cik0001137360-20210930
|
|
|
|
|
|
|
|
|
|
|
PROSPECTUS
February
1, 2022 |
VANECK®
Biotech
ETF BBH
Digital
Transformation ETF DAPP
Environmental
Services ETF EVX®
Gaming
ETF BJK®
Pharmaceutical
ETF PPH®
Retail
ETF RTH®
Semiconductor
ETF SMH®
Video
Gaming and eSports
ETF ESPO®
|
|
|
Principal
U.S. Listing Exchange for EVX: NYSE Arca, Inc.
Principal U.S. Listing
Exchange for BBH, DAPP, BJK, PPH, RTH, SMH and ESPO:
The NASDAQ Stock
Market LLC.
The U.S. Securities and Exchange Commission ("SEC") has not
approved or disapproved these
securities or passed upon the accuracy
or adequacy of this Prospectus. Any representation to the
contrary is
a criminal offense.
|
800.826.2333 vaneck.com
|
|
|
|
|
|
|
|
|
| Summary
Information |
|
| VanEck
Biotech ETF (BBH) |
|
| VanEck
Digital Transformation ETF (DAPP) |
|
| VanEck
Environmental Services ETF (EVX) |
|
| VanEck
Gaming ETF (BJK) |
|
| VanEck
Pharmaceutical ETF (PPH) |
|
| VanEck
Retail ETF (RTH) |
|
| VanEck
Semiconductor ETF (SMH) |
|
| VanEck
Video Gaming and eSports ETF (ESPO) |
|
| Summary
Information About Purchases and Sales of Fund Shares, Taxes and Payments
to Broker-Dealers and Other Financial Intermediaries |
|
| Additional
Information About the Funds’ Investment Strategies and Risks |
|
| Tax
Advantaged Product Structure |
|
| Portfolio
Holdings |
|
| Management
of the Funds |
|
| Portfolio
Managers |
|
| Shareholder
Information |
|
| Index
Providers |
|
|
MVIS®
US Listed Biotech 25 Index |
|
|
MVIS®
Global Digital Assets Equity Index |
|
|
NYSE®
Arca
Environmental Services Index |
|
|
MVIS®
Global Gaming Index |
|
|
MVIS®
US Listed Pharmaceutical 25 Index |
|
|
MVIS®
US Listed Retail 25 Index |
|
|
MVIS®
US Listed Semiconductor 25 Index |
|
|
MVIS®
Global Video Gaming & eSports Index |
|
| License
Agreements and Disclaimers |
|
| Financial
Highlights |
|
| Premium/Discount
Information |
|
| General
Information |
|
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Biotech ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
US Listed Biotech 25 Index (the “Biotech 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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.35 |
% |
|
|
|
|
|
|
Other
Expenses(a)(b) |
0.00 |
% |
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
|
|
|
|
|
(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least February 1,
2023.
(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. Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR |
EXPENSES |
|
|
1 |
$36 |
|
|
3 |
$113 |
|
|
5 |
$197 |
|
|
10 |
$443 |
|
|
|
|
|
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
41% 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 Biotech Index includes common stocks and depositary receipts of U.S.
exchange-listed companies in the biotechnology industry. Such companies may
include medium-capitalization companies and foreign companies that are listed on
a U.S. exchange. To be initially
____________________________
1
Prior to September 1,
2021, the Fund's name was VanEck Vectors®
Biotech ETF.
eligible
for the Biotech Index, companies must generate at least 50% of their revenues
from biotechnology. Biotechnology includes companies engaged primarily in
research (including research contractors) and development as well as production,
marketing and sales of drugs based on genetic analysis and diagnostic equipment
(excluding pharmacies). Of the largest 50 stocks in the biotechnology industry
by full market capitalization, the top 25 by free-float market capitalization
(i.e.,
includes only shares that are readily available for trading in the market) and
three month average daily trading volume are included in the Biotech Index. As
of December 31, 2021, the Biotech Index included 25 securities of companies with
a market capitalization range of between approximately $5.8 billion and $127.6
billion and a weighted average market capitalization of $55.6 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 Biotech Index by investing in a portfolio of
securities that generally replicates the Biotech Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Biotech Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Biotech 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 Biotech Index concentrates in an industry or group of industries. As of
September 30, 2021, each of the biotechnology and life sciences tools &
services industries represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in the Biotechnology Industry.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the biotechnology industry. The success of
biotechnology companies is highly dependent on the development, procurement
and/or marketing of drugs. The values of biotechnology companies are also
dependent on the development, protection and exploitation of intellectual
property rights and other proprietary information, and the profitability of
biotechnology companies may be affected significantly by such things as the
expiration of patents or the loss of, or the inability to enforce, intellectual
property rights. The research and development and other costs associated with
developing or procuring new drugs, products or technologies and the related
intellectual property rights can be significant, and the results of such
research and expenditures are unpredictable and may not necessarily lead to
commercially successful products. In addition, the potential for an increased
amount of required disclosure or proprietary scientific information could
negatively impact the competitive position of these companies. Governmental
regulation may delay or inhibit the release of new products. The process for
obtaining regulatory approval by the U.S. Food and Drug Administration (the
"FDA") or other governmental regulatory authorities is long and costly and there
can be no assurance that the necessary approvals will be obtained or maintained.
Companies in the biotechnology industry may also be subject to expenses and
losses from expensive insurance costs due to the risk of product liability
lawsuits, and extensive litigation based on intellectual property, product
liability and similar claims. Companies in the biotechnology industry may be
adversely affected by government regulation and changes in reimbursement rates.
Health care providers, principally hospitals, that transact with companies in
the biotechnology industry often rely on third party payors, such as Medicare,
Medicaid and other government sponsored programs, private health insurance plans
and health maintenance organizations to reimburse all or a portion of the cost
of health care related products or services.
A
biotechnology company’s valuation can often be based largely on the potential or
actual performance of a limited number of products. A biotechnology company’s
valuation can also be greatly affected if one of its products proves unsafe,
ineffective, unprofitable or if such product is not approved by the FDA. Such
companies may also be characterized by thin capitalization and limited markets,
financial resources or personnel. The stock prices of companies in the
biotechnology industry have been and will likely continue to be extremely
volatile, particularly when their products are up for regulatory approval and/or
under regulatory scrutiny. Some of the companies in the biotechnology industry
are engaged in other lines of business unrelated to biotechnology, and they may
experience problems with these lines of business which could adversely affect
their operating results. The operating results of these companies may fluctuate
as a result of these additional risks and events in the other lines of business.
In addition, a company’s ability to engage in new activities may expose it to
business risks with which it has less experience than it has with the business
risks associated with its traditional businesses. Despite a company’s possible
success in traditional biotechnology activities, there can be no assurance that
the other lines of business in which these companies are engaged will not have
an adverse effect on a company’s business or financial condition.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or
economic
developments, taxation by foreign governments, political instability, the
possibility that foreign governmental restrictions may be adopted which might
adversely affect such securities and that the selection of such securities may
be more difficult because there may be less publicly available information
concerning such non-U.S. issuers or the accounting, auditing and financial
reporting standards, practices and requirements applicable to non-U.S. issuers
may differ from those applicable to U.S. issuers.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the Life Sciences Tools and Services Industry. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the life sciences tools and services industry. The
profitability of life sciences tools and services companies may be adversely
affected by the loss or impairment of patent or intellectual property rights,
the advent of new technologies or competitors, large expenditures on research
and development of products or services that may not prove commercially
successful or may become obsolete quickly, and the imposition of regulations and
restrictions by the Food and Drug Administration, the Environmental Protection
Agency, state and local governments, and foreign regulatory authorities. In
addition, stock prices of these companies are at times extremely volatile,
particularly when their products are subject to regulatory approval and/or under
regulatory scrutiny. Life sciences tools and services companies may also be
particularly affected by risks that affect the broader health care sector,
including heavy dependence on patent protection, with profitability affected by
the expiration of patents, competition that may make it difficult to raise
prices or result in price discounts; and thin capitalization and limited product
lines, markets and financial resources or personnel. Companies that make medical
equipment and supply may be subject to extensive litigation based on product
liability and similar claims. Meanwhile, healthcare providers and services
companies are particularly subject to the risks of restrictions on government
reimbursement for medical expenses, an increased emphasis on outpatient
services, rising costs of medical products and public health
conditions.
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 Biotech Index, may negatively affect the Fund’s ability to
replicate the performance of the Biotech Index.
Risk
of Investing in Medium-Capitalization Companies. The
Fund may invest in medium-capitalization companies and, therefore, will be
subject to certain risks associated with medium-capitalization companies. These
companies are often subject to less analyst coverage and may be in early and
less predictable periods of their corporate existences, with little or no record
of profitability. In addition, these companies often have greater price
volatility, lower trading volume and less liquidity than larger more established
companies. These companies tend to have smaller revenues, narrower product
lines, less management depth and experience, smaller shares of their product or
service markets, fewer financial resources and less competitive strength than
large-capitalization companies. Returns on investments in securities of
medium-capitalization companies could trail the returns on investments in
securities of larger companies.
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.
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 Biotech Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Biotech 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
Biotech 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 (as defined herein), which are not factored into
the return of the Biotech 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 Biotech
Index. Errors in the Biotech Index data, the Biotech Index computations and/or
the construction of the Biotech Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Biotech
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 Biotech Index provider's errors will
be kept by the Fund and its shareholders and any losses or costs resulting from
the Biotech Index provider's errors will be borne 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.
When
the Biotech Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the Biotech
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders.
