ck0001137360-20230430
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PROSPECTUS |
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September
1, 2023 |
CEF
Muni Income ETF XMPT
High
Yield Muni ETF HYD
HIP
Sustainable Muni ETF SMI
Intermediate
Muni ETF ITM
Long
Muni ETF MLN
Short
High Yield Muni ETF SHYD
Short
Muni ETF SMB
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Principal
U.S. Listing Exchange for each Fund: Cboe BZX Exchange,
Inc. |
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The
U.S. Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal
offense. |
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800.826.2333 vaneck.com
INVESTMENT
OBJECTIVE
VanEck® CEF Muni Income ETF (the “Fund”) seeks to
replicate as closely as possible, before fees and expenses, the price and yield
performance of the S-Network Municipal Bond Closed-End Fund IndexSM
(the “CEFMX 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 |
0.40 |
% |
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Other
Expenses(a) |
0.01 |
% |
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Acquired
Fund Fees and Expenses(b) |
1.41 |
% |
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Total
Annual Fund Operating Expenses(a) |
1.82 |
% |
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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 September 1,
2024.
(b) “Acquired Fund
Fees and Expenses” reflect the Fund’s pro rata portion of the expenses charged
by the Underlying Funds (as defined herein). These expenses are based on the
total expense ratio disclosed in each Underlying Fund’s most recent shareholder
report. Because Acquired Fund Fees and Expenses are not borne directly by the
Fund, they will not be reflected in the expense information in the Fund’s
financial statements and the information presented in the table will differ from
that presented in the Fund’s financial highlights included in the Fund’s reports
to shareholders.
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 |
$185 |
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| 3 |
$573 |
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| 5 |
$985 |
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| 10 |
$2,137 |
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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 15% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at least 80% of its total assets
in investments the income from which is exempt from U.S. federal income tax
(other than federal alternative minimum tax (“AMT”)). The Fund is a “fund of
funds,” meaning that it invests all or a portion of its assets in other funds
(the “Underlying Funds”). The Fund normally invests at least 80% of its total
assets in securities of issuers that comprise the Fund’s benchmark index. The
CEFMX Index is comprised of shares of U.S.-listed closed-end funds.
The
Underlying Funds invest in municipal bonds issued by states or local governments
or agencies the income of which is exempt from U.S. federal income tax, but a
portion of this income may be subject to the AMT and will generally be subject
to state income taxes. The Fund’s investment policy to invest at least 80% of
its total assets in investments the income from which is exempt from U.S.
federal income tax (other than AMT) requires shareholder approval before it can
be changed. The Fund may count investments that generate income subject to the
AMT toward the 80% investment requirement.
The
Investment Company Act of 1940, as amended (the “Investment Company Act of
1940”), places limits on the percentage of the total outstanding stock of an
Underlying Fund that may be owned by the Fund.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the CEFMX Index by investing in a portfolio of
securities that generally replicates the CEFMX Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the CEFMX Index and does not take temporary defensive
positions that are inconsistent with its investment objective of seeking to
replicate the CEFMX Index.
The
Fund may become “non-diversified” as defined under the Investment Company Act of
1940, solely as a result of a change in relative market capitalization or index
weighting of one or more constituents of the CEFMX Index. This means that the
Fund may invest a greater percentage of its assets in a limited number of
issuers than would be the case if the Fund were always managed as a diversified
management investment company. The Fund intends to be diversified in
approximately the same proportion as the CEFMX Index. Shareholder approval will
not be sought when the Fund crosses from diversified to non-diversified status
due solely to a change in the relative market capitalization or index weighting
of one or more constituents of the CEFMX Index.
The Fund may
concentrate its investments in a particular industry or group of industries to
the extent that the CEFMX Index concentrates in an industry or group of
industries.
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.
Fund of Funds Risk.
The performance of the Fund is dependent on the performance of the underlying
funds. The Fund will be subject to the risks of the underlying funds’
investments. The Fund will pay indirectly a proportional share of the fees and
expenses of the underlying funds in which it invests, including their investment
advisory and administration fees, while continuing to pay its own management
fee. As a result, the Fund’s shareholders will indirectly bear the expenses of
the underlying funds, absorbing duplicative levels of fees.
Risks
of Investing in Closed-End Funds. The
shares of a closed-end fund may trade at a discount or premium to its net asset
value. A closed-end fund may be leveraged as part of its investment strategy.
Investments in Underlying Funds that use leverage indirectly expose the Fund to
the effects of leverage and may cause the value of the Fund’s Shares to be more
volatile than if the Fund invested in Underlying Funds that do not utilize
leverage, diminishing the Fund’s long-term returns. Provisions of the Investment
Company Act of 1940 or regulations thereunder may dictate how the Adviser is
required to vote Underlying Fund Shares (in the same general proportion as
shares held by other shareholders of the Underlying Fund).
Underlying
Funds Risk.
The Fund may be subject to the following risks as a result of its investment in
the Underlying Funds:
Market
Risk.
The prices of the securities in the Underlying 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. An
investment in an Underlying Fund may lose money.
Municipal
Securities Risk.
The Underlying Funds may invest in municipal securities. Municipal securities
are subject to the risk that litigation, legislation or other political events,
local business or economic conditions, credit rating downgrades, or the
bankruptcy of the issuer could have a significant effect on an issuer’s ability
to make payments of principal and/or interest or otherwise affect the value of
such securities. Certain municipalities may have difficulty meeting their
obligations due to, among other reasons, changes in underlying demographics.
Municipal securities can be significantly affected by political changes as well
as uncertainties in the municipal market related to government regulation,
taxation, legislative changes or the rights of municipal security holders.
Because many municipal securities are issued to finance similar projects,
especially those relating to education, health care, transportation, utilities
and water and sewer, conditions in those sectors can affect the overall
municipal market. Municipal securities include general obligation bonds, which
are backed by the “full faith and credit” of the issuer, which has the power to
tax residents to pay bondholders. Timely payments depend on the issuer’s credit
quality, ability to raise tax revenues and ability to maintain an adequate tax
base. General obligation bonds generally are not backed by revenues from a
specific project or source. Municipal securities also include revenue bonds,
which are generally backed by
revenue
from a specific project or tax. The issuer of a revenue bond makes interest and
principal payments from revenues generated from a particular source or facility,
such as a tax on particular property or revenues generated from a municipal
water or sewer utility or an airport. Revenue bonds generally are not backed by
the full faith and credit and general taxing power of the issuer. The market for
municipal bonds may be less liquid than for taxable bonds. There may be less
information available on the financial condition of issuers of municipal
securities than for public corporations. Municipal instruments may be
susceptible to periods of economic stress, which could affect the market values
and marketability of many or all municipal obligations of issuers in a state,
U.S. territory, or possession. For example, the COVID-19 pandemic has
significantly stressed the financial resources of many municipal issuers, which
may impair a municipal issuer’s ability to meet its financial obligations when
due and could adversely impact the value of its bonds, which could negatively
impact the performance of the Fund.
High
Yield Securities Risk.
The Underlying Funds may invest in high yield securities. Securities rated below
investment grade are commonly referred to as high yield securities or “junk
bonds.” High yield securities are often issued by issuers that are
restructuring, are smaller or less creditworthy than other issuers, or are more
highly indebted than other issuers. High yield securities are subject to greater
risk of loss of income and principal than higher rated securities and are
considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual municipal developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for municipal
securities that are high yield securities may be less liquid than the markets
for higher quality municipal securities or high yield securities issued by
corporate issuers and, as such, may have an adverse effect on the market prices
of and an Underlying Fund’s ability to arrive at a fair value for certain
securities. In addition, periods of economic uncertainty and change may result
in an increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund’s net asset value.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s creditworthiness may decline, which may adversely
affect the value of the security. The Underlying Funds may hold securities that
are insured by a bond insurer. A downgrade of the credit rating of such bond
insurer may cause the value of the insured security to decline.
Interest
Rate Risk.
Debt securities, such as bonds, are also subject to interest rate risk. Interest
rate risk refers to fluctuations in the value of a bond resulting from changes
in the general level of interest rates. When the general level of interest rates
goes up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
In addition, in response to the COVID-19 pandemic, as with other serious
economic disruptions, governmental authorities and regulators are enacting
significant fiscal and monetary policy changes, including providing direct
capital infusions into companies, creating new monetary programs and lowering
interest rates. These actions present heightened risks to debt instruments, and
such risks could be even further heightened if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
The Underlying Funds may invest in callable bonds. If interest rates fall, it is
possible that issuers of callable securities will “call” (or prepay) their bonds
before their maturity date. If a call were exercised by the issuer during or
following a period of declining interest rates, the Underlying Fund is likely to
have to replace such called security with a lower yielding security or
securities with greater risks or other less favorable features. If that were to
happen, it would decrease the Underlying Fund’s net investment income, resulting
in a decline in the Fund’s income.
Tax
Risk. There
is no guarantee that the Underlying Fund’s income will be exempt from U.S.
federal or state or local income taxes. Events occurring after the date of
issuance of a municipal bond or after the Underlying Fund’s acquisition of a
municipal bond may result in a determination that interest on that bond is
includible in gross income for U.S. federal income tax purposes retroactively to
its date of issuance. Such a determination may cause a portion of prior
distributions by the Underlying Fund to its shareholders to be taxable to those
shareholders in the year of receipt. Federal or state or local changes in income
or alternative minimum tax rates or in the tax treatment of municipal bonds may
make municipal bonds less attractive as investments and cause them to lose
value.
Liquidity
Risk.
Unlike the Fund, as closed-end funds the Underlying Funds are not limited in
their ability to invest in illiquid securities. Securities with reduced
liquidity involve greater risk than securities with more liquid markets. Prices
of securities not traded on an exchange may vary over time. Secondary trading of
a fixed-income security may decline for a period of time if its credit quality
unexpectedly declines. An Underlying Fund may not receive full value for assets
sold during periods of infrequent trading.
Leverage
Risk. Ordinary
borrowings by an Underlying Fund or an Underlying Fund’s investment in
derivatives may result in leverage. If the prices of those investments decrease,
or if the cost of borrowing exceeds any increase in the prices of investments
made with the proceeds of the borrowing, the net asset value of the Underlying
Fund’s shares will decrease more than if the Underlying Fund had not used
leverage. An Underlying Fund may have to sell investments at a time and at a
price that is unfavorable to the Underlying Fund to repay borrowings. Interest
on borrowings is an expense the Underlying Fund would not otherwise incur.
Leverage magnifies the potential for gain and the risk of loss. If an Underlying
Fund uses leverage, there can be no assurance that the Underlying Fund’s
leverage strategy will be successful.
Anti-Takeover
Measures Risk.
Certain Underlying Funds may have provisions in their organizational documents
intended to limit the ability of third parties to acquire control or change the
composition of the Underlying Fund’s board. This may discourage a third party
from seeking to obtain control of the Underlying Fund, which could limit the
ability of Underlying Fund shareholders to sell their shares at a premium over
prevailing market prices.
Non-Diversified
Risk.
Some of the Underlying Funds may invest a relatively high percentage of their
assets in a smaller number of issuers or may invest a larger proportion of their
assets in the obligations of a single issuer. Moreover, the gains and losses on
an investment in such an Underlying Fund may have a greater impact on the Fund’s
net asset value and may make the value of the Fund’s investment in such an
Underlying Fund more volatile than an investment in more diversified Underlying
Funds.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 or regulations thereunder that limit the amount
that the Fund and its affiliates, in the aggregate, can invest in the
outstanding voting securities of an unaffiliated Underlying Fund. The Fund and
its affiliates may not acquire “control” of an Underlying Fund, which is
presumed once ownership of an Underlying Fund’s outstanding voting securities
exceeds 25%. This limitation could inhibit the Fund’s ability to purchase one or
more Underlying Funds in the Index in the proportions represented in the Index.
In these circumstances, the Fund would be required to use sampling techniques,
which could increase the risk of tracking error.
Illinois Risk. The
Fund may invest a significant portion of its assets in Illinois municipal bonds.
Consequently, the Fund may be affected by negative political, economic,
regulatory or other developments within the State of Illinois including the
financial condition of its public authorities and political subdivisions, to a
greater degree than a fund that invests in a broader base of securities.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Index Tracking Risk.
The Fund’s return may not match the return of the Index for a number of reasons.
For example, the Fund incurs operating expenses, including taxes, not applicable
to the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index or (if applicable) raising cash to meet redemptions or deploying
cash in connection with inflows into the Fund. Transaction costs, including
brokerage costs, may decrease the Fund’s net asset value.
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 Index. Errors in the Index data, the Index computations and/or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index provider, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Index provider’s or others’ errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Index provider’s or others’ errors will be borne by the Fund and its
shareholders. Additionally, when the Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the 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 Index provider or its
agents may carry out additional ad hoc rebalances to the Index. Therefore,
errors and additional ad hoc rebalances carried out by the Index provider or its
agents to the Index may increase the costs to and the tracking error risk of the
Fund.
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 pay expenses or to meet
redemptions. In addition, the Fund may not invest in certain securities included
in the Index, or invest in them in the exact proportions in which they are
represented in the Index. The Fund’s performance may also deviate from the
return of the Index for various reasons, including legal restrictions or
limitations imposed by the governments of certain countries,
certain
exchange listing standards (where applicable), a lack of liquidity in markets in
which such securities trade, potential adverse tax consequences or other
regulatory reasons (such as diversification requirements). To the extent the
Fund utilizes depositary receipts, the purchase of depositary receipts may
negatively affect the Fund’s ability to track the performance of the Index and
increase tracking error, which may be exacerbated if the issuer of the
depositary receipt discontinues issuing new depositary receipts or withdraws
existing depositary receipts.
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 net
asset value based on fair value prices and the value of the Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the 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), repatriation or economic sanctions may also increase
the index tracking risk. The Fund’s performance may also deviate from the
performance of the Index due to the impact of withholding taxes, late
announcements relating to changes to the Index and high turnover of the 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. 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 Index. In light of the
factors discussed above, the Fund’s return may deviate significantly from the
return of the Index. Changes to the composition of the Index in connection with
a rebalancing or reconstitution of the Index may cause the Fund to experience
increased volatility, during which time the Fund’s index tracking risk may be
heightened.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. 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
Authorized Participants 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 net asset value.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk. Unlike
many investment companies, the Fund is not “actively” managed. Therefore, unless
a specific security is removed from its Index, the Fund generally would not sell
a security because the security’s issuer is in financial trouble. If a specific
security is removed from the 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 the Fund involves risks similar to those of investing
in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on market and economic conditions,
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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different
time
than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder may be unable to sell his or her Shares.
Non-Diversification
Risk. The Fund may become classified as “non-diversified” under
the Investment Company Act of 1940 solely as a result of a change in relative
market capitalization or index weighting of one or more constituents of the its
Index. If the Fund becomes non-diversified, it may invest a greater portion of
its assets in securities of a smaller number of individual issuers than a
diversified fund. As a result, changes in the market value of a single
investment could cause greater fluctuations in share price than would occur in a
more diversified fund.
Index-Related
Concentration Risk. The Fund’s assets may be
concentrated in a particular sector or sectors or industry or group of
industries to reflect the Index’s allocation to such 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, the 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 securities.
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
The
year-to-date total return as of
June 30, 2023 was
-0.01%.
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| Best
Quarter: |
10.40% |
1Q 2019 |
| Worst
Quarter: |
-14.00% |
1Q
2022 |
Average Annual
Total Returns for the Periods Ended December 31,
2022
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 CEF
Muni Income ETF
(return before taxes) |
-23.76% |
0.07% |
2.07% |
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| VanEck CEF
Muni Income ETF
(return after taxes on
distributions) |
-23.78% |
0.05% |
2.06% |
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| VanEck CEF
Muni Income ETF
(return after taxes on distributions and sale of Fund
Shares) |
-12.54% |
1.16% |
2.74% |
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S-Network
Municipal Bond Closed-End Fund Index
(reflects no deduction for
fees, expenses or taxes) |
-23.46% |
0.39% |
2.40% |
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ICE
BofA US Broad Market Index
(reflects
no deduction for fees, expenses or taxes) |
-13.16% |
0.03% |
1.07% |
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See “License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are primarily 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 |
July
2011 |
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| Griffin
Driscoll |
Deputy
Portfolio Manager |
August
2023 |
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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® High Yield Muni ETF (the “Fund”) seeks to
replicate as closely as possible, before fees and expenses, the price and yield
performance of the ICE High Yield Crossover Municipal Index (the “High Yield
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 |
0.32 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.32 |
% |
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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 September 1,
2024.
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 |
$33 |
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| 3 |
$103 |
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| 5 |
$180 |
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| 10 |
$406 |
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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 11% 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 benchmark index. The High Yield Index is comprised of publicly
traded municipal bonds that cover the U.S. dollar denominated high yield
long-term tax-exempt bond market with a weight of 70% in non-investment grade
municipal bonds, 25% in triple-B rated investment grade municipal bonds and 5%
in single-A rated investment grade municipal bonds (in accordance with the High
Yield Index provider’s methodology). This 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days'
prior written notice to shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the
investment.
The Fund, using a “passive” or indexing
investment approach, attempts to approximate the investment performance of the
High Yield Index. Unlike many investment companies that try to “beat” the
performance of a benchmark index, the Fund does not try to “beat” the High Yield
Index and does not take temporary defensive positions that are inconsistent with
its investment objective of seeking to replicate the High Yield Index. Because
of the practical difficulties and expense of purchasing all of the securities in
the High Yield Index, the Fund does not purchase all of the securities in the
High Yield Index. Instead, the Adviser utilizes a “sampling” methodology in
seeking to achieve the Fund’s objective. As such, the Fund may purchase a subset
of the bonds in the High Yield Index in an effort to hold a portfolio of bonds
with generally the same risk and return characteristics of the High Yield Index.
The High Yield Index is rebalanced on the last calendar day of the
month.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the High Yield Index concentrates in an industry
or group of industries. As of April 30, 2023, each of the healthcare, industrial
development and special tax (i.e., revenue bonds backed by a special
tax) 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.
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades, or the bankruptcy of the issuer could have a significant effect on
an issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. Certain municipalities may have difficulty
meeting their obligations due to, among other reasons, changes in underlying
demographics. Municipal securities can be significantly affected by political
changes as well as uncertainties in the municipal market related to government
regulation, taxation, legislative changes or the rights of municipal security
holders. Because many municipal securities are issued to finance similar
projects, especially those relating to education, health care, transportation,
utilities and water and sewer, conditions in those sectors can affect the
overall municipal market. Municipal securities include general obligation bonds,
which are backed by the “full faith and credit” of the issuer, which has the
power to tax residents to pay bondholders. Timely payments depend on the
issuer’s credit quality, ability to raise tax revenues and ability to maintain
an adequate tax base. General obligation bonds generally are not backed by
revenues from a specific project or source. Municipal securities also include
revenue bonds, which are generally backed by revenue from a specific project or
tax. Revenue bonds generally are not backed by the full faith and credit and
general taxing power of the issuer. The bond markets may experience reduced
liquidity due to events such as limited trading activity, reductions in bond
inventory, market volatility, and rapid or unexpected changes in interest rates.
Less liquid markets could lead to greater price volatility and limit the Fund's
ability to sell a holding at a suitable price. The market for municipal bonds
may be less liquid than for taxable bonds. There may be less information
available on the financial condition of issuers of municipal securities than for
public corporations. Municipal instruments may be susceptible to periods of
economic stress, which could affect the market values and marketability of
municipal obligations of issuers in a state, U.S. territory, or possession. For
example, the COVID-19 pandemic has significantly stressed the financial
resources of many municipal issuers, which may impair a municipal issuer’s
ability to meet its financial obligations when due and could adversely impact
the value of its bonds, which could negatively impact the performance of the
Fund.
High
Yield Securities Risk.
Securities rated below investment grade are commonly referred to as high yield
securities or “junk bonds.” High yield securities are often issued by issuers
that are restructuring, are smaller or less creditworthy than other issuers, or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities, resulting in increased volatility of their market
prices and a corresponding volatility in the Fund’s net asset value. During an
economic downturn or substantial period of rising interest rates, high yield
security issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet their projected business goals or to obtain additional financing. In the
event of a default, the Fund may incur additional expenses to seek recovery. The
secondary market for high yield securities may be less liquid than the markets
for higher quality securities, and high yield securities issued by non-corporate
issuers may be less liquid than high yield securities issued by corporate
issuers. Illiquidity may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities when it seeks to
do so. In addition, periods of economic uncertainty and change may result in an
increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund's net asset value.
Credit Risk.
Credit risk refers
to the possibility that the issuer or guarantor of a security will be unable
and/or unwilling to honor its payment obligations and/or default completely on
securities. The Fund’s securities are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on
the terms of the securities, which may be reflected in credit ratings. There is
a possibility that the credit rating of a security may be downgraded after
purchase or the perception of an issuer’s creditworthiness may decline, which
may adversely affect the value of the security. Lower credit quality may also
affect liquidity and make it difficult for the Fund to sell the
security.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
Call Risk.
The Fund may invest in callable debt securities. If interest rates fall, issuers
may “call” (or prepay) their debt securities before their maturity date. If the
issuer exercises a call during or following a period of declining interest
rates, the Fund is likely to have to replace the called security with a lower
yielding security or riskier security, decreasing the Fund’s net investment
income. The Fund also may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Private Activity Bonds Risk. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition and performance of private activity bonds. The issuers
of private activity bonds may be negatively impacted by conditions affecting
either the general credit of the user of the private activity project or the
project itself.
Industrial Development Bond Risk.
These
revenue bonds are issued by or on behalf of public authorities to obtain funds
to finance various public and/or privately operated facilities, including those
for business and manufacturing, housing, sports, pollution control, airport,
mass transit, port and parking facilities. These bonds are normally secured only
by the revenues from the project and not by state or local government tax
payments. Consequently, the credit quality of these securities is dependent upon
the ability of the user of the facilities financed by the bonds and any
guarantor to meet its financial obligations. Payment of interest on and
repayment of principal of such bonds are the responsibility of the user and/or
any guarantor. These bonds are subject to a wide variety of risks, many of which
relate to the nature of the specific project. Generally, the value and credit
quality of these bonds are sensitive to the risks related to an economic
slowdown.
Health Care Bond Risk.
The
health care industry is subject to regulatory action by a number of private and
governmental agencies, including federal, state and local governmental agencies.
A major source of revenues for the health care industry is payments from
Medicare and Medicaid programs. As a result, the industry is sensitive to
legislative changes and reductions in governmental spending for such programs.
Numerous other factors may also affect the industry and the value and credit
quality of health care bonds, such as general and local economic conditions,
demand for services, expenses (including malpractice insurance premiums) and
competition among health care providers. The following elements may adversely
affect health care facility operations: the implementation of national and/or
state-specific health insurance exchanges; other national, state or local health
care reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services are
delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; efforts by employers, insurers, and governmental
agencies to reduce the costs of health insurance and health care services; and
increases and decreases in the cost and availability of medical
products.
Special Tax Bond Risk.
Special tax bonds are usually backed and payable through a single tax, or series
of special taxes such as incremental property taxes. The failure of the tax levy
to generate adequate revenue to pay the debt service on the bonds may cause the
value of the bonds to decline. Adverse conditions and developments affecting a
particular project may result in lower revenues to the issuer of the municipal
securities, which may adversely affect the value of the Fund’s
portfolio.
California Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
Illinois Risk.
