ck0000768847-20221231
VANECK
FUNDS
STATEMENT
OF ADDITIONAL INFORMATION
Dated
May 1, 2023
EMERGING
MARKETS LEADERS FUND
CLASS
A: ELMAX / CLASS I: ELMIX / CLASS Y: ELMYX / CLASS Z: ELMZX
ENVIRONMENTAL
SUSTAINABILITY FUND
CLASS
A: ENVAX / CLASS I: ENVIX / CLASS Y: ENVYX
CM
COMMODITY INDEX FUND
CLASS
A: CMCAX / CLASS I: COMIX / CLASS Y: CMCYX
EMERGING
MARKETS BOND FUND
CLASS
A: EMBAX / CLASS I: EMBUX / CLASS Y: EMBYX
EMERGING
MARKETS FUND
CLASS
A : GBFAX / CLASS C: EMRCX / CLASS I: EMRIX / CLASS Y: EMRYX/ CLASS Z:
EMRZX
GLOBAL
RESOURCES FUND
CLASS
A : GHAAX / CLASS C: GHACX / CLASS I: GHAIX / CLASS Y: GHAYX
INTERNATIONAL
INVESTORS GOLD FUND
CLASS
A : INIVX / CLASS C: IIGCX / CLASS I: INIIX / CLASS Y: INIYX
VANECK
MORNINGSTAR WIDE MOAT FUND
CLASS
I: MWMIX / CLASS Z: MWMZX
This
statement of additional information (“SAI”) is not a prospectus. It should be
read in conjunction with the prospectuses for VanEck Funds (the “Trust”) dated
May 1, 2023, relating to CM Commodity Index Fund, Emerging Markets Bond Fund,
Emerging Markets Fund, Emerging Markets Leaders Fund, Environmental
Sustainability Fund, Global Resources Fund, International Investors Gold Fund
and VanEck Morningstar Wide Moat Fund; (each, a “Fund” and collectively, the
“Funds”), as each may be revised from time to time (each, a “Prospectus”). The
audited
financial statements of the Funds for
the fiscal year ended December 31, 2022
are hereby incorporated by reference from the Funds’ Annual Report to
shareholders. A copy of the Prospectuses and Annual and Semi-Annual Reports for
the Trust, relating to the Funds, may be obtained without charge by visiting the
VanEck website at vaneck.com, by calling toll-free 800.826.1115 or by writing to
the Trust or Van Eck Securities Corporation, the Funds’ distributor (the
“Distributor”). The Trust’s and the Distributor’s address is 666 Third Avenue,
9th Floor, New York, New York 10017. Capitalized terms used herein that are not
defined have the same meaning as in the Prospectuses, unless otherwise
noted.
TABLE
OF CONTENTS
STATEMENT
OF ADDITIONAL INFORMATION
MAY
1, 2023
GENERAL
INFORMATION
The
Trust is an open-end management investment company organized as a business trust
under the laws of the Commonwealth of Massachusetts on April 3, 1985. On May 1,
2016, Van Eck Funds changed its name to VanEck Funds. The Trust’s series which
are currently being offered are the following: Emerging Markets Fund, which
offers Class A, Class C, Class I, Class Y and Class Z shares; Global Resources
Fund (formerly, Global Hard Assets Fund prior to May 1, 2021) and International
Investors Gold Fund, each of which offers Class A, Class C, Class I and Class Y
shares; CM Commodity Index Fund, Emerging Markets Bond Fund, and Environmental
Sustainability Fund, each of which offers Class A, Class I and Class Y shares;
VanEck Morningstar Wide Moat Fund which offers Class I and Class Z shares, and
Emerging Markets Leaders Fund which offers Class A, Class I, Class Y and Class Z
shares. The Board of Trustees of the Trust (the “Board”) has authority, without
the necessity of a shareholder vote, to create additional series or funds, each
of which may issue separate classes of shares.
Emerging
Markets Bond Fund, Emerging Markets Leaders Fund, Environmental Sustainability
Fund and International Investors Gold Fund are classified as non-diversified
funds under the Investment Company Act of 1940, as amended (the “1940 Act”). CM
Commodity Index Fund, Emerging Markets Fund, Global Resources Fund and VanEck
Morningstar Wide Moat Fund are classified as diversified funds under the 1940
Act. Van Eck Associates Corporation (“VEAC”) serves as investment adviser to all
the Funds, except for CM Commodity Index Fund. Van Eck Absolute Return Advisers
Corporation (“VEARA” and together with VEAC, each an “Adviser” or the
“Advisers”) serves as investment adviser to CM Commodity Index
Fund.
INVESTMENT
POLICIES AND RISKS
The
following is additional information regarding the investment policies and
strategies used by the Funds in attempting to achieve their respective
objectives, and should be read with the sections of the Funds’ Prospectuses
titled “Summary Information - Principal Investment Strategies”, “Summary
Information - Principal Risks” and “Investment Objectives, Strategies, Policies,
Risks and Other Information”. The Funds, except for VanEck Morningstar Wide Moat
Fund, may take temporary defensive positions in anticipation of or in an attempt
to respond to adverse market, economic, political or other conditions. Such a
position could have the effect of reducing any benefit a Fund may receive from a
market increase. When taking a temporary defensive position, a Fund may invest
all or a substantial portion of its total assets in cash or cash equivalents,
government securities, short-term or medium-term fixed income securities, which
may include, but not be limited to, shares of other mutual funds, U.S. Treasury
bills, commercial paper or repurchase agreements. A Fund may not achieve its
investment objective while it is investing defensively. Each of the Emerging
Markets Bond Fund and VanEck Morningstar Wide Moat Fund may engage in active and
frequent trading of its portfolio securities.
CM
Commodity Index Fund seeks to achieve its investment objective by investing in
instruments that derive their value from the performance of the UBS Constant
Maturity Commodity Total Return Index (the “CMCI”), as described below, and in
bonds, debt securities and other fixed income instruments (“Fixed Income
Instruments”) issued by various U.S. public- or private-sector entities. CM
Commodity Index Fund invests in commodity-linked derivative instruments,
including commodity index-linked notes, swap agreements, commodity futures
contracts and options on futures contracts that provide economic exposure to the
investment returns of the commodities markets, as represented by the CMCI and
its constituents. A derivative is an investment whose value depends on (or is
derived from) that value of an underlying security. Commodities are assets that
have tangible properties, such as oil, metals, and agricultural products. A
commodity-linked derivative is a derivative instrument whose value is linked to
the movement of a commodity, commodity index, commodity option or futures
contract. The value of commodity-linked derivative instruments may be affected
by overall market movements and other factors affecting the value of a
particular industry or commodity, such as weather, disease, embargoes, or
political and regulatory developments.
The
CMCI is a rules-based, composite benchmark index diversified across 29 commodity
components from the following five sectors: energy, precious metals, industrial
metals, agriculture and livestock. The CMCI is comprised of futures contracts
with maturities ranging from three months up to a maximum of about three years
for each commodity, depending on liquidity. The return of the CMCI reflects a
combination of (i) the returns on the futures contracts comprising the CMCI; and
(ii) the fixed-income return that would be earned on a hypothetical portfolio of
13-week U.S. Treasury bills theoretically deposited as full collateral for the
notional exposure of the hypothetical positions in the futures contracts
comprising the CMCI. The selection and relative weightings of the components of
the CMCI are designed to reflect the economic significance and market liquidity
of each commodity, as determined based on global economic data, consumption
data, commodity futures prices, open interest and volume data. The maturity of
each commodity component in the CMCI remains fixed at a predefined time interval
from the current date at all times by means of a continuous rolling process, in
which a weighted percentage of shorter dated contracts for each commodity are
swapped for longer dated contracts on a daily basis. The CMCI is rebalanced
monthly
back to the target weightings of the commodity components of the CMCI and the
target weightings of all commodity components are revised once per year. A more
detailed description of the CMCI is contained in the section of this SAI
entitled “Additional Information About the CMCI.”
CM
Commodity Index Fund seeks to track the returns of the CMCI by entering into
swap contracts and commodity index-linked notes with one or more counterparties,
which contracts and notes will rise and fall in value in response to changes in
the value of the CMCI. As of the date of this SAI, UBS was the only available
counterparty with which CM Commodity Index Fund may enter into such swap
contracts on the CMCI. CM Commodity Index Fund may enter into such contracts and
notes directly or indirectly through a wholly-owned subsidiary of the Fund (the
“CMCI Subsidiary”). Commodity index-linked notes are derivative debt instruments
with principal and/or coupon payments linked to the performance of commodity
indices (such as the CMCI). These commodity index-linked notes are sometimes
referred to as “structured notes” because the terms of these notes may be
structured by the issuer and the purchaser of the note. CM Commodity Index Fund
may also seek to gain exposure to the individual commodity components of the
CMCI by investing in futures contracts that comprise the CMCI, either directly
or indirectly through the Subsidiary.