Apart
from scheduled rebalances, the Biotech Index provider or its agents may carry
out additional ad hoc rebalances to the Biotech Index. Therefore, errors and
additional ad hoc rebalances carried out by the Biotech Index provider or its
agents to the Biotech 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 Biotech Index, or invest in them in the exact proportions in which they are
represented in the Biotech Index. The Fund’s performance may also deviate from
the return of the Biotech 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 and/or underlying currencies based on fair value prices. To the
extent the Fund calculates its NAV based on fair value prices and the value of
the Biotech Index is based on securities’ closing prices on local foreign
markets (i.e.,
the value of the Biotech Index is not based on fair value prices), the Fund’s
ability to track the Biotech Index may be adversely affected. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. The Fund may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. For tax efficiency purposes, the Fund may
sell certain securities, and such sale may cause the Fund to realize a loss and
deviate from the performance of the Biotech Index. In light of the factors
discussed above, the Fund’s return may deviate significantly from the return of
the Biotech Index. Changes to the composition of the Biotech Index in connection
with a rebalancing or reconstitution of the Biotech 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 Biotech 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 Biotech Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Biotech 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. The Fund may be particularly
vulnerable to this risk because the Biotech Index is comprised of securities 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 Biotech 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
|
|
|
|
|
|
|
|
|
| Best
Quarter: |
27.58% |
2Q 2020 |
| Worst
Quarter: |
-18.19% |
1Q
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
One Year |
Past
Five Years |
Past
Ten Years |
|
|
VanEck Biotech ETF (return before
taxes) |
11.77% |
12.43% |
18.24% |
|
|
VanEck Biotech ETF (return after taxes
on distributions) |
11.71% |
12.33% |
18.16% |
|
|
VanEck Biotech ETF (return after taxes
on distributions and sale of Fund Shares) |
7.01% |
9.93% |
15.70% |
|
|
MVIS US Listed Biotech 25 Index
(reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
12.00% |
12.63% |
18.44% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
|
|
|
|
|
|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
|
|
|
|
|
|
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.
|
|
|
|
VANECK®
DIGITAL TRANSFORMATION ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Digital Transformation ETF1
(the
“Fund”) seeks to track as closely as possible, before fees and expenses, the
price and yield performance of the MVIS®
Global Digital Assets Equity Index (the “Digital Transformation
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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.50 |
% |
|
|
Other
Expenses(a) |
0.00 |
% |
|
|
|
|
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.50 |
% |
|
|
|
|
|
(a)
Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least February 1,
2023.
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. Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR
|
EXPENSES |
|
|
1 |
$51 |
|
|
3 |
$160 |
|
|
|
|
|
|
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 period from April 13, 2021 (the Fund's commencement of operations) through
September 30, 2021, the Fund’s portfolio turnover rate was 49% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities of Digital Transformation Companies.
The Digital Transformation Index is a global index that tracks the performance
of Digital Transformation Companies. “Digital Transformation Companies” are
companies (i) that operate digital asset exchanges, operate payment gateways
(i.e., a merchant service that authorizes direct payments processing for
businesses), engage in and/or assist with the digital asset mining operations,
provide software services, equipment and technology or services to digital asset
operations, operate digital asset infrastructure businesses, or facilitate
commerce with the use of digital assets (these items are collectively referred
to herein as “digital asset projects”) and/or (ii) that own a material amount of
digital assets or otherwise generate revenues related to digital asset
projects.
____________________________
1
Prior to September 1,
2021, the Fund's name was VanEck Vectors®
Digital Transformation ETF.
The
Fund will not invest in digital assets (including cryptocurrencies) (i) directly
or (ii) indirectly through the use of digital asset derivatives. The
Fund also will not invest in initial coin offerings. Therefore the Fund is not
expected to track the price movement of any digital asset. The Fund may,
however, have indirect exposure to digital assets by virtue of its investments
in Digital Transformation Companies that use one or more digital assets as part
of their business activities or that hold digital assets as proprietary
investments.
To
be initially eligible for inclusion in the Digital Transformation Index, a
company must (i) generate at least 50% of its revenues from digital asset
projects; (ii) generate at least 50% of its revenues from projects that, when
developed, have the potential to generate at least 50% of their revenues from
digital assets or digital asset projects; and/or (iii) have at least 50% of its
assets invested in direct digital asset holdings or digital asset projects.
Companies that are current components of the Digital Transformation Index must
generate at least 25% of their revenues from digital assets projects and/or have
at least 25% of their assets invested in direct digital asset holdings or
digital asset projects in order to remain in the Digital Transformation Index.
The Digital Transformation Index currently includes a minimum of 20 Digital
Transformation Index components and has an expected range of between 25 to 30
Digital Transformation Index components.
“Digital
assets” are assets issued and transferred using distributed ledger or blockchain
technology. As used herein, “digital assets” refers to all digital assets,
including both digital asset securities (i.e., digital assets that are
securities under U.S. securities laws) and cryptocurrencies. Many digital assets
and, consequently, many Digital Transformation Companies, rely on "blockchain"
technologies. A “blockchain” is a peer-to-peer shared, distributed ledger that
facilitates the process of recording transactions and tracking assets in a
business network. A blockchain stores transaction data in "blocks" that are
linked together to form a "chain." As the number of transactions grow, so does
the blockchain. Blocks record and confirm the time and sequence of transactions,
which are then logged into the blockchain, within a discrete network governed by
rules agreed on by the network participants. Although initially associated with
digital commodities, it can be used to track tangible, intangible and digital
assets and companies in all business sectors.
Digital
Transformation Companies may include small- and medium-capitalization companies
and foreign and emerging market issuers, and the Fund may invest in depositary
receipts and securities denominated in foreign currencies. As of December 31,
2021, the Digital Transformation Index included 25 securities of companies with
a market capitalization range of between approximately $154 million and $64.5
billion and a weighted average market capitalization of $10.2 billion. These
amounts are subject to change. As of September 30, 2021, a significant portion
of the Fund’s assets was invested in securities of Canadian issuers. The Fund’s
80% investment policy is non-fundamental and may be changed without shareholder
approval upon 60 days’ prior written notice to shareholders. The Digital
Transformation Index is published by MV Index Solutions GmbH (the “Index
Provider” or “MVIS”), which is a wholly owned subsidiary of the Adviser. The
Digital Transformation Index is reconstituted and rebalanced
quarterly.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Digital Transformation Index by investing in a
portfolio of securities that generally replicates the Index. Unlike many
investment companies that try to “beat” the performance of a benchmark index,
the Fund does not try to “beat” the Digital Transformation Index and does not
seek temporary defensive positions that are inconsistent with its investment
objective of seeking to track the Digital Transformation 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 Digital Transformation Index concentrates in an industry or group of
industries. As of September 30, 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.
Risk
of Investing in Digital Transformation Companies. The
technology relating to digital assets, including blockchain, is new and
developing and the risks associated with digital assets may not fully emerge
until the technology is widely used. Digital asset technologies are used by
companies to optimize their business practices, whether by using the technology
within their business or operating business lines involved in the operation of
the technology. The cryptographic keys necessary to transact a digital asset may
be subject to theft, loss, or destruction, which could adversely affect a
company’s business or operations if it were dependent on the digital asset.
Competing platforms and technologies may be developed such that consumers or
investors use an alternative to digital assets. Currently, there are relatively
few companies for which digital assets represents an attributable and
significant revenue stream. Therefore, the values of the companies included in
the Index may not be a reflection of their connection to digital assets, but may
be based on other business operations. In addition, these companies may engage
in other lines of business unrelated to digital assets and these lines of
business could adversely affect their operating results. These companies also
may not
be
able to develop digital asset technology applications or may not be able to
capitalize on those applications. Digital asset technologies also may never be
fully implemented, which could adversely affect an investment in the Fund.
Companies that use digital asset technologies may be subject to cybersecurity
risk. In addition, certain features of digital asset technologies, such as
decentralization, open source protocol, and reliance on peer-to-peer
connectivity, may increase the risk of fraud or cyber-attack by potentially
reducing the likelihood of a coordinated response. A significant disruption of
Internet connectivity affecting large numbers of users or geographic areas could
impede the functionality of digital asset technologies and adversely affect
companies included in the Index. Digital Transformation Companies may be subject
to the risks posed by conflicting intellectual property claims, which may reduce
confidence in the viability of a digital asset. There may be risks posed by the
lack of regulation for digital assets and any future regulatory developments
could affect the viability and expansion of the use of digital assets. Because
digital asset platforms may operate across many national boundaries and
regulatory jurisdictions, it is possible that digital asset platforms may be
subject to widespread and inconsistent regulation. Digital asset systems built
using third party products may be subject to technical defects or
vulnerabilities beyond a company’s control. Because many digital assets do not
have a standardized exchange, like a stock market, there is less liquidity for
such assets and greater possibility of volatility, fraud or
manipulation.
Certain
of the Fund’s investments, including investments in companies that hold material
amounts of digital assets, may be subject to the risks associated with investing
in digital assets, including cryptocurrencies and crypto tokens. Such companies
may be subject to the risk that: the technology that facilitates the transfer of
a digital asset could fail; the decentralized, open source protocol of the
applicable blockchain network could be affected by Internet connectivity
disruptions, fraud, consensus failures or cybersecurity attacks; such network
may not be adequately maintained by its participants; because digital assets are
a new technological innovation with a limited history, they are highly
speculative assets and may experience extreme price volatility; future
regulatory actions or policies may limit the ability to sell, exchange or use a
digital asset; the price of a digital asset may be impacted by the transactions
of a small number of holders of such digital asset; and that a digital asset
will decline in popularity, acceptance or use, thereby impairing its
price.
Special
Risk Considerations of Investing in Canadian Issuers.
Investments
in securities of Canadian issuers, including issuers located outside of Canada
that generate significant revenue from Canada, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Canadian economy is very dependent on the demand for, and supply
and price of, natural resources. The Canadian market is relatively concentrated
in issuers involved in the production and distribution of natural resources.
There is a risk that any changes in natural resources sectors could have an
adverse impact on the Canadian economy. Additionally, the Canadian economy is
heavily dependent on relationships with certain key trading partners including
the United States, countries in the European Union and China. Because the United
States is Canada’s largest trading partner and foreign investor, the Canadian
economy is dependent on and may be significantly affected by the U.S. economy.
Reduction in spending on Canadian products and services or changes in the U.S.
economy may adversely impact the Canadian economy. Trade agreements may further
increase Canada’s dependency on the U.S. economy, and uncertainty as to future
trade agreements may cause a decline in the value of the Fund’s Shares. Past
periodic demands by the Province of Quebec for sovereignty have significantly
affected equity valuations and foreign currency movements in the Canadian market
and such demands may have this effect in the future. In addition, certain
sectors of Canada’s economy may be subject to foreign ownership limitations.
This may negatively impact the Fund’s ability to invest in Canadian issuers and
to track the Index.