The Fund may invest a significant portion of its assets in Illinois municipal
bonds. Consequently, the Fund may be affected by negative political, economic,
regulatory or other developments within the State of Illinois including the
financial condition of its public authorities and political subdivisions, to a
greater degree than a fund that invests in a broader base of securities.
New
York Risk.
The Fund may invest a significant portion of its assets in New York municipal
bonds. Consequently, the Fund may be affected by political, economic, regulatory
or other developments within the State of New York, and by the financial
condition of its public authorities and political subdivisions.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other
circumstances,
such events or developments might affect companies world-wide. Overall
securities values could decline generally or underperform other investments.
An investment
may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in its Index. As a result, an adverse
development respecting an issuer of securities held by the Fund could result in
a greater decline in net asset value than would be the case if the Fund held all
of the securities in its Index. Conversely, a positive development relating to
an issuer of securities in the Index that is not held by the Fund could cause
the Fund to underperform the Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Index Tracking Risk. The
Fund’s return may not match the return of the Index for a number of reasons. For
example, the Fund incurs operating expenses, including taxes, not applicable to
the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index or (if applicable) raising cash to meet redemptions or deploying
cash in connection with inflows into the Fund. Transaction costs, including
brokerage costs, may decrease the Fund’s net asset value.
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 Index. Errors in the Index data, the Index computations and/or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index provider, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Index provider’s or others’ errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Index provider’s or others’ errors will be borne by the Fund and its
shareholders. Additionally, when the Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the 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 Index provider or its
agents may carry out additional ad hoc rebalances to the Index. Therefore,
errors and additional ad hoc rebalances carried out by the Index provider or its
agents to the Index may increase the costs to and the tracking error risk of the
Fund.
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 pay expenses or to meet
redemptions. In addition, the Fund may not invest in certain securities included
in the Index, or invest in them in the exact proportions in which they are
represented in the Index. The Fund’s performance may also deviate from the
return of the Index for various reasons, including legal restrictions or
limitations imposed by the governments of certain countries, certain exchange
listing standards (where applicable), a lack of liquidity in markets in which
such securities trade, potential adverse tax consequences or other regulatory
reasons (such as diversification requirements). To the extent the Fund utilizes
depositary receipts, the purchase of depositary receipts may negatively affect
the Fund’s ability to track the performance of the Index and increase tracking
error, which may be exacerbated if the issuer of the depositary receipt
discontinues issuing new depositary receipts or withdraws existing depositary
receipts.
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 net
asset value based on fair value prices and the value of the Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the 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), repatriation or economic sanctions may also increase
the index tracking risk. The Fund’s performance may also deviate from the
performance of the Index due to the impact of withholding taxes, late
announcements relating to changes to the Index and high turnover of the 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. 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 Index. In light of the
factors discussed above, the Fund’s return may deviate significantly from the
return of the Index. Changes to the composition of the 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.
Tax
Risk. There
is no guarantee that the Fund’s income will be exempt from U.S. federal or state
or local income taxes. Events occurring after the date of issuance of a
municipal bond or after the Fund’s acquisition of a municipal bond may result in
a determination that interest on that bond is includible in gross income for
U.S. federal income tax purposes retroactively to its date of issuance. Such a
determination may cause a portion of prior distributions by the Fund to its
shareholders to be taxable to those shareholders in the year of receipt.
Federal, state or local changes in income or alternative minimum tax rates or in
the tax treatment of municipal bonds may make municipal bonds less attractive as
investments and cause them to lose value.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the
business,
or do not process creation and/or redemption orders, there may be a
significantly diminished trading market for Shares or Shares may trade like
closed-end funds at a discount (or premium) to net asset value and possibly face
trading halts and/or de-listing. This can be reflected as a spread between the
bid-ask prices for the Fund. The Authorized Participant concentration risk may
be heightened in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk.
Unlike many investment companies, the Fund is not “actively” managed. Therefore,
unless a specific security is removed from its Index, the Fund generally would
not sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from the 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 the Fund involves risks similar to those of
investing in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on market and economic conditions,
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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder may be unable to sell
his or her Shares.
Index-Related
Concentration Risk. The Fund’s assets may be concentrated in a particular sector
or sectors or industry or group of industries to reflect the Index’s allocation
to such 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, the 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 securities.
PERFORMANCE
The bar chart that follows shows how the
Fund performed for the calendar years shown. The table below the bar chart shows
the Fund’s average annual returns (before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1, 2022, the Fund sought to replicate as
closely as possible, before fees and expenses, the price and yield performance
of the Bloomberg Municipal Custom High Yield Composite Index (the “Prior High
Yield Index”). Therefore, performance information prior to March 1, 2022
reflects the performance of the Fund tracking the Prior High Yield Index. From
March 1, 2022 to November 30, 2022, the Fund tracked the ICE High Yield
Crossover Municipal Bond
Transition
Index and performance from March 1, 2022 to November 30, 2022 reflects the
performance of the Fund tracking the ICE High Yield Crossover Municipal Bond
Transition Index. The Fund began tracking the High Yield Index on December 1,
2022. 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
The
year-to-date total return as of
June 30, 2023 was
2.77%.
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|
|
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| |
| Best
Quarter: |
5.53% |
1Q 2014 |
| Worst
Quarter: |
-7.55% |
1Q
2020 |
Average Annual
Total Returns for the Periods Ended December 31,
2022
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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| |
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| Past
One Year |
Past
Five Years |
Past
Ten Years |
|
|
|
VanEck
High Yield Muni ETF
(return
before taxes)* |
-15.25% |
-0.11% |
1.92% |
|
|
| VanEck High
Yield Muni ETF
(return after taxes on
distributions) |
-15.27% |
-0.13% |
1.90% |
|
|
| VanEck High
Yield Muni ETF
(return after taxes on distributions and sale of Fund
Shares) |
-7.72% |
0.91% |
2.51% |
|
|
|
ICE
Broad High Yield Crossover Municipal Index*
(reflects no deduction for
fees, expenses or taxes) |
-12.27% |
2.40% |
3.86% |
|
|
| ICE BofA US
Broad Market Index
(reflects no deduction for fees, expenses or
taxes) |
-13.16% |
0.03% |
1.07% |
|
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| |
*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior High Yield Index. Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior High Yield Index and index data prior to March 1, 2022
reflects that of the Prior High Yield Index. From March 1, 2022 to November 30,
2022, the Fund tracked the ICE High Yield Crossover Municipal Bond Transition
Index and performance from March 1, 2022 to November 30, 2022 reflects the
performance of the Fund tracking the ICE High Yield Crossover Municipal Bond
Transition Index and index data from March 1, 2022 to November 30, 2022 reflects
that of the ICE High Yield Crossover Municipal Bond Transition Index. From
December 1, 2022, the index data reflects that of the High Yield
Index.
See “License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers. The
following individuals are primarily and jointly responsible for the day-to-day
management of the Fund’s portfolio:
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| |
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| |
|
| Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
| James
T. Colby III |
Portfolio
Manager |
February
2009 |
|
|
| Stephanie
Wang |
Deputy
Portfolio Manager |
December
2022 |
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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
The
investment objective of VanEck®
HIP
Sustainable Muni ETF (the “Fund”) is to seek
current income generally exempt from federal income tax (other than federal
alternative minimum tax (“AMT”)).
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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| |
|
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| |
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| Management
Fee |
0.24 |
% |
|
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|
Other
Expenses(a) |
0.00 |
% |
|
|
|
Total
Annual Fund Operating Expenses(a) |
0.24 |
% |
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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 September 1,
2024.
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 |
$25 |
|
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| 3 |
$77 |
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| 5 |
$135 |
|
|
| 10 |
$306 |
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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 14% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The Fund normally invests at least 80% of its total
assets in investments the income from which is exempt from U.S. federal income
tax (other than AMT). The Fund is an actively managed exchange-traded fund
(“ETF”) that seeks to achieve its investment objective by investing, under
normal circumstances, in investment grade municipal debt securities that fund
issuers with operations or projects helping to promote progress towards
sustainable development, in alignment with the goals and metrics defined by the
United Nations Sustainable Development Goals (“SDGs”) 9, 11 and 12. The SDGs
were adopted by the United Nations General Assembly to achieve sustainable
development for all, and the specific goals of SDGs 9, 11 and 12 are as follows:
SDG 9 is to “build resilient infrastructure, promote inclusive and sustainable
industrialization and foster innovation,” SDG 11 is to “make cities and human
settlements inclusive, safe, resilient and sustainable” and SDG 12 is to “ensure
sustainable consumption and production patterns.” The Fund normally invests at
least 80% of its total assets in securities that support sustainable
development. The Adviser determines which operations or projects of issuers it
believes to be supportive of sustainable
development
and that promote beneficial environmental and social outcomes in U.S.
communities and cities by utilizing the rules-based investment approach
described below. The Fund's policy to normally invest at least 80% of its total
assets in securities that support sustainable development is non-fundamental and
may be changed without shareholder approval upon 60 days' prior written notice
to shareholders.
The
Adviser primarily uses a rules-based investment approach which utilizes
proprietary HIP (Human Impact + Profit) Ratings data for the application of
impact criteria to security selection and portfolio management. HIP Ratings are
produced and licensed from HIP Investor, Inc. (“HIP” or the “Data Provider”),
which provides services
to
evaluate, rate and rank issuers and their securities based on data-driven,
quantitative performance measures that demonstrate positive social,
environmental and economic outcomes or mission accomplishment. The Adviser’s
investment process begins by using HIP Ratings to screen municipal securities
based on their SDGs 9, 11 and 12 ratings by HIP, Environmental, Social and
Governance (“ESG”) ratings by HIP
and
Climate-Threat and Resilience ratings by HIP. HIP Ratings are only assigned to
the municipal securities of issuers where at least one qualified opportunity
zone is located in the issuer’s region. An “opportunity zone” is an
economically-distressed community where new investments, under certain
conditions, may be eligible for preferential tax treatment based on
certification from the Internal Revenue Service. HIP, as the Data Provider,
analyzes multiple data points of municipal securities to determine an estimate
of
the
impact (i.e.,
net benefit to the community) each municipal security provides. The HIP Ratings
used by the Adviser seek to evaluate the impact of municipal securities with
respect to the goals and metrics defined by SDGs 9, 11 and 12, climate
resilience, and overall net benefit to people, planet, and prosperity. These HIP
Ratings are used by the Adviser to narrow the universe of eligible Fund
investments to municipal securities that, based on the HIP Ratings, the Adviser
believes have been issued to fund operations or projects that support or advance
sustainable development, as well as promote positive social and environmental
outcomes. Such municipal debt securities may include, but are not limited
to, bonds issued in connection with (i) new or revitalized infrastructure
(i.e.,
roads, bridges, tunnels, buildings, transportation of people and freight,
affordable and safe housing and redevelopment of urban areas (e.g.,
green spaces), school or campus upgrades and Leadership in Energy and
Environmental Design (“LEED”) qualified real estate); (ii) information and
education systems (i.e.,
schools, research, financial services, communication services and technologies
and information services); (iii) healthier communities (i.e.,
hospitals, food and nutrition infrastructure, waste systems, air quality and
environmental management systems); (iv) cleaner energy (i.e.,
utilities, resource and material use); (v) inclusive and sustainable
industrialization towards increased gross domestic product (“GDP”); (vi) action
and resilience planning and projects to mitigate the effects of climate change
and other natural disasters and hazards; and (vii) ensuring sustainable
consumption and production patterns. The Adviser is not required to invest in
any issuer rated by the Data Provider and the Data Provider is not acting as a
sub-adviser to the Fund.
Municipal
securities that the Fund may invest in include securities issued by U.S. states
and municipal governments, any of their political subdivisions, agencies, or
instrumentalities, or by U.S. territories and possessions, such as Guam, the
U.S. Virgin Islands, and Puerto Rico, and their political subdivisions and
public corporations. The Fund may invest a significant portion of its assets in
municipal obligations of issuers located in the States of California and New
York. The Fund does not expect to invest in non-investment grade (or “junk”)
securities. The Fund may invest in debt securities of any maturity or duration
and does not have a target maturity or duration. “Duration” is a measure of a
debt security’s price sensitivity to changes in interest rates. The longer the
duration of a debt security, the more sensitive its market price is to changes
in interest rates. The Fund seeks to reduce its exposure to credit risk by
diversifying its assets among many municipal issuers and among the different
types and maturities of municipal securities available.
The
Fund’s investment policy to invest at least 80% of its total assets in
investments the income from which is exempt from U.S. federal income tax (other
than AMT) may not be changed without shareholder approval. The Fund may count
investments that generate income subject to the AMT toward its 80% investment
policy. For purposes of this policy, the term “assets” means net assets plus the
amount of any borrowings for investment purposes. This percentage limitation
applies at the time of the investment.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940 and, therefore, may invest a greater percentage of its assets in a
particular issuer. As of April 30, 2023, each of the general obligation bonds
and special tax (i.e., revenue bonds backed by a special tax) 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.
Sustainable
Impact Investing Strategy Risk.
The Fund’s strategy of investing in municipal debt securities of issuers
promoting sustainable development may limit the types and number of investments
available to the Fund or cause the Fund to invest in securities that
underperform the market as a whole. As a result, the Fund may underperform funds
that do not have a sustainable investing strategy or funds with sustainable
investing strategies that do not employ HIP Ratings. In addition, the Fund
relies on the Data Provider for the identification of issuers that promote
sustainable development based on their HIP Ratings; however, there
can
be no guarantee that the Data Provider’s methodology will align with the Fund’s
investment strategy or desirable issuers can be correctly identified. Moreover,
SDGs 9, 11 and 12 may be modified or abandoned in the future and there can be no
guarantee that the Fund will be able to continue to use HIP Ratings or find an
appropriate substitute ratings system.
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades, or the bankruptcy of the issuer could have a significant effect on
an issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. Certain municipalities may have difficulty
meeting their obligations due to, among other reasons, changes in underlying
demographics. Municipal securities can be significantly affected by political
changes as well as uncertainties in the municipal market related to government
regulation, taxation, legislative changes or the rights of municipal security
holders. Because many municipal securities are issued to finance similar
projects, especially those relating to education, health care, transportation,
utilities and water and sewer, conditions in those sectors can affect the
overall municipal market. Municipal securities include general obligation bonds,
which are backed by the “full faith and credit” of the issuer, which has the
power to tax residents to pay bondholders. Timely payments depend on the
issuer’s credit quality, ability to raise tax revenues and ability to maintain
an adequate tax base. General obligation bonds generally are not backed by
revenues from a specific project or source. Municipal securities also include
revenue bonds, which are generally backed by revenue from a specific project or
tax. Revenue bonds generally are not backed by the full faith and credit and
general taxing power of the issuer. The bond markets may experience reduced
liquidity due to events such as limited trading activity, reductions in bond
inventory, market volatility, and rapid or unexpected changes in interest rates.
Less liquid markets could lead to greater price volatility and limit the Fund's
ability to sell a holding at a suitable price. The market for municipal bonds
may be less liquid than for taxable bonds. There may be less information
available on the financial condition of issuers of municipal securities than for
public corporations. Municipal instruments may be susceptible to periods of
economic stress, which could affect the market values and marketability of
municipal obligations of issuers in a state, U.S. territory, or possession. For
example, the COVID-19 pandemic has significantly stressed the financial
resources of many municipal issuers, which may impair a municipal issuer’s
ability to meet its financial obligations when due and could adversely impact
the value of its bonds, which could negatively impact the performance of the
Fund.
Credit Risk. Credit risk refers
to the possibility that the issuer or guarantor of a security will be unable
and/or unwilling to honor its payment obligations and/or default completely on
securities. The Fund’s securities are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on
the terms of the securities, which may be reflected in credit ratings. There is
a possibility that the credit rating of a security may be downgraded after
purchase or the perception of an issuer’s creditworthiness may decline, which
may adversely affect the value of the security. Lower credit quality may also
affect liquidity and make it difficult for the Fund to sell the
security.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
Call Risk. The
Fund may invest in callable debt securities. If interest rates fall, issuers may
“call” (or prepay) their debt securities before their maturity date. If the
issuer exercises a call during or following a period of declining interest
rates, the Fund is likely to have to replace the called security with a lower
yielding security or riskier security, decreasing the Fund’s net investment
income. The Fund also may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Data
Risk.
Given the complexity of the investments and strategies of the Fund, the Adviser
relies heavily on quantitative models and information and data. This data is
used to construct sets of transactions and investments, and to provide risk
management insights. If the quantitative models and information and data proves
to be incorrect or incomplete, any decisions made in reliance thereon expose the
Fund to potential risks.
Special Tax Bond Risk.
Special tax bonds are usually backed and payable through a single tax, or series
of special taxes such as incremental property taxes. The failure of the tax levy
to generate adequate revenue to pay the debt service on the bonds may cause the
value of the bonds to decline. Adverse conditions and developments affecting a
particular project may result in lower revenues to the issuer of the municipal
securities, which may adversely affect the value of the Fund’s
portfolio.
California Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk.
The Fund may invest a significant portion of its assets in New York municipal
bonds. Consequently, the Fund may be affected by political, economic, regulatory
or other developments within the State of New York, and by the financial
condition of its public authorities and political subdivisions.
Active
Management Risk.
In managing the Fund’s portfolio, the Adviser will apply investment techniques
and risk analyses in making investment decisions for the Fund, but there can be
no guarantee that these will produce the desired results. Investment decisions
made by the Adviser in seeking to achieve the Fund’s investment objective may
cause a decline in the value of the investments held by the Fund and, in turn,
cause the Fund’s shares to lose value or underperform other funds with similar
investment objectives.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. 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
Authorized Participants 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 net asset value.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under
the Investment Company Act of 1940. The Fund is subject to the risk that it will
be more volatile than a diversified fund because the Fund may invest a
relatively high percentage of its assets in a smaller number of issuers or may
invest a larger proportion of its assets in a single issuer. Moreover, the gains
and losses on a single investment may have a greater impact on the Fund’s net
asset value and may make the Fund more volatile than more diversified funds. The
Fund may be particularly vulnerable to this risk if it is comprised of a limited
number of investments.
State
Concentration Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in a particular state or states. Consequently, the Fund may
be affected by political, economic, regulatory and other developments
within the state or states and by the
financial condition of the state’s or states’ political subdivisions, agencies,
instrumentalities and public authorities.
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 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
The
year-to-date total return as of
June 30, 2023 was
2.19%.
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| Best
Quarter: |
3.78% |
4Q 2022 |
| Worst
Quarter: |
-5.87% |
1Q
2022 |
Average Annual
Total Returns for the Periods Ended December 31,
2022
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 |
Since
Inception (09/08/2021) |
|
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| VanEck HIP
Sustainable Muni ETF (return before taxes) |
-8.53% |
-6.41% |
|
|
| VanEck HIP
Sustainable Muni ETF (return after taxes on
distributions) |
-8.53% |
-6.41% |
|
|
| VanEck HIP
Sustainable Muni ETF (return after taxes on distributions and sale of Fund
Shares) |
-4.62% |
-4.63% |
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|
|
ICE US
Broad Municipal Index (reflects no deduction for
fees, expenses or taxes) |
-8.01% |
-6.09% |
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See “License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
| James
T. Colby III |
Portfolio
Manager |
August
2021 |
|
|
| Stephanie
Wang |
Deputy
Portfolio Manager |
August
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.
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
VanEck® Intermediate Muni ETF (the “Fund”) seeks to
replicate as closely as possible, before fees and expenses, the price and yield
performance of the ICE Intermediate AMT-Free Broad National Municipal Index (the
“Intermediate 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 |
0.24 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.24 |
% |
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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 September 1,
2024.
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 |
$25 |
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| 3 |
$77 |
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| 5 |
$135 |
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| 10 |
$306 |
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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 17% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund normally invests at least 80% of its total assets in fixed income
securities that comprise the Intermediate Index. The Intermediate Index is
comprised of publicly traded municipal bonds that cover the U.S. dollar
denominated intermediate term tax-exempt bond market. This 80% investment policy
is non-fundamental and may be changed without shareholder approval upon 60 days'
prior written notice to shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Intermediate Index. Unlike many investment
companies that try to “beat” the performance of a benchmark index, the Fund does
not try to “beat” the Intermediate Index and
does not take temporary defensive positions that are inconsistent with its
investment objective of seeking to replicate the Intermediate Index. Because of
the practical difficulties and expense of purchasing all of the securities in
the Intermediate Index, the Fund does not purchase all of the securities in the
Intermediate Index. Instead, the Adviser utilizes a “sampling” methodology in
seeking to achieve the Fund’s objective. As such, the Fund may purchase a subset
of the bonds in the Intermediate Index in an effort to hold a portfolio of bonds
with generally the same risk and return characteristics of the Intermediate
Index. The Intermediate Index is rebalanced on the last calendar day of the
month.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Intermediate Index concentrates in an industry
or group of industries. As of April 30, 2023 the special tax (i.e., revenue bonds backed by a specific
tax) 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.
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades, or the bankruptcy of the issuer could have a significant effect on
an issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. Certain municipalities may have difficulty
meeting their obligations due to, among other reasons, changes in underlying
demographics. Municipal securities can be significantly affected by political
changes as well as uncertainties in the municipal market related to government
regulation, taxation, legislative changes or the rights of municipal security
holders. Because many municipal securities are issued to finance similar
projects, especially those relating to education, health care, transportation,
utilities and water and sewer, conditions in those sectors can affect the
overall municipal market. Municipal securities include general obligation bonds,
which are backed by the “full faith and credit” of the issuer, which has the
power to tax residents to pay bondholders. Timely payments depend on the
issuer’s credit quality, ability to raise tax revenues and ability to maintain
an adequate tax base. General obligation bonds generally are not backed by
revenues from a specific project or source. Municipal securities also include
revenue bonds, which are generally backed by revenue from a specific project or
tax. Revenue bonds generally are not backed by the full faith and credit and
general taxing power of the issuer. The bond markets may experience reduced
liquidity due to events such as limited trading activity, reductions in bond
inventory, market volatility, and rapid or unexpected changes in interest rates.
Less liquid markets could lead to greater price volatility and limit the Fund's
ability to sell a holding at a suitable price. The market for municipal bonds
may be less liquid than for taxable bonds. There may be less information
available on the financial condition of issuers of municipal securities than for
public corporations. Municipal instruments may be susceptible to periods of
economic stress, which could affect the market values and marketability of
municipal obligations of issuers in a state, U.S. territory, or possession. For
example, the COVID-19 pandemic has significantly stressed the financial
resources of many municipal issuers, which may impair a municipal issuer’s
ability to meet its financial obligations when due and could adversely impact
the value of its bonds, which could negatively impact the performance of the
Fund.
Credit Risk. Credit risk refers
to the possibility that the issuer or guarantor of a security will be unable
and/or unwilling to honor its payment obligations and/or default completely on
securities. The Fund’s securities are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on
the terms of the securities, which may be reflected in credit ratings. There is
a possibility that the credit rating of a security may be downgraded after
purchase or the perception of an issuer’s creditworthiness may decline, which
may adversely affect the value of the security. Lower credit quality may also
affect liquidity and make it difficult for the Fund to sell the
security.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
Call Risk. The
Fund may invest in callable debt securities. If interest rates fall, issuers may
“call” (or prepay) their debt securities before their maturity date. If the
issuer exercises a call during or following a period of declining interest
rates, the Fund is likely to have to replace the called security with a lower
yielding security or riskier security, decreasing the Fund’s net investment
income.