Under
normal conditions, the VanEck Morningstar Wide Moat Fund invests at least 80% of
its net assets in securities that comprise the Morningstar® Wide Moat Focus
IndexSM
(the “Wide Moat Index”). The Wide Moat Index is comprised of securities issued
by companies that Morningstar, Inc. (“Morningstar”) determines to have
sustainable competitive advantages based on a proprietary methodology that
considers quantitative and qualitative factors (“wide moat companies”). Wide
moat companies are selected from the universe of companies represented in the
Morningstar® US Market IndexSM,
a broad market index representing 97% of U.S. market capitalization. The Wide
Moat Index targets a select group of wide moat companies: those that according
to Morningstar’s equity research team are attractively priced as of each Wide
Moat Index review. Out of the companies in the Morningstar US Market Index that
Morningstar determines are wide moat companies, Morningstar selects companies to
be included in Index as determined by the ratio of Morningstar’s estimate of
fair value of the issuer’s common stock to the price. Morningstar’s equity
research fair value estimates are calculated using a standardized, proprietary
valuation model. Wide moat companies may include medium-capitalization
companies. VanEck Morningstar Wide Moat Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders. In seeking to achieve its investment
objective, VanEck Morningstar Wide Moat Fund may also invest in VanEck
Morningstar Wide Moat ETF (the “underlying fund”), an affiliated fund, which
also seeks to replicate the price and yield performance of the Wide Moat Index,
and such investment will count towards the VanEck Morningstar Wide Moat Fund’s
80% investment policy. VanEck Morningstar Wide Moat Fund, using a “passive” or
indexing investment approach, attempts to replicate the price and yield
performance of the Index by investing in a portfolio of securities that
generally replicate the performance of the Wide Moat Index.
ASSET-BACKED
SECURITIES
The
Funds may invest in asset-backed securities. Asset-backed securities, directly
or indirectly, represent interests in, or are secured by and payable from, pools
of consumer loans (generally unrelated to mortgage loans) and most often are
structured as pass-through securities. Interest and principal payments
ultimately depend on payment of the underlying loans, although the securities
may be supported by letters of credit or other credit enhancements. The value of
asset-backed securities may also depend on the creditworthiness of the servicing
agent for the loan pool, the originator of the loans, or the financial
institution providing the credit enhancement.
Asset-backed
securities are subject to certain risks. These risks generally arise out of the
security interest in the assets collateralizing the security. For example,
credit card receivables are generally unsecured and the debtors are entitled to
a number of protections from the state and through federal consumer laws, many
of which give the debtor the right to offset certain amounts of credit card
debts and thereby reducing the amounts due.
BELOW
INVESTMENT GRADE SECURITIES
The
Funds may invest in below investment grade debt securities. Investments in
securities rated below investment grade that are eligible for purchase by a Fund
are described as “speculative” by Moody’s, S&P and Fitch, Inc. Investments
in lower rated corporate debt securities (“high yield securities” or “junk
bonds”) generally provide greater income and increased opportunity for capital
appreciation than investments in higher quality securities, but they also
typically entail greater price volatility and principal and income
risk.
These
high yield securities are regarded as predominantly speculative with respect to
the issuer’s continuing ability to meet principal and interest payments.
Analysis of the creditworthiness of issuers of debt securities that are high
yield may be more complex than for issuers of higher quality debt
securities.
High
yield securities may be more susceptible to real or perceived adverse economic
and competitive industry conditions than investment grade securities. The prices
of high yield securities have been found to be less sensitive to interest-rate
changes than higher-rated investments, but more sensitive to adverse economic
downturns or individual corporate
developments.
A projection of an economic downturn or of a period of rising interest rates,
for example, could cause a decline in high yield security prices because the
advent of a recession could lessen the ability of a highly leveraged company to
make principal and interest payments on its debt securities. If an issuer of
high yield securities defaults, in addition to risking payment of all or a
portion of interest and principal, a Fund by investing in such securities may
incur additional expenses to seek recovery. In the case of high yield securities
structured as zero-coupon or pay-in-kind securities, their market prices are
affected to a greater extent by interest rate changes, and therefore tend to be
more volatile than securities which pay interest periodically and in
cash.
The
secondary market on which high yield securities are traded may be less liquid
than the market for higher grade securities. Less liquidity in the secondary
trading market could adversely affect the price at which a Fund could sell a
high yield security, and could adversely affect the daily net asset value of the
shares. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of high yield
securities, especially in a thinly-traded market. When secondary markets for
high yield securities are less liquid than the market for higher grade
securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgment may play a greater
role in the valuation because there is less reliable, objective data
available.
BORROWING;
LEVERAGE
Borrowing
to invest more is called “leverage.” A Fund may borrow from banks provided that
the amount of borrowing is no more than one third of the net assets of the Fund
plus the amount of the borrowings. A Fund is required to be able to restore
borrowing to its permitted level within three days, if it should increase to
more than one-third of its net assets as stated above. Methods that may be used
to restore borrowings in this context include selling securities, even if the
sale hurts a Fund’s investment performance. Leverage exaggerates the effect of
rises or falls in prices of securities bought with borrowed money. Borrowing
also costs money, including fees and interest. The Funds expect to borrow only
through negotiated loan agreements with commercial banks or other institutional
lenders.
COLLATERALIZED
MORTGAGE OBLIGATIONS
The
Funds may invest in collateralized mortgage obligations (“CMOs”). CMOs are
fixed-income securities which are collateralized by pools of mortgage loans or
mortgage-related securities created by commercial banks, savings and loan
institutions, private mortgage insurance companies and mortgage bankers. In
effect, CMOs “pass through” the monthly payments made by individual borrowers on
their mortgage loans. Prepayments of the mortgages included in the mortgage pool
may influence the yield of the CMO. In addition, prepayments usually increase
when interest rates are decreasing, thereby decreasing the life of the pool. As
a result, reinvestment of prepayments may be at a lower rate than that on the
original CMO. There are different classes of CMOs, and certain classes have
priority over others with respect to prepayment of the mortgages. Timely payment
of interest and principal (but not the market value) of these pools is supported
by various forms of insurance or guarantees. Each Fund may buy CMOs without
insurance or guarantees if, in the opinion of its Adviser, the pooler is
creditworthy or if rated investment grade. In the event that any CMOs are
determined to be investment companies, the Funds will be subject to certain
limitations under the 1940 Act.
COMMERCIAL
PAPER
The
Funds may invest in commercial paper that is indexed to certain specific foreign
currency exchange rates which may entail the risk of loss of principal. The
terms of such commercial paper typically provide that its principal amount is
adjusted upwards or downwards (but not below zero) at maturity to reflect
changes in the exchange rate between two currencies while the obligation is
outstanding. The Funds purchase such commercial paper with the currency in which
it is denominated and, at maturity, will typically receive interest and
principal payments thereon in that currency, but the amount or principal payable
by the issuer at maturity will change in proportion to the change (if any) in
the exchange rate between two specified currencies between the date the
instrument is issued and the date the instrument matures.
The
Funds may invest in commercial paper with the principal amount indexed to the
difference, up or down, in value between two foreign currencies. The Funds
segregate asset accounts with an equivalent amount of cash, U.S. government
securities or other highly liquid securities equal in value to this commercial
paper.
COMMODITIES
AND COMMODITY-LINKED DERIVATIVES
Exposure
to the commodities markets may subject the Funds to greater volatility than
investments in traditional securities. The commodities markets may fluctuate
widely based on a variety of factors including changes in overall market
movements, political and economic events and policies, war, disease, acts of
terrorism, natural disasters, and changes in interest rates or inflation rates.
Prices of various commodities may also be affected by factors such as drought,
floods, weather, embargoes, tariffs and other regulatory developments. The
prices of commodities can also fluctuate widely due to supply and demand
disruptions in major producing or consuming regions. Certain commodities may be
produced in a limited number of countries and may be controlled by a small
number of producers. As a result, political, economic and supply related events
in such countries could have a disproportionate impact on the prices of such
commodities.
Commodity-Linked
“Structured” Securities.
Because the value of a commodity-linked derivative instrument typically is based
upon the price movements of a physical commodity, the value of the
commodity-linked derivative instrument may be affected by changes in overall
market movements, commodity index volatility, changes in interest rates, or
factors affecting a particular industry. The value of these securities typically
rises or falls in response to changes in the underlying commodity or related
index of investment.
Structured
Notes.
Structured notes expose CM Commodity Index Fund economically to movements in
commodity prices. The performance of a structured note is determined by the
price movement of the commodity underlying the note. A liquid secondary market
may not exist for structured notes, and there can be no assurance that one will
develop. These notes are often leveraged, increasing the volatility of each
note’s market value relative to changes in the underlying commodity, commodity
futures contract or commodity index.
CONCENTRATION
To
the extent that the Wide Moat Index is concentrated in a particular sector or
sectors or industry or group of industries, VanEck Morningstar Wide Moat Fund
will be subject to the risk that economic, political or other conditions that
have a negative effect on that sector or industry may negatively impact the Fund
to a greater extent than if the Fund’s assets were invested in a wider variety
of sectors or industries.
