealings with, countries subject to sanctions and/or embargoes
imposed by the U.S. Government and the United Nations and/or countries
identified by the U.S. Government as state sponsors of terrorism. As a result,
an issuer may sustain damage to its reputation if it is identified as an issuer
which operates in, or has dealings with, such countries. A Fund, as an investor
in such issuers, will be indirectly subject to those risks.
Risk
of Investing in Emerging and Frontier Market Issuers.
(VanEck Africa Index ETF, VanEck Brazil Small-Cap ETF, VanEck Egypt Index ETF,
VanEck India Growth Leaders ETF, VanEck Indonesia Index ETF, VanEck Russia ETF,
VanEck Russia Small-Cap ETF and VanEck Vietnam ETF only.) Certain Funds invest
in securities of emerging market issuers and frontier market issuers. Emerging
and frontier market countries include countries in Africa, as well as the
following countries: Brazil, Egypt, India, Indonesia, Russia and
Vietnam.
Frontier
market countries generally have smaller economies and less developed capital
markets than traditional emerging markets, and, as a result, the risks of
investing in frontier market countries are magnified. Investment in securities
of emerging and frontier market issuers involves risks not typically associated
with investments in securities of issuers in more developed countries that may
negatively affect the value of your investment in a Fund. Such heightened risks
may include, among others, expropriation and/or nationalization of assets,
restrictions on and government intervention in international trade, confiscatory
taxation, political instability, including authoritarian and/or military
involvement in governmental decision making, armed conflict, the impact on the
economy as a result of civil war, crime (including drug violence) and social
instability as a result of religious, ethnic and/or socioeconomic unrest.
Issuers in certain emerging and frontier market countries are subject to less
stringent requirements regarding accounting, auditing, financial reporting and
record keeping than are issuers in more developed markets, and therefore, all
material information may not be available or reliable. Emerging and frontier
markets are also more likely to experience problems with the clearing and
settling of trades, as well as the holding of securities by local banks, agents
and depositories. Low trading volumes and volatile prices in less developed
markets may make trades harder to complete and settle, and governments or trade
groups may compel local agents to hold securities in designated depositories
that may not be subject to independent evaluation. Local agents are held only to
the standards of care of their local markets. In general, the less developed a
country’s securities markets are, the greater the likelihood of custody
problems. Additionally, each of the factors described below could have a
negative impact on a Fund’s performance and increase the volatility of the
Fund.
Securities
Markets.
Securities markets in emerging and frontier market countries are underdeveloped
and are often considered to be less correlated to global economic cycles than
those markets located in more developed countries. Securities markets in
emerging and frontier market countries are subject to greater risks associated
with market volatility, lower market capitalization, lower trading volume,
illiquidity, inflation, greater price fluctuations, uncertainty regarding the
existence of trading markets, governmental control and heavy regulation of labor
and industry. These factors, coupled with restrictions on foreign investment and
other factors, limit the supply of securities available for investment by a
Fund. This will
affect
the rate at which a Fund is able to invest in emerging and frontier market
countries, the purchase and sale prices for such securities and the timing of
purchases and sales. Emerging and frontier markets can experience high rates of
inflation, deflation and currency devaluation. The prices of certain securities
listed on securities markets in emerging and frontier market countries have been
subject to sharp fluctuations and sudden declines, and no assurance can be given
as to the future performance of listed securities in general. Volatility of
prices may be greater than in more developed securities markets. Moreover,
securities markets in emerging and frontier market countries may be closed for
extended periods of time or trading on securities markets may be suspended
altogether due to political or civil unrest. Market volatility may also be
heightened by the actions of a small number of investors. Brokerage firms in
emerging and frontier market countries may be fewer in number and less
established than brokerage firms in more developed markets. Since a Fund may
need to effect securities transactions through these brokerage firms, the Fund
is subject to the risk that these brokerage firms will not be able to fulfill
their obligations to the Fund. This risk is magnified to the extent a Fund
effects securities transactions through a single brokerage firm or a small
number of brokerage firms. In addition, the infrastructure for the safe custody
of securities and for purchasing and selling securities, settling trades,
collecting dividends, initiating corporate actions, and following corporate
activity is not as well developed in emerging and frontier market countries as
is the case in certain more developed markets.
Political
and Economic Risk.
Certain emerging and frontier market countries have historically been subject to
political instability and their prospects are tied to the continuation of
economic and political liberalization in the region. Instability may result from
factors such as government or military intervention in decision making,
terrorism, civil unrest, extremism or hostilities between neighboring countries.
Any of these factors, including an outbreak of hostilities could negatively
impact a Fund’s returns. Extremist groups in certain countries in the Middle
East and North Africa region have traditionally held anti-Western views and are
opposed to openness to foreign investments. Egypt borders the Gaza Strip and
Israel and there are risks of further instability and violence in the region.
Limited political and democratic freedoms in emerging and frontier market
countries might cause significant social unrest. These factors may have a
significant adverse effect on an emerging or frontier market country’s
economy.
Many
emerging and frontier market countries may be heavily dependent upon
international trade and, consequently, may continue to be negatively affected by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which it trades. They also have been, and may continue to be, adversely
affected by economic conditions in the countries with which they
trade.
In
addition, commodities (such as oil, gas and minerals) represent a significant
percentage of certain emerging markets’ exports and these economies are
particularly sensitive to fluctuations in commodity prices. Adverse economic
events in one country may have a significant adverse effect on other countries
of this region. In addition, most emerging market countries have experienced, at
one time or another, severe and persistent levels of inflation, including, in
some cases, hyperinflation. This has, in turn, led to high interest rates,
extreme measures by governments to keep inflation in check, and a generally
debilitating effect on economic growth. Although inflation in many countries has
lessened, there is no guarantee it will remain at lower levels. The political
history of certain emerging market countries has been characterized by political
uncertainty, intervention by the military in civilian and economic spheres, and
political corruption. Such events could reverse favorable trends toward market
and economic reform, privatization, and removal of trade barriers, and result in
significant disruption in securities markets in the region.
Also,
from time to time, certain issuers located in emerging and frontier market
countries in which a Fund invests may operate in, or have dealings with,
countries subject to sanctions and/or embargoes imposed by the U.S. Government
and the United Nations and/or countries identified by the U.S. Government as
state sponsors of terrorism. As a result, an issuer may sustain damage to its
reputation if it is identified as an issuer which operates in, or has dealings
with, such countries. A Fund, as an investor in such issuers, will be indirectly
subject to those risks.
The
economies of one or more countries in which a Fund may invest may be in various
states of transition from a planned economy to a more market-oriented economy.
The economies of such countries differ from the economies of most developed
countries in many respects, including levels of government involvement, states
of development, growth rates, control of foreign exchange and allocation of
resources. Economic growth in these economies may be uneven both geographically
and among various sectors of their economies and may also be accompanied by
periods of high inflation. Political changes, social instability and adverse
diplomatic developments in these countries could result in the imposition of
additional government restrictions including expropriation of assets,
confiscatory taxes or nationalization of some or all of the property held by the
underlying issuers of securities included in a Fund’s Index. There is no
guarantee that the governments of these countries will not revert back to some
form of planned or non market-oriented economy, and such governments continue to
be active participants in many economic sectors through ownership positions and
regulation. The allocation of resources in such countries is subject to a high
level of government control. Such countries’ governments may strictly regulate
the payment of foreign currency denominated obligations and set monetary policy.
Through their policies, these governments may provide preferential treatment to
particular industries or companies. The policies set by the government of one of
these countries could have a substantial effect on that country’s
economy.
Investment
and Repatriation Restrictions.
The government in an emerging or frontier market country may restrict or control
to varying degrees the ability of foreign investors to invest in securities of
issuers located or operating in such emerging and frontier market countries.
These restrictions and/or controls may at times limit or prevent foreign
investment in securities of issuers located or operating in emerging and
frontier market countries and may inhibit a Fund’s ability to track its Index.
In addition, a Fund may not be able to buy or sell securities or receive full
value for such securities. Moreover, certain emerging and frontier market
countries may require governmental approval or special licenses prior to
investments by foreign investors and may limit the amount of investments by
foreign investors in a particular industry and/or issuer; may limit such foreign
investment to a certain class of securities of an issuer that may have less
advantageous rights than the classes available for purchase by domiciliaries of
such emerging and frontier market countries; and/or may impose additional taxes
on foreign investors. A delay in obtaining a required government approval or a
license would delay investments in those emerging and frontier market countries,
and, as a result, a Fund may not be able to invest in certain securities while
approval is pending. The government of certain emerging and frontier market
countries may also withdraw or decline to renew a license that enables a Fund to
invest in such country. These factors make investing in issuers located or
operating in emerging and frontier market countries significantly riskier than
investing in issuers located or operating in more developed countries, and any
one of them could cause a decline in the value of a Fund’s Shares.
Additionally,
investments in issuers located in certain emerging and frontier market countries
may be subject to a greater degree of risk associated with governmental approval
in connection with the repatriation of investment income, capital or the
proceeds of sales of securities by foreign investors. Moreover, there is the
risk that if the balance of payments in an emerging or frontier market country
declines, the government of such country may impose temporary restrictions on
foreign capital remittances. Consequently, a Fund could be adversely affected by
delays in, or a refusal to grant, required governmental approval for
repatriation of capital, as well as by the application to the Fund of any
restrictions on investments. Furthermore, investments in emerging and frontier
market countries may require a Fund to adopt special procedures, seek local
government approvals or take other actions, each of which may involve additional
costs to the Fund.
Available
Disclosure About Emerging and Frontier Market Issuers.
Issuers located or operating in emerging and frontier market countries are not
subject to the same rules and regulations as issuers located or operating in
more developed countries. Therefore, there may be less financial and other
information publicly available with regard to issuers located or operating in
emerging and frontier market countries and such issuers are not subject to the
uniform accounting, auditing and financial reporting standards applicable to
issuers located or operating in more developed countries.
Foreign
Currency Considerations.
A Fund’s assets that are invested in equity securities of issuers in emerging
and frontier market countries will generally be denominated in foreign
currencies, and the income received by a Fund from these investments will be
principally in foreign currencies. The value of an emerging or frontier market
country’s currency may be subject to a high degree of fluctuation. This
fluctuation may be due to changes in interest rates, the effects of monetary
policies issued by the United States, foreign governments, central banks or
supranational entities, the imposition of currency controls or other national or
global political or economic developments. The economies of certain emerging and
frontier market countries can be significantly affected by currency
devaluations. Certain emerging and frontier market countries may also have
managed currencies which are maintained at artificial levels relative to the
U.S. dollar rather than at levels determined by the market. This type of system
can lead to sudden and large adjustments in the currency which, in turn, can
have a disruptive and negative effect on foreign investors.
A
Fund’s exposure to an emerging or frontier market country’s currency and changes
in value of such foreign currencies versus the U.S. dollar may reduce a Fund’s
investment performance and the value of your investment in the Fund. Meanwhile,
a Fund will compute and expects to distribute its income in U.S. dollars, and
the computation of income will be made on the date that the income is earned by
a Fund at the foreign exchange rate in effect on that date. Therefore, if the
value of the respective emerging or frontier market country’s currency falls
relative to the U.S. dollar between the earning of the income and the time at
which a Fund converts the relevant emerging or frontier market country’s
currency to U.S. dollars, the Fund may be required to liquidate certain
positions in order to make distributions if the Fund has insufficient cash in
U.S. dollars to meet distribution requirements under the Internal Revenue Code.
The liquidation of investments, if required, could be at disadvantageous prices
or otherwise have an adverse impact on a Fund’s performance.
Certain
emerging and frontier market countries also restrict the free conversion of
their currency into foreign currencies, including the U.S. dollar. There is no
significant foreign exchange market for many such currencies and it would, as a
result, be difficult for a Fund to engage in foreign currency transactions
designed to protect the value of the Fund’s interests in securities denominated
in such currencies. Furthermore, if permitted, a Fund may incur costs in
connection with conversions between U.S. dollars and an emerging or frontier
market country’s currency. Foreign exchange dealers realize a profit based on
the difference between the prices at which they are buying and selling various
currencies. Thus, a dealer normally will offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire immediately to resell that currency to the dealer. A Fund will conduct
its foreign currency exchange transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward, futures or options contracts to purchase or
sell foreign currencies.
Operational
and Settlement Risk.
In addition to having less developed securities markets, emerging and frontier
market countries have less developed custody and settlement practices than
certain developed countries. Rules adopted under the 1940 Act permit a Fund to
maintain its foreign securities and cash in the custody of certain eligible
non-U.S. banks and securities depositories. Banks in emerging and frontier
market countries that are eligible foreign sub-custodians may be recently
organized or otherwise lack extensive operating experience. In addition, in
certain emerging and frontier market countries there may be legal restrictions
or limitations on the ability of a Fund to recover assets held in custody by a
foreign sub-custodian in the event of the bankruptcy of the sub-custodian.
Because settlement systems in emerging and frontier market countries may be less
organized than in other developed markets, there may be a risk that settlement
may be delayed and that cash or securities of the Fund may be in jeopardy
because of failures of or defects in the systems. Under the laws in many
emerging and frontier market countries, a Fund may be required to release local
shares before receiving cash payment or may be required to make cash payment
prior to receiving local shares, creating a risk that the Fund may surrender
cash or securities without ever receiving securities or cash from the other
party. Settlement systems in emerging and frontier market countries also have a
higher risk of failed trades and back to back settlements may not be
possible.
A
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event of a redemption request from
an AP, a Fund will be required to deliver U.S. dollars to the AP on the
settlement date. In the event that a Fund is not able to convert the foreign
currency to U.S. dollars in time for settlement, which may occur as a result of
the delays described above, the Fund may be required to liquidate certain
investments and/or borrow money in order to fund such redemption. The
liquidation of investments, if required, could be at disadvantageous prices or
otherwise have an adverse impact on 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, a Fund will incur
interest expense on any borrowings and the borrowings will cause the Fund to be
leveraged, which may magnify gains and losses on its investments.
In
certain frontier and emerging market countries, the marketability of quoted
shares may be limited due to the restricted opening hours of stock exchanges,
and a narrow range of investors and a relatively high proportion of market value
may be concentrated in the hands of a relatively small number of shareholders.
In addition, because certain frontier and emerging market countries’ stock
exchanges on which a Fund’s portfolio securities may trade are open when the
Exchange is closed, the Fund may be subject to heightened risk associated with
market movements. Trading volume may be lower on certain frontier and emerging
market countries’ stock exchanges than on more developed securities markets and
equities may be generally less liquid. The infrastructure for clearing,
settlement and registration on the primary and secondary markets of certain
frontier and emerging market countries are less developed than in certain other
markets and under certain circumstances this may result in a Fund experiencing
delays in settling and/or registering transactions in the markets in which it
invests, particularly if the growth of foreign and domestic investment in
certain frontier and emerging market countries places an undue burden on such
investment infrastructure. Such delays could affect the speed with which a Fund
can transmit redemption proceeds and may inhibit the initiation and realization
of investment opportunities at optimum times.
Certain
issuers in emerging and frontier market countries may utilize share blocking
schemes. Share blocking refers to a practice, in certain foreign markets, where
voting rights related to an issuer’s securities are predicated on these
securities being blocked from trading at the custodian or sub-custodian level
for a period of time around a shareholder meeting. These restrictions have the
effect of barring the purchase and sale of certain voting securities within a
specified number of days before and, in certain instances, after a shareholder
meeting where a vote of shareholders will be taken. Share blocking may prevent
the Fund from buying or selling securities for a period of time. During the time
that shares are blocked, trades in such securities will not settle. The blocking
period can last up to several weeks. The process for having a blocking
restriction lifted can be quite onerous with the particular requirements varying
widely by country. In addition, in certain countries, the block cannot be
removed. As a result of the ramifications of voting ballots in markets that
allow share blocking, the Adviser, on behalf of the Fund, reserves the right to
abstain from voting proxies in those markets.
Corporate
and Securities Laws.
Securities laws in emerging and frontier market countries are relatively new and
unsettled and, consequently, there is a risk of rapid and unpredictable change
in laws regarding foreign investment, securities regulation, title to securities
and shareholder rights. Accordingly, foreign investors may be adversely affected
by new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging and frontier market issuers are subject may be less
advanced than those systems to which issuers located in more developed countries
are subject, and therefore, shareholders of issuers located in emerging and
frontier market countries may not receive many of the protections available to
shareholders of issuers located in more developed countries. In circumstances
where adequate laws and shareholder rights exist, it may not be possible to
obtain swift and equitable enforcement of the law. In addition, the enforcement
of systems of taxation at federal, regional and local levels in emerging and
frontier market countries may be inconsistent and subject to sudden change. A
Fund has limited rights and few practical remedies in emerging markets and the
ability of U.S. authorities to bring enforcement actions in emerging markets may
be limited.
Foreign
Currency Risk.
Because a Fund’s assets that are invested in equity securities of issuers in
foreign countries may be denominated in foreign currencies, the proceeds
received by the Fund from these investments will generally be in foreign
currencies. A Fund’s exposure to foreign currencies and changes in the value of
foreign currencies versus the U.S. dollar may result in reduced returns for the
Fund, and the value of certain foreign currencies may be subject to a high
degree of fluctuation.
Moreover,
a Fund may incur costs in connection with conversions between U.S. dollars and
foreign currencies. The value of certain emerging market country’s currency 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 a Fund and its investments.
Risk
of Investing in Depositary Receipts.
A Fund may invest in depositary receipts which involve similar risks to those
associated with investments in foreign securities. Depositary receipts are
receipts listed on U.S. or foreign exchanges issued by banks or trust companies
that entitle the holder to all dividends and capital gains that are paid out on
the underlying foreign shares. The issuers of certain depositary receipts are
under no obligation to distribute shareholder communications to the holders of
such receipts, or to pass through to them any voting rights with respect to the
deposited securities. Investments in depositary receipts may be less liquid than
the underlying shares in their primary trading market and, if not included in a
Fund’s Index, may negatively affect the Fund’s ability to replicate the
performance of its Index. In addition, investments in depositary receipts that
are not included in the Index may lead to tracking error. The issuers of
depositary receipts may discontinue issuing new depositary receipts and withdraw
existing depositary receipts at any time, which may result in costs and delays
in the distribution of the underlying assets to the Fund and may negatively
impact the Fund’s performance and the Fund’s ability to replicate/track the
performance of its Index.
Risk
of Investing in the Basic Materials Sector.
(VanEck Africa Index ETF, VanEck Egypt Index ETF, VanEck India Growth Leaders
ETF, VanEck Indonesia Index ETF, VanEck Russia ETF and VanEck Russia Small-Cap
ETF only.) A Fund will be sensitive to, and its performance will depend to a
greater extent on, the overall condition of the basic materials sector.
Companies engaged in the production and distribution of basic materials may be
adversely affected by changes in world events, political and economic
conditions, energy conservation, environmental policies, commodity price
volatility, changes in exchange rates, imposition of import controls, increased
competition, depletion of resources and labor relations.
Risk
of Investing in the Communication Services Sector.
