cik0001137360-20210930
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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®
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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.
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800.826.2333 vaneck.com
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| Summary
Information |
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| VanEck
Biotech ETF (BBH) |
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| VanEck
Digital Transformation ETF (DAPP) |
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| VanEck
Environmental Services ETF (EVX) |
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| VanEck
Gaming ETF (BJK) |
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| VanEck
Pharmaceutical ETF (PPH) |
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| VanEck
Retail ETF (RTH) |
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| VanEck
Semiconductor ETF (SMH) |
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| VanEck
Video Gaming and eSports ETF (ESPO) |
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| Summary
Information About Purchases and Sales of Fund Shares, Taxes and Payments
to Broker-Dealers and Other Financial Intermediaries |
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| Additional
Information About the Funds’ Investment Strategies and Risks |
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| Tax
Advantaged Product Structure |
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| Portfolio
Holdings |
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| Management
of the Funds |
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| Portfolio
Managers |
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| Shareholder
Information |
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| Index
Providers |
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MVIS®
US Listed Biotech 25 Index |
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MVIS®
Global Digital Assets Equity Index |
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NYSE®
Arca
Environmental Services Index |
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MVIS®
Global Gaming Index |
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MVIS®
US Listed Pharmaceutical 25 Index |
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MVIS®
US Listed Retail 25 Index |
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MVIS®
US Listed Semiconductor 25 Index |
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MVIS®
Global Video Gaming & eSports Index |
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| License
Agreements and Disclaimers |
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| Financial
Highlights |
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| Premium/Discount
Information |
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| General
Information |
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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.
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| Shareholder Fees (fees paid directly from
your investment) |
None |
Annual Fund Operating
Expenses
(expenses that you pay each year as a
percentage of the value of your investment)
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Management
Fee |
0.35 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least 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:
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YEAR |
EXPENSES |
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1 |
$36 |
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3 |
$113 |
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5 |
$197 |
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10 |
$443 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
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
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| 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.
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Past
One Year |
Past
Five Years |
Past
Ten Years |
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VanEck Biotech ETF (return before
taxes) |
11.77% |
12.43% |
18.24% |
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VanEck Biotech ETF (return after taxes
on distributions) |
11.71% |
12.33% |
18.16% |
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VanEck Biotech ETF (return after taxes
on distributions and sale of Fund Shares) |
7.01% |
9.93% |
15.70% |
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MVIS US Listed Biotech 25 Index
(reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
12.00% |
12.63% |
18.44% |
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S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
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See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
December
2011 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
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.
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| Shareholder Fees (fees paid directly from
your investment) |
None |
Annual Fund Operating Expenses
(expenses that you pay each year as a
percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.50 |
% |
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(a)
Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least 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:
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YEAR
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EXPENSES |
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1 |
$51 |
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3 |
$160 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the 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:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
April
2021 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
April
2021 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
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.
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| Shareholder Fees (fees paid directly from
your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.50 |
% |
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Other
Expenses |
0.21 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.71 |
% |
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Fee
Waivers and Expense Reimbursement(a) |
-0.16 |
% |
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Total
Annual Fund Operating Expenses After Fee Waivers and Expense
Reimbursement(a) |
0.55 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.55% 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:
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YEAR |
EXPENSES |
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1 |
$56 |
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3 |
$211 |
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5 |
$379 |
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10 |
$867 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
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
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| 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.
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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% |
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|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are jointly and primarily responsible for the
day-to-day management of the Fund’s portfolio:
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|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
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
|
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|
|
|
|
|
| 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.
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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% |
|
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|
|
|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
January
2008 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
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.
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| Shareholder Fees (fees paid directly from
your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fee |
0.35 |
% |
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Other
Expenses(a)(b) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
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(a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least 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:
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YEAR |
EXPENSES |
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1 |
$36 |
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3 |
$113 |
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5 |
$197 |
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10 |
$443 |
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
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
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| 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.
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Past
One Year |
Past
Five Years |
Past
Ten Years |
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VanEck Pharmaceutical ETF (return
before taxes) |
18.30% |
10.05% |
10.04% |
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VanEck Pharmaceutical ETF (return after
taxes on distributions) |
17.70% |
9.53% |
9.46% |
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VanEck Pharmaceutical ETF (return after
taxes on distributions and sale of Fund Shares) |
11.19% |
7.85% |
8.11% |
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MVIS US Listed Pharmaceutical 25 Index
(reflects no deduction for
fees, expenses or taxes, except withholding
taxes) |
17.48% |
9.81% |
9.93% |
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S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
18.47% |
16.55% |
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See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are jointly and primarily responsible for the day-to-day
management of the Fund’s portfolio:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
December
2011 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
SUMMARY
INFORMATION
INVESTMENT OBJECTIVE
VanEck®
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)
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Management
Fee |
0.35 |
% |
|
|
|
|
|
|
Other
Expenses(a)(b) |
0.00 |
% |
|
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|
|
Total
Annual Fund Operating Expenses(a) |
0.35 |
% |
|
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|
|
|
a) Van Eck Associates
Corporation (the “Adviser”) will pay all expenses of the Fund, except for the
fee payment under the investment management agreement, acquired fund fees and
expenses, interest expense, offering costs, trading expenses, taxes and
extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to
pay the offering costs until at least 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:
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YEAR |
EXPENSES |
|
|
1 |
$36 |
|
|
3 |
$113 |
|
|
5 |
$197 |
|
|
10 |
$443 |
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|
PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
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.
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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:
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|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
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|
|
PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
|
|
|
|
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)
|
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|
|
|
|
|
|
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:
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|
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.
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|
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% |
|
|
|
|
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|
|
See “License Agreements
and Disclaimers” for important information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers.
The following individuals are jointly and primarily responsible for the
day-to-day management of the Fund’s portfolio:
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|
Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
Peter
H. Liao |
Portfolio
Manager |
December
2011 |
|
|
Guo
Hua (Jason) Jin |
Portfolio
Manager |
February
2018 |
|
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|
PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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VANECK®
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.
|
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| Shareholder Fees (fees paid directly from
your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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|
Management
Fee |
0.50 |
% |
|
|
|
|
|
|
Other
Expenses |
0.05 |
% |
|
|
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|
|
|
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 |
% |
|
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|
|
(a) Van Eck Associates
Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to
the extent necessary to prevent the operating expenses of the Fund (excluding
acquired fund fees and expenses, interest expense, trading expenses, taxes and
extraordinary expenses) from exceeding 0.55% 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:
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|
YEAR |
EXPENSES |
|
|
1 |
$56 |
|
|
3 |
$176 |
|
|
5 |
$307 |
|
|
10 |
$689 |
|
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PORTFOLIO TURNOVER
The Fund will pay transaction
costs, such as commissions, when it purchases and sells securities (or “turns
over” its portfolio). A higher portfolio turnover will cause the Fund to incur
additional transaction costs and may result in higher taxes when Fund Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, may affect the Fund’s performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
33% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at
least 80% of its total assets in securities that comprise the Fund’s benchmark
index. The 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
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 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 eSports Index, may negatively affect the Fund’s ability to
replicate the performance of the eSports 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.
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.
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 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 Japanese Issuers. Investments
in securities of Japanese issuers, including issuers located outside of Japan
that generate significant revenues from Japan, involve risks and special
considerations not typically associated with investments in the U.S. securities
markets. Investment in securities of Japanese issuers, including issuers located
outside of Japan that generate significant revenues from Japan, involves risks
that may negatively affect the value of your investment in the Fund. The risks
of investing in the securities of Japanese issuers also includes lack of natural
resources, fluctuations or shortages in the commodity markets, new trade
regulations, decreasing U.S. imports and changes in the U.S. dollar exchange
rates. Japan is located in a part of the world that has historically been prone
to natural disasters such as earthquakes, volcanoes and tsunamis and is
economically sensitive to environmental events. Any such event could result in a
significant adverse impact on the Japanese economy. In addition, such disasters,
and the resulting damage, could impair the long-term ability of issuers in which
the Fund invests to conduct their businesses in the manner normally conducted.
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
by subject to a high degree of fluctuation. Moreover, the Fund may incur costs
in connection with conversions between U.S. dollars and foreign
currencies.
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.
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.
Index
Tracking Risk. The
Fund’s return may not match the return of the eSports Index for a number of
reasons. For example, the Fund incurs a number of operating expenses, including
taxes, not applicable to the eSports 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 eSports 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
eSports 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 eSports Index. Errors in
the eSports Index data, the eSports Index computations and/or the construction
of the eSports Index in accordance with its methodology may occur from time to
time and may not be identified and corrected by the eSports 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 eSports Index provider's errors will
be kept by the Fund and its shareholders and any losses or costs resulting from
the eSports Index provider's errors will be borne by the Fund and its
shareholders. When
the eSports Index is rebalanced and the Fund in turn rebalances its portfolio to
attempt to increase the correlation between the Fund’s portfolio and the eSports
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 eSports Index provider or its agents may carry
out additional ad hoc rebalances to the eSports Index. Therefore, errors and
additional ad hoc rebalances carried out by the eSports Index provider or its
agents to the eSports 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 eSports
Index, or invest in them in the exact proportions in which they are represented
in the eSports Index. The Fund’s performance may also deviate from the return of
the eSports 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 eSports Index is based on securities’ closing prices
on local foreign markets (i.e.,
the value of the eSports Index is not based on fair value prices), the Fund’s
ability to track the eSports 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
eSports Index. In light of the factors discussed above, the Fund’s return may
deviate significantly from the return of the eSports Index. Changes to the
composition of the eSports Index in connection with a rebalancing or
reconstitution of the eSports 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 eSports 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 eSports Index provider to postpone a scheduled
rebalance or reconstitution, which could cause the eSports 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 will be particularly
vulnerable to this risk because the eSports 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 eSports Index concentrates in a
particular sector or sectors or industry or group of industries. To the extent
that the Fund is concentrated in a particular sector or sectors or industry or
group of industries, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on those sectors
and/or industries may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of sectors or
industries.
PERFORMANCE
The bar chart that follows
shows how the Fund performed for the calendar year shown. The table below the
bar chart shows the Fund’s average annual returns (before and after taxes).
The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. 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: |
34.23 |
% |
2Q 2020 |
| Worst
Quarter: |
-10.45 |
% |
3Q
2021 |
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 |
Since
Inception (10/16/18) |
|
|
VanEck Video Gaming and eSports ETF
(return before taxes) |
-2.09% |
28.33% |
|
|
VanEck Video Gaming and eSports ETF
(return after taxes on distributions) |
-3.18% |
27.86% |
|
|
VanEck Video Gaming and eSports ETF
(return after taxes on distributions and sale of Fund
Shares) |
-1.03% |
22.68% |
|
|
MVIS
Global Video Gaming and eSports Index
(reflects no deduction for
fees, expenses or taxes) |
-1.32% |
29.35% |
|
|
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
28.71% |
20.02% |
|
|
|
|
|
|
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:
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Name |
Title
with Adviser |
Date
Began Managing the Fund |
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Peter
H. Liao |
Portfolio
Manager |
October
2018 |
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Guo
Hua (Jason) Jin |
Portfolio
Manager |
October
2018 |
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PURCHASE
AND SALE OF FUND SHARES
For
important information about the purchase and sale of Fund Shares, tax
information and payments to broker-dealers and other financial intermediaries,
please turn to the “Summary Information About Purchases and Sales of Fund
Shares, Taxes and Payments to Broker-Dealers and Other Financial Intermediaries”
section of this Prospectus.
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SUMMARY
INFORMATION ABOUT PURCHASES AND SALES OF FUND SHARES, TAXES AND PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL
INTERMEDIARIES |
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of a Fund may only be purchased and sold in secondary market transactions
through a broker or dealer at a market price. Shares of the Funds are listed on
the Exchange, and because Shares trade at market prices rather than NAV, Shares
of the Funds may trade at a price greater than NAV (i.e.,
a "premium") or less than NAV (i.e.,
a "discount").
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of a Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid/ask spread”).
Recent
information, including information about each Fund’s NAV, market price, premiums
and discounts, and bid/ask spreads, is included on the Fund’s website at
www.vaneck.com.
TAX
INFORMATION
Each
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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ADDITIONAL
INFORMATION ABOUT THE FUNDS’ INVESTMENT STRATEGIES AND
RISKS |
PRINCIPAL
INVESTMENT STRATEGIES
The
Adviser anticipates that, generally, each Fund will hold or gain exposure to all
of the securities that comprise its Index in proportion to their weightings in
such Index. However, under various circumstances, it may not be possible or
practicable to purchase all of those securities in those weightings. In these
circumstances, a Fund may purchase a sample of securities in its Index. There
also may be instances in which the Adviser may choose to underweight or
overweight a security in a Fund’s Index, purchase securities not in the Fund’s
Index that the Adviser believes are appropriate to substitute for certain
securities in such Index or utilize various combinations of other available
investment techniques in seeking to replicate as closely as possible, before
fees and expenses, the price and yield performance of the Fund’s Index. Each
Fund may sell securities that are represented in its Index in anticipation of
their removal from its Index or purchase securities not represented in its Index
in anticipation of their addition to such Index. Each Fund may also, in order to
comply with the tax diversification requirements of the Internal Revenue Code of
1986, as amended (the “Internal Revenue Code”), temporarily invest in securities
not included in its Index that are expected to be highly correlated with the
securities included in its Index.
FUNDAMENTAL
AND NON-FUNDAMENTAL POLICIES
Each
Fund’s investment objective and each of its other investment policies are
non-fundamental policies that may be changed by the Board of Trustees without
shareholder approval, except as noted in this Prospectus or the Statement of
Additional Information (“SAI”) under the section entitled “Investment Policies
and Restrictions—Investment Restrictions.”
RISKS
OF INVESTING IN THE FUNDS
The
following section provides additional information regarding the principal risks
identified under “Principal Risks of Investing in the Fund” in each Fund’s
“Summary Information” section followed by additional risk
information.
Investors
in a Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
a Fund involves a substantial degree of risk. An investment in a Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in a Fund, each of which
could significantly and adversely affect the value of an investment in a
Fund.
Risk
of Investing in the Biotechnology Industry.
(VanEck Biotech ETF only.) 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 of
proprietary scientific information could negatively impact the competitive
position of these companies. Governmental regulation may delay or inhibit the
release of new products. There can be no assurance that those efforts or costs
will result in the development of a profitable drug, product or technology.
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.
The
biotechnology industry is also subject to rapid and significant technological
change and competitive forces that may make drugs, products or technologies
obsolete or make it difficult to raise prices and, in fact, may result in price
discounting. 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. Failure of biotechnology companies to
comply with applicable laws and regulations can result in the imposition of
civil and/or criminal fines, penalties and, in some instances, exclusion of
participation in government sponsored programs such as Medicare and
Medicaid.
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. Biotechnology companies will continue to be affected by
the efforts of governments and third party payors to contain or reduce health
care costs. For example, certain foreign markets control pricing or
profitability of biotechnology products and technologies. In the United States,
there have been, and there will likely to continue to be, a number of federal
and state proposals to implement similar controls.
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 or unprofitable. Such companies may also be characterized by thin
capitalization and limited markets, financial resources or personnel. The stock
prices of companies involved in the biotechnology industry, especially those of
smaller, less-seasoned companies, 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 a 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.
Risk
of Investing in Digital Transformation Companies. (VanEck
Digital Transformation ETF only.) 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.
Risk
of Investing in the Environmental Services Industry. (VanEck
Environmental Services ETF only.) 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 global decrease in demand for consumer waste disposal,
removal and 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, failure 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.
Risk
of Investing in the Gaming Industry. (VanEck
Gaming ETF only.) 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 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. Certain companies in the gaming
industry are highly leveraged and have recently experienced financial
difficulty. 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 that may cause these companies to become obsolete
quickly, 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.
Risk
of Investing in the Pharmaceutical Industry. (VanEck
Pharmaceutical ETF only.) 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 expiration of patents or the loss of, or the inability to
enforce, intellectual property rights. There can be no assurance that the steps
taken by pharmaceutical companies to protect their proprietary rights will be
adequate to prevent misappropriation of their proprietary rights or that
competitors will not independently develop products that are substantially
equivalent or superior to such companies’ products. Pharmaceutical companies
also rely on trade secrets, know-how and technology, which are not protected by
patents, to maintain their competitive position. If any trade secret, know-how
or other technology not protected by a patent were disclosed to, or
independently developed by, a competitor, that company’s business and financial
condition could be materially adversely affected.
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. There can be no assurance that
those efforts or costs will result in the development of a profitable drug.
Pharmaceutical companies may be susceptible to product obsolescence. Many
pharmaceutical companies face intense competition from new products and less
costly generic products.
Pharmaceutical
products are subject to approval of the FDA. The research, design, testing,
manufacturing, labeling, marketing, distribution and advertising of
pharmaceutical products are subject to extensive regulation by governmental
authorities in the United States and other countries. The process for obtaining
regulatory approval by the FDA or other governmental regulatory authorities is
long and costly and may require extensive preclinical and clinical trials. There
can be no assurance that the necessary approvals will be obtained or maintained.
In addition, the potential for an increased amount of required disclosure of
proprietary scientific information could negatively impact the position of
pharmaceutical companies. The pharmaceutical industry is also subject to laws
and regulations governing the protection of the environment and occupational
health and safety, including laws regulating air emissions, wastewater
discharges, the management and disposal of hazardous materials and wastes, and
the health and safety of employees. Failure to comply with applicable domestic
and/or foreign requirements can result in civil and criminal fines or other
enforcement actions, recall or seizure of products, total or partial suspension
of production, withdrawal of existing product approvals or clearances, refusal
to approve or clear new applications or notifications, increased quality control
costs, criminal prosecution, other penalties and, in some instances, exclusion
of participation in government sponsored programs such as Medicare, Medicaid and
other government sponsored programs.
The
pharmaceutical industry is also subject to rapid and significant technological
change and competitive forces that may make drugs obsolete or make it difficult
to raise prices and, in fact, may result in price discounting. 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 that are inherent in the development, manufacturing and marketing
of human therapeutic products. Product liability
claims
could delay or prevent completion of companies’ clinical development programs as
well as result in FDA investigations of the safety and effectiveness of
companies’ products, manufacturing processes and facilities, and marketing
programs.