CONVERTIBLE
SECURITIES
The
Funds may invest in securities that are convertible into common stock or other
securities of the same or a different issuer or into cash within a particular
period of time at a specified price or formula. Convertible securities are
generally fixed income securities (but may include preferred stock) and
generally rank senior to common stocks in a corporation’s capital structure and,
therefore, entail less risk than the corporation’s common stock. The value of a
convertible security is a function of its “investment value” (its value as if it
did not have a conversion privilege), and its “conversion value” (the security’s
worth if it were to be exchanged for the underlying security, at market value,
pursuant to its conversion privilege).
To
the extent that a convertible security’s investment value is greater than its
conversion value, its price will generally be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security (the
credit standing of the issuer and other factors may also have an effect on the
convertible security’s value). If the conversion value exceeds the investment
value, the price of the convertible security will generally rise above its
investment value and, in addition, will generally sell at some premium over its
conversion value. (This premium represents the price investors are willing to
pay for the privilege of purchasing a fixed-income security with a possibility
of capital appreciation due to the conversion privilege.) At such times, the
price of the convertible security will tend to fluctuate directly with the price
of the underlying equity security. Convertible securities may be purchased by
the Funds at varying price levels above their investment values and/or their
conversion values in keeping with the Funds’ objectives.
CREDIT
Credit
risk is the risk that the issuer or guarantor of a debt security or the
counterparty to an over-the-counter (“OTC”) contract (including many
derivatives) will be unable or unwilling to make timely principal, interest or
settlement payments or otherwise honor its obligations. The Funds invest in debt
securities that are subject to varying degrees of risk that the issuers of the
securities will have their credit ratings downgraded or will default,
potentially reducing the value of the securities. A Fund may enter into
financial transactions that involve a limited number of counterparties, which
may increase the Fund’s exposure to credit risk. The Fund does not specifically
limit its credit risk with respect to any single counterparty. Further, there is
a risk that no suitable counterparties will be willing to enter into, or
continue to enter into, transactions with the Fund and, as a result, the Fund
may not be able to achieve its investment objective.
CURRENCY
FORWARDS
A
currency forward transaction is a contract to buy or sell a specified quantity
of currency at a specified date in the future at a specified price which may be
any fixed number of days from the date of the contract agreed upon by the
parties. Currency forward contracts may be used to increase or reduce exposure
to currency price movements.
The
use of currency forward transactions involves certain risks. For example, if the
counterparty under the contract defaults on its obligation to make payments due
from it as a result of its bankruptcy or otherwise, a Fund may lose such
payments altogether or collect only a portion thereof, which collection could
involve costs or delays.
CURRENCY
MANAGEMENT STRATEGIES
Currency
management strategies are generally used in an attempt to reduce the risk and
impact of adverse currency movements to protect the value of, or seek to
mitigate the currency exposure associated with, an investment (including, for
example, mitigating the exposure to the Euro that may be embedded in the Polish
zloty). Currency management strategies, including currency forward contracts
(described above) and cross-hedging, may substantially change a Fund’s exposure
to currency exchange rates and could result in losses to the Fund if currencies
do not perform as an Adviser expects. In addition, currency management
strategies, to the extent that such strategies reduce a Fund’s exposure to
currency risks, may also reduce the Fund’s ability to benefit from favorable
changes in currency exchange rates. There is no assurance that an Adviser’s use
of currency management strategies will benefit a Fund or that they will be, or
can be, used at appropriate times. Furthermore, there may not be a perfect
correlation between the amount of exposure to a particular currency and the
amount of securities in the portfolio denominated in that currency or exposed to
that currency. Currency markets are generally less regulated than securities
markets. Derivatives transactions, especially currency forward contracts,
currency related futures contracts and swap agreements, may involve significant
amounts of currency management strategies risk. The Emerging Markets Bond Fund,
which may utilize these types of instruments to a significant extent, will be
especially subject to currency management strategies risk.
CYBER
SECURITY
The
Funds and their service providers are susceptible to cyber security risks that
include, among other things, theft, unauthorized monitoring, release, misuse,
loss, destruction or corruption of confidential and highly restricted data;
denial of service attacks; unauthorized access to relevant systems; compromises
to networks or devices that the Funds and their service providers use to service
the Funds’ operations; and operational disruption or failures in the physical
infrastructure or operating systems that support the Funds and their service
providers. Cyber attacks against or security breakdowns of the Funds or their
service providers may adversely impact the Funds and their shareholders,
potentially resulting in, among other things, financial losses; the inability of
Fund shareholders to transact business and the Funds to process transactions;
the inability to calculate the Funds’ NAV; violations of applicable privacy and
other laws; regulatory fines, penalties, reputational damage, reimbursement or
other compensation costs; and/or additional compliance costs. The Funds may
incur additional costs for cyber security risk management and remediation
purposes. In addition, cyber security risks may also impact issuers of
securities in which the Funds invest, which may cause the Funds’ investments in
such issuers to lose value. There can be no assurance that the Funds or their
service providers will not suffer losses relating to cyber attacks or other
information security breaches in the future.
DEBT
SECURITIES
The
Funds may invest in debt securities. The market value of debt securities
generally varies in response to changes in interest rates and the financial
condition of each issuer and the value of a global resource if linked to the
value of a global resource. Debt securities with similar maturities may have
different yields, depending upon several factors, including the relative
financial condition of the issuers. Investment grade means a rating of Baa3 or
better by Moody’s or BBB- or better by S&P, or of comparable quality in the
judgment of a Fund’s Adviser or if no rating has been given by either service.
Many securities of foreign issuers are not rated by these services. Therefore,
the selection of such issuers depends to a large extent on the credit analysis
performed by an Adviser. During periods of declining interest rates, the value
of debt securities generally increases. Conversely, during periods of rising
interest rates, the value of such securities generally declines. These changes
in market value will be reflected in a Fund’s net asset value. Debt securities
with similar maturities may have different yields, depending upon several
factors, including the relative financial condition of the issuers. For example,
higher yields are generally available from securities in the lower rating
categories of S&P or Moody’s. However, the values of lower-rated securities
generally fluctuate more than those of high-grade securities. Many securities of
foreign issuers are not rated by these services. Therefore the selection of such
issuers depends to a large extent on the credit analysis performed by an
Adviser.
New
issues of certain debt securities are often offered on a when-issued basis. That
is, the payment obligation and the interest rate are fixed at the time the buyer
enters into the commitment, but delivery and payment for the securities normally
take place after the date of the commitment to purchase. The value of
when-issued securities may vary prior to and after delivery depending on market
conditions and changes in interest rate levels. However, the Funds do not accrue
any income on these securities prior to delivery. The Funds may also invest in
low rated or unrated debt securities. Low rated debt securities present a
significantly greater risk of default than do higher rated securities, in times
of poor business or economic conditions, the Funds may lose interest and/or
principal on such securities.
The
Funds may also invest in various money market securities for cash management
purposes or when assuming a temporary defensive position. Money market
securities may include commercial paper, bankers’ acceptances, bank obligations,
corporate debt securities, certificates of deposit, U.S. government securities
and obligations of savings institutions.
DEPOSITARY
RECEIPTS
The
Funds may invest in Depositary Receipts, which represent an ownership interest
in securities of foreign companies (an “underlying issuer”) that are deposited
with a depositary. Depositary Receipts are not necessarily denominated in the
same currency as the underlying securities. Depositary Receipts include American
Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) and other
types of Depositary Receipts (which, together with ADRs and GDRs, are
hereinafter collectively referred to as “Depositary Receipts”). ADRs are
dollar-denominated Depositary Receipts typically issued by a U.S. financial
institution which evidence an ownership interest in a security or pool of
securities issued by a foreign issuer. ADRs are listed and traded in the United
States. GDRs and other types of Depositary Receipts are typically issued by
foreign banks or trust companies, although they also may be issued by U.S.
financial institutions, and evidence ownership interests in a security or pool
of securities issued by either a foreign or a U.S. corporation. Generally,
Depositary Receipts in registered form are designed for use in the U.S.
securities market and Depositary Receipts in bearer form are designed for use in
securities markets outside the United States.
Depositary
Receipts may be “sponsored” or “unsponsored.” Sponsored Depositary Receipts are
established jointly by a depositary and the underlying issuer, whereas
unsponsored Depositary Receipts may be established by a depositary without
participation by the underlying issuer. Holders of unsponsored Depositary
Receipts generally bear all the costs associated with establishing unsponsored
Depositary Receipts. In addition, the issuers of the securities underlying
unsponsored Depository Receipts are not obligated to disclose material
information in the United States and, therefore, there may be less information
available regarding such issuers and there may not be a correlation between such
information and the market value of the Depositary Receipts.