(VanEck Africa Index ETF and VanEck Indonesia Index ETF only.) A Fund will be
sensitive to, and its performance will depend to a greater extent on, the
overall condition of the communication services sector. Companies in the
communication services sector may be affected by industry competition,
substantial capital requirements, government regulations and obsolescence of
communications products and services due to technological
advancement.
Risk
of Investing in the Consumer Discretionary Sector.
(VanEck Brazil Small-Cap ETF, VanEck Russia Small-Cap ETF and VanEck Vietnam ETF
only.) A Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the consumer discretionary sector. The
consumer discretionary sector comprises companies whose businesses are sensitive
to economic cycles, such as manufacturers of high-end apparel and automobile and
leisure companies. Companies in the consumer discretionary sector are subject to
fluctuations in supply and demand. These companies may also be adversely
affected by changes in consumer spending as a result of world events, political
and economic conditions, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Consumer Staples Sector.
(VanEck Brazil Small-Cap ETF, VanEck Egypt Index ETF, VanEck Indonesia Index ETF
and VanEck Vietnam ETF only.) A Fund will be sensitive to, and its performance
will depend to a greater extent on, the overall condition of the consumer
staples sector. The consumer staples sector comprises of companies whose
businesses are less sensitive to economic cycles, such as manufacturers and
distributors of food and beverages and producers of non-durable household goods
and personal products. Companies in the consumer staples sector may be adversely
affected by changes in the worldwide economy, consumer spending, competition,
demographics and consumer preferences, exploration and production spending.
Companies in this sector are also affected by changes in government regulation,
world events and economic conditions.
Risk
of Investing in the Energy Sector.
(VanEck Russia ETF only.) The Fund will be sensitive to, and its performance
will depend to a greater extent on, the overall condition of the energy sector.
Companies operating in the energy sector are subject to risks including, but not
limited to, economic growth, worldwide demand, political instability in the
regions that the companies operate, government regulation stipulating rates
charged by utilities, interest rate sensitivity, oil price volatility, the cost
of providing the specific utility services and other factors that they cannot
control.
The
energy sector is cyclical and is highly dependent on commodity prices; prices
and supplies of energy may fluctuate significantly over short and long periods
of time due to, among other things, national and international political
changes, Organization of Petroleum Exporting Countries (“OPEC”) policies,
changes in relationships among OPEC members and between OPEC and oil-importing
nations, the regulatory environment, taxation policies, and the economy of the
key energy-consuming
countries.
Commodity prices have recently been subject to increased volatility and
declines, which may negatively affect companies in which the Fund
invests.
Companies
in the energy sector may be adversely affected by terrorism, natural disasters
or other catastrophes. Companies in the energy sector are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims 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 composed
of governmental entities and utilities, governmental budget constraints may have
a significant impact on the stock prices of companies in this sector. The energy
sector is highly regulated. Entities operating in the energy sector are subject
to significant regulation of nearly every aspect of their operations by federal,
state and local governmental agencies. Such regulation can change rapidly or
over time in both scope and intensity. Stricter laws, regulations or enforcement
policies could be enacted in the future which would likely increase compliance
costs and may materially adversely affect the financial performance of companies
in the energy sector.
A
downturn in the energy sector of the economy, adverse political, legislative or
regulatory developments or other events could have a larger impact on the Fund
than on an investment company that does not invest a substantial portion of its
assets in the energy sector. At times, the performance of securities of
companies in the energy sector may lag the performance of other sectors or the
broader market as a whole. The price of oil, natural gas and other fossil fuels
may decline and/or experience significant volatility, which could adversely
impact companies operating in the energy sector.
Risk
of Investing in the Financials Sector.
(VanEck Africa Index ETF, VanEck Egypt Index ETF, VanEck Indonesia Index ETF,
VanEck Israel ETF, VanEck Russia ETF and VanEck Vietnam ETF only.) A Fund will
be sensitive to, and its performance will depend to a greater extent on, the
overall condition of the financials sector. Companies in the financials sector
may be subject to extensive government regulation that affects the scope of
their activities, the prices they can charge and the amount of capital they must
maintain. The profitability of companies in the financials sector may be
adversely affected by increases in interest rates, by loan losses, which usually
increase in economic downturns, and by credit downgrades. In addition, the
financials sector is undergoing numerous changes, including continuing
consolidations, development of new products and structures and changes to its
regulatory framework. Furthermore, some companies in the financials sector
perceived as benefitting from government intervention in the past may be subject
to future government- imposed restrictions on their businesses or face increased
government involvement in their operations. Increased government involvement in
the financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Risk
of Investing in the Health Care Sector.
(VanEck India Growth Leaders ETF only.) A Fund will be sensitive to, and its
performance will depend to a greater extent on, the overall condition of the
health care sector. Companies in the health care sector may be affected by
extensive government regulation, restrictions on government reimbursement for
medical expenses, rising costs of medical products and services, pricing
pressure, an increased emphasis on outpatient services, limited number of
products, industry innovation, changes in technologies and other market
developments. Many health care companies are heavily dependent on patent
protection. The expiration of patents may adversely affect the profitability of
these companies. Many health care companies are subject to extensive litigation
based on product liability and similar claims. Health care companies are subject
to competitive forces that may make it difficult to raise prices and, in fact,
may result in price discounting. Many new products in the health care sector may
be subject to regulatory approvals. The process of obtaining such approvals may
be long and costly. Companies in the health care sector may be thinly
capitalized and may be susceptible to product obsolescence.
Risk
of Investing in the Industrials Sector.
(VanEck Brazil Small-Cap ETF, VanEck Russia Small-Cap ETF and VanEck Vietnam ETF
only.) A Fund will be sensitive to, and its performance will depend to a greater
extent on, the overall condition of the industrials sector. The industrials
sector comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates. The stock prices of companies in the industrials sector are
affected by supply and demand both for their specific product or service and for
industrial sector products in general. The products of manufacturing companies
may face product obsolescence due to rapid technological developments and
frequent new product introduction. In addition, the industrials sector may also
be adversely affected by changes or trends in commodity prices, which may be
influenced or characterized by unpredictable factors.
Risk
of Investing in the Information Technology Sector.
(VanEck India Growth Leaders ETF and VanEck Israel ETF only.) A Fund will be
sensitive to, and its performance will depend to a greater extent on, the
overall condition of the information technology
sector.
Information technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Information
technology companies may have limited product lines, markets, financial
resources or personnel. The products of information technology companies may
face product obsolescence due to rapid technological developments and frequent
new product introduction, unpredictable changes in growth rates and competition
for the services of qualified personnel. Companies in the information technology
sector are heavily dependent on patent protection and the expiration of patents
may adversely affect the profitability of these companies.
Risk
of Investing in the Real Estate Sector.
(VanEck Egypt Index ETF and VanEck Vietnam ETF only.) Companies in the real
estate sector include companies that invest in real estate, such as REITs and
real estate management and development companies. A Fund will be sensitive to
changes in, and its performance will depend to a greater extent on, the overall
condition of the real estate sector. Companies that invest in real estate are
subject to the risks of owning real estate directly as well as to risks that
relate specifically to the way that such companies operate, including management
risk (such companies are dependent upon the management skills of a few key
individuals and may have limited financial resources). Adverse economic,
business or political developments affecting real estate could have a major
effect on the values of the Fund’s investments. Investing in real estate is
subject to such risks as decreases in real estate values, overbuilding,
increased competition and other risks related to local or general economic
conditions, increases in operating costs and property taxes, changes in zoning
laws, casualty or condemnation losses, possible environmental liabilities,
regulatory limitations on rent, possible lack of availability of mortgage
financing, market saturation, fluctuations in rental income and the value of
underlying properties and extended vacancies of properties. Certain real estate
securities have a relatively small market capitalization, which may tend to
increase the volatility of the market price of these securities. Real estate
securities have limited diversification and are, therefore, subject to risks
inherent in operating and financing a limited number of projects. Real estate
securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.
Risk
of Investing in the Utilities Sector.
(VanEck Brazil Small-Cap ETF only.) A Fund will be sensitive to, and its
performance will depend to a greater extent on, the overall condition of the
utilities sector. Issuers in the utilities sector are subject to a variety of
factors that may adversely affect their business or operations, including high
interest costs in connection with capital construction and improvement programs,
difficulty in raising capital in adequate amounts on reasonable terms in periods
of high inflation and unsettled capital markets, and the effects of effects of
economic slowdowns and surplus capacity. Companies in the utilities sector are
subject to extensive regulation, including governmental regulation of rates
charged to customers, and may face difficulty in obtaining regulatory approval
of new technologies. The effects of a U.S. national energy policy and lengthy
delays and greatly increased costs and other problems associated with the
design, construction, licensing, regulation and operation of nuclear facilities
for electric generation, including, among other considerations, the problems
associated with the use of radioactive materials and the disposal of radioactive
wastes, may adversely affect companies in the utilities sector. Certain
companies in the utilities sector may be inexperienced and may suffer potential
losses resulting from a developing deregulatory environment. Technological
innovations may render existing plants, equipment or products obsolete.
Companies in the utilities sector may face increased competition from other
providers of utility services. The potential impact of terrorist activities on
companies in the utilities sector and its customers and the impact of natural or
man-made disasters may adversely affect the utilities sector. Issuers in the
utilities sector also may be subject to regulation by various governmental
authorities and may be affected by the imposition of special tariffs and changes
in tax laws, regulatory policies and accounting standards.
Risk
of Investing in Micro-Capitalization Companies.
(VanEck Brazil Small-Cap ETF, VanEck Egypt Index ETF, VanEck India Growth
Leaders ETF, VanEck Israel ETF and VanEck Russia Small-Cap ETF only.) The Fund
may invest in micro-capitalization companies. These companies are subject to
substantially greater risks of loss and price fluctuations because their
earnings and revenues tend to be less predictable (and some companies may be
experiencing significant losses), and their share prices tend to be more
volatile and their markets less liquid than companies with larger market
capitalizations. Micro-capitalization companies may be newly formed or in the
early stages of development, with limited product lines, markets or financial
resources and may lack management depth. In addition, there may be less public
information available about these companies. The shares of micro-capitalization
companies tend to trade less frequently than those of larger, more established
companies, which can adversely affect the pricing of these securities and the
future ability to sell these securities. Also, it may take a long time before
the Fund realizes a gain, if any, on an investment in a micro-capitalization
company.
Risk
of Investing in Small- and/or Medium-Capitalization Companies.
A Fund may invest in small- and/or medium- capitalization companies and,
therefore will be subject to certain risks associated with small- and/or
medium-capitalization companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences, with little or no record of profitability. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. These companies tend to
have smaller revenues, narrower product lines, less management depth and
experience, smaller shares of their product or service markets, fewer financial
resources and less competitive strength than large-capitalization companies.
Returns on investments in securities of small- and/or medium-capitalization
companies could trail the returns on investments in securities of larger
companies.
Risk
of Cash Transactions.
Unlike other ETFs, VanEck Africa Index ETF, VanEck Brazil Small-Cap ETF, VanEck
Egypt Index ETF, VanEck India Growth Leaders ETF and VanEck Vietnam ETF effect
their creations and redemptions at least partially for cash, rather than wholly
for in-kind securities. Because these Funds currently intend to effect a portion
of redemptions for cash, rather
than
in-kind distributions, they may be required to sell portfolio securities in
order to obtain the cash needed to distribute redemption proceeds, which
involves transaction costs that the Funds may not have incurred had they
effected redemptions entirely in kind. These costs may include brokerage costs
and/or taxable gains or losses, which may be imposed on the Funds and decrease
the Fund’s NAV to the extent such costs are not offset by a transaction fee
payable by an AP. If a Fund recognizes gain on these sales, this generally will
cause the Fund to recognize gain it might not otherwise have recognized if it
were to distribute portfolio securities in-kind, or to recognize such gain
sooner than would otherwise be required. As a result, an investment in such Fund
may be less tax-efficient than an investment in a more conventional ETF. Other
ETFs generally are able to make in-kind redemptions and avoid realizing gains in
connection with transactions designed to raise cash to meet redemption requests.
The Funds generally intend to distribute these gains to shareholders to avoid
being taxed on this gain at the Fund level and otherwise comply with the special
tax rules that apply to it. This strategy may cause shareholders to be subject
to tax on gains they would not otherwise be subject to, or at an earlier date
than, if they had made an investment in a different ETF. Additionally,
transactions may have to be carried out over several days if the securities
market is relatively illiquid and may involve considerable transaction fees and
taxes.
Equity
Securities Risk.
The value of the equity securities held by each Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by a Fund participate, or factors relating to
specific issuers in which a Fund invests. For example, an adverse event, such as
an unfavorable earnings report, may result in a decline in the value of equity
securities of an issuer held by a Fund; the price of the equity securities of an
issuer may be particularly sensitive to general movements in the securities
markets; or a drop in the securities markets may depress the price of most or
all of the equities securities held by a Fund. In addition, the equity
securities of an issuer in a Fund’s portfolio may decline in price if the issuer
fails to make anticipated dividend payments. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in a Fund’s Index may cause the value of its
securities to decline.
Risk
of Investing in Other Funds.
Each Fund may invest in shares of other funds, including ETFs. As a result, a
Fund will indirectly be exposed to the risks of an investment in the underlying
funds. Shares of other funds have many of the same risks as direct investments
in common stocks or bonds. In addition, the market value of such funds’ shares
is expected to rise and fall as the value of the underlying index or securities
rise and fall. If the shares of such funds are traded on a secondary market, the
market value of such funds’ shares may differ from the NAV of the particular
fund. As a shareholder in a fund, each Fund will also bear its ratable share of
the underlying fund’s expenses. At the same time, each Fund will continue to pay
its own investment management fees and other expenses. The expenses of such
underlying funds will not, however, be counted towards a Fund’s expense
cap.
In
October 2020, the SEC adopted certain regulatory changes and took other actions
related to the ability of an investment company to invest in another investment
company, including the rescission of exemptive relief issued by the SEC
permitting such investments in excess of statutory limits. These regulatory
changes may adversely impact the Fund’s investment strategies and
operations.
Market
Risk.
The prices of the securities in the Funds are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. Overall securities
values could decline generally or could underperform other
investments.
An
investment in the Funds may lose money.
Operational
Risk.
Each Fund is exposed to operational risk arising from a number of factors,
including but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third- parties,
failed or inadequate processes and technology or system failures.
High
Portfolio Turnover Risk. The
Fund may engage in active and frequent trading of its portfolio securities. High
portfolio turnover may result in increased transaction costs to the Fund,
including brokerage commissions, dealer mark-ups and other transaction costs on
the sale of the securities and on reinvestment in other securities.
Additionally, the sale of Fund portfolio securities may result in the
realization and/or distribution to shareholders of higher capital gains or
losses as compared to a fund with less active trading. These effects of higher
than normal portfolio turnover may adversely affect Fund performance. High
portfolio turnover may also result in higher taxes when Fund Shares are held in
a taxable account.
Index
Tracking Risk.
A Fund’s return may not match the return of its Index for a number of reasons.
For example, a Fund incurs a number of operating expenses, including taxes, not
applicable to its Index and incurs costs associated with buying and selling
securities,
and entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of its Index and (to the extent a Fund effects creations and redemptions are
effected in cash) raising cash to meet redemptions or deploying cash in
connection with newly created Creation Units, which are not factored into the
return of each Fund's Index. Transaction costs, including brokerage costs, will
decrease a Fund’s NAV to the extent not offset by the transaction fee payable by
an AP. Market disruptions and regulatory restrictions could have an adverse
effect on a Fund’s ability to adjust its exposure to the required levels in
order to track its Index. Unusual market conditions may cause the Index Provider
to postpone a scheduled rebalance, which could cause the Index to vary from its
normal or expected composition. There is no assurance that the Index Providers
(defined herein) or any agents that may act on their behalf will compile each
Fund’s Index accurately, or that each Index will be determined, composed or
calculated accurately. Errors in respect of the quality, accuracy and
completeness of the data used to compile an Index may occur from time to time
and may not be identified and corrected by the Index Providers for a period of
time or at all, particularly where the indices are less commonly used as
benchmarks by funds or managers. Therefore, gains, losses or costs associated
with errors of the Index Providers or their agents will generally be borne by
the applicable Fund and its shareholders. For example, during a period where a
Fund’s Index contains incorrect constituents, the Fund would have market
exposure to such constituents and would be underexposed to an Index’s other
constituents. Such errors may negatively or positively impact a Fund and its
shareholders. Any gains due to the Index Provider’s or others’ errors will be
kept by the applicable Fund and its shareholders and any losses resulting from
an Index Providers’ or others’ errors will be borne by the applicable Fund and
its shareholders. When a Fund’s Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and its respective Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by the
applicable Fund and its shareholders. A Fund may not be fully invested at times,
either as a result of cash flows into the Fund or reserves of cash held by the
Fund to pay expenses and (to the extent creations and redemptions are effected
in cash) to meet redemptions. Apart
from scheduled rebalances, the Index Providers or their agents may carry out
additional ad hoc rebalances to a Fund's Index. Therefore, errors and additional
ad hoc rebalances carried out by the Index Providers or their agents to a
respective Index may increase the costs to and the tracking error risk of the
Funds. In
addition, a Fund may not be able to invest in certain securities and/or other
assets included in its Index, or invest in them in the exact proportions in
which they are represented in its Index, due to legal restrictions or
limitations imposed by the governments of certain countries, certain Exchange
listing standards, a lack of liquidity in markets in which such securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). A lack of liquidity may be due to various events,
including market events, economic conditions or investor perceptions. Illiquid
securities may be difficult to value and their value may be lower than the
market price of comparable liquid securities, which would negatively affect a
Fund's performance. Moreover, a Fund may be delayed in purchasing or selling
securities included in its Index. Any issues a Fund encounters with regard to
currency convertibility (including the cost of borrowing funds, if any) and
repatriation may also increase the index tracking risk. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. Certain Funds may also need to rely on borrowings to meet
redemptions, which may lead to increased expenses. For tax efficiency purposes,
a Fund may sell certain securities, and such sale may cause the Fund to realize
a loss and deviate from the performance of its Index. Certain Funds may accept
cash in connection with a purchase of Creation Units or effect their redemptions
in cash rather than in-kind and, as a result, a Fund’s ability to match the
return of its respective Index will be affected.
Pursuant
to the methodology of the Index Provider used to calculate and maintain the
India Index, when a security in the India Index reaches its limitation on
foreign ownership, it may not be removed from the India Index that day. The
VanEck India Growth Leaders ETF, however, may be forced to sell securities at
inopportune times or for prices other than at current market values or may elect
not to sell such securities on the day that they are removed from the India
Index, due to market conditions or otherwise. Due to these factors, the
variation between the VanEck India Growth Leaders ETF’s annual return and the
return of the India Index may increase.