The
Fund also may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
California Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk.
The Fund may invest a significant portion of its assets in New York municipal
bonds. Consequently, the Fund may be affected by political, economic, regulatory
or other developments within the State of New York, and by the financial
condition of its public authorities and political subdivisions.
Special Tax Bond Risk. Special
tax bonds are usually backed and payable through a single tax, or series of
special taxes such as incremental property taxes. The failure of the tax levy to
generate adequate revenue to pay the debt service on the bonds may cause the
value of the bonds to decline. Adverse conditions and developments affecting a
particular project may result in lower revenues to the issuer of the municipal
securities, which may adversely affect the value of the Fund’s
portfolio.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in its Index. As a result, an adverse
development respecting an issuer of securities held by the Fund could result in
a greater decline in net asset value than would be the case if the Fund held all
of the securities in its Index. Conversely, a positive development relating to
an issuer of securities in the Index that is not held by the Fund could cause
the Fund to underperform the Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Index Tracking Risk. The
Fund’s return may not match the return of the Index for a number of reasons. For
example, the Fund incurs operating expenses, including taxes, not applicable to
the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index or (if applicable) raising cash to meet redemptions or deploying
cash in connection with inflows into the Fund. Transaction costs, including
brokerage costs, may decrease the Fund’s net asset value.
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 Index. Errors in the Index data, the Index computations and/or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index provider, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Index provider’s or others’ errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Index provider’s or others’ errors will be borne by the Fund and its
shareholders. Additionally, when the Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the 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 Index provider or its
agents may carry out additional ad hoc rebalances to the Index. Therefore,
errors and additional ad hoc rebalances carried out by the Index provider or its
agents to the Index may increase the costs to and the tracking error risk of the
Fund.
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 pay expenses or to meet
redemptions. In addition, the Fund may not invest in certain securities included
in the Index, or invest in them in the exact proportions in which they are
represented in the Index. The Fund’s performance may also deviate from the
return of the Index for various reasons, including legal restrictions or
limitations imposed by the governments of certain countries, certain exchange
listing standards (where applicable), a lack of liquidity in markets in which
such securities trade, potential adverse tax consequences or other regulatory
reasons (such as diversification requirements). To the extent the Fund utilizes
depositary receipts, the purchase of depositary receipts may negatively affect
the Fund’s ability to track the performance of the Index and increase tracking
error, which may be exacerbated if the issuer of the depositary receipt
discontinues issuing new depositary receipts or withdraws existing depositary
receipts.
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 net
asset value based on fair value prices and the value of the Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the 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), repatriation or economic sanctions may also increase the index
tracking risk. The Fund’s performance may also deviate from the performance of
the Index due to the impact of withholding taxes, late announcements relating to
changes to the Index and high turnover of the 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. 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 Index. In light of the factors discussed
above, the Fund’s return may deviate significantly from the return of the Index.
Changes to the composition of the 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.
Tax
Risk. There
is no guarantee that the Fund’s income will be exempt from U.S. federal or state
or local income taxes. Events occurring after the date of issuance of a
municipal bond or after the Fund’s acquisition of a municipal bond may result in
a determination that interest on that bond is includible in gross income for
U.S. federal income tax purposes retroactively to its date of issuance. Such a
determination may cause a portion of prior distributions by the Fund to its
shareholders to be taxable to those shareholders in the year of receipt.
Federal, state or local changes in income or alternative minimum tax rates or in
the tax treatment of municipal bonds may make municipal bonds less attractive as
investments and cause them to lose value.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk.
Unlike many investment companies, the Fund is not “actively” managed. Therefore,
unless a specific security is removed from its Index, the Fund generally would
not sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from the 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 the Fund involves risks similar to those of
investing in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on market and economic conditions,
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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder
may be unable to sell his or her Shares.
Index-Related
Concentration Risk. The Fund’s assets may be concentrated in a particular sector
or sectors or industry or group of industries to reflect the Index’s allocation
to such 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, the 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 securities.
PERFORMANCE
The bar chart that follows shows how the Fund performed for the
calendar years shown. The table below the bar chart shows the Fund’s average
annual returns (before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1,
2022, the Fund sought to replicate as closely as possible, before fees and
expenses, the price and yield performance of the Bloomberg AMT-Free Intermediate
Continuous Municipal Index (the "Prior Intermediate Index"). Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior Intermediate Index. From March 1, 2022 to November 30,
2022, the Fund tracked the ICE Intermediate AMT-Free Broad National Municipal
Transition Index and performance from March 1, 2022 to November 30, 2022
reflects the performance of the Fund tracking the ICE Intermediate AMT-Free
Broad National Municipal Transition Index. The Fund began
tracking the Intermediate Index on December 1, 2022. 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
The
year-to-date total return as of
June 30, 2023 was
2.14%.
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| Best
Quarter: |
4.57% |
4Q 2022 |
| Worst
Quarter: |
-7.53% |
1Q
2022 |
Average Annual
Total Returns for the Periods Ended December 31,
2022
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
Intermediate Muni ETF
(return before taxes)* |
-9.66% |
0.96% |
1.90% |
|
|
| VanEck
Intermediate Muni ETF
(return after taxes on
distributions) |
-9.66% |
0.95% |
1.90% |
|
|
| VanEck
Intermediate Muni ETF
(return after taxes on distributions and sale of
Fund Shares) |
-5.02% |
1.25% |
1.99% |
|
|
|
ICE
Intermediate AMT-Free Broad National Municipal Index (reflects no deduction for
fees, expenses or taxes)*
|
-9.39% |
1.47% |
2.47% |
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|
|
ICE
BofA US Broad Market Index
(reflects
no deduction for fees, expenses or taxes) |
-13.16% |
0.03% |
1.07% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Intermediate Index. Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior Intermediate Index and index data prior to March 1, 2022
reflects that of the Prior Intermediate Index. From March 1, 2022 to November
30, 2022, the Fund tracked the ICE Intermediate AMT-Free Broad National
Municipal Transition Index and performance from March 1, 2022 to November 30,
2022 reflects the performance of the Fund tracking the ICE Intermediate AMT-Free
Broad National Municipal Transition Index and index data from March 1, 2022 to
November 30, 2022 reflects that of the ICE Intermediate AMT-Free Broad National
Municipal Transition Index. From December 1, 2022, the index data reflects that
of the Intermediate Index.
See “License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Associates Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
|
|
| James
T. Colby III |
Portfolio
Manager |
December
2007 |
|
|
| Stephanie
Wang |
Deputy
Portfolio Manager |
December
2022 |
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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® Long Muni ETF (the “Fund”) seeks to replicate as
closely as possible, before fees and expenses, the price and yield performance
of the ICE Long AMT-Free Broad National Municipal Index (the “Long
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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Fee |
0.24 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.24 |
% |
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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 September 1,
2024.
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 |
$25 |
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| 3 |
$77 |
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| 5 |
$135 |
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| 10 |
$306 |
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PORTFOLIO
TURNOVER
The Fund will pay transaction costs, such as commissions, when it
purchases and sells securities (or “turns over” its portfolio). A higher
portfolio turnover will cause the Fund to incur additional transaction costs and
may result in higher taxes when Fund Shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the
example, may affect the Fund’s performance. During the most recent fiscal year,
the Fund’s portfolio turnover rate was 32% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund normally invests at least 80% of its total assets in fixed income
securities that comprise the Long Index. The Long Index is comprised of publicly
traded municipal bonds that cover the U.S. dollar denominated long-term
tax-exempt bond market. This 80% investment policy is non-fundamental and may be
changed without shareholder approval upon 60 days' prior written notice to
shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Long Index. Unlike many investment companies
that try to “beat” the performance of a benchmark index, the Fund does not try
to
“beat” the Long Index and does not take
temporary defensive positions that are inconsistent with its investment
objective of seeking to replicate the Long Index. Because of the practical
difficulties and expense of purchasing all of the securities in the Long Index,
the Fund does not purchase all of the securities in the Long Index. Instead, the
Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s
objective. As such, the Fund may purchase a subset of the bonds in the Long
Index in an effort to hold a portfolio of bonds with generally the same risk and
return characteristics of the Long Index. The Long Index is rebalanced on the
last calendar day of the month.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Long Index concentrates in an industry or
group of industries. As of April 30, 2023, each of the healthcare and the
special tax (i.e. revenue bonds backed by a special tax)
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.
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades, or the bankruptcy of the issuer could have a significant effect on
an issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. Certain municipalities may have difficulty
meeting their obligations due to, among other reasons, changes in underlying
demographics. Municipal securities can be significantly affected by political
changes as well as uncertainties in the municipal market related to government
regulation, taxation, legislative changes or the rights of municipal security
holders. Because many municipal securities are issued to finance similar
projects, especially those relating to education, health care, transportation,
utilities and water and sewer, conditions in those sectors can affect the
overall municipal market. Municipal securities include general obligation bonds,
which are backed by the “full faith and credit” of the issuer, which has the
power to tax residents to pay bondholders. Timely payments depend on the
issuer’s credit quality, ability to raise tax revenues and ability to maintain
an adequate tax base. General obligation bonds generally are not backed by
revenues from a specific project or source. Municipal securities also include
revenue bonds, which are generally backed by revenue from a specific project or
tax. Revenue bonds generally are not backed by the full faith and credit and
general taxing power of the issuer. The bond markets may experience reduced
liquidity due to events such as limited trading activity, reductions in bond
inventory, market volatility, and rapid or unexpected changes in interest rates.
Less liquid markets could lead to greater price volatility and limit the Fund's
ability to sell a holding at a suitable price. The market for municipal bonds
may be less liquid than for taxable bonds. There may be less information
available on the financial condition of issuers of municipal securities than for
public corporations. Municipal instruments may be susceptible to periods of
economic stress, which could affect the market values and marketability of
municipal obligations of issuers in a state, U.S. territory, or possession. For
example, the COVID-19 pandemic has significantly stressed the financial
resources of many municipal issuers, which may impair a municipal issuer’s
ability to meet its financial obligations when due and could adversely impact
the value of its bonds, which could negatively impact the performance of the
Fund.
Credit Risk. Credit risk refers
to the possibility that the issuer or guarantor of a security will be unable
and/or unwilling to honor its payment obligations and/or default completely on
securities. The Fund’s securities are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on
the terms of the securities, which may be reflected in credit ratings. There is
a possibility that the credit rating of a security may be downgraded after
purchase or the perception of an issuer’s creditworthiness may decline, which
may adversely affect the value of the security. Lower credit quality may also
affect liquidity and make it difficult for the Fund to sell the
security.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
California Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk.
The Fund may invest a significant portion of its assets in New York municipal
bonds. Consequently, the Fund may be affected by political, economic, regulatory
or other developments within the State of New York, and by the financial
condition of its public authorities and political subdivisions.
Texas
Risk.
The Fund may invest a significant portion of its assets in Texas municipal
bonds. Consequently, the Fund may be affected by negative political, economic,
regulatory or other developments within the State of Texas including the
financial condition of its public authorities and political
subdivisions.
Call Risk. The
Fund may invest in callable debt securities. If interest rates fall, issuers may
“call” (or prepay) their debt securities before their maturity date. If the
issuer exercises a call during or following a period of declining interest
rates, the Fund is likely to have to replace the called security with a lower
yielding security or riskier security, decreasing the Fund’s net investment
income. The Fund also may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Health Care Bond Risk.
The health care industry is subject to regulatory action by a number of private
and governmental agencies, including federal, state and local governmental
agencies. A major source of revenues for the health care industry is payments
from Medicare and Medicaid programs. As a result, the industry is sensitive to
legislative changes and reductions in governmental spending for such programs.
Numerous other factors may also affect the industry and the value and credit
quality of health care bonds, such as general and local economic conditions,
demand for services, expenses (including malpractice insurance premiums) and
competition among health care providers. The following elements may adversely
affect health care facility operations: the implementation of national and/or
state-specific health insurance exchanges; other national, state or local health
care reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services are
delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; efforts by employers, insurers, and governmental
agencies to reduce the costs of health insurance and health care services; and
increases and decreases in the cost and availability of medical
products.
Special Tax Bond Risk.
Special tax bonds are usually backed and payable through a single tax, or series
of special taxes such as incremental property taxes. The failure of the tax levy
to generate adequate revenue to pay the debt service on the bonds may cause the
value of the bonds to decline. Adverse conditions and developments affecting a
particular project may result in lower revenues to the issuer of the municipal
securities, which may adversely affect the value of the Fund’s
portfolio.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in its Index. As a result, an adverse
development respecting an issuer of securities held by the Fund could result in
a greater decline in net asset value than would be the case if the Fund held all
of the securities in its Index. Conversely, a positive development relating to
an issuer of securities in the Index that is not held by the Fund could cause
the Fund to underperform the Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Index Tracking Risk. The
Fund’s return may not match the return of the Index for a number of reasons. For
example, the Fund incurs operating expenses, including taxes, not applicable to
the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index or (if applicable) raising cash to meet redemptions or deploying
cash in connection with inflows into the Fund. Transaction costs, including
brokerage costs, may decrease the Fund’s net asset value.
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 Index. Errors in the Index data, the Index computations and/or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index provider, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Index provider’s or others’ errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Index provider’s or others’ errors will be borne by the Fund and its
shareholders. Additionally, when the Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the 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 Index provider or its
agents may carry out additional ad hoc rebalances to the Index. Therefore,
errors and additional ad hoc rebalances carried out by the Index provider or its
agents to the Index may increase the costs to and the tracking error risk of the
Fund.
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 pay expenses or to meet
redemptions. In addition, the Fund may not invest in certain securities included
in the Index, or invest in them in the exact proportions in which they are
represented in the Index. The Fund’s performance may also deviate from the
return of the Index for various reasons, including legal restrictions or
limitations imposed by the governments of certain countries, certain exchange
listing standards (where applicable), a lack of liquidity in markets in which
such securities trade, potential adverse tax consequences or other regulatory
reasons (such as diversification requirements). To the extent the Fund utilizes
depositary receipts, the purchase of depositary receipts may negatively affect
the Fund’s ability to track the performance of the Index and increase tracking
error, which may be exacerbated if the issuer of the depositary receipt
discontinues issuing new depositary receipts or withdraws existing depositary
receipts.
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 net
asset value based on fair value prices and the value of the Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the 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), repatriation or economic sanctions may also increase
the index tracking risk. The Fund’s performance may also deviate from the
performance of the Index due to the impact of withholding taxes, late
announcements relating to changes to the Index and high turnover of the 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. 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 Index. In light of the
factors discussed above, the Fund’s return may deviate significantly from the
return of the Index. Changes to the composition of the 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.
Tax
Risk. There
is no guarantee that the Fund’s income will be exempt from U.S. federal or state
or local income taxes. Events occurring after the date of issuance of a
municipal bond or after the Fund’s acquisition of a municipal bond may result in
a determination that interest on that bond is includible in gross income for
U.S. federal income tax purposes retroactively to its date of issuance. Such a
determination may cause a portion of prior distributions by the Fund to its
shareholders to be taxable to those shareholders in the year of receipt.
Federal, state or local changes in income or alternative minimum tax rates or in
the tax treatment of municipal bonds may make municipal bonds less attractive as
investments and cause them to lose value.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk.
Unlike many investment companies, the Fund is not “actively” managed. Therefore,
unless a specific security is removed from its Index, the Fund generally would
not sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from the 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 the Fund involves risks similar to those of
investing in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on
market
and economic conditions, 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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder may be unable to sell
his or her Shares.
Index-Related
Concentration Risk. The Fund’s assets may be concentrated in a particular sector
or sectors or industry or group of industries to reflect the Index’s allocation
to such 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, the 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 securities.
PERFORMANCE
The bar chart that follows shows how the Fund performed for the
calendar years shown. The table below the bar chart shows the Fund’s average
annual returns (before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March 1,
2022, the Fund sought to replicate as closely as possible, before fees and
expenses, the price and yield performance of the Bloomberg AMT-Free Long
Continuous Municipal Index (the "Prior Long Index"). Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Long Index. From March 1, 2022 to November 30, 2022, the Fund tracked
the ICE Long AMT-Free Broad National Municipal Transition Index and performance
from March 1, 2022 to November 30, 2022 reflects the performance of the Fund
tracking the ICE Long AMT-Free Broad National Municipal Transition Index. The
Fund began tracking the Long Index on December 1, 2022. 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
The year-to-date total return as of
June 30, 2023 was
4.05%.
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| Best
Quarter: |
6.69% |
1Q 2014 |
| Worst
Quarter: |
-9.77% |
1Q
2022 |
Average Annual
Total Returns for the Periods Ended December 31,
2022
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 Long
Muni ETF
(return before taxes)* |
-17.52% |
-0.33% |
1.71% |
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| VanEck Long
Muni ETF
(return after taxes on
distributions) |
-17.52% |
-0.36% |
1.69% |
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| VanEck Long
Muni ETF
(return after taxes on distributions and sale of Fund
Shares) |
-9.49% |
0.44% |
2.06% |
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ICE
Long AMT-Free Broad National Municipal Index
(reflects no deduction for
fees, expenses or taxes)* |
-15.75% |
0.61% |
2.57% |
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| ICE BofA
US Broad Market Index
(reflects no deduction for fees, expenses or
taxes) |
-13.16% |
0.03% |
1.07% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Long Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Long Index and index data prior to March 1, 2022 reflects that of the
Prior Long Index. From March 1, 2022 to November 30, 2022, the Fund tracked the
ICE Long AMT-Free Broad National Municipal Transition Index and performance from
March 1, 2022 to November 30, 2022 reflects the performance of the Fund tracking
the ICE Long AMT-Free Broad National Municipal Transition Index and index data
from March 1, 2022 to November 30, 2022 reflects that of the ICE Long AMT-Free
Broad National Municipal Transition Index. From December 1, 2022, the index data
reflects that of the Long Index.
See “License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are primarily and jointly responsible for the day-to-day
management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
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| James
T. Colby III |
Portfolio
Manager |
January
2008 |
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| Stephanie
Wang |
Deputy
Portfolio Manager |
December
2022 |
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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® Short High Yield Muni ETF (the “Fund”) seeks to
replicate as closely as possible, before fees and expenses, the price and yield
performance of the ICE 1-12 Year Broad High Yield Crossover Municipal Index (the
“Short High Yield 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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Fee |
0.35 |
% |
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Other
Expenses(a) |
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 September 1,
2024.
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 17% 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 benchmark index. The Short High Yield Index is composed of publicly
traded municipal bonds that cover the U.S. dollar denominated high yield
short-term tax-exempt bond market with a weight of 70% in non-investment grade
municipal bonds, 20% in triple-B rated investment grade municipal bonds and a
targeted 10% in single-A rated investment grade municipal bonds (in accordance
with the Short High Yield Index provider's methodology). All bonds must have a
nominal maturity of 1 to 12 years. This 80% investment policy is non-fundamental
and may be changed without shareholder approval upon 60 days' prior written
notice to shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the
investment.
The Fund, using a “passive” or indexing
investment approach, attempts to approximate the investment performance of the
Short High Yield Index. Unlike many investment companies that try to “beat” the
performance of a benchmark index, the Fund does not try to “beat” the Short High
Yield Index and does not take temporary defensive positions that are
inconsistent with its investment objective of seeking to replicate the Short
High Yield Index. Because of the practical difficulties and expense of
purchasing all of the securities in the Short High Yield Index, the Fund does
not purchase all of the securities in the Short High Yield Index. Instead, the
Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s
objective. As such, the Fund may purchase a subset of the bonds in the Short
High Yield Index in an effort to hold a portfolio of bonds with generally the
same risk and return characteristics of the Short High Yield Index. The Short
High Yield Index is rebalanced on the last calendar day of the
month.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Short High Yield Index concentrates in an
industry or group of industries. As of April 30, 2023 each of the industrial
development and special tax (i.e. revenue bonds backed by a special tax)
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.
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades, or the bankruptcy of the issuer could have a significant effect on
an issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. Certain municipalities may have difficulty
meeting their obligations due to, among other reasons, changes in underlying
demographics. Municipal securities can be significantly affected by political
changes as well as uncertainties in the municipal market related to government
regulation, taxation, legislative changes or the rights of municipal security
holders. Because many municipal securities are issued to finance similar
projects, especially those relating to education, health care, transportation,
utilities and water and sewer, conditions in those sectors can affect the
overall municipal market. Municipal securities include general obligation bonds,
which are backed by the “full faith and credit” of the issuer, which has the
power to tax residents to pay bondholders. Timely payments depend on the
issuer’s credit quality, ability to raise tax revenues and ability to maintain
an adequate tax base. General obligation bonds generally are not backed by
revenues from a specific project or source. Municipal securities also include
revenue bonds, which are generally backed by revenue from a specific project or
tax. Revenue bonds generally are not backed by the full faith and credit and
general taxing power of the issuer. The bond markets may experience reduced
liquidity due to events such as limited trading activity, reductions in bond
inventory, market volatility, and rapid or unexpected changes in interest rates.
Less liquid markets could lead to greater price volatility and limit the Fund's
ability to sell a holding at a suitable price. The market for municipal bonds
may be less liquid than for taxable bonds. There may be less information
available on the financial condition of issuers of municipal securities than for
public corporations. Municipal instruments may be susceptible to periods of
economic stress, which could affect the market values and marketability of
municipal obligations of issuers in a state, U.S. territory, or possession. For
example, the COVID-19 pandemic has significantly stressed the financial
resources of many municipal issuers, which may impair a municipal issuer’s
ability to meet its financial obligations when due and could adversely impact
the value of its bonds, which could negatively impact the performance of the
Fund.
Credit Risk. Credit risk refers
to the possibility that the issuer or guarantor of a security will be unable
and/or unwilling to honor its payment obligations and/or default completely on
securities. The Fund’s securities are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on
the terms of the securities, which may be reflected in credit ratings. There is
a possibility that the credit rating of a security may be downgraded after
purchase or the perception of an issuer’s creditworthiness may decline, which
may adversely affect the value of the security. Lower credit quality may also
affect liquidity and make it difficult for the Fund to sell the
security.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
High
Yield Securities Risk. Securities
rated below investment grade are commonly referred to as high yield securities
or “junk bonds.” High yield securities are often issued by issuers that are
restructuring, are smaller or less creditworthy than other issuers,
or
are more highly indebted than other issuers. High yield securities are subject
to greater risk of loss of income and principal than higher rated securities and
are considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities, resulting in increased volatility of their market
prices and a corresponding volatility in the Fund’s net asset value. During an
economic downturn or substantial period of rising interest rates, high yield
security issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet their projected business goals or to obtain additional financing. In the
event of a default, the Fund may incur additional expenses to seek recovery. The
secondary market for high yield securities may be less liquid than the markets
for higher quality securities, and high yield securities issued by non-corporate
issuers may be less liquid than high yield securities issued by corporate
issuers. Illiquidity may have an adverse effect on the market prices of and the
Fund’s ability to arrive at a fair value for certain securities when it seeks to
do so. In addition, periods of economic uncertainty and change may result in an
increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund's net asset value.
Industrial Development Bond Risk.