DERIVATIVES
The
Funds may also use derivatives, such as futures contracts, options, forward
contracts and swaps as part of various investment techniques and strategies,
such as creating non-speculative “synthetic” positions (covered by segregation
of liquid assets) or implementing “cross-hedging” strategies. A “synthetic”
position is the duplication of a cash market transaction. “Cross-hedging”
involves the use of one currency to hedge against the decline in the value of
another currency. The use of such instruments as described herein involves
several risks. First, there can be no assurance that the prices of such
instruments and the hedge security or the cash market position will move as
anticipated. If prices do not move as anticipated, a Fund may incur a loss on
its investment, may not achieve the hedging protection it anticipated and/or may
incur a loss greater than if it had entered into a cash market position. Second,
investments in such instruments may reduce the gains which would otherwise be
realized from the sale of the underlying securities or assets which are being
hedged. Third, positions in such instruments can be closed out only on an
exchange that provides a market for those instruments. There can be no assurance
that such a market will exist for a particular derivative. If the Fund cannot
close out an exchange traded derivative which it holds, it may have to perform
its contract obligation or exercise its option to realize any profit and may
incur transaction cost on the sale of the underlying assets. In addition, the
use of derivative instruments involves the risk that a loss may be sustained as
a result of the failure of the counterparty to the derivatives contract to make
required payments or otherwise comply with the contract’s terms.
When
the Funds intend to acquire securities (or gold bullion or coins as the case may
be) for their portfolio, they may use call derivatives as a means of fixing the
price of the security (or gold) they intend to purchase at the exercise price or
contract price depending on the derivative. An increase in the acquisition cost
may be offset, in whole or part, by a gain on the derivative. Options and
futures contracts requiring delivery of a security may also be useful to the
Funds in purchasing a large block of securities that would be more difficult to
acquire by direct market purchases. If the Funds hold a call option rather than
the underlying security itself, the Funds are partially protected from any
unexpected decline in the market price of the underlying security and in such
event could allow the call option to expire, incurring a loss only to the extent
of the premium paid for the option. Using a futures contract would not offer
such partial protection against market declines and the Funds may experience a
loss as if they had owned the underlying security.
In
addition, the Funds may invest in Participation Notes or P-Notes which are
issued by banks or broker-dealers and are designed to offer a return linked to
the performance of a particular underlying equity security or market. P-Notes
can have the characteristics or take the form of various instruments, including,
but not limited to, certificates or warrants. The holder of a P-Note that is
linked to a particular underlying security is entitled to receive any dividends
paid in connection with the underlying security. However, the holder of a P-Note
generally does not receive voting rights as it would if it directly owned the
underlying security. P-Notes constitute direct, general and unsecured
contractual obligations of the banks or broker-dealers that issue them, which
therefore subject a Fund to counterparty risk, as discussed below. Investments
in P-Notes involve certain risks in addition to those associated with a direct
investment in the underlying foreign companies or foreign securities markets
whose return they seek to replicate. For instance, there can be no assurance
that the trading price of a P-Note will equal the underlying value of the
foreign company or foreign securities market that it seeks to replicate. As the
purchaser of a P-Note, a Fund is relying on the creditworthiness of the
counterparty issuing the P-Note and has no rights under a P-Note against the
issuer of the underlying security. Therefore, if such counterparty were to
become insolvent, a Fund would lose its investment.
The
risk that a Fund may lose its investments due to the insolvency of a single
counterparty may be amplified to the extent the Fund purchases P-Notes issued by
one issuer or a small number of issuers. P-Notes also include transaction costs
in addition to those applicable to a direct investment in securities. In
addition, the use of P-Notes by VanEck Morningstar Wide Moat Fund may cause the
Fund’s performance to deviate from the performance of the portion of the Wide
Moat Index to which the Fund is gaining exposure through the use of
P-Notes.
Due
to liquidity and transfer restrictions, the secondary markets on which P-Notes
are traded may be less liquid than the markets for other securities, which may
lead to the absence of readily available market quotations for securities in a
Fund’s portfolio. The ability of a Fund to value its securities becomes more
difficult and the judgment in the application of fair value procedures may play
a greater role in the valuation of a Fund’s securities due to reduced
availability of reliable objective pricing data. Consequently, while such
determinations will be made in good faith, it may nevertheless be more difficult
for a Fund to accurately assign a daily value to such securities.
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 (“SEC”)
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 1940 Act, 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 1940 Act, 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.
DIRECT
INVESTMENTS
The
Funds, except CM Commodity Index Fund, Emerging Markets Bond Fund and VanEck
Morningstar Wide Moat Fund, may not invest more than 10% of their total assets
in direct investments. Direct investments include (i) the private purchase from
an enterprise of an equity interest in the enterprise, and (ii) the purchase of
such an equity interest in an enterprise from an investor in the enterprise. In
each case, a Fund may, at the time of making an investment, enter into a
shareholder or similar agreement with the enterprise and one or more other
holders of equity interests in the enterprise.
Certain
of the Funds’ direct investments may include investments in smaller, less
seasoned companies. These companies may have limited product lines, markets or
financial resources, or they may be dependent on a limited management group. In
some cases, the Funds’ direct investments may fund new start-up operations for
an enterprise. With respect to Emerging Markets Fund and Emerging Markets
Leaders Fund, such direct investments may be made in entities that are
reasonably expected in the foreseeable future to become growth companies, either
by expanding current operations or establishing significant
operations.
Direct
investments may involve a high degree of business and financial risk that can
result in substantial losses. Because of the absence of any public trading
market for these investments, the Funds may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices on
these sales could be less than those originally paid by the Funds. Furthermore,
issuers whose securities are not publicly traded may not be subject to public
disclosure and other investor protection requirements applicable to publicly
traded securities. If such securities are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Funds may
be required to bear the expense of the registration. Direct investments are
generally considered illiquid and will be aggregated with other illiquid
investments for purposes of the limitation on illiquid investments. Direct
investments can be difficult to price. The pricing of direct investments may not
be reflective of the price at which these assets could be
liquidated.
EQUITY
SECURITIES
The
Funds may invest in equity securities. Equity securities, such as common stock,
represent an ownership interest, or the right to acquire an ownership interest,
in an issuer.
Common
stock generally takes the form of shares in a corporation. The value of a
company’s stock may fall as a result of factors directly relating to that
company, such as decisions made by its management or lower demand for the
company’s products or services. A stock’s value also may fall because of factors
affecting not just the company, but also companies in the same industry or in a
number of different industries, such as increases in production costs. The value
of a company’s stock also may be affected by changes in financial markets that
are relatively unrelated to the company or its industry, such as changes in
interest rates or currency exchange rates. In addition, a company’s stock
generally pays dividends only after the company invests in its own business and
makes required payments to holders of its bonds, other debt and preferred stock.
For this reason, the value of a company’s stock usually reacts more strongly
than its bonds, other debt and preferred stock to actual or perceived changes in
the company’s financial condition or prospects. Stocks of smaller companies may
be more vulnerable to adverse developments than those of larger companies.
Stocks of companies that the portfolio manager believes are fast-growing may
trade at a higher multiple of current earnings than other stocks. The value of
such stocks may be more sensitive to changes in current or expected earnings
than the values of other stocks.
Different
types of equity securities provide different voting and dividend rights and
priority in the event of the bankruptcy and/or insolvency of the issuer. In
addition to common stock, equity securities may include preferred stock,
convertible securities and warrants, which are discussed elsewhere in the
Prospectus and this Statement of Additional Information. Equity securities other
than common stock are subject to many of the same risks as common stock,
although possibly to different degrees.
Environmental,
social and governance (“ESG”) considerations, may be utilized as a component of
a Fund’s investment process to implement its investment strategy in pursuit of
its investment objective. ESG factors may be incorporated to evaluate an issuer,
as part of risk analysis, opportunity analysis, or in other manners. ESG factors
may vary across types of investments and issuers, and not every ESG factor may
be identified or evaluated. The incorporation of ESG factors may affect a Fund’s
exposure to certain issuers or industries and may not work as intended. A Fund
may underperform other funds that do not assess an issuer’s ESG factors as part
of the investment process or that use a different methodology to identify and/or
incorporate ESG factors. Because ESG considerations may be used as one part of
an overall investment process, a Fund may still invest in securities of issuers
that are not considered ESG-focused or that may be viewed as having a high ESG
risk profile. As investors can differ in their views regarding ESG factors, a
Fund may invest in issuers that do not reflect the views with respect to ESG of
any particular investor. Information used by a Fund to evaluate such factors,
including information from reliance on third-party research and/or proprietary
research, may not be readily available, complete or accurate, and may vary
across providers and issuers as ESG is not a uniformly defined characteristic,
which could negatively impact a Fund’s ability to accurately assess an issuer,
which could negatively impact a Fund’s performance. There is no guarantee that
the evaluation of ESG considerations will be additive to a Fund’s
performance.