In
addition, with respect to VanEck Vietnam ETF, pursuant to the methodology of the
Index Provider used to calculate and maintain the Vietnam Index, a company may
be removed from the Vietnam Index at a quarterly rebalancing as a result of
reaching its limitation on foreign ownership. Consequently, VanEck Vietnam ETF
may be forced to sell securities at inopportune times or for prices other than
at current market values or may elect not to sell such securities on the day
that they are removed from the Vietnam Index, due to market conditions or
otherwise. Due to these factors, the variation between the VanEck Vietnam ETF’s
annual return and the return of the Vietnam Index may increase.
Certain
Funds may fair value certain of the foreign securities and/or underlying
currencies or other assets it holds, except those securities primarily traded on
exchanges that close at the same time the Fund calculates its NAV. To the extent
a Fund calculates its NAV based on fair value prices and the value of its Index
is based on securities’ closing prices on local foreign markets (i.e.,
the value of its Index is not based on fair value prices) or if a Fund otherwise
calculates its NAV based on prices that differ from those used in calculating
its Index, the Fund’s ability to track its Index may be adversely affected. The
need to comply with the tax diversification and other requirements of the
Internal Revenue Code may also impact a Fund’s ability to replicate the
performance of its Index. In addition, if a Fund utilizes depositary receipts
and other derivative instruments that are not included in its Index, its return
may not correlate as well with the returns of its Index as would be the case if
the Fund purchased all the securities in its Index directly. Actions taken in
response to proposed corporate actions may result in increased tracking error.
In light of the factors discussed above, a Fund’s return may deviate
significantly from the return of its Index.
With
respect to VanEck Russia ETF and VanEck Russia Small-Cap ETF only, in the event
economic sanctions are imposed by the United States against certain Russian
companies, VanEck Russia ETF and VanEck Russia Small-Cap ETF may not be able to
fully replicate the Russia Index and the Russia Small-Cap Index by investing in
the relevant securities, which may lead to increased tracking
error.
In
light of the above factors, VanEck Africa Index ETF’s and VanEck Egypt Index
ETF’s returns may deviate significantly from the return of the Africa Index and
the Egypt Index.
Index
tracking risk may be heightened during times of increased market volatility or
other unusual market conditions. Changes to the composition of a Fund’s Index in
connection with a rebalancing or reconstitution of the Index may cause the Fund
to experience increased volatility, during which time the Fund’s index tracking
risk may be heightened.
Authorized
Participant Concentration Risk.
A Fund may have a limited number of financial institutions that act as APs, none
of which are obligated to engage in creation and/or redemption transactions. To
the extent that those APs exit the business, or are unable to or choose not to
process creation and/or redemption orders, and no other AP is able to step
forward to create and redeem, there may be a significantly diminished trading
market for Shares or Shares may trade like closed-end funds at a greater
discount (or premium) to NAV and possibly face trading halts and/or de-listing.
The AP concentration risk may be heightened in scenarios where APs have limited
or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on the Exchange, there can be no assurance that an
active trading market for the Shares will be maintained. Further, secondary
markets may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods in times of market stress because market
makers and APs may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in a
Fund’s market price from its NAV. The Distributor (defined herein), does not
maintain a secondary market in the Shares. Investors purchasing and selling
Shares in the secondary market may not experience investment results consistent
with those experienced by those APs creating and redeeming directly with a
Fund.
Decisions
by market makers or APs to reduce their role or “step away” from these
activities in times of market stress could inhibit the effectiveness of the
arbitrage process in maintaining the relationship between the underlying value
of a Fund’s portfolio securities and the Fund’s market price. This reduced
effectiveness could result in Fund Shares trading at a price which differs
materially from NAV and also in greater than normal intraday bid/ask spreads for
Fund Shares.
Trading
Issues.
Trading in Shares on an Exchange may be halted due to market conditions or for
reasons that, in the view of the Exchange, make trading in Shares inadvisable.
In addition, trading in Shares on an Exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the relevant Exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of an Exchange
occurs, a shareholder may be unable to purchase or sell Shares of a Fund. There
can be no assurance that the requirements of an Exchange necessary to maintain
the listing of a Fund will continue to be met or will remain
unchanged.
Passive
Management Risk.
Unlike many investment companies, the Funds are not “actively” managed.
Therefore, unless a specific security is removed from its Index, a Fund
generally would not sell a security because the security’s issuer is in
financial trouble. If a specific security is removed from a Fund’s Index, the
Fund may be forced to sell such security at an inopportune time or for prices
other than at current market values. An investment in a Fund involves risks
similar to those of investing in any fund that invests in equity securities
traded on an exchange, such as market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in security prices. Each Fund’s Index may not contain the appropriate or
a diversified mix of securities for any particular economic cycle. The timing of
changes in the securities of a Fund’s portfolio in seeking to replicate its
Index could have a negative effect on the Fund. Unlike with an actively managed
fund, the Adviser does not use techniques or defensive strategies designed to
lessen the effects of market volatility or to reduce the impact of periods of
market decline. Additionally, unusual market conditions may cause a Fund's Index
Provider to postpone a scheduled rebalance or reconstitution, which could cause
a Fund's Index to vary from its normal or expected composition. This means that,
based on market and economic conditions, a Fund’s performance could be lower
than funds that may actively shift their portfolio assets to take advantage of
market opportunities or to lessen the impact of a market decline or a decline in
the value of one or more issuers.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
Disruptions to creations and redemptions, the existence of market volatility or
potential lack of an active trading market for Shares (including through a
trading halt), as well as other factors, may result in Shares trading at a
significant premium or discount to NAV or to the intraday value of a Fund’s
holdings. The NAV of the Shares will fluctuate with changes in the market value
of a Fund’s securities holdings. The market price of Shares will fluctuate, in
some cases materially, in accordance with changes in NAV and the intraday value
of a Fund’s holdings, as well as supply and demand on an Exchange. The Adviser
cannot predict whether Shares will trade below, at or above their NAV. Given the
fact that Shares can be created and redeemed by APs in Creation Units, the
Adviser believes that large discounts or premiums to the NAV of Shares should
not be sustained in the long-term. While the creation/redemption feature is
designed to make it likely that Shares normally will trade close to the value of
a Fund’s holdings, market prices are not expected to correlate exactly to a
Fund’s NAV due to timing reasons, supply and demand imbalances and other
factors. The price differences may be due, in large part, to the fact that
supply and demand forces at work in the secondary trading market for Shares may
be closely
related
to, but not necessarily identical to, the same forces influencing the prices of
the securities of a Fund’s portfolio of investments trading individually or in
the aggregate at any point in time. If a shareholder purchases Shares at a time
when the market price is at a premium to the NAV or sells Shares at a time when
the market price is at a discount to the NAV, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares that were bought or sold or the shareholder may be unable to sell his
or her Shares. Any of these factors, discussed above and further below, may lead
to the Shares trading at a premium or discount to a Fund’s NAV. In addition,
because certain of a Fund’s underlying securities trade on exchanges that are
closed when an Exchange (i.e.,
the exchange that Shares of the Fund trade on) is open, there are likely to be
deviations between the expected value of an underlying security and the closing
security’s price (i.e.,
the last quote from its closed foreign market) resulting in premiums or
discounts to NAV that may be greater than those experienced by other ETFs. In
addition, the securities held by a Fund may be traded in markets that close at a
different time than an Exchange. Liquidity in those securities may be reduced
after the applicable closing times. Accordingly, during the time when an
Exchange is open but after the applicable market closing, fixing or settlement
times, bid/ask spreads and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for a Fund’s
Shares may become less liquid in response to deteriorating liquidity in the
markets for the Fund’s underlying portfolio holdings. There are various methods
by which investors can purchase and sell Shares. Investors should consult their
financial intermediaries before purchasing or selling Shares of the
Funds.
When
you buy or sell Shares of a Fund through a broker, you will likely incur a
brokerage commission or other charges imposed by brokers. In addition, the
market price of Shares, like the price of any exchange-traded security, includes
a bid/ask spread charged by the market makers or other participants that trade
the particular security. The spread of a Fund’s Shares varies over time based on
a Fund’s trading volume and market liquidity and may increase if a Fund’s
trading volume, the spread of the Fund’s underlying securities, or market
liquidity decrease. In times of severe market disruption, including when trading
of a Fund’s holdings may be halted, the bid/ask spread may increase
significantly. This means that Shares may trade at a discount to a Fund’s NAV,
and the discount is likely to be greatest during significant market
volatility.
Issuer-Specific
Changes Risk.
(VanEck Egypt Index ETF, VanEck Russia Small-Cap ETF and VanEck Vietnam ETF
only.) The value of individual securities or particular types of securities in a
Fund’s portfolio can be more volatile than the market as a whole and can perform
differently from the value of the market as a whole, which may have a greater
impact if the Fund’s portfolio is concentrated in a country, group of countries,
region, market, industry, group of industries, sector or asset class. The value
of securities of smaller issuers can be more volatile than that of larger
issuers. A change in the financial condition, market perception or the credit
rating of an issuer of securities included in a Fund’s Index may cause the value
of its securities to decline.
Non-Diversified
Risk.
(VanEck Egypt Index ETF, VanEck Indonesia Index ETF, VanEck Israel ETF, VanEck
Russia ETF, VanEck Russia Small-Cap ETF and VanEck Vietnam ETF only.) Each Fund
is a separate investment portfolio of VanEck ETF Trust (the “Trust”), which is
an open-end investment company registered under the 1940 Act. Each Fund is
classified as a “non-diversified” fund under the 1940 Act. Moreover, each Fund
is subject to the risk that it will be more volatile than a diversified fund
because the Fund may invest its assets in a smaller number of issuers or may
invest a larger proportion of its assets in a single issuer. Moreover, the gains
and losses on a single investment may have a greater impact on a Fund’s NAV and
may make the Fund more volatile than more diversified funds. Certain Funds may
be particularly vulnerable to this risk because their respective Indices are
comprised of securities of a limited number of companies.
Non-Diversification
Risk. (VanEck
India Growth Leaders ETF only.) The Fund may become classified as
non-diversified under the 1940 Act solely as a result of a change in relative
market capitalization or index weighting of one or more constituents of its
Index. If the Fund becomes non-diversified, it may invest a greater portion of
assets in securities of a smaller number of individual issuers than a
diversified fund. As a result, changes in the market value of a single
investment could cause greater fluctuations in share price than would occur in a
more diversified fund.
Concentration
Risk.
Each Fund’s assets may be concentrated in a particular sector or sectors or
industry or group of industries to the extent that its respective Index
concentrates in a particular sector or sectors or industry or group of
industries. The securities of many or all of the companies in the same sector or
industry may decline in value due to developments adversely affecting such
sector or industry. By concentrating its assets in a particular sector or
sectors or industry or group of industries, a Fund is subject to the risk that
economic, political or other conditions that have a negative effect on those
sectors and/or industries may negatively impact the Fund to a greater extent
than if the Fund’s assets were invested in a wider variety of sectors or
industries.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
Each
Fund may invest in securities not included in its respective Index, money market
instruments, including repurchase agreements or other funds which invest
exclusively in money market instruments, convertible securities, structured
notes (notes on which the amount of principal repayment and interest payments
are based on the movement of one or more specified factors, such as the movement
of a particular stock or stock index) and/or certain derivatives, which the
Adviser believes will help a Fund track its Index. Depositary receipts not
included in an Index may be used by a Fund in seeking performance that
corresponds to its Index and in managing cash flows, and may count towards
compliance with a Fund’s 80% policy. Certain Funds may also utilize
participation notes to seek performance that corresponds to its respective
Index. Each Fund may also invest, to the extent
permitted
by the 1940 Act, in other affiliated and unaffiliated funds, such as open- end
or closed-end management investment companies, including other ETFs. A Fund will
not invest as part of a temporary defensive strategy to protect against
potential securities market declines.
BORROWING
MONEY
Each
Fund may borrow money from a bank up to a limit of one-third of the market value
of its assets. Each Fund has entered or intends to enter into a credit facility
to borrow money for temporary, emergency or other purposes, including the
funding of shareholder redemption requests, trade settlements and as necessary
to distribute to shareholders any income required to maintain such Fund’s status
as a regulated investment company. To the extent that a Fund borrows money, it
may be leveraged; at such times, the Fund will appreciate or depreciate in value
more rapidly than its Index. Leverage generally has the effect of increasing the
amount of loss or gain a Fund might realize, and may increase volatility in the
value of such Fund’s investments.
LENDING
PORTFOLIO SECURITIES
Each
Fund may lend its portfolio securities to brokers, dealers and other financial
institutions desiring to borrow securities to complete transactions and for
other purposes. In connection with such loans, a Fund receives cash, U.S.
government securities and stand-by letters of credit not issued by the Fund’s
bank lending agent equal to at least 102% of the value of the portfolio
securities being loaned. This collateral is marked-to-market on a daily basis.
Although a Fund will receive collateral in connection with all loans of its
securities holdings, the Fund would be exposed to a risk of loss should a
borrower fail to return the borrowed securities (e.g., the Fund would have to
buy replacement securities and the loaned securities may have appreciated beyond
the value of the collateral held by the Fund) or become insolvent. A Fund may
pay fees to the party arranging the loan of securities. In addition, a Fund will
bear the risk that it may lose money because the borrower of the loaned
securities fails to return the securities in a timely manner or at all. Each
Fund could also lose money in the event of a decline in the value of any cash
collateral or in the value of investments made with the cash collateral. These
events could trigger adverse tax consequences for a Fund. Substitute payments
for dividends received by a Fund for securities loaned out by a Fund will not be
considered qualified dividend income.
ADDITIONAL
NON-PRINCIPAL RISKS
Risk
of Investing in Derivatives.
Derivatives are financial instruments whose values are based on the value of one
or more reference assets or indicators, such as a security, currency, interest
rate, or index. A 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 a Fund invested
directly in the underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments, or in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality, and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and a Fund could lose more than the amount
it invests. The use of derivatives may increase the amount and affect the timing
and character of taxes payable by shareholders of a Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of a Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, a Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). A liquid
secondary market may not always exist for a Fund’s derivative positions at any
time, and a Fund may not be able to initiate or liquidate a swap position at an
advantageous time or price, which may result in significant losses.
In
October 2020, the Securities and Exchange Commission (the “SEC”) adopted a final
rule related to the use of derivatives, short sales, reverse repurchase
agreements and certain other transactions by registered investment companies
that will rescind and withdraw the guidance of the SEC and its staff regarding
asset segregation and cover transactions. The final rule requires funds to trade
derivatives and other transactions that create future payment or delivery
obligations (except reverse repurchase agreements and similar financing
transactions) subject to a value-at-risk (“VaR”) leverage limit, certain
derivatives risk management program and reporting requirements. Generally, these
requirements apply unless a fund qualifies as a “limited derivatives user,” as
defined in the final rule. Under the final rule, when a fund trades reverse
repurchase agreements or similar financing transactions, including certain
tender option bonds, it needs to aggregate the amount of indebtedness associated
with the reverse repurchase agreements or similar financing transactions with
the aggregate amount of any other senior securities representing indebtedness
when calculating the fund’s asset coverage ratio or treat all such transactions
as derivatives transactions. Reverse repurchase agreements or similar financing
transactions aggregated with other indebtedness do not need to be included in
the calculation of whether a fund is a limited derivatives user, but for funds
subject to the VaR testing, reverse repurchase agreements and similar financing
transactions must be included for purposes of such testing whether treated as
derivatives transactions or not. The SEC also provided guidance in connection
with the new rule regarding use of securities lending collateral that may limit
a fund's securities lending activities. Compliance with these new requirements
will be required after an eighteen-month transition period.
Participation
Notes.
Participation Notes (“P-Notes”) are issued by banks or broker-dealers and are
designed to offer a return linked to the performance of a particular underlying
equity security or market. P-Notes can have the characteristics or take the form
of various instruments, including, but not limited to, certificates or warrants.
The holder of a P-Note that is linked to a particular underlying security is
entitled to receive any dividends paid in connection with the underlying
security. However, the holder of a P-Note generally does not receive voting
rights as it would if it directly owned the underlying security.
P-Notes
constitute direct, general and unsecured contractual obligations of the banks or
broker-dealers that issue them, which therefore subject a Fund to counterparty
risk, as discussed below.
Investments
in P-Notes involve certain risks in addition to those associated with a direct
investment in the underlying foreign securities or foreign securities markets
whose return they seek to replicate. For instance, there can be no assurance
that the trading price of a P-Note will equal the value of the underlying
foreign security or foreign securities market that it seeks to replicate. As the
purchaser of a P-Note, a Fund is relying on the creditworthiness of the
counterparty issuing the P-Note and has no rights under a P-Note against the
issuer of the underlying security. Therefore, if such counterparty were to
become insolvent or default on its obligations, a Fund would lose its
investment. The risk that a Fund may lose its investments due to the insolvency
of a single counterparty may be amplified to the extent the Fund purchases
P-Notes issued by one issuer or a small number of issuers. P-Notes also include
transaction costs in addition to those applicable to a direct investment in
securities. In addition, a Fund’s use of P-Notes may cause the Fund’s
performance to deviate from the performance of the portion of its Index to which
the Fund is gaining exposure through the use of P-Notes.
Due
to liquidity and transfer restrictions, the secondary markets on which P-Notes
are traded may be less liquid than the markets for other securities, which may
lead to the absence of readily available market quotations for securities in a
Fund’s portfolio and may cause the value of the P-Notes to decline. The ability
of a Fund to value its securities may become more difficult and the judgment in
the application of fair value procedures may play a greater role in the
valuation of a Fund’s securities due to reduced availability of reliable
objective pricing data. Consequently, while such determinations will be made in
good faith, it may nevertheless be more difficult for a Fund to accurately
assign a daily value to such securities.
Additionally
any subscription to P-notes with Indian underlying may be subject to regulatory
requirements imposed by SEBI and non-compliance may lead to winding down of such
positions, which may adversely affect a Fund.
Shareholder
Risk.
Certain shareholders, including other funds advised by the Adviser, may from
time to time own a substantial amount of a Fund’s Shares. In addition, a third
party investor, the Adviser or an affiliate of the Adviser, an AP, a market
maker, or another entity may invest in a Fund and hold its investment for a
limited period of time. There can be no assurance that any large shareholder
would not redeem its investment. Redemptions by shareholders could have a
negative impact on a Fund. In addition, transactions by large shareholders may
account for a large percentage of the trading volume on the Exchange and may,
therefore, have a material effect on the market price of the
Shares.
Leverage
Risk.
To
the extent that a Fund borrows money or utilizes certain derivatives, it may be
leveraged. Leveraging generally exaggerates the effect on NAV of any increase or
decrease in the market value of a Fund’s portfolio securities. To manage the
risk associated with leveraging, under current SEC guidance a Fund may segregate
liquid assets, or otherwise “cover” its derivatives position in a manner
consistent with the 1940 Act and the rules and SEC interpretations thereunder. A
Fund may modify its asset segregation policies at any time to comply with any
changes in the SEC’s positions regarding asset segregation.