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. Third party payors are
increasingly challenging the price and cost-effectiveness of medical products.
Significant uncertainty exists as to the reimbursement status of health care
products, and there can be no assurance that adequate third party coverage will
be available for pharmaceutical companies to obtain satisfactory price levels
for their products.
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. Additionally, a pharmaceutical company’s
valuation can often be based largely on the potential or actual performance of a
limited number of products. A pharmaceutical company’s valuation can also be
greatly affected if one of its products proves unsafe, ineffective or
unprofitable. Such companies also may be characterized by thin capitalization
and limited markets, financial resources or personnel, as well as dependence on
wholesale distributors. 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. Investing in non-U.S. issuers involves 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.
Risk
of Investing in Retail Companies. (VanEck
Retail ETF only.) 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 certain retail 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 and purchase merchandise both directly from brand owners
and indirectly from retailers and third party suppliers. Such companies may also
be dependent upon suppliers for the products used for their own brand name
merchandise. Reliance on third party suppliers subjects retail companies to
risks of delivery delays, price increases and receipt of nonconforming or poor
quality merchandise. 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 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 of the
companies in the Retail Index 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.
Risk
of Investing in the Semiconductor Industry.
(VanEck
Semiconductor ETF only.) 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, which may, in certain circumstances, cause the value of
securities of all companies in the semiconductor industry of the market to
decrease. As product cycles shorten and manufacturing capacity increases, these
companies may become increasingly subject to aggressive pricing, which hampers
profitability. The Fund is also subject to the risk that the securities of such
issuers will underperform the market as a whole due to legislative or regulatory
changes. Additionally, 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, limited
personnel, periods of production shortages, significant price erosion, a limited
number of products, wide fluctuations in securities prices due to risks of rapid
obsolescence of products, economic performance of the customers of semiconductor
companies 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. In addition, their capital equipment could suffer from
rapid obsolescence. 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, competition from subsidized foreign competitors
with lower production costs, tariffs and trade disputes 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, both domestically and internationally,
including competition from foreign competitors with lower production costs. The
stock prices of companies in the semiconductor industry have been and will
likely continue to be extremely volatile compared to the overall
market.
Semiconductor
manufacturing processes are highly complex, costly and potentially vulnerable to
impurities and other disruptions that can significantly increase costs and delay
product shipments to customers. Many semiconductor companies rely on a single
supplier or a limited number of suppliers for the parts and raw materials used
in their products, and if quality parts and materials are not delivered by the
suppliers on a timely basis, these companies will not be able to manufacture and
deliver their products on a timely schedule which could adversely affect their
financial condition.
Semiconductor
design and process methodologies are subject to rapid technological change
requiring large expenditures for research and development in order to improve
product performance and increase manufacturing yields. Semiconductor companies
also may be subject to risks relating to research and development costs and the
availability and price of components. Many semiconductor companies have created
new technologies for the semiconductor sector and currently rely on a limited
number of customers as purchasers of their products and services. Semiconductor
companies rely on a combination of patents,
trade
secret laws and contractual provisions to protect their technologies. Inability
to adequately protect proprietary rights may harm the competitive positions of
many semiconductor companies. Additionally, semiconductor companies may be
subject to claims of infringement of third party intellectual property rights,
which could adversely affect their business. Many semiconductor companies are
dependent on their ability to continue to attract and retain highly skilled
technical and managerial personnel to develop and generate their
business.
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.
Video
Gaming and eSports Companies Risk.
(VanEck Video Gaming and eSports ETF only.) 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. Pure-play companies (i.e.,
companies that focus only on a particular product or activity) 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. These companies are also subject to increasing regulatory
constraints, particularly with respect to cybersecurity and privacy. In addition
to the costs of complying with such constraints, the unintended disclosure of
confidential information, whether because of an error or a cybersecurity event,
could adversely affect the profitability and value of these companies. Video
gaming and eSports companies may be subject to sophisticated intellectual
property infringement schemes and piracy efforts, particularly in foreign
markets, which may limit the revenue potential in such markets, and combatting
such infringement or piracy schemes may require significant expenses. Such
antipiracy programs may not be effective. 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. Software companies also face the risks that new services, equipment or
technologies are not accepted by consumers and businesses or will become rapidly
obsolete. These factors can affect the profitability of software companies and,
as a result, the value of their securities. Patent protection is integral to the
success of many companies and their profitability can be affected materially by,
among other things, the cost of obtaining (or failing to obtain) patent
approvals, the cost of litigating patent infringement and the loss of patent
protection for products (which significantly increases pricing pressures and can
materially reduce profitability with respect to such products). In addition,
many software companies have limited operating histories. Prices of software
companies’ securities historically have been more volatile than other
securities, especially over the short term.
Risk
of Investing in the Internet Software & Services Industry. The
prices of the securities of companies in the internet software and 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. 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. There can be no assurance that the steps taken by internet
software and software services companies to protect their proprietary rights
will sufficiently prevent misappropriation of their technology or that
competitors will not independently develop technologies that are substantially
equivalent or superior to such companies’ technology. Legislative or regulatory
changes and increased government supervision also may affect companies in the
internet software and services industry.
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.
Risk
of Investing in the Financials Sector. (VanEck
Digital Transformation ETF only.) 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 Industrials Sector. (VanEck
Environmental Services ETF only.) 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. The stock prices of
companies in the industrials sector are affected by supply and demand both for
their specific product or service and for industrial sector products in general.
The products of manufacturing companies may face product obsolescence due to
rapid technological developments and frequent new product introduction. In
addition, the industrials sector may also be adversely affected by changes or
trends in commodity prices, which may be influenced or characterized by
unpredictable factors.
Risk
of Investing in the Information Technology Sector. (VanEck
Digital Transformation ETF and VanEck Video Gaming and eSports ETF only.) 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 the Basic Materials Sector.
(VanEck Environmental Services ETF only.) A 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 Communication Services Sector.
(VanEck Video Gaming and eSports ETF only.) 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
of Investing in the Consumer Discretionary Sector. (VanEck
Gaming ETF and VanEck Retail ETF only.) A Fund will be sensitive to, and its
performance may depend to a greater extent on, the overall condition of the
consumer discretionary sector. The consumer discretionary sector comprises
companies whose businesses are sensitive to economic cycles, such as
manufacturers of high-end apparel and automobile and leisure companies.
Companies in the consumer discretionary sector are subject to fluctuations in
supply and demand. These companies may also be adversely affected by changes in
consumer spending as a result of world events, political and economic
conditions, commodity price volatility, changes in exchange rates, imposition of
import controls, increased competition, depletion of resources and labor
relations.
Risk
of Investing in the Consumer Staples Sector.
(VanEck Retail ETF only.) The Fund will be sensitive to, and its performance may
depend to a greater extent on, the overall condition of the consumer staples
sector. The consumer staples sector comprises companies whose businesses are
less sensitive to economic cycles, such as manufacturers and distributors of
food and beverages and producers of non-durable household goods and personal
products. Companies in the consumer staples sector may be adversely affected by
changes in the worldwide economy, consumer spending, competition, demographics
and consumer preferences, exploration and production spending. Companies in this
sector are also affected by changes in government regulation, world events and
economic conditions.
Risk
of Investing in the Health Care Sector. (VanEck
Pharmaceutical ETF only.) A Fund will be sensitive to, and its performance will
depend to a greater extent on, the overall condition of the health care sector.
Companies in the health care sector may be affected by extensive government
regulation, restrictions on government reimbursement for medical expenses,
rising costs of medical products and services, pricing pressure, an increased
emphasis on outpatient services, limited number of products, industry
innovation, changes in technologies and other market developments. Many health
care companies are heavily dependent on patent protection. The expiration of
patents may adversely affect the profitability of these companies. Many health
care companies are subject to extensive litigation based on product liability
and similar claims. Health care companies are subject to competitive forces that
may make it difficult to raise prices and, in fact, may result in price
discounting. Many new products in the health care sector may be subject to
regulatory approvals. The process of obtaining such approvals may be long and
costly. Companies in the health care sector may be thinly capitalized and may be
susceptible to product obsolescence.
Risk
of Investing in Foreign Securities.
(VanEck Digital Transformation ETF, VanEck Gaming ETF, VanEck Pharmaceutical
ETF, VanEck Semiconductor ETF and VanEck Video Gaming and eSports ETF only.)
Investments in the securities of foreign issuers involve risks beyond those
associated with investments in U.S. securities. These additional risks include
greater market volatility, the availability of less reliable financial
information, higher transactional and custody costs, taxation by foreign
governments, decreased market liquidity and political instability. Because
certain foreign securities markets may be limited in size, the activity of large
traders may have an undue influence on the prices of securities that trade in
such markets. Certain foreign markets that have historically been considered
relatively stable may become volatile in response to changed conditions or new
developments. Increased interconnectivity of world economies and financial
markets increases the possibility that adverse developments and conditions in
one country or region will affect the stability of economies and financial
markets in other countries or regions. Each Fund invests in securities of
issuers located in countries whose economies are heavily dependent upon trading
with key partners. Any reduction in this trading may have an adverse impact on a
Fund’s investments. Because each Fund may invest in securities denominated in
foreign currencies and some of the income received by each Fund may be in
foreign currency, changes in currency exchange rates may negatively impact the
Funds’ return. The risks of investing in emerging market countries are greater
than risks associated with investments in foreign developed
countries.
Foreign
issuers are often subject to less stringent requirements regarding accounting,
auditing, financial reporting and record keeping than are U.S. issuers, and,
therefore, not all material information may be available or reliable. Securities
exchanges or foreign governments may adopt rules or regulations that may
negatively impact a Fund’s ability to invest in foreign securities or may
prevent each Fund from repatriating its investments. Each Fund may also invest
in depositary receipts which involve similar risks to those associated with
investments in foreign securities. In addition, each Fund may not receive
shareholder communications or be permitted to vote the securities that it holds,
as the issuers may be under no legal obligation to distribute shareholder
communications.
Certain
foreign markets may rely heavily on particular industries or foreign capital and
are more vulnerable to diplomatic developments, the imposition of economic
sanctions against a particular country or countries, organizations, entities
and/or individuals, changes in international trade patterns, trade barriers and
other protectionist or retaliatory measures. The United States and other nations
or international organizations may impose economic sanctions or take other
actions that may adversely affect issuers of specific countries. Economic
sanctions could, among other things, effectively restrict or eliminate the
Fund’s ability to purchase or sell securities or groups of securities for a
substantial period of time, and may make the Fund’s investments in such
securities harder to value. These sanctions, any future sanctions or other
actions, or even the threat of future sanctions or other actions, may negatively
affect the value and liquidity of the Fund.
Also,
certain issuers located in foreign countries in which a Fund invests may operate
in, or have dealings with, countries subject to sanctions and/or embargoes
imposed by the U.S. Government and the United Nations and/or countries
identified by the U.S. Government as state sponsors of terrorism. As a result,
an issuer may sustain damage to its reputation if it is identified as an issuer
which operates in, or has dealings with, such countries. A Fund, as an investor
in such issuers, may be indirectly subject to those risks.
Risk
of Investing in Emerging Market Issuers. (VanEck
Digital Transformation ETF, VanEck Gaming ETF and VanEck Video Gaming and
eSports ETF only.) Investments in securities of emerging market issuers involve
risks not typically associated with investments in securities of issuers in more
developed countries that may negatively affect the value of your investment in
the Fund. Such heightened risks may include, among others, expropriation and/or
nationalization of assets, restrictions on and government intervention in
international trade, confiscatory taxation, political instability, including
authoritarian and/or military involvement in governmental decision making, armed
conflict, the impact on the economy as a result of civil war, crime (including
drug violence) and social instability as a result of religious, ethnic and/or
socioeconomic unrest. Issuers in certain emerging market countries are subject
to less stringent requirements regarding accounting, auditing, financial
reporting and record keeping than are issuers in more developed markets, and
therefore, all material information may not be available or reliable. Emerging
markets are also more likely than developed markets to experience problems with
the clearing and settling of trades, as well as the holding of securities by
local banks, agents and depositories. Low trading volumes and volatile prices in
less developed markets may make trades harder to complete and settle, and
governments or trade groups may compel local agents to hold securities in
designated depositories that may not be subject to independent evaluation. Local
agents are held only to the standards of care of their local markets. In
general, the less developed a country’s securities markets are, the greater the
likelihood of custody problems.
Additionally,
each of the factors described below could have a negative impact on the Fund’s
performance and increase the volatility of the Fund.
Securities
Markets.
Securities markets in emerging market countries are underdeveloped and are often
considered to be less correlated to global economic cycles than those markets
located in more developed countries. Securities markets in emerging market
countries are subject to greater risks associated with market volatility, lower
market capitalization, lower trading volume, illiquidity, inflation, greater
price fluctuations, uncertainty regarding the existence of trading markets,
governmental control and heavy regulation of labor and industry. These factors,
coupled with restrictions on foreign investment and other factors, limit the
supply of securities available for investment by the Fund. This will affect the
rate at which a Fund is able to invest in emerging market countries, the
purchase and sale prices for such securities and the timing of purchases and
sales. Emerging markets can experience high rates of inflation, deflation and
currency devaluation. The prices of certain securities listed on securities
markets in emerging market countries have been subject to sharp fluctuations and
sudden declines, and no assurance can be given as to the future performance of
listed securities in general. Volatility of prices may be greater than in more
developed securities markets. Moreover, securities markets in emerging market
countries may be closed for extended periods of time or trading on securities
markets may be suspended altogether due to political or civil unrest. Market
volatility may also be heightened by the actions of a small number of investors.
Brokerage firms in emerging market countries may be fewer in number and less
established than brokerage firms in more developed markets. Since a Fund may
need to effect securities transactions through these brokerage firms, the Fund
is subject to the risk that these brokerage firms will not be able to fulfill
their obligations to the Fund. This risk is magnified to the extent a Fund
effects securities transactions through a single brokerage firm or a small
number of brokerage firms. In addition, the infrastructure for the safe custody
of securities and for purchasing and selling securities, settling trades,
collecting dividends, initiating corporate actions, and following corporate
activity is not as well developed in emerging market countries as is the case in
certain more developed markets.
Political
and Economic Risk.
Certain emerging market countries have historically been subject to political
instability, and their prospects are tied to the continuation of economic and
political liberalization in the region. Instability may result from factors such
as government or military intervention in decision making, terrorism, civil
unrest, extremism or hostilities between neighboring countries. Any of these
factors, including an outbreak of hostilities could negatively impact a Fund’s
returns. Limited political and democratic freedoms in emerging market countries
might cause significant social unrest. These factors may have a significant
adverse effect on an emerging market country’s economy.
Many
emerging market countries may be heavily dependent upon international trade and,
consequently, may continue to be negatively affected by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which it
trades. They also have been, and may continue to be, adversely affected by
economic conditions in the countries with which they trade.
In
addition, commodities (such as oil, gas and minerals) represent a significant
percentage of certain emerging market countries’ exports and these economies are
particularly sensitive to fluctuations in commodity prices. Adverse economic
events in one country may have a significant adverse effect on other countries
of this region. In addition, most emerging market countries have experienced, at
one time or another, severe and persistent levels of inflation, including, in
some cases, hyperinflation. This has, in turn, led to high interest rates,
extreme measures by governments to keep inflation in check, and a generally
debilitating effect on economic growth. Although inflation in many countries has
lessened, there is no guarantee it will remain at lower levels. The political
history of certain emerging market countries has been characterized by political
uncertainty, intervention by the military in civilian and economic spheres, and
political corruption. Such events could reverse favorable trends toward market
and economic reform, privatization, and removal of trade barriers, and result in
significant disruption in securities markets in the region.
Also,
from time to time, certain issuers located in emerging market countries in which
a Fund invests may operate in, or have dealings with, countries subject to
sanctions and/or embargoes imposed by the U.S. Government and the United Nations
and/or countries identified by the U.S. Government as state sponsors of
terrorism. As a result, an issuer may sustain damage to its reputation if it is
identified as an issuer which operates in, or has dealings with, such countries.
A Fund, as an investor in such issuers, may be indirectly subject to those
risks.
The
economies of one or more countries in which a Fund may invest may be in various
states of transition from a planned economy to a more market oriented economy.
The economies of such countries differ from the economies of most developed
countries in many respects, including levels of government involvement, states
of development, growth rates, control of foreign exchange and allocation of
resources. Economic growth in these economies may be uneven both geographically
and among various sectors of their economies and may also be accompanied by
periods of high inflation. Political changes, social instability and adverse
diplomatic developments in these countries could result in the imposition of
additional government restrictions including expropriation of assets,
confiscatory taxes or nationalization of some or all of the property held by the
underlying issuers of securities included in a Fund’s Index. There is no
guarantee that the governments of these countries will not revert back to some
form of planned or non-market oriented economy, and such governments continue to
be active participants in many economic sectors through ownership positions and
regulation. The allocation of
resources
in such countries is subject to a high level of government control. Such
countries’ governments may strictly regulate the payment of foreign currency
denominated obligations and set monetary policy. Through their policies, these
governments may provide preferential treatment to particular industries or
companies. The policies set by the government of one of these countries could
have a substantial effect on that country’s economy.
Investment
and Repatriation Restrictions.
The government in an emerging market country may restrict or control to varying
degrees the ability of foreign investors to invest in securities of issuers
located or operating in such emerging market countries. These restrictions
and/or controls may at times limit or prevent foreign investment in securities
of issuers located or operating in emerging market countries and may inhibit a
Fund’s ability to track its Index. In addition, a Fund may not be able to buy or
sell securities or receive full value for such securities. Moreover, certain
emerging market countries may require governmental approval or special licenses
prior to investments by foreign investors and may limit the amount of
investments by foreign investors in a particular industry and/or issuer; may
limit such foreign investment to a certain class of securities of an issuer that
may have less advantageous rights than the classes available for purchase by
domiciliaries of such emerging market countries; and/or may impose additional
taxes on foreign investors. A delay in obtaining a required government approval
or a license would delay investments in those emerging market countries, and, as
a result, a Fund may not be able to invest in certain securities while approval
is pending. The government of certain emerging market countries may also
withdraw or decline to renew a license that enables a Fund to invest in such
country. These factors make investing in issuers located or operating in
emerging market countries significantly riskier than investing in issuers
located or operating in more developed countries, and any one of them could
cause a decline in the value of a Fund’s Shares.