Special
Risk Considerations of Investing in Chinese Issuers. Investments
in securities of Chinese issuers, including issuers located outside of China
that generate significant revenues from China, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. These risks, include, among others, (i) more frequent (and potentially
widespread) trading suspensions and government interventions with respect to
Chinese issuers resulting in lack of liquidity and in price volatility, (ii)
currency revaluations and other currency exchange rate fluctuations or blockage,
(iii) the nature and extent of intervention by the Chinese government in the
Chinese securities markets, whether such intervention will continue and the
impact of such intervention or its discontinuation, (iv) the risk of
nationalization or expropriation of assets, (v) the risk that the Chinese
government may decide not to continue to support economic reform programs, (vi)
limitations on the use of brokers, (vii) higher rates of inflation, (viii) the
unavailability of consistently-reliable economic data, (ix) the relatively small
size and absence of operating history of many Chinese companies, (x) accounting,
auditing and financial reporting standards in China are different from U.S.
standards and, therefore, disclosure of certain material information may not be
available, (xi) greater political, economic, social, legal and tax-related
uncertainty, (xii) market volatility caused by any potential regional or
territorial conflicts or natural disasters, (xiii) higher dependence on exports
and international trade, (xiv) the risk of increased trade tariffs, embargoes,
sanctions, investment restrictions and other trade limitations, (xv)
restrictions on foreign ownership, and (xvi) custody risks associated with
investing through programs to access Chinese securities. Certain securities are,
or may in future become restricted, and the Fund may be forced to sell such
restricted securities and incur a loss as a result. In addition, the economy of
China differs, often unfavorably, from the U.S. economy in such respects as
structure, general development, government involvement, wealth distribution,
rate of inflation, growth rate, interest rates, allocation of resources and
capital reinvestment, among others. The Chinese central government has
historically exercised substantial control over virtually every sector of the
Chinese economy through administrative regulation and/or state ownership and
actions of the Chinese central and local government authorities continue to have
a substantial effect on economic conditions in China. In addition, previously
the Chinese government has from time to time taken actions that influence the
prices at which certain goods may be sold, encourage companies to invest or
concentrate in particular industries, induce mergers between companies in
certain industries and induce private companies to
publicly
offer their securities to increase or continue the rate of economic growth,
control the rate of inflation or otherwise regulate economic expansion. The
Chinese government may do so in the future as well, potentially having a
significant adverse effect on economic conditions in China.
China
has experienced security concerns, such as terrorism and strained international
relations. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity and strained international
relations, including purchasing restrictions, sanctions, tariffs or cyberattacks
on the Chinese government or Chinese companies, may impact China’s economy and
Chinese issuers of securities in which the Fund invests. Incidents involving
China's or the region's security may cause uncertainty in Chinese markets and
may adversely affect the Chinese economy and the Fund's
investments.
Special
Risk Considerations of Investing in European Issuers.
Investments in securities of European issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Economic and Monetary Union ("EMU") of the European Union ("EU")
requires member countries to comply with restrictions on inflation rates,
deficits, interest rates, debt levels and fiscal and monetary controls, each of
which may significantly affect every country in Europe. Decreasing imports or
exports, changes in governmental or EU regulations on trade, changes in the
exchange rate of the euro, the default or threat of default by an EU member
country on its sovereign debt, and/or an economic recession in an EU member
country may have a significant adverse effect on the economies of EU member
countries and on major trading partners outside Europe. The European financial
markets have previously experienced, and may continue to experience, volatility
and have been adversely affected, and may in the future be affected, by concerns
about economic downturns, credit rating downgrades, rising government debt
levels and possible default on or restructuring of government debt in several
European countries. These events have adversely affected, and may in the future
affect, the value and exchange rate of the euro and may continue to
significantly affect the economies of every country in Europe, including EU
member countries that do not use the euro and non-EU member countries. In a
referendum held on June 23, 2016, voters in the UK voted to leave the EU,
creating economic and political uncertainty in its wake. On January 31, 2020,
the UK officially withdrew from the EU and the UK entered a transition period
which ended on December 31, 2020. On December 30, 2020, the EU and UK signed the
EU-UK Trade and Cooperation Agreement (“TCA”), an agreement on the terms
governing certain aspects of the EU’s and the UK’s relationship following the
end of the transition period. Notwithstanding the TCA, following the transition
period, there is likely to be considerable uncertainty as to the UK’s post
transition framework.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in Small- and Medium-Capitalization Companies. A
Fund may invest in small- and medium-capitalization companies and, therefore,
will be subject to certain risks associated with small- and
medium-capitalization companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences, with little or no record of profitability. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. These companies tend to
have smaller revenues, narrower product lines, less management depth and
experience, smaller shares of their product or service markets, fewer financial
resources and less competitive strength than large-capitalization companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of larger
companies.
Risk
of Investing in the Financials Sector. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the financials sector. Companies in the financials
sector may be subject to extensive government regulation that affects the scope
of their activities, the prices they can charge and the amount of capital they
must maintain. The profitability of companies in the financials sector may be
adversely affected by increases in interest rates, by loan losses, which usually
increase in economic downturns, and by credit rating downgrades. In addition,
the financials sector is undergoing numerous changes, including continuing
consolidations, development of new products and structures and changes to its
regulatory framework. Furthermore, some companies in the financials sector
perceived as benefiting from government intervention in the past may be subject
to future government-imposed restrictions on their businesses or face increased
government involvement in their operations. Increased government involvement in
the financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Risk
of Investing in the Information Technology Sector.
The Fund will be sensitive to, and its performance may depend to a greater
extent on, the overall condition of the information technology sector.
Information technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Information
technology companies may have limited product lines, markets, financial
resources or personnel. The products of information technology
companies
may face product obsolescence due to rapid technological developments and
frequent new product introduction, unpredictable changes in growth rates and
competition for the services of qualified personnel. Companies in the
information technology sector are heavily dependent on patent protection and the
expiration of patents may adversely affect the profitability of these
companies.
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.
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 Digital Transformation Index for a
number of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Digital Transformation 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
Digital Transformation 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 Digital Transformation 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 Digital Transformation Index. Errors in the Digital Transformation
Index data, the Digital Transformation Index computations and/or the
construction of the Digital Transformation Index in accordance with its
methodology may occur from time to time and may not be identified and corrected
by the Digital Transformation 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 Digital Transformation Index
provider’s errors will be kept by the Fund and its shareholders and any losses
or costs resulting from the Digital Transformation Index provider’s errors will
be borne by the Fund and its shareholders. When the Digital Transformation Index
is rebalanced and the Fund in turn rebalances its portfolio to attempt to
increase the correlation between the Fund’s portfolio and the Digital
Transformation Index, any transaction costs and market exposure arising from
such portfolio rebalancing will be borne directly by the Fund and its
shareholders. Apart from scheduled rebalances, the Digital Transformation Index
provider or its agents may carry out additional ad hoc rebalances to the Digital
Transformation Index. Therefore, errors and additional ad hoc rebalances carried
out by the Digital Transformation Index provider or its agents to the Digital
Transformation Index may increase the costs to and the tracking error risk of
the Fund. In addition, the Fund may not invest in certain securities included in
the Digital Transformation Index, or invest in them in the exact proportions in
which they are represented in the Digital Transformation Index. The Fund’s
performance may also deviate from the return of the Digital Transformation Index
due to legal restrictions or limitations imposed by the governments of certain
countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). The Fund may value certain of its investments,
underlying 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 Digital Transformation Index is based on securities’ closing prices
(i.e.,
the value of the Digital Transformation Index is not based on fair value
prices), the Fund’s ability to track the Digital Transformation Index may be
adversely affected. When markets are volatile, the ability to sell securities at
fair value prices may be adversely impacted and may result in additional trading
costs and/or increase the index tracking risk. 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 Digital Transformation Index. In
light of the factors discussed above, the Fund’s return may deviate
significantly from the return of the Digital Transformation Index. Changes to
the composition of the Digital Transformation Index in connection with a
rebalancing or reconstitution of the Digital Transformation 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.
Absence
of Prior Active Market. The
Fund is a newly organized series of an investment company and thus has no
operating history. While the Fund’s Shares are expected to be listed on the
Exchange, there can be no assurance that active trading markets for the Shares
will develop or 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 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 Index provider to postpone a scheduled rebalance or
reconstitution, which could cause the 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. The Fund may be particularly
vulnerable to this risk because the Index is comprised of securities 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 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 Fund commenced operations on April 13,
2021 and therefore does not have a performance history for a full calendar
year. The Fund’s financial performance for the Fund’s first
fiscal period is included in the “Financial Highlights” section of the
Prospectus. Visit www.vaneck.com
for current performance figures.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
April
2021 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
April
2021 |
|
|
|
|
|
|
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.
|
|
|
|
VANECK®
ENVIRONMENTAL SERVICES ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Environmental Services ETF1
(the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the NYSE®
Arca Environmental Services Index (the “Environmental Services
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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.50 |
% |
|
|
|
|
|
|
Other
Expenses |
0.21 |
% |
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.71 |
% |
|
|
Fee
Waivers and Expense Reimbursement(a) |
-0.16 |
% |
|
|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.55 |
% |
|
|
|
|
|
(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 0.55% of the Fund’s average daily net
assets per year until at least February 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR |
EXPENSES |
|
|
1 |
$56 |
|
|
3 |
$211 |
|
|
5 |
$379 |
|
|
10 |
$867 |
|
|
|
|
|
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
21% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in common stocks and American depositary receipts
(“ADRs”) of companies involved in the environmental services industry. The
Environmental Services Index is designed to measure the
____________________________
1Prior to September 1,
2021, the Fund's name was VanEck Vectors® Environmental Services
ETF.
performance
of widely held, highly capitalized companies engaged in business activities that
may benefit from the global increase in demand for consumer waste disposal,
removal and storage of industrial by-products, and the management of associated
resources. Such companies may include small- and medium-capitalization
companies. As of December 31, 2021, the Environmental Services Index included 26
securities of companies with a market capitalization range of between
approximately $124.89 million and $69.8 billion and a weighted average market
capitalization of $24.6 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 Environmental Services Index by investing in a
portfolio of securities that generally replicates the Environmental Services
Index. Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Environmental Services
Index and does not seek temporary defensive positions that are inconsistent with
its investment objective of seeking to replicate the Environmental Services
Index. The Fund will normally invest at least 80% of its assets in securities
that comprise the Environmental Services 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 assets in a particular issuer. The Fund may concentrate its
investments in a particular industry or group of industries to the extent that
the Environmental Services Index concentrates in an industry or group of
industries. As of September 30, 2021, each of the industrials and basic
materials sectors represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in the Environmental Services Industry. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the environmental services industry. Companies in
the environmental services industry are engaged in a variety of activities
related to environmental services and consumer and industrial waste management.
These companies may be adversely affected by a decrease in demand for waste
disposal, removal or storage of industrial by-products, and the management of
associated resources. Competitive pressures may have a significant effect on the
financial condition of such companies. These prices may fluctuate substantially
over short periods of time so the Fund may be more volatile than other types of
investments. Environmental services companies must comply with various
regulations and the terms of their operating permits and licenses. Failure to
comply with or to renew permits and licenses or changes in government
regulations can adversely impact their operations. Waste management companies
are also affected by demand cycles, world events, increased outsourcing and
economic conditions. In addition, these companies are subject to liability for
environmental damage claims.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability and the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the Basic Materials Sector. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the basic materials sector. Companies engaged in
the production and distribution of basic materials may be adversely affected by
changes in world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations.