Unlike
many conventional mutual funds which are only bought and sold at closing NAVs,
the Shares of each Fund have been designed to be tradable in a secondary market
on an intra-day basis and to be created and redeemed in-kind, except for VanEck
Africa Index ETF, VanEck Brazil Small-Cap ETF, VanEck Egypt Index ETF, VanEck
India Growth Leaders ETF and VanEck Vietnam
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TAX
ADVANTAGED PRODUCT STRUCTURE |
ETF,
whose Shares are created and redeemed partially or principally for cash, in
Creation Units at each day’s market close. These in-kind arrangements are
designed to mitigate the adverse effects on a Fund’s portfolio that could arise
from frequent cash purchase and redemption transactions that affect the NAV of
the Fund. Moreover, in contrast to conventional mutual funds, where frequent
redemptions can have an adverse tax impact on taxable shareholders because of
the need to sell portfolio securities which, in turn, may generate taxable gain,
the in-kind redemption mechanism of certain Funds, to the extent used, generally
is not expected to lead to a tax event for shareholders whose Shares are not
being redeemed.
A
description of each Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio securities is available in the Funds’
SAI.
Board
of Trustees.
The Board of Trustees of the Trust has responsibility for the general oversight
of the management of the Funds, including general supervision of the Adviser and
other service providers, but is not involved in the day-to-day management of the
Trust. A list of the Trustees and the Trust officers, and their present
positions and principal occupations, is provided in the Funds’ SAI.
Investment
Adviser.
Under the terms of an investment management agreement between the Trust and Van
Eck Associates Corporation with respect to the Funds (the “Investment Management
Agreement”), Van Eck Associates Corporation serves as the adviser to each Fund
and, subject to the supervision of the Board of Trustees, is responsible for the
day-to-day investment management of the Funds. As of December 31, 2021, the
Adviser managed approximately $81.93 billion in assets. The Adviser has been an
investment adviser since 1955 and also acts as adviser or sub-adviser to mutual
funds, other ETFs, other pooled investment vehicles and separate accounts. The
Adviser’s principal business address is 666 Third Avenue, 9th Floor, New York,
New York 10017. A discussion regarding the Board of Trustees’ approval of the
Investment Management Agreement is available in the Trust’s semi- annual report
for the period ended June 30, 2021.
For
the services provided to each Fund under the Investment Management Agreement,
each Fund pays the Adviser monthly fees based on a percentage of each Fund’s
average daily net assets at the annual rate of 0.50%. From time to time, the
Adviser may waive all or a portion of its fee. With respect to all Funds except
VanEck India Growth Leaders ETF, until at least May 1, 2023, the Adviser
has agreed to waive fees and/or pay Fund expenses to the extent necessary to
prevent the operating expenses of each Fund (excluding acquired fund fees and
expenses, interest expense, depositary receipt fees up to 0.10% and 0.08% of the
average daily net assets for VanEck Russia ETF and VanEck Russia Small-Cap ETF,
respectively, trading expenses, taxes and extraordinary expenses of the Fund)
from exceeding 0.57% (with respect to VanEck Indonesia Index ETF), 0.59% (with
respect to VanEck Brazil Small-Cap ETF and VanEck Israel ETF), 0.62% (with
respect to VanEck Russia ETF), 0.67% (with respect to VanEck Russia Small-Cap
ETF), 0.76% (with respect to VanEck Vietnam ETF), 0.78% (with respect to VanEck
Africa Index ETF) and 0.94% (with respect to VanEck Egypt Index ETF) of its
average daily net assets per year. Until at least May 1, 2023, the Adviser
has agreed to waive fees and/or pay Fund and Subsidiary expenses with respect to
VanEck India Growth Leaders ETF to the extent necessary to prevent the operating
expenses of the Fund (excluding acquired fund fees and expenses, interest
expense, trading expenses, taxes and extraordinary expenses of the Fund and the
Subsidiary) from exceeding 0.75% of its average daily net assets per
year.
Each
Fund is responsible for all of its expenses, including the investment advisory
fees, costs of transfer agency, custody, legal, audit and other services,
interest, taxes, any distribution fees or expenses, offering fees or expenses
and extraordinary expenses.
Administrator,
Custodian and Transfer Agent. Van
Eck Associates Corporation is the administrator for the Funds (the
“Administrator”), and State Street Bank and Trust Company is the custodian of
the Funds’ assets and provides transfer agency and fund accounting services to
the Funds. The Administrator is responsible for certain clerical, recordkeeping
and/or bookkeeping services which are required to be provided pursuant to the
Investment Management Agreement.
Distributor.
Van Eck Securities Corporation is the distributor of the Shares (the
“Distributor”). The Distributor will not distribute Shares in less than a
specified number of Shares, each called a “Creation Unit,” and does not maintain
a secondary market in the Shares. The Shares are traded in the secondary market.
The
portfolio managers who currently share joint responsibility for the day-to-day
management of each Fund’s portfolio are Peter H. Liao, CFA, and Guo Hua (Jason)
Jin. Mr. Liao has been employed by the Adviser as an analyst since the summer of
2004 and has been a portfolio manager since 2006. Mr. Liao graduated from New
York University in 2004 with a Bachelor of Arts in Economics and Mathematics.
Mr. Jin has been employed by the Adviser as an analyst since January 2007 and
has been a portfolio manager since 2018. Mr. Jin graduated from the State
University of New York at Buffalo in 2004 with a Bachelor of Science degree in
Business Administration with a concentration in Financial Analysis. Messrs. Liao
and Jin also serve as portfolio managers for certain other investment companies
and pooled investment vehicles advised by the Adviser. See the Funds’ SAI for
additional information about the portfolio managers’ compensation, other
accounts managed by the portfolio managers and their respective ownership of
Shares.
DETERMINATION
OF NAV
The
NAV per Share for each Fund is computed by dividing the value of the net assets
of the Fund (i.e.,
the value of its total assets less total liabilities) by the total number of
Shares outstanding. Expenses and fees, including the management fee, are accrued
daily and taken into account for purposes of determining NAV. The NAV of each
Fund is determined each business day as of the close of trading (ordinarily 4:00
p.m., Eastern time) on the New York Stock Exchange.
The
values of each Fund’s portfolio securities are based on the securities’ closing
prices on the markets on which the securities trade, when available. Due to the
time differences between the United States and certain countries in which
certain Funds invest, securities on these exchanges may not trade at times when
Shares of the Fund will trade. In the absence of a last reported sales price, or
if no sales were reported, and for other assets for which market quotes are not
readily available, values may be based on quotes obtained from a quotation
reporting system, established market makers or by an outside independent pricing
service. Debt instruments with remaining maturities of more than 60 days are
valued at the evaluated mean price provided by an outside independent pricing
service. If an outside independent pricing service is unable to provide a
valuation, the instrument is valued at the mean of the highest bid and the
lowest asked quotes obtained from one or more brokers or dealers selected by the
Adviser. Prices obtained by an outside independent pricing service may use
information provided by market makers or estimates of market values obtained
from yield data related to investments or securities with similar
characteristics and may use a computerized grid matrix of securities and its
evaluations in determining what it believes is the fair value of the portfolio
securities. Short-term debt instruments having a maturity of 60 days or less are
valued at amortized cost. Any assets or liabilities denominated in currencies
other than the U.S. dollar are converted into U.S. dollars at the current market
rates on the date of valuation as quoted by one or more sources. If a market
quotation for a security or other asset is not readily available or the Adviser
believes it does not otherwise accurately reflect the market value of the
security or asset at the time a Fund calculates its NAV, the security or asset
will be fair valued by the Adviser in accordance with the Trust’s valuation
policies and procedures approved by the Board of Trustees. Each Fund may also
use fair value pricing in a variety of circumstances, including but not limited
to, situations when the value of a security in the Fund’s portfolio has been
materially affected by events occurring after the close of the market on which
the security is principally traded (such as a corporate action or other news
that may materially affect the price of a security) or trading in a security has
been suspended or halted. In addition, each Fund that holds foreign equity
securities currently expects that it will fair value certain of the foreign
equity securities held by the Fund, if any, each day the Fund calculates its
NAV, except those securities principally traded on exchanges that close at the
same time the Fund calculates its NAV.
Accordingly,
a Fund’s NAV may reflect certain portfolio securities’ fair values rather than
their market prices at the time the exchanges on which they principally trade
close. Fair value pricing involves subjective judgments and it is possible that
a fair value determination for a security or other asset is materially different
than the value that could be realized upon the sale of such security or asset.
In addition, fair value pricing could result in a difference between the prices
used to calculate a Fund’s NAV and the prices used by such Fund’s respective
Index. This may adversely affect a Fund’s ability to track its Index. With
respect to securities that are principally traded on foreign exchanges, the
value of a Fund’s portfolio securities may change on days when you will not be
able to purchase or sell your Shares.
INTRADAY
VALUE
The
trading prices of the Funds’ Shares in the secondary market generally differ
from the Funds’ daily NAV and are affected by market forces such as the supply
of and demand for Fund Shares and underlying securities held by each Fund,
economic conditions and other factors. Information regarding the intraday value
of the Funds’ Shares (“IIV”) may be disseminated throughout each trading day by
an Exchange or by market data vendors or other information providers. The IIV is
based on the current market value of the securities and/or cash required to be
deposited in exchange for a Creation Unit. The IIV does not necessarily reflect
the precise composition of the current portfolio of securities held by each Fund
at a particular point in time or the best possible valuation of the current
portfolio. Therefore, the IIV should not be viewed as a “real-time” update of
the Funds’ NAV, which is computed only once a day. The IIV is generally
determined by using current market quotations and/or price quotations obtained
from broker-dealers and other market intermediaries that may trade in the
portfolio securities held by each Fund and valuations based on current market
rates. The quotations and/or valuations of certain Fund holdings may not be
updated during U.S. trading hours if such holdings do not trade in the United
States. Each Fund is not involved in, or responsible for, the calculation or
dissemination of the IIV and makes no warranty as to its accuracy.
RULE
144A AND OTHER UNREGISTERED SECURITIES
An
AP (i.e.,
a person eligible to place orders with the Distributor to create or redeem
Creation Units of a Fund) that is not a “qualified institutional buyer,” as such
term is defined under Rule 144A of the Securities Act of 1933, as amended (the
“Securities Act”), will not be able to receive, as part of a redemption,
restricted securities eligible for resale under Rule 144A or other unregistered
securities.
BUYING
AND SELLING EXCHANGE-TRADED SHARES
The
Shares of the Funds are listed on an Exchange. If you buy or sell Shares in the
secondary market, you will incur customary brokerage commissions and charges and
may pay some or all of the “spread,” which is any difference between the bid
price and the ask price. The spread varies over time for a Fund’s Shares based
on the Fund’s trading volume and market liquidity, and is generally lower if the
Funds have high trading volume and market liquidity, and generally higher if the
Funds have little trading volume and market liquidity (which is often the case
for funds that are newly launched or small in size). In times of severe market
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disruption
or low trading volume in a Fund’s Shares, this spread can increase
significantly. It is anticipated that the Shares will trade in the secondary
market at prices that may differ to varying degrees from the NAV of the Shares.
During periods of disruptions to creations and redemptions or the existence of
extreme market volatility, the market prices of Shares are more likely to differ
significantly from the Shares’ NAV.
The
Depository Trust Company (“DTC”) serves as securities depository for the Shares.
(The Shares may be held only in book-entry form; stock certificates will not be
issued.) DTC, or its nominee, is the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on the records
of DTC or its participants (described below). Beneficial owners of Shares are
not entitled to have Shares registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and are
not considered the registered holder thereof. Accordingly, to exercise any
rights of a holder of Shares, each beneficial owner must rely on the procedures
of: (i) DTC; (ii) “DTC Participants,” i.e.,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives) own
DTC; and (iii) “Indirect Participants,” i.e.,
brokers, dealers, banks and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly,
through which such beneficial owner holds its interests. The Trust understands
that under existing industry practice, in the event the Trust requests any
action of holders of Shares, or a beneficial owner desires to take any action
that DTC, as the record owner of all outstanding Shares, is entitled to take,
DTC would authorize the DTC Participants to take such action and that the DTC
Participants would authorize the Indirect Participants and beneficial owners
acting through such DTC Participants to take such action and would otherwise act
upon the instructions of beneficial owners owning through them. As described
above, the Trust recognizes DTC or its nominee as the owner of all Shares for
all purposes. For more information, see the section entitled “Book Entry Only
System” in the Funds’ SAI.
Each
Exchange is open for trading Monday through Friday and is closed on weekends and
the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Because
non-U.S. exchanges may be open on days when a Fund does not price its Shares,
the value of the securities in the Fund’s portfolio may change on days when
shareholders will not be able to purchase or sell a Fund’s Shares.
The
right of redemption by an AP may be suspended or the date of payment postponed
(1) for any period during which an Exchange is closed (other than customary
weekend and holiday closings); (2) for any period during which trading on an
Exchange is suspended or restricted; (3) for any period during which an
emergency exists as a result of which disposal of the Shares of a Fund or
determination of its NAV is not reasonably practicable; or (4) in such other
circumstance as is permitted by the SEC.
Market
Timing and Related Matters.
The Funds impose no restrictions on the frequency of purchases and redemptions.
Frequent purchases and redemptions of Fund Shares may attempt to take advantage
of a potential arbitrage opportunity presented by a lag between a change in the
value of a Fund’s portfolio securities after the close of the primary markets
for a Fund’s portfolio securities and the reflection of that change in a Fund’s
NAV (“market timing”). The Board of Trustees considered the nature of each Fund
(i.e.,
a fund whose Shares are expected to trade intraday), that the Adviser monitors
the trading activity of APs for patterns of abusive trading, that the Funds
reserve the right to reject orders that may be disruptive to the management of
or otherwise not in the Funds’ best interests, and that each Fund may fair value
certain of its securities. Given this structure, the Board of Trustees
determined that it is not necessary to impose restrictions on the frequency of
purchases and redemptions for the Funds at the present time.
DISTRIBUTIONS
Net
Investment Income and Capital Gains.
As a shareholder of a Fund, you are entitled to your share of such Fund’s
distributions of net investment income and net realized capital gains on its
investments. Each Fund pays out substantially all of its net earnings to its
shareholders as “distributions.”
Each
Fund typically earns income dividends from stocks and interest from debt
securities. These amounts, net of expenses, are typically passed along to Fund
shareholders as dividends from net investment income. Each Fund realizes capital
gains or losses whenever it sells securities. Net capital gains are distributed
to shareholders as “capital gain distributions.”
Net
investment income, if any, and net capital gains, if any, are
typically distributed to shareholders at
least annually. Dividends may be declared and paid more frequently to improve
index tracking or to comply with the distribution requirements of the Code. In
addition, in situations where a Fund acquires investment securities after the
beginning of a dividend period, a Fund may elect to distribute at least annually
amounts representing the full dividend yield net of expenses on the underlying
investment securities, as if the Fund owned the underlying investment securities
for the entire dividend period. If a Fund so elects, some portion of each
distribution may result in a return of capital, which, for tax purposes, is
treated as a return of your investment in Shares. You will be notified regarding
the portion of the distribution which represents a return of capital.
Distributions
in cash may be reinvested automatically in additional Shares of a Fund only if
the broker through which you purchased Shares makes such option
available.
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TAX
INFORMATION
As
with any investment, you should consider how your Fund investment will be taxed.
The tax information in this Prospectus is provided as general information. You
should consult your own tax professional about the tax consequences of an
investment in a Fund, including the possible application of foreign, state and
local taxes. Unless your investment in a Fund is through a tax-exempt entity or
tax-deferred retirement account, such as a 401(k) plan, you need to be aware of
the possible tax consequences when: (i) the Fund makes distributions, (ii) you
sell Shares in the secondary market or (iii) you create or redeem Creation
Units.
Taxes
on Distributions.
As noted above, each Fund expects to distribute net investment income, if any,
at least annually, and any net realized long-term or short-term capital gains,
if any, annually. Each Fund may also pay a special distribution at any time to
comply with U.S. federal tax requirements.
In
general, your distributions are subject to U.S. federal income tax when they are
paid, whether you take them in cash or reinvest them in a Fund. Distributions of
net investment income, including net short-term gains, if any, are generally
taxable as ordinary income. Whether distributions of capital gains represent
long-term or short-term capital gains is determined by how long a Fund owned the
investments that generated them, rather than how long you have owned your
Shares. Distributions of net short-term capital gains in excess of net long—term
capital losses, if any, are generally taxable as ordinary income. Distributions
of net long-term capital gains in excess of net short-term capital losses, if
any, that are properly reported as capital gain dividends are generally taxable
as long-term capital gains. Long-term capital gains of a non-corporate
shareholder are generally taxable at a maximum rate of 15% or 20%, depending on
whether the shareholder’s income exceeds certain threshold amounts.
The
Funds may receive dividends, the distribution of which a Fund may report as
qualified dividends. In the event that a Fund receives such a dividend and
reports the distribution of such dividend as a qualified dividend, the dividend
may be taxed at the maximum capital gains rates of 15% or 20%, provided holding
period and other requirements are met at both the shareholder and the Fund
level. There can be no assurance that any significant portion of a Fund’s
distributions will be eligible for qualified dividend treatment.
Distributions
in excess of a Fund’s current and accumulated earnings and profits are treated
as a tax-free return of your investment to the extent of your basis in the
Shares, and generally as capital gain thereafter. A return of capital, which for
tax purposes is treated as a return of your investment, reduces your basis in
Shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition of Shares. A distribution will reduce a Fund’s NAV per Share and may
be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of
capital.
Each
Fund may make investments in companies classified as passive foreign investment
companies (“PFICs”) for U.S. federal income tax purposes. Investments in PFICs
are subject to special tax rules which may result in adverse tax consequences to
the Fund and its shareholders. Each Fund generally intends to elect to “mark to
market” these investments at the end of each taxable year. By making this
election, a Fund will recognize as ordinary income any increase in the value of
such shares as of the close of the taxable year over their adjusted basis and as
ordinary loss any decrease in such investment (but only to the extent of prior
income from such investment under the mark to market rules). Gains realized with
respect to a disposition of a PFIC that a Fund has elected to mark to market
will be ordinary income. By making the mark to market election, a Fund may
recognize income in excess of the distributions that it receives from its
investments. Accordingly, a Fund may need to borrow money or dispose of some of
its investments in order to meet its distribution requirements. If a Fund does
not make the mark to market election with respect to an investment in a PFIC,
the Fund could become subject to U.S. federal income tax with respect to certain
distributions from, and gain on the dispositions of, the PFIC which cannot be
avoided by distributing such amounts to the Fund’s shareholders.
Dividends,
interest and gains from non-U.S. investments of a Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may, in some cases, reduce or
eliminate such taxes.
If
more than 50% of a Fund’s total assets at the end of its taxable year consist of
foreign securities, the Fund may elect to “pass through” to its investors
certain foreign income taxes paid by the Fund, with the result that each
investor will (i) include in gross income, even though not actually received,
the investor’s pro rata share of the Fund’s foreign income taxes, and (ii)
either deduct (in calculating U.S. taxable income) or credit (in calculating
U.S. federal income), subject to certain holding period and other limitations,
the investor’s pro rata share of the Fund’s foreign income taxes. It is expected
that more than 50% of each Fund’s assets will consist of foreign
securities.