Additionally,
investments in issuers located in certain emerging market countries may be
subject to a greater degree of risk associated with governmental approval in
connection with the repatriation of investment income, capital or the proceeds
of sales of securities by foreign investors. Moreover, there is the risk that if
the balance of payments in an emerging market country declines, the government
of such country may impose temporary restrictions on foreign capital
remittances. Consequently, a Fund could be adversely affected by delays in, or a
refusal to grant, required governmental approval for repatriation of capital, as
well as by the application to a Fund of any restrictions on investments.
Furthermore, investments in emerging market countries may require a Fund to
adopt special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to the Fund.
Available
Disclosure About Emerging Market Issuers.
Issuers located or operating in emerging market countries are not subject to the
same rules and regulations as issuers located or operating in more developed
countries. Therefore, there may be less financial and other information publicly
available with regard to issuers located or operating in emerging market
countries and such issuers are not subject to the uniform accounting, auditing
and financial reporting standards applicable to issuers located or operating in
more developed countries.
Foreign
Currency Considerations.
A Fund’s assets that are invested in equity securities of issuers in emerging
market countries will generally be denominated in foreign currencies, and the
proceeds received by the Fund from these investments will be principally in
foreign currencies. The value of an emerging market country’s currency may be
subject to a high degree of fluctuation. This fluctuation may be due to changes
in interest rates, the effects of monetary policies issued by the United States,
foreign governments, central banks or supranational entities, the imposition of
currency controls or other national or global political or economic
developments. The economies of certain emerging market countries can be
significantly affected by currency devaluations. Certain emerging market
countries may also have managed currencies which are maintained at artificial
levels relative to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors.
A
Fund’s exposure to an emerging market country’s currency and changes in value of
such foreign currencies versus the U.S. dollar may reduce a Fund’s investment
performance and the value of your investment in the Fund. Meanwhile, a Fund will
compute and expects to distribute its income in U.S. dollars, and the
computation of income will be made on the date that the income is earned by the
Fund at the foreign exchange rate in effect on that date. Therefore, if the
value of the respective emerging market country’s currency falls relative to the
U.S. dollar between the earning of the income and the time at which a Fund
converts the relevant emerging market country’s currency to U.S. dollars, the
Fund may be required to liquidate certain positions in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements under the Internal Revenue Code. The liquidation of
investments, if required, could be at disadvantageous prices or otherwise have
an adverse impact on a Fund’s performance.
Certain
emerging market countries also restrict the free conversion of their currency
into foreign currencies, including the U.S. dollar. There is no significant
foreign exchange market for many such currencies and it would, as a result, be
difficult for a Fund to engage in foreign currency transactions designed to
protect the value of the Fund’s interests in securities denominated in such
currencies. Furthermore, if permitted, a Fund may incur costs in connection with
conversions between U.S. dollars and an emerging market country’s currency.
Foreign exchange dealers realize a profit based on the difference between the
prices at which they are buying and selling various currencies. Thus, a dealer
normally will offer to sell a foreign currency to a Fund at one rate, while
offering a lesser rate of exchange should the Fund desire immediately to resell
that currency to the dealer. A Fund will conduct its foreign currency exchange
transactions either on a spot (i.e.,
cash) basis at the
spot
rate prevailing in the foreign currency exchange market, or through entering
into forward, futures or options contracts to purchase or sell foreign
currencies.
Operational
and Settlement Risk.
In addition to having less developed securities markets, emerging market
countries have less developed custody and settlement practices than certain
developed countries. Rules adopted under the 1940 Act permit a Fund to maintain
its foreign securities and cash in the custody of certain eligible non-U.S.
banks and securities depositories. Banks in emerging market countries that are
eligible foreign sub-custodians may be recently organized or otherwise lack
extensive operating experience. In addition, in certain emerging market
countries there may be legal restrictions or limitations on the ability of a
Fund to recover assets held in custody by a foreign sub-custodian in the event
of the bankruptcy of the sub-custodian. Because settlement systems in emerging
market countries may be less organized than in other developed markets, there
may be a risk that settlement may be delayed and that cash or securities of the
Fund may be in jeopardy because of failures of or defects in the systems. Under
the laws in many emerging market countries, a Fund may be required to release
local shares before receiving cash payment or may be required to make cash
payment prior to receiving local shares, creating a risk that the Fund may
surrender cash or securities without ever receiving securities or cash from the
other party. Settlement systems in emerging market countries also have a higher
risk of failed trades and back to back settlements may not be
possible.
A
Fund may not be able to convert a foreign currency to U.S. dollars in time for
the settlement of redemption requests. In the event of a redemption request from
an AP, a Fund will be required to deliver U.S. dollars to the AP on the
settlement date. In the event that a Fund is not able to convert the foreign
currency to U.S. dollars in time for settlement, which may occur as a result of
the delays described above, the Fund may be required to liquidate certain
investments and/or borrow money in order to fund such redemption. The
liquidation of investments, if required, could be at disadvantageous prices or
otherwise have an adverse impact on the Fund’s performance (e.g.,
by causing the Fund to overweight foreign currency denominated holdings and
underweight other holdings which were sold to fund redemptions). In addition, a
Fund will incur interest expense on any borrowings and the borrowings will cause
the Fund to be leveraged, which may magnify gains and losses on its
investments.
In
certain emerging market countries, the marketability of quoted shares may be
limited due to the restricted opening hours of stock exchanges, and a narrow
range of investors and a relatively high proportion of market value may be
concentrated in the hands of a relatively small number of shareholders. In
addition, because certain emerging market countries’ stock exchanges on which a
Fund’s portfolio securities may trade are open when the relevant Exchanges are
closed, the Fund may be subject to heightened risk associated with market
movements. Trading volume may be lower on certain emerging market countries’
stock exchanges than on more developed securities markets and equities may be
generally less liquid. The infrastructure for clearing, settlement and
registration on the primary and secondary markets of certain emerging market
countries are less developed than in certain other markets and under certain
circumstances this may result in a Fund experiencing delays in settling and/or
registering transactions in the markets in which it invests, particularly if the
growth of foreign and domestic investment in certain emerging market countries
places an undue burden on such investment infrastructure. Such delays could
affect the speed with which a Fund can transmit redemption proceeds and may
inhibit the initiation and realization of investment opportunities at optimum
times.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer’s securities are predicated on these securities being
blocked from trading at the custodian or sub-custodian level for a period of
time around a shareholder meeting. These restrictions have the effect of barring
the purchase and sale of certain voting securities within a specified number of
days before and, in certain instances, after a shareholder meeting where a vote
of shareholders will be taken. Share blocking may prevent the Fund from buying
or selling securities for a period of time. During the time that shares are
blocked, trades in such securities will not settle. The blocking period can last
up to several weeks. The process for having a blocking restriction lifted can be
quite onerous with the particular requirements varying widely by country. In
addition, in certain countries, the block cannot be removed. As a result of the
ramifications of voting ballots in markets that allow share blocking, the
Adviser, on behalf of the Fund, reserves the right to abstain from voting
proxies in those markets.
Corporate
and Securities Laws. Securities
laws in emerging market countries are relatively new and unsettled and,
consequently, there is a risk of rapid and unpredictable change in laws
regarding foreign investment, securities regulation, title to securities and
shareholder rights. Accordingly, foreign investors may be adversely affected by
new or amended laws and regulations. In addition, the systems of corporate
governance to which emerging market issuers are subject may be less advanced
than those systems to which issuers located in more developed countries are
subject, and therefore, shareholders of issuers located in emerging market
countries may not receive many of the protections available to shareholders of
issuers located in more developed countries. In circumstances where adequate
laws and shareholder rights exist, it may not be possible to obtain swift and
equitable enforcement of the law. In addition, the enforcement of systems of
taxation at federal, regional and local levels in emerging market countries may
be inconsistent and subject to sudden change. A Fund has limited rights and few
practical remedies in emerging markets and the ability of U.S. authorities to
bring enforcement actions in emerging markets may be limited.
Foreign
Currency Risk.
(VanEck Gaming ETF, VanEck Pharmaceutical ETF, VanEck Semiconductor ETF and
VanEck Video Gaming and eSports ETF only.) Because a Fund’s assets that are
invested in equity securities of issuers in foreign countries may be denominated
in foreign currencies, the proceeds received by the Fund from these investments
will generally be in foreign currencies. A Fund’s exposure to foreign currencies
and changes in the value of foreign currencies versus the U.S. dollar may result
in reduced returns for the Fund, and the value of certain foreign currencies may
be subject to a high degree of fluctuation. Moreover, a Fund may incur costs in
connection with conversions between U.S. dollars and foreign currencies. The
value of certain emerging market countries' currencies may be subject to a high
degree of fluctuation. This fluctuation may be due to changes in interest rates,
investors’ expectations concerning inflation and interest rates, the emerging
market country’s debt levels and trade deficit, the effects of monetary policies
issued by the United States, foreign governments, central banks or supranational
entities, the imposition of currency controls or other national or global
political or economic developments. For example, certain emerging market
countries have experienced economic challenges and liquidity issues with respect
to their currency. The economies of certain emerging market countries can be
significantly affected by currency devaluations. Certain emerging market
countries may also have managed currencies which are maintained at artificial
levels relative to the U.S. dollar rather than at levels determined by the
market. This type of system could lead to sudden and large adjustments in the
currency, which in turn, may have a negative effect on a Fund and its
investments.
Risk
of Investing in Depositary Receipts.
A Fund may invest in depositary receipts (including ADRs) which involve similar
risks to those associated with investments in foreign securities. Depositary
receipts are receipts listed on U.S. or foreign exchanges issued by banks or
trust companies that entitle the holder to all dividends and capital gains that
are paid out on the underlying foreign shares. The issuers of certain depositary
receipts are under no obligation to distribute shareholder communications to the
holders of such receipts, or to pass through to them any voting rights with
respect to the deposited securities. Investments in depositary receipts may be
less liquid than the underlying shares in their primary trading market and, if
not included in a Fund’s Index, may negatively affect a Fund’s ability to
replicate the performance of its Index. In addition, investments in depositary
receipts that are not included in a Fund’s 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.
(VanEck Biotech ETF, VanEck Environmental Services ETF, VanEck Pharmaceutical
ETF, VanEck Retail ETF, VanEck Semiconductor ETF and VanEck Video Gaming and
eSports ETF only.) The value of individual securities or particular types of
securities in a Fund’s portfolio can be more volatile than the market as a whole
and can perform differently from the value of the market as a whole, which may
have a greater impact if the Fund’s portfolio is concentrated in a country,
group of countries, region, market, industry, group of industries, sector or
asset class. The value of securities of smaller issuers can be more volatile
than that of larger issuers. A change in the financial condition, market
perception or the credit rating of an issuer of securities included in a Fund’s
Index may cause the value of its securities to decline.
Risk
of Cash Transactions.
(VanEck Gaming ETF and VanEck Video Gaming and eSports ETF only.) Unlike other
ETFs, each Fund expects to effects its creations and redemptions at least
partially for cash, rather than wholly for in-kind securities, due to various
legal and operational constraints in certain countries in which the Funds
invest. Because each Fund currently intends to effect a portion of redemptions
for cash, rather than in-kind distributions, it may be required to sell
portfolio securities in order to obtain the cash needed to distribute redemption
proceeds, which involves transaction costs that a Fund may not have incurred had
it effected redemptions entirely in kind. These costs may include brokerage
costs or taxable losses or gains, which may be imposed on a Fund and decrease a
Fund’s NAV to the extent such costs are not offset by a transaction fee payable
by an Authorized Participant (“AP”). If each Fund recognizes gain on these
sales, this generally will cause each Fund to recognize gain it might not
otherwise have recognized if it were to distribute portfolio securities in-kind,
or to recognize such gain sooner than would otherwise be required. As a result,
an investment in each Fund may be less tax-efficient than an investment in a
more conventional ETF. Other ETFs generally are able to make in-kind redemptions
and avoid realizing gains in connection with transactions designed to raise cash
to meet redemption requests. Each Fund generally intends to distribute these
gains to shareholders to avoid being taxed on this gain at the Fund level and
otherwise comply with the special tax rules that apply to it. This strategy may
cause shareholders to be subject to tax on gains they would not otherwise be
subject to, or at an earlier date than, if they had made an investment in a
different ETF.
Risk
of Investing in the Life Sciences Tools and Services Industry. (VanEck
Biotech ETF only.) 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.
Special
Risk Considerations of Investing in Asian Issuers.
(VanEck Gaming ETF and VanEck Video Gaming and eSports ETF only.) Investments in
securities of Asian issuers involve risks and special considerations not
typically associated with investments in the U.S. securities markets. Certain
Asian economies have experienced over-extension of credit, currency devaluations
and restrictions, high unemployment, high inflation, decreased exports and
economic recessions. Economic events in any one Asian country can have a
significant effect on the entire Asian region as well as on major trading
partners outside Asia, and any adverse effect on some or all of the Asian
countries and regions in which the Fund invests. The securities markets in some
Asian economies are relatively underdeveloped and may subject the Fund to higher
action costs or greater uncertainty than investments in more developed
securities markets. Such risks may adversely affect the value of the Fund’s
investments.
Governments
of many Asian countries have implemented significant economic reforms in order
to liberalize trade policy, promote foreign investment in their economies,
reduce government control of the economy and develop market mechanisms. There
can be no assurance these reforms will continue or that they will be effective.
Despite recent reform and privatizations, significant regulation of investment
and industry is still pervasive in many Asian countries and may restrict foreign
ownership of domestic corporations and repatriation of assets, which may
adversely affect a Fund’s investments. Governments in some Asian countries are
authoritarian in nature, have been installed or removed as a result of military
coups or have periodically used force to suppress civil dissent. Disparities of
wealth, the pace and success of democratization, and ethnic, religious and
racial disaffection have led to social turmoil, violence and labor unrest in
some countries. Unanticipated or sudden political or social developments may
result in sudden and significant investment losses. Investing in certain Asian
countries involves risk of loss due to expropriation, nationalization, or
confiscation of assets and property or the imposition of restrictions on foreign
investments and on repatriation of capital invested. In addition, several
countries in Asia may be impacted by the occurrence of global events such as
war, terrorism, environmental disasters, natural disasters or events, country
instability, and infectious disease epidemics and pandemics.
Special
Risk Considerations of Investing in Australian Issuers. (VanEck
Gaming ETF only.) Investments in securities of Australian issuers, including
issuers located outside of Australia that generate significant revenues from
Australia, involve risks and special considerations not typically associated
with investments in the U.S. securities markets. Investments in Australian
issuers may subject each Fund to regulatory, political, currency, security, and
economic risk specific to Australia. The Australian economy is heavily dependent
on exports from the agricultural and mining sectors. As a result, the Australian
economy is susceptible to fluctuations in the commodity markets. The Australian
economy is also becoming increasingly dependent on its growing services
industry. The Australian economy is dependent on trading with key trading
partners, including the United States, China, Japan, Singapore and certain
European countries. Reduction in spending on Australian products and services,
or changes in any of the economies, may cause an adverse impact on the
Australian economy.
Additionally,
Australia is located in a part of the world that has historically been prone to
natural disasters, such as hurricanes, droughts and bushfires, and is
economically sensitive to environmental events. Any such event may adversely
impact the Australian economy, causing an adverse impact on the value of the
Fund.
Special
Risk Considerations of Investing in Canadian Issuers.
(VanEck Digital Transformation ETF only.) 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 EU and China. Because the United States is Canada’s largest
trading partner and foreign investor, the Canadian economy is dependent on and
may be significantly affected by the U.S. economy. Reduction in spending on
Canadian products and services or changes in the U.S. economy may adversely
impact the Canadian economy. Trade agreements may further increase Canada’s
dependency on the U.S. economy, and uncertainty as to the future of such trade
agreements may cause a decline in the value of the Fund’s Shares. Past periodic
demands by the Province of Quebec for sovereignty have significantly affected
equity valuations and foreign currency movements in the Canadian market and such
demands may have this effect in the future. In addition, certain sectors of
Canada’s economy may be subject to foreign ownership limitations. This may
negatively impact the Fund’s ability to invest in Canadian issuers and to track
the Index.
Special
Risk Considerations of Investing in Chinese Issuers. (VanEck
Digital Transformation ETF, VanEck Gaming ETF and VanEck Video Gaming and eSport
ETF only.) Investments in securities of Chinese issuers, including issuers
located outside of China that generate significant revenues from China, involve
certain risks and considerations not typically associated with investments in
the U.S. securities markets. These risks include, among others, (i) more
frequent (and potentially widespread) trading suspensions and government
interventions with respect to Chinese issuers resulting in a lack of liquidity
and in price volatility, (ii) currency revaluations and other currency exchange
rate fluctuations or blockage, (iii) the nature and extent of intervention by
the Chinese government in the Chinese securities markets, whether such
intervention will continue and the impact of such intervention or its
discontinuation, (iv) the risk of nationalization or expropriation of assets,
(v) the risk that the Chinese government may decide not to continue to support
economic reform programs, (vi) limitations on the use of brokers, (vii) higher
rates of inflation, (viii) greater political, economic and social uncertainty,
(ix) market volatility caused by any potential regional or territorial conflicts
or natural disasters and (x) the risk of increased trade tariffs, embargoes,
sanctions, investments restrictions and other trade limitations. Certain
securities are, or may in the future become restricted, and a 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.
Special
Risk Considerations of Investing in European Issuers. (VanEck
Biotech ETF, VanEck Digital Transformation ETF, VanEck Gaming ETF, VanEck
Pharmaceutical ETF and VanEck Semiconductor ETF only.) Investments in securities
of European issuers involve risks and special considerations not typically
associated with investments in the U.S. securities markets. The EMU of the EU
requires member countries to comply with restrictions on inflation rates,
deficits, interest rates, debt levels and fiscal and monetary controls, each of
which may significantly affect every country in Europe. Decreasing imports or
exports, changes in governmental or EU regulations on trade, changes in the
exchange rate of the euro, the default or threat of default by an EU member
country on its sovereign debt, and/or an economic recession in an EU member
country may have a significant adverse effect on the economies of 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.