FOREIGN
SECURITIES
Foreign
securities include securities issued by a foreign government, quasi-government
or corporate entity, traded in foreign currencies or issued by companies with
most of their business interests in foreign countries. Investors should
recognize that investing in foreign securities involves certain special
considerations that are not typically associated with investing in United States
securities. Since investments in foreign companies frequently involve currencies
of foreign countries, and since the Funds may hold securities and funds in
foreign currencies, the Funds may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, if any, and may
incur costs in connection with conversions between various currencies. Most
foreign stock markets, while growing in volume of trading activity, have less
volume than the New York Stock Exchange (“NYSE”), and securities of some foreign
companies may be less liquid and more volatile than securities of comparable
domestic companies. Similarly, volume and liquidity in most foreign bond markets
may be less than in the United States, and at times volatility of price can be
greater than in the United States. Fixed commissions on foreign securities
exchanges are generally higher than negotiated commissions on United States
exchanges. There is generally less government supervision and regulation of
securities exchanges, brokers and listed companies in foreign countries than in
the United States. In addition, with respect to certain foreign countries, there
is the possibility of exchange control restrictions, expropriation or
confiscatory taxation, political, economic or social instability, which could
affect investments in those countries. Foreign securities such as those
purchased by the Funds may be subject to foreign government taxes, higher
custodian fees, higher brokerage commissions and dividend collection fees which
could reduce the yield on such securities.
Trading
in futures contracts traded on foreign commodity exchanges may be subject to the
same or similar risks as trading in foreign securities.
FOREIGN
SECURITIES - EMERGING MARKET SECURITIES
The
Funds, except for VanEck Morningstar Wide Moat Fund, may have a substantial
portion of their assets invested in emerging markets. A Fund’s Adviser has broad
discretion to identify countries that it considers to qualify as emerging
markets. Each Fund’s Adviser selects emerging market countries and currencies
that the Fund will invest in based on the Adviser’s evaluation of economic
fundamentals, legal structure, political developments and other specific factors
the Adviser believes to be relevant. An instrument may qualify as an emerging
market debt security if it is either (i) issued by an emerging market
government, quasi-government or corporate entity (regardless of the currency in
which it is denominated) or (ii) denominated in the currency of an emerging
market country (regardless of the location of the issuer).
Investing
in the equity and fixed income markets of emerging market countries involves
exposure to potentially unstable governments, the risk of nationalization of
businesses, restrictions on foreign ownership, prohibitions on repatriation of
assets and a system of laws that may offer less protection of property rights.
Emerging market economies may be based on only a few industries, may be highly
vulnerable to changes in local and global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates.
Additionally,
the government in an emerging market country may restrict or control to varying
degrees the ability of foreign investors to invest in securities of issuers
located or operating in such emerging market countries. These restrictions
and/or controls may at times limit or prevent foreign investment in securities
of issuers located or operating in emerging market countries. In addition, a
Fund may not be able to buy or sell securities or receive full value for such
securities. Moreover, certain emerging market countries may require governmental
approval or special licenses prior to investments by foreign investors and may
limit the amount of investments by foreign investors in a particular industry
and/or issuer; may limit such foreign investment to a certain class of
securities of an issuer that may have less advantageous rights than the classes
available for purchase by domiciliaries of such emerging market countries;
and/or may impose additional taxes on foreign investors. A delay in obtaining a
required government approval or a license would delay investments in those
emerging market countries, and, as a result, a Fund may not be able to invest in
certain securities while approval is pending. The government of certain emerging
market countries may also withdraw or decline to renew a license that enables a
Fund to invest in such country. These factors make investing in issuers located
or operating in emerging market countries significantly riskier than investing
in issuers located or operating in more developed countries, and any one of them
could cause a decline in the value of a Fund’s shares.
Additionally,
investments in issuers located in certain emerging market countries may be
subject to a greater degree of risk associated with governmental approval in
connection with the repatriation of investment income, capital or the proceeds
of sales of securities by foreign investors. Moreover, there is the risk that if
the balance of payments in an emerging market country declines, the government
of such country may impose temporary restrictions on foreign capital
remittances. Consequently, a Fund could be adversely affected by delays in, or a
refusal to grant, required governmental approval for repatriation of capital, as
well as by the application to the Fund of any restrictions on investments.
Furthermore, investments in emerging market countries may require a Fund to
adopt special procedures, seek local government approvals or take other actions,
each of which may involve additional costs to a Fund.
The
securities markets in emerging markets are substantially smaller, less liquid
and more volatile than the major securities markets in the United States. A high
proportion of the shares of many issuers may be held by a limited number of
persons and financial institutions, which may limit the number of shares
available for investment by the portfolio. Similarly, volume and liquidity in
the bond markets in Asia, Eastern and Central Europe and other emerging markets
are less than in the United States and, at times, price volatility can be
greater than in the United States. A limited number of issuers in Asian and
emerging market securities markets may represent a disproportionately large
percentage of market capitalization and trading value. The limited liquidity of
securities markets in these regions may also affect a Fund’s ability to acquire
or dispose of securities at the price and time it wishes to do so. Accordingly,
during periods of rising securities prices in the more illiquid regions’
securities markets, a Fund’s ability to participate fully in such price
increases may be limited by its investment policy of investing not more than 15%
of its net assets in illiquid investments. Conversely, the inability of a Fund
to dispose fully and promptly of positions in declining markets may cause such
Fund’s net asset values to decline as the values of the unsold positions are
marked to lower prices. In addition, these securities markets are susceptible to
being influenced by large investors trading significant blocks of securities.
Also, stockbrokers and other intermediaries in emerging markets may not perform
in the same way as their counterparts in the United States and other more
developed securities markets. The prices at which a Fund may acquire investments
may be affected by trading by persons with material non-public information and
by securities transactions by brokers in anticipation of transactions by the
Fund in particular securities.
The
Funds may invest in Latin American, Asian, Eurasian and other countries with
emerging economies or securities markets. Political and economic structures in
many such countries may be undergoing significant evolution and rapid
development, and such countries may lack the social, political and economic
stability characteristic of the United States. Certain such countries have in
the past failed to recognize private property rights and have at times
nationalized or expropriated the assets of private companies. As a result, the
risks described above, including the risks of nationalization or expropriation
of
assets,
may be heightened. In addition, unanticipated political or social developments
may affect the value of the Fund’s investments in those countries and the
availability to the Fund of additional investments in those countries. Emerging
market countries may have different accounting, auditing and financial reporting
standards and may employ other regulatory practices and requirements as compared
to more developed markets.
The
Russian, Eastern and Central European, Chinese and Taiwanese stock markets are
undergoing a period of growth and change which may result in trading volatility
and difficulties in the settlement and recording of transactions, and in
interpreting and applying the relevant law and regulations.
Certain
Risks of Investing in Asia-Pacific Countries.
In addition to the risks of foreign investing and the risks of investing in
developing markets, the developing market Asia-Pacific countries in which a Fund
may invest are subject to certain additional or specific risks. A Fund may make
substantial investments in Asia-Pacific countries. In many of these markets,
there is a high concentration of market capitalization and trading volume in a
small number of issuers representing a limited number of industries, as well as
a high concentration of investors and financial intermediaries. Many of these
markets also may be affected by developments with respect to more established
markets in the region such as in Japan and Hong Kong. Brokers in developing
market Asia-Pacific countries typically are fewer in number and less well
capitalized than brokers in the United States. These factors, combined with the
U.S. regulatory requirements for open-end investment companies, result in
potentially fewer investment opportunities for the Fund and may have an adverse
impact on the investment performance of a Fund.
Many
of the developing market Asia-Pacific countries may be subject to a greater
degree of economic, political and social instability than is the case in the
United States and Western European countries. Such instability may result from,
among other things: (i) authoritarian governments or military involvement in
political and economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; and (v) ethnic, religious and
racial disaffection. Public health crises or major health-related developments
may have a substantial impact on the economy of certain Asian-Pacific countries.
Outbreaks of contagious viruses and diseases, including the novel viruses
commonly known as SARS, MERS, and Covid-19 (Coronavirus), may reduce business
activity or disrupt market activity, and have the potential to exacerbate market
risks such as volatility in exchange rates or the trading of Asian-Pacific
securities listed domestically or abroad.
In
addition, the governments of many of such countries, such as Indonesia, have a
substantial role in regulating and supervising the economy. Another risk common
to most such countries is that the economy is heavily export oriented and,
accordingly, is dependent upon international trade. The existence of
overburdened infrastructure and obsolete financial systems also presents risks
in certain countries, as do environmental problems. Certain economies also
depend to a significant degree upon exports of primary commodities and,
therefore, are vulnerable to changes in commodity prices that, in turn, may be
affected by a variety of factors.
Governments
of many developing market Asia-Pacific countries have exercised and continue to
exercise substantial influence over many aspects of the private sector. In
certain cases, the government owns or controls many companies, including the
largest in the country. Accordingly, government actions in the future could have
a significant effect on economic conditions in developing market Asia-Pacific
countries, which could affect private sector companies and a Fund itself, as
well as the value of securities in the Fund’s portfolio. In addition, economic
statistics of developing market Asia-Pacific countries may be less reliable than
economic statistics of more developed nations.
Investments
through Stock Connect.
Each of the Emerging Markets Fund, Emerging Markets Leaders Fund and the
Environmental Sustainability Fund may invest in A-shares listed and traded on
the Shanghai Stock Exchange and the Shenzhen Stock Exchange through the
Shanghai-Hong Kong Stock Connect Program and the Shenzhen-Hong Kong Stock
Connect Program (together, “Stock Connect”), or on such other stock exchanges in
China which participate in Stock Connect from time to time or in the future.