Backup
Withholding.
Each Fund may be required to withhold a percentage of your distributions and
proceeds if you have not provided a taxpayer identification number or social
security number or otherwise established a basis for exemption from backup
withholding. The backup withholding rate for individuals is currently 24%. This
is not an additional tax and may be refunded, or credited against your U.S.
federal income tax liability, provided certain required information is furnished
to the Internal Revenue Service.
Taxes
on the Sale or Cash Redemption of Exchange Listed Shares.
Currently, any capital gain or loss realized upon a sale of Shares is generally
treated as long-term capital gain or loss if the Shares have been held for more
than one year and as a short term capital gain or loss if held for one year or
less. However, any capital loss on a sale of Shares held for six months or less
is treated as long-term capital loss to the extent that capital gain dividends
were paid with respect to such Shares. The ability to
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deduct
capital losses may be limited. To the extent that a Fund shareholder’s Shares
are redeemed for cash, this is normally treated as a sale for tax
purposes.
Taxes
on Creations and Redemptions of Creation Units.
To the extent a person exchanges securities for Creation Units generally will
recognize a gain or loss. The gain or loss will be equal to the difference
between the market value of the Creation Units at the time of exchange and the
sum of the exchanger’s aggregate basis in the securities surrendered and the
amount of any cash paid for such Creation Units. A person who exchanges Creation
Units for securities will generally recognize a gain or loss equal to the
difference between the exchanger’s basis in the Creation Units and the sum of
the aggregate market value of the securities received. The IRS, however, may
assert that a loss realized upon an exchange of primarily securities for
Creation Units cannot be deducted currently under the rules governing “wash
sales,” or on the basis that there has been no significant change in economic
position. Persons exchanging securities for Creation Units or redeeming Creation
Units should consult their own tax adviser with respect to whether wash sale
rules apply and when a loss might be deductible and the tax treatment of any
creation or redemption transaction.
Under
current U.S. federal income tax laws, any capital gain or loss realized upon a
redemption (or creation) of Creation Units held as capital assets is generally
treated as long-term capital gain or loss if the Shares (or securities
surrendered) have been held for more than one year and as a short-term capital
gain or loss if the Shares (or securities surrendered) have been held for one
year or less.
If
you create or redeem Creation Units, you will be sent a confirmation statement
showing how many Shares you created or sold and at what price.
Medicare
Tax.
An additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
Non-U.S.
Shareholders. Dividends
paid by the Funds to Non-U.S. shareholders are generally subject to withholding
tax at a 30% rate or a reduced rate specified by an applicable income tax treaty
to the extent derived from investment income and short-term capital gains.
Dividends paid by the Funds from net tax-exempt income or long-term capital
gains are generally not subject to such withholding tax. Properly-reported
dividends are generally exempt from U.S. federal withholding tax where they (i)
are paid in respect of the Funds’ “qualified net interest income” (generally,
the Funds’ U.S. source interest income, other than certain contingent interest
and interest from obligations of a corporation or partnership in which the Fund
is at least a 10% shareholder, reduced by expenses that are allocable to such
income); or (ii) are paid in respect of the Funds’ “qualified short-term capital
gains” (generally, the excess of the Fund’s net short-term capital gain over the
Fund’s long-term capital loss for such taxable year). However, depending on its
circumstances, the Funds may report all, some or none of its potentially
eligible dividends as such qualified net interest income or as qualified
short-term capital gains and/or treat such dividends, in whole or in part, as
ineligible for this exemption from withholding.
Any
capital gain realized by a Non-U.S. shareholder upon a sale of Shares of a Fund
will generally not be subject to U.S. federal income or withholding tax unless
(i) the gain is effectively connected with the shareholder’s trade or business
in the United States, or in the case of a shareholder who is a nonresident alien
individual, the shareholder is present in the United States for 183 days or more
during the taxable year and certain other conditions are met or (ii) the Fund is
or has been a U.S. real property holding corporation, as defined below, at any
time within the five-year period preceding the date of disposition of the Fund’s
Shares or, if shorter, within the period during which the Non-U.S. shareholder
has held the Shares. Generally, a corporation is a U.S. real property holding
corporation if the fair market value of its U.S. real property interests, as
defined in the Code and applicable regulations, equals or exceeds 50% of the
aggregate fair market value of its worldwide real property interests and its
other assets used or held for use in a trade or business. A Fund may be, or may
prior to a Non-U.S. shareholder’s disposition of Shares become, a U.S. real
property holding corporation. If a Fund is or becomes a U.S. real property
holding corporation, so long as the Fund’s Shares are regularly traded on an
established securities market, only a Non-U.S. shareholder who holds or held (at
any time during the shorter of the five year period preceding the date of
disposition or the holder’s holding period) more than 5% (directly or indirectly
as determined under applicable attribution rules of the Code) of the Fund’s
Shares will be subject to United States federal income tax on the disposition of
Shares.
As
part of the Foreign Account Tax Compliance Act, (“FATCA”), a Fund may be
required to withhold 30% tax on certain types of U.S. sourced income (e.g.,
dividends, interest, and other types of passive income), paid to (i) foreign
financial institutions (“FFIs”), including non-U.S. investment funds, unless
they agree to collect and disclose to the IRS information regarding their direct
and indirect U.S. account holders and (ii) certain nonfinancial foreign entities
(“NFFEs”), unless they certify certain information regarding their direct and
indirect U.S. owners. To avoid possible withholding, FFIs will need to enter
into agreements with the IRS which state that they will provide the IRS
information, including the names, account numbers and balances, addresses and
taxpayer identification numbers of U.S. account holders and comply with due
diligence procedures with respect to the identification of U.S. accounts as well
as agree to withhold tax on certain types of withholdable payments made to
non-compliant foreign financial institutions or to applicable foreign account
holders who fail to provide the required information to the IRS, or similar
account information and required documentation to a local revenue authority,
should an applicable intergovernmental agreement be
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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.
A
Fund may be subject to the FATCA withholding obligation, and also will be
required to perform due diligence reviews to classify foreign entity investors
for FATCA purposes. Investors are required to agree to provide information
necessary to allow a Fund to comply with the FATCA rules. If a Fund is required
to withhold amounts from payments pursuant to FATCA, investors will receive
distributions that are reduced by such withholding amounts.
Non-U.S.
shareholders are advised to consult their tax advisors with respect to the
particular tax consequences to them of an investment in the Funds, including the
possible applicability of the U.S. estate tax.
The
foregoing discussion summarizes some of the consequences under current U.S.
federal income tax law of an investment in a Fund. It is not a substitute for
personal tax advice. Consult your own tax advisor about the potential tax
consequences of an investment in a Fund under all applicable tax laws. Changes
in applicable tax authority could materially affect the conclusions discussed
above and could adversely affect the Funds, and such changes often
occur.
Mauritian
Tax Status.
The Subsidiary is wholly owned by VanEck India Growth Leaders ETF (for purposes
of this section, the “Fund”) and is a tax resident of Mauritius. The Subsidiary
is regulated by the Financial Services Commission in Mauritius (“FSC”), which
has issued a Category 1 Global Business License (which has been renamed the
“Global Business License” effective January 1, 2019) to the Subsidiary to
conduct the business of “investment holding” under the Financial Services Act
2007 (“FSA 07”). The Subsidiary has applied for a tax residence certificate
(“TRC”) from the Mauritius Revenue Authority (the “MRA”) through the FSC to be
able to benefit from the network of tax treaties in Mauritius. The TRC is issued
by the MRA subject to the subsidiary meeting certain tests and conditions and is
renewable on an annual basis.
The
Subsidiary will be taxed in Mauritius on income derived from its investments in
the portfolio companies at the rate of 15%.
Prior
to certain changes made by the Finance (Miscellaneous Provisions) Act 2018 (“FA
18”) to the Mauritius Income Tax Act 1995 (“ITA 95”), effective January 1, 2019,
a company holding a Category 1 Global Business License was entitled to claim a
deemed tax credit on foreign source income at a rate which was the higher
of:
(a)the
actual foreign tax paid (including if the Mauritius company holds more than 5%
of the issued capital of a company effecting a dividend distribution, a
proportionate share of the foreign tax paid by such company) on such income;
or
(b)a
deemed foreign tax representing 80% of the Mauritius tax on such
income.
The
ITA 95 defines “foreign source income” as income which is not derived from
Mauritius. This includes, in the case of a corporation holding a Category 1
Global Business License, income derived from transactions with “non-residents.”
For a person other than an individual, the term “non-resident” has been defined
based upon criteria such as economic interests and place of
incorporation.
Effective
January 1, 2019, the regime of deemed tax credit on foreign source income
available to corporations holding a Category 1 Global Business License has been
abolished and a partial exemption regime has been introduced whereby a
corporation holding a Global Business License will be granted an exemption of
80% on specified income subject to meeting certain additional substance
requirements as discussed below. The exemption will apply on the
following:
•foreign
source dividend, provided the dividend has not been allowed as a deduction in
the source country;
•foreign
source interest income;
•profit
attributable to a permanent establishment of a resident company in a foreign
company;
•foreign
source income derived by a collective investment scheme, closed-end funds, CIS
manager, administrator, investment adviser or asset manager licensed or approved
by the FSC; and
•income
derived by companies engaged in ship and aircraft leasing.
No
actual foreign tax credit will be allowed on foreign source income where the 80%
exemption has been claimed.
As
the holder of a Category 1 Global Business License, which was issued on or
before October 16, 2017, the Subsidiary was grandfathered until June 30, 2021.
Accordingly, the regime of deemed tax credit on foreign source income continued
to apply to the Subsidiary until June 30, 2021.
Under
the ITA 95, dividends paid to shareholders that do not otherwise derive income
from Mauritius are not subject to Mauritius income tax. Moreover, there are no
withholding taxes on dividends paid by a Mauritian resident company to its non-
resident and resident shareholders. Distributions paid to shareholders following
a redemption of shares are not subject to Mauritius income tax provided that the
shareholder does not hold its shares in the course of trading
activities.
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There
is no Mauritius capital gains tax on the disposal of shares. However, following
changes to the India-Mauritius tax treaty in 2016, the rights to tax capital
gains on the alienation of shares in an Indian Company has shifted to India. Any
gain arising from the alienation of shares acquired before April 1, 2017 will be
grandfathered. However, capital gains arising from the alienation of shares
acquired after March 31, 2017 and disposed post April 1, 2019 will be taxed at
full domestic rate in India.
Profits
made from the disposal of securities in the course of trading activities may be
liable to income tax at the applicable rate. Under ITA 95, interests paid by a
corporation holding a Global Business License out of its foreign source income
to non-residents that do not conduct any business in Mauritius are not subject
to Mauritius income tax.
Substance
Requirements.
In determining whether a corporation holding a Global Business License is
managed and controlled from Mauritius, the FSC shall have regard to such matters
as it deems necessary in the circumstances and in particular but without
limitation to whether that corporation:
(a)has
at least 2 directors, resident in Mauritius, of sufficient caliber to exercise
independence of mind and judgment;
(b)maintains,
at all times, its principal bank account in Mauritius;
(c)keeps
and maintains, at all times, its accounting records at its registered office in
Mauritius;
(d)prepares
its statutory financial statements and causes such financial statements to be
audited in Mauritius; and
(e)provides
for meetings of directors to include at least 2 directors from
Mauritius.
In
addition to the requirements mentioned above, when determining whether a
corporation holding a Global Business License is managed and controlled from
Mauritius, the FSC will also consider whether a corporation meets at least one
of the following criteria:
(a)the
corporation has or shall have office premises in Mauritius;
(b)the
corporation employs or shall employ on a full-time basis, at the
administrative/technical level, at least one person who shall be resident in
Mauritius;
(c)the
corporation’s constitution contains a clause whereby all disputes arising out of
the constitution shall be resolved by way of arbitration in
Mauritius;
(d)the
corporation holds, or is expected to hold, within the next 12 months, assets
(excluding cash held in a bank account or shares/interests in another
corporation holding a Global Business License) that are worth at least $100,000
in Mauritius;
(e)the
corporation’s shares are listed on a securities exchange licensed by the
Commission;
(f)the
corporation has, or is expected to have, a yearly expenditure in Mauritius that
can be reasonably expected from any similar corporation that is controlled and
managed from Mauritius.
Moreover,
section 71 of FSA 07 has been amended by FA 18 such that a corporation holding a
Global Business License must at all times:
(a)carry
out the core income generating activities in or from Mauritius by:
• employing
either directly or indirectly a reasonable number of suitably qualified persons
to carry out the core activities; and
• having
a minimum level of expenditure, which is proportionate to its level of
activities;
(b)be
managed and controlled from Mauritius; and
(c)be
administered by a management company.
The
Subsidiary may not continue to meet the substance requirements of Mauritius and
may face adverse tax consequences as a result.
Compliance
with the Foreign Account Tax Compliance Act (“FATCA”).
On September 27, 2013, the Government of Mauritius and the Government of the
United States signed an Agreement for the Exchange of Information Relating to
Taxes (the “Agreement”) to set the legal framework to enable the exchange of tax
information between the two countries. That was followed by the signing of
another agreement known as the Inter-Governmental Agreement (the “Model 1 IGA”)
to improve international tax compliance and to implement FATCA. The Agreement
provides for the exchange of tax information (upon request, spontaneous and
automatic) between Mauritius and the United States. The Model 1 IGA provides for
the automatic reporting and exchange of information in relation to financial
accounts held with Mauritius Financial Institutions by U.S. account holders and
the reciprocal exchange of information regarding U.S. accounts held by Mauritius
residents. According to the Model 1 IGA, Mauritius Financial Institutions are
not subject to 30% withholding tax on US source income provided they comply with
the requirements of FATCA. The Agreement
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SHAREHOLDER
INFORMATION (continued) |
for
the Exchange of Information Relating to Taxes (United States of America—FATCA
Implementation) Regulations 2014 (the “FATCA Regulations”), which gives effect
to both the Agreement and the Model 1 IGA, became operational on August 29,
2014.
Compliance
with the Convention on Mutual Administrative Assistance in Tax
Matters.
On June 23, 2015, the Government of Mauritius signed the Convention on Mutual
Administrative Assistance in Tax Matters (the “Convention”), which was developed
jointly by the Organization for Economic Cooperation and Development (“OECD”)
and the Council of Europe, and amended Section 76 of the ITA 95 to enable the
implementation of the common reporting standard (“CRS”). Under CRS, financial
institutions in Mauritius have to report annually to the MRA on the financial
accounts held by non-residents for eventual exchange with relevant treaty
partners. Amendments may be brought to Mauritius laws to introduce the
obligations adopted by Mauritius pursuant to the Convention. Different and
potentially obligatory disclosure requirements may be imposed in respect of
investors as a result of CRS, local legislation implementing CRS and/or other
legislation similar to CRS.
Additional
Disclosure Obligations.
As a result of FATCA, CRS or any other legislation under which disclosure may be
necessary or desirable which may apply to the Subsidiary, investors may be
required to provide the Board of Directors of the Subsidiary (the “Subsidiary
Board”) with all information and documents as the Subsidiary Board may require.
The Subsidiary may disclose such information regarding the investors as may be
required by the Government of Mauritius pursuant to FATCA, CRS or applicable
laws or regulations in connection therewith (including, without limitation, the
disclosure of certain non-public personal information regarding the investors to
the extent required).
Prevention
of Money Laundering and Terrorist Financing in Mauritius.
Mauritius made significant alterations to laws related to anti-money laundering
following its Eastern and Southern Africa Anti-Money Laundering Group
(“ESAAMLG”) mutual evaluation in 2018 which highlighted certain deficiencies in
its anti-money laundering (“AML”)/counter financing of terrorism (“CFT”) regime.
The primary statute governing money laundering offenses is the Financial
Intelligence and Anti-Money Laundering Act 2002 (“FIAMLA”) was amended by the
Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation
(Miscellaneous Provisions) Act 2019 (the “AML-CFT Act 2019”) to enhance the
regulatory regime for combating money laundering and terrorism financing in
Mauritius, and to bring the legislation in line with the recommendations made in
the ESAAMLG Mutual Evaluation Report for Mauritius 2018 (the
“Report”).
Also,
the FIAMLA Regulations 2003 were replaced with the Financial Intelligence and
Anti-Money Laundering Regulations 2018 (the “Regulations”) which came into force
on October 1, 2018. The amendments are focused to address the shortcomings
identified in the Report. The Regulations were subsequently amended in 2019,
further to the coming into force of the AML-CFT Act 2019. This improved the
framework regarding customer due diligence, politically exposed persons,
correspondent banking, money or value transfer services, new technologies, wire
transfers, reliance on third parties, internal controls, foreign branches and
subsidiaries. Additional details and clarifications were included in the
Regulations concerning enhanced due diligence to be conducted and the risk-based
approach to be used for high-risk customers and politically exposed
persons.
On
July 9, 2020, the Government of Mauritius has further strengthened its framework
against money laundering and the financing of terrorism by passing the
Anti-Money Laundering and Combating the Financing of Terrorism (Miscellaneous
Provisions) Act 2020 (the “AML-CFT Act 2020”), which amends 19 existing pieces
of legislation including FIAMLA. The aim of the AML-CFT Act 2020 is to align
Mauritius with the recommendations of the Financial Action Task Force and the EU
Commission. The AML-CFT Act 2020 states that the Beneficial Ownership
Information (“BO information”) of companies (including branches), limited
liability partnerships, limited partnerships and foundations, must be provided
to the Registrar of Companies (“RoC”) upon the incorporation and registration of
any such entity, and, later on, at the time of making certain mandatory filings.
This disclosure exercise also applies to existing entities that shall be obliged
to provide their BO information when requested by a regulatory authority. These
measures will give the enforcement authorities prompt access to up-to-date BO
information on the entities in Mauritius.
Stringent
reporting standards on suspicious transactions have also been imposed across
multiple sectors, including governmental agencies and parastatal organizations.
A reporting person now has only five days from the discovery of a suspicious
transaction, or from the reasonable belief that a suspicious transaction has
been made, to file a “Suspicious Transaction Report” to the Financial
Intelligence Unit (“FIU”).
The
regulators of all banking and non-banking financial institutions will now
possess enhanced supervisory and investigatory powers. Within the purview of
AML-CFT Act 2020, the regulators are also mandated to adhere to stricter
risk-based control and oversight. The RoC and the FSC have already increased the
frequency of their inspections of registered entities and/or licensees’ books
and records.
The
following fines may be imposed following non-compliance and breaches of AML-CFT
laws and Rules:
▪The
FIAMLA: A fine up to Indian Rupees 10 million (approx. US$252,845) and a
sentence of imprisonment of up to five years for non-compliance, and a fine of
up to INR 1 million (approx. US$25,285) and imprisonment of up to five years for
failure to file a ‘Suspicious Transaction Report’ to the FIU in the time
prescribed;
▪The
Prevention of Corruption Act: A fine of up to Indian Rupees 10 million (approx.
US$252,845) may be imposed upon an entity found to have committed a corruption
offense.