These revenue bonds are issued by or on behalf of public authorities to obtain
funds to finance various public and/or privately operated facilities, including
those for business and manufacturing, housing, sports, pollution control,
airport, mass transit, port and parking facilities. These bonds are normally
secured only by the revenues from the project and not by state or local
government tax payments. Consequently, the credit quality of these securities is
dependent upon the ability of the user of the facilities financed by the bonds
and any guarantor to meet its financial obligations. Payment of interest on and
repayment of principal of such bonds are the responsibility of the user and/or
any guarantor. These bonds are subject to a wide variety of risks, many of which
relate to the nature of the specific project. Generally, the value and credit
quality of these bonds are sensitive to the risks related to an economic
slowdown.
Special Tax Bond Risk.
Special tax bonds are usually backed and payable through a single tax, or series
of special taxes such as incremental property taxes. The failure of the tax levy
to generate adequate revenue to pay the debt service on the bonds may cause the
value of the bonds to decline. Adverse conditions and developments affecting a
particular project may result in lower revenues to the issuer of the municipal
securities, which may adversely affect the value of the Fund’s
portfolio.
Illinois Risk. The
Fund may invest a significant portion of its assets in Illinois municipal bonds.
Consequently, the Fund may be affected by negative political, economic,
regulatory or other developments within the State of Illinois including the
financial condition of its public authorities and political subdivisions, to a
greater degree than a fund that invests in a broader base of securities.
New
York Risk.
The Fund may invest a significant portion of its assets in New York municipal
bonds. Consequently, the Fund may be affected by political, economic, regulatory
or other developments within the State of New York, and by the financial
condition of its public authorities and political subdivisions.
Call Risk. The
Fund may invest in callable debt securities. If interest rates fall, issuers may
“call” (or prepay) their debt securities before their maturity date. If the
issuer exercises a call during or following a period of declining interest
rates, the Fund is likely to have to replace the called security with a lower
yielding security or riskier security, decreasing the Fund’s net investment
income. The Fund also may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Private Activity Bonds Risk. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition and performance of private activity bonds. The issuers
of private activity bonds may be negatively impacted by conditions affecting
either the general credit of the user of the private activity project or the
project itself.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in its Index. As a result, an adverse
development respecting an issuer of securities held by the Fund could result in
a greater decline in net asset value than would be the case if the Fund held all
of the securities in its Index. Conversely, a positive development relating to
an issuer of securities in the Index that is not held by the Fund could cause
the Fund to underperform the Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Index Tracking Risk. The
Fund’s return may not match the return of the Index for a number of reasons. For
example, the Fund incurs operating expenses, including taxes, not applicable to
the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to
reflect
changes in the composition of the Index or (if applicable) raising cash to meet
redemptions or deploying cash in connection with inflows into the Fund.
Transaction costs, including brokerage costs, may decrease the Fund’s net asset
value.
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 Index. Errors in the Index data, the Index computations and/or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index provider, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Index provider’s or others’ errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Index provider’s or others’ errors will be borne by the Fund and its
shareholders. Additionally, when the Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the 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 Index provider or its
agents may carry out additional ad hoc rebalances to the Index. Therefore,
errors and additional ad hoc rebalances carried out by the Index provider or its
agents to the Index may increase the costs to and the tracking error risk of the
Fund.
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 pay expenses or to meet
redemptions. In addition, the Fund may not invest in certain securities included
in the Index, or invest in them in the exact proportions in which they are
represented in the Index. The Fund’s performance may also deviate from the
return of the Index for various reasons, including legal restrictions or
limitations imposed by the governments of certain countries, certain exchange
listing standards (where applicable), a lack of liquidity in markets in which
such securities trade, potential adverse tax consequences or other regulatory
reasons (such as diversification requirements). To the extent the Fund utilizes
depositary receipts, the purchase of depositary receipts may negatively affect
the Fund’s ability to track the performance of the Index and increase tracking
error, which may be exacerbated if the issuer of the depositary receipt
discontinues issuing new depositary receipts or withdraws existing depositary
receipts.
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 net
asset value based on fair value prices and the value of the Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the 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), repatriation or economic sanctions may also increase
the index tracking risk. The Fund’s performance may also deviate from the
performance of the Index due to the impact of withholding taxes, late
announcements relating to changes to the Index and high turnover of the 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. 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 Index. In light of the
factors discussed above, the Fund’s return may deviate significantly from the
return of the Index. Changes to the composition of the 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.
Tax
Risk. There
is no guarantee that the Fund’s income will be exempt from U.S. federal or state
or local income taxes. Events occurring after the date of issuance of a
municipal bond or after the Fund’s acquisition of a municipal bond may result in
a determination that interest on that bond is includible in gross income for
U.S. federal income tax purposes retroactively to its date of issuance. Such a
determination may cause a portion of prior distributions by the Fund to its
shareholders to be taxable to those shareholders in the year of receipt.
Federal, state or local changes in income or alternative minimum tax rates or in
the tax treatment of municipal bonds may make municipal bonds less attractive as
investments and cause them to lose value.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can
be
no assurance that requirements of the exchange necessary to maintain the listing
of the Fund will continue to be met or will remain unchanged.
Passive
Management Risk.
Unlike many investment companies, the Fund is not “actively” managed. Therefore,
unless a specific security is removed from its Index, the Fund generally would
not sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from the 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 the Fund involves risks similar to those of
investing in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on market and economic conditions,
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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder may be unable to sell
his or her Shares.
Index-Related
Concentration Risk. The Fund’s assets may be concentrated in a particular sector
or sectors or industry or group of industries to reflect the Index’s allocation
to such 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, the 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 securities.
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 year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March
1, 2022, the Fund sought to replicate as closely as possible, before fees and
expenses, the price and yield performance of the Bloomberg Municipal High Yield
Short Duration Index (the "Prior Short High Yield Index"). Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior Short High Yield Index. From March 1, 2022 to November
30, 2022, the Fund tracked the ICE 1-12 Year High Yield Crossover Municipal Bond
Transition Index and performance from March 1, 2022 to November 30, 2022
reflects the performance of the Fund tracking the ICE 1-12 Year High Yield
Crossover Municipal Bond Transition Index. The Fund began tracking the Short
High Yield Index on December 1, 2022. 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
The
year-to-date total return as of
June 30, 2023 was
1.84%.
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| Best
Quarter: |
3.00% |
1Q 2019 |
| Worst
Quarter: |
-5.99% |
1Q
2022 |
Average Annual
Total Returns for the Periods Ended December 31,
2022
The after-tax returns presented
in the table below are calculated using the highest historical individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Your actual after-tax returns will depend on your
specific tax situation and may differ from those shown below. After-tax returns are not
relevant to investors who hold Shares of the Fund through tax-deferred
arrangements, such as 401(k) plans or individual retirement
accounts.
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| Past
One Year |
Past
Five Years |
Since
Inception
(1/13/2014) |
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| VanEck
Short High Yield Muni ETF
(return before
taxes)* |
-9.06% |
1.12% |
1.69% |
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| VanEck
Short High Yield Muni ETF
(return after taxes on
distributions) |
-9.06% |
1.11% |
1.68% |
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| VanEck
Short High Yield Muni ETF
(return after taxes on distributions and
sale of Fund Shares) |
-4.39% |
1.58% |
2.00% |
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ICE
1-12 Year Broad High Yield Crossover Municipal Index
(reflects no deduction for
fees, expenses or taxes)* |
-5.75% |
3.03% |
3.50% |
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| ICE BofA
US Broad Market Index
(reflects no deduction for fees, expenses or
taxes) |
-13.16% |
0.03% |
1.35% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Short High Yield Index. Therefore,
performance information prior to March 1, 2022 reflects the performance of the
Fund tracking the Prior Short High Yield Index and index data prior to March 1,
2022 reflects that of the Prior Short High Yield Index. From March 1, 2022 to
November 30, 2022, the Fund tracked the ICE 1-12 Year High Yield Crossover
Municipal Bond Transition Index and performance from March 1, 2022 to November
30, 2022 reflects the performance of the Fund tracking the ICE 1-12 Year High
Yield Crossover Municipal Bond Transition Index and index data from March 1,
2022 to November 30, 2022 reflects that of the ICE 1-12 Year High Yield
Crossover Municipal Bond Transition Index. From December 1, 2022, the index data
reflects that of the Short High Yield Index.
See “License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are primarily and jointly responsible for the day-to-day
management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
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| James
T. Colby III |
Portfolio
Manager |
January
2014 |
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| Stephanie
Wang |
Deputy
Portfolio Manager |
December
2022 |
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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® Short Muni ETF (the “Fund”) seeks to replicate as
closely as possible, before fees and expenses, the price and yield performance
of the ICE Short AMT-Free Broad National Municipal Index (the “Short
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 |
0.07 |
% |
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Other
Expenses(a) |
0.00 |
% |
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Total
Annual Fund Operating Expenses(a) |
0.07 |
% |
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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 September 1,
2024.
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 |
$7 |
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| 3 |
$23 |
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| 5 |
$40 |
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| 10 |
$90 |
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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 19% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund normally invests at least 80% of its total assets in fixed income
securities that comprise the Short Index. The Short Index is comprised of
publicly traded municipal bonds that cover the U.S. dollar denominated
short-term tax-exempt bond market. This 80% investment policy is non-fundamental
and may be changed without shareholder approval upon 60 days’ prior written
notice to shareholders.
The
Fund has adopted a fundamental investment policy to invest at least 80% of its
assets in municipal securities. Such policy cannot be changed without a
shareholder vote. For purposes of this policy, the term “assets” means net
assets plus the amount of any borrowings for investment purposes. This
percentage limitation applies at the time of the investment.
The
Fund, using a “passive” or indexing investment approach, attempts to approximate
the investment performance of the Short Index. Unlike many investment companies
that try to “beat” the performance of a benchmark index, the Fund does not try
to “beat” the Short Index and does not take
temporary defensive positions that are inconsistent with its investment
objective of seeking to replicate the Short Index. Because of the practical
difficulties and expense of purchasing all of the securities in the Short Index,
the Fund does not purchase all of the securities in the Short Index. Instead,
the Adviser utilizes a “sampling” methodology in seeking to achieve the Fund’s
objective. As such, the Fund may purchase a subset of the bonds in the Short
Index in an effort to hold a portfolio of bonds with generally the same risk and
return characteristics of the Short Index. The Short Index is rebalanced on the
last calendar day of the month.
The
Fund may concentrate its investments in a particular industry or group of
industries to the extent that the Short Index concentrates in an industry or
group of industries. As of April 30, 2023, each of the general obligation and
special tax (i.e., revenue bonds backed by a special
tax) 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.
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades, or the bankruptcy of the issuer could have a significant effect on
an issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. Certain municipalities may have difficulty
meeting their obligations due to, among other reasons, changes in underlying
demographics. Municipal securities can be significantly affected by political
changes as well as uncertainties in the municipal market related to government
regulation, taxation, legislative changes or the rights of municipal security
holders. Because many municipal securities are issued to finance similar
projects, especially those relating to education, health care, transportation,
utilities and water and sewer, conditions in those sectors can affect the
overall municipal market. Municipal securities include general obligation bonds,
which are backed by the “full faith and credit” of the issuer, which has the
power to tax residents to pay bondholders. Timely payments depend on the
issuer’s credit quality, ability to raise tax revenues and ability to maintain
an adequate tax base. General obligation bonds generally are not backed by
revenues from a specific project or source. Municipal securities also include
revenue bonds, which are generally backed by revenue from a specific project or
tax. Revenue bonds generally are not backed by the full faith and credit and
general taxing power of the issuer. The bond markets may experience reduced
liquidity due to events such as limited trading activity, reductions in bond
inventory, market volatility, and rapid or unexpected changes in interest rates.
Less liquid markets could lead to greater price volatility and limit the Fund's
ability to sell a holding at a suitable price. The market for municipal bonds
may be less liquid than for taxable bonds. There may be less information
available on the financial condition of issuers of municipal securities than for
public corporations. Municipal instruments may be susceptible to periods of
economic stress, which could affect the market values and marketability of
municipal obligations of issuers in a state, U.S. territory, or possession. For
example, the COVID-19 pandemic has significantly stressed the financial
resources of many municipal issuers, which may impair a municipal issuer’s
ability to meet its financial obligations when due and could adversely impact
the value of its bonds, which could negatively impact the performance of the
Fund.
Credit Risk. Credit risk refers
to the possibility that the issuer or guarantor of a security will be unable
and/or unwilling to honor its payment obligations and/or default completely on
securities. The Fund’s securities are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on
the terms of the securities, which may be reflected in credit ratings. There is
a possibility that the credit rating of a security may be downgraded after
purchase or the perception of an issuer’s creditworthiness may decline, which
may adversely affect the value of the security. Lower credit quality may also
affect liquidity and make it difficult for the Fund to sell the
security.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
California Risk. The
Fund may invest a significant portion of its assets in municipal obligations of
issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
New
York Risk.
The Fund may invest a significant portion of its assets in New York municipal
bonds. Consequently, the Fund may be affected by political, economic, regulatory
or other developments within the State of New York, and by the financial
condition of its public authorities and political subdivisions.
Call Risk. The
Fund may invest in callable debt securities. If interest rates fall, issuers may
“call” (or prepay) their debt securities before their maturity date. If the
issuer exercises a call during or following a period of declining interest
rates, the Fund is likely to have to replace the called security with a lower
yielding security or riskier security, decreasing the Fund’s net investment
income. The Fund also may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in its Index. As a result, an adverse
development respecting an issuer of securities held by the Fund could result in
a greater decline in net asset value than would be the case if the Fund held all
of the securities in its Index. Conversely, a positive development relating to
an issuer of securities in the Index that is not held by the Fund could cause
the Fund to underperform the Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Index Tracking Risk. The
Fund’s return may not match the return of the Index for a number of reasons. For
example, the Fund incurs operating expenses, including taxes, not applicable to
the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index or (if applicable) raising cash to meet redemptions or deploying
cash in connection with inflows into the Fund. Transaction costs, including
brokerage costs, may decrease the Fund’s net asset value.
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 Index. Errors in the Index data, the Index computations and/or the
construction of the Index in accordance with its methodology may occur from time
to time and may not be identified and corrected by the Index provider, which may
have an adverse impact on the Fund and its shareholders. Shareholders should
understand that any gains from the Index provider’s or others’ errors will be
kept by the Fund and its shareholders and any losses or costs resulting from the
Index provider’s or others’ errors will be borne by the Fund and its
shareholders. Additionally, when the Index is rebalanced and the Fund in turn
rebalances its portfolio to attempt to increase the correlation between the
Fund’s portfolio and the 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 Index provider or its
agents may carry out additional ad hoc rebalances to the Index. Therefore,
errors and additional ad hoc rebalances carried out by the Index provider or its
agents to the Index may increase the costs to and the tracking error risk of the
Fund.
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 pay expenses or to meet
redemptions. In addition, the Fund may not invest in certain securities included
in the Index, or invest in them in the exact proportions in which they are
represented in the Index. The Fund’s performance may also deviate from the
return of the Index for various reasons, including legal restrictions or
limitations imposed by the governments of certain countries, certain exchange
listing standards (where applicable), a lack of liquidity in markets in which
such securities trade, potential adverse tax consequences or other regulatory
reasons (such as diversification requirements). To the extent the Fund utilizes
depositary receipts, the purchase of depositary receipts may negatively affect
the Fund’s ability to track the performance of the Index and increase tracking
error, which may be exacerbated if the issuer of the depositary receipt
discontinues issuing new depositary receipts or withdraws existing depositary
receipts.
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 net
asset value based on fair value prices and the value of the Index is based on
securities’ closing prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the 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), repatriation or economic sanctions may also increase
the index tracking risk. The Fund’s performance may also deviate from the
performance of the Index due to the impact of withholding taxes, late
announcements relating to changes to the Index and high turnover of the 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. 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 Index. In light of the factors discussed above, the
Fund’s return may deviate significantly from the return of the Index. Changes to
the composition of the 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.
Tax
Risk. There
is no guarantee that the Fund’s income will be exempt from U.S. federal or state
or local income taxes. Events occurring after the date of issuance of a
municipal bond or after the Fund’s acquisition of a municipal bond may result in
a determination that interest on that bond is includible in gross income for
U.S. federal income tax purposes retroactively to its date of issuance. Such a
determination may cause a portion of prior distributions by the Fund to its
shareholders to be taxable to those shareholders in the year of receipt.
Federal, state or local changes in income or alternative minimum tax rates or in
the tax treatment of municipal bonds may make municipal bonds less attractive as
investments and cause them to lose value.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Passive
Management Risk.
Unlike many investment companies, the Fund is not “actively” managed. Therefore,
unless a specific security is removed from its Index, the Fund generally would
not sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from the 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 the Fund involves risks similar to those of
investing in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on market and economic conditions,
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 net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including 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), may result in Shares trading at a
significant premium or discount to net asset value 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 net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. 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’ net asset value 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 and a shareholder may be unable to sell
his or her Shares.
Index-Related
Concentration Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to reflect the Index’s allocation to such 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, the 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
securities.
PERFORMANCE
The bar chart that follows shows how the Fund performed for the
calendar years shown. The table below the bar chart shows the Fund’s average
annual returns (before and after taxes). The bar chart
and table provide an indication of the risks of investing in the Fund by
comparing the Fund’s performance from year to year and by showing how the Fund’s
average annual returns for the one year, five year, ten year and/or since
inception periods, as applicable, compared with the Fund’s benchmark index and a
broad measure of market performance. Prior to March
1, 2022, the Fund sought to replicate as closely as possible, before fees and
expenses, the price and yield performance of the Bloomberg AMT-Free Short
Continuous Municipal Index (the "Prior Short Index"). Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Short Index. From March 1, 2022 to November 30, 2022,
the Fund tracked the ICE Short AMT-Free Broad National Municipal Transition
Index and performance from March 1, 2022 to November 30, 2022 reflects the
performance of the Fund tracking the ICE Short AMT-Free Broad National Municipal
Transition Index. The Fund began tracking the Short Index on December 1, 2022.
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
The
year-to-date total return as of
June 30, 2023 was
0.91%.
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| Best
Quarter: |
2.62% |
2Q 2020 |
| Worst
Quarter: |
-3.95% |
1Q
2022 |
Average Annual
Total Returns for the Periods Ended December 31,
2022
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
Short Muni ETF
(return before taxes)* |
-4.31% |
0.89% |
0.86% |
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| VanEck
Short Muni ETF
(return after taxes on
distributions) |
-4.32% |
0.88% |
0.85% |
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| VanEck
Short Muni ETF
(return after taxes on distributions and sale of Fund
Shares) |
-2.05% |
1.02% |
0.97% |
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ICE
Short AMT-Free Broad National Municipal Index
(reflects no deduction for
fees, expenses or taxes)* |
-4.44% |
1.13% |
1.25% |
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ICE
BofA US Broad Market Index
(reflects
no deduction for fees, expenses or taxes) |
-13.16% |
0.03% |
1.07% |
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*
Prior to March 1, 2022,
the Fund sought to replicate as closely as possible, before fees and expenses,
the price and yield performance of the Prior Short Index. Therefore, performance
information prior to March 1, 2022 reflects the performance of the Fund tracking
the Prior Short Index and index data prior to March 1, 2022 reflects that of the
Prior Short Index. From March 1, 2022 to November 30, 2022, the Fund tracked the
ICE Short AMT-Free Broad National Municipal Transition Index and performance
from March 1, 2022 to November 30, 2022 reflects the performance of the Fund
tracking the ICE Short AMT-Free Broad National Municipal Transition Index and
index data from March 1, 2022 to November 30, 2022 reflects that of the ICE
Short AMT-Free Broad National Municipal Transition Index. From December 1, 2022,
the index data reflects that of the Short Index.
See “License Agreements and Disclaimers” for important
information.
PORTFOLIO
MANAGEMENT
Investment
Adviser. Van
Eck Associates Corporation.
Portfolio
Managers. The
following individuals are primarily and jointly responsible for the day-to-day
management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| |
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| James
T. Colby III |
Portfolio
Manager |
February
2008 |
| |
|
| Stephanie
Wang |
Deputy
Portfolio Manager |
December
2022 |
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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.
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 net asset
value, Shares of the Funds may trade at a price greater than net asset value
(i.e.,
a “premium”) or less than net asset value (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 net asset value, market
price, premiums and discounts, and bid/ask spreads, is included on the Fund’s
website at www.vaneck.com.
TAX
INFORMATION
The
Funds expect to distribute net investment income, if any, at least monthly, and
any net realized long-term or short-term capital gains annually. The Funds may
also pay a special distribution at any time to comply with U.S. federal tax
requirements.
Dividends
paid by the Funds that are properly reported as exempt-interest dividends will
not be subject to regular U.S. federal income tax. The Funds intend to invest
its assets in a manner such that a significant portion of their dividend
distributions to shareholders will generally be exempt from U.S. federal income
taxes, including the federal alternative minimum tax for noncorporate
shareholders. Such distributions will generally be subject to state income
taxes.
Distributions
from a Fund’s net investment income (other than net tax-exempt income),
including any net short-term capital gains, if any, are taxable to you as
ordinary income.
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.
PRINCIPAL
INVESTMENT STRATEGIES
(All
Funds except VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni
ETF)
Each
Fund uses a sampling approach in seeking to achieve its investment objective.
Sampling means that the Adviser uses quantitative analysis to select a
representative sample of securities that the Adviser believes collectively have
an investment profile similar to a Fund’s Index. The Adviser seeks to select
securities that will have, in the aggregate, investment characteristics (based
on factors such as market capitalization and industry weightings), fundamental
characteristics (such as return variability, duration, maturity or credit
ratings and yield) and liquidity measures similar to those of a Fund’s Index.
The quantity of holdings in a Fund will be based on a number of factors,
including asset size of such Fund. The Adviser generally expects a Fund to hold
less than the total number of securities in its Index, but reserves the right to
hold as many securities as it believes necessary to achieve the Fund’s
investment objective. In addition, from time to time, securities are added to or
removed from the applicable Index. Each Fund may sell securities that are
represented in its Index, or purchase securities that are not yet represented in
its Index, in anticipation of their removal from or addition to such Index.
Further, the Adviser may choose to underweight or overweight securities,
purchase or sell securities not in an Index, or utilize various combinations of
other available investment techniques, in seeking to track a Fund’s
Index.
(VanEck
CEF Muni Income ETF only)
The
Adviser anticipates that, generally, VanEck CEF Muni Income ETF will hold or
gain exposure to all of the securities that comprise the CEFMX Index in
proportion to their weightings in the CEFMX Index. However, because of
limitations imposed by the Investment Company Act of 1940 regarding investments
in other investment companies, VanEck CEF Muni Income ETF may purchase a sample
of securities in the CEFMX Index. There also may be instances in which the
Adviser may choose to underweight or overweight a security in the CEFMX Index,
purchase securities not in the CEFMX Index that the Adviser believes are
appropriate to substitute for certain securities in the CEFMX 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 CEFMX Index. VanEck CEF Muni Income ETF may sell securities
that are represented in the CEFMX Index in anticipation of their removal from
the CEFMX Index or purchase securities not represented in the CEFMX Index in
anticipation of their addition to the CEFMX Index. VanEck CEF Muni Income ETF
may also, in order to comply with the tax diversification requirements of the
Internal Revenue Code of 1986, temporarily invest in securities not included on
the CEFMX Index that are expected to be highly correlated with the securities
included in the CEFMX Index.