Responses
to the financial problems by European governments, central banks and others,
including austerity measures and reforms, may not work, may result in social
unrest and may limit future growth and economic recovery or have other
unintended consequences. Further defaults or restructurings by governments and
other entities of their debt could have additional adverse effects on economies,
financial markets and asset valuations around the world. In addition, one or
more countries may abandon the euro and/or withdraw from the EU. The impact of
these actions, especially if they occur in a disorderly fashion, is not clear
but could be significant and far-reaching.
Special
Risk Considerations of Investing in Japanese Issuers.
(VanEck Video Gaming and eSports ETF only.) Investments in securities of
Japanese issuers, including issuers located outside of Japan that generate
significant revenues from Japan, involve risks and special considerations not
typically associated with investments in the U.S. securities markets. Investment
in securities of Japanese issuers, including issuers located outside of Japan
that generate significant revenues from Japan, involves risks that may
negatively affect the value of your investment in the Fund. The risks of
investing in the securities of Japanese issuers also includes lack of natural
resources, fluctuations or shortages in the commodity markets, new trade
regulations, decreasing U.S. imports and changes in the U.S. dollar exchange
rates. Japan is located in a part of the world that has historically been prone
to natural disasters such as earthquakes, volcanoes and tsunamis and is
economically sensitive to environmental events. Any such event could result in a
significant adverse impact on the Japanese economy. In addition, such disasters,
and the resulting damage, could impair the long-term ability of issuers in which
the Fund invests to conduct their businesses in the manner normally conducted.
Special
Risk Considerations of Investing in Taiwanese Issuers.
(VanEck Semiconductor ETF only.) 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.
Equity
Securities Risk.
The value of the equity securities held by a Fund may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by a Fund participate, or factors relating to specific
issuers in which a Fund invests. For example, an adverse event, such as an
unfavorable earnings report, may result in a decline in the value of equity
securities of an issuer held by a Fund; the price of the equity securities of an
issuer may be particularly sensitive to general movements in the securities
markets; or a drop in the securities markets may depress the price of most or
all of the equities securities held by a Fund. In addition, the equity
securities of an issuer in a Fund’s portfolio may decline in price if the issuer
fails to make anticipated dividend payments. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority in right to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns,
although under certain market conditions fixed income securities may have
comparable or greater price volatility. A change in the financial condition,
market perception or the credit rating of an issuer of securities included in a
Fund’s Index may cause the value of its securities to decline.
Market
Risk. The
prices of the securities in the Funds are subject to the risks associated with
investing in the securities market, including general economic conditions,
sudden and unpredictable drops in value, exchange trading suspensions and
closures and public health risks. These risks may be magnified if certain
social, political, economic and other conditions and events (such as natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest)
adversely interrupt the global economy; in these and other circumstances, such
events or developments might affect companies world-wide. Overall securities
values could decline generally or underperform other investments. An investment
in the Funds may lose money.
Operational
Risk. A
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
a Fund’s service providers, counterparties or other third parties, failed or
inadequate processes and technology or system failures.
Index
Tracking Risk. Each
Fund’s return may not match the return of its Index for a number of reasons. For
example, each Fund incurs a number of operating expenses, including taxes, not
applicable to its Index and incurs costs associated with buying and selling
securities, especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of its Index or (to the extent a Fund effects
creations and redemptions are effected in cash) raising cash to meet redemptions
or deploying cash in connection with newly created Creation Units (defined
herein), which are not factored into the return of each Fund's Index.
Transaction costs, including brokerage costs, will decrease the Fund’s NAV to
the extent not offset by the transaction fee payable by an AP. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
its Index. Unusual market conditions may cause an Index Provider to postpone a
scheduled rebalance, which could cause the Index to vary from its normal or
expected composition. There is no assurance that the Index Providers (defined
herein) or any agents that may act on their behalf will compile each Fund’s
Index accurately, or that each Index will be determined, composed or calculated
accurately. Errors in respect of the quality, accuracy and completeness of the
data used to compile an Index may occur from time to time and may not be
identified and corrected by the Index Providers for a period of time or at all,
particularly where the indices are less commonly used as benchmarks by funds or
managers. Therefore, gains, losses or costs associated with errors of the Index
Providers or their agents will generally be borne by the applicable Fund and its
shareholders. For example, during a period where a Fund’s Index contains
incorrect constituents, the Fund would have market exposure to such constituents
and would be underexposed to an Index’s other constituents. Such errors may
negatively or positively impact a Fund and its shareholders. Any gains due to an
Index Provider's or others’ errors will be kept by the applicable Fund and its
shareholders and any losses resulting from an Index Providers’ or others’ errors
will be borne by the applicable Fund and its shareholders. When a Fund’s Index
is rebalanced and the Fund in turn rebalances its portfolio to attempt to
increase the correlation between the Fund’s portfolio and its respective Index,
any transaction costs and market exposure arising from such portfolio
rebalancing will be borne directly by the applicable Fund and its shareholders.
A Fund may not be fully invested at times, either as a result of cash flows into
the Fund or reserves of cash held by the Fund to pay expenses and (to the extent
creations and redemptions are effected in cash) to meet redemptions.
In
addition, a Fund may not be able to invest in certain securities and/or other
assets
included
in its Index, or invest in them in the exact proportions in which they are
represented in its Index, due to legal restrictions or limitations imposed by
the governments of certain countries, certain Exchange listing standards, a lack
of liquidity in markets in which such securities trade, potential adverse tax
consequences or other regulatory reasons (such as diversification requirements).
A lack of liquidity may be due to various events, including market events,
economic conditions or
investor
perceptions. Illiquid securities may be difficult to value and their value may
be lower than the market price of comparable liquid securities, which would
negatively affect a Fund's performance. Moreover, a Fund may be delayed in
purchasing or selling securities included in its Index. 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. Any issues a Fund encounters with regard to currency
convertibility (including the cost of borrowing funds, if any) and repatriation
may also increase the index tracking risk. Certain Funds may also need to rely
on borrowings to meet redemptions, which may lead to increased expenses. For tax
efficiency purposes, a Fund may sell certain securities, and such sale may cause
the Fund to realize a loss and deviate from the performance of its Index.
Certain Funds may accept cash in connection with a purchase of Creation Units or
effect their redemptions in cash rather than in-kind and, as a result, a Fund’s
ability to match the return of its respective Index will be
affected.
Certain
Funds may fair value certain of the securities, underlying currencies and/or
other assets it holds, except those securities primarily traded on exchanges
that close at the same time the Fund calculates its NAV. To the extent a Fund
calculates its NAV based on fair value prices and the value of its Index is
based on securities’ closing prices on local foreign markets (i.e.,
the value of its Index is not based on fair value prices) or if a Fund otherwise
calculates its NAV based on prices that differ from those used in calculating
its Index, the Fund’s ability to track its Index may be adversely affected. The
need to comply with the tax diversification and other requirements of the
Internal Revenue Code may also impact a Fund’s ability to replicate the
performance of its Index. In addition, if a Fund utilizes depositary receipts
and other derivative instruments, its return may not correlate as well with the
returns of its Index as would be the case if the Fund purchased all the
securities in its Index directly. Actions taken in response to proposed
corporate actions could result in increased tracking error. In light of the
factors discussed above, each Fund’s return may deviate significantly from the
return of its Index.
Apart
from scheduled rebalances, an Index Provider or its agents may carry out
additional ad hoc rebalances to an Index in order, for example, to correct an
error in the selection of index constituents. When an Index is rebalanced and a
Fund in turn rebalances its portfolio to attempt to increase the correlation
between such Fund’s portfolio and its Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by such
Fund and its shareholders. Therefore, errors and additional ad hoc rebalances
carried out by an Index Provider to an Index may increase the costs to and the
tracking error risk of a Fund.
Index
tracking risk may be heightened during times of increased market volatility or
other unusual market conditions. Changes to the composition of a Fund’s Index in
connection with a rebalancing or reconstitution of the Index may cause the Fund
to experience increased volatility, during which time the Fund’s index tracking
risk may be heightened.
Passive
Management Risk. Unlike
many investment companies, the Funds are not “actively” managed. Therefore,
unless a specific security is removed from its Index, a Fund generally would not
sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from a Fund’s Index, the Fund may be forced to sell
such security at an inopportune time or for prices other than at current market
values. An investment in a Fund involves risks similar to those of investing in
any fund that invests in bonds or equity securities traded on an exchange, such
as market fluctuations caused by such factors as economic and political
developments, changes in interest rates and perceived trends in security prices.
Each Fund’s Index may not contain the appropriate or a diversified mix of
securities for any particular economic cycle. The timing of changes in the
securities of a Fund’s portfolio in seeking to replicate its Index could have a
negative effect on the Fund. Unlike with an actively managed fund, the Adviser
does not use techniques or defensive strategies designed to lessen the effects
of market volatility or to reduce the impact of periods of market decline.
Additionally, unusual market conditions may cause a Fund’s Index Provider to
postpone a scheduled rebalance or reconstitution, which could cause a Fund’s
Index to vary from its normal or expected composition.This means that, based on
market and economic conditions, a Fund’s performance could be lower than funds
that may actively shift their portfolio assets to take advantage of market
opportunities or to lessen the impact of a market decline or a decline in the
value of one or more issuers.
Authorized
Participant Concentration Risk. A
Fund may have a limited number of financial institutions that act as APs, none
of which are obligated to engage in creation and/or redemption transactions. To
the extent that those APs exit the business, or are unable to or choose not to
process creation and/or redemption orders, and no other AP is able to step
forward to create and redeem, there may be a significantly diminished trading
market for Shares or Shares may trade like closed-end funds at a greater
discount (or premium) to NAV and possibly face trading halts and/or de-listing.
The AP concentration risk may be heightened in scenarios where APs have limited
or diminished access to the capital required to post collateral.
No
Guarantee of Active Trading Market.
While Shares are listed on an Exchange, there can be no assurance that an active
trading market for the Shares will be maintained. Further, secondary markets may
be subject to irregular trading activity, wide bid/ask spreads and extended
trade settlement periods in times of market stress because market makers and APs
may step away from making a market in the Shares and in executing creation and
redemption orders, which could cause a material deviation in a Fund’s market
price from its NAV. The Distributor (as defined herein) does not maintain a
secondary market in the Shares. Investors purchasing and selling shares in the
secondary market may not experience investment results consistent with those
experienced by those APs creating and redeeming directly with a
Fund.
Decisions
by market makers or APs to reduce their role or “step away” from these
activities in times of market stress could inhibit the effectiveness of the
arbitrage process in maintaining the relationship between the underlying value
of a Fund’s portfolio
securities
and the Fund’s market price. This reduced effectiveness could result in Fund
Shares trading at a price which differs materially from NAV and also in greater
than normal intraday bid/ask spreads for Fund Shares.
Trading
Issues. Trading
in Shares on an Exchange may be halted due to market conditions or for reasons
that, in the view of the Exchange, make trading in Shares inadvisable. In
addition, trading in Shares on an Exchange is subject to trading halts caused by
extraordinary market volatility pursuant to the relevant Exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of an Exchange
occurs, a shareholder may be unable to purchase or sell shares of a Fund. There
can be no assurance that the requirements of an Exchange necessary to maintain
the listing of a Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
Disruptions to creations and redemptions, the existence of market volatility or
potential lack of an active trading market for Shares (including through a
trading halt), as well as other factors, may result in Shares trading at a
significant premium or discount to NAV or to the intraday value of a Fund’s
holdings. The NAV of the Shares will fluctuate with changes in the market value
of a Fund’s securities holdings. The market price of Shares may fluctuate, in
some cases materially, in accordance with changes in NAV and the intraday value
of a Fund’s holdings, as well as supply and demand on an Exchange. The Adviser
cannot predict whether Shares will trade below, at or above their NAV. Given the
fact that Shares can be created and redeemed by APs in Creation Units, the
Adviser believes that large discounts or premiums to the NAV of Shares should
not be sustained in the long-term. While the creation/redemption feature is
designed to make it likely that Shares normally will trade close to the value of
a Fund’s holdings, market prices are not expected to correlate exactly to a
Fund’s NAV due to timing reasons, supply and demand imbalances and other
factors. The price differences may be due, in large part, to the fact that
supply and demand forces at work in the secondary trading market for Shares may
be closely related to, but not necessarily identical to, the same forces
influencing the prices of the securities of a Fund’s portfolio of investments
trading individually or in the aggregate at any point in time. If a shareholder
purchases Shares at a time when the market price is at a premium to the NAV or
sells Shares at a time when the market price is at a discount to the NAV, the
shareholder may pay significantly more or receive significantly less than the
underlying value of the Shares that were bought or sold or the shareholder may
be unable to sell his or her Shares. Any of these factors, discussed above and
further below, may lead to the Shares trading at a premium or discount to a
Fund’s NAV. In addition, because certain of a Fund’s underlying securities trade
on exchanges that are closed when the an Exchange (i.e.,
the exchange that Shares of the Fund trade on) is open, there are likely to be
deviations between the expected value of an underlying security and the closing
security’s price (i.e.,
the last quote from its closed foreign market) resulting in premiums or
discounts to NAV that may be greater than those experienced by other ETFs. In
addition, the securities held by a Fund may be traded in markets that close at a
different time than an Exchange. Liquidity in those securities may be reduced
after the applicable closing times. Accordingly, during the time when an
Exchange is open but after the applicable market closing, fixing or settlement
times, bid/ask spreads and the resulting premium or discount to the Shares’ NAV
may widen. Additionally, in stressed market conditions, the market for a Fund’s
Shares may become less liquid in response to deteriorating liquidity in the
markets for the Fund’s underlying portfolio holdings. There are various methods
by which investors can purchase and sell Shares. Investors should consult their
financial intermediaries before purchasing or selling Shares of the
Funds.
When
you buy or sell Shares of a Fund through a broker, you will likely incur a
brokerage commission or other charges imposed by brokers. In addition, the
market price of Shares, like the price of any exchange-traded security, includes
a bid/ask spread charged by the market makers or other participants that trade
the particular security. The spread of a Fund’s Shares varies over time based on
a Fund’s trading volume and market liquidity and may increase if a Fund’s
trading volume, the spread of a Fund’s underlying securities, or market
liquidity decrease. In times of severe market disruption, including when trading
of a Fund’s holdings may be halted, the bid/ask spread may increase
significantly. This means that Shares may trade at a discount to a Fund’s NAV,
and the discount is likely to be greatest during significant market
volatility.
Non-Diversified
Risk.
Each Fund is a separate investment portfolio of VanEck ETF Trust (the “Trust”),
which is an open-end investment company registered under the 1940 Act. Each Fund
is classified as a “non-diversified” fund under the 1940 Act. Moreover, each
Fund is subject to the risk that it will be more volatile than a diversified
fund because the Fund may invest 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 a Fund’s NAV and may make the Fund more volatile than more
diversified funds. Certain Funds may be particularly vulnerable to this risk
because their respective Index is comprised of securities of a limited number of
companies.
Concentration
Risk. Each
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to the extent that its respective Index concentrates in a
particular sector or sectors or industry or group of industries. The securities
of many or all of the companies in the same sector or industry may decline in
value due to developments adversely affecting such sector or industry. By
concentrating its assets in a particular sector or sectors or industry or group
of industries, a Fund is subject to the risk that economic, political or other
conditions that have a negative effect on those sectors and/or industries may
negatively impact the Fund to a greater extent than if the Fund’s assets were
invested in a wider variety of sectors or industries.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
Each
Fund may invest in securities not included in its respective Index, money market
instruments, including repurchase agreements or other funds which invest
exclusively in money market instruments, convertible securities, structured
notes (notes on which the amount of principal repayment and interest payments
are based on the movement of one or more specified factors, such as the movement
of a particular stock or stock index) and/or certain derivatives, which the
Adviser believes will help a Fund track its Index. Depositary receipts not
included in a Fund’s Index may be used by a Fund in seeking performance that
corresponds to its respective Index and in managing cash flows, and may count
towards compliance with the Fund’s 80% policy. Each Fund may also invest, to the
extent permitted by the 1940 Act, in other affiliated and unaffiliated funds,
such as open-end or closed-end management investment companies, including other
ETFs. None of the Funds employs a temporary defensive strategy to protect
against potential stock market declines.
BORROWING
MONEY
Each
Fund may borrow money from a bank up to a limit of one-third of the market value
of its assets. Each Fund has entered or intends to enter into a credit facility
to borrow money for temporary, emergency or other purposes, including the
funding of shareholder redemption requests, trade settlements and as necessary
to distribute to shareholders any income required to maintain such Fund’s status
as a regulated investment company. To the extent that a Fund borrows money, it
may be leveraged; at such times, the Fund will appreciate or depreciate in value
more rapidly than its Index. Leverage generally has the effect of increasing the
amount of loss or gain a Fund might realize, and may increase volatility in the
value of a Fund’s investments.
LENDING
PORTFOLIO SECURITIES
Each
Fund may lend its portfolio securities to brokers, dealers and other financial
institutions desiring to borrow securities to complete transactions and for
other purposes. In connection with such loans, a Fund receives cash, U.S.
government securities and stand-by letters of credit not issued by the Funds’
bank lending agent equal to at least 102% of the value of the portfolio
securities being loaned. This collateral is marked-to-market on a daily basis.
Although a Fund will receive collateral in connection with all loans of its
securities holdings, the Fund would be exposed to a risk of loss should a
borrower fail to return the borrowed securities (e.g.,
the Fund would have to buy replacement securities and the loaned securities may
have appreciated beyond the value of the collateral held by the Fund) or become
insolvent. A Fund may pay fees to the party arranging the loan of securities. In
addition, a Fund will bear the risk that it may lose money because the borrower
of the loaned securities fails to return the securities in a timely manner or at
all. A Fund could also lose money in the event of a decline in the value of any
cash collateral or in the value of the investments made with the cash
collateral. These events could trigger adverse tax consequences for a Fund.
Substitute payments for dividends received by a Fund for securities loaned out
by the Fund will not be considered qualified dividend income.