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SHAREHOLDER
INFORMATION (continued) |
Consequently,
to ensure compliance with the AML-CFT laws, the FSC issued an Anti-Money
Laundering and Countering the Financing of Terrorism Handbook 2020 (the “FSC
Handbook”) which is supplemented by the Mauritius Code on the Prevention of
Money Laundering and Terrorist Financing issued by the FSC (the “FSC Code”) and
which consolidates the FSC’s guidance on anti-money laundering, financing of
terrorism and financing of proliferation of weapons of mass destruction.
According
to the FSC Handbook and the FSC Code, the Subsidiary will need to carry out a
due diligence selection process, based on generally accepted industry norms,
prior to accepting investors. This will include but may not be limited to: (a)
applying the “know your client” principle by making sure that investors provide
valid proof of identification; (b) maintaining records of identification
information; (c) determining that potential investors are not known or suspected
terrorists by checking their names against a list of known or suspected
terrorists; (d) informing investors that information they provide may be used to
verify their identity; and (e) monitoring investors’ money transactions, that
is, the level of subscriptions. To ensure compliance with the AML-CFT laws, an
investor in the Subsidiary will be required to provide certain
information/documents for the purpose of verifying the identity of the investor
and source of funds and obtain confirmation that the subscription monies do not
represent, directly or indirectly, the proceeds of any crime. The request for
information may be exempted where an investor (other than an agent acting on
behalf of underlying principals) is a regulated financial services business
based in Mauritius or in an equivalent jurisdiction (that is subject to the
supervision of a public authority) or in the case of public companies listed on
recognized stock/investment exchanges.
By
way of example, an individual will be required to produce a copy of a passport
or identification card duly certified by a public authority such as a notary
public, the police or an accountant together with evidence of his address, such
as a utility bill or bank statement. In the case of corporate applicants, this
may require production of a certified copy of the certificate of incorporation
(and any change of name) and the memorandum and articles of association (or
equivalent), and of the names and residential and business addresses of all
directors and beneficial owners, the passport copies and utility bills of
directors and controllers as well as due diligence on source of funds of the
corporate entity. The details given above are by way of example only and the
Subsidiary may request such information and documentation as it considers
necessary to verify the identity of an investor.
In
the event of delay or failure by an investor to produce any information required
for verification purposes, the Mauritius Administrator may refuse to accept the
application and the subscription monies relating thereto, or may refuse to
process a redemption requests until proper information has been provided.
Investors should note specifically that the Mauritius Administrator reserves the
right to request such information as may be necessary in order to verify the
identity of the investor for shares and the owner of the account to which the
redemption proceeds will be paid. Redemption proceeds will not be paid to a
third-party account.
Each
investor acknowledges that the Mauritius Administrator shall be held harmless
against loss arising as a result of the failure to process an application for
shares or redemption requests if such information and documentation as requested
by the Mauritius Administrator has not been provided by the
investor.
In
compliance with the FSC Handbook and the FSC Code, the Subsidiary will appoint a
Money Laundering Reporting Officer (“MLRO”). The duties of the MLRO will include
receiving and evaluating internal ‘Suspicious Transactions Reports’ and, where
appropriate, filing these with the FIU. Persons connected with the Subsidiary
are required to report any suspicions of money laundering, terrorist financing
or other suspicious transactions to the MLRO. If requested by any relevant
authority including, without limitation, the FIU, the MLRO may pass on
information about any investor to any such regulatory authority. It is a term of
subscription that any shareholder will be deemed to have consented to the
passing on of such information to any such authority.
Indian
Tax Status.
The taxation of the Subsidiary in India is governed by the provisions of the ITA
1961, the Treaty and the 2016 Protocol (defined below).
In
order to claim the beneficial provisions of the Treaty (discussed below), the
Subsidiary must be a tax resident of Mauritius and should obtain a TRC
pertaining to the relevant period from the FSC. Further, the Subsidiary should
be eligible for the benefits under the Treaty if it is incorporated in Mauritius
and has been issued a TRC by the MRA.
Additionally,
under the amendments to the ITA 1961 brought in through the Finance Act, 2013,
the Subsidiary may have to provide to the tax authorities such other documents
and information, as may be prescribed.
Under
amendments to the Income Tax Rules, 1962 dated May 1, 2013, persons seeking to
avail of Treaty benefits are required to furnish their return of income
(irrespective of whether such income is liable to tax in India or not) from
assessment years 2013-2014 onwards in the manner prescribed under the ITA 1961.
For purposes of filing tax returns, a permanent account number or PAN
(i.e.,
a taxpayer identification number) is required.
India-Mauritius
Double Tax Avoidance Treaty.
On May 10, 2016, India and Mauritius entered into a protocol (the “2016
Protocol”) amending the double-tax Treaty between the two countries. The 2016
Protocol went into effect on July 19, 2016.
Taxation
of capital gains arising to the Subsidiary.
Subject to the discussion below regarding Grandfathered Investments, the 2016
Protocol allows India to tax capital gains from alienation of shares of an
Indian resident company acquired by a Mauritian tax resident. Taxation of
capital gains arising to the Subsidiary should be as under:
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SHAREHOLDER
INFORMATION (continued) |
(a)Capital
gains from the sale of listed equity shares or units of equity oriented mutual
funds made off the floor of the stock exchange or zero coupon bonds, held for 12
months or less are taxable as short-term capital gains at the rate of 30%
(excluding the applicable surcharge and health and education cess). For those
securities held for more than 12 months, capital gains shall be taxed at the
rate of 10% (excluding the applicable surcharge and health and education
cess);
(b)Capital
gains from the sale of unlisted securities (other than those covered above) held
for 36 months (for securities other than shares) and 24 months (for shares) or
less are taxable at the rate of 30% (excluding the applicable surcharge and
health and education cess), and those held for more than 36 months (for
securities other than shares) and 24 months (for shares) shall be taxed at the
rate of 10% (excluding the applicable surcharge and health and education
cess);
(c)Capital
gains from the sale of listed Indian equity shares or units of equity oriented
mutual funds made on the floor of the stock exchange and subject to Securities
Transaction Tax (“STT”) and held for 12 months or less are taxable at the rate
of 15% (excluding the applicable surcharge and health and education cess) and
those held for more than 12 months shall be taxed at the rate of 10% (excluding
the applicable surcharge and health and education cess) for gains exceeding
100,000 Indian rupees; and
(d)Capital
gains arising from the transfer of foreign currency convertible bonds and
depositary receipts outside India between non-resident investors should not be
subject to tax in India.
Taxation
of capital gains arising to the Subsidiary from Grandfathered
Investments.
Under the 2016 Protocol, gains made on shares of an Indian company acquired by a
Mauritius resident entity before April 1, 2017 are grandfathered (“Grandfathered
Investments”) and continue to be exempt from Indian capital gains tax
irrespective of the date on which such shares are sold. If the Subsidiary
qualifies as a Mauritius resident entity under Mauritius income tax laws, has a
valid TRC and is eligible for benefits under the Treaty, the Subsidiary will not
be subject to Indian tax on capital gains derived from Grandfathered
Investments. Even if the gains earned by the Subsidiary are considered business
profits, such capital gains are not taxable in India if the Subsidiary does not
have a PE in India.
Taxation
of Dividends.
Dividends paid by Indian companies on or after April 1, 2020 will no longer be
subject to dividend distribution tax in the hands of the Indian company, but
instead be subject to tax in the hands of the shareholder. The dividend income
paid to non-Indian shareholders is taxable under Indian law at 20%. Under the
Treaty, the rate of withholding on dividends applicable to the Subsidiary as a
resident of Mauritius can be reduced to:
(a)5%
if the Subsidiary holds directly at least 10% of the capital of the company
paying the dividends;
(b)15%
in all other cases; and
(c)The
Subsidiary is currently subject to 20% withholding on dividends.
Taxation
of Interest.
Interest income from loans provided or debt securities held in India will be
taxed at the rate of 7.5% under the Treaty (from the financial year which begins
after the Protocol comes into force) provided the Subsidiary qualifies as the
beneficial owner of the interest income unless the ITA 1961 provides a more
beneficial tax rate, in which case such beneficial rate of withholding will be
applicable. For instance, interest income with respect to investment in certain
rupee denominated bonds payable to an FPI on or after June 1, 2013 and before
July 1, 2023 should be taxable at the rate of 5% (exclusive of applicable
surcharge and cess). The Finance Act, 2020 also provides a lower withholding tax
rate of 5% on the interest payable to an FPI in respect of the investment made
in municipal debt security, during the period beginning from April 1, 2020 and
ending on July 1, 2023.
In
the event that the benefits of the Treaty are not available to the Subsidiary,
or the Subsidiary is held to have a permanent establishment in India, its income
from India will be taxed in accordance with the rules under ITA 1961. In light
of the particularized nature of tax consequences, you are advised to consult
your own tax adviser with respect to the specific tax consequences of purchasing
interests in the Fund.
Securities
Transaction Tax
All
transactions entered on a recognized stock exchange in India are subject to the
STT in accordance with the ITA 1961. The Subsidiary will be liable to pay STT in
respect of dealings in Indian securities purchased or sold on the Indian stock
exchanges. The applicable rates of STT are set out below:
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SHAREHOLDER
INFORMATION (continued) |
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Transactions/
Particulars |
Payable
by Purchaser |
Payable
by Seller |
Purchase/sale
of an equity share in a company or unit of an equity oriented mutual fund
- delivery based transaction in recognized stock exchange |
0.1% |
0.1% |
Sale
of equity share in a company or unit of an equity oriented mutual fund -
transaction in a recognized stock exchange, settled otherwise than by
actual delivery |
N.A. |
0.025% |
Sale
of unlisted shares under an offer for sale to the public |
N.A |
0.2% |
Sale
of an option in securities |
N.A |
0.05% |
Sale
of an option in securities, where option is exercised |
0.125% |
N.A. |
Sale
of futures in securities |
N.A. |
0.01% |
Sale
of unit of an equity oriented fund to a mutual fund |
N.A. |
0.001% |
GAAR.
GAAR became effective April 1, 2017. Under the Finance Act, 2012, upon
declaration of an arrangement as an ‘impermissible avoidance agreement’, the tax
authorities can disregard entities in a structure, reallocate income and
expenditure between parties to the arrangement, alter the tax residence of such
entities and the legal situs of assets involved, treat debt as equity and vice
versa.
An
‘impermissible avoidance arrangement’ is an arrangement entered into with the
main purpose of obtaining a tax benefit and satisfying one or more of the
following: (a) non-arm’s length dealings; (b) misuse or abuse of the provisions
of the domestic income tax provisions; (c) lack of commercial substance; or (d)
arrangement similar to that employed for non-bona fide purposes.
If
the Indian Tax authorities deem the Subsidiary’s structure to be an
“impermissible avoidance arrangement,” then the Subsidiary may not be able to
claim benefits under the Treaty. Inability of the Subsidiary to claim the tax
benefits under the Treaty could have an adverse impact on the tax liabilities of
the Subsidiary, and the performance of the Fund would be adversely
impacted.
Taxation
of Indirect Transfer of Indian Assets.
Under ITA 1961, Indian capital gains tax can be imposed on income arising from
the transfer of shares in a company registered outside India which derives,
directly or indirectly, its value substantially from the assets located in
India. Under the provisions of Finance Act, 2017, assets or capital assets held
by non-residents by way of investment, directly or indirectly, in a Category I
or Category II FPI were exempted from applicability of the indirect transfer
provisions (described in the foregoing paragraph). Pursuant to implementation of
the FPI Regulations in 2019, under which there are only two categories of FPIs,
the Finance Act, 2020 has restricted the exemption (discussed in the foregoing
paragraph) to Category I FPIs under the FPI Regulations.
Taxation
under indirect transfer provisions (if and as applicable) may be subject to
relief under an applicable tax treaty, subject to compliance with the applicable
requirements under the treaty and the furnishing of requisite documents to the
Indian income tax authorities, including a TRC.
The
levels and bases of taxation and any relevant reliefs from taxation referred to
in this document may change, any reliefs referred to are the ones which
currently apply and their value may differ from investor to
investor.
Taxation
of Shareholders
For
investors in the Fund who are tax residents outside India and who do not carry
on any business activities in India, there should be no Indian income tax
implications on distributions received from the Fund. However, where shares in
the Fund are sold by the investors, gains from such transfer could be subject to
tax in India as outlined under the heading “Taxation of Indirect Transfer of
Indian Assets” above, subject to applicable tax treaty relief.
Please
note that the above description is based on current provisions of Mauritius and
Indian law, and any change or modification made by subsequent legislation,
regulation, or administrative or judicial decision could increase the Indian tax
liability of the Subsidiary and thus reduce the return to Fund
shareholders.
The
Africa Index, Brazil Small-Cap Index, Egypt Index, Indonesia Index, Israel
Index, Russia Index, Russia Small-Cap Index and Vietnam Index are published by
MV Index Solutions GmbH (“MVIS”), which is an indirectly wholly owned subsidiary
of the Adviser.
The
India Index is published by MarketGrader.com Corp. (“MarketGrader”), an
independent global equity research and index provider.
MarketGrader
and MVIS are each referred to herein as an “Index Provider” and collectively,
the “Index Providers.” The Index Providers do not sponsor, endorse, or promote
the Funds and bear no liability with respect to the Funds or any security.
The
Africa Index is a rules-based, modified-capitalization-weighted, float-adjusted
index and is intended to give investors a means of tracking the overall
performance of the publicly traded companies in Africa. The Africa Index
includes local listings of companies that are incorporated in or doing
substantial business in Africa. A GDP capping scheme is applied.
To
be initially eligible for the Africa Index, (i) companies must be incorporated
in Africa or have at least 50% of their revenues/related assets in Africa and
(ii) their stocks must have a market capitalization of greater than $150 million
as of the end of the month prior to the month in which a rebalancing date
occurs.
The
Africa Index is the exclusive property of MVIS (a wholly owned subsidiary of the
Adviser), which has contracted with Solactive AG to maintain and calculate the
Africa Index. Solactive AG uses its best efforts to ensure that the Africa Index
is calculated correctly. Irrespective of its obligations towards MVIS, Solactive
AG has no obligation to point out errors in the Africa Index to third parties.
VanEck Africa Index ETF is not sponsored, endorsed, sold or promoted by MVIS and
MVIS makes no representation regarding the advisability of investing in VanEck
Africa Index ETF.
The
Africa Index is reconstituted and rebalanced quarterly. MVIS may delay or change
a scheduled rebalancing or reconstitution of the Africa Index or the
implementation of certain rules at its sole discretion.
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MVIS®
BRAZIL SMALL-CAP INDEX |
The
Brazil Small-Cap Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of publicly traded small-capitalization companies that are
incorporated in or doing substantial business in Brazil.
To
be initially eligible for the Brazil Small-Cap Index, (i) companies must be
incorporated in Brazil or have at least 50% of their revenues/related assets in
Brazil and (ii) their stocks must have a market capitalization of greater than
$150 million as of the end of the month prior to the month in which a
rebalancing date occurs.
The
Brazil Small-Cap Index is the exclusive property of MVIS (a wholly owned
subsidiary of the Adviser), which has contracted with Solactive AG to maintain
and calculate the Brazil Small-Cap Index. Solactive AG uses its best efforts to
ensure that the Brazil Small-Cap Index is calculated correctly. Irrespective of
its obligations towards MVIS, Solactive AG has no obligation to point out errors
in the Brazil Small-Cap Index to third parties. VanEck Brazil Small-Cap ETF is
not sponsored, endorsed, sold or promoted by MVIS and MVIS makes no
representation regarding the advisability of investing in VanEck Brazil
Small-Cap ETF.
The
Brazil Small-Cap Index is reconstituted semi-annually and rebalanced quarterly.
MVIS may delay or change a scheduled rebalancing or reconstitution of the Brazil
Small-Cap Index or the implementation of certain rules at its sole
discretion.
The
Egypt Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
publicly traded companies that are incorporated in or doing substantial business
in Egypt.
To
be initially eligible for the Egypt Index, (i) companies must be incorporated in
Egypt or have at least 50% of their revenues/related assets in Egypt and (ii)
their stocks must have a market capitalization of greater than $150 million as
of the end of the month prior to the month in which a rebalancing date
occurs.
The
Egypt Index is the exclusive property of MVIS (a wholly owned subsidiary of the
Adviser), which has contracted with Solactive AG to maintain and calculate the
Egypt Index. Solactive AG uses its best efforts to ensure that the Egypt Index
is calculated correctly. Irrespective of its obligations towards MVIS, Solactive
AG has no obligation to point out errors in the Egypt Index to third parties.
VanEck Egypt Index ETF is not sponsored, endorsed, sold or promoted by MVIS and
MVIS makes no representation regarding the advisability of investing in VanEck
Egypt Index ETF.
The
Egypt Index is reconstituted and rebalanced quarterly. MVIS may delay or change
a scheduled rebalancing or reconstitution of the Egypt Index or the
implementation of certain rules at its sole discretion.
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MARKETGRADER
INDIA ALL-CAP GROWTH LEADERS INDEX |
The
India Index is a modified market capitalization weighted, float adjusted index
designed to track Indian companies that the Index Provider has determined
exhibit favorable fundamental characteristics according to the Index Provider’s
proprietary scoring methodology. The Index Provider creates a numerical score
based on indicators measuring four fundamental characteristics for companies
that are eligible for index inclusion, derived from public company filings and
stock prices. The four fundamental characteristics are growth, value,
profitability and cash flow. The resulting score is an aggregate of these
indicators.
To
be initially eligible for the India Index, companies must be domiciled in India
and listed on an eligible stock exchange, as determined by the Index Provider.
From this universe of companies, the top-ranked names according to the Index
Provider’s proprietary score are included, and then weighted according to their
free-float market capitalization.
The
India Index is rebalanced semi-annually. The Index Provider may delay or change
a scheduled rebalancing or reconstitution of the India Index or the
implementation of certain rules at its sole discretion.
The
Indonesia Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of publicly traded companies that are incorporated in or doing
substantial business in Indonesia.
To
be initially eligible for the Indonesia Index, (i) companies must be
incorporated in Indonesia or have at least 50% of their revenues/related assets
in Indonesia and (ii) their stocks must have a market capitalization of greater
than $150 million as of the end of the month prior to the month in which a
rebalancing date occurs.
The
Indonesia Index is the exclusive property of MVIS (a wholly owned subsidiary of
the Adviser), which has contracted with Solactive AG to maintain and calculate
the Indonesia Index. Solactive AG uses its best efforts to ensure that the
Indonesia Index is calculated correctly. Irrespective of its obligations towards
MVIS, Solactive AG has no obligation to point out errors in the Indonesia Index
to third parties. VanEck Indonesia Index ETF is not sponsored, endorsed, sold or
promoted by MVIS and MVIS makes no representation regarding the advisability of
investing in the VanEck Indonesia Index ETF.
The
Indonesia Index is reconstituted and rebalanced quarterly. MVIS may delay or
change a scheduled rebalancing or reconstitution of the Indonesia Index or the
implementation of certain rules at its sole discretion.