(VanEck
HIP Sustainable Muni ETF only)
The
Fund normally invests at least 80% of its total assets in investments the income
from which is exempt from U.S. federal income tax (other than AMT). The Fund is
an actively managed exchange-traded fund (“ETF”) that seeks to achieve its
investment objective by investing, under normal circumstances, in investment
grade municipal debt securities that fund issuers with operations or projects
helping to promote progress towards sustainable development, in alignment with
the goals and metrics defined by the United Nations Sustainable Development
Goals (“SDGs”) 9, 11 and 12. The SDGs were adopted by the United Nations General
Assembly to achieve sustainable development for all, and the specific goals of
SDGs 9, 11 and 12 are as follows: SDG 9 is to "build resilient infrastructure,
promote inclusive and sustainable industrialization and foster innovation," SDG
11 is to "make cities and human settlements inclusive, safe, resilient and
sustainable" and SDG 12 is to "ensure sustainable consumption and production
patterns." The Fund normally invests at least 80% of its total assets in
securities that support sustainable development. The Adviser determines which
operations or projects of issuers it believes to be supportive of sustainable
development and that promote beneficial environmental and social outcomes in
U.S. communities and cities by utilizing the rules-based investment approach
described below. The Fund’s policy to normally invest at least 80% of its total
assets in securities that support sustainable development is non-fundamental and
may be changed without shareholder approval upon 60 days’ prior written notice
to shareholders.
The
Adviser primarily uses a rules-based investment approach which utilizes
proprietary HIP (Human Impact + Profit) Ratings data for the application of
impact criteria to security selection and portfolio management. HIP Ratings are
produced and licensed from HIP Investor, Inc. (“HIP” or the "Data Provider"),
which provides services to evaluate, rate and rank issuers and their securities
based on data-driven, quantitative performance measures that demonstrate
positive social, environmental and economic outcomes or mission accomplishment.
The Adviser’s investment process begins by using HIP Ratings to screen municipal
securities based on their SDGs 9, 11 and 12 ratings by HIP, Environmental,
Social and Governance (“ESG”) ratings by HIP and Climate-Threat and Resilience
ratings by HIP. HIP Ratings are only assigned to the municipal securities of
issuers where at least one qualified opportunity zone is located in the issuer’s
region. An “opportunity zone” is an economically-distressed community where new
investments, under certain conditions, may be eligible for preferential tax
treatment based on certification from the Internal Revenue Service. HIP, as the
Data Provider, analyzes multiple data points of municipal securities to
determine an estimate of the impact (i.e., net benefit to the community) each
municipal security provides. The HIP Ratings used by the Adviser seek to
evaluate the impact of municipal securities with respect to the goals and
metrics defined by SDGs 9, 11 and 12, climate resilience, and overall net
benefit to people, planet, and prosperity. These HIP Ratings are used by the
Adviser to narrow the universe of eligible Fund investments to municipal
securities that, based on the HIP Ratings, the Adviser believes have been issued
to fund operations or projects that support or advance sustainable development,
as well as promote positive social and
environmental
outcomes. Such municipal debt securities may include, but are not limited to,
bonds issued in connection with (i) new or revitalized infrastructure (i.e.
roads, bridges, tunnels, buildings, transportation of people and freight,
affordable and safe housing and redevelopment of urban areas (e.g. green
spaces), school or campus upgrades and Leadership in Energy and Environmental
Design ("LEED") qualified real estate); (ii) information and education systems
(i.e. schools, research, financial services, communication services and
technologies and information services); (iii) healthier communities (i.e.
hospitals, food and nutrition infrastructure, waste systems, air quality and
environmental management systems); (iv) cleaner energy (i.e. utilities, resource
and material use); (v) inclusive and sustainable industrialization towards
increased Gross Domestic Product ("GDP"); (vi) action and resilience planning
and projects to mitigate the effects of climate change and other natural
disasters and hazards; and (vii) ensuring sustainable consumption and production
patterns. The Adviser is not required to invest in any issuer rated by the Data
Provider and the Data Provider is not acting as a sub-adviser to the Fund.
Municipal
securities that the Fund may invest in include securities issued by U.S. states
and municipal governments, any of their political subdivisions, agencies, or
instrumentalities, or by U.S. territories and possessions, such as Guam, the
U.S. Virgin Islands, and Puerto Rico, and their political subdivisions and
public corporations. The Fund may invest a significant portion of its assets in
municipal obligations of issuers located in the States of California and New
York. The Fund does not expect to invest in non-investment grade (or “junk”)
securities. The Fund may invest in debt securities of any maturity or duration
and does not have a target maturity or duration. “Duration” is a measure of a
debt security’s price sensitivity to changes in interest rates. The longer the
duration of a debt security, the more sensitive its market price is to changes
in interest rates. The Fund seeks to reduce its exposure to credit risk by
diversifying its assets among many municipal issuers and among the different
types and maturities of municipal securities available.
The
Fund’s investment policy to invest at least 80% of its total assets in
investments the income from which is exempt from U.S. federal income tax (other
than AMT) may not be changed without shareholder approval. The Fund may count
investments that generate income subject to the AMT toward its 80% investment
policy. For purposes of this policy, the term “assets” means net assets plus the
amount of any borrowings for investment purposes. This percentage limitation
applies at the time of the investment.
FUNDAMENTAL
AND NON-FUNDAMENTAL POLICIES
Each
Fund’s investment objective and each of its other investment policies are
non-fundamental policies that may be changed by the Board of Trustees of the
Trust (the "Board of Trustees") without shareholder approval, except as noted in
this Prospectus or the Statement of Additional Information (“SAI”) under the
section entitled “Investment Policies and Restrictions—Investment
Restrictions.”
RISKS
OF INVESTING IN THE FUNDS
The
following section provides additional information regarding the principal risks
identified under “Principal Risks of Investing in the Fund” in each Fund’s
“Summary Information” section and additional non-principal risks, if applicable.
The risks listed below are applicable to each Fund unless otherwise
noted.
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.
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| Risk |
CEF
Muni Income ETF (XMPT) |
High
Yield Muni ETF (HYD) |
HIP
Sustainable Muni ETF (SMI) |
Intermediate
Muni ETF (ITM) |
Long
Muni ETF (MLN) |
Short
High Yield Muni ETF (SHYD) |
Short
Muni ETF (SMB) |
| √
Principal Risk | X Additional Non-Principal Risk |
| Active
Management Risk |
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| √ |
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| Authorized
Participant Concentration Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
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| California
Risk |
| √ |
√ |
√ |
√ |
| √ |
| Call
Risk |
| √ |
√ |
√ |
√ |
√ |
√ |
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| Credit
Risk |
| √ |
√ |
√ |
√ |
√ |
√ |
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| Data
Risk |
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| √ |
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| Derivatives
Risk |
X |
X |
X |
X |
X |
X |
X |
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| Fund
of Funds Risk |
√ |
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| Risk |
CEF
Muni Income ETF (XMPT) |
High
Yield Muni ETF (HYD) |
HIP
Sustainable Muni ETF (SMI) |
Intermediate
Muni ETF (ITM) |
Long
Muni ETF (MLN) |
Short
High Yield Muni ETF (SHYD) |
Short
Muni ETF (SMB) |
| √
Principal Risk | X Additional Non-Principal Risk |
| Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund
Shares |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
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| Health
Care Bond Risk |
| √ |
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| √ |
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| High
Yield Securities Risk |
| √ |
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| √ |
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| Illinois
Risk |
√ |
√ |
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| √ |
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| Index-Related
Concentration Risk |
√ |
√ |
| √ |
√ |
√ |
√ |
| Index
Tracking Risk |
√ |
√ |
| √ |
√ |
√ |
√ |
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| Industrial
Development Bond Risk |
| √ |
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| √ |
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| Interest
Rate Risk |
| √ |
√ |
√ |
√ |
√ |
√ |
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| Leverage
Risk |
X |
X |
X |
X |
X |
X |
X |
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| Market
Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
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| Municipal
Securities Risk |
| √ |
√ |
√ |
√ |
√ |
√ |
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| New
York Risk |
| √ |
√ |
√ |
√ |
√ |
√ |
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| No
Guarantee of Active Trading Market Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Non-Diversified
Risk |
|
| √ |
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| |
| Non-Diversification
Risk |
√ |
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| Operational
Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
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| |
| Passive
Management Risk |
√ |
√ |
| √ |
√ |
√ |
√ |
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| |
| Private
Activity Bonds Risk |
| √ |
|
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| √ |
|
| Puerto
Rico Risk |
| X |
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| X |
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| Risks
of Investing in Closed-End Funds |
√ |
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| Sampling
Risk |
| √ |
| √ |
√ |
√ |
√ |
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| |
| Shareholder
Risk |
X |
X |
X |
X |
X |
X |
X |
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| Special
Tax Bond Risk |
| √ |
√ |
√ |
√ |
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| State
Concentration Risk |
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| Risk |
CEF
Muni Income ETF (XMPT) |
High
Yield Muni ETF (HYD) |
HIP
Sustainable Muni ETF (SMI) |
Intermediate
Muni ETF (ITM) |
Long
Muni ETF (MLN) |
Short
High Yield Muni ETF (SHYD) |
Short
Muni ETF (SMB) |
| √
Principal Risk | X Additional Non-Principal Risk |
| Sustainable
Impact Investing Strategy Risk |
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| √ |
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| Tax
Risk |
| √ |
| √ |
√ |
√ |
√ |
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| Texas
Risk |
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| √ |
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| Trading
Issues Risk |
√ |
√ |
√ |
√ |
√ |
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| Underlying
Funds Risk |
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GLOSSARY
– INVESTMENT RISKS
Active
Management Risk.
In managing the Fund’s portfolio, the Adviser will apply investment techniques
and risk analyses in making investment decisions for the Fund, but there can be
no guarantee that these will produce the desired results. Investment decisions
made by the Adviser in seeking to achieve the Fund’s investment objective may
cause a decline in the value of the investments held by the Fund and, in turn,
cause the Fund’s shares to lose value or underperform other funds with similar
investment objectives.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened in cases where Authorized
Participants have limited or diminished access to the capital required to post
collateral.
California Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in the State of California. Consequently, the Fund may be
affected by political, economic, regulatory and other developments within
California and by the financial condition of California’s political
subdivisions, agencies, instrumentalities and public authorities.
The
following is a summary of certain factors affecting the State’s current
financial situation that could, in turn, adversely affect the Fund’s investments
in California municipal obligations. Provisions of the California Constitution
and State statutes limit the taxing and spending authority of California
governmental entities. Payments of certain municipal obligations may also be
structurally subordinated to other obligations as a matter of California law.
These provisions may impair the ability of California issuers to pay principal
and/or interest on their obligations and the ability of the State and
municipalities to address financial downturns, including limitations on the
ability of the State or municipalities to raise taxes, fees or charges without
voter approval. In addition, California has recently experienced financial and
economic difficulties, which heighten the risks associated with investing in
bonds issued by the State of California and its political subdivisions,
agencies, instrumentalities and public authorities. Risks that threaten the
State’s fiscal condition include the significant unfunded liabilities of the
State’s two main retirement systems. Moreover, many local government agencies
continue to face budget constraints due to mandated expenditures for health,
welfare and public safety, as well as dependence on property taxes and sales
taxes, two major sources of revenue for local government. In particular, there
is an increased risk that payments to bondholders could be interrupted or that
an issuer could default on its obligations. A default or credit rating downgrade
of a small number of California municipal security issuers could negatively
impact the market values and marketability of all California municipal
securities held by the Fund. A downgrade of the State’s general obligation bond
rating could result in a reduction in the market value of California municipal
obligations held by the Fund. California’s economy has major concentrations in
high technology, trade, entertainment, manufacturing, agriculture, government,
tourism, construction and services and may be sensitive to economic problems
affecting those industries. In addition, future California political and
economic developments, constitutional amendments, legislative measures,
executive orders, administrative regulations, litigation and voter initiatives
could negatively impact California’s economy. Such developments could adversely
affect the Fund’s income, net asset value, liquidity and/or ability to preserve
or realize appreciation of capital.
Call Risk. The
Fund may invest in callable debt securities. If interest rates fall, issuers may
“call” (or prepay) their debt securities before their maturity date. If the
issuer exercises a call during or following a period of declining interest
rates, the Fund is likely to have to replace the called security with a lower
yielding security or riskier security, decreasing the Fund’s net investment
income. The Fund also may fail to recover additional amounts (i.e.,
premiums) paid for securities with higher interest rates, resulting in an
unexpected capital loss.
Credit Risk. Credit risk refers
to the possibility that the issuer or guarantor of a security will be unable
and/or unwilling to honor its payment obligations and/or default completely on
securities. The Fund’s securities are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on
the terms of the securities, which may be reflected in credit ratings. There is
a possibility that the credit rating of a security may be downgraded after
purchase or the perception of an issuer’s creditworthiness may decline, which
may adversely affect the value of the security. Lower credit quality may also
affect liquidity and make it difficult for the Fund to sell the
security.
Data
Risk.
Given the complexity of the investments and strategies of the Fund, the Adviser
relies heavily on quantitative models and information and data. This data is
used to construct sets of transactions and investments, and to provide risk
management insights. If the quantitative models and information and data proves
to be incorrect or incomplete, any decisions made in reliance thereon expose the
Fund to potential risks.
Derivatives
Risk. Derivatives
and other similar instruments (referred to collectively as “derivatives”) are
financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it is contractually
entitled to receive). Counterparty risk also refers to the related risks of
having concentrated exposure to such a counterparty. A liquid secondary market
may not always exist for the Fund’s derivative positions at any time, and the
Fund may not be able to initiate or liquidate a swap position at an advantageous
time or price, which may result in significant losses. The Fund may also face
the risk that it may not be able to meet margin and payment requirements and
maintain a derivatives position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Under
Rule 18f-4 (the “derivatives rule”), funds need to trade derivatives and other
transactions that create future fund payment or delivery obligations subject to
a value-at-risk (“VaR”) leverage limit, and 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 derivatives
rule. Under the derivatives 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 Securities and Exchange Commission also
provided guidance in connection with the derivatives rule regarding use of
securities lending collateral that may limit a fund's securities lending
activities. In addition, under the derivatives rule, the Fund is permitted to
invest in a security on a when-issued or forward-settling basis, or with a
non-standard settlement cycle, and the transaction will be deemed not to involve
a senior security under the Investment Company Act of 1940, provided that (i)
the Fund intends to physically settle the transaction and (ii) the transaction
will settle within 35 days of its trade date (the “Delayed-Settlement Securities
Provision”). The Fund may otherwise engage in such transactions that do not meet
the conditions of the Delayed-Settlement Securities Provision so long as the
Fund treats any such transaction as a “derivatives transaction” for purposes of
compliance with the derivatives rule. Furthermore, under the derivatives rule,
the Fund will be permitted to enter into an unfunded commitment agreement, and
such unfunded commitment agreement will not be subject to the asset coverage
requirements under the Investment Company Act of 1940, if the Fund reasonably
believes, at the time it enters into such agreement, that it will have
sufficient cash and cash equivalents to meet its obligations with respect to all
such agreements as they come due.
Fund of Funds Risk. The
performance of the Fund is dependent on the performance of the underlying funds.
The Fund will be subject to the risks of the underlying funds’ investments. The
Fund will pay indirectly a proportional share of the fees and expenses of the
underlying funds in which it invests, including their investment advisory and
administration fees, while continuing to pay its own management fee. As a
result, the Fund’s shareholders will indirectly bear the expenses of the
underlying funds, absorbing duplicative levels of fees.
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 net asset value or to the intraday value of the Fund’s holdings.
The net asset value of the Shares will fluctuate with changes in the market
value of the Fund’s securities holdings. The market price of Shares may
fluctuate, in some cases materially, in accordance with changes in net asset
value and the intraday value of the Fund’s holdings, as well as supply and
demand on the Exchange. Shares may trade below, at or above their net asset
value. While the creation/redemption feature is designed to make it likely that
Shares normally will trade close to the value of the Fund’s holdings, market
prices are not expected to correlate exactly to the Fund’s net asset value 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 the 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 net asset value or sells Shares at a
time when the market price is at a discount to the net asset value, 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 the
Fund’s net asset value. In addition, because certain of the Fund’s underlying
securities may trade on exchanges that are closed when 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 net asset value that may be greater than those experienced by other
ETFs. In addition, 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 and the resulting premium or discount to the
Shares’ net asset value 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.
When
you buy or sell Shares of the 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 the Fund’s Shares varies over time based
on the Fund’s trading volume and market liquidity and may increase if the Fund’s
trading volume, the spread of the Fund’s underlying securities, or market
liquidity decrease. In times of severe market disruption, including when trading
of the Fund’s holdings may be halted, the bid/ask spread may increase
significantly. This means that Shares may trade at a discount to the Fund’s net
asset value, and the discount is likely to be greatest during significant market
volatility.
Health
Care Sector Risk.
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.
High
Yield Securities Risk. Securities
rated below investment grade are commonly referred to as high yield securities
or “junk bonds.” High yield securities are often issued by issuers that are
restructuring, are smaller or less creditworthy than other issuers, or are more
highly indebted than other issuers. High yield securities are subject to greater
risk of loss of income and principal than higher rated securities and are
considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual issuer developments
than higher rated securities, resulting in increased volatility of their market
prices and a corresponding volatility in the Fund’s net asset value. During an
economic downturn or substantial period of rising interest rates, high yield
security issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet their projected business goals or to obtain additional financing. In the
event of a default, the Fund may incur additional expenses to seek recovery. The
secondary market for high yield securities may be less liquid than the markets
for higher quality securities, and high yield securities issued by non-corporate
issuers may be less liquid than high yield securities issued by corporate
issuers. Illiquidity may have an adverse effect on the market prices of and the
Fund’s ability to
arrive
at a fair value for certain securities when it seeks to do so. In addition,
periods of economic uncertainty and change may result in an increased volatility
of market prices of high yield securities and a corresponding volatility in the
Fund's net asset value.
Illinois Risk.
The Fund may invest a significant portion of its assets in Illinois municipal
bonds. Consequently, the Fund may be affected by negative political, economic,
regulatory or other developments within the State of Illinois including the
financial condition of its public authorities and political subdivisions, to a
greater degree than a fund that invests in a broader base of securities.
Unfavorable
developments in any economic sector may have a substantial impact on the overall
Illinois municipal market. Certain issuers of Illinois municipal bonds have
experienced serious financial difficulties in the past and reoccurrence of these
difficulties may impair the ability of certain Illinois issuers to pay principal
or interest on their obligations. In July 2017, Illinois narrowly avoided
becoming the first state to be issued a “junk” credit rating after it passed its
first budget in more than two years. However, the state’s recent budget
stalemate could still trigger a credit downgrade from one of the other major
ratings companies.
Index-Related
Concentration Risk. The
Fund’s assets may be concentrated in a particular sector or sectors or industry
or group of industries to reflect the Index’s allocation to such 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, the
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 securities.
Index Tracking Risk. The
Fund’s return may not match the return of the Index for a number of reasons. For
example, the Fund incurs operating expenses, including taxes, not applicable to
the Index and incurs costs associated with buying and selling securities and
entering into derivatives transactions (if applicable), especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index, or (if applicable) raising cash to meet redemptions or deploying
cash in connection with inflows into the Fund. Transaction costs, including
brokerage costs, may decrease the Fund’s net asset value.
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 Index. Unusual market conditions may cause the Index provider to postpone a
scheduled rebalance, which could cause the Index to vary from its normal or
expected composition. There is no assurance that the Index provider or any
agents that may act on its behalf will compile the Index accurately, or that the
Index will be determined, composed or calculated accurately. Errors in respect
of the quality, accuracy and completeness of the data used to compile the Index
may occur from time to time and may not be identified and corrected by the Index
provider, 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 provider or its agents will generally be borne by the Fund and its
shareholders. For example, during a period where the Index contains incorrect
constituents, the Fund would have market exposure to such constituents and would
be underexposed to the Index’s other constituents. Such errors may negatively or
positively impact the Fund and its shareholders.
When
the Index is rebalanced and the Fund in turn rebalances its portfolio to attempt
to increase the correlation between the Fund’s portfolio and the 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 or
reserves of cash held by the Fund to pay expenses or to meet redemptions. In
addition, the Fund may not invest in certain securities and/or other assets
included in the Index, or invest in them in the exact proportions in which they
are represented in the Index. The Fund’s performance may also deviate from the
return of the Index for a variety of reasons, including legal restrictions or
limitations imposed by the governments of certain countries, certain exchange
listing standards (where applicable), 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 the Fund’s performance. Moreover, the Fund may be delayed in
purchasing or selling securities included in the 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. To the extent the Fund encounters any issues with regard to
currency convertibility (including the cost of borrowing funds, if any),
repatriation or economic sanctions, such issues may also increase 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 Index. The Fund’s performance may also
deviate from the performance of the Index due to the impact of withholding
taxes, late announcements relating to changes to the Index and high turnover of
the Index.
The
Fund may fair value certain of its investments, underlying currencies and/or
other assets. To the extent the Fund calculates its net asset value based on
fair value prices and the value of the Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices) or if the Fund
otherwise calculates its net asset value based on prices that differ from those
used in calculating the Index, the Fund’s ability to track the Index may be
adversely affected. The need to comply with the tax diversification and other
requirements of the Internal Revenue Code of 1986 may also impact the Fund’s
ability to track the performance of the Index. In addition, if the Fund utilizes
depositary receipts or other derivative instruments, its return
may
not correlate as well with the return of the Index as would be the case if the
Fund purchased all the securities in the Index directly. To the extent the Fund
utilizes depositary receipts, the purchase of depositary receipts may negatively
affect the Fund’s ability to track the performance of the Index and increase
tracking error, which may be exacerbated if the issuer of the depositary receipt
discontinues issuing new depositary receipts or withdraws existing depositary
receipts. Actions taken in response to proposed corporate actions could also
result in increased tracking error. In light of the factors discussed above, the
Fund’s return may deviate significantly from the return of the
Index.
Apart
from scheduled rebalances, the Index provider or its agents may carry out
additional ad hoc rebalances to the Index in order, for example, to correct an
error in the selection of index constituents. When the Index is rebalanced and
the Fund in turn rebalances its portfolio to attempt to increase the correlation
between the Fund’s portfolio and the Index, any transaction costs and market
exposure arising from such portfolio rebalancing will be borne directly by the
Fund and its shareholders. Therefore, errors and additional ad hoc rebalances
carried out by the Index provider to the Index may increase the costs to and the
tracking error risk of the Fund.
Index
tracking risk may be heightened during times of increased market volatility or
other unusual market conditions. Changes to the composition of the 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.
Industrial Development Bond Risk.
These revenue bonds are issued by or on behalf of public authorities to obtain
funds to finance various public and/or privately operated facilities, including
those for business and manufacturing, housing, sports, pollution control,
airport, mass transit, port and parking facilities. These bonds are normally
secured only by the revenues from the project and not by state or local
government tax payments. Consequently, the credit quality of these securities is
dependent upon the ability of the user of the facilities financed by the bonds
and any guarantor to meet its financial obligations. Payment of interest on and
repayment of principal of such bonds are the responsibility of the user and/or
any guarantor. These bonds are subject to a wide variety of risks, many of which
relate to the nature of the specific project. Generally, the value and credit
quality of these bonds are sensitive to the risks related to an economic
slowdown.
Interest Rate Risk.
Debt securities and preferred securities are subject to interest rate risk.