ADDITIONAL
NON-PRINCIPAL RISKS
Risk
of Investing in Derivatives. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. A Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if a Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and a Fund could lose more than the amount
it invests. The use of derivatives may increase the amount and affect the timing
and character of taxes payable by shareholders of a Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of a Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, a Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it is contractually
entitled to receive). A liquid secondary market may not always exist for a
Fund’s derivative positions at any time, and a Fund may not be able to initiate
or liquidate a swap position at an advantageous time or price, which may result
in significant losses.
In
October 2020, the Securities and Exchange Commission (the "SEC") adopted a final
rule related to the use of derivatives, short sales, reverse repurchase
agreements and certain other transactions by registered investment companies
that will rescind and withdraw the guidance of the SEC and its staff regarding
asset segregation and cover transactions. The final rule requires funds to trade
derivatives and other transactions that create future payment or delivery
obligations (except reverse repurchase agreements and similar financing
transactions) subject to a value-at-risk (“VaR”) leverage limit, certain
derivatives risk management program and reporting requirements. Generally, these
requirements apply unless a fund qualifies as a “limited derivatives user,” as
defined in the final rule. Under the final rule, when a fund trades reverse
repurchase agreements or similar financing transactions, including certain
tender option bonds, it needs to aggregate the amount of indebtedness associated
with the reverse repurchase agreements or similar financing transactions with
the aggregate amount of any other senior securities representing indebtedness
when
calculating the fund’s asset coverage ratio or treat all such transactions as
derivatives transactions. Reverse repurchase agreements or similar financing
transactions aggregated with other indebtedness do not need to be included in
the calculation of whether a fund is a limited derivatives user, but for funds
subject to the VaR testing, reverse repurchase agreements and similar financing
transactions must be included for purposes of such testing whether treated as
derivatives transactions or not. The SEC also provided guidance in connection
with the new rule regarding use of securities lending collateral that may limit
a fund's securities lending activities. Compliance with these new requirements
will be required after an eighteen-month transition period.
Leverage
Risk. To
the extent that a Fund borrows money or utilizes certain derivatives, it may be
leveraged. Leveraging generally exaggerates the effect on NAV of any increase or
decrease in the market value of the Fund’s portfolio securities. To manage the
risk associated with leveraging, the Fund may segregate liquid assets, or
otherwise “cover” its derivatives position in a manner consistent with the 1940
Act and the rules and SEC interpretations thereunder. The Fund may modify its
asset segregation policies at any time to comply with any changes in the SEC’s
positions regarding asset segregation.
Shareholder
Risk.
Certain shareholders, including other funds advised by the Adviser, may from
time to time own a substantial amount of the Funds’ Shares. In addition, a third
party investor, the Adviser or an affiliate of the Adviser, an AP, a market
maker, or another entity may invest in a Fund and hold its investment for a
limited period of time. There can be no assurance that any large shareholder
would not redeem its investment. Redemptions by shareholders could have a
negative impact on a Fund. In addition, transactions by large shareholders may
account for a large percentage of the trading volume on an Exchange and may,
therefore, have a material effect on the market price of the
Shares.
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TAX
ADVANTAGED PRODUCT STRUCTURE |
Unlike
many conventional mutual funds which are only bought and sold at closing NAVs,
the Shares of the Funds have been designed to be tradable in a secondary market
on an intra-day basis and to be created and redeemed principally in-kind, except
VanEck Gaming ETF and VanEck Video Gaming and eSports ETF, whose Shares are
created and redeemed partially for cash, in Creation Units at each day’s market
close. These in-kind arrangements are designed to mitigate the adverse effects
on a Fund’s portfolio that could arise from frequent cash purchase and
redemption transactions that affect the NAV of the Fund. Moreover, in contrast
to conventional mutual funds, where frequent redemptions can have an adverse tax
impact on taxable shareholders because of the need to sell portfolio securities
which, in turn, may generate taxable gain, the in-kind redemption mechanism of
certain Funds, to the extent used, generally is not expected to lead to a tax
event for shareholders whose Shares are not being redeemed.
A
description of each Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio securities is available in the Funds’
SAI.
Board
of Trustees.
The Board of Trustees of the Trust has responsibility for the general oversight
of the management of the Funds, including general supervision of the Adviser and
other service providers, but is not involved in the day-to-day management of the
Trust. A list of the Trustees and the Trust officers, and their present
positions and principal occupations, is provided in the Funds’ SAI.
Investment
Adviser.
Under the terms of an investment management agreement between the Trust and Van
Eck Associates Corporation with respect to each Fund (the “Investment Management
Agreement”), Van Eck Associates Corporation serves as the adviser to each Fund
and, subject to the supervision of the Board of Trustees, is responsible for the
day-to-day investment management of the Funds. As of December 31, 2021, the
Adviser managed approximately $81.73 billion in assets. The Adviser has been an
investment adviser since 1955 and also acts as adviser or sub-adviser to mutual
funds, other ETFs, other pooled investment vehicles and separate accounts. The
Adviser’s principal business address is 666 Third Avenue, 9th Floor, New York,
New York 10017. A discussion regarding the Board of Trustees’ approval of the
Investment Management Agreement is available in the Trust’s annual report for
the period ended September 30, 2021.
For
the services provided to each of VanEck Environmental Services ETF, VanEck
Gaming ETF, and VanEck Video Gaming and eSports ETF under the Investment
Management Agreement, each Fund pays the Adviser monthly fees based on a
percentage of each Fund’s average daily net assets at the annual rate of 0.50%
(with respect to VanEck Environmental Services ETF, VanEck Gaming ETF and VanEck
Video Gaming and eSports ETF). From time to time, the Adviser may waive all or a
portion of its fee. Until at least February 1, 2023, the Adviser has agreed
to waive fees and/or pay Fund expenses to the extent necessary to prevent the
operating expenses of each Fund (excluding acquired fund fees and expenses,
interest expense, trading expenses, taxes and extraordinary expenses) from
exceeding 0.55% (with respect to VanEck Environmental Services ETF and VanEck
Video Gaming and eSports ETF) and 0.65% (with respect to VanEck Gaming ETF) of
its average daily net assets per year.
Each
of VanEck Environmental Services ETF, VanEck Gaming ETF, and VanEck Video Gaming
and eSports ETF is responsible for all of its expenses, including the investment
advisory fees, costs of transfer agency, custody, legal, audit and other
services, interest, taxes, any distribution fees or expenses, offering fees or
expenses and extraordinary expenses.
Pursuant
to the Investment Management Agreement, the Adviser is responsible for all
expenses of the VanEck Biotech ETF, VanEck Pharmaceutical ETF, VanEck Retail
ETF, VanEck Semiconductor ETF and VanEck Digital Transformation ETF including
the costs of transfer agency, custody, fund administration, legal, audit and
other services, except for the fee payment under the Investment Management
Agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. For its services to the
VanEck Biotech ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF and VanEck
Semiconductor ETF, each Fund has agreed to pay the Adviser an annual unitary
management fee equal to 0.35% of its average daily net assets. For its services
to the VanEck Digital Transformation ETF, the Fund has agreed to pay the Adviser
an annual unitary management fee equal to 0.50% of its average daily net assets.
Offering costs excluded from the annual unitary management fee are: (a) legal
fees pertaining to a Fund’s Shares offered for sale; (b) SEC and state
registration fees; and (c) initial fees paid for Shares of a Fund to be listed
on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay all
such offering costs until at least February 1, 2023 with respect to each of
VanEck Biotech ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF, VanEck
Semiconductor ETF and VanEck Digital Transformation ETF.
Prior
to October 1, 2021, for the services provided to each of VanEck Biotech ETF,
VanEck Pharmaceutical ETF, VanEck Retail ETF and VanEck Semiconductor ETF under
the Investment Management Agreement, each Fund paid the Adviser monthly fees
based on a percentage of each Fund’s average daily net assets at the annual rate
of 0.35%.
Manager
of Managers Structure.
With respect to VanEck Video Gaming and eSports ETF, the Adviser and the Trust
may rely on an exemptive order (the “Order”) from the SEC that permits the
Adviser to enter into investment sub-advisory agreements with unaffiliated
sub-advisers without obtaining shareholder approval. The Adviser, subject to the
review and approval of the Board of Trustees, may select one or more
sub-advisers for the Fund and supervise, monitor and evaluate the performance of
each sub-adviser.
The
Order also permits the Adviser, subject to the approval of the Board of
Trustees, to replace sub-advisers and amend investment sub-advisory agreements,
including applicable fee arrangements, without shareholder approval whenever the
Adviser and the Board of Trustees believe such action will benefit the Fund and
its shareholders. The Adviser thus would have the responsibility (subject to the
oversight of the Board of Trustees) to recommend the hiring and replacement of
sub-advisers as well as the discretion to terminate any sub-adviser and
reallocate the Fund’s assets for management among any other sub-adviser(s) and
itself. This means that the Adviser would be able to reduce the sub-advisory
fees and retain a larger portion of the
management
fee, or increase the sub-advisory fees and retain a smaller portion of the
management fee. The Adviser would compensate each sub-adviser out of its
management fee.
Administrator,
Custodian and Transfer Agent. Van
Eck Associates Corporation is the administrator for the Funds (the
“Administrator”), and State Street Bank and Trust Company is the custodian of
each Fund’s assets and provides transfer agency and fund accounting services to
the Funds. The Administrator is responsible for certain clerical, recordkeeping
and/or bookkeeping services which are required to be provided pursuant to the
Investment Management Agreement.
Distributor.
Van Eck Securities Corporation is the distributor of the Shares (the
"Distributor"). The Distributor will not distribute Shares in less than a
specified number of Shares, each called a "Creation Unit," and does not maintain
a secondary market in the Shares. The Shares are traded in the secondary market.
The
portfolio managers who currently share joint responsibility for the day-to-day
management of each Fund’s portfolio are Peter H. Liao, CFA and Guo Hua (Jason)
Jin. Mr. Liao has been employed by the Adviser as an analyst since the summer of
2004 and has been a portfolio manager since 2006. Mr. Liao graduated from New
York University in 2004 with a Bachelor of Arts in Economics and Mathematics.
Mr. Jin has been employed by the Adviser as an analyst since January 2007 and
has been a portfolio manager since 2018. Mr. Jin graduated from the State
University of New York at Buffalo in 2004 with a Bachelor of Science degree in
Business Administration with a concentration in Financial Analysis. Messrs. Liao
and Jin also serve as portfolio managers for certain other investment companies
and pooled investment vehicles advised by the Adviser. See the Funds’ SAI for
additional information about the portfolio managers’ compensation, other
accounts managed by the portfolio managers and their respective ownership of
Shares.
DETERMINATION
OF NAV
The
NAV per Share for each Fund is computed by dividing the value of the net assets
of the Fund (i.e.,
the value of its total assets less total liabilities) by the total number of
Shares outstanding. Expenses and fees, including the management fee, are accrued
daily and taken into account for purposes of determining NAV. The NAV of each
Fund is determined each business day as of the close of trading (ordinarily 4:00
p.m., Eastern time) on the New York Stock Exchange.
The
values of each Fund’s portfolio securities are based on the securities’ closing
prices on the markets on which the securities trade, when available. Due to the
time differences between the United States and certain countries in which
certain Funds invest, securities on these exchanges may not trade at times when
Shares of the Fund will trade. In the absence of a last reported sales price, or
if no sales were reported, and for other assets for which market quotes are not
readily available, values may be based on quotes obtained from a quotation
reporting system, established market makers or by an outside independent pricing
service. Debt instruments with remaining maturities of more than 60 days are
valued at the evaluated mean price provided by an outside independent pricing
service. If an outside independent pricing service is unable to provide a
valuation, the instrument is valued at the mean of the highest bid and the
lowest asked quotes obtained from one or more brokers or dealers selected by the
Adviser. Prices obtained by an outside independent pricing service may use
information provided by market makers or estimates of market values obtained
from yield data related to investments or securities with similar
characteristics and may use a computerized grid matrix of securities and its
evaluations in determining what it believes is the fair value of the portfolio
securities. Short-term debt instruments having a maturity of 60 days or less are
valued at amortized cost. Any assets or liabilities denominated in currencies
other than the U.S. dollar are converted into U.S. dollars at the current market
rates on the date of valuation as quoted by one or more sources. If a market
quotation for a security or other asset is not readily available or the Adviser
believes it does not otherwise accurately reflect the market value of the
security or asset at the time a Fund calculates its NAV, the security or asset
will be fair valued by the Adviser in accordance with the Trust’s valuation
policies and procedures approved by the Board of Trustees. Each Fund may also
use fair value pricing in a variety of circumstances, including but not limited
to, situations when the value of a security in the Fund’s portfolio has been
materially affected by events occurring after the close of the market on which
the security is principally traded (such as a corporate action or other news
that may materially affect the price of a security) or trading in a security has
been suspended or halted. In addition, each Fund that holds foreign equity
securities currently expects that it will fair value certain of the foreign
equity securities held by the Fund each day the Fund calculates its NAV, except
those securities principally traded on exchanges that close at the same time the
Fund calculates its NAV.
Accordingly,
a Fund’s NAV may reflect certain portfolio securities’ fair values rather than
their market prices at the time the exchanges on which they principally trade
close. Fair value pricing involves subjective judgments and it is possible that
a fair value determination for a security or other asset is materially different
than the value that could be realized upon the sale of such security or asset.
In addition, fair value pricing could result in a difference between the prices
used to calculate a Fund’s NAV and the prices used by such Fund’s respective
Index. This may adversely affect a Fund’s ability to track its Index. With
respect to securities that are principally traded on foreign exchanges, the
value of a Fund’s portfolio securities may change on days when you will not be
able to purchase or sell your Shares.
INTRADAY
VALUE
The
trading prices of the Funds’ Shares in the secondary market generally differ
from the Funds’ daily NAV and are affected by market forces such as the supply
of and demand for Fund Shares and underlying securities held by each Fund,
economic conditions and other factors. Information regarding the intraday value
of the Funds’ Shares (“IIV”) may be disseminated throughout each trading day by
an Exchange or by market data vendors or other information providers. The IIV is
based on the current market value of the securities and/or cash required to be
deposited in exchange for a Creation Unit. The IIV does not necessarily reflect
the precise composition of the current portfolio of securities held by each Fund
at a particular point in time or the best possible valuation of the current
portfolio. Therefore, the IIV should not be viewed as a “real-time” update of
the Funds’ NAV, which is computed only once a day. The IIV is generally
determined by using current market quotations and/or price quotations obtained
from broker-dealers and other market intermediaries that may trade in the
portfolio securities held by each Fund and valuations
based
on current market rates. The quotations and/or valuations of certain Fund
holdings may not be updated during U.S. trading hours if such holdings do not
trade in the United States. Each Fund is not involved in, or responsible for,
the calculation or dissemination of the IIV and makes no warranty as to its
accuracy.
RULE
144A AND OTHER UNREGISTERED SECURITIES
An
AP (i.e., a person eligible to place orders with the Distributor to create or
redeem Creation Units of a Fund) that is not a “qualified institutional buyer,”
as such term is defined under Rule 144A of the Securities Act of 1933, as
amended (the “Securities Act”), will not be able to receive, as part of a
redemption, restricted securities eligible for resale under Rule 144A or other
unregistered securities.
BUYING
AND SELLING EXCHANGE-TRADED SHARES
The
Shares of the Funds are listed on an Exchange. If you buy or sell Shares in the
secondary market, you will incur customary brokerage commissions and charges and
may pay some or all of the “spread,” which is any difference between the bid
price and the ask price. The spread varies over time for a Fund’s Shares based
on the Fund’s trading volume and market liquidity, and is generally lower if the
Funds have high trading volume and market liquidity, and generally higher if the
Funds have little trading volume and market liquidity (which is often the case
for funds that are newly launched or small in size). In times of severe market
disruption or low trading volume in a Fund’s Shares, this spread can increase
significantly. It is anticipated that the Shares will trade in the secondary
market at prices that may differ to varying degrees from the NAV of the Shares.
During periods of disruptions to creations and redemptions or the existence of
extreme market volatility, the market prices of Shares are more likely to differ
significantly from the Shares’ NAV.
The
Depository Trust Company (“DTC”) serves as securities depository for the Shares.
(The Shares may be held only in book- entry form; stock certificates will not be
issued.) DTC, or its nominee, is the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on the records
of DTC or its participants (described below). Beneficial owners of Shares are
not entitled to have Shares registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and are
not considered the registered holder thereof. Accordingly, to exercise any
rights of a holder of Shares, each beneficial owner must rely on the procedures
of: (i) DTC; (ii) “DTC Participants,” i.e., securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations,
some of whom (and/or their representatives) own DTC; and (iii) “Indirect
Participants,” i.e., brokers, dealers, banks and trust companies that clear
through or maintain a custodial relationship with a DTC Participant, either
directly or indirectly, through which such beneficial owner holds its interests.
The Trust understands that under existing industry practice, in the event the
Trust requests any action of holders of Shares, or a beneficial owner desires to
take any action that DTC, as the record owner of all outstanding Shares, is
entitled to take, DTC would authorize the DTC Participants to take such action
and that the DTC Participants would authorize the Indirect Participants and
beneficial owners acting through such DTC Participants to take such action and
would otherwise act upon the instructions of beneficial owners owning through
them. As described above, the Trust recognizes DTC or its nominee as the owner
of all Shares for all purposes. For more information, see the section entitled
“Book Entry Only System” in the Funds’ SAI.
Each
Exchange is open for trading Monday through Friday and is closed on weekends and
the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Because
non-U.S. exchanges may be open on days when a Fund does not price its Shares,
the value of the securities in the Fund’s portfolio may change on days when
shareholders will not be able to purchase or sell a Fund’s Shares.
The
right of redemption by an AP may be suspended or the date of payment postponed
(1) for any period during which the an Exchange is closed (other than customary
weekend and holiday closings); (2) for any period during which trading on the an
Exchange is suspended or restricted; (3) for any period during which an
emergency exists as a result of which disposal of the Shares of a Fund or
determination of its NAV is not reasonably practicable; or (4) in such other
circumstance as is permitted by the SEC.