Trading through Stock Connect is subject to a number of restrictions that may
affect each of the Fund's investments and returns. For example, trading through
Stock Connect is subject to daily quotas that limit the maximum daily net
purchases on any particular day, which may restrict or preclude each of the
Fund's ability to invest in Stock Connect A-shares. In addition, investments
made through Stock Connect are subject to trading, clearance and settlement
procedures that are relatively untested in the PRC, which could pose risks to
the Funds. Furthermore, securities purchased via Stock Connect are generally
held via a book entry omnibus account in the name of Hong Kong Securities
Clearing Company Limited (“HKSCC”), Hong Kong’s clearing entity, at the China
Securities Depository and Clearing Corporation Limited (“CSDCC”). These Funds'
ownership interest in Stock Connect securities will not be reflected directly in
book entry with CSDCC and will instead only be reflected on the books of its
Hong Kong sub-custodian. The Funds may therefore depend on HKSCC’s ability or
willingness as record-holder of Stock Connect securities to enforce each of the
Fund’s shareholder rights. PRC law did not historically recognize the concept of
beneficial ownership; while PRC regulations and the Hong Kong Stock Exchange
have issued clarifications and guidance supporting the concept of beneficial
ownership via Stock Connect, the interpretation of beneficial ownership in the
PRC by regulators and courts may continue to evolve. Moreover, Stock Connect
A-shares generally may not be sold, purchased or otherwise transferred other
than through Stock Connect in accordance with applicable rules.
A
primary feature of Stock Connect is the application of the home market’s laws
and rules applicable to investors in A-shares. Therefore, each of the Fund’s
investments in Stock Connect A-shares are generally subject to PRC securities
regulations and listing rules, among other restrictions.The Stock Exchange of
Hong Kong, Shenzhen Stock Exchange (“SZSE”) and Shanghai Stock Exchange (“SSE”)
reserve the right to suspend trading if necessary for ensuring an orderly and
fair market and managing risks prudently, which could adversely affect each of
the Fund's ability to access the mainland China market. A stock may be recalled
from the scope of eligible SSE securities or SZSE securities for trading via the
Stock Connect for various reasons, and in such event, the stock can only be sold
but is restricted from being bought. Stock Connect is only available on days
when markets in both the PRC and Hong Kong are open, which may limit each of the
Fund's ability to trade when it would be otherwise attractive to do so. Since
the inception of Stock Connect, foreign investors (including each of the Funds)
investing in A-shares through Stock Connect would be temporarily exempt from the
PRC corporate income tax and value-added tax on the gains on disposal of such
A-shares. Dividends would be subject to PRC corporate income tax on a
withholding basis at 10%, unless reduced under a double tax treaty with China
upon application to and obtaining approval from the competent tax authority.
Aside from these temporary measures, uncertainties in permanent PRC tax rules
governing taxation of income and gains from investments in Stock Connect
A-shares could result in unexpected tax liabilities for the Funds.
The
Funds may, through the Stock Connect, access securities listed on the ChiNext
market and STAR Board of the SZSE. Listed companies on the ChiNext market and
START Board are usually of an emerging nature with smaller operating scale.
Listed companies on the ChiNext Market and STAR Board are subject to wider price
fluctuation limits and due to higher entry thresholds for investors, may have
limited liquidity, compared to other boards. They are subject to higher
fluctuation in stock prices and liquidity and have higher risks and turnover
ratios than companies listed on the main board of the SZSE. Securities listed on
the ChiNext Market may be overvalued and such exceptionally high valuation may
not be sustainable. Stock prices may be more susceptible to manipulation due to
fewer circulating shares. It may be more common and faster for companies listed
on the ChiNext to delist. This may have an adverse impact on the Funds if the
companies that it invests in are delisted. Also, the rules and regulations
regarding companies listed on ChiNext Market and STAR Board are less stringent
in terms of profitability and share capital than those on the main board.
Investments in the ChiNext Market and STAR Board may result in significant
losses for the Funds and their investors. STAR Board is a newly established
board and may have a limited number of listed companies during the initial
stage. Investments in STAR board may be concentrated in a small number of stocks
and subject the Funds to higher concentration risk.
The
Stock Connect only operates on days when both the PRC and Hong Kong markets are
open for trading and when banks in both markets are open on the corresponding
settlement days. So it is possible that there are occasions when it is a normal
trading day for the PRC market but the Fund cannot carry out any China A-Shares
trading via the Stock Connect. The Fund may be subject to a risk of price
fluctuations in China A-Shares during the time when any of the Stock Connect is
not trading as a result.
PRC
regulations require that before an investor sells any share, there should be
sufficient shares in the account; otherwise the SSE or SZSE will reject the sell
order concerned. SEHK will carry out pre-trade checking on China A-Shares sell
orders of its participants (i.e. the stock brokers) to ensure there is no
over-selling. If the Fund intends to sell certain China A-Shares it holds, it
must transfer those China A-Shares to the respective accounts of its broker(s)
before the market opens on the day of selling (“trading day”). If it fails to
meet this deadline, it will not be able to sell those shares on the trading day.
Because of this requirement, the Fund may not be able to dispose of its holdings
of China A-Shares in a timely manner.
The
Stock Connect program is a relatively new program and may be subject to further
interpretation and guidance. There can be no assurance as to the program’s
continued existence or whether future developments regarding the program may
restrict or adversely affect each of the Fund's investments or returns. In
addition, the application and interpretation of the laws and regulations of Hong
Kong and the PRC, and the rules, policies or guidelines published or applied by
relevant regulators and exchanges in respect of the Stock Connect program are
uncertain, and they may have a detrimental effect on each of the Fund's
investments and returns. Moreover, the rules and regulations may have potential
retrospective effect. There can be no assurance that the Stock Connects will not
be abolished. Investments in mainland China markets through the Stock Connects
may adversely affect the Funds as a result of such changes.
Investments
through Bond Connect and the China Interbank Bond Market Direct Access
Program.
The Emerging Markets Bond Fund may invest in Renminbi (“RMB”)-denominated bonds
issued in the PRC by Chinese credit, government, and quasi-governmental issuers
(“RMB Bonds”). RMB Bonds are available on the China interbank bond market
(“CIBM”) to eligible foreign investors through the CIBM Direct Access Program
and through the “Mutual Bond Market Access between Mainland China and Hong Kong”
(“Bond Connect”) program. The Emerging Markets Bond Fund’s investments in bonds
through either program will be subject to a number of additional risks and
restrictions that may affect the Emerging Markets Bond Fund’s investments and
returns.
Bond
Connect Risks (VanEck
Emerging Markets Bond Fund only)
The
“Mutual Bond Market Access between Mainland China and Hong Kong” (“Bond
Connect”) program is a new initiative established by China Foreign Exchange
Trade System & National Interbank Funding Centre (“CFETS”), CSDCC, Shanghai
Clearing House (“SHCH”), and Hong Kong Exchanges and Clearing Limited (“HKEx”)
and Central Moneymarkets Unit (“CMU”) of the Hong Kong Monetary Authority
(“HKMA”) to facilitate investors from Mainland China and Hong Kong to trade in
each other’s bond markets through connection between the Mainland China and Hong
Kong financial institutions.
Laws,
rules, regulations, policies, notices, circulars or guidelines relating to the
Bond Connect (the “Applicable Bond Connect Regulations”) as published or applied
by any of the Bond Connect Authorities (as defined below) are untested and are
subject to change from time to time. There can be no assurance that the Bond
Connect will not be restricted, suspended or abolished. If such event occurs,
the Fund’s ability to invest in the CIBM through the Bond Connect will be
adversely affected, and if the Fund is unable to adequately access the CIBM
through other means, the Fund’s ability to achieve its investment objective will
be adversely affected. “Bond Connect Authorities” refers to the exchanges,
trading systems, settlement systems, governmental, regulatory or tax bodies
which provide services and/or regulate Bond Connect and activities relating to
Bond Connect, including, without limitation, the PBOC, the HKMA, the HKEx, the
CEFTS, the CMU, the CSDCC and the SHCH and any other regulator, agency or
authority with jurisdiction, authority or responsibility in respect of Bond
Connect.
Under
the prevailing Applicable Bond Connect Regulations, eligible foreign investors
who wish to participate in the Bond Connect may do so through an offshore
custody agent, registration agent or other third parties (as the case may be),
who would be responsible for making the relevant filings and account opening
with the relevant authorities. The Fund is therefore subject to the risk of
default or errors on the part of such agents.
Trading
through the Bond Connect is performed through trading platforms and operational
systems. There is no assurance that such systems will function properly (in
particular, under extreme market conditions) or will continue to be adapted to
changes and developments in the market. In the event that the relevant systems
fails to function properly, trading through the Bond Connect may be disrupted.
The Fund’s ability to trade through the Bond Connect (and hence to pursue its
investment strategy) may therefore be adversely affected. In addition, where the
Fund invests in the CIBM through the Bond Connect, it may be subject to risks of
delays inherent in the order placing and/or settlement.