Risk
of Investing in the Industrials Sector. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the industrials sector. The industrials sector
comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to
produce
other goods. Companies in the industrials sector may be adversely affected by
changes in government regulation, world events and economic conditions. In
addition, companies in the industrials sector may be adversely affected by
environmental damages, product liability claims and exchange rates.
Risk
of Investing in American Depositary Receipts (“ADRs”).
ADRs are issued by U.S. banks or trust companies that entitle the holder to all
dividends and capital gains that are paid out on the underlying foreign shares.
The Fund’s investments in ADRs may be less liquid than the underlying shares in
their primary trading market and, if not included in the Environmental Services
Index, may negatively affect the Fund’s ability to replicate the performance of
the Environmental Services Index. In addition, investments in ADRs that are not
included in the Environmental Services Index may increase tracking
error.
Risk
of Investing in Small- and Medium-Capitalization Companies. A
Fund may invest in small- and medium-capitalization companies and, therefore,
will be subject to certain risks associated with small- and
medium-capitalization companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences, with little or no record of profitability. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. These companies tend to
have smaller revenues, narrower product lines, less management depth and
experience, smaller shares of their product or service markets, fewer financial
resources and less competitive strength than large-capitalization companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of larger
companies.
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.
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 Environmental Services Index
for a number of reasons. For example, the Fund incurs a number of operating
expenses, including taxes, not applicable to the Environmental Services 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 Environmental Services Index, which are not factored into the return of
the Environmental Services 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
Environmental Services Index. Errors in the Environmental Services Index data,
the Environmental Services Index computations and/or the construction of the
Environmental Services Index in accordance with its methodology may occur from
time to time and may not be identified and corrected by the Environmental
Services 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 Environmental Services Index
provider's errors will be kept by the Fund and its shareholders and any losses
or costs resulting from the Environmental Services Index provider's errors will
be borne by the Fund and its shareholders. When
the Environmental Services Index is rebalanced and the Fund in turn rebalances
its portfolio to attempt to increase the correlation between the Fund’s
portfolio and the Environmental Services Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by the
Fund and its shareholders. Apart
from scheduled rebalances, the Environmental Services Index provider or its
agents may carry out additional ad hoc rebalances to the Environmental Services
Index. Therefore, errors and additional ad hoc rebalances carried out by the
Environmental Services Index provider or its agents to the Environmental
Services Index may increase the costs to and the tracking error risk of the
Fund. In
addition, the Fund may not invest in certain securities included in the
Environmental Services Index, or invest in them in the exact proportions in
which they are represented in the Environmental Services Index. The Fund’s
performance may also deviate from the return of the Environmental Services Index
due to legal restrictions or limitations imposed by the governments of certain
countries, certain listing standards of the Fund’s listing exchange (the
“Exchange”), a lack of liquidity on stock exchanges in which such securities
trade, potential adverse tax consequences or other regulatory reasons (such as
diversification requirements). The Fund may value certain of its investments,
underlying 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 Environmental Services Index is based on securities’ closing prices
(i.e.,
the value of the Environmental Services Index is not based on fair value
prices), the Fund’s ability to track the Environmental Services Index may be
adversely affected. When markets are volatile, the ability to sell securities at
fair value prices may be adversely impacted and may result in additional trading
costs and/or increase the index
tracking
risk. In addition, any issues the Fund encounters with regard to currency
convertibility (including the cost of borrowing funds, if any) and repatriation
may increase the index tracking risk. 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 Environmental Services Index. In light of
the factors discussed above, the Fund’s return may deviate significantly from
the return of the Environmental Services Index. Changes to the composition of
the Environmental Services Index in connection with a rebalancing or
reconstitution of the Environmental Services 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
Environmental Services 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 Environmental Services Index provider to
postpone a scheduled rebalance or reconstitution, which could cause the
Environmental Services 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. The Fund may be particularly
vulnerable to this risk because the Environmental Services Index is comprised of
securities 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 Environmental Services 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
|
|
|
|
|
|
|
|
|
| Best
Quarter: |
21.29% |
4Q 2020 |
| Worst
Quarter: |
-27.52% |
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
One Year |
Past
Five Years |
Past
Ten Years |
|
|
VanEck Environmental Services ETF
(return before taxes) |
27.72% |
15.74% |
13.58% |
|
|
VanEck Environmental Services ETF
(return after taxes on distributions) |
27.65% |
15.62% |
13.36% |
|
|
VanEck Environmental Services ETF
(return after taxes on distributions and sale of Fund
Shares) |
16.46% |
12.70% |
11.36% |
|
|
NYSE Arca Environmental Services Index
(reflects no deduction for
fees, expenses or taxes) |
28.39% |
16.23% |
14.10% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
|
|
|
|
|
|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are jointly and primarily responsible for the
day-to-day management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
October
2006 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
|
|
|
|
|
|
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®
Gaming ETF1
(the
“Fund”) seeks to replicate as closely as possible, before fees and expenses, the
price and yield performance of the MVIS®
Global Gaming Index (the “Gaming 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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.50 |
% |
|
|
|
|
|
|
Other
Expenses |
0.12 |
% |
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.62 |
% |
|
|
Fee
Waivers and Expense Reimbursement(a) |
0.00 |
% |
|
|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.62 |
% |
|
|
|
|
|
(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 0.65% of the Fund’s average daily net
assets per year until at least February 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR |
EXPENSES |
|
|
1 |
$63 |
|
|
3 |
$199 |
|
|
5 |
$346 |
|
|
10 |
$774 |
|
|
|
|
|
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. To be initially eligible for the Gaming Index, companies must generate at
least 50% of their revenues from gaming. Gaming includes casinos and casino
hotels, sports betting (including internet gambling and racetracks) and lottery
services as well as gaming services, gaming
____________________________
1Prior to September 1,
2021, the Fund's name was VanEck Vectors® Gaming ETF.
technology
and gaming equipment. Such companies may include small- and
medium-capitalization companies and foreign companies that are listed on a U.S.
or foreign exchanges. As of December 31, 2021, the Gaming Index included 39
securities of companies with a market capitalization range of between
approximately $1.6 billion and $30.6 billion and a weighted average market
capitalization of $16.7 billion. These amounts are subject to change. As of
September 30, 2021, a significant portion of the Fund’s assets was invested in
securities of Australian issuers. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Gaming Index by investing in a portfolio of
securities that generally replicates the Gaming Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Gaming Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Gaming 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 Gaming Index concentrates in an industry or group of industries. As of
September 30, 2021, the consumer discretionary sector represented a significant
portion of the Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in the Gaming Industry. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the gaming industry. Companies in the gaming
industry include those engaged in casino operations, race track operations,
sports and horse race betting operations, online gaming operations and/or the
provision of related equipment and technologies. Companies in the gaming
industry face intense competition, both domestically and internationally.
Companies in the gaming industry are also highly regulated, and state and
Federal legislative or regulatory changes and licensing issues (as well as the
laws of other countries) can significantly impact their ability to operate in
certain jurisdictions, the activities in which such companies are allowed to
engage and the profitability of companies in the industry. As a result, the
securities of gaming companies owned by the Fund may react similarly to, and
move in unison with, one another. The gaming industry may also be negatively
affected by changes in economic conditions, consumer tastes and discretionary
income levels, intense competition, technological developments, financial
resources, markets or personnel. In addition, the gaming industry is
characterized by the use of various forms of intellectual property, which are
dependent upon patented technologies, trademarked brands and proprietary
information. Companies operating in the gaming industry are subject to the risk
of significant litigation regarding intellectual property rights, which may
adversely affect and financially harm companies in which the Fund may invest.
Furthermore, certain jurisdictions may impose additional restrictions on
securities issued by gaming companies organized or operated in such
jurisdictions that may be held by the Fund.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the 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 Foreign Securities.
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. The Fund invests in securities of issuers located in countries
whose economies are heavily dependent upon trading with key partners. Any
reduction in this trading may have an adverse impact on the Fund’s investments.
Risk
of Investing in Emerging Market Issuers.
Investments in securities of emerging market issuers are exposed to a number of
risks that may make these investments volatile in price or difficult to trade.
Emerging markets are more likely than developed markets to experience problems
with the clearing and settling of trades, as well as the holding of securities
by local banks, agents and depositories. Political risks may include unstable
governments, nationalization, restrictions on foreign ownership, laws that
prevent investors from getting their money out of a country and legal systems
that do not protect property rights as well as the laws of the United States.
Market risks may include economies that concentrate in only a few industries,
securities issues that are held by only a few investors, liquidity issues and
limited trading capacity in local exchanges and the possibility that markets or
issues may be manipulated by foreign nationals who have inside information. The
frequency, availability and quality of financial information about investments
in emerging markets varies. The Fund has limited rights and few practical
remedies in emerging markets and the ability of U.S. authorities to bring
enforcement actions in emerging markets may be limited, and the Fund's passive
investment approach does not take account of these risks. All of these factors
can make emerging market securities more volatile and potentially less liquid
than securities issued in more developed markets.
Foreign
Currency Risk.
Because the Fund’s assets may be invested in securities denominated in foreign
currencies, the proceeds received by the Fund from these investments will
generally be 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 and
the value of certain foreign currencies.
Special
Risk Considerations of Investing in Asian Issuers.
Investments in securities of Asian issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Certain Asian economies have experienced over-extension of credit,
currency devaluations and restrictions, high unemployment, high inflation,
decreased exports and economic recessions. Economic events in any one Asian
country can have a significant effect on the entire Asian region as well as on
major trading partners outside Asia, and any adverse effect on some or all of
the Asian countries and regions in which the Fund invests. The securities
markets in some Asian economies are relatively underdeveloped and may subject
the Fund to higher action costs or greater uncertainty than investments in more
developed securities markets. Such risks may adversely affect the value of the
Fund’s investments.
Special
Risk Considerations of Investing in Australian Issuers.
Investments in securities of Australian issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Australian economy is heavily dependent on exports from the
agriculture and mining industries. This makes the Australian economy susceptible
to fluctuations in the commodity markets. Australia is also dependent on trading
with key trading partners.