Market
Timing and Related Matters.
The Funds impose no restrictions on the frequency of purchases and redemptions.
Frequent purchases and redemptions of Fund Shares may attempt to take advantage
of a potential arbitrage opportunity presented by a lag between a change in the
value of a Fund’s portfolio securities after the close of the primary markets
for a Fund’s portfolio securities and the reflection of that change in a Fund’s
NAV (“market timing”). The Board of Trustees considered the nature of each Fund
(i.e., a fund whose shares are expected to trade intraday), that the Adviser
monitors the trading activity of APs for patterns of abusive trading, that the
Funds reserve the right to reject orders that may be disruptive to the
management of or otherwise not in the Funds’ best interests, and that each Fund
may fair value certain of its securities. Given this structure, the Board of
Trustees determined that it is not necessary to impose restrictions on the
frequency of purchases and redemptions for the Funds at the present time.
DISTRIBUTIONS
Net
Investment Income and Capital Gains.
As a shareholder of a Fund, you are entitled to your share of such Fund’s
distributions of net investment income and net realized capital gains on its
investments. Each Fund pays out substantially all of its net earnings to its
shareholders as “distributions.”
Each
Fund typically earns income dividends from stocks and interest from debt
securities. These amounts, net of expenses, are typically passed along to Fund
shareholders as dividends from net investment income. Each Fund realizes capital
gains or losses whenever it sells securities. Net capital gains are distributed
to shareholders as “capital gain distributions.” Distributions from a Fund’s net
investment income, including net short-term capital gains, if any, are taxable
to you as ordinary income. Any long-term capital gains distributions you receive
from a Fund are taxable as long-term capital gains.
Net
investment income, if any, is typically distributed to shareholders quarterly
for VanEck Pharmaceutical ETF. Net investment income, if any, is typically
distributed to shareholders at least annually for all other Funds while net
realized capital gains, if any, are also typically distributed to shareholders
at least annually. Dividends may be declared and paid more frequently to improve
index tracking or to comply with the distribution requirements of the Internal
Revenue Code. In addition, in situations where a Fund acquires investment
securities after the beginning of a dividend period, a Fund may elect to
distribute at least annually amounts representing the full dividend yield net of
expenses on the underlying investment securities, as if the Fund owned the
underlying investment securities for the entire dividend period. If a Fund so
elects, some portion of each distribution may result in a return of capital,
which, for tax purposes, is treated as a return of your investment in Shares.
You will be notified regarding the portion of the distribution which represents
a return of capital.
Distributions
in cash may be reinvested automatically in additional Shares of a Fund only if
the broker through which you purchased Shares makes such option
available.
TAX
INFORMATION
As
with any investment, you should consider how your Fund investment will be taxed.
The tax information in this Prospectus is provided as general information. You
should consult your own tax professional about the tax consequences of an
investment in a Fund, including the possible application of foreign, state and
local taxes. Unless your investment in a Fund is through a tax-exempt entity or
tax-deferred retirement account, such as a 401(k) plan, you need to be aware of
the possible tax consequences when: (i) the Fund makes distributions, (ii) you
sell Shares in the secondary market or (iii) you create or redeem Creation
Units.
Taxes
on Distributions.
As noted above, each Fund expects to distribute net investment income, if any,
at least annually (except for VanEck Pharmaceutical ETF, which expects to
distribute net investment income, if any, at least quarterly), and any net
realized long-term or short-term capital gains, if any, annually. Each Fund may
also pay a special distribution at any time to comply with U.S. federal tax
requirements.
In
general, your distributions are subject to U.S. federal income tax when they are
paid, whether you take them in cash or reinvest them in the Fund. Distributions
of net investment income, including net short-term gains, if any, are generally
taxable as ordinary income. Whether distributions of capital gains represent
long-term or short-term capital gains is determined by how long the Fund owned
the investments that generated them, rather than how long you have owned your
Shares. Distributions of net short-term capital gains in excess of net long–term
capital losses, if any, are generally taxable as ordinary income. Distributions
of net long-term capital gains in excess of net short-term capital losses, if
any, that are properly reported as capital gain dividends are generally taxable
as long-term capital gains. Long-term capital gains of a non-corporate
shareholder are generally taxable at a maximum rate of 15% or 20%, depending on
whether the shareholder’s income exceeds certain threshold amounts.
The
Funds may receive dividends, the distribution of which a Fund may report as
qualified dividends. In the event that a Fund receives such a dividend and
reports the distribution of such dividend as a qualified dividend, the dividend
may be taxed at the maximum capital gains rates of 15% or 20%, provided holding
period and other requirements are met at both the shareholder and the Fund
level. There can be no assurance that any significant portion of a Fund’s
distributions will be eligible for qualified dividend treatment.
Distributions
in excess of a Fund’s current and accumulated earnings and profits are treated
as a tax-free return of your investment to the extent of your basis in the
Shares, and generally as capital gain thereafter. A return of capital, which for
tax purposes is treated as a return of your investment, reduces your basis in
Shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition of Shares. A distribution will reduce a Fund’s NAV per Share and may
be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of
capital.
Dividends,
interest and gains from non-U.S. investments of a Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may, in some cases, reduce or
eliminate such taxes.
If
more than 50% of a Fund’s total assets at the end of its taxable year consist of
foreign securities, the Fund may elect to “pass through” to its investors
certain foreign income taxes paid by the Fund, with the result that each
investor will (i) include in gross income, even though not actually received,
the investor’s pro rata share of the Fund’s foreign income taxes, and (ii)
either deduct (in calculating U.S. taxable income) or credit (in calculating
U.S. federal income), subject to certain holding period and other limitations,
the investor’s pro rata share of the Fund’s foreign income taxes. It is expected
that more than 50% of VanEck Gaming ETF’s and VanEck Video Gaming and eSports
ETF’s assets will consist of securities that are foreign-listed companies and/or
foreign-domiciled companies.
Each
Fund may make investments in companies classified as passive foreign investment
companies ("PFICs") for U.S. federal income tax purposes. Investments in PFICs
are subject to special tax rules which may result in adverse tax consequences to
the Fund and its shareholders. Each Fund generally intends to elect to “mark to
market” these investments at the end of each taxable year. By making this
election, a Fund will recognize as ordinary income any increase in the value of
such shares as of the close of the taxable year over their adjusted basis and as
ordinary loss any decrease in such investment (but only to the extent of prior
income from such investment under the mark to market rules). Gains realized with
respect to a disposition of a PFIC that a Fund has elected to mark to market
will be ordinary income. By making the mark to market election, a Fund may
recognize income in excess of the distributions that it receives from its
investments. Accordingly, a Fund may need to borrow money or dispose of some of
its investments in order to meet its distribution requirements. If a Fund does
not make the mark to market election with respect to an investment in a PFIC,
the Fund could become subject to U.S. federal income tax with respect to certain
distributions from, and gain on the dispositions of, the PFIC which cannot be
avoided by distributing such amounts to the Fund’s shareholders.
Backup
Withholding.
Each Fund may be required to withhold a percentage of your distributions and
proceeds if you have not provided a taxpayer identification number or social
security number or otherwise established a basis for exemption from backup
withholding. The backup withholding rate for individuals is currently 24%. This
is not an additional tax and may be refunded, or credited against your U.S.
federal income tax liability, provided certain required information is furnished
to the Internal Revenue Service.
Taxes
on the Sale or Cash Redemption of Exchange Listed Shares.
Currently, any capital gain or loss realized upon a sale of Shares is generally
treated as long-term capital gain or loss if the Shares have been held for more
than one year and as a short-term capital gain or loss if held for one year or
less. However, any capital loss on a sale of Shares held for six months or less
is treated as long-term capital loss to the extent that capital gain dividends
were paid with respect to such Shares. The ability to deduct capital losses may
be limited. To the extent that a Fund shareholder’s Shares are redeemed for
cash, this is normally treated as a sale for tax purposes.
Taxes
on Creations and Redemptions of Creation Units.
A person who exchanges securities for Creation Units generally will recognize a
gain or loss. The gain or loss will be equal to the difference between the
market value of the Creation Units at the time of exchange and the sum of the
exchanger’s aggregate basis in the securities surrendered and the amount of any
cash paid for such Creation Units. A person who exchanges Creation Units for
securities will generally recognize a gain or loss equal to the difference
between the exchanger’s basis in the Creation Units and the sum of the aggregate
market value of the securities received. The IRS, however, may assert that a
loss realized upon an exchange of primarily securities for Creation Units cannot
be deducted currently under the rules governing “wash sales,” or on the basis
that there has been no significant change in economic position. Persons
exchanging securities for Creation Units or redeeming Creation Units should
consult their own tax adviser with respect to whether wash sale rules apply and
when a loss might be deductible and the tax treatment of any creation or
redemption transaction.
Under
current U.S. federal income tax laws, any capital gain or loss realized upon a
redemption (or creation) of Creation Units held as capital assets is generally
treated as long-term capital gain or loss if the Shares (or securities
surrendered) have been held for more than one year and as a short-term capital
gain or loss if the Shares (or securities surrendered) have been held for one
year or less.
If
you create or redeem Creation Units, you will be sent a confirmation statement
showing how many Shares you created or sold and at what price.
Medicare
Tax. An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
Non-U.S.
Shareholders.
Dividends paid by a Fund to non-U.S. shareholders are generally subject to
withholding tax at a 30% rate or a reduced rate specified by an applicable
income tax treaty to the extent derived from investment income and short-term
capital gains. Dividends paid by a Fund from net tax-exempt income or long-term
capital gains are generally not subject to such withholding tax.
Properly-reported dividends are generally exempt from U.S. federal withholding
tax where they (i) are paid in respect of a Fund’s “qualified net interest
income” (generally, a Fund’s U.S. source interest income, other than certain
contingent interest and interest from obligations of a corporation or
partnership in which a Fund is at least a 10% shareholder, reduced by expenses
that are allocable to such income); or (ii) are paid in respect of a Fund’s
“qualified short-term capital gains” (generally, the excess of a Fund’s net
short-term capital gain over a Fund’s long-term capital loss for such taxable
year). However, depending on its circumstances, a Fund may report all, some or
none of its potentially eligible dividends as such qualified net interest income
or as qualified short-term capital gains and/or treat such dividends, in whole
or in part, as ineligible for this exemption from withholding.
Any
capital gain realized by a Non-U.S. shareholder upon a sale of Shares of a Fund
will generally not be subject to U.S. federal income or withholding tax unless
(i) the gain is effectively connected with the shareholder’s trade or business
in the United States, or in the case of a shareholder who is a nonresident alien
individual, the shareholder is present in the United States for 183 days or
more
during the taxable year and certain other conditions are met or (ii) the Fund is
or has been a U.S. real property holding corporation, as defined below, at any
time within the five-year period preceding the date of disposition of the Fund’s
Shares or, if shorter, within the period during which the Non-U.S. shareholder
has held the Shares. Generally, a corporation is a U.S. real property holding
corporation if the fair market value of its U.S. real property interests, as
defined in the Internal Revenue Code and applicable regulations, equals or
exceeds 50% of the aggregate fair market value of its worldwide real property
interests and its other assets used or held for use in a trade or business. A
Fund may be, or may prior to a Non-U.S. shareholder’s disposition of Shares
become, a U.S. real property holding corporation. If a Fund is or becomes a U.S.
real property holding corporation, so long as the Fund’s Shares are regularly
traded on an established securities market, only a Non-U.S. shareholder who
holds or held (at any time during the shorter of the five year period preceding
the date of disposition or the holder’s holding period) more than 5% (directly
or indirectly as determined under applicable attribution rules of the Internal
Revenue Code) of the Fund’s Shares will be subject to United States federal
income tax on the disposition of Shares.
As
part of the Foreign Account Tax Compliance Act, (“FATCA”), a Fund may be
required to withhold 30% tax on certain types of U.S. sourced income
(e.g.,
dividends, interest, and other types of passive income), paid to (i) foreign
financial institutions (“FFIs”), including non-U.S. investment funds, unless
they agree to collect and disclose to the IRS information regarding their direct
and indirect U.S. account holders and (ii) certain nonfinancial foreign entities
(“NFFEs”), unless they certify certain information regarding their direct and
indirect U.S. owners. To avoid possible withholding, FFIs will need to enter
into agreements with the IRS which state that they will provide the IRS
information, including the names, account numbers and balances, addresses and
taxpayer identification numbers of U.S. account holders and comply with due
diligence procedures with respect to the identification of U.S. accounts as well
as agree to withhold tax on certain types of withholdable payments made to
non-compliant foreign financial institutions or to applicable foreign account
holders who fail to provide the required information to the IRS, or similar
account information and required documentation to a local revenue authority,
should an applicable intergovernmental agreement be implemented. NFFEs will need
to provide certain information regarding each substantial U.S. owner or
certifications of no substantial U.S. ownership, unless certain exceptions
apply, or agree to provide certain information to the IRS.
While
some parts of the FATCA rules have not been finalized, a Fund may be subject to
the FATCA withholding obligation, and also will be required to perform due
diligence reviews to classify foreign entity investors for FATCA purposes.
Investors are required to agree to provide information necessary to allow a Fund
to comply with the FATCA rules. If a Fund is required to withhold amounts from
payments pursuant to FATCA, investors will receive distributions that are
reduced by such withholding amounts.
Non-U.S.
shareholders are advised to consult their tax advisors with respect to the
particular tax consequences to them of an investment in the Funds, including the
possible applicability of the U.S. estate tax.
The
foregoing discussion summarizes some of the consequences under current U.S.
federal income tax law of an investment in a Fund. It is not a substitute for
personal tax advice. Consult your own tax advisor about the potential tax
consequences of an investment in a Fund under all applicable tax laws. Changes
in applicable tax authority could materially affect the conclusions discussed
above and could adversely affect the Funds, and such changes often
occur.
The
Biotech Index, Digital Transformation Index, Gaming Index, Pharmaceutical Index,
Retail Index, Semiconductor Index and eSports Index are published by MV Index
Solutions GmbH (“MVIS”), which is an indirectly wholly owned subsidiary of the
Adviser. The Environmental Services Index is published by ICE Data Indices, LLC
(“ICE Data”).
MVIS
and ICE Data do not sponsor, endorse, or promote the Funds and bear no liability
with respect to the Funds or any security.
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MVIS
US LISTED BIOTECH 25 INDEX |
The
Biotech Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
companies involved in the biotech industry. Biotechnology includes research
(including research contractors), development as well as production, marketing
and sales of drugs based on genetic analysis and diagnostic equipment (excluding
pharmacies).
To
be initially eligible for the Biotech Index, (i) companies must generate at
least 50% of their revenues from biotechnology (as defined above) and (ii)
stocks must have a market capitalization of greater than $150 million as of the
end of the month prior to the month in which a rebalancing date occurs. The
Biotech Index includes common stocks and depositary receipts of U.S.-listed
companies that meet the eligibility requirements described above.
The
Biotech Index is the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the Biotech Index. Solactive AG uses its
best efforts to ensure that the Biotech Index is calculated correctly.
Irrespective of its obligations towards MVIS, Solactive AG has no obligation to
point out errors in the Biotech Index to third parties. VanEck Biotech ETF is
not sponsored, endorsed, sold or promoted by MVIS and MVIS makes no
representation regarding the advisability of investing in the VanEck Biotech
ETF.
The
Biotech Index is reconstituted semi-annually and rebalanced quarterly. MVIS may
delay or change a scheduled rebalancing or reconstitution of the Biotech Index
or the implementation of certain rules at its sole discretion.
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MVIS®
GLOBAL DIGITAL ASSETS EQUITY
INDEX |
The
Index is a rules based, modified capitalization weighted, float adjusted index
intended to give investors a means of tracking the overall performance of the
global digital asset segment. These companies may include those that operate
digital asset exchanges, payment gateways, digital asset mining operations,
software services, equipment and technology or services to the digital asset
operations, digital asset infrastructure businesses, or companies facilitating
commerce with the use of digital assets, among others. They may also include
companies which own a material amount of digital assets, or otherwise generate
revenues related to digital asset projects.
The
Index is composed beginning with a global universe of equity securities from
financial markets that are freely investable for foreign investors and that
provide real-time and historical component and currency pricing. Only companies
with a free-float of at least 10% of outstanding shares are initially eligible
for the Index. Additionally, to be initially eligible for inclusion in the
Index, companies must have a full market capitalization greater than $150
million, a three-month average-daily-trading volume of at least $1 million at
the current review and also at the previous two reviews, and at least 250,000
shares traded per month over the last six months at the current review and also
at the previous two reviews. Companies may also become initially eligible for
inclusion in the Index pursuant to the Index Provider’s ongoing maintenance
rules.
To
be initially eligible for inclusion in the Index, a company must (i) generate at
least 50% of its revenues from digital assets 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 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 Index. Index component weights are based upon free-float market
capitalization and individual components are limited to a maximum of an 8%
weighting in the Index. The Index includes a minimum of 20 Index components and
has an expected range of between 25 to 30 Index components.
The
Index is the exclusive property of MVIS (a wholly owned subsidiary of the
Adviser), which has contracted with Solactive AG to maintain and calculate the
Index. Solactive AG uses its best efforts to ensure that the Index is calculated
correctly. Irrespective of its obligations towards MVIS, Solactive AG has no
obligation to point out errors in the Index to third parties. The Fund is not
sponsored, endorsed, sold or promoted by MVIS and MVIS makes no representation
regarding the advisability of investing in the Fund.
The
Index is reconstituted and rebalanced quarterly.
MVIS
may delay or change a scheduled rebalancing or reconstitution of the Index or
the implementation of certain rules at its sole discretion.
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NYSE
ARCA ENVIRONMENTAL SERVICES
INDEX |
The
Environmental Services Index is a rules based, modified equal dollar weighted
index intended to give investors a means of tracking the overall performance of
the common stocks and depositary receipts of U.S. exchange-listed companies
involved in environmental services. The Environmental Services Index is designed
to measure the 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.
To
be eligible for the Environmental Services Index, stocks must have a minimum
market capitalization of $100 million, trading price over three months of
greater than $3.00, and minimum three-month average daily traded value of $1
million. Components will be removed from the Environmental Services Index during
the quarterly review if the market capitalization falls below $75 million or the
three-month average daily traded value falls below $750,000.