Interest rate risk refers to fluctuations in the value of a security resulting
from changes in the general level of interest rates. When the general level of
interest rates goes up, the prices of most debt securities and certain preferred
securities go down. When the general level of interest rates goes down, the
prices of most debt securities go up. Many factors can cause interest rates to
rise, including central bank monetary policy, rising inflation rates and general
economic conditions. Debt securities with longer durations tend to be more
sensitive to interest rate changes, usually making them more volatile than debt
securities, such as bonds, with shorter durations. A substantial investment by
the Fund in debt securities with longer-term maturities during periods of rising
interest rates may cause the value of the Fund’s investments to decline
significantly. Changing interest rates may have unpredictable effects on
markets, may result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates and/or
volatility. It is difficult to predict the magnitude, timing or direction of
interest rate changes and the impact these changes will have on the markets in
which the Fund invests.
Leverage
Risk.
To the extent that the Fund borrows money or utilizes certain derivatives, it
may be leveraged. Leveraging generally exaggerates the effect on net asset value
of any increase or decrease in the market value of the Fund’s portfolio
securities. The Fund is required to comply with the derivatives rule when it
engages in transactions that create future Fund payment or delivery obligations.
The Fund is required to comply with the asset coverage requirements under the
Investment Company Act of 1940 when it engages in borrowings and/or transactions
treated as borrowings.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts and social unrest) adversely interrupt the
global economy; in these and other circumstances, such events or developments
might affect companies world-wide. Overall securities values could decline
generally or underperform other investments. An investment may lose
money.
Municipal
Securities Risk.
Municipal securities are subject to the risk that litigation, legislation or
other political events, local business or economic conditions, credit rating
downgrades or the bankruptcy of an issuer could have a significant effect on the
issuer’s ability to make payments of principal and/or interest or otherwise
affect the value of such securities. In addition, there is a risk that, as a
result of the recent economic crisis, the ability of any issuer to pay, when
due, the principal or interest on its municipal bonds may be materially
affected. Certain municipalities may have difficulty meeting their obligations
due to, among other reasons, changes in underlying demographics. These actions
present heightened risks to debt instruments, and such risks could be even
further heightened if these actions are unexpectedly or suddenly reversed or are
ineffective in achieving their desired outcomes. Municipal instruments may be
susceptible to periods of economic stress, which could affect the market values
and marketability of municipal obligations of issuers in a state, U.S.
territory, or possession. For example, the COVID-19 pandemic has significantly
stressed the financial resources of many municipal issuers, which may impair a
municipal issuer’s ability to meet its financial obligations when due and could
adversely impact the value of its bonds, which could negatively impact the
performance of the Fund. Municipal securities can be significantly affected by
political changes as well as uncertainties in the municipal market
related
to taxation, legislative changes or the rights of municipal security holders.
Because many municipal securities are issued to finance similar projects,
especially those relating to education, health care, transportation, utilities
and water and sewer, conditions in those sectors can affect the overall
municipal market. Municipal securities include general obligation bonds, which
are backed by the “full faith and credit” of the issuer, which has the power to
tax residents to pay bondholders. Timely payments depend on the issuer’s credit
quality, ability to raise tax revenues and ability to maintain an adequate tax
base. General obligation bonds generally are not backed by revenues from a
specific project or source. Municipal securities also include revenue bonds,
which are generally backed by revenue from a specific project or tax. Revenue
bonds generally are not backed by the full faith and credit and general taxing
power of the issuer. Municipal securities also include special tax bonds, which
are usually backed and payable through a single tax, or series of special taxes
such as incremental property taxes. The failure of the tax levy to generate
adequate revenue to pay the debt service on the bonds may cause the value of the
bonds to decline. Municipal securities backed by current or anticipated revenues
from a specific project or specific assets or a specific tax can be negatively
affected by the discontinuance of that taxation or the inability to collect
revenues for the project or from the assets or tax.
If
the Internal Revenue Service determines that an issuer of a municipal security
has not complied with applicable tax requirements, interest from the security
could become taxable and the security could decline significantly in value.
The
bond markets may experience reduced liquidity due to events such as limited
trading activity, reductions in bond inventory, market volatility, and rapid or
unexpected changes in interest rates. Less liquid markets could lead to greater
price volatility and limit the Fund's ability to sell a holding at a suitable
price. The market for municipal bonds may be less liquid than for taxable bonds.
There may also be less information available on the financial condition of
issuers of municipal securities than for public corporations. The reorganization
of a municipality’s debts may include extending debt maturities, reducing the
amount of principal or interest, refinancing the debt or taking other measures,
which may significantly affect the rights of creditors and the value of the
securities issued by the municipality and the value of the Fund’s investments.
The taxing power of any governmental entity may be limited and an entity’s
credit may depend on factors which are beyond the entity’s control.
Municipal
bonds may expose the Fund to the following risks:
Education
Bond Risk.
In general, there are two types of education related bonds: those issued to
finance projects for public and private colleges and universities, and those
representing pooled interests in student loans. Bonds issued to supply
educational institutions with funds are subject to the risk of unanticipated
revenue decline, primarily the result of decreasing student enrollment or
decreasing state and federal funding. Among the factors that may lead to
declining or insufficient revenues are restrictions on students’ ability to pay
tuition, availability of state and federal funding and general economic
conditions. Student loan revenue bonds are generally offered by state (or
substate) authorities or commissions and are backed by pools of student loans.
Underlying student loans may be guaranteed by state guarantee agencies and may
be subject to reimbursement by the United States Department of Education through
its guaranteed student loan program. Others may be private, uninsured loans made
to parents or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be applied to
redemption of bonds or may be used to re-lend, depending on program latitude and
demand for loans. Cash flows supporting student loan revenue bonds are impacted
by numerous factors, including the rate of student loan defaults, seasoning of
the loan portfolio and student repayment deferral periods of forbearance. Other
risks associated with student loan revenue bonds include potential changes in
federal legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
Electric
Utilities Bond Risk.
The electric utilities industry has been experiencing, and will continue to
experience, increased competitive pressures. Federal legislation may open
transmission access to any electricity supplier, although it is not presently
known to what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel; (b) the availability and cost of capital; (c) the
effects of conservation on energy demand; (d) the effects of rapidly changing
environmental, safety and licensing requirements, and other federal, state and
local regulations; (e) timely and sufficient rate increases and governmental
limitations on rates charged to customers; (f) the effects of opposition to
nuclear power; (h) increases in operating costs; and (i) obsolescence of
existing equipment, facilities and products.
Health
Care Bond Risk. The
health care industry is subject to regulatory action by a number of private and
governmental agencies, including federal, state and local governmental agencies.
A major source of revenues for the health care industry is payments from
Medicare and Medicaid programs. As a result, the industry is sensitive to
legislative changes and reductions in governmental spending for such programs.
Numerous other factors may also affect the industry and the value and credit
quality of health care bonds, such as general and local economic conditions,
demand for services, expenses (including malpractice insurance premiums) and
competition among health care providers. The following elements may adversely
affect health care facility operations: the implementation of national and/or
state-specific health insurance exchanges; other national, state or local health
care reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services are
delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; efforts by employers, insurers, and governmental
agencies to reduce the costs of health insurance and health care services; and
increases and decreases in the cost and availability of medical
products.
Housing
Bond Risk. Housing
revenue bonds are generally issued by a state, county, city, local housing
authority or other public agency and are secured by the revenues derived from
mortgages purchased with the proceeds of the bond issue. It is extremely
difficult to predict the supply of available mortgages to be purchased with the
proceeds of an issue or the future cash flow from the underlying mortgages.
Consequently, there are risks that proceeds will exceed supply, resulting in
early retirement of bonds, or that homeowner repayments will create an irregular
cash flow. Many factors may affect the financing of multi-family housing
projects, including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions and changes to current laws and
regulations.
Industrial
Development Bond Risk.
These revenue bonds are issued by or on behalf of public authorities to obtain
funds to finance various public and/or privately operated facilities, including
those for business and manufacturing, housing, sports, pollution control,
airport, mass transit, port and parking facilities. These bonds are normally
secured only by the revenues from the project and not by state or local
government tax payments. Consequently, the credit quality of these securities is
dependent upon the ability of the user of the facilities financed by the bonds
and any guarantor to meet its financial obligations. Payment of interest on and
repayment of principal of such bonds are the responsibility of the user and/or
any guarantor. These bonds are subject to a wide variety of risks, many of which
relate to the nature of the specific project. Generally, the value and credit
quality of these bonds are sensitive to the risks related to an economic
slowdown.
Lease
Obligations Risk.
Lease obligations may have risks not normally associated with general obligation
or other revenue bonds. Leases and installment purchase or conditional sale
contracts (which may provide for title to the leased asset to pass to the issuer
eventually) have developed as a means for governmental issuers to acquire
property and equipment without the necessity of complying with the statutory
requirements generally applicable for the issuance of debt.
Resource
Recovery Bond Risk. Resource
recovery bonds are a type of revenue bond issued to build facilities such as
solid waste incinerators or waste-to-energy plants. Typically, a private
corporation is involved, at least during the construction phase, and the revenue
stream is secured by fees or rents paid by municipalities for use of the
facilities.
These
bonds are normally secured only by the revenues from the project and not by
state or local government tax receipts. Consequently, the credit quality of
these securities is dependent upon the ability of the user of the facilities
financed by the bonds and any guarantor to meet its financial obligations. The
viability of a resource recovery project, environmental protection regulations,
and project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
Tobacco
Bond Risk.
Tobacco settlement revenue bonds are rarely general or legal obligations of a
state or any of its political subdivisions and neither the full faith and credit
nor the taxing power nor any other assets or revenues of a state or of any
political subdivision will be pledged to paying such bonds. In addition, tobacco
companies’ profits from the sale of tobacco products are inherently variable and
difficult to estimate. There can be no guarantee that tobacco companies will
earn enough revenues to cover the payments due under tobacco bonds. The revenues
of tobacco companies may be adversely affected by the adoption of new
legislation and/or by litigation.
Transportation
Bond Risk.
Transportation debt may be issued to finance the construction of airports, toll
roads, highways or other transit facilities. Fuel costs and availability affect
transportation related securities, as do the presence of alternate forms of
transportation, such as public transportation. Airport bonds are also dependent
on the general stability of the airline industry and on the stability of a
specific carrier that uses the airport as a hub. Air traffic generally follows
broader economic trends. Toll road bonds are also affected by toll levels, the
presence of competing roads and the general economic health of an area.
Municipal securities that are issued to finance a particular transportation
project often depend solely on revenues from that project to make principal and
interest payments. Adverse conditions and developments affecting a particular
project may result in lower revenues to the issuer of the municipal
securities.
Water
and Sewer Bond Risk.
Water and sewer revenue bonds are often considered to have relatively secure
credit as a result of their issuer’s importance, monopoly status and generally
unimpeded ability to raise rates. Despite this, lack of water supply due to
insufficient rain, run off or snow pack is a concern that has led to past
defaults. Further, public resistance to rate increases, costly environmental
litigation and federal environmental mandates are challenges faced by issuers of
water and sewer.
New
York Risk.
The Fund may invest a significant portion of its assets in New York municipal
bonds. Consequently, the Fund may be affected by political, economic, regulatory
or other developments within the State of New York, and by the financial
condition of its public authorities and political subdivisions.
Unfavorable
developments in any economic sector may have a substantial impact on the overall
New York municipal market. As the nation’s financial capital, New York State’s
and New York City’s economy is heavily dependent on the financial sector and may
be sensitive to economic problems affecting the sector. New York State and New
York City also face a particularly large degree of uncertainty from interest
rate risk and equity market volatility. The New York State and New York City
economy tends to be more sensitive to monetary policy actions and to movements
in the national and world economies than the economies of other states. Certain
issuers of New York municipal bonds have experienced serious financial
difficulties in the past and reoccurrence of these difficulties may impair the
ability of certain New York issuers to pay principal or interest on their
obligations.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. 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 Authorized
Participants 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 net asset value.
Van
Eck Securities Corporation, the distributor of the Shares, 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 Authorized Participants creating and redeeming directly
with the Fund.
Decisions
by market makers or Authorized Participants 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 the 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 net asset value and also in greater than normal intraday
bid/ask spreads for Fund Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Non-Diversification
Risk.
The Fund may become classified as “non-diversified” under the Investment Company
Act of 1940 solely as a result of a change in relative market capitalization or
index weighting of one or more constituents of the its Index. If the Fund
becomes non-diversified, it may invest a greater portion of its assets in
securities of a smaller number of individual issuers than a diversified fund. As
a result, changes in the market value of a single investment could cause greater
fluctuations in share price than would occur in a more diversified
fund.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Passive
Management Risk.
Unlike many investment companies, the Fund is not “actively” managed. Therefore,
unless a specific security is removed from its Index, the Fund generally would
not sell a security because the security’s issuer is in financial trouble. If a
specific security is removed from the 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 the Fund involves risks similar to those of
investing in any fund that invests in bonds or equity securities, such as market
fluctuations caused by such factors as economic and political developments,
changes in interest rates and perceived trends in security prices. The 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 the 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 the Fund’s Index provider to postpone a scheduled rebalance
or reconstitution, which could cause the Fund’s Index to vary from its normal or
expected composition. This means that, based on market and economic conditions,
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.
Private Activity Bonds Risk. The
Fund will be sensitive to, and its performance may depend to a greater extent
on, the overall condition and performance of private activity bonds. The issuers
of private activity bonds may be negatively impacted by conditions affecting
either the general credit of the user of the private activity project or the
project itself.
Conditions
such as regulatory and environmental restrictions and economic downturns may
lower the need for these facilities and the ability of users of the project to
pay for the facilities. This could cause a decline in the Fund’s value. The
Fund’s private activity bond holdings also may pay interest subject to the
alternative minimum tax.
Puerto
Rico Risk.
The Fund may invest a portion of its assets in municipal obligations of issuers
located in Puerto Rico. Consequently, the Fund may be affected by political,
economic, regulatory and other developments within Puerto Rico and by the
financial condition of Puerto Rico’s political subdivisions, agencies,
instrumentalities and public authorities. Events, including economic and
political policy changes, tax base erosion, territory constitutional limits on
tax increases, budget deficits and other financial difficulties and changes in
the credit ratings assigned to Puerto Rico’s municipal issuers, are likely to
affect the Fund’s performance. The Puerto Rican economy is reliant on
manufacturing, services and tourism, and its economic and financial operations
parallel the economic cycles of the United States. As a result, a decline in
tourism, which is an important component of the Puerto Rico economy, and the
U.S. recession have had a negative effect on the overall economy of Puerto Rico.
Puerto Rico continues to face significant fiscal challenges, including
persistent government deficits, underfunded public pension benefit obligations,
underfunded government retirement systems, sizable debt service obligations and
a high unemployment rate.
The
Puerto Rican government defaulted on nearly $2 billion in debt payments due on
July 1, 2016. In May 2017, the newly created oversight board that oversees
Puerto Rico’s finance and court-supervised debt restructuring initiated a
bankruptcy-like process for the general government, general obligation debt, and
certain Puerto Rico instrumentalities, including the Puerto Rico Sales Tax
Financing Corporation, the Highways and Transportation Authority, and the
Employee Retirement System. These municipal obligations are subject to
heightened risks that may adversely affect the value of the Fund’s portfolio and
the repayment of such bonds may be subject to significant uncertainties if
Puerto Rico’s economic downturn continues. Recently, the oversight board
initiated legal proceedings to seek to have various general obligation debt
issuances retroactively declared null and void and potentially claw back fees
and interest payments tied to these debt issuances. It is not possible to
predict the results of the legal proceedings. Further legislation by the U.S.
Congress, actions by the oversight board or court approval of an unfavorable
debt restructuring deal could have a negative impact on the marketability,
liquidity or value of certain investments held by the Fund and could adversely
impact the Fund.
Risks
of Investing in Closed-End Funds. The
shares of a closed-end fund may trade at a discount or premium to its net asset
value. Certain closed-end funds traded on exchanges may be thinly traded and
experience large spreads between the “ask” price quoted by a seller and the
“bid” price offered by a buyer. A closed-end fund may be leveraged as part of
its investment strategy. As a result, the Fund may be indirectly exposed to the
effects of leverage through its investment in the Underlying Funds. Investments
in Underlying Funds that use leverage may cause the value of the Fund’s Shares
to be more volatile than if the Fund invested in Underlying Funds that do not
utilize leverage and may expose the Fund to the possibility that the Fund’s
long-term returns on such securities (and, indirectly, the long-term returns on
the Shares) will be diminished. To comply with provisions of the Investment
Company Act of 1940 or regulations thereunder, on any matter upon which the
Underlying Fund shareholders are solicited to vote, the Adviser will vote
Underlying Fund shares held by the Fund in the same general proportion as shares
held by other shareholders of the Underlying Fund. In addition, to the extent
that a closed-end fund persistently trades at a significant discount to net
asset value, it may become the target of activist shareholders seeking to narrow
the discount, which may increase the expenses of such fund.
Sampling
Risk. The
Fund’s use of a representative sampling approach will result in its holding a
smaller number of securities than are in its Index. As a result, an adverse
development respecting an issuer of securities held by the Fund could result in
a greater decline in net asset value than would be the case if the Fund held all
of the securities in its Index. Conversely, a positive development relating to
an issuer of securities in the Index that is not held by the Fund could cause
the Fund to underperform the Index. To the extent the assets in the Fund are
smaller, these risks will be greater.
Shareholder
Risk. Certain
shareholders, including other funds advised by the Adviser, may from time to
time own a substantial amount of the Fund’s Shares. In addition, a third party
investor, the Adviser or an affiliate of the Adviser, an Authorized Participant,
a market maker, or another entity may invest in the 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 the Fund. In addition, transactions by large
shareholders may account for a large percentage of the trading volume on the
exchange and may, therefore, have a material effect on the market price of the
Shares.
Special Tax Bond Risk.
Special tax bonds are usually backed and payable through a single tax, or series
of special taxes such as incremental property taxes. The failure of the tax levy
to generate adequate revenue to pay the debt service on the bonds may cause the
value of the bonds to decline. Adverse conditions and developments affecting a
particular project may result in lower revenues to the issuer of the municipal
securities, which may adversely affect the value of the Fund’s
portfolio.
State
Concentration Risk.
The Fund may invest a significant portion of its assets in municipal obligations
of issuers located in a particular state or states. Consequently, the Fund may
be affected by political, economic, regulatory and other developments within the
state or states and by the financial condition of the state’s or states’
political subdivisions, agencies, instrumentalities and public authorities.
Sustainable
Impact Investing Strategy Risk.
The Fund’s strategy of investing in municipal debt securities of issuers
promoting sustainable development may limit the types and number of investments
available to the Fund or cause the Fund to invest in securities that
underperform the market as a whole. As a result, the Fund may underperform funds
that do not have a sustainable investing strategy or funds with sustainable
investing strategies that do not employ HIP Ratings. In addition, the Fund
relies on the Data Provider for the identification of issuers that promote
sustainable development based on their HIP Ratings; however, there can be no
guarantee that the Data Provider’s methodology will align with the Fund’s
investment strategy or desirable issuers can be correctly identified. Moreover,
SDGs 9, 11 and 12 may be modified or abandoned in the future and there can be no
guarantee that the Fund will be able to continue to use HIP Ratings or find an
appropriate substitute ratings system.
Tax
Risk. There
is no guarantee that the Fund’s income will be exempt from U.S. federal or state
or local income taxes. Events occurring after the date of issuance of a
municipal bond or after the Fund’s acquisition of a municipal bond may result in
a determination that interest on that bond is includible in gross income for
U.S. federal income tax purposes retroactively to its date of issuance. Such a
determination may cause a portion of prior distributions by the Fund to its
shareholders to be taxable to those shareholders in the year of receipt.
Federal, state or local changes in income or alternative minimum tax rates or in
the tax treatment of municipal bonds may make municipal bonds less attractive as
investments and cause them to lose value.
Texas
Risk.
The Fund may invest a significant portion of its assets in Texas municipal
bonds. Consequently, the Fund may be affected by negative political, economic,
regulatory or other developments within the State of Texas including the
financial condition of its public authorities and political
subdivisions.
Trading
Issues Risk.
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 relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Underlying
Funds Risk.
The Fund may be subject to the following risks as a result of its investment in
the Underlying Funds:
Market
Risk.
The prices of the securities in the Underlying 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. An
investment in an Underlying Fund may lose money.
Municipal
Securities Risk.
The Underlying Funds may invest in municipal securities. Municipal securities
are subject to the risk that litigation, legislation or other political events,
local business or economic conditions, credit rating downgrades, or the
bankruptcy of the issuer could have a significant effect on an issuer’s ability
to make payments of principal and/or interest or otherwise affect the value of
such securities. Certain municipalities may have difficulty meeting their
obligations due to, among other reasons, changes in underlying demographics.
Municipal securities can be significantly affected by political changes as well
as uncertainties in the municipal market related to government regulation,
taxation, legislative changes or the rights of municipal security holders.
Because many municipal securities are issued to finance similar projects,
especially those relating to education, health care, transportation, utilities
and water and sewer, conditions in those sectors can affect the overall
municipal market. Municipal securities include general obligation bonds, which
are backed by the “full faith and credit” of the issuer, which has the power to
tax residents to pay bondholders. Timely payments depend on the issuer’s credit
quality, ability to raise tax revenues and ability to maintain an adequate tax
base. General obligation bonds generally are not backed by revenues from a
specific project or source. Municipal securities also include revenue bonds,
which are generally backed by revenue from a specific project or tax. The issuer
of a revenue bond makes interest and principal payments from revenues generated
from a particular source or facility, such as a tax on particular property or
revenues generated from a municipal water or sewer utility or an airport.
Revenue bonds generally are not backed by the full faith and credit and general
taxing power of the issuer. The market for municipal bonds may be less liquid
than for taxable bonds. There may be less information available on the financial
condition of issuers of municipal securities than for public corporations.
Municipal instruments may be susceptible to periods of economic stress, which
could affect the market values and marketability of many or all municipal
obligations of issuers in a state, U.S. territory, or possession. For example,
the COVID-19 pandemic has significantly stressed the financial resources of many
municipal issuers, which may impair a municipal issuer’s ability to meet its
financial obligations when due and could adversely impact the value of its
bonds, which could negatively impact the performance of the Fund.
High
Yield Securities Risk.
The Underlying Funds may invest in high yield securities. Securities rated below
investment grade are commonly referred to as high yield securities or “junk
bonds.” High yield securities are often issued by issuers that are
restructuring, are smaller or less creditworthy than other issuers, or are more
highly indebted than other issuers. High yield securities are subject to greater
risk of loss of income and principal than higher rated securities and are
considered speculative. The prices of high yield securities are likely to be
more sensitive to adverse economic changes or individual municipal developments
than higher rated securities. During an economic downturn or substantial period
of rising interest rates, high yield security issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Fund may incur
additional expenses to seek recovery. The secondary market for municipal
securities that are high yield securities may be less liquid than the markets
for higher quality municipal securities or high yield securities issued by
corporate issuers and, as such, may have an adverse effect on the market prices
of and an Underlying Fund’s ability to arrive at a fair value for certain
securities. In addition, periods of economic uncertainty and change may result
in an increased volatility of market prices of high yield securities and a
corresponding volatility in the Fund’s net asset value.
Credit
Risk.