Special
Risk Considerations of Investing in Chinese Issuers. Investments
in securities of Chinese issuers, including issuers located outside of China
that generate significant revenues from China, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. These risks, include, among others, (i) more frequent (and potentially
widespread) trading suspensions and government interventions with respect to
Chinese issuers resulting in lack of liquidity and in price volatility, (ii)
currency revaluations and other currency exchange rate fluctuations or blockage,
(iii) the nature and extent of intervention by the Chinese government in the
Chinese securities markets, whether such intervention will continue and the
impact of such intervention or its discontinuation, (iv) the risk of
nationalization or expropriation of assets, (v) the risk that the Chinese
government may decide not to continue to support economic reform programs, (vi)
limitations on the use of brokers, (vii) higher rates of inflation, (viii) the
unavailability of consistently-reliable economic data, (ix) the relatively small
size and absence of operating history of many Chinese companies, (x) accounting,
auditing and financial reporting standards in China are different from U.S.
standards and, therefore, disclosure of certain material information may not be
available, (xi) greater political, economic, social, legal and tax-related
uncertainty, (xii) market volatility caused by any potential regional or
territorial conflicts or natural disasters, (xiii) higher dependence on exports
and international trade, (xiv) the risk of increased trade tariffs, embargoes,
sanctions, investment restrictions and other trade limitations, (xv)
restrictions on foreign ownership, and (xvi) custody risks associated with
investing through programs to access Chinese securities. Certain securities are,
or may in future become restricted, and the Fund may be forced to sell such
restricted securities and incur a loss as a result. In addition, the economy of
China differs, often unfavorably, from the U.S. economy in such respects as
structure, general development, government involvement, wealth distribution,
rate of inflation, growth rate, interest rates, allocation of resources and
capital reinvestment, among others. The Chinese central government has
historically exercised substantial control over virtually every sector of the
Chinese economy through administrative regulation and/or state ownership and
actions of the Chinese central and local government authorities continue to have
a substantial effect on economic conditions in China. In addition, previously
the Chinese government has from time to time taken actions that influence the
prices at which certain goods may be sold, encourage companies to invest or
concentrate in particular industries, induce mergers between companies in
certain industries and induce private companies to publicly offer their
securities to increase or continue the rate of economic growth, control the rate
of inflation or otherwise regulate economic expansion. The Chinese government
may do so in the future as well, potentially having a significant adverse effect
on economic conditions in China.
China
has experienced security concerns, such as terrorism and strained international
relations. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity and strained international
relations, including purchasing restrictions, sanctions, tariffs or cyberattacks
on
the Chinese government or Chinese companies, may impact China’s economy and
Chinese issuers of securities in which the Fund invests. Incidents involving
China's or the region's security may cause uncertainty in Chinese markets and
may adversely affect the Chinese economy and the Fund's
investments.
Special
Risk Considerations of Investing in European Issuers. Investments
in securities of European issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. The
Economic and Monetary Union (“EMU”) of the European Union (“EU”) requires member
countries to comply with restrictions on inflation rates, deficits, interest
rates, debt levels and fiscal and monetary controls, each of which may
significantly affect every country in Europe. Decreasing imports or exports,
changes in governmental or EU regulations on trade, changes in the exchange rate
of the euro, the default or threat of default by an EU member country on its
sovereign debt, and/or an economic recession in an EU member country may have a
significant adverse effect on the economies of other EU countries and on major
trading partners outside Europe. The European financial markets have previously
experienced, and may continue to experience, volatility and have been adversely
affected by concerns about economic downturns, credit rating downgrades, rising
government debt levels and possible default on or restructuring of government
debt in several European countries. These events have adversely affected, and
may in the future affect, the value and exchange rate of the euro and may
continue to significantly affect the economies of every country in Europe,
including EU member countries that do not use the euro and non-EU member
countries. In a referendum held on June 23, 2016, voters in the United Kingdom
(“UK”) voted to leave the EU, creating economic and political uncertainty in its
wake. On January 31, 2020, the UK officially withdrew from the EU and the UK
entered a transition period which ended on December 31, 2020. On December 30,
2020, the EU and UK signed the EU-UK Trade and Cooperation Agreement ("TCA"), an
agreement on the terms governing certain aspects of the EU's and the UK's
relationship following the end of the transition period. Notwithstanding the
TCA, following the transition period, there is likely to be considerable
uncertainty as to the UK's post transition framework.
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 Gaming Index, may negatively affect the Fund’s ability to
replicate the performance of the Gaming Index.
Risk
of Investing in Small- and Medium-Capitalization Companies.
A Fund may invest in small- and medium-capitalization companies and, therefore,
will be subject to certain risks associated with small- and
medium-capitalization companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences, with little or no record of profitability. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. These companies tend to
have smaller revenues, narrower product lines, less management depth and
experience, smaller shares of their product or service markets, fewer financial
resources and less competitive strength than large-capitalization companies.
Returns on investments in securities of small- and medium-capitalization
companies could trail the returns on investments in securities of larger
companies.
Risk
of Cash Transactions.
Unlike other exchange-traded funds (“ETFs”), the Fund expects to effect its
creations and redemptions at least partially for cash, rather than wholly for
in-kind securities. Therefore, it may be required to sell portfolio securities
and subsequently incur brokerage costs and/or recognize gains or losses on such
sales that the Fund might not have recognized if it were to distribute portfolio
securities in kind. As such, investments in Shares may be less tax-efficient
than an investment in a conventional ETF.
Market
Risk.
The prices of the securities in the Fund are subject to the risks associated
with investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. An investment in the Fund may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including, but not limited to, human error, processing and communication errors,
errors of the Fund’s service providers, counterparties or other third parties,
failed or inadequate processes and technology or system failures.
Index
Tracking Risk.
The Fund’s return may not match the return of the Gaming Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Gaming 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 Gaming Index and raising
cash to meet redemptions or deploying cash in connection with newly created
Creation Units (defined herein), which are not factored into the return of the
Gaming 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 Gaming Index. Errors in
the Gaming Index data, the Gaming Index computations and/or the construction of
the Gaming Index in accordance with its methodology may occur from time to time
and may not be identified
and
corrected by the Gaming Index provider for a period of time or at all, which may
have an adverse impact on the Fund and its shareholders. The Fund may not be
fully invested at times either as a result of cash flows into the Fund or
reserves of cash held by the Fund to meet redemptions or pay expenses.
Shareholders
should understand that any gains from the Gaming Index provider's errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Gaming Index provider's errors will be borne by the Fund and its shareholders.
When
the Gaming Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the Gaming
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders.
Apart
from scheduled rebalances, the Gaming Index provider or its agents may carry out
additional ad hoc rebalances to the Gaming Index. Therefore, errors and
additional ad hoc rebalances carried out by the Gaming Index provider or its
agents to the Gaming Index may increase the costs to and the tracking error risk
of the Fund. In
addition, the Fund may not invest in certain securities included in the Gaming
Index, or invest in them in the exact proportions in which they are represented
in the Gaming Index. The Fund’s performance may also deviate from the return of
the Gaming Index due to legal restrictions or limitations imposed by the
governments of certain countries, certain listing standards of the Fund’s
listing exchange (the “Exchange”), a lack of liquidity on stock exchanges in
which such securities trade, potential adverse tax consequences or other
regulatory reasons (such as diversification requirements). The Fund may value
certain of its investments, underlying 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 Gaming Index is based on securities’ closing prices
(i.e.,
the value of the Gaming Index is not based on fair value prices), the Fund’s
ability to track the Gaming Index may be adversely affected. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. The Fund may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. 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. 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 Gaming Index. In light of the factors discussed above, the Fund’s return
may deviate significantly from the return of the Gaming Index. Changes to the
composition of the Gaming Index in connection with a rebalancing or
reconstitution of the Gaming 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 Gaming 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 Gaming Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Gaming 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 Gaming 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
|
|
|
|
|
|
|
|
|
| Best
Quarter: |
29.22% |
2Q 2020 |
| Worst
Quarter: |
-38.32% |
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
One Year |
Past
Five Years |
Past
Ten Years |
|
|
VanEck Gaming ETF (return before
taxes) |
-4.24% |
7.55% |
6.70% |
|
|
VanEck Gaming ETF (return after taxes
on distributions) |
-4.44% |
6.96% |
5.93% |
|
|
VanEck Gaming ETF (return after taxes
on distributions and sale of Fund Shares) |
-2.41% |
5.79% |
5.17% |
|
|
MVIS Global Gaming Index (reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
-3.76% |
7.91% |
7.11% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
|
|
|
|
|
|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
January
2008 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
|
|
|
|
|
|
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.
|
|
|
|
VANECK®
PHARMACEUTICAL ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Pharmaceutical ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
US Listed Pharmaceutical 25 Index (the “Pharmaceutical
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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.35 |
% |
|
|
|
|
|
|
Other
Expenses(a)(b) |
0.00 |
% |
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
|
|
|
|
|
(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least February 1,
2023.
(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. Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR |
EXPENSES |
|
|
1 |
$36 |
|
|
3 |
$113 |
|
|
5 |
$197 |
|
|
10 |
$443 |
|
|
|
|
|
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 Pharmaceutical Index includes common stocks and depositary receipts
of U.S. exchange-listed companies in the pharmaceutical industry. Such companies
may include medium-capitalization companies and foreign companies that are
listed on a U.S. exchange. To be initially eligible for the Pharmaceutical
Index, companies must generate at least 50% of their revenues from
pharmaceuticals. Pharmaceuticals include companies engaged primarily in research
(including research contractors) and
____________________________
1
Prior to September 1,
2021, the Fund's name was VanEck Vectors®
Pharmaceutical ETF.
development
as well as production, marketing and sales of pharmaceuticals (excluding
pharmacies). Of the largest 50 stocks in the pharmaceutical industry by full
market capitalization, the top 25 by free-float market capitalization (i.e.,
includes only shares that are readily available for trading in the market) and
three month average daily trading volume are included in the Pharmaceutical
Index. As of December 31, 2021, the Pharmaceutical Index included 25 securities
of companies with a market capitalization range of between approximately $1.3
billion and $450.3 billion and a weighted average market capitalization of
$137.6 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 Pharmaceutical Index by investing in a
portfolio of securities that generally replicates the Pharmaceutical Index.
Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Pharmaceutical Index and
does not seek temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Pharmaceutical
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 Pharmaceutical Index concentrates in an industry or group of industries. As
of September 30, 2021, each of the health care sector and pharmaceutical
industry represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in the Pharmaceutical Industry. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the pharmaceutical industry. The success of
companies in the pharmaceutical industry is highly dependent on the development,
procurement and marketing of drugs. The values of pharmaceutical companies are
also dependent on the development, protection and exploitation of intellectual
property rights and other proprietary information, and the profitability of
pharmaceutical companies may be significantly affected by such things as the
limited number of products, expiration of patents or the loss of, or the
inability to enforce, intellectual property rights. The research and other costs
associated with developing or procuring new drugs and the related intellectual
property rights can be significant, and the results of such research and
expenditures are unpredictable. In addition, pharmaceutical companies may be
susceptible to product obsolescence. Many pharmaceutical companies face intense
competition from new products and less costly generic products. Moreover, the
process for obtaining regulatory approval by the U.S. Food and Drug
Administration (“FDA”) or other governmental regulatory authorities is long and
costly and there can be no assurance that the necessary approvals will be
obtained or maintained.