The
Environmental Services Index is weighted based on the market capitalization of
each of the component securities, which are applied in conjunction with the
scheduled quarterly adjustments to the Environmental Services Index: (1) the top
four components, ranked by market capitalization, are equally weighted to
collectively represent 40% of the Environmental Services Index by weight; (2)
the bottom five components, ranked by market capitalization, are equally
weighted to collectively represent 10% of the Environmental Services Index by
weight; and (3) the remaining components are equally weighted to collectively to
represent 50% of the Environmental Services Index by weight.
The
Environmental Services Index is reviewed quarterly so that the Environmental
Services Index components continue to represent the universe of companies
involved in environmental services relating to consumer and industrial waste
management. ICE Data, as the Environmental Services Index Provider, may at any
time change the number of securities comprising the group by adding or deleting
one or more securities, or replacing one more securities contained in the group
with one or more substitute securities of its choice, if in the discretion of
ICE Data such addition, deletion or substitution is necessary or appropriate to
maintain the quality and/or character of the Environmental Services Index. Such
index constituent changes are reviewed by the ICE Data Governance Committee to
ensure that they are made objectively, without bias and in accordance with
applicable law and regulation and ICE Data’s policies and procedures. Changes to
the Environmental Services Index components and/or the component share weights
typically take effect after the close of trading one business day prior to the
last business day of each calendar quarter in connection with the quarterly
index rebalance. ICE Data may delay or change a scheduled rebalancing or
reconstitution of the Environmental Services Index or the implementation of
certain rules at its sole discretion.
The
Gaming Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
companies involved in the casino and gaming industry. Gaming includes casinos
and casino hotels, sports betting (including internet gambling and racetracks)
and lottery services as well as gaming services, gaming technology and gaming
equipment.
To
be initially eligible for the Gaming Index, (i) companies must generate at least
50% of their revenues from gaming (as defined above) and (ii) stocks must have a
market capitalization of greater than $150 million as of the end of the month
prior to the month in which a rebalancing date occurs.
The
Gaming Index includes common stocks and depositary receipts of companies that
meet the eligibility requirements described above. The Gaming Index is the
exclusive property of MVIS, which has contracted with Solactive AG to maintain
and calculate the Gaming Index. Solactive AG uses its best efforts to ensure
that the Gaming Index is calculated correctly. Irrespective of its obligations
towards MVIS, Solactive AG has no obligation to point out errors in the Gaming
Index to third parties. VanEck Gaming ETF is not sponsored, endorsed, sold or
promoted by MVIS and MVIS makes no representation regarding the advisability of
investing in the VanEck Gaming ETF.
The
Gaming Index is reconstituted and rebalanced quarterly. MVIS may delay or change
a scheduled rebalancing or reconstitution of the Gaming Index or the
implementation of certain rules at its sole discretion.
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MVIS
US LISTED PHARMACEUTICAL 25
INDEX |
The
Pharmaceutical Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of companies involved in the pharmaceutical industry.
Pharmaceuticals include companies engaged primarily in research (including
research contractors) and development as well as production, marketing and sales
of pharmaceuticals (excluding pharmacies).
To
be initially eligible for the Pharmaceutical Index, (i) companies must generate
at least 50% of their revenues from pharmaceuticals (as defined above) and (ii)
stocks must have a market capitalization of greater than $150 million as of the
end of the month prior to the month in which a rebalancing date occurs. The
Pharmaceutical Index includes common stocks and depositary receipts of
U.S.-listed companies that meet the eligibility requirements described above.
The
Pharmaceutical Index is the exclusive property of MVIS, which has contracted
with Solactive AG to maintain and calculate the Pharmaceutical Index. Solactive
AG uses its best efforts to ensure that the Pharmaceutical Index is calculated
correctly. Irrespective of its obligations towards MVIS, Solactive AG has no
obligation to point out errors in the Pharmaceutical Index to third parties.
VanEck Pharmaceutical ETF is not sponsored, endorsed, sold or promoted by MVIS
and MVIS makes no representation regarding the advisability of investing in the
VanEck Pharmaceutical ETF.
The
Pharmaceutical Index is reconstituted semi-annually and rebalanced quarterly.
MVIS may delay or change a scheduled rebalancing or reconstitution of the
Pharmaceutical Index or the implementation of certain rules at its sole
discretion.
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MVIS
US LISTED RETAIL 25 INDEX |
The
Retail Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
companies involved in the retail industry. Retail includes companies engaged
primarily in retail distribution; wholesalers; online, direct mail retailers;
multi-line retailers; specialty retailers, such as apparel, automotive, computer
and electronics, drug, home improvement and home furnishing retailers; and food
and other staples retailers.
To
be initially eligible for the Retail Index, (i) companies must generate at least
50% of their revenues from retail (as defined above) and (ii) stocks must have a
market capitalization of greater than $150 million as of the end of the month
prior to the month in which a rebalancing date occurs. The Retail Index includes
common stocks and depositary receipts of U.S.-listed companies that meet the
eligibility requirements described above.
The
Retail Index is the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the Retail Index. Solactive AG uses its
best efforts to ensure that the Retail Index is calculated correctly.
Irrespective of its obligations towards MVIS, Solactive AG has no obligation to
point out errors in the Retail Index to third parties. VanEck Retail ETF is not
sponsored, endorsed, sold or promoted by MVIS and MVIS makes no representation
regarding the advisability of investing in the VanEck Retail ETF.
The
Retail Index is reconstituted semi-annually and rebalanced quarterly. MVIS may
delay or change a scheduled rebalancing or reconstitution of the Retail Index or
the implementation of certain rules at its sole discretion.
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MVIS
US LISTED SEMICONDUCTOR 25
INDEX |
The
Semiconductor Index is a rules based, modified capitalization weighted, float
adjusted index intended to give investors a means of tracking the overall
performance of companies involved in the semiconductor industry. Semiconductors
include companies engaged primarily in the production of semiconductors and
semiconductor equipment.
To
be initially eligible for the Semiconductor Index, (i) companies must generate
at least 50% of their revenues from semiconductors (as defined above) and (ii)
stocks must have a market capitalization of greater than $150 million as of the
end of the month prior to the month in which a rebalancing date occurs. The
Semiconductor Index includes common stocks and depositary receipts of
U.S.-listed companies that meet the eligibility requirements described above.
The
Semiconductor Index is the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the Semiconductor Index. Solactive AG
uses its best efforts to ensure that the Semiconductor Index is calculated
correctly. Irrespective of its obligations towards MVIS, Solactive AG has no
obligation to point out errors in the Semiconductor Index to third parties.
VanEck Semiconductor ETF is not sponsored, endorsed, sold or promoted by MVIS
and MVIS makes no representation regarding the advisability of investing in the
VanEck Semiconductor ETF.
The
Semiconductor Index is reconstituted semi-annually and rebalanced quarterly.
MVIS may delay or change a scheduled rebalancing or reconstitution of the
Semiconductor Index or the implementation of certain rules at its sole
discretion.
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MVIS
GLOBAL VIDEO GAMING & ESPORTS
INDEX |
The
eSports Index is a rules based, modified capitalization weighted, float adjusted
index intended to give investors a means of tracking the overall performance of
companies involved in video gaming and 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.
The
eSports Index begins with a global universe of equity securities from financial
markets that are freely investable for foreign investors and that provide
real-time and historical component and currency pricing. Only companies with a
free-float of at least 10% are initially eligible for the eSports Index.
Additionally, to be initially eligible for inclusion in the eSports Index,
companies must have a full market capitalization greater than $150 million, a
three-month average-daily-trading volume of at least $1 million at the current
review and also at the previous two reviews, and at least 250,000 shares traded
per month over the last six months at the current review and also at the
previous two reviews. To be initially eligible for inclusion in the eSports
Index, a company must generate at least 50% of their revenue from video gaming
and/or eSports. A buffer rule allows current eSports Index constituents to
remain in the eSports Index if the percentage of their revenue derived from
video gaming and/or eSports remains at or above 25%. Index component weights are
based upon free-float market capitalization and individual components are
limited to a maximum of an 8% weighting in the eSports Index.
The
eSports Index is the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the eSports Index. Solactive AG uses its
best efforts to ensure that the eSports Index is calculated correctly.
Irrespective of its obligations towards MVIS, Solactive AG has no obligation to
point out errors in the eSports Index to third parties. The Fund is not
sponsored, endorsed, sold or promoted by MVIS and MVIS makes no representation
regarding the advisability of investing in the Fund.
The
eSports Index is reconstituted and rebalanced quarterly. MVIS may delay or
change a scheduled rebalancing or reconstitution of the eSports Index or the
implementation of certain rules at its sole discretion.
|
|
|
|
LICENSE
AGREEMENTS AND DISCLAIMERS |
The
Adviser has entered into a licensing agreement with MVIS to use each of the
Biotech Index, Digital Transformation Index, Gaming Index, Pharmaceutical Index,
Retail Index, Semiconductor Index and eSports Index (each an "MVIS Index," and
together, the "MVIS Indices"). The Index Provider is a wholly owned subsidiary
of the Adviser. Each of VanEck Biotech ETF, VanEck Digital Transformation ETF,
VanEck Gaming ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF, VanEck
Semiconductor ETF and VanEck Video Gaming and eSports ETF (each an "MVIS Index
ETF," and together, the "MVIS Index ETFs") is entitled to use its Index pursuant
to a sublicensing arrangement with the Adviser.
Shares
of the MVIS Index ETFs are not sponsored, endorsed, sold or promoted by MVIS.
MVIS makes no representation or warranty, express or implied, to the owners of
the Shares of the MVIS Index ETFs or any member of the public regarding the
advisability of investing in securities generally or in the Shares of the MVIS
Index ETFs particularly or the ability of the MVIS Indices to track the
performance of its respective securities markets. Each of the MVIS Indices is
determined and composed by MVIS without regard to the Adviser or the Shares of
the MVIS Index ETFs. MVIS has no obligation to take the needs of the Adviser or
the owners of the Shares of the MVIS Index ETFs into consideration in
determining or composing the respective Index. MVIS is not responsible for and
has not participated in the determination of the timing of, prices at, or
quantities of the Shares of the MVIS Index ETFs to be issued or in the
determination or calculation of the equation by which the Shares of the MVIS
Index ETFs are to be converted into cash. MVIS has no obligation or liability in
connection with the administration, marketing or trading of the Shares of the
MVIS Index ETFs.
The
MVIS Indices are the exclusive property of MVIS, which has contracted with
Solactive AG to maintain and calculate the MVIS Indices. Solactive AG uses its
best efforts to ensure that the MVIS Indices are calculated correctly.
Irrespective of its obligations towards the MVIS, Solactive AG has no obligation
to point out errors in the MVIS Indices to third parties including but not
limited to investors and/or financial intermediaries of the financial
instrument.
Solactive
AG nor does Solactive AG offer any express or implicit guarantee or assurance
either with regard to the results of using the MVIS Indices and/or its trade
mark or its price at any time or in any other respect. The MVIS Indices are
calculated and maintained by Solactive AG. Solactive AG uses its best efforts to
ensure that the MVIS Indices are calculated correctly. Irrespective of its
obligations towards MVIS, Solactive AG has no obligation to point out errors in
the MVIS Indices to third parties including but not limited to investors and/or
financial intermediaries of the MVIS Index ETFs. Neither publication of the MVIS
Indices by Solactive AG nor the licensing of the MVIS Indices or its trade mark
for the purpose of use in connection with the MVIS Index ETFs constitutes a
recommendation by Solactive AG to invest capital in the MVIS Index ETFs nor does
it in any way represent an assurance or opinion of Solactive AG with regard to
any investment in the MVIS Index ETFs. Solactive AG is not responsible for
fulfilling the legal requirements concerning the accuracy and completeness of
the prospectus of the MVIS Index ETFs.
MVIS
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE MVIS INDICES OR
ANY DATA INCLUDED THEREIN AND MVIS SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. MVIS MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE MVIS INDEX
ETFS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE MVIS INDICES, OR MVIS
INDEX ETFS OR ANY DATA INCLUDED THEREIN. MVIS MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE MVIS INDICES OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MVIS
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
The
Adviser has entered into a licensing agreement with ICE Data, to use the
Environmental Services Index. VanEck Environmental Services ETF is entitled to
use the Environmental Services Index pursuant to a sub-licensing arrangement
with the Adviser.
Source
ICE Data, is used with permission. “ICE” is a registered trademark of ICE Data
or its affiliates. “NYSE” and “NYSE Arca” are registered trademarks of NYSE
Group, Inc., and are used by ICE Data with permission and under a license. These
trademarks have been licensed along with the Environmental Services Index for
use by the Adviser in connection with the VanEck Environmental Services ETF (the
“Product”). Neither the Adviser (the “Licensee”), the trust underlying the
Product (the “Trust”) nor the Product, as applicable, is sponsored, endorsed,
sold or promoted by ICE Data, its affiliates or its Third Party Suppliers (“ICE
Data and its Suppliers”). ICE Data and its Suppliers make no representations or
warranties regarding the advisability of investing in securities generally, in
the Product particularly, the Licensee, the Trust or the ability of the
Environmental Services Index to track general stock market performance. ICE
Data’s only relationship to the Licensee is the licensing of certain trademarks
and trade names and the Environmental Services Index or components thereof. The
Environmental Services Index is determined, composed and calculated by ICE Data
without regard to the Licensee or the Product or its holders. ICE Data has no
obligation to take the needs of the Licensee or the holders of the Product into
consideration in determining, composing or calculating the Environmental
Services Index. ICE Data is not responsible for and has not participated in the
determination of the timing of, prices of, or quantities of the Product to be
issued or in the determination or calculation of the equation by which the
Product is to be priced, sold, purchased, or redeemed. Except for certain custom
index calculation services, all information provided by ICE Data is general in
nature and not tailored to the needs of the Licensee or any other person, entity
or group of persons. ICE Data has no obligation or liability in connection with
the administration, marketing, or trading of the Product. ICE Data is not an
investment advisor. Inclusion of a security within an index is not a
recommendation by ICE Data to buy, sell, or hold such security, nor is it
considered to be investment advice.
|
|
|
|
LICENSE
AGREEMENTS AND DISCLAIMERS
(continued) |
ICE
DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS,
EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY
INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE
DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH
RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND
THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR
OWN RISK.
The
S&P 500®
Index included in certain Funds’ performance tables is a product of S&P Dow
Jones Indices LLC and/or its affiliates and has been licensed for use by the
Adviser. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P
Global, Inc., and/or its affiliates. All rights reserved. Redistribution or
reproduction in whole or in part are prohibited without written permission of
S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones
Indices LLC’s indices please visit www.spdji.com. S&P®
is a registered trademark of S&P Global and Dow Jones®
is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P
Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor
their third party licensors make any representation or warranty, express or
implied, as to the ability of any index to accurately represent the asset class
or market sector that it purports to represent and neither S&P Dow Jones
Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third
party licensors shall have any liability for any errors, omissions, or
interruptions of any index or the data included therein.
S&P
DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR
THE COMPLETENESS OF EACH INDEX OR ANY DATA RELATED THERETO, OR ANY COMMUNICATION
INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING
ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL
NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS
THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF EACH INDEX, OR WITH RESPECT TO ANY DATA
RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER
SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF
PROFITS, TRADING LOSSES, LOST TIME, OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY,
OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR
ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE ADVISER, OTHER THAN THE
LICENSORS OF S&P DOW JONES INDICES.
The
financial highlights tables which follow are intended to help you understand the
Funds’ financial performance for the past five years or as indicated. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in a Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Ernst & Young LLP, the
Trust’s independent registered public accounting firm, whose report, along with
the Funds’ financial statements, are included in the Funds’ Annual Report, which
is available upon request.
For
a share outstanding throughout each year:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Biotech
ETF |
|
Year
Ended September 30, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
| Net
asset value, beginning of year |
$ |
162.01 |
|
|
$ |
118.04 |
|
|
$ |
136.11 |
|
|
$ |
134.17 |
|
|
$ |
115.25 |
|
|
| Net
investment income (a) |
0.42 |
|
0.59 |
|
0.39 |
|
0.52 |
|
0.58 |
|
| Net
realized and unrealized gain (loss) on investments |
40.17 |
|
43.85 |
|
(17.91) |
|
2.10 |
(b) |
18.67 |
|
| Total
from investment operations |
40.59 |
|
44.44 |
|
(17.52) |
|
2.62 |
|
19.25 |
|
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
| Net
investment income |
(0.61) |
|
(0.47) |
|
(0.55) |
|
(0.68) |
|
(0.33) |
|
| Net
asset value, end of year |
$ |
201.99 |
|
|
$ |
162.01 |
|
|
$ |
118.04 |
|
|
$ |
136.11 |
|
|
$ |
134.17 |
|
|
| Total
return (c) |
25.13 |
|
% |
37.71 |
|
% |
(12.84) |
|
% |
2.00 |
|
% |
16.77 |
|
% |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
| Gross
expenses |
0.38 |
|
% |
0.39 |
|
% |
0.40 |
|
% |
0.40 |
|
% |
0.39 |
|
% |
| Net
expenses |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
| Net
investment income |
0.23 |
|
% |
0.40 |
|
% |
0.31 |
|
% |
0.41 |
|
% |
0.48 |
|
% |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
| Net
assets, end of year (in millions) |
$590 |
|
|
$485 |
|
|
$318 |
|
|
$476 |
|
|
$717 |
|
|
| Portfolio
turnover rate (d) |
41 |
|
% |
40 |
|
% |
24 |
|
% |
30 |
|
% |
27 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
(a)Calculated
based upon average shares outstanding
(b)The
amount shown does not correspond with the aggregate net gain (loss) on
investments for the period due to the timing of sales and repurchase of shares
in relation to fluctuating market values of the investments of the
Fund.