The
CMU (i.e. the HKMA) is the “nominee holder” of the bonds acquired by the Fund
through the Bond Connect. Whilst the Bond Connect Authorities have expressly
stated that investors will enjoy the rights and interests of the bonds acquired
through the Bond Connect in accordance with applicable laws, the exercise and
the enforcement of beneficial ownership rights over such bonds in the courts in
China is yet to be tested. In addition, in the event that the nominee holder
(i.e. the HKMA) becomes insolvent, such bonds may form part of the pool of
assets of the nominee holder available for distribution to its creditors and the
Fund, as a beneficial owner, may have no rights whatsoever in respect
thereof.
Risk
of Investing through the CIBM Direct Access Program (VanEck
Emerging Markets Bond Fund only)
The
China interbank bond market (“CIBM”) is an OTC market in which domestic
institutional investors and certain foreign institutional investors can trade,
on a one-to-one quote-driven basis, sovereign bonds, government bonds, corporate
bonds, bond repo, bond lending, bills issued by the People’s Bank of China
(“PBOC”) and other financial debt instruments.
The
Fund’s investments in bonds through the CIBM Direct Access Program, which allows
access to eligible foreign institutional investors, will be subject to a number
of additional risks and restrictions that may affect the Fund’s investments and
returns.
The
CIBM Direct Access Program is relatively new. Laws, rules, regulations,
policies, notices, circulars or guidelines relating to the CIBM Direct Access
Program as published or applied by the PBOC and other PRC authorities are
untested and are subject to change from time to time. There can be no assurance
that the CIBM Direct Access Program will not be restricted, suspended or
abolished. If such event occurs, the Fund’s ability to invest in the CIBM
through the CIBM Direct Access Program will be adversely affected, and if the
Fund is unable to adequately access the CIBM through other means, the Fund’s
ability to achieve its investment objective will be adversely
affected.
Under
the prevailing PRC regulations, eligible foreign institutional investors who
wish to invest directly in CIBM through the CIBM Direct Access Program may do so
through an onshore settlement agent, who would be responsible for making the
relevant filings and account opening with the relevant authorities. The Fund is
therefore subject to the risk of default or errors on the part of such agent.
Cash deposited in the cash account of the Fund with the relevant onshore
settlement agent will not be segregated. In the event of the bankruptcy or
liquidation of the onshore settlement agent, the Fund will not have any
proprietary rights to the cash deposited in such cash account and may face
difficulty and/or encounter delays in recovering such assets, or may not be able
to recover it in full or at all, in which case the Fund will suffer
losses.
Market
volatility and potential lack of liquidity due to low trading volume of certain
debt securities in the China interbank bond market may result in prices of
certain debt securities traded on such market fluctuating significantly. The
Fund
is
therefore subject to liquidity and volatility risks. The bid and offer spreads
of the prices of such securities may be large, and the Fund may therefore incur
significant trading and realization costs and may even suffer losses when
selling such investments.
The
Fund is also exposed to risks associated with settlement procedures and default
of counterparties. The counterparty which has entered into a transaction with
the Fund may default in its obligation to settle the transaction by delivery of
the relevant security or by payment for value. Although there is no quota
limitation regarding investment via the CIBM Direct Access Program, the Fund may
be required to make further filings with the PBOC if it wishes to increase its
anticipated investment size. There is no guarantee the PBOC will accept such
further filings. In the event any further filings for an increase in the
anticipated investment size are not accepted by the PBOC, the Fund’s ability to
invest in the CIBM will be limited and the performance of the relevant Fund may
be unfavorably affected as a result.
Investing
in the CIBM is also subject to certain restrictions imposed by the PRC
authorities on fund remittance and repatriation which may potentially affect the
Fund’s performance and liquidity. Any non-compliance with or failure to meet the
fund remittance and repatriation requirements may result in regulatory sanctions
which in turn may have an adverse impact on the portion of the Fund’s investment
via the CIBM Direct Access Program. Further, there is no assurance that the fund
remittance and repatriation requirements in relation to investment in CIBM will
not be changed as a result of change in government policies or foreign exchange
control policies. The Fund may incur loss in the event such change in the fund
remittance and repatriation requirements in relation to investment in CIBM
occurs.
Chinese
Variable Interest Entities Risks
Chinese
operating companies sometimes rely on variable interest entity (“VIE”)
structures to raise capital from non Chinese investors. In a VIE structure, a
China-based operating company establishes an entity (typically offshore) that
enters into service and other contracts with the Chinese company designed to
provide economic exposure to the company. The offshore entity then issues
exchange-traded shares that are sold to the public, including non-Chinese
investors (such as a Fund). Shares of the offshore entity are not equity
ownership interests in the Chinese operating company and therefore the ability
of the offshore entity to control the activities of the Chinese company are
limited and the Chinese company may engage in activities that negatively impact
investment value. The VIE structure is designed to provide the offshore entity
(and in turn, investors in the entity) with economic exposure to the Chinese
company that replicates equity ownership, without actual equity ownership. VIE
structures are used due to Chinese government prohibitions on foreign ownership
of companies in certain industries and it is not clear that the contracts are
enforceable or that the structures will otherwise work as intended.
Intervention
by the Chinese government with respect to VIE structures could adversely affect
the Chinese operating company’s performance, the enforceability of the offshore
entity’s contractual arrangements with the Chinese company and the value of the
offshore entity’s shares. Further, if the Chinese government determines that the
agreements establishing the VIE structure do not comply with Chinese law and
regulations, including those related to prohibitions on foreign ownership, the
Chinese government could subject the Chinese company to penalties, revocation of
business and operating licenses or forfeiture of ownership interests. The
offshore entity’s control over the Chinese company may also be jeopardized if
certain legal formalities are not observed in connection with the agreements, if
the agreements are breached or if the agreements are otherwise determined not to
be enforceable. If any of the foregoing were to occur, the market value of a
Fund’s associated portfolio holdings would likely fall, causing substantial
investment losses for the Fund.
In
addition, Chinese companies listed on U.S. exchanges, including ADRs and
companies that rely on VIE structures, may be delisted if they do not meet U.S.
accounting standards and auditor oversight requirements. Delisting could
significantly decrease the liquidity and value of the securities of these
companies, decrease the ability of a Fund to invest in such securities and
increase the cost of the Fund if it is required to seek alternative markets in
which to invest in such securities.
FOREIGN
SECURITIES - FOREIGN CURRENCY TRANSACTIONS
Although
the Funds value their assets daily in terms of U.S. dollars, they do not
generally physically convert their holdings of foreign currencies into U.S.
dollars on a daily basis. The Funds may do so from time to time, and investors
should be aware of the costs of currency conversion. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a profit based on
the difference (the “spread”) between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Funds at one rate, while offering a lesser rate of exchange should the
Funds desire to resell that currency to the dealer. The Funds may use forward
contracts, along with futures contracts, foreign exchange swaps and put and call
options (all types of derivatives) as part of their overall hedging strategy.
The Funds generally conduct their foreign currency exchange transactions, either
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through purchasing put and call options on, or entering into
futures contracts or forward contracts to purchase or sell foreign currencies.
See “Options, Futures, Warrants and Subscription Rights.”
Changes
in currency exchange rates may affect the Funds’ net asset value and
performance. The Adviser may not be able to anticipate currency fluctuations in
exchange rates accurately. The Funds may invest in a variety of derivatives and
enter into hedging transactions to attempt to moderate the effect of currency
fluctuations. The Funds may purchase and sell put and call options on, or enter
into futures contracts or forward contracts to purchase or sell foreign
currencies. This may reduce a Fund’s losses on a security when a foreign
currency’s value changes. Hedging against a change in the value of a foreign
currency does not eliminate fluctuations in the prices of portfolio securities
or prevent losses if the prices of such securities decline. Furthermore, such
hedging transactions reduce or preclude the opportunity for gain if the value of
the hedged currency should change relative to the other currency. Finally, when
the Funds use options and futures in anticipation of the purchase of a portfolio
security to hedge against adverse movements in the security’s underlying
currency, but the purchase of such security is subsequently deemed undesirable,
a Fund may incur a gain or loss on the option or futures contract.
The
Funds may enter into forward contracts to duplicate a cash market transaction.
See also “Options, Futures, Warrants and Subscription Rights.”
A
Fund may (but is not required to) engage in these transactions in order to
protect against uncertainty in the level of future foreign exchange rates in the
purchase and sale of securities. A Fund may also use foreign currency options
and foreign currency forward contracts to increase exposure to a foreign
currency or to shift exposure to foreign currency fluctuations from one country
to another. Suitable currency hedging transactions may not be available in all
circumstances and an Adviser may decide not to use hedging transactions that are
available.
In
those situations where foreign currency options or futures contracts, or options
on futures contracts may not be readily purchased (or where they may be deemed
illiquid or unattractive) in the primary currency in which the hedge is desired,
the hedge may be obtained by purchasing or selling an option, futures contract
or forward contract on a secondary currency. There can be no assurances that the
exchange rate or the primary and secondary currencies will move as anticipated,
or that the relationship between the hedged security and the hedging instrument
will continue. If they do not move as anticipated or the relationship does not
continue, a loss may result to a Fund on its investments in the hedging
positions.