Companies
in the pharmaceutical industry may also be subject to expenses and losses from
extensive litigation based on intellectual property, product liability and
similar claims. Companies in the pharmaceutical industry may be adversely
affected by government regulation and changes in reimbursement rates. The
ability of many pharmaceutical companies to commercialize current and any future
products depends in part on the extent to which reimbursement for the cost of
such products and related treatments are available from third party payors, such
as Medicare, Medicaid and other government sponsored programs, private health
insurance plans and health maintenance organizations.
The
international operations of many pharmaceutical companies expose them to risks
associated with instability and changes in economic and political conditions,
foreign currency fluctuations, changes in foreign regulations and other risks
inherent to international business. Such companies also may be characterized by
thin capitalization and limited markets, financial resources or personnel, as
well as dependence on wholesale distributors. A pharmaceutical company’s
valuation can be adversely affected if one of its products proves unsafe,
ineffective or unprofitable. The stock prices of companies in the pharmaceutical
industry have been and will likely continue to be extremely volatile, in part
due to the prevalence of merger and acquisition activity in the pharmaceutical
industry. Some pharmaceutical companies are engaged in other lines of business
unrelated to pharmaceuticals, and they may experience problems with these lines
of business which could adversely affect their operating results. The operating
results of these companies may fluctuate as a result of these additional risks
and events in the other lines of business. In addition, a company’s ability to
engage in new activities may expose it to business risks with which it has less
experience than it has with the business risks associated with its traditional
businesses. Despite a company’s possible success in traditional pharmaceutical
activities, there can be no assurance that the other lines of business in which
these companies are engaged will not have an adverse effect on a company’s
business or financial condition.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or
economic
developments, taxation by foreign governments, political instability, the
possibility that foreign governmental restrictions may be adopted which might
adversely affect such securities and that the selection of such securities may
be more difficult because there may be less publicly available information
concerning such non-U.S. issuers or the accounting, auditing and financial
reporting standards, practices and requirements applicable to non-U.S. issuers
may differ from those applicable to U.S. issuers.
Equity
Securities Risk. The
value of the equity securities held by the Fund may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by the Fund participate, or factors relating to specific
issuers in which the Fund invests. Equity securities are subordinated to
preferred securities and debt in a company’s capital structure with respect to
priority in right to a share of corporate income, and therefore will be subject
to greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the 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 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 Pharmaceutical Index, may negatively affect the Fund’s ability
to replicate the performance of the Pharmaceutical Index.
Special
Risk Considerations of Investing in European Issuers.
Investments in securities of European issuers involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. The Economic and Monetary Union ("EMU") of the European Union ("EU")
requires member countries to comply with restrictions on inflation rates,
deficits, interest rates, debt levels and fiscal and monetary controls, each of
which may significantly affect every country in Europe. Decreasing imports or
exports, changes in governmental or EU regulations on trade, changes in the
exchange rate of the euro, the default or threat of default by an EU member
country on its sovereign debt, and/or an economic recession in an EU member
country may have a significant adverse effect on the economies of other EU
countries and on major trading partners outside Europe. The European financial
markets have previously experienced, and may continue to experience, volatility
and have been adversely affected, and may in the future be affected, by concerns
about economic downturns, credit rating downgrades, rising government debt
levels and possible default on or restructuring of government debt in several
European countries. These events have adversely affected, and may in the future
affect, the value and exchange rate of the euro and may continue to
significantly affect the economies of every country in Europe, including EU
member countries that do not use the euro and non-EU member countries. In a
referendum held on June 23, 2016, voters in the UK voted to leave the EU,
creating economic and political uncertainty in its wake. On January 31, 2020,
the UK officially withdrew from the EU and the UK entered a transition period
which ended on December 31, 2020. On December 30, 2020, the EU and UK signed the
EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on the terms
governing certain aspects of the EU's and the UK's relationship following the
end of the transition period. Notwithstanding the TCA, following the transition
period, there is likely to be considerable uncertainty as to the UK's
post-transition framework.
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 proceeds 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 Small- and Medium-Capitalization Companies.
A Fund may invest in small- and medium-capitalization companies and, therefore,
will be subject to certain risks associated with small- and
medium-capitalization companies. These
companies
are often subject to less analyst coverage and may be in early and less
predictable periods of their corporate existences, with little or no record of
profitability. In addition, these companies often have greater price volatility,
lower trading volume and less liquidity than larger more established companies.
These companies tend to have smaller revenues, narrower product lines, less
management depth and experience, smaller shares of their product or service
markets, fewer financial resources and less competitive strength than
large-capitalization companies. Returns on investments in securities of small-
and medium-capitalization companies could trail the returns on investments in
securities of larger companies.
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.
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 Pharmaceutical Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Pharmaceutical 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
Pharmaceutical 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 (as defined herein), which are not
factored into the return of the Pharmaceutical 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 Pharmaceutical Index. Errors in the Pharmaceutical
Index data, the Pharmaceutical Index computations and/or the construction of the
Pharmaceutical Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the Pharmaceutical 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 Pharmaceutical Index provider's errors
will be kept by the Fund and its shareholders and any losses or costs resulting
from the Pharmaceutical Index provider's errors will be borne by the Fund and
its shareholders. When
the Pharmaceutical Index is rebalanced and the Fund in turn rebalances its
portfolio to attempt to increase the correlation between the Fund’s portfolio
and the Pharmaceutical 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 Pharmaceutical Index provider or its agents may
carry out additional ad hoc rebalances to the Pharmaceutical Index. Therefore,
errors and additional ad hoc rebalances carried out by the Pharmaceutical Index
provider or its agents to the Pharmaceutical 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 Pharmaceutical Index, or invest in them in the exact proportions in which
they are represented in the Pharmaceutical Index. The Fund’s performance may
also deviate from the return of the Pharmaceutical 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 and/or underlying currencies based on
fair value prices. To the extent the Fund calculates its NAV based on fair value
prices and the value of the Pharmaceutical Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Pharmaceutical Index is not based on fair value prices), the
Fund’s ability to track the Pharmaceutical Index may be adversely affected. When
markets are volatile, the ability to sell securities at fair value prices may be
adversely impacted and may result in additional trading costs and/or increase
the index tracking risk. 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. 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
Pharmaceutical Index. In light of the factors discussed above, the Fund’s return
may deviate significantly from the return of the Pharmaceutical Index. Changes
to the composition of the Pharmaceutical Index in connection with a rebalancing
or reconstitution of the Pharmaceutical 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
Pharmaceutical 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 Pharmaceutical Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Pharmaceutical 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. The Fund may be particularly
vulnerable to this risk because the Pharmaceutical Index is comprised of
securities 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 Pharmaceutical 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
|
|
|
|
|
|
|
|
|
| Best
Quarter: |
15.01 |
% |
2Q 2020 |
| Worst
Quarter: |
-15.01 |
% |
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
One Year |
Past
Five Years |
Past
Ten Years |
|
|
VanEck Pharmaceutical ETF (return
before taxes) |
18.30% |
10.05% |
10.04% |
|
|
VanEck Pharmaceutical ETF (return after
taxes on distributions) |
17.70% |
9.53% |
9.46% |
|
|
VanEck Pharmaceutical ETF (return after
taxes on distributions and sale of Fund Shares) |
11.19% |
7.85% |
8.11% |
|
|
MVIS US Listed Pharmaceutical 25 Index
(reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
17.48% |
9.81% |
9.93% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
|
|
|
|
|
|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
|
|
|
|
|
|
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®
Retail ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
US Listed Retail 25 Index (the “Retail 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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.35 |
% |
|
|
|
|
|
|
Other
Expenses(a)(b) |
0.00 |
% |
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
|
|
|
|
|
a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least February 1,
2023.
(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. Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR |
EXPENSES |
|
|
1 |
$36 |
|
|
3 |
$113 |
|
|
5 |
$197 |
|
|
10 |
$443 |
|
|
|
|
|
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
12% 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. To be initially eligible for the Retail Index, companies must generate at
least 50% of their revenues from retail. Retail includes companies engaged
primarily in retail distribution; wholesalers; online, direct mail and TV
retailers; multi-line retailers; specialty retailers, such
____________________________
1
Prior to September 1,
2021, the Fund's name was VanEck Vectors®
Retail ETF.
as
apparel, automotive, computer and electronics, drug, home improvement and home
furnishing retailers; and food and other staples retailers. Of the largest 50
stocks in the retail industry by full market capitalization, the top 25 by
free-float market capitalization (i.e.,
includes only shares that are readily available for trading in the market) and
three month average daily trading volume are included in the Retail Index. Such
companies may include foreign companies that are listed on a U.S. exchange. As
of December 31, 2021, the Retail Index included 25 securities of companies with
a market capitalization range of between approximately $6.5 billion and $1,691
billion and a weighted average market capitalization of $458.8 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 Retail Index by investing in a portfolio of
securities that generally replicates the Retail Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Retail Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the Retail 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 Retail Index concentrates in an industry or group of industries. As of
September 30, 2021, each of the consumer discretionary 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.
Risk
of Investing in Retail Companies. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the retail industry. Companies involved in retail
may be affected by the performance of the domestic and international economy,
interest rates, rates of inflation, exchange rates, competition, consumer
confidence and reputational damage. The success of companies involved in retail
depends heavily on disposable household income and consumer spending, and
changes in demographics and consumer preferences can affect the success of
retail companies. Certain retail companies have historically been subject to
significant seasonal and quarterly variations. The success of retail companies
may be strongly affected by fads, marketing campaigns and other factors
affecting supply and demand, and a retail company’s success can be tied to its
ability to anticipate changing consumer tastes. These companies may be subject
to severe competition, which may have an adverse impact on their
profitability.
Certain
business segments of retail companies are highly cyclical, which may cause the
operating results of such companies to vary significantly. Retail companies may
be dependent on outside financing, which may be difficult to obtain. Many of
these companies are dependent on third party suppliers and distribution systems.
Retail companies may be unable to protect their intellectual property rights and
may be liable for infringing the intellectual property rights of others. Changes
in labor laws and other labor issues, such as increased labor costs, could
adversely affect the financial performance of retail companies. If retail
companies do not maintain the security of customer-related information, they
could damage their reputations with customers, incur substantial costs and
become subject to litigation, all of which could adversely affect the financial
performance of such companies. The international operations of certain retail
companies in expose them to risks associated with instability and changes in
economic and political conditions, foreign currency fluctuations, changes in
foreign regulations, tariffs and trade disputes and other risks inherent to
international business. Some retail companies are engaged in other lines of
business unrelated to retail, and they may experience problems with these lines
of business which could adversely affect their operating results. The operating
results of these companies may fluctuate as a result of these additional risks
and events in the other lines of business. In addition, a company’s ability to
engage in new activities may expose it to business risks with which it has less
experience than it has with the business risks associated with its traditional
businesses. Despite a company’s possible success in traditional retail
activities, there can be no assurance that the other lines of business in which
these companies are engaged will not have an adverse effect on a company’s
business or financial condition.