(c)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(d)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
|
|
|
|
|
| For
a share outstanding throughout each period: |
|
|
|
Digital
Transformation ETF |
|
Period
Ended September 30, 2021 (a) |
| Net
asset value, beginning of period |
$ |
35.25 |
|
|
| Net
investment income (b) |
— |
(c) |
| Net
realized and unrealized loss on investments |
(12.44) |
|
| Total
from investment operations |
(12.44) |
|
| Net
asset value, end of period |
$ |
22.81 |
|
|
| Total
return (d) |
(35.30) |
|
%(e) |
| Ratios
to average net assets |
|
|
| Expenses |
0.58 |
|
%(f) |
| Net
investment income |
0.02 |
|
%(f) |
| Supplemental
data |
|
|
| Net
assets, end of period (in millions) |
$46 |
|
|
| Portfolio
turnover rate (g) |
49 |
|
%(e) |
|
|
|
(a)For
the period April 13, 2021 (commencement of operations) through September 30,
2021.
(b)Calculated
based upon average shares outstanding
(c)Amount
represents less than $0.005 per share.
(d)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(e)Not
Annualized
(f)Annualized
(g)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For
a share outstanding throughout each year: |
|
Environmental
Services ETF |
|
Year
Ended September 30, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
| Net
asset value, beginning of year |
$ |
99.41 |
|
|
$ |
104.25 |
|
|
$ |
96.64 |
|
|
$ |
86.02 |
|
|
$ |
69.68 |
|
|
| Net
investment income (a) |
0.36 |
|
|
0.46 |
|
|
0.46 |
|
|
0.42 |
|
|
0.66 |
|
|
| Net
realized and unrealized gain (loss) on investments |
43.80 |
|
(4.83) |
|
7.47 |
|
10.98 |
|
16.21 |
|
| Total
from investment operations |
44.16 |
|
(4.37) |
|
7.93 |
|
11.40 |
|
16.87 |
|
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
| Net
investment income |
(0.39) |
|
(0.47) |
|
(0.32) |
|
(0.78) |
|
(0.53) |
|
| Net
asset value, end of year |
$ |
143.18 |
|
|
$ |
99.41 |
|
|
$ |
104.25 |
|
|
$ |
96.64 |
|
|
$ |
86.02 |
|
|
| Total
return (b) |
44.50 |
|
% |
(4.23) |
|
% |
8.30 |
|
% |
13.36 |
|
% |
24.31 |
|
% |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
| Gross
expenses |
0.71 |
|
% |
0.85 |
|
% |
0.81 |
|
% |
0.98 |
|
% |
0.95 |
|
% |
| Net
expenses |
0.55 |
|
% |
0.55 |
|
% |
0.55 |
|
% |
0.56 |
|
% |
0.55 |
|
% |
| Net
expenses excluding interest expense |
0.55 |
|
% |
0.55 |
|
% |
0.55 |
|
% |
0.55 |
|
% |
0.55 |
|
% |
| Net
investment income |
0.27 |
|
% |
0.47 |
|
% |
0.47 |
|
% |
0.47 |
|
% |
0.86 |
|
% |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
| Net
assets, end of year (in millions) |
$67 |
|
|
$31 |
|
|
$36 |
|
|
$24 |
|
|
$17 |
|
|
| Portfolio
turnover rate (c) |
21 |
|
% |
38 |
|
% |
20 |
|
% |
24 |
|
% |
20 |
|
% |
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
ETF |
|
Year
Ended September 30, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
| Net
asset value, beginning of year |
$ |
39.14 |
|
|
$ |
36.61 |
|
|
$ |
39.76 |
|
|
$ |
42.61 |
|
|
$ |
36.15 |
|
|
| Net
investment income (a) |
0.16 |
|
|
0.51 |
|
|
1.07 |
|
|
1.03 |
|
|
1.13 |
|
|
| Net
realized and unrealized gain (loss) on investments |
9.24 |
|
3.25 |
|
(3.09) |
|
(2.80) |
|
6.40 |
|
| Total
from investment operations |
9.40 |
|
3.76 |
|
(2.02) |
|
(1.77) |
|
7.53 |
|
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
| Net
investment income |
(0.22) |
|
(1.23) |
|
(1.13) |
|
(1.08) |
|
(1.07) |
|
| Net
asset value, end of year |
$ |
48.32 |
|
|
$ |
39.14 |
|
|
$ |
36.61 |
|
|
$ |
39.76 |
|
|
$ |
42.61 |
|
|
| Total
return (b) |
24.06 |
|
% |
10.03 |
|
% |
(4.73) |
|
% |
(4.51) |
|
% |
21.58 |
|
% |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
| Gross
expenses |
0.62 |
|
% |
0.92 |
|
% |
0.94 |
|
% |
0.86 |
|
% |
0.94 |
|
% |
| Net
expenses |
0.62 |
|
% |
0.65 |
|
% |
0.66 |
|
% |
0.66 |
|
% |
0.65 |
|
% |
| Net
expenses excluding interest expense |
0.62 |
|
% |
0.65 |
|
% |
0.65 |
|
% |
0.65 |
|
% |
0.65 |
|
% |
| Net
investment income |
0.32 |
|
% |
1.41 |
|
% |
2.92 |
|
% |
2.24 |
|
% |
2.97 |
|
% |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
| Net
assets, end of year (in millions) |
$118 |
|
|
$55 |
|
|
$24 |
|
|
$26 |
|
|
$23 |
|
|
| Portfolio
turnover rate (c) |
20 |
|
% |
29 |
|
% |
20 |
|
% |
31 |
|
% |
22 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
FINANCIAL
HIGHLIGHTS (continued) |
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical
ETF |
|
Year
Ended September 30, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
| Net
asset value, beginning of year |
$ |
62.08 |
|
|
$ |
56.93 |
|
|
$ |
64.37 |
|
|
$ |
57.75 |
|
|
$ |
57.44 |
|
|
| Net
investment income (a) |
1.29 |
|
1.06 |
|
|
1.04 |
|
|
1.01 |
|
|
1.18 |
|
| Net
realized and unrealized gain (loss) on investments |
10.46 |
|
|
5.14 |
|
(7.37) |
|
6.62 |
|
0.26 |
|
| Total
from investment operations |
11.75 |
|
6.20 |
|
(6.33) |
|
7.63 |
|
1.44 |
|
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
| Net
investment income |
(1.15) |
|
(1.05) |
|
(1.11) |
|
(1.01) |
|
(1.13) |
|
| Net
asset value, end of year |
$ |
72.68 |
|
|
$ |
62.08 |
|
|
$ |
56.93 |
|
|
$ |
64.37 |
|
|
$ |
57.75 |
|
|
| Total
return (b) |
19.10 |
|
% |
11.02 |
|
% |
(9.88) |
|
% |
13.42 |
|
% |
2.59 |
|
% |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
| Gross
expenses |
0.40 |
|
% |
0.42 |
|
% |
0.43 |
|
% |
0.43 |
|
% |
0.40 |
|
% |
| Net
expenses |
0.35 |
|
% |
0.35 |
|
% |
0.36 |
|
% |
0.36 |
|
% |
0.35 |
|
% |
| Net
expenses excluding interest expense |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
| Net
investment income |
1.85 |
|
% |
1.74 |
|
% |
1.77 |
|
% |
1.70 |
|
% |
2.14 |
|
% |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
| Net
assets, end of year (in millions) |
$319 |
|
|
$235 |
|
|
$142 |
|
|
$276 |
|
|
$285 |
|
|
| Portfolio
turnover rate (c) |
20 |
|
% |
18 |
|
% |
21 |
|
% |
18 |
|
% |
40 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
ETF |
|
Year
Ended September 30, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
| Net
asset value, beginning of year |
$ |
148.87 |
|
|
$ |
114.49 |
|
|
$ |
111.44 |
|
|
$ |
81.42 |
|
|
$ |
78.02 |
|
|
| Net
investment income (a) |
1.54 |
|
1.22 |
|
|
1.31 |
|
|
1.13 |
|
|
1.15 |
|
| Net
realized and unrealized gain on investments |
25.34 |
|
|
34.25 |
|
2.72 |
|
30.32 |
|
3.64 |
|
| Total
from investment operations |
26.88 |
|
35.47 |
|
4.03 |
|
31.45 |
|
4.79 |
|
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
| Net
investment income |
(1.00) |
|
(1.09) |
|
(0.98) |
|
(1.43) |
|
(1.39) |
|
| Net
asset value, end of year |
$ |
174.75 |
|
|
$ |
148.87 |
|
|
$ |
114.49 |
|
|
$ |
111.44 |
|
|
$ |
81.42 |
|
|
| Total
return (b) |
18.13 |
|
% |
31.22 |
|
% |
3.82 |
|
% |
39.01 |
|
% |
6.25 |
|
% |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
| Gross
expenses |
0.42 |
|
% |
0.47 |
|
% |
0.48 |
|
% |
0.52 |
|
% |
0.50 |
|
% |
| Net
expenses |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
| Net
investment income |
0.92 |
|
% |
0.96 |
|
% |
1.25 |
|
% |
1.15 |
|
% |
1.46 |
|
% |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
| Net
assets, end of year (in millions) |
$240 |
|
|
$182 |
|
|
$71 |
|
|
$136 |
|
|
$59 |
|
|
| Portfolio
turnover rate (c) |
12 |
|
% |
12 |
|
% |
9 |
|
% |
16 |
|
% |
17 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Semiconductor
ETF |
|
Year
Ended September 30, |
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
| Net
asset value, beginning of year |
$ |
174.43 |
|
|
$ |
119.14 |
|
|
$ |
106.41 |
|
|
$ |
93.34 |
|
|
$ |
69.36 |
|
|
| Net
investment income (a) |
1.71 |
|
1.88 |
|
|
1.75 |
|
|
1.19 |
|
|
1.10 |
|
| Net
realized and unrealized gain on investments |
81.61 |
|
|
55.53 |
|
12.62 |
|
13.28 |
|
23.46 |
|
| Total
from investment operations |
83.32 |
|
57.41 |
|
14.37 |
|
14.47 |
|
24.56 |
|
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
| Net
investment income |
(1.50) |
|
(2.12) |
|
(1.64) |
|
(1.40) |
|
(0.58) |
|
| Net
asset value, end of year |
$ |
256.25 |
|
|
$ |
174.43 |
|
|
$ |
119.14 |
|
|
$ |
106.41 |
|
|
$ |
93.34 |
|
|
| Total
return (b) |
47.94 |
|
% |
48.60 |
|
% |
14.09 |
|
% |
15.61 |
|
% |
35.63 |
|
% |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
| Gross
expenses |
0.36 |
|
% |
0.37 |
|
% |
0.39 |
|
% |
0.39 |
|
% |
0.38 |
|
% |
| Net
expenses |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
0.35 |
|
% |
| Net
investment income |
0.72 |
|
% |
1.31 |
|
% |
1.68 |
|
% |
1.14 |
|
% |
1.38 |
|
% |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
| Net
assets, end of year (in millions) |
$5,938 |
|
|
$2,646 |
|
|
$1,361 |
|
|
$1,215 |
|
|
$800 |
|
|
| Portfolio
turnover rate (c) |
20 |
|
% |
14 |
|
% |
19 |
|
% |
23 |
|
% |
22 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
(a)Calculated
based upon average shares outstanding
(b)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(c)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
Gaming and eSports ETF |
|
Year
Ended September 30, |
|
Period
Ended September 30, 2019(a) |
|
2021 |
|
|
2020 |
|
|
| Net
asset value, beginning of of period |
$ |
61.36 |
|
|
|
$ |
33.74 |
|
|
|
$ |
30.88 |
|
|
| Net
investment income (b) |
0.04 |
|
|
0.03 |
|
|
|
0.12 |
|
|
| Net
realized and unrealized gain on investments |
3.73 |
|
|
|
27.67 |
|
|
2.75 |
|
| Total
from investment operations |
3.77 |
|
|
27.70 |
|
|
2.87 |
|
| Distributions
from: |
|
|
|
|
|
|
|
|
| Net
investment income |
(0.08) |
|
|
(0.08) |
|
|
(0.01) |
|
| Net
asset value, end of period |
$ |
65.05 |
|
|
|
$ |
61.36 |
|
|
|
$ |
33.74 |
|
|
| Total
return (c) |
6.15 |
|
% |
|
82.25 |
|
% |
|
9.31 |
|
%(d) |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
| Gross
expenses |
0.55 |
|
% |
|
0.58 |
|
% |
|
0.99 |
|
%(e) |
| Net
expenses |
0.55 |
|
% |
|
0.55 |
|
% |
|
0.55 |
|
%(e) |
| Net
investment income |
0.06 |
|
% |
|
0.06 |
|
% |
|
0.38 |
|
%(e) |
| Supplemental
data |
|
|
|
|
|
|
|
|
| Net
assets, end of period (in millions) |
$631 |
|
|
|
$522 |
|
|
|
$39 |
|
|
| Portfolio
turnover rate (f) |
33 |
|
% |
|
25 |
|
% |
|
27 |
|
%(d) |
|
|
|
|
|
|
|
|
|
(a)For
the period October 16, 2018 (commencement of operations) through September 30,
2019.
(b)Calculated
based upon average shares outstanding
(c)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(d)Not
Annualized
(e)Annualized
(f)Portfolio
turnover rate excludes in-kind transactions.
|
|
|
|
PREMIUM/DISCOUNT
INFORMATION |
Information
regarding how often the closing trading price of the Shares of each Fund was
above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund
for the most recently completed calendar year and the most recently completed
calendar quarter(s) since that year (or the life of the Fund, if shorter) can be
found at www.vaneck.com.
CONTINUOUS
OFFERING
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Trust on an ongoing basis, a “distribution,” as such term is used in the
Securities Act, may occur at any point. Broker dealers and other persons are
cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery and liability provisions of the Securities Act.
For
example, a broker dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent Shares, and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker
dealers who are not “underwriters” but are participating in a distribution (as
contrasted to ordinary secondary trading transactions), and thus dealing with
Shares that are part of an “unsold allotment” within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
This is because the prospectus delivery exemption in Section 4(a)3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the 1940 Act. As a result, broker dealer firms should note that
dealers who are not underwriters but are participating in a distribution (as
contrasted with ordinary secondary market transactions) and thus dealing with
the Shares that are part of an overallotment within the meaning of Section
4(a)(3)(A) of the Securities Act would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
Firms that incur a prospectus delivery obligation with respect to Shares are
reminded that, under Rule 153 of the Securities Act, a prospectus delivery
obligation under Section 5(b)(2) of the Securities Act owed to an exchange
member in connection with a sale on an Exchange is satisfied by the fact that
the prospectus is available at an Exchange upon request. The prospectus delivery
mechanism provided in Rule 153 is only available with respect to transactions on
an exchange.
In
addition, certain affiliates of the Funds and the Adviser may purchase and
resell Fund shares pursuant to this Prospectus.
OTHER
INFORMATION
The
Trust was organized as a Delaware statutory trust on March 15, 2001. Its
Declaration of Trust currently permits the Trust to issue an unlimited number of
Shares of beneficial interest. If shareholders are required to vote on any
matters, each Share outstanding would be entitled to one vote. Annual meetings
of shareholders will not be held except as required by the 1940 Act and other
applicable law. See the Funds’ SAI for more information concerning the Trust’s
form of organization. Section 12(d)(1) of the 1940 Act restricts investments by
investment companies in the securities of other investment companies, including
Shares of a Fund. Registered investment companies are permitted to invest in the
Funds beyond the limits set forth in Section 12(d)(1) subject to certain terms
and conditions set forth in SEC regulations, including that such investment
companies enter into an agreement with such Fund.
The
Prospectus, SAI and any other Fund communication do not create any contractual
obligations between the Fund’s shareholders and the Trust, the Fund, the Adviser
and/or the Trustees. Further, shareholders are not intended third-party
beneficiaries of any contracts entered into by (or on behalf of) any Fund,
including contracts with the Adviser or other parties who provide services to
the Fund.
Dechert
LLP serves as counsel to the Trust, including the Funds. Ernst & Young LLP
serves as the Trust’s independent registered public accounting firm and will
audit the Fund’s financial statements annually.
|
|
|
|
GENERAL
INFORMATION (continued) |
ADDITIONAL
INFORMATION
This
Prospectus does not contain all the information included in the Registration
Statement filed with the SEC with respect to the Funds’ Shares. The Funds’
Registration Statement, including this Prospectus, the Funds’ SAI and the
exhibits are available on the EDGAR database at the SEC’s website
(http://www.sec.gov), and copies may be obtained, after paying a duplicating
fee, by electronic request at the following email address: [email protected].
The
SAI for the Funds, which has been filed with the SEC, provides more information
about the Funds. The SAI for the Funds is incorporated herein by reference and
is legally part of this Prospectus. Additional information about the Funds’
investments is available in each Fund’s annual and semi-annual reports to
shareholders. In each Fund’s annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund’s performance during its last fiscal year. The SAI and the Funds’ annual
and semi-annual reports may be obtained without charge by writing to the Funds
at Van Eck Securities Corporation, the Funds’ Distributor, at 666 Third Avenue,
9th Floor, New York, New York 10017 or by calling the Distributor at the
following number: Investor Information: 800.826.2333.
Shareholder
inquiries may be directed to the Funds in writing to 666 Third Avenue, 9th
Floor, New York, New York 10017 or by calling 800.826.2333.
The
Funds’ SAI is available at www.vaneck.com.
(Investment
Company Act file no. 811-10325)
For
more detailed information about the Funds, see the SAI dated February 1, 2022,
as may be supplemented from time to time. Additional information about the
Funds’ investments is or will be available in each Fund’s annual and semi-annual
reports to shareholders. In each Fund’s annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund’s performance during its last fiscal year.
Call
VanEck at 800.826.2333 to request, free of charge, the annual or semi-annual
reports, the SAI, or other information about the Funds or to make shareholder
inquiries. You may also obtain the SAI or a Fund’s annual or semi-annual reports
by visiting the VanEck website at www.vaneck.com.
Reports
and other information about the Funds are available on the EDGAR Database on the
SEC’s internet site at http://www.sec.gov. In addition, copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following email address: [email protected].
|
|
|
|
|
|
|
|
|
Transfer
Agent: State Street Bank and Trust Company
SEC Registration Number:
333-123257
1940 Act Registration Number: 811-10325 |
800.826.2333
vaneck.com |
|
INDUSPRO |