A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. Although forwards are intended to minimize the risk of
loss due to a decline in the value of the hedged currencies, at the same time,
they tend to limit any potential gain which might result should the value of
such currencies increase.
The
forecasting of currency market movement is extremely difficult, and whether any
hedging strategy will be successful is highly uncertain. Moreover, it is
impossible to forecast with precision the market value of portfolio securities
at the expiration of a foreign currency forward contract. Accordingly, a Fund
may be required to buy or sell additional currency on the spot market (and bear
the expense of such transaction) if an Adviser’s predictions regarding the
movement of foreign currency or securities markets prove inaccurate. In
addition, the use of cross-hedging transactions may involve special risks, and
may leave the Fund in a less advantageous position than if such a hedge had not
been established.
At
the maturity of a forward contract, the Funds may either sell the portfolio
security and make delivery of the foreign currency, or they may retain the
security and terminate their contractual obligation to deliver the foreign
currency prior to maturity by purchasing an “offsetting” contract with the same
currency trader, obligating it to purchase, on the same maturity date, the same
amount of the foreign currency. There can be no assurance, however, that the
Funds will be able to effect such a closing purchase transaction.
It
is impossible to forecast the market value of a particular portfolio security at
the expiration of the contract. Accordingly, if a decision is made to sell the
security and make delivery of the foreign currency it may be necessary for a
Fund to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency that a Fund is obligated to deliver.
If
a Fund retains the portfolio security and engages in an offsetting transaction,
the Fund may incur a gain or a loss to the extent that there has been movement
in forward contract prices. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result
should the value of such currency increase.
FUTURE
DEVELOPMENTS
The
Funds may take advantage of opportunities in the area of options, futures
contracts, options on futures contracts, warrants, swaps and any other
investments which are not presently contemplated for use or which are not
currently available, but which may be developed, to the extent such investments
are considered suitable for the Funds by each Adviser.
GLOBAL
RESOURCES SECURITIES
Global
resources securities include securities of global resource companies and
instruments that derive their value from global resources. Global resources
include precious metals (including gold), base and industrial metals, energy
(including, but not limited to, gas, petroleum, petrochemicals and other
hydrocarbons, and renewable energy resources such as solar, wind, geothermal, or
biofuel), natural resources and other commodities. A global resource company is
a company that derives, directly or indirectly, at least 50% of its revenues
from exploration, development, production, distribution or facilitation of
processes relating to global resources.
Since
the market action of global resources securities may move against or
independently of the market trend of industrial shares, the addition of such
securities to an overall portfolio may increase the return and reduce the price
fluctuations of such a portfolio. There can be no assurance that an increased
rate of return or a reduction in price fluctuations of a portfolio will be
achieved. Global resources securities are affected by many factors, including
movement in the stock market.
Inflation
may cause a decline in the market, including global resource securities. The
Global Resources Fund has a fundamental policy of concentrating in “global
resource” industries, and more than 50% of the Global Resources Fund’s assets
may be invested in any one of the above sectors. Precious metal and natural
resource securities are at times volatile and there may be sharp fluctuations in
prices, even during periods of rising prices.
HEDGING
Hedging
is a strategy in which a derivative or other instrument or practice is used to
offset the risks associated with other Fund holdings. Losses on the other
investment may be substantially reduced by gains on a derivative that reacts in
an opposite manner to market movements. Hedging can reduce or eliminate gains or
cause losses if the market moves in a manner different from that anticipated by
a Fund or if the cost of the derivative outweighs the benefit of the hedge.
Hedging also involves correlation risk, i.e. the risk that changes in the value
of the derivative will not match those of the holdings being hedged as expected
by a Fund, in which case any losses on the holdings being hedged may not be
reduced or may be increased. The inability to close options and futures
positions also could have an adverse impact on a Fund’s ability to hedge
effectively its portfolio. There is also a risk of loss by a Fund of margin
deposits or collateral in the event of bankruptcy of a broker with whom the Fund
has an open position in an option, a futures contract or a related option. There
can be no assurance that a Fund’s hedging strategies will be effective. The use
of hedging may invoke the application of the mark-to-market and straddle
provisions of the Internal Revenue Code of 1986, as amended (the “Code”). If
such provisions are applicable, there could be an increase (or decrease) in the
amount of taxable dividends paid by a Fund and may impact whether dividends paid
by the Fund are classified as capital gains or ordinary income. The use of
derivatives increases the risk that a Fund will be unable to close out certain
hedged positions to avoid adverse tax consequences.
ILLIQUID
INVESTMENTS
Each
Fund may not acquire any illiquid investment if, immediately after the
acquisition, the Fund would have invested more than 15% of its net assets in
illiquid investments that are assets. For purposes of the above 15% limitation,
illiquid investment means any investment that a Fund reasonably expects cannot
be sold or disposed of in current market conditions in seven calendar days or
less without the sale or disposition significantly changing the market value of
the investment, as determined pursuant to the 1940 Act and applicable rules and
regulations thereunder.
INDEXED
SECURITIES AND STRUCTURED NOTES
The
Funds may invest in indexed securities, i.e., structured notes securities and
index options, whose value is linked to one or more currencies, interest rates,
commodities, or financial or commodity indices. An indexed security enables the
investor to purchase a note whose coupon and/or principal redemption is linked
to the performance of an underlying asset. Indexed securities may be positively
or negatively indexed (i.e., their value may increase or decrease if the
underlying instrument appreciates). Indexed securities may have return
characteristics similar to direct investments in the underlying instrument or to
one or more options on the underlying instrument. Indexed securities may be more
volatile than the underlying instrument itself, and present many of the same
risks as investing in futures and options. Indexed securities are also subject
to credit risks associated with the issuer of the security with respect to both
principal and interest. Securities linked to one or more non-agriculture
commodities or commodity indices may be considered a global resources
securities.
Indexed
securities may be publicly traded or may be two-party contracts (such two-party
agreements are referred to hereafter collectively as structured notes). When a
Fund purchases a structured note, it makes a payment of principal to the
counterparty. Some structured notes have a guaranteed repayment of principal
while others place a portion (or all) of the principal at risk. Notes determined
to be illiquid will be aggregated with other illiquid securities and will be
subject to the Funds’ limitations on illiquid investments.
Credit
Linked Notes.
The Funds may invest in credit linked securities or credit linked notes
(“CLNs”). CLNs are typically issued by a limited purpose trust or other vehicle
(the “CLN trust”) that, in turn, invests in a derivative or basket of
derivatives instruments, such as credit default swaps, interest rate swaps
and/or other securities, in order to provide exposure to certain high yield,
sovereign debt, emerging markets, or other fixed income markets. Generally,
investments in CLNs represent the right to receive periodic income payments (in
the form of distributions) and payment of principal at the end of the term of
the CLN. However, these payments are conditioned on the CLN trust’s receipt of
payments from, and the CLN trust’s potential obligations, to the counterparties
to the derivative instruments and other securities in which the CLN trust
invests. For example, the CLN trust may sell one or more credit default swaps,
under which the CLN trust would receive a stream of payments over the term of
the swap agreements provided that no event of default has occurred with respect
to the referenced debt obligation upon which the swap is based. If a default
were to occur, the stream of payments may stop and the CLN trust would be
obligated to pay the counterparty the par (or other agreed upon value) of the
referenced debt obligation. This, in turn, would reduce the amount of income and
principal that the Fund would receive as an investor in the CLN trust. A Fund
may also enter in CLNs to gain access to sovereign debt and securities in
emerging markets particularly in markets where the Fund is not able to purchase
securities directly due to domicile restrictions or tax restrictions or tariffs.
In such an instance, the issuer of the CLN may purchase the reference security
directly and/or gain exposure through a credit default swap or other derivative.
The Fund’s investments in CLNs is subject to the risks associated with the
underlying reference obligations and derivative instruments.
INITIAL
PUBLIC OFFERINGS
The
Funds may invest in initial public offerings (IPOs) of common stock or other
primary or secondary syndicated offerings of equity or debt securities issued by
a corporate issuer. A purchase of IPO securities often involves higher
transaction costs than those associated with the purchase of securities already
traded on exchanges or markets. IPO securities are subject to market risk and
liquidity risk. The market value of recently issued IPO securities may fluctuate
considerably due to factors such as the absence of a prior public market,
unseasoned trading and speculation, a potentially small number of securities
available for trading, limited information about the issuer, and other factors.
A Fund may hold IPO securities for a period of time, or may sell them soon after
the purchase. Investments in IPOs could have a magnified impact – either
positive or negative – on the Fund’s performance while the Fund’s assets are
relatively small. The impact of an IPO on the Fund’s performance may tend to
diminish as the Fund’s assets grow.
INVESTMENTS
IN OTHER INVESTMENT COMPANIES
Emerging
Markets Bond Fund, Emerging Markets Fund, Emerging Markets Leaders Fund,
Environmental Sustainability Fund, Global