Retail
companies may also be exposed to online retail risk. Companies that operate in
the online marketplace are subject to fluctuating consumer demand. Unlike
traditional brick and mortar retailers, online marketplaces and retailers must
assume shipping costs or pass such costs to consumers. Consumer access to price
information for the same or similar products may cause companies that operate in
the online marketplace to reduce profit margins in order to compete. Due to the
nature of their business models, companies that operate in the online
marketplace may also be subject to heightened cybersecurity risk, including the
risk of theft or damage to vital hardware, software and information systems. The
loss or public dissemination of sensitive customer information or other
proprietary data may negatively affect the financial performance of such
companies to a greater extent than traditional brick and mortar retailers. As a
result of such companies being web-based and the fact that they process, store
and transmit large amounts of data, including personal information, for their
customers, failure to prevent or mitigate
data
loss or other security breaches, including breaches of vendors’ technology and
systems, could expose companies that operate in the online marketplace or their
customers to a risk of loss or misuse of such information, adversely affect
their operating results, result in litigation or potential liability and
otherwise harm their businesses.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and financial reporting standards,
practices and requirements applicable to non-U.S. issuers may differ from those
applicable to U.S. issuers.
Equity
Securities Risk. The
value of the equity securities held by the Fund may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by the Fund participate, or factors relating to specific
issuers in which the Fund invests. Equity securities are subordinated to
preferred securities and debt in a company’s capital structure with respect to
priority in right to a share of corporate income, and therefore will be subject
to greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the 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 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 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 Retail Index, may negatively affect the Fund’s ability to
replicate the performance of the Retail Index.
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.
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 Retail Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the Retail 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 Retail 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
(as defined herein), which are not factored into the return of the
Retail
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 Retail Index. Errors in
the Retail Index data, the Retail Index computations and/or the construction of
the Retail Index in accordance with its methodology may occur from time to time
and may not be identified and corrected by the Retail Index provider for a
period of time or at all, which may have an adverse impact on 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.
Shareholders
should understand that any gains from the Retail Index provider's errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Retail Index provider's errors will be borne by the Fund and its shareholders.
When
the Retail Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the Retail
Index, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the Fund and its shareholders.
Apart
from scheduled rebalances, the Retail Index provider or its agents may carry out
additional ad hoc rebalances to the Retail Index. Therefore, errors and
additional ad hoc rebalances carried out by the Retail Index provider or its
agents to the Retail 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 Retail Index, or invest in them in the exact proportions in which they are
represented in the Retail Index. The Fund’s performance may also deviate from
the return of the Retail 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 and/or underlying currencies based on fair value prices. To the
extent the Fund calculates its NAV based on fair value prices and the value of
the Retail Index is based on securities’ closing prices on local foreign markets
(i.e.,
the value of the Retail Index is not based on fair value prices), the Fund’s
ability to track the Retail Index may be adversely affected. When markets are
volatile, the ability to sell securities at fair value prices may be adversely
impacted and may result in additional trading costs and/or increase the index
tracking risk. The Fund may also need to rely on borrowings to meet redemptions,
which may lead to increased expenses. For tax efficiency purposes, the Fund may
sell certain securities, and such sale may cause the Fund to realize a loss and
deviate from the performance of the Retail Index. In light of the factors
discussed above, the Fund’s return may deviate significantly from the return of
the Retail Index. Changes to the composition of the Retail Index in connection
with a rebalancing or reconstitution of the Retail 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 Retail 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 Retail Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the Retail 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. The Fund may be particularly
vulnerable to this risk because the Retail Index is comprised of securities 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 Retail 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
|
|
|
|
|
|
|
|
|
| Best
Quarter: |
25.61 |
% |
2Q 2020 |
| Worst
Quarter: |
-14.78 |
% |
4Q
2018 |
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
One Year |
Past
Five Years |
Past
Ten Years |
|
|
VanEck Retail ETF (return before
taxes) |
24.94% |
21.92% |
19.44% |
|
|
VanEck Retail ETF (return after taxes
on distributions) |
24.71% |
21.64% |
19.07% |
|
|
VanEck Retail ETF (return after taxes
on distributions and sale of Fund Shares) |
14.93% |
17.93% |
16.64% |
|
|
MVIS US Listed Retail 25 Index
(reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
24.99% |
21.81% |
19.28% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
|
|
|
|
|
|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are jointly and primarily responsible for the
day-to-day management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
|
|
|
|
|
|
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.
|
|
|
|
VANECK®
SEMICONDUCTOR ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Semiconductor ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
US Listed Semiconductor 25 Index (the “Semiconductor
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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.35 |
% |
|
|
|
|
|
|
Other
Expenses(a)(b) |
0.00 |
% |
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
|
|
|
|
|
a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least February 1,
2023.
(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. Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR |
EXPENSES |
|
|
1 |
$36 |
|
|
3 |
$113 |
|
|
5 |
$197 |
|
|
10 |
$443 |
|
|
|
|
|
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 Semiconductor Index includes common stocks and depositary receipts of
U.S. exchange-listed companies in the semiconductor industry. Such companies may
include medium-capitalization companies and foreign companies that are listed on
a U.S. exchange. To be initially eligible for the Semiconductor Index, companies
must generate at least 50% of their revenues from semiconductors. Semiconductors
include companies engaged primarily in the production of semiconductors and
semiconductor
____________________________
1
Prior to September 1,
2021, the Fund's name was VanEck Vectors®
Semiconductor ETF.
equipment.
Of the largest 50 stocks in the semiconductor industry by full market
capitalization, the top 25 by free-float market capitalization (i.e., includes
only shares that are readily available for trading in the market) and three
month average daily trading volume are included in the Semiconductor Index. As
of December 31, 2021, the Semiconductor Index included 25 securities of
companies with a market capitalization range of between approximately $7.8
billion and $735.3 billion and a weighted average market capitalization of
$236.9 billion. These amounts are subject to change. As of September 30, 2021, a
significant portion of the Fund’s assets was invested in securities of Taiwanese
issuers. The Fund’s 80% investment policy is non-fundamental and may be changed
without shareholder approval upon 60 days’ prior written notice to
shareholders.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Semiconductor Index by investing in a
portfolio of securities that generally replicates the Semiconductor Index.
Unlike many investment companies that try to “beat” the performance of a
benchmark index, the Fund does not try to “beat” the Semiconductor Index and
does not seek temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Semiconductor
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 Semiconductor Index concentrates in an industry or group of industries. As
of September 30, 2021, the semiconductor industry, including semiconductor
equipment, represented a significant portion of the
Fund.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk.
An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
Therefore,
you should consider carefully the following risks before investing in the Fund,
each of which could significantly and adversely affect the value of an
investment in the Fund.
Risk
of Investing in the Semiconductor Industry. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the semiconductor industry. Competitive pressures
may have a significant effect on the financial condition of companies in the
semiconductor industry. The Fund is subject to the risk that companies that are
in the semiconductor industry may be similarly affected by particular economic
or market events. As product cycles shorten and manufacturing capacity
increases, these companies may become increasingly subject to aggressive
pricing, which hampers profitability. Semiconductor companies are vulnerable to
wide fluctuations in securities prices due to rapid product obsolescence. Many
semiconductor companies may not successfully introduce new products, develop and
maintain a loyal customer base or achieve general market acceptance for their
products, and failure to do so could have a material adverse effect on their
business, results of operations and financial condition. Reduced demand for
end-user products, underutilization of manufacturing capacity, and other factors
could adversely impact the operating results of companies in the semiconductor
industry. Semiconductor companies typically face high capital costs and such
companies may need additional financing, which may be difficult to obtain. They
also may be subject to risks relating to research and development costs and the
availability and price of components. Moreover, they may be heavily dependent on
intellectual property rights and may be adversely affected by loss or impairment
of those rights. Some of the companies involved in the semiconductor industry
are also engaged in other lines of business unrelated to the semiconductor
business, and they may experience problems with these lines of business, which
could adversely affect their operating results. The international operations of
many semiconductor companies expose them to risks associated with instability
and changes in economic and political conditions, foreign currency fluctuations,
changes in foreign regulations, tariffs and trade disputes, competition from
subsidized foreign competitors with lower production costs and other risks
inherent to international business. The semiconductor industry is highly
cyclical, which may cause the operating results of many semiconductor companies
to vary significantly. Companies in the semiconductor industry also may be
subject to competition from new market entrants. The stock prices of companies
in the semiconductor industry have been and will likely continue to be extremely
volatile compared to the overall market.
Certain
companies in which the Fund may invest are non-U.S. issuers whose securities are
listed on U.S. exchanges. These securities involve risks beyond those associated
with investments in U.S. securities, including greater market volatility, higher
transactional costs, the possibility that the liquidity of such securities could
be impaired because of future political and/or economic developments, taxation
by foreign governments, political instability, the possibility that foreign
governmental restrictions may be adopted which might adversely affect such
securities and that the selection of such securities may be more difficult
because there may be less publicly available information concerning such
non-U.S. issuers or the accounting, auditing and financial reporting standards,
practices and requirements applicable to non-U.S. issuers may differ from those
applicable to U.S. issuers.
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.
Special
Risk Considerations of Investing in European Issuers. Investments
in securities of European issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. The 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 other EU
countries and on major trading partners outside Europe. The European financial
markets have previously experienced, and may continue to experience, volatility
and have been adversely affected, and may in the future be affected, by concerns
about economic downturns, credit rating downgrades, rising government debt
levels and possible default on or restructuring of government debt in several
European countries. These events have adversely affected, and may in the future
affect, the value and exchange rate of the euro and may continue to
significantly affect the economies of every country in Europe, including EU
member countries that do not use the euro and non-EU member countries. In a
referendum held on June 23, 2016, voters in the UK voted to leave the EU,
creating economic and political uncertainty in its wake. On January 31, 2020,
the UK officially withdrew from the EU and the UK entered a transition period
which ended on December 31, 2020. On December 30, 2020, the EU and UK signed the
EU-UK Trade and Cooperation Agreement ("TCA"), an agreement on the terms
governing certain aspects of the EU’s and the UK’s relationship following the
end of the transition period. Notwithstanding the TCA, following the transition
period, there is likely to be considerable uncertainty as to the UK’s
post-transition framework.