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BLUESTAR
ISRAEL GLOBAL INDEX® |
The
Israel Index is a rules based, modified capitalization, float adjusted weighted
index comprised of equity securities, which may include depositary receipts, of
publicly traded companies that are generally considered by the Index Provider to
be Israeli companies. The Index Provider considers a range of factors such as
domicile, country of company formation/founding, primary location of management,
operations and/or research and development facilities, tax status, location of
revenues and employees, among other things, when determining whether a company
will be included in the Israel Index.
For
a company to be considered part of the Israel Index, it must meet at least one
quantitative criterion and/or at least two qualitative criteria, below, as
decided upon by the BlueStar Index Advisory Committee. If a company meets this
requirement, it will be considered an Israeli company and part of the universe
of Israeli global equities.
Quantitative
criteria:
1) The
company’s tax status is in Israel.
2) The
company is headquartered in Israel.
3) The
company generates at least 50% of its revenues or at least 50% of its operating
expenses are derived from operations in Israel.
Qualitative
criteria:
1)The
company was founded or formed in Israel.
2)The
company is listed on the Tel Aviv Stock Exchange.
3)The
company has major management, operational, logistical, or R&D facilities in
Israel.
4)The
company has a majority of its board of directors or at least two executives
domiciled in Israel.
5)The
company’s business results would be materially altered without its Israel based
assets. These assets may include, but are not limited to: intellectual and human
capital, or licenses to Israeli technology that materially affect revenue or
R&D.
6)The
company is a subsidiary or non-Israel operating branch of an Israeli company
that meets at least one of the quantitative criteria described
above.
The
Israel Index is the exclusive property of MVIS and is calculated and maintained
by Standard & Poor’s based on a methodology developed by MVIS in
consultation with Standard & Poor’s. The Israel Index is calculated on a
real-time and end-of-day basis. Information on the Israel Index is freely
available on the website of MVIS at www.mvis-indices.com.
The
Israel Index is rebalanced and reconstituted semi-annually. MVIS may delay or
change a scheduled rebalancing or reconstitution of the Israel Index or the
implementation of certain rules at its sole discretion.
The
Russia Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
publicly traded companies that are incorporated in or doing substantial business
in Russia.
To
be initially eligible for the Russia Index, (i) companies must be incorporated
in Russia or have at least 50% of their revenues/related assets in Russia and
(ii) their stocks must have a market capitalization of greater than $150 million
as of the end of the month prior to the month in which a rebalancing date
occurs.
The
Russia Index is the exclusive property of MVIS (a wholly owned subsidiary of the
Adviser), which has contracted with Solactive AG to maintain and calculate the
Russia Index. Solactive AG uses its best efforts to ensure that the Russia Index
is calculated correctly. Irrespective of its obligations towards MVIS, Solactive
AG has no obligation to point out errors in the Russia Index to third parties.
VanEck Russia ETF is not sponsored, endorsed, sold or promoted by MVIS and MVIS
makes no representation regarding the advisability of investing in the VanEck
Russia ETF.
The
Russia Index is reconstituted and rebalanced quarterly. MVIS may delay or change
a scheduled rebalancing or reconstitution of the Russia Index or the
implementation of certain rules at its sole discretion.
|
|
|
MVIS®
RUSSIA SMALL-CAP INDEX |
The
Russia Small-Cap Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of publicly traded small-capitalization companies that are
incorporated in or doing substantial business in Russia.
To
be initially eligible for the Russia Small-Cap Index, (i) companies must be
incorporated in Russia or have at least 50% of their revenues/related assets in
Russia and (ii) their stocks must have a market capitalization of greater than
$150 million as of the end of the month prior to the month in which a
rebalancing date occurs.
The
Russia Small-Cap Index is the exclusive property of MVIS (a wholly owned
subsidiary of the Adviser), which has contracted with Solactive AG to maintain
and calculate the Russia Small-Cap Index. Solactive AG uses its best efforts to
ensure that the Russia Small-Cap Index is calculated correctly. Irrespective of
its obligations towards MVIS, Solactive AG has no obligation to point out errors
in the Russia Small-Cap Index to third parties. VanEck Russia Small-Cap ETF is
not sponsored, endorsed, sold or promoted by MVIS and MVIS makes no
representation regarding the advisability of investing in VanEck Russia
Small-Cap ETF.
The
Russia Small-Cap Index is reconstituted semi-annually and rebalanced quarterly.
MVIS may delay or change a scheduled rebalancing or reconstitution of the Russia
Small-Cap Index or the implementation of certain rules at its sole
discretion.
The
Vietnam Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
publicly traded companies that are incorporated in or doing substantial business
in Vietnam.
To
be initially eligible for the Vietnam Index, (i) companies must be incorporated
in Vietnam or have at least 50% of their revenues/related assets in Vietnam and
(ii) their stocks must have a market capitalization of greater than $150 million
as of the end of the month prior to the month in which a rebalancing date
occurs.
The
Vietnam Index is the exclusive property of MVIS (a wholly owned subsidiary of
the Adviser), which has contracted with Solactive AG to maintain and calculate
the Vietnam Index. Solactive AG uses its best efforts to ensure that the Vietnam
Index is calculated correctly. Irrespective of its obligations towards MVIS,
Solactive AG has no obligation to point out errors in the Vietnam Index to third
parties. VanEck Vietnam ETF is not sponsored, endorsed, sold or promoted by MVIS
and MVIS makes no representation regarding the advisability of investing in
VanEck Vietnam ETF.
The
Vietnam Index is reconstituted and rebalanced quarterly. MVIS may delay or
change a scheduled rebalancing or reconstitution of the Vietnam Index or the
implementation of certain rules at its sole discretion.
|
|
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LICENSE
AGREEMENTS AND DISCLAIMERS |
The
Adviser has entered into a licensing agreement with MVIS to use each of the
Africa Index, Brazil Small-Cap Index, Egypt Index, Indonesia Index, Israel
Index, Russia Index, Russia Small-Cap Index and Vietnam Index (each an “MVIS
Index”, and together, the “MVIS Indices”). The Index Provider is a wholly owned
subsidiary of the Adviser. Each of VanEck Africa Index ETF, VanEck Brazil
Small-Cap ETF, VanEck Egypt Index ETF, VanEck Indonesia Index ETF, VanEck Israel
ETF, VanEck Russia ETF, VanEck Russia Small-Cap ETF and VanEck Vietnam ETF (each
an “MVIS Index ETF,” and together, the “MVIS Index ETFs”) is entitled to use its
Index pursuant to a sub-licensing arrangement with the Adviser.
Shares
of the MVIS Index ETFs are not sponsored, endorsed, sold or promoted by MVIS.
MVIS makes no representation or warranty, express or implied, to the owners of
Shares of the MVIS Index ETFs or any member of the public regarding the
advisability of investing in securities generally or in the Shares of the MIVS
Index ETFs particularly or the ability of the MIVS Indices to track the
performance of its respective securities market. Each of the MVIS Indices is
determined and composed by MVIS without regard to the Adviser or the Shares of
the MVIS Index ETFs. MVIS has no obligation to take the needs of the Adviser or
the owners of Shares of the MVIS Index ETFs into consideration in determining or
composing the respective Index. MVIS is not responsible for and has not
participated in the determination of the timing of, prices at, or quantities of
the Shares of the MVIS Index ETFs are to be converted into cash. MVIS has no
obligation or liability in connection with the administration, marketing or
trading of the Shares of the MIVS Index ETFs.
MVIS
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE MVIS INDICES OR
ANY DATA INCLUDED THEREIN AND MVIS SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. MVIS MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE MVIS INDEX
ETFS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE MVIS INDICES, OR MVIS
INDEX ETFS OR ANY DATA INCLUDED THEREIN. MVIS MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE MVIS INDICES OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MVIS
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
The
Shares of the MVIS Index ETFs are not sponsored, promoted, sold or supported in
any other manner by Solactive AG nor does Solactive AG offer any express or
implicit guarantee or assurance either with regard to the results of using the
MVIS Indices and/or its trade mark or its price at any time or in any other
respect. The MVIS Indices are calculated and maintained by Solactive AG.
Solactive AG uses its best efforts to ensure that the MVIS Indices are
calculated correctly. Irrespective of its obligations towards MVIS, Solactive AG
has no obligation to point out errors in the MVIS Indices to third parties
including but not limited to investors and/or financial intermediaries of the
MVIS Index ETFs. Neither publication of the MVIS Indices by Solactive AG nor the
licensing of the MVIS Indices or its trade mark for the purpose of use in
connection with the MVIS Index ETFs constitutes a recommendation by Solactive AG
to invest capital in the MVIS Index ETFs nor does it in any way represent an
assurance or opinion of Solactive AG with regard to any investment in the MVIS
Index ETFs. Solactive AG is not responsible for fulfilling the legal
requirements concerning the accuracy and completeness of the prospectus of the
MVIS Index ETFs.
The
Adviser has entered into a licensing agreement with the Index Provider to use
the India Index. The Fund is entitled to use the India Index pursuant to a
sub-licensing arrangement with the Adviser.
VanEck®
India
Growth Leaders ETF is not sponsored, endorsed, sold or promoted by the Index
Provider. The Index Provider's only relationship to Van Eck Associates
Corporation (“Licensee”) is the licensing of the India Index which is
determined, composed and calculated by the Index Provider and Solactive AG, as
Index Calculation Agent, without regard to Licensee. The Index Provider has no
obligation to take the needs of Licensee or the owners of the Fund into
consideration in determining, composing or calculating the India Index. THE
INDEX PROVIDER SHALL NOT BE A PARTY TO THE TRANSACTION CONTEMPLATED HEREBY, AND
IS NOT PROVIDING ANY ADVICE, RECOMMENDATION, REPRESENTATION OR WARRANTY
REGARDING THE ADVISABILITY OF THIS TRANSACTION OR THE FUND OR THE ABILITY OF THE
INDIA INDEX TO TRACK INVESTMENT PERFORMANCE. THE INDEX PROVIDER HEREBY EXPRESSLY
DISCLAIMS ALL WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, REGARDING THIS
TRANSACTION AND ANY USE OF THE INDIA INDEX, INCLUDING BUT NOT LIMITED TO ALL
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE,
AND NON-INFRINGEMENT AND ALL WARRANTIES ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING AND USAGE OF TRADE OR THEIR EQUIVALENTS UNDER THE LAWS OF ANY
JURISDICTION. UNDER NO CIRCUMSTANCES AND UNDER NO THEORY OF LAW, TORT, CONTRACT,
STRICT LIABILITY OR OTHERWISE, SHALL THE INDEX PROVIDER OR ANY OF ITS AFFILIATES
BE LIABLE TO ANY PERSON FOR ANY DAMAGES, REGARDLESS OF WHETHER THEY ARE DIRECT,
INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY CHARACTER,
INCLUDING DAMAGES FOR TRADING LOSSES OR LOST PROFITS, OR FOR ANY CLAIM OR DEMAND
BY ANY THIRD PARTY, EVEN IF THE INDEX PROVIDER KNEW OR HAD REASON TO KNOW OF THE
POSSIBILITY OF SUCH DAMAGES, CLAIM OR DEMAND.
The
India Index is not sponsored, promoted, sold or supported in any other manner by
Solactive AG nor does Solactive AG offer any express or implicit guarantee or
assurance either with regard to the results of using the India Index and/or the
Index Price at any time or in any other respect. The India Index is calculated
and published by Solactive AG. Solactive AG uses its best efforts to ensure that
the India Index is calculated correctly. Irrespective of its obligations towards
the Index Provider, Solactive AG has no
|
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LICENSE
AGREEMENTS AND DISCLAIMERS
(continued) |
obligation
to point out errors in the India Index to third parties including but not
limited to investors and/or financial intermediaries of the financial
instrument. Neither publication of the India Index by Solactive AG nor the
licensing of the India Index or for the purpose of use in connection with the
financial instrument constitutes a recommendation by Solactive AG to invest
capital in said financial instrument nor does it in any way represent an
assurance or opinion of Solactive AG with regard to any investment in this
financial instrument.
The
S&P 500®
Index included in each Fund’s performance table is a product of S&P Dow
Jones Indices LLC and/or its affiliates and has been licensed for use by the
Adviser. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P
Global, Inc., and/or its affiliates. All rights reserved. Redistribution or
reproduction in whole or in part are prohibited without written permission of
S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones
Indices LLC’s indices please visit www.spdji.com. S&P®
is a registered trademark of S&P Global and Dow Jones®
is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P
Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor
their third party licensors make any representation or warranty, express or
implied, as to the ability of any index to accurately represent the asset class
or market sector that it purports to represent and neither S&P Dow Jones
Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third
party licensors shall have any liability for any errors, omissions, or
interruptions of any index or the data included therein.
S&P
DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR
THE COMPLETENESS OF EACH INDEX OR ANY DATA RELATED THERETO, OR ANY COMMUNICATION
INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING
ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL
NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS
THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF EACH INDEX, OR WITH RESPECT TO ANY DATA
RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER
SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF
PROFITS, TRADING LOSSES, LOST TIME, OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY,
OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR
ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE ADVISER, OTHER THAN THE
LICENSORS OF S&P DOW JONES INDICES.
The
financial highlights tables which follow are intended to help you understand the
Funds’ financial performance for the past five years or as indicated. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in a Fund (assuming reinvestment of all dividends and
distributions).
The
information below has been audited by Ernst & Young LLP, the Trust’s
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.
For
a share outstanding throughout each year:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Africa
Index ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
20.17 |
|
|
$ |
20.50 |
|
|
$ |
20.08 |
|
|
$ |
24.81 |
|
|
$ |
20.09 |
|
|
Net
investment income (a) |
0.53 |
|
0.52 |
|
1.09 |
|
0.57 |
|
0.39 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
0.20 |
(b) |
(0.05) |
|
0.62 |
|
(4.96) |
|
4.82 |
|
Total
from investment operations |
0.73 |
|
0.47 |
|
1.71 |
|
(4.39) |
|
5.21 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.84) |
|
(0.80) |
|
(1.29) |
|
(0.34) |
|
(0.49) |
|
Net
asset value, end of year |
$ |
20.06 |
|
|
$ |
20.17 |
|
|
$ |
20.50 |
|
|
$ |
20.08 |
|
|
$ |
24.81 |
|
|
Total
return (c) |
3.69 |
|
% |
2.29 |
|
% |
8.52 |
|
% |
(17.70) |
|
% |
26.02 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
0.77 |
|
% |
0.92 |
|
% |
0.90 |
|
% |
0.91 |
|
% |
0.87 |
|
% |
Net
expenses |
0.77 |
|
% |
0.79 |
|
% |
0.79 |
|
% |
0.78 |
|
% |
0.84 |
|
% |
Net
expenses excluding interest expense |
0.77 |
|
% |
0.78 |
|
% |
0.78 |
|
% |
0.78 |
|
% |
0.78 |
|
% |
Net
investment income |
2.50 |
|
% |
3.00 |
|
% |
5.13 |
|
% |
2.44 |
|
% |
1.73 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$59 |
|
|
$52 |
|
|
$50 |
|
|
$55 |
|
|
$76 |
|
|
Portfolio
turnover rate (d) |
37 |
|
% |
37 |
|
% |
46 |
|
% |
23 |
|
% |
38 |
|
% |
(a)Calculated
based upon average shares outstanding
(b)The
amount shown does not correspond with the aggregate net gain (loss) on
investments for the period due to the timing of sales and repurchase of shares
in relation to fluctuating market values of the investments of the
Fund.
(c)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.
(d)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil
Small-Cap ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
21.44 |
|
|
$ |
27.50 |
|
|
$ |
20.09 |
|
|
$ |
23.33 |
|
|
$ |
16.10 |
|
|
Net
investment income (a) |
0.48 |
|
0.33 |
|
0.58 |
|
0.68 |
|
0.48 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(5.08) |
|
(6.04) |
|
7.42 |
|
(3.34) |
|
7.81 |
|
Payment
from Adviser |
— |
|
— |
|
0.11 |
(b) |
— |
|
|
— |
|
|
Total
from investment operations |
(4.60) |
|
(5.71) |
|
8.11 |
|
(2.66) |
|
8.29 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.49) |
|
(0.35) |
|
(0.70) |
|
(0.58) |
|
(1.06) |
|
Net
asset value, end of year |
$ |
16.35 |
|
|
$ |
21.44 |
|
|
$ |
27.50 |
|
|
$ |
20.09 |
|
|
$ |
23.33 |
|
|
Total
return (c)
|
(21.38) |
|
% |
(20.75) |
|
% |
40.81 |
|
%(b) |
(11.66) |
|
% |
51.71 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
0.84 |
|
%(d) |
0.84 |
|
% |
0.73 |
|
% |
0.73 |
|
% |
0.68 |
|
% |
Net
expenses |
0.59 |
|
%(d) |
0.60 |
|
% |
0.63 |
|
% |
0.60 |
|
% |
0.60 |
|
% |
Net
expenses excluding interest expense |
0.59 |
|
%(d) |
0.59 |
|
% |
0.59 |
|
% |
0.59 |
|
% |
0.59 |
|
% |
Net
investment income |
2.32 |
|
%(d) |
1.73 |
|
% |
2.52 |
|
% |
3.25 |
|
% |
2.24 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$32 |
|
|
$55 |
|
|
$98 |
|
|
$88 |
|
|
$108 |
|
|
Portfolio
turnover rate (e) |
56 |
|
% |
31 |
|
% |
38 |
|
% |
45 |
|
% |
53 |
|
% |
(a)Calculated
based upon average shares outstanding
(b)For
the year ended December 31, 2019, 0.55% of total return, representing $0.11 per
share, consisted of a payment from the Adviser.
(c)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.
(d)The
ratios presented do not reflect the Fund’s proportionate share of income and
expenses from the Fund’s investment in underlying funds.
(e)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Egypt
Index ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
25.62 |
|
|
$ |
29.20 |
|
|
$ |
28.28 |
|
|
$ |
32.89 |
|
|
$ |
26.02 |
|
|
Net
investment income (a) |
0.75 |
|
0.61 |
|
0.59 |
|
0.60 |
|
0.81 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
1.38 |
|
(3.56) |
|
0.93 |
(b) |
(4.73) |
|
6.31 |
|
Total
from investment operations |
2.13 |
|
(2.95) |
|
1.52 |
|
(4.13) |
|
7.12 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.66) |
|
(0.63) |
|
(0.60) |
|
(0.48) |
|
(0.25) |
|
Net
asset value, end of year |
$ |
27.09 |
|
|
$ |
25.62 |
|
|
$ |
29.20 |
|
|
$ |
28.28 |
|
|
$ |
32.89 |
|
|
Total
return (c) |
8.36 |
|
% |
(10.09) |
|
% |
5.42 |
|
% |
(12.56) |
|
% |
27.39 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
1.10 |
|
% |
1.11 |
|
% |
1.11 |
|
% |
1.19 |
|
% |
1.09 |
|
% |
Net
expenses |
1.02 |
|
% |
0.98 |
|
% |
1.01 |
|
% |
0.98 |
|
% |
0.94 |
|
% |
Net
expenses excluding interest expense |
0.94 |
|
% |
0.94 |
|
% |
0.94 |
|
% |
0.94 |
|
% |
0.94 |
|
% |
Net
investment income |
2.92 |
|
% |
2.43 |
|
% |
1.88 |
|
% |
1.73 |
|
% |
2.82 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$22 |
|
|
$19 |
|
|
$31 |
|
|
$33 |
|
|
$76 |
|
|
Portfolio
turnover rate (d) |
73 |
|
% |
27 |
|
% |
76 |
|
% |
41 |
|
% |
41 |
|
% |
(a)Calculated
based upon average shares outstanding
(b)The
amount shown does not correspond with the aggregate net gain (loss) on
investments for the period due to the timing of sales and repurchase of shares
in relation to fluctuating market values of the investments of the
Fund.