Bonds are subject to credit risk. Credit risk refers to the possibility that the
issuer or guarantor of a security will be unable and/or unwilling to make timely
interest payments and/or repay the principal on its debt or to otherwise honor
its obligations and/or default completely. Bonds are subject to varying degrees
of credit risk, depending on the issuer’s financial condition and on the terms
of the securities, which may be reflected in credit ratings. There is a
possibility that the credit rating of a bond may be downgraded after purchase or
the perception of an issuer’s creditworthiness may decline, which may adversely
affect the value of the security. The Underlying Funds may hold securities that
are insured by a bond insurer. A downgrade of the credit rating of such bond
insurer may cause the value of the insured security to decline.
Interest
Rate Risk.
Debt securities, such as bonds, are also subject to interest rate risk. Interest
rate risk refers to fluctuations in the value of a bond resulting from changes
in the general level of interest rates. When the general level of interest rates
goes up, the prices of most debt securities go down. When the general level of
interest rates goes down, the prices of most debt securities go up. The
prevailing historically low interest rate environment increases the risks
associated with rising interest rates, including the potential for periods of
volatility and increased redemptions. In addition, debt securities, such as
bonds, with longer durations tend to be more sensitive to interest rate changes,
usually making them more volatile than debt securities with shorter durations.
In addition, in response to the COVID-19 pandemic, as with other serious
economic disruptions, governmental authorities and regulators are enacting
significant fiscal and monetary policy changes, including providing direct
capital infusions into companies, creating new monetary programs and lowering
interest rates. These actions present heightened risks to debt instruments, and
such risks could be even further heightened if these actions are unexpectedly or
suddenly reversed or are ineffective in achieving their desired
outcomes.
Call
Risk.
The Underlying Funds may invest in callable bonds. If interest rates fall, it is
possible that issuers of callable securities will “call” (or prepay) their bonds
before their maturity date. If a call were exercised by the issuer during or
following a period of declining interest rates, the Underlying Fund is likely to
have to replace such called security with a lower yielding security or
securities with greater risks or other less favorable features. If that were to
happen, it would decrease the Underlying Fund’s net investment income, resulting
in a decline in the Fund’s income.
Tax
Risk. There
is no guarantee that the Underlying Fund’s income will be exempt from U.S.
federal or state or local income taxes. Events occurring after the date of
issuance of a municipal bond or after the Underlying Fund’s acquisition of a
municipal bond may result in a determination that interest on that bond is
includible in gross income for U.S. federal income tax purposes retroactively to
its date of issuance. Such a determination may cause a portion of prior
distributions by the Underlying Fund to its shareholders to be taxable to those
shareholders in the year of receipt. Federal or state or local changes in income
or alternative minimum tax rates or in the tax treatment of municipal bonds may
make municipal bonds less attractive as investments and cause them to lose
value.
Liquidity
Risk.
Unlike the Fund, as closed-end funds the Underlying Funds are not limited in
their ability to invest in illiquid securities. Securities with reduced
liquidity involve greater risk than securities with more liquid markets. Prices
of securities not traded on an exchange may vary over time. Secondary trading of
a fixed-income security may decline for a period of time if its credit quality
unexpectedly declines. An Underlying Fund may not receive full value for assets
sold during periods of infrequent trading.
Leverage
Risk. Ordinary
borrowings by an Underlying Fund or an Underlying Fund’s investment in
derivatives may result in leverage. If the prices of those investments decrease,
or if the cost of borrowing exceeds any increase in the prices of investments
made with the proceeds of the borrowing, the net asset value of the Underlying
Fund’s shares will decrease more than if the Underlying Fund had not used
leverage. An Underlying Fund may have to sell investments at a time and at a
price that is unfavorable to the Underlying Fund to repay borrowings. Interest
on borrowings is an expense the Underlying Fund would not otherwise incur.
Leverage magnifies the potential for gain and the risk of loss. If an Underlying
Fund uses leverage, there can be no assurance that the Underlying Fund’s
leverage strategy will be successful.
Anti-Takeover
Measures Risk.
Certain Underlying Funds may have provisions in their organizational documents
intended to limit the ability of third parties to acquire control or change the
composition of the Underlying Fund’s board. This may discourage a third party
from seeking to obtain control of the Underlying Fund, which could limit the
ability of Underlying Fund shareholders to sell their shares at a premium over
prevailing market prices.
Non-Diversified
Risk.
Some of the Underlying Funds may invest a relatively high percentage of their
assets in a smaller number of issuers or may invest a larger proportion of their
assets in the obligations of a single issuer. Moreover, the gains and losses on
an investment in such an Underlying Fund may have a greater impact on the Fund’s
net asset value and may make the value of the Fund’s investment in such an
Underlying Fund more volatile than an investment in more diversified Underlying
Funds.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 or regulations thereunder that limit the amount
that the Fund and its affiliates, in the aggregate, can invest in the
outstanding voting securities of an unaffiliated Underlying Fund. The Fund and
its affiliates may not acquire “control” of an Underlying Fund, which is
presumed once ownership of an Underlying Fund’s outstanding voting securities
exceeds 25%. This limitation could inhibit the Fund’s ability to purchase one or
more Underlying Funds in the Index in the proportions represented in the Index.
In these circumstances, the Fund would be required to use sampling techniques,
which could increase the risk of tracking error.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
Each
Fund (except
the VanEck HIP Sustainable Muni ETF),
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 certain Funds in seeking
performance that corresponds to its respective Index, and in managing cash
flows, and may count towards compliance with a Fund’s 80% policy. Each Fund may
also invest, to the extent permitted by the Investment Company Act of 1940 and
the Securities and Exchange Commission regulations thereunder in other
affiliated and unaffiliated funds, such as open-end or closed-end management
investment companies, including other ETFs.
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 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 the 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 Fund’s
bank lending agent equal to at least 102% of the value of the portfolio
securities being loaned. This collateral is marked-to-market on a daily basis.
Although a Fund will receive collateral in connection with all loans of its
securities holdings, the Fund would be exposed to a risk of loss should a
borrower fail to return the borrowed securities (e.g.,
the Fund would have to buy replacement securities and the loaned securities may
have appreciated beyond the value of the collateral held by the Fund) or become
insolvent. A Fund may pay fees to the party arranging the loan of securities. In
addition, a Fund will bear the risk that it may lose money because the borrower
of the loaned securities fails to return the securities in a timely manner or at
all. Each Fund could also lose money in the event of a decline in the value of
any cash collateral or in the value of investments made with the cash
collateral. These events could trigger adverse tax consequences for the Funds.
Substitute payments for dividends received by a Fund for securities loaned out
by a Fund will not be considered qualified dividend income.
Unlike
many conventional mutual funds which are only bought and sold at closing net
asset values, the Shares of each Fund have been designed to be tradable in a
secondary market on an intra-day basis and to be created and redeemed
principally in-kind 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 net asset value 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 each Fund,
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 VanEck CEF Muni Income ETF, VanEck
High Yield Muni ETF, VanEck HIP Sustainable Muni ETF, VanEck Intermediate Muni
ETF, VanEck Long Muni ETF, VanEck Short High Yield Muni ETF, and VanEck Short
Muni ETF (the “Municipal 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-today investment management
of each Fund. As of June 30, 2023, the Adviser managed approximately
$77.75 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 for each Fund will be available
in the Trust’s semi-annual report for the period ended October 31, 2023.
Pursuant
to the Municipal Investment Management Agreement, the Adviser is responsible for
all expenses of VanEck CEF Muni Income ETF, VanEck High Yield Muni ETF, VanEck
HIP Sustainable Muni ETF, VanEck Intermediate Muni ETF, VanEck Long Muni ETF,
VanEck Short High Yield Muni ETF and VanEck Short Muni ETF, including the costs
of transfer agency, custody, fund administration, legal, audit and other
services, except for the fee payment under the Municipal Investment Management
Agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. For its services to each
Fund, each Fund has agreed to pay the Adviser an annual unitary management fee
equal to 0.40% (with respect to VanEck CEF Muni Income ETF), 0.32% (with respect
to VanEck High Yield Muni ETF), 0.35% (with respect to VanEck Short High Yield
Muni ETF), 0.24% (with respect to VanEck HIP Sustainable Muni ETF, VanEck
Intermediate Muni ETF and VanEck Long Muni ETF), and 0.07% (with respect to
VanEck Short Muni ETF) 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) the Securities and Exchange Commission 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 September 1, 2024.
Prior
to June 20, 2023, for its services to the VanEck High Yield Muni ETF and VanEck
Short Muni ETF, each of VanEck High Yield Muni ETF and VanEck Short Muni ETF
paid the Adviser an annual unitary management fee equal to 0.35% and 0.20%,
respectively, of its average daily net assets.
Manager
of Managers Structure. With
respect to VanEck HIP Sustainable Muni ETF, the
Adviser and the Trust may rely on an exemptive order (the “Order”) from the
Securities and Exchange Commission 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)
Administrator,
Custodian and Transfer Agent.
Van
Eck Associates Corporation is the administrator for the Funds (the
“Administrator”), and State Street Bank and Trust Company is the custodian of
the Funds’ assets and provides transfer agency and fund accounting services to
the Funds. The Administrator is responsible for certain clerical, recordkeeping
and/or bookkeeping services which are required to be provided pursuant to the
Investment Management Agreement.
Distributor.
Van
Eck Securities Corporation is the distributor of the Shares (the “Distributor”).
The Distributor will not distribute Shares in less than a specified number of
Shares, each called a “Creation Unit,” and does not maintain a secondary market
in the Shares. The Shares are traded in the secondary market.
The
portfolio managers who currently share joint responsibility for the day-to-day
management of the VanEck CEF Muni Income ETF’s portfolio are Peter H. Liao and
Griffin Driscoll.
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.
Liao serves as a portfolio manager of other funds of the Trust. Mr. Liao also
serves as portfolio manager for certain other investment companies and pooled
investment vehicles advised by the Adviser. See the Funds’ SAI for additional
information about the portfolio manager’s compensation, other accounts managed
by the portfolio manager and his respective ownership of Shares.
Mr.
Driscoll is deputy portfolio manager of the Fund. He has been employed with the
Adviser since 2018 and has over 6 years’ experience in the financial markets.
Mr. Driscoll received his Bachelor of Science in Finance from Providence
College.
The
portfolio managers who currently share joint responsibility for the day-to-day
management of the VanEck High Yield Muni ETF's, VanEck HIP Sustainable Muni
ETF's, VanEck Intermediate Muni ETF's, VanEck Long Muni ETF's. VanEck Short High
Yield Muni ETF's, and VanEck Short Muni ETF's portfolios are James T. Colby III
and Stephanie Wang.
Mr.
Colby has been employed by the Adviser as a portfolio manager since September
2007. Mr. Colby graduated from Brown University in 1972 with a Bachelor of Arts
in Economics and International Relations; and from Hofstra University in 1979
with a Masters of Business Administration in Finance.
Ms.
Wang is deputy portfolio manager of the Funds. She has been employed with the
Adviser since 2016. Ms. Wang graduated from Baruch College in 2013 with a
Bachelor of Business Administration in Finance and in 2016 with a Master's in
Financial Engineering. She is a CFA®
charter holder and a member of the CFA Institute.
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 of each Fund.
DETERMINATION
OF NAV
The
net asset value (“NAV”) per Share for each Fund is computed by dividing the
value of the net assets of the Fund (i.e.,
the value of its total assets less total liabilities) by the total number of
Shares outstanding. Expenses and fees, including the management fee, are accrued
daily and taken into account for purposes of determining NAV. The NAV of each
Fund is determined each business day as of the close of trading (ordinarily 4:00
p.m., Eastern time) on the New York Stock Exchange.
The
values of each Fund’s portfolio securities are based on the securities’ closing
prices on the markets on which the securities trade, when available. Due to the
time differences between the United States and certain countries in which
certain Funds invest, securities on these exchanges may not trade at times when
Shares of the Fund will trade. In the absence of a last reported sales price, or
if no sales were reported, and for other assets for which market quotes are not
readily available, values may be based on quotes obtained from a quotation
reporting system, established market makers or by an outside independent pricing
service. Debt instruments with remaining maturities of more than 60 days are
valued at the evaluated mean price provided by an outside
independent
pricing service. If an outside independent pricing service is unable to provide
a valuation, the instrument is valued at the mean of the highest bid and the
lowest asked quotes obtained from one or more brokers or dealers selected by the
Adviser. Prices obtained by an outside independent pricing service may use
information provided by market makers or estimates of market values obtained
from yield data related to investments or securities with similar
characteristics and may use a computerized grid matrix of securities and its
evaluations in determining what it believes is the fair value of the portfolio
securities. Short-term debt instruments having a maturity of 60 days or less are
valued at amortized cost. Any assets or liabilities denominated in currencies
other than the U.S. dollar are converted into U.S. dollars at the current market
rates on the date of valuation as quoted by one or more sources. If a market
quotation for a security or other asset is not readily available or the Adviser
believes it does not otherwise accurately reflect the market value of the
security or asset at the time a Fund calculates its NAV, the security or asset
will be fair valued by the Adviser in accordance with the Trust’s valuation
policies and procedures approved by the Board of Trustees. Each Fund may also
use fair value pricing in a variety of circumstances, including but not limited
to, situations when the value of a security in the Fund’s portfolio has been
materially affected by events occurring after the close of the market on which
the security is principally traded (such as a corporate action or other news
that may materially affect the price of a security) or trading in a security has
been suspended or halted. In addition, each Fund that holds foreign equity
securities currently expects that it will fair value certain of the foreign
equity securities held by the Fund, if any, each day the Fund calculates its
NAV, except those securities principally traded on exchanges that close at the
same time the Fund calculates its NAV.
Accordingly,
a Fund’s NAV may reflect certain portfolio securities’ fair values rather than
their market prices at the time the exchanges on which they principally trade
close. Fair value pricing involves subjective judgments and it is possible that
a fair value determination for a security or other asset is materially different
than the value that could be realized upon the sale of such security or asset.
In addition, fair value pricing could result in a difference between the prices
used to calculate a Fund’s NAV and the prices used by such Fund’s respective
Index. This may adversely affect a Fund’s ability to track its Index. With
respect to securities that are principally traded on foreign exchanges, the
value of a Fund’s portfolio securities may change on days when you will not be
able to purchase or sell your Shares.
INTRADAY
VALUE
The
trading prices of the Funds’ Shares in the secondary market generally differ
from the Funds’ daily NAV and are affected by market forces such as the supply
of and demand for Fund Shares and underlying securities held by each Fund,
economic conditions and other factors. Information regarding the intraday value
of the Funds’ Shares (“IIV”) may be disseminated throughout each trading day by
an Exchange or by market data vendors or other information providers. The IIV is
based on the current market value of the securities and/or cash required to be
deposited in exchange for a Creation Unit. The IIV does not necessarily reflect
the precise composition of the current portfolio of securities held by each Fund
at a particular point in time or the best possible valuation of the current
portfolio. Therefore, the IIV should not be viewed as a “real-time” update of
the Funds’ NAV, which is computed only once a day. The IIV is generally
determined by using current market quotations and/or price quotations obtained
from broker-dealers and other market intermediaries that may trade in the
portfolio securities held by each Fund and valuations based on current market
rates. The quotations and/or valuations of certain Fund holdings may not be
updated during U.S. trading hours if such holdings do not trade in the United
States. Each Fund is not involved in, or responsible for, the calculation or
dissemination of the IIV and makes no warranty as to its accuracy.
RULE
144A AND OTHER UNREGISTERED SECURITIES
An
AP (i.e.,
a person eligible to place orders with the Distributor to create or redeem
Creation Units of a Fund) that is not a “qualified institutional buyer,” as such
term is defined under Rule 144A of the Securities Act of 1933, as amended (the
“Securities Act”), will not be able to receive, as part of a redemption,
restricted securities eligible for resale under Rule 144A or other unregistered
securities.
BUYING
AND SELLING EXCHANGE-TRADED SHARES
The
Shares of the Funds are listed on the 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 an Exchange is closed (other than customary
weekend and holiday closings); (2) for any period during which trading on an
Exchange is suspended or restricted; (3) for any period during which an
emergency exists as a result of which disposal of the Shares of a Fund or
determination of its NAV is not reasonably practicable; or (4) in such other
circumstance as is permitted by the SEC.
Market
Timing and Related Matters.
The
Funds impose no restrictions on the frequency of purchases and redemptions.
Frequent purchases and redemptions of Fund Shares may attempt to take advantage
of a potential arbitrage opportunity presented by a lag between a change in the
value of a Fund’s portfolio securities after the close of the primary markets
for a Fund’s portfolio securities and the reflection of that change in a Fund’s
NAV (“market timing”). The Board of Trustees considered the nature of each Fund
(i.e.,
a fund whose Shares are expected to trade intraday), that the Adviser monitors
the trading activity of APs for patterns of abusive trading, that the Funds
reserve the right to reject orders that may be disruptive to the management of
or otherwise not in the Funds’ best interests, and that each Fund may fair value
certain of its securities. Given this structure, the Board of Trustees
determined that it is not necessary to impose restrictions on the frequency of
purchases and redemptions for the Funds at the present time.
DISTRIBUTIONS
Net
Investment Income and Capital Gains.
As a shareholder of a Fund, you are entitled to your share of such Fund’s
distributions of net investment income and net realized capital gains on its
investments. Each Fund pays out substantially all of its net earnings to its
shareholders as “distributions.”
Each
Fund typically earns income dividends from stocks and/or interest on municipal
securities. These amounts, net of expenses, are typically passed along to Fund
shareholders as dividends from net investment income. Each Fund generally
realizes capital gains or losses whenever it sells securities. Net capital gains
are distributed to shareholders as “capital gain distributions.” Dividends paid
by the Funds that are properly reported as exempt-interest dividends will not be
subject to regular federal income tax. Distributions from a Fund’s net
investment income (other than net tax-exempt income), including any 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 at least
monthly and net realized capital gains, if any, are typically distributed to
shareholders at least annually. Dividends may be declared and paid more
frequently to improve index tracking or to comply with the distribution
requirements of the Internal Revenue Code of 1986. In addition, in situations
where the Fund acquires investment securities after the beginning of a dividend
period, the 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 Funds owned the underlying investment securities for the entire
dividend period. If the 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 your 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 the Funds, 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) a 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,
monthly, 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.
Dividends
paid by the Funds that are properly reported as exempt-interest dividends will
not be subject to regular U.S. federal income tax. The Funds intend to invest
their assets in a manner such that a significant portion of their dividend
distributions to shareholders will generally be exempt from U.S. federal income
taxes, including the federal alternative minimum tax for noncorporate
shareholders. The VanEck High Yield Muni ETF, VanEck Short High Yield Muni ETF
and the Underlying Funds in which the VanEck CEF Muni ETF invests may invest a
portion of their assets in certain “private activity bonds,” and as a result, a
portion of the exempt-interest dividends paid by them will be an item of tax
preference to shareholders subject to the alternative minimum tax. Depending on
a shareholder’s state of residence, exempt-interest dividends from interest
earned on municipal securities of a state or its political subdivisions may be
exempt in the hands of such shareholder from income tax in that state. However,
income from municipal securities of states other than the shareholder’s state of
residence generally will not qualify for tax-free treatment for such
shareholder.
Distributions
from a Fund’s net investment income other than net tax-exempt income, including
any net short-term gains, if any, are taxable to you as ordinary
income.
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. 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 do not expect that any of their
distributions will be qualified dividends eligible for lower tax rates or for
the corporate dividends received deduction.
Exempt-interest
dividends from a Fund are taken into account in determining the taxable portion
of any Social Security or railroad retirement benefits that you
receive.
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.
The
VanEck CEF Muni Income ETF will not be able to offset gains realized by one
Underlying Fund in which the VanEck CEF Muni Income ETF invests against losses
realized by another Underlying Fund in which the VanEck CEF Muni Income ETF
invests. Short-term capital gains earned by an Underlying Fund when distributed
will be ordinary income to the VanEck CEF Muni Income ETF and will not be offset
by its capital losses, if any. Redemptions of Shares in an Underlying Fund could
also result in a gain and/or income to the VanEck CEF Muni Income ETF and
realized losses from such redemptions may be deferred indefinitely as wash
sales. The VanEck CEF Muni Income ETF’s use of the fund-of-funds structure could
therefore affect the amount, timing and character of distributions to
shareholders. Redemptions of Shares in an Underlying Fund could also cause
additional distributable gains to shareholders.
Backup
Withholding.
A 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 IRS.
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’s 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 of 1986 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 1986) 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.
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
CEFMX Index is published by VettaFi. The High Yield Index, Intermediate Index,
Long Index, Short High Yield Index and Short Index are published by ICE Data
Indices, LLC (“ICE Data”) and its affiliates. ICE Data is referred to herein as
the “Index Provider.” The Index Provider does not sponsor, endorse, or promote
the Funds and bear no liability with respect to the Funds or any
security.
The
CEFMX Index is a rules-based index intended to serve as a benchmark for
closed-end funds listed in the U.S. that are principally engaged in asset
management processes designed to produce federally tax-exempt annual yield. The
CEFMX Index employs a modified total net assets weighting methodology designed
to provide investment exposure across the various business segments that
together comprise the federally tax-exempt annual yield sector of the closed-end
fund market. The CEFMX Index is divided into four main closed-end fund segments
including: leveraged municipal fixed income closed-end funds; unleveraged
municipal fixed income closed-end funds; leveraged high yield municipal fixed
income closed-end funds; and unleveraged high yield municipal fixed income
closed-end funds. The CEFMX Index will reconstitute at the conclusion of trading
on the last business day of the last month of each calendar half
(March/September) and rebalance at the conclusion of trading on the last
business day of the last month of each calendar quarter.
VettaFi
calculates End Of Day index calculations for the CEFMX Index and ICE calculates
intraday values.
End
Of Day index calculations for the CEFMX Index are performed by VettaFi and
intraday index calculations are performed by ICE. The CEFMX Index is reviewed on
an ongoing basis. VettaFi may delay or change a scheduled rebalancing or
reconstitution of the CEFMX Index or the implementation of certain rules at its
sole discretion.
___________________________________
1(S-Network
and S- Network Municipal Bond Closed-End Fund Index are service marks of
VettaFi, LLC licensed to the Adviser)
The
High Yield Index tracks the performance of lower-rated and unrated U.S. dollar
denominated tax-exempt debt publicly issued in the U.S. domestic market by U.S.
states and territories as well as their political subdivisions.
The
High Yield Index is a modified blend of the following indices, with additional
constraints placed on certain exposure concentrations:
70%
ICE Core High Yield & Unrated Municipal Index;
25%
ICE Core BBB Municipal Index;
5%
ICE Core Single-A Municipal Index.
The
High Yield Index is rebalanced on the last calendar day of the month, based on
the rebalanced constituencies of the three component indices. ICE Data may delay
or change a scheduled rebalancing or reconstitution of the High Yield Index or
the implementation of certain rules at its sole discretion.
The
Intermediate Index tracks the performance of intermediate maturity U.S. dollar
denominated investment grade tax-exempt debt publicly issued in the U.S.
domestic market by U.S. states and territories as well as their political
subdivisions. Qualifying securities must be exempt from Federal taxes and must
not be subject to alternative minimum tax. In addition, qualifying securities
must have at least six years but less than 17 years remaining term to final
maturity, a fixed coupon schedule (including zero coupon and step up or stepdown
bonds) and an investment grade rating (based on the middle rating of Moody’s,
S&P and Fitch).
The
Intermediate Index is rebalanced on the last calendar day of the month. ICE Data
may delay or change a scheduled rebalancing or reconstitution of the
Intermediate Index or the implementation of certain rules at its sole
discretion.