Special
Risk Considerations of Investing in Taiwanese Issuers.
Investments in securities of Taiwanese issuers, including issuers located
outside of Taiwan that generate significant revenues from Taiwan, involve risks
and special considerations not typically associated with investments in the U.S.
securities markets. To the extent the Fund continues to invest in securities
issued by Taiwanese issuers, the Fund may be subject to the risk of investing in
such issuers. Investments in Taiwanese issuers may subject the Fund to legal,
regulatory, political, currency and economic risks that are specific to Taiwan.
Specifically, Taiwan’s geographic proximity and history of political contention
with China have resulted in ongoing tensions between the two countries. These
tensions may materially affect the Taiwanese economy and its securities market.
Taiwan’s economy is export-oriented, so it depends on an open world trade regime
and remains vulnerable to fluctuations in the world economy.
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 proceeds 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 Semiconductor Index, may negatively affect the Fund’s ability to
replicate the performance of the Semiconductor Index.
Risk
of Investing in Medium-Capitalization Companies. The
Fund may invest in medium-capitalization companies and, therefore will be
subject to certain risks associated with medium- capitalization companies. These
companies are often subject to less analyst coverage and may be in early and
less predictable periods of their corporate existences, with little or no record
of profitability. In addition, these companies often have greater price
volatility, lower trading volume and less liquidity than larger more established
companies. These companies tend to have smaller revenues, narrower product
lines, less management depth and experience, smaller shares of their product or
service markets, fewer financial resources and less competitive strength than
large-capitalization companies. Returns on investments in securities of
medium-capitalization companies could trail the returns on investments in
securities of larger companies.
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.
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 Semiconductor Index for a number
of reasons. For example, the Fund incurs a number of operating expenses,
including taxes, not applicable to the Semiconductor 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
Semiconductor 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 (as defined herein), which are not
factored into the return of the Semiconductor 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 Semiconductor Index. Errors in the Semiconductor
Index data, the Semiconductor Index computations and/or the construction of the
Semiconductor Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the Semiconductor 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 Semiconductor Index provider's errors
will be kept by the Fund and its shareholders and any losses or costs resulting
from the Semiconductor Index provider's errors will be borne by the Fund and its
shareholders. When
the Semiconductor Index is rebalanced and the Fund in turn rebalances its
portfolio to attempt to increase the correlation between the Fund’s portfolio
and the Semiconductor 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 Semiconductor Index provider or its agents may
carry out additional ad hoc rebalances to the Semiconductor Index. Therefore,
errors and additional ad hoc rebalances carried out by the Semiconductor Index
provider or its agents to the Semiconductor 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 Semiconductor Index, or invest in them in the exact proportions in which
they are represented in the Semiconductor Index. The Fund’s performance may also
deviate from the return of the Semiconductor 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 and/or underlying currencies based on fair
value prices. To the extent the Fund calculates its net asset value NAV based on
fair value prices and the value of the Semiconductor Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Semiconductor Index is not based on fair value prices), the
Fund’s ability to track the Semiconductor 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 Semiconductor Index. In light of the factors discussed above, the Fund’s
return may deviate significantly from the return of the Semiconductor Index.
Changes to the composition of the Semiconductor Index in connection with a
rebalancing or reconstitution of the Semiconductor 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 Semiconductor 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 Semiconductor Index provider to postpone
a scheduled rebalance or reconstitution, which could cause the Semiconductor
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. The Fund may be particularly
vulnerable to this risk because the Semiconductor Index is comprised of
securities of a very limited number of issuers.
Concentration
Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent the Semiconductor 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
|
|
|
|
|
|
|
|
|
| Best
Quarter: |
30.65 |
% |
2Q 2020 |
| Worst
Quarter: |
-17.27 |
% |
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
One Year |
Past
Five Years |
Past
Ten Years |
|
|
VanEck Semiconductor ETF (return before
taxes) |
42.18% |
35.53% |
27.81% |
|
|
VanEck Semiconductor ETF (return after
taxes on distributions) |
42.01% |
35.04% |
27.28% |
|
|
VanEck Semiconductor ETF (return after
taxes on distributions and sale of Fund Shares) |
25.10% |
29.77% |
24.31% |
|
|
MVIS US Listed Semiconductor 25 Index
(reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
42.46% |
35.56% |
27.78% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
|
|
|
|
|
|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are jointly and primarily responsible for the
day-to-day management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
|
|
|
|
|
|
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.
|
|
|
|
VANECK®
VIDEO GAMING AND ESPORTS ETF |
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
Video Gaming and eSports ETF1
(the “Fund”) seeks to replicate as closely as possible, before fees and
expenses, the price and yield performance of the MVIS®
Global Video Gaming & eSports Index (the “eSports
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.
|
|
|
|
|
|
| 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fee |
0.50 |
% |
|
|
|
|
|
|
Other
Expenses |
0.05 |
% |
|
|
|
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.55 |
% |
|
|
Fee
Waivers and Expense Reimbursement(a) |
0.00 |
% |
|
|
Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.55 |
% |
|
|
|
|
|
(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 0.55% of the Fund’s average daily net
assets per year until at least February 1,
2023. During such time, the expense limitation is expected to
continue until the Fund’s Board of Trustees acts to discontinue all or a portion
of such expense limitation.
EXPENSE EXAMPLE
This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds. This example does not take into account brokerage
commissions that you pay when purchasing or selling Shares of the
Fund.
The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell or hold all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% annual return and that the Fund’s operating expenses remain
the same (except that the example incorporates the fee waivers and/or expense
reimbursement arrangement for only the first year). Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR |
EXPENSES |
|
|
1 |
$56 |
|
|
3 |
$176 |
|
|
5 |
$307 |
|
|
10 |
$689 |
|
|
|
|
|
PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
33% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The eSports Index is a global index that tracks the performance of the
global video gaming and eSports (also known as electronic sports) segment. To be
initially eligible for the eSports Index, a company is generally considered by
the Index Provider (defined herein) to
____________________________
1
Prior to September 1,
2021, the Fund's name was VanEck Vectors® Video Gaming and eSports
ETF.
be
part of the global video gaming and eSports segment if the company generates at
least 50% of its revenues from video gaming and/or eSports. These companies may
include those that develop video games and related software or hardware such as
computer processors and graphics cards used in video gaming systems and related
hardware such as controllers, headsets, and video gaming consoles. They may also
include those that offer streaming services, develop video games and/or hardware
for use in eSports events and are involved in eSports events such as league
operators, teams, distributors and platforms.
Video
gaming and eSports companies may include small- and medium-capitalization
companies and foreign and emerging market issuers, and the Fund may invest in
depositary receipts and securities denominated in foreign currencies. As of
December 31, 2021, the eSports Index included 25 securities of companies with a
market capitalization range of between approximately $4.8 billion and $735.2
billion and a weighted average market capitalization of $142 billion. As of
September 30, 2021, a significant portion of the Fund's assets was invested in
securities of Asian issuers, which included Chinese and Japanese issuers. 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 eSports Index is published by MV Index
Solutions GmbH (the “Index Provider” or “MVIS”), which is a wholly owned
subsidiary of the Adviser. The eSports Index is reconstituted and rebalanced
quarterly.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the eSports Index by investing in a portfolio of
securities that generally replicates the eSports Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the eSports Index and does not seek temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the eSports 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 eSports Index concentrates in an industry or group of industries. As of
September 30, 2021, each of the communication services and information
technology 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.
Video
Gaming and eSports Companies Risk. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition of video gaming and eSports companies. Video gaming
and eSports companies face intense competition, both domestically and
internationally, may have limited product lines, markets, financial resources,
or personnel, may have products that face rapid obsolescence, and are heavily
dependent on the protection of patent and intellectual property rights. Video
gaming companies may be dependent on one or a small number of product or product
franchises for a significant portion of their revenue and profits. They may also
be subject to shifting consumer preferences, including preferences with respect
to gaming console platforms, and changes in consumer discretionary spending.
Such factors may adversely affect the profitability and value of video gaming
and eSports companies. Video gaming companies are also subject to increasing
regulatory constraints, particularly with respect to cybersecurity and privacy,
and may be subject to sophisticated intellectual property infringement schemes
and piracy efforts. Video gaming and eSports companies may have significant
exposure to the following industries, and therefore may be subject to the risks
associated with such industries.
Risk
of Investing in the Software Industry. Companies
in the software industry are subject to significant competitive pressures, such
as aggressive pricing, new market entrants, competition for market share, short
product cycles due to an accelerated rate of technological developments and the
potential for limited earnings and/or falling profit margins. These companies
also face the risks that new services, equipment or technologies will not be
accepted by consumers and businesses or will become rapidly obsolete. These
factors can affect the profitability of these companies and, as a result, the
value of their securities.
Risk
of Investing in the Internet Software & Services Industry. The
prices of the securities of companies in the internet software & services
industry may fluctuate widely due to competitive pressures, increased
sensitivity to short product cycles and aggressive pricing, heavy expenses
incurred for research and development of products or services that prove
unsuccessful, problems related to bringing products to market, and rapid
obsolescence of products. In addition, many internet software and software
services companies rely on a combination of patents, copyrights, trademarks and
trade secret laws to establish and protect their proprietary rights in their
products and technologies.
Risk
of Investing in the Semiconductor Industry.
Competitive pressures may have a significant effect on the financial condition
of companies in the semiconductor industry. Video gaming and eSports companies
are subject to the risk that companies that are in the semiconductor industry
may be similarly affected by particular economic or market events. As product
cycles shorten and manufacturing capacity increases, these companies may become
increasingly subject to aggressive pricing, which hampers profitability.
Semiconductor companies are vulnerable to wide fluctuations in securities prices
due to rapid product
obsolescence.
Many semiconductor companies may not successfully introduce new products,
develop and maintain a loyal customer base or achieve general market acceptance
for their products, and failure to do so could have a material adverse effect on
their business, results of operations and financial condition. Reduced demand
for end-user products, underutilization of manufacturing capacity, and other
factors could adversely impact the operating results of companies in the
semiconductor industry. Semiconductor companies typically face high capital
costs and such companies may need additional financing, which may be difficult
to obtain. They also may be subject to risks relating to research and
development costs and the availability and price of components.
Equity
Securities Risk. The
value of the equity securities held by the Fund may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by the Fund participate, or factors relating to specific
issuers in which the Fund invests. Equity securities are subordinated to
preferred securities and debt in a company’s capital structure with respect to
priority in right to a share of corporate income, and therefore will be subject
to greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility.
Risk
of Investing in the Communication Services Sector.
The Fund will be sensitive to, and its performance may 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