(c)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.
(d)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
India
Growth Leaders ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
|
|
Net
asset value, beginning of year |
$ |
32.94 |
|
|
$ |
32.76 |
|
|
$ |
42.36 |
|
|
$ |
68.40 |
|
|
$ |
41.03 |
|
|
|
|
Net
investment income (loss) (a) |
0.08 |
|
0.15 |
|
0.50 |
|
(0.02) |
|
0.02 |
|
|
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
|
|
investments |
9.91 |
|
0.11 |
(b) |
(9.68) |
|
(25.97) |
|
27.42 |
|
|
|
Total
from investment operations |
9.99 |
|
0.26 |
|
(9.18) |
|
(25.99) |
|
27.44 |
|
|
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income |
— |
|
(0.08) |
|
(0.42) |
|
(0.05) |
|
(0.07) |
|
|
|
Total
distributions |
— |
|
(0.08) |
|
(0.42) |
|
(0.05) |
|
(0.07) |
|
|
|
Net
asset value, end of year |
$ |
42.93 |
|
|
$ |
32.94 |
|
|
$ |
32.76 |
|
|
$ |
42.36 |
|
|
$ |
68.40 |
|
|
|
|
Total
return (c) |
30.30 |
|
% |
0.80 |
|
% |
(21.65) |
|
% |
(38.00) |
|
% |
66.88 |
|
% |
|
|
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
1.00 |
|
% |
1.24 |
|
% |
0.86 |
|
% |
0.83 |
|
% |
0.72 |
|
% |
|
|
Net
expenses |
0.90 |
|
% |
1.05 |
|
% |
0.86 |
|
% |
0.83 |
|
% |
0.72 |
|
% |
|
|
Net
expenses excluding interest expense and |
|
|
|
|
|
|
|
|
|
|
|
|
taxes |
0.83 |
|
% |
0.85 |
|
% |
0.83 |
|
% |
0.80 |
|
% |
0.70 |
|
% |
|
|
Net
investment income (loss) |
0.22 |
|
% |
0.55 |
|
% |
1.35 |
|
% |
(0.03) |
|
% |
0.04 |
|
% |
|
|
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$78 |
|
|
$68 |
|
|
$122 |
|
|
$187 |
|
|
$405 |
|
|
|
|
Portfolio
turnover rate (d) |
67 |
|
% |
133 |
|
% |
51 |
|
% |
39 |
|
% |
42 |
|
% |
|
|
(a)Calculated
based upon average shares outstanding.
(b)The
amount shown does not correspond with the aggregate net gain (loss) on
investments for the period due to the timing of sales and repurchase of shares
in relation to fluctuating market values of the investments of the
Fund.
(c)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.
(d)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
Index ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
20.49 |
|
|
$ |
22.68 |
|
|
$ |
21.85 |
|
|
$ |
24.75 |
|
|
$ |
21.31 |
|
|
Net
investment income (a) |
0.27 |
|
0.36 |
|
0.40 |
|
0.36 |
|
0.35 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(0.61) |
|
(2.21) |
|
0.90 |
|
(2.78) |
|
3.55 |
|
Total
from investment operations |
(0.34) |
|
(1.85) |
|
1.30 |
|
(2.42) |
|
3.90 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.22) |
|
(0.34) |
|
(0.47) |
|
(0.48) |
|
(0.46) |
|
Net
asset value, end of year |
$ |
19.93 |
|
|
$ |
20.49 |
|
|
$ |
22.68 |
|
|
$ |
21.85 |
|
|
$ |
24.75 |
|
|
Total
return (b) |
(1.65) |
|
% |
(8.20) |
|
% |
5.97 |
|
% |
(9.79) |
|
% |
18.35 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
0.82 |
|
% |
0.97 |
|
% |
0.80 |
|
% |
0.75 |
|
% |
0.73 |
|
% |
Net
expenses |
0.57 |
|
% |
0.57 |
|
% |
0.57 |
|
% |
0.57 |
|
% |
0.57 |
|
% |
Net
investment income |
1.38 |
|
% |
2.03 |
|
% |
1.78 |
|
% |
1.61 |
|
% |
1.53 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$54 |
|
|
$36 |
|
|
$41 |
|
|
$45 |
|
|
$62 |
|
|
Portfolio
turnover rate (c) |
36 |
|
% |
13 |
|
% |
10 |
|
% |
14 |
|
% |
14 |
|
% |
(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.
(c)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Israel
ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
44.82 |
|
|
$ |
35.03 |
|
|
$ |
28.05 |
|
|
$ |
30.37 |
|
|
$ |
26.84 |
|
|
Net
investment income (a) |
0.27 |
|
0.08 |
|
0.19 |
|
0.27 |
|
0.30 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
4.30 |
|
9.79 |
|
7.27 |
|
(2.38) |
|
3.71 |
|
Total
from investment operations |
4.57 |
|
9.87 |
|
7.46 |
|
(2.11) |
|
4.01 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.62) |
|
(0.08) |
|
(0.48) |
|
(0.21) |
|
(0.48) |
|
Net
asset value, end of year |
$ |
48.77 |
|
|
$ |
44.82 |
|
|
$ |
35.03 |
|
|
$ |
28.05 |
|
|
$ |
30.37 |
|
|
Total
return (b) |
10.20 |
|
% |
28.14 |
|
% |
26.64 |
|
% |
(6.94) |
|
% |
14.96 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
0.71 |
|
% |
0.80 |
|
% |
0.94 |
|
% |
1.02 |
|
% |
0.92 |
|
% |
Net
expenses |
0.59 |
|
% |
0.60 |
|
% |
0.62 |
|
% |
0.60 |
|
% |
0.59 |
|
% |
Net
expenses excluding interest expense |
0.59 |
|
% |
0.59 |
|
% |
0.59 |
|
% |
0.59 |
|
% |
0.59 |
|
% |
Net
investment income |
0.57 |
|
% |
0.24 |
|
% |
0.60 |
|
% |
0.85 |
|
% |
1.04 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$80 |
|
|
$75 |
|
|
$58 |
|
|
$46 |
|
|
$43 |
|
|
Portfolio
turnover rate (c) |
32 |
|
% |
22 |
|
% |
14 |
|
% |
23 |
|
% |
21 |
|
% |
(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.
(c)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russia
ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
23.82 |
|
|
$ |
24.96 |
|
|
$ |
18.79 |
|
|
$ |
21.14 |
|
|
$ |
21.09 |
|
|
Net
investment income (a) |
1.39 |
|
0.97 |
|
1.20 |
|
0.88 |
|
0.71 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
3.06 |
|
(1.31) |
|
6.39 |
|
(2.26) |
|
0.25 |
|
Total
from investment operations |
4.45 |
|
(0.34) |
|
7.59 |
|
(1.38) |
|
0.96 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(1.52) |
|
(0.79) |
|
(1.42) |
|
(0.97) |
|
(0.91) |
|
Return
of capital |
— |
|
(0.01) |
|
— |
|
— |
|
— |
|
Total
distributions |
(1.52) |
|
(0.80) |
|
(1.42) |
|
(0.97) |
|
(0.91) |
|
Net
asset value, end of year |
$ |
26.75 |
|
|
$ |
23.82 |
|
|
$ |
24.96 |
|
|
$ |
18.79 |
|
|
$ |
21.14 |
|
|
Total
return (b) |
18.74 |
|
% |
(1.38) |
|
% |
40.40 |
|
% |
(6.47) |
|
% |
4.62 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
0.56 |
|
% |
0.61 |
|
% |
0.67 |
|
% |
0.65 |
|
% |
0.72 |
|
% |
Net
expenses |
0.56 |
|
% |
0.61 |
|
% |
0.67 |
|
% |
0.65 |
|
% |
0.67 |
|
% |
Net
expenses excluding interest expense and a portion of depositary receipt
fees (c) |
0.56 |
|
% |
0.60 |
|
% |
0.65 |
|
% |
0.64 |
|
% |
0.66 |
|
% |
Net
investment income |
4.99 |
|
% |
4.45 |
|
% |
5.40 |
|
% |
4.09 |
|
% |
3.40 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$1,376 |
|
|
$1,621 |
|
|
$1,282 |
|
|
$1,326 |
|
|
$1,807 |
|
|
Portfolio
turnover rate (d) |
20 |
|
% |
25 |
|
% |
15 |
|
% |
20 |
|
% |
15 |
|
% |
(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.
(c)Ratio
excludes depositary receipt fees in excess of 0.10% of average daily net
assets.
(d)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russia
Small-Cap ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
36.22 |
|
|
$ |
35.94 |
|
|
$ |
27.61 |
|
|
$ |
40.68 |
|
|
$ |
38.04 |
|
|
Net
investment income (a) |
1.12 |
|
1.12 |
|
1.53 |
|
1.17 |
|
1.17 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
(2.29) |
|
0.74 |
|
8.45 |
|
(13.02) |
|
2.94 |
|
Total
from investment operations |
(1.17) |
|
1.86 |
|
9.98 |
|
(11.85) |
|
4.11 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(2.00) |
|
(1.58) |
|
(1.65) |
|
(1.22) |
|
(1.47) |
|
Return
of capital |
(0.08) |
|
— |
|
— |
|
— |
|
— |
|
Total
distributions |
(2.08) |
|
(1.58) |
|
(1.65) |
|
(1.22) |
|
(1.47) |
|
Net
asset value, end of year |
$ |
32.97 |
|
|
$ |
36.22 |
|
|
$ |
35.94 |
|
|
$ |
27.61 |
|
|
$ |
40.68 |
|
|
Total
return (b) |
(3.29) |
|
% |
5.23 |
|
% |
36.17 |
|
% |
(29.09) |
|
% |
(11.01) |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Gross
expenses |
1.08 |
|
% |
1.31 |
|
% |
1.20 |
|
% |
0.94 |
|
% |
0.82 |
|
% |
Net
expenses |
0.75 |
|
% |
0.75 |
|
% |
0.77 |
|
% |
0.76 |
|
% |
0.76 |
|
% |
Net
expenses excluding interest expense and a portion of depositary receipt
fees (c) |
0.75 |
|
% |
0.75 |
|
% |
0.75 |
|
% |
0.75 |
|
% |
0.75 |
|
% |
Net
investment income |
3.01 |
|
% |
3.45 |
|
% |
4.67 |
|
% |
3.22 |
|
% |
2.87 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$24 |
|
|
$32 |
|
|
$35 |
|
|
$33 |
|
|
$58 |
|
|
Portfolio
turnover rate (d) |
47 |
|
% |
47 |
|
% |
30 |
|
% |
49 |
|
% |
39 |
|
% |
(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.
(c)Ratio
excludes depositary receipt fees in excess of 0.08% of average daily net
assets.
(d)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vietnam
ETF |
|
Year
Ended December 31, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
Net
asset value, beginning of year |
$ |
17.52 |
|
|
$ |
16.05 |
|
|
$ |
14.84 |
|
|
$ |
17.45 |
|
|
$ |
12.97 |
|
|
Net
investment income (a) |
0.11 |
|
0.08 |
|
0.14 |
|
0.17 |
|
0.20 |
|
Net
realized and unrealized gain (loss) on |
|
|
|
|
|
|
|
|
|
|
investments |
3.83 |
|
1.46 |
|
1.19 |
|
(2.66) |
|
4.46 |
|
Total
from investment operations |
3.94 |
|
1.54 |
|
1.33 |
|
(2.49) |
|
4.66 |
|
Distributions
from: |
|
|
|
|
|
|
|
|
|
|
Net
investment income |
(0.10) |
|
(0.06) |
|
(0.12) |
|
(0.12) |
|
(0.18) |
|
Return
of capital |
— |
|
(0.01) |
|
— |
|
|
— |
|
|
— |
|
(b) |
Total
distributions |
(0.10) |
|
(0.07) |
|
(0.12) |
|
(0.12) |
|
(0.18) |
|
Net
asset value, end of year |
$ |
21.36 |
|
|
$ |
17.52 |
|
|
$ |
16.05 |
|
|
$ |
14.84 |
|
|
$ |
17.45 |
|
|
Total
return (c) |
22.52 |
|
% |
9.72 |
|
% |
8.86 |
|
% |
(14.15) |
|
% |
35.76 |
|
% |
Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
Expenses |
0.59 |
|
%(d) |
0.61 |
|
% |
0.66 |
|
% |
0.68 |
|
% |
0.66 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Expenses
excluding interest expense |
0.58 |
|
%(d) |
0.60 |
|
% |
0.63 |
|
% |
0.64 |
|
% |
0.63 |
|
% |
Net
investment income |
0.58 |
|
%(d) |
0.55 |
|
% |
0.89 |
|
% |
0.98 |
|
% |
1.37 |
|
% |
Supplemental
data |
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (in millions) |
$591 |
|
|
$457 |
|
|
$443 |
|
|
$318 |
|
|
$349 |
|
|
Portfolio
turnover rate (e) |
57 |
|
% |
33 |
|
% |
33 |
|
% |
49 |
|
% |
50 |
|
% |
(a)Calculated
based upon average shares outstanding
(b)Amount
represents less than $0.005 per share.
(c)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.
(d)The
ratios presented do not reflect the Fund’s proportionate share of income and
expenses from the Fund’s investment in underlying funds.
(e)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
PREMIUM/DISCOUNT
INFORMATION |
Information
regarding how often the closing trading price of the Shares of each Fund was
above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund
for the most recently completed calendar year and the most recently completed
calendar quarter(s) since that year (or the life of the Fund, if shorter) can be
found at www.vaneck.com.
CONTINUOUS
OFFERING
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Trust on an ongoing basis, a “distribution,” as such term is used in the
Securities Act, may occur at any point. Broker dealers and other persons are
cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery and liability provisions of the Securities Act.
For
example, a broker dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent Shares, and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker
dealers who are not “underwriters” but are participating in a distribution (as
contrasted to ordinary secondary trading transactions), and thus dealing with
Shares that are part of an “unsold allotment” within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
This is because the prospectus delivery exemption in Section 4(a)(3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the 1940 Act. As a result, broker dealer firms should note that
dealers who are not underwriters but are participating in a distribution (as
contrasted with ordinary secondary market transactions) and thus dealing with
the Shares that are part of an overallotment within the meaning of Section
4(a)(3)(A) of the Securities Act would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
Firms that incur a prospectus delivery obligation with respect to Shares are
reminded that, under Rule 153 of the Securities Act, a prospectus delivery
obligation under Section 5(b)(2) of the Securities Act owed to an exchange
member in connection with a sale on an Exchange is satisfied by the fact that
the prospectus is available at an Exchange upon request. The prospectus delivery
mechanism provided in Rule 153 is only available with respect to transactions on
an Exchange.
In
addition, certain affiliates of the Funds and the Adviser may purchase and
resell Fund shares pursuant to this Prospectus.
OTHER
INFORMATION
The
Trust was organized as a Delaware statutory trust on March 15, 2001. Its
Declaration of Trust currently permits the Trust to issue an unlimited number of
Shares of beneficial interest. If shareholders are required to vote on any
matters, each Share outstanding would be entitled to one vote. Annual meetings
of shareholders will not be held except as required by the 1940 Act and other
applicable law. See the Funds’ SAI for more information concerning the Trust’s
form of organization. Section 12(d)(1) of the 1940 Act restricts investments by
investment companies in the securities of other investment companies, including
Shares of a Fund. Registered investment companies are permitted to invest in the
Funds beyond the limits set forth in Section 12(d)(1) subject to certain terms
and conditions set forth in SEC regulations, including that such investment
companies enter into an agreement with the Funds.
The
Prospectus, SAI and any other Fund communication do not create any contractual
obligations between the Funds’ shareholders and the Trust, the Funds, the
Adviser and/or the Trustees. Further, shareholders are not intended third party
beneficiaries of any contracts entered into by (or on behalf of) any Fund,
including contracts with the Adviser or other parties who provide services to
the Fund.
Dechert
LLP serves as counsel to the Trust, including the Funds. Ernst & Young LLP
serves as the Trust’s independent registered public accounting firm and will
audit the Fund’s financial statements annually.
ADDITIONAL
INFORMATION
This
Prospectus does not contain all the information included in the Registration
Statement filed with the SEC with respect to the Funds’ Shares. The Funds’
Registration Statement, including this Prospectus, the Funds’ SAI and the
exhibits are available on the EDGAR database at the SEC’s website
(http://www.sec.gov), and copies may be obtained, after paying a duplicating
fee, by electronic request at the following email address: [email protected].
The
SAI for the Funds, which has been filed with the SEC, provides more information
about the Funds. The SAI for the Funds is incorporated herein by reference and
is legally part of this Prospectus. Additional information about the Funds’
investments is available in each Fund’s annual and semi-annual reports to
shareholders. In each Fund’s annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund’s performance during its last fiscal year. The SAI and the Funds’ annual
and semi-annual reports may be obtained without charge by writing to the Funds
at Van Eck Securities Corporation, the Funds’ Distributor, at 666 Third Avenue,
9th Floor, New York, New York 10017 or by calling the Distributor at the
following number: Investor Information: 800.826.2333.
Shareholder
inquiries may be directed to the Funds in writing to 666 Third Avenue, 9th
Floor, New York, New York 10017 or by calling 800.826.2333.
The
Funds’ SAI is available at www.vaneck.com.
(Investment
Company Act file no. 811-10325)
For
more detailed information about the Funds, see the SAI dated May 1, 2022, as may
be supplemented from time to time. Additional information about each of the
Funds’ investments is or will be available in each Fund’s annual and semi-annual
reports to shareholders. In each Fund’s annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected each Fund’s performance during its last fiscal year.
Call
VanEck at 800.826.2333 to request, free of charge, the annual or semi-annual
reports, the SAI, or other information about the Funds or to make shareholder
inquiries. You may also obtain the SAI or a Fund’s annual or semi-annual
reports, by visiting the VanEck website at www.vaneck.com.
Reports
and other information about the Funds are available on the EDGAR Database on the
SEC’s internet site at http://www.sec.gov. In addition, copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following email address: [email protected].
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Transfer
Agent: State Street Bank and Trust Company SEC Registration Number:
333-123257 1940 Act Registration Number: 811-10325 |
800.826.2333 vaneck.com |
INTPRO |