The
Long Index tracks the performance of long maturity U.S. dollar denominated
investment grade tax-exempt debt publicly issued in the U.S. domestic market by
U.S. states and territories as well as their political subdivisions. Qualifying
securities must be exempt from Federal taxes and must not be subject to
alternative minimum tax. In addition, qualifying securities must have at least
17 years remaining term to final maturity, a fixed coupon schedule (including
zero coupon and step up or stepdown bonds) and an investment grade rating (based
on the middle rating of Moody’s, S&P and Fitch).
The
Long Index is rebalanced on the last calendar day of the month. ICE Data may
delay or change a scheduled rebalancing or reconstitution of the Long Index or
the implementation of certain rules at its sole discretion.
The
Short High Yield Index tracks the performance of lower-rated and unrated U.S.
dollar denominated tax-exempt debt publicly issued in the U.S. domestic market
by U.S. states and territories as well as their political
subdivisions.
The
Short High Yield Index is a modified blend of the following indices, with
additional constraints placed on certain exposure concentrations:
70%
ICE 1-12 Year Core High Yield & Unrated Municipal Index;
20%
ICE 1-12 Year Core BBB Municipal Index;
10%
ICE 1-12 Year Core Single-A Municipal Index.
The
Short High Yield Index is rebalanced on the last calendar day of the month,
based on the rebalanced constituencies of the three component indices. ICE Data
may delay or change a scheduled rebalancing or reconstitution of the Short High
Yield Index or the implementation of certain rules at its sole
discretion.
The
Short Index tracks the performance of short maturity U.S. dollar denominated
investment grade tax-exempt debt publicly issued in the U.S. domestic market by
U.S. states and territories as well as their political subdivisions. Qualifying
securities must be exempt from Federal taxes and must not be subject to
alternative minimum tax. In addition, qualifying securities must have less than
six years remaining term to final maturity, a fixed coupon schedule (including
zero coupon and step up or stepdown bonds) and an investment grade rating (based
on the middle rating of Moody’s, S&P and Fitch).
Qualifying
securities included in the Short Index must have at least one year but less than
six years remaining term to final maturity.
The
Short Index is rebalanced on the last calendar day of the month. ICE Data may
delay or change a scheduled rebalancing or reconstitution of the Short Index or
the implementation of certain rules at its sole discretion.
The
Adviser has entered into a licensing agreement with each Index Provider to use
each Fund’s respective Index. Each Fund is entitled to use its respective Index
pursuant to a sublicensing arrangement with the Adviser.
VanEck
CEF Muni Income ETF is not sponsored, endorsed, sold or promoted by VettaFi .
VettaFi makes no representation or warranty, express or implied, to the owners
of VanEck CEF Muni Income ETF, or any member of the public regarding the
advisability of investing in securities generally or in VanEck CEF Muni Income
ETF particularly or the ability of the CEFMX Index to track the performance of
the federally tax-exempt annual yield sector of the closed-end fund market.
VettaFi’s’s only relationship to the Adviser is the licensing of certain service
marks and trade names of S-Network and of the CEFMX Index that is determined,
composed and calculated by VettaFi without regard to the Adviser or VanEck CEF
Muni Income ETF. VettaFi has no obligation to take the needs of the Adviser or
the owners of VanEck CEF Muni Income ETF, into consideration in determining,
composing or calculating the CEFMX Index. VettaFi is not responsible for and has
not participated in the determination of the timing of, prices at, or quantities
of VanEck CEF Muni Income ETF to be issued or in the determination or
calculation of the equation by which VanEck CEF Muni Income ETF is to be
converted into cash. VettaFi has no obligation or liability in connection with
the administration, marketing or trading of VanEck CEF Muni Income ETF.
VETTAFI
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE CEFMX INDEX OR
ANY DATA INCLUDED THEREIN AND THE INDEX PROVIDER SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. VETTAFI MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF VANECK CEF
MUNI INCOME ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE CEFMX INDEX
OR ANY DATA INCLUDED THEREIN. S-NETWORK 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 CEFMX INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CEFMX
INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
The
information contained herein regarding the High Yield Index, the Intermediate
Index, the Long Index, the Short High Yield Index, and the Short Index
(collectively, the “ICE Indices”) was provided by ICE Data and its
affiliates.
The
Adviser has entered into a licensing agreement with ICE Data to use the ICE
Indices. Each of VanEck High Yield Muni ETF, VanEck Intermediate Muni ETF,
VanEck Long Muni ETF, VanEck Short High Yield Muni ETF and VanEck Short Muni ETF
(collectively, the “Products”) is entitled to use its respective Index pursuant
to a sub-licensing arrangement with the Adviser.
Source
ICE Data is used with permission. ICE and NYSE are service/trademarks of ICE
Data or its affiliates. Such trademarks have been licensed, along with the ICE
Indices for use by the Adviser in connection with the Products. Neither Van Eck
Associates Corporation (the “Licensee”) nor the Products, as applicable, are
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 Products particularly, the Licensee or the ability
of the ICE Indices to track general bond market performance.
ICE
Data’s only relationship to the Adviser is the licensing of certain trademarks
and trade names and the ICE Indices or components thereof. The ICE Indices are
determined, composed and calculated by ICE Data without regard to the Adviser or
the Products or their holders. ICE Data has no obligation to take the needs of
the Adviser or the holders of the Products into consideration in determining,
composing or calculating the ICE Indices. ICE Data is not responsible for and
has not participated in the determination of the timing of, prices of, or
quantities of the Products to be issued or in the determination or calculation
of the equation by which the Products are 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
Adviser 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 Products. 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.
ICE
DATA DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE ICE INDICES
OR ANY DATA INCLUDED THEREIN AND ICE DATA SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, UNAVAILABILITY, OR INTERRUPTIONS THEREIN. ICE DATA MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER,
SHAREHOLDERS OF THE PRODUCTS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
ICE INDICES OR ANY DATA INCLUDED THEREIN. ICE DATA 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 ICE INDICES OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL ICE
DATA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL,
CONSEQUENTIAL DAMAGES, OR LOST PROFITS, EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.
The
financial highlights tables which follow are intended to help you understand the
Funds’ financial performance for the past five years or as indicated. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in a Fund (assuming reinvestment of all dividends and
distributions). The information for the fiscal year ended April 30, 2023 has
been audited by PricewaterhouseCoopers 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. The information for periods prior to the fiscal year ended April 30,
2023 was audited by another independent registered public accounting firm.
For
a share outstanding throughout each year:
|
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|
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|
|
|
|
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|
|
|
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| |
|
| CEF
Muni Income ETF |
|
| Year
Ended April 30, |
|
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| Net
asset value, beginning of year |
$23.53 |
|
|
| $29.07 |
|
|
| $24.34 |
|
|
| $26.18 |
|
|
| $24.97 |
| |
| Net
investment income (a) |
0.95 |
|
|
| 1.14 |
|
|
| 1.14 |
|
|
| 1.09 |
|
|
| 1.16 |
| |
| Net
realized and unrealized gain (loss) on investments |
(2.00) |
|
|
| (5.56) |
|
|
| 4.71 |
|
|
| (1.83) |
|
|
| 1.21 |
| |
| Total
from investment operations |
(1.05) |
|
|
| (4.42) |
|
|
| 5.85 |
|
|
| (0.74) |
|
|
| 2.37 |
| |
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
investment income |
(1.02) |
|
|
| (1.12) |
|
|
| (1.12) |
|
|
| (1.10) |
|
|
| (1.16) |
| |
| Net
asset value, end of year |
$21.46 |
|
|
| $23.53 |
|
|
| $29.07 |
|
|
| $24.34 |
|
|
| $26.18 |
| |
| Total
return (b) |
(4.53) |
| % |
| (15.82) |
| % |
| 24.38 |
| % |
| (3.17) |
| % |
| 9.83 |
| % |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Gross
expenses (c)(d) |
0.41 |
| % |
| 0.40 |
| % |
| 0.40 |
| % |
| 0.45 |
| % |
| 0.48 |
| % |
| Net
expenses (c)(d) |
0.41 |
| % |
| 0.40 |
| % |
| 0.40 |
| % |
| 0.40 |
| % |
| 0.40 |
| % |
| Net
expenses excluding interest and taxes (c)(d) |
0.40 |
| % |
| 0.40 |
| % |
| 0.40 |
| % |
| 0.40 |
| % |
| 0.40 |
| % |
| Net
investment income (c) |
4.30 |
| % |
| 4.01 |
| % |
| 4.17 |
| % |
| 4.02 |
| % |
| 4.67 |
| % |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
assets, end of year (in millions) |
$204 |
|
|
| $169 |
|
|
| $177 |
|
|
| $142 |
|
|
| $144 |
| |
| Portfolio
turnover rate (e) |
15 |
| % |
| 15 |
| % |
| 11 |
| % |
| 10 |
| % |
| 13 |
| % |
(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) The
ratios presented do not reflect the Fund’s proportionate share of income and
expenses from the Fund’s investment in underlying funds.
(d) Periods
after November 1, 2019 reflect a unitary management fee structure.
(e) Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| High
Yield Muni ETF |
|
| Year
Ended April 30, |
|
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| |
| Net
asset value, beginning of year |
$55.18 |
|
|
| $62.48 |
|
|
| $56.13 |
|
|
| $62.79 |
|
|
| $62.16 |
|
|
|
| |
| Net
investment income (a) |
2.01 |
|
|
| 2.09 |
|
|
| 2.36 |
|
|
| 2.69 |
|
|
| 2.67 |
|
|
|
| |
| Net
realized and unrealized gain (loss) on investments |
(3.73) |
|
|
| (7.27) |
|
|
| 6.38 |
|
|
| (6.73) |
|
|
| 0.64 |
|
|
|
| |
| Total
from investment operations |
(1.72) |
|
|
| (5.18) |
|
|
| 8.74 |
|
|
| (4.04) |
|
|
| 3.31 |
|
|
|
| |
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
investment income |
(2.03) |
|
|
| (2.12) |
|
|
| (2.39) |
|
|
| (2.62) |
|
|
| (2.68) |
|
|
|
| |
| Net
asset value, end of year |
$51.43 |
|
|
| $55.18 |
|
|
| $62.48 |
|
|
| $56.13 |
|
|
| $62.79 |
|
|
|
| |
| Total
return (b) |
(3.11) |
| % |
| (8.62) |
| % |
| 15.84 |
| % |
| (6.86) |
| % |
| 5.46 |
| % |
|
| |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Expenses |
0.35 |
| % |
| 0.35 |
| % |
| 0.35 |
| % |
| 0.35 |
| % |
| 0.35 |
| % |
|
| |
| Net
Investment Income |
3.84 |
| % |
| 3.38 |
| % |
| 3.91 |
| % |
| 4.26 |
| % |
| 4.31 |
| % |
|
| |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
assets, end of year (in millions) |
$2,800 |
|
|
| $3,018 |
|
|
| $3,461 |
|
|
| $2,570 |
|
|
| $2,656 |
|
|
|
| |
| Portfolio
turnover rate (c) |
11 |
| % |
| 11 |
| % |
| 9 |
| % |
| 12 |
| % |
| 10 |
| % |
|
| |
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| HIP
Sustainable Muni ETF |
|
| Year
Ended
April 30,
2023 |
| Period
Ended
April
30,
2022(a) |
| Net
asset value, beginning of period |
$45.66 |
|
|
| $50.00 |
| |
| Net
investment income (b) |
0.72 |
|
|
| 0.10 |
| |
| Net
realized and unrealized loss on investments |
0.09 |
|
|
| (4.22) |
| |
| Total
from investment operations |
0.81 |
|
|
| (4.12) |
| |
| Distributions
from: |
|
|
|
| |
| Net
investment income |
(0.65) |
|
|
| (0.22) |
| |
| Net
asset value, end of period |
$45.82 |
|
|
| $45.66 |
| |
| Total
return (c) |
1.79 |
| % |
| (8.26) |
| %(d) |
| Ratios
to average net assets |
|
|
|
| |
| Expenses |
0.24 |
| % |
| 0.24 |
| %(e) |
| Net
Investment Income |
1.59 |
| % |
| 0.33 |
| %(e) |
| Supplemental
data |
|
|
|
| |
| Net
assets, end of period (in millions) |
$18 |
|
|
| $14 |
| |
| Portfolio
turnover rate (f) |
14 |
| % |
| 11 |
| %(d) |
(a) For
the period September 9, 2021 (commencement of operations) through April 30,
2022.
(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.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Intermediate
Muni ETF |
|
| Year
Ended April 30, |
|
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| |
| Net
asset value, beginning of year |
$45.69 |
|
|
| $51.62 |
|
|
| $48.97 |
|
|
| $48.94 |
|
|
| $46.83 |
|
|
|
| |
| Net
investment income (a) |
0.97 |
|
|
| 0.83 |
|
|
| 0.98 |
|
|
| 1.09 |
|
|
| 1.12 |
|
|
|
| |
| Net
realized and unrealized gain (loss) on investments |
0.65 |
|
|
| (5.92) |
|
|
| 2.72 |
|
|
| 0.10 |
|
|
| 2.11 |
|
|
|
| |
| Total
from investment operations |
1.62 |
|
|
| (5.09) |
|
|
| 3.70 |
|
|
| 1.19 |
|
|
| 3.23 |
|
|
|
| |
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
investment income |
(0.96) |
|
|
| (0.84) |
|
|
| (0.98) |
|
|
| (1.10) |
|
|
| (1.12) |
|
|
|
| |
| Net
realized capital gains |
— |
|
|
| — |
| (b) |
| (0.07) |
|
|
| (0.06) |
|
|
| — |
|
|
|
| |
| Total
distributions |
(0.96) |
|
|
| (0.84) |
|
|
| (1.05) |
|
|
| (1.16) |
|
|
| (1.12) |
|
|
|
| |
| Net
asset value, end of year |
$46.35 |
|
|
| $45.69 |
|
|
| $51.62 |
|
|
| $48.97 |
|
|
| $48.94 |
|
|
|
| |
| Total
return (c) |
3.59 |
| % |
| (9.99) |
| % |
| 7.59 |
| % |
| 2.40 |
| % |
| 6.98 |
| % |
|
| |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Expenses |
0.24 |
| % |
| 0.24 |
| % |
| 0.24 |
| % |
| 0.24 |
| % |
| 0.24 |
| % |
|
| |
| Net
investment income |
2.12 |
| % |
| 1.64 |
| % |
| 1.90 |
| % |
| 2.17 |
| % |
| 2.37 |
| % |
|
| |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
assets, end of year (in millions) |
$1,822 |
|
|
| $1,695 |
|
|
| $1,801 |
|
|
| $1,582 |
|
|
| $1,720 |
|
|
|
| |
| Portfolio
turnover rate (d) |
17 |
| % |
| 4 |
| % |
| 6 |
| % |
| 7 |
| % |
| 7 |
| % |
|
| |
(a)Calculated
based upon average shares outstanding
(b)Amount
represents less than $0.005 per share.
(c)Returns
include adjustments in accordance with U.S. Generally Accepted Accounting
Principles. Net asset values and returns for financial reporting purposes may
differ from those for shareholder transactions.
(d)Portfolio
turnover rate excludes in-kind transactions.
For
a share outstanding throughout each year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Long
Muni ETF |
|
| Year
Ended April 30, |
|
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| |
| Net
asset value, beginning of year |
$18.35 |
|
|
| $21.68 |
|
|
| $20.18 |
|
|
| $20.40 |
|
|
| $19.63 |
|
|
|
| |
| Net
investment income (a) |
0.52 |
|
|
| 0.46 |
|
|
| 0.52 |
|
|
| 0.57 |
|
|
| 0.60 |
|
|
|
| |
| Net
realized and unrealized gain (loss) on investments |
(0.46) |
|
|
| (3.26) |
|
|
| 1.54 |
|
|
| (0.20) |
|
|
| 0.77 |
|
|
|
| |
| Total
from investment operations |
0.06 |
|
|
| (2.80) |
|
|
| 2.06 |
|
|
| 0.37 |
|
|
| 1.37 |
|
|
|
| |
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
investment income |
(0.50) |
|
|
| (0.46) |
|
|
| (0.52) |
|
|
| (0.57) |
|
|
| (0.60) |
|
|
|
| |
| Net
realized capital gains |
— |
|
|
| (0.07) |
|
|
| (0.04) |
|
|
| (0.02) |
|
|
| — |
|
|
|
| |
| Total
distributions |
(0.50) |
|
|
| (0.53) |
|
|
| (0.56) |
|
|
| (0.59) |
|
|
| (0.60) |
|
|
|
| |
| Net
asset value, end of year |
$17.91 |
|
|
| $18.35 |
|
|
| $21.68 |
|
|
| $20.18 |
|
|
| $20.40 |
|
|
|
| |
| Total
return (b) |
0.40 |
| % |
| (13.26) |
| % |
| 10.31 |
| % |
| 1.75 |
| % |
| 7.15 |
| % |
|
| |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Expenses |
0.24 |
| % |
| 0.24 |
| % |
| 0.24 |
| % |
| 0.24 |
| % |
| 0.24 |
| % |
|
| |
| Net
investment income |
2.91 |
| % |
| 2.15 |
| % |
| 2.45 |
| % |
| 2.72 |
| % |
| 3.06 |
| % |
|
| |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
assets, end of year (in millions) |
$313 |
|
|
| $216 |
|
|
| $228 |
|
|
| $200 |
|
|
| $153 |
|
|
|
| |
| Portfolio
turnover rate (c) |
32 |
| % |
| 7 |
| % |
| 23 |
| % |
| 22 |
| % |
| 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 year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Short
High Yield Muni ETF |
|
| Year
Ended April 30, |
|
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| |
| Net
asset value, beginning of year |
$22.86 |
|
|
| $25.06 |
|
|
| $23.09 |
|
|
| $24.70 |
|
|
| $24.24 |
|
|
|
| |
| Net
investment income (a) |
0.59 |
|
|
| 0.58 |
|
|
| 0.73 |
|
|
| 0.84 |
|
|
| 0.80 |
|
|
|
| |
| Net
realized and unrealized gain (loss) on investments |
(0.50) |
|
|
| (2.18) |
|
|
| 1.99 |
|
|
| (1.64) |
|
|
| 0.43 |
|
|
|
| |
| Total
from investment operations |
0.09 |
|
|
| (1.60) |
|
|
| 2.72 |
|
|
| (0.80) |
|
|
| 1.23 |
|
|
|
| |
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
investment income |
(0.61) |
|
|
| (0.60) |
|
|
| (0.75) |
|
|
| (0.81) |
|
|
| (0.77) |
|
|
|
| |
| Net
asset value, end of year |
$22.34 |
|
|
| $22.86 |
|
|
| $25.06 |
|
|
| $23.09 |
|
|
| $24.70 |
|
|
|
| |
| Total
return (b) |
0.43 |
| % |
| (6.58) |
| % |
| 11.89 |
| % |
| (3.44) |
| % |
| 5.16 |
| % |
|
| |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Expenses |
0.35 |
| % |
| 0.35 |
| % |
| 0.35 |
| % |
| 0.35 |
| % |
| 0.35 |
| % |
|
| |
| Net
investment income |
2.64 |
| % |
| 2.34 |
| % |
| 2.98 |
| % |
| 3.37 |
| % |
| 3.28 |
| % |
|
| |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
assets, end of year (in millions) |
$398 |
|
|
| $418 |
|
|
| $306 |
|
|
| $263 |
|
|
| $203 |
|
|
|
| |
| Portfolio
turnover rate (c) |
17 |
| % |
| 16 |
| % |
| 14 |
| % |
| 17 |
| % |
| 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 year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Short
Muni ETF |
|
| Year
Ended April 30, |
|
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| |
| Net
asset value, beginning of year |
$16.89 |
|
|
| $18.04 |
|
|
| $17.55 |
|
|
| $17.54 |
|
|
| $17.18 |
|
|
|
| |
| Net
investment income (a) |
0.21 |
|
|
| 0.15 |
|
|
| 0.23 |
|
|
| 0.27 |
|
|
| 0.27 |
|
|
|
| |
| Net
realized and unrealized gain (loss) on investments |
0.10 |
|
|
| (1.09) |
|
|
| 0.51 |
|
|
| 0.02 |
|
|
| 0.36 |
|
|
|
| |
| Total
from investment operations |
0.31 |
|
|
| (0.94) |
|
|
| 0.74 |
|
|
| 0.29 |
|
|
| 0.63 |
|
|
|
| |
| Distributions
from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
investment income |
(0.25) |
|
|
| (0.19) |
|
|
| (0.25) |
|
|
| (0.28) |
|
|
| (0.27) |
|
|
|
| |
| Net
realized capital gains |
— |
|
|
| (0.02) |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| |
| Total
distributions |
(0.25) |
|
|
| (0.21) |
|
|
| (0.25) |
|
|
| (0.28) |
|
|
| (0.27) |
|
|
|
| |
| Net
asset value, end of year |
$16.95 |
|
|
| $16.89 |
|
|
| $18.04 |
|
|
| $17.55 |
|
|
| $17.54 |
|
|
|
| |
| Total
return (b) |
1.83 |
| % |
| (5.27) |
| % |
| 4.27 |
| % |
| 1.66 |
| % |
| 3.70 |
| % |
|
| |
| Ratios
to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Expenses |
0.20 |
| % |
| 0.20 |
| % |
| 0.20 |
| % |
| 0.20 |
| % |
| 0.20 |
| % |
|
| |
| Net
investment income |
1.22 |
| % |
| 0.86 |
| % |
| 1.26 |
| % |
| 1.54 |
| % |
| 1.57 |
| % |
|
| |
| Supplemental
data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Net
assets, end of year (in millions) |
$269 |
|
|
| $328 |
|
|
| $297 |
|
|
| $204 |
|
|
| $201 |
|
|
|
| |
| Portfolio
turnover rate (c) |
19 |
| % |
| 18 |
| % |
| 30 |
| % |
| 34 |
| % |
| 33 |
| % |
|
| |
(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.
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 net asset value 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 Investment Company Act of 1940. 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 the Exchange is satisfied by
the fact that the prospectus is available at the 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 Investment Company
Act of 1940 and other applicable law. See the Funds’ SAI for more information
concerning the Trust’s form of organization. Section 12(d)(1) of the Investment
Company Act of 1940 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 (except VanEck CEF
Muni Income ETF) beyond the limits set forth in Section 12(d)(1) subject to
certain terms and conditions set forth in Securities and Exchange Commission
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. PricewaterhouseCoopers
LLP serves as the Trust’s independent registered public accounting firm and will
audit the Fund’s financial statements annually.
ADDITIONAL
INFORMATION
This
Prospectus does not contain all the information included in the Registration
Statement filed with the SEC with respect to the Funds’ Shares. The Funds’
Registration Statement, including this Prospectus, the Funds’ SAI and the
exhibits are available on the EDGAR database at the Securities and Exchange
Commission’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 Securities and Exchange
Commission, 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 September 1, 2023,
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
Securities and Exchange Commission’s internet site at http://www.sec.gov. In
addition, copies of this information may be obtained, after paying a duplicating
fee, by electronic request at the following email address:
[email protected].
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Transfer
Agent: State Street Bank and Trust Company
SEC Registration Number:
333-123257
Investment Company Act of 1940 Registration Number:
811-10325 |
800.826.2333
vaneck.com |
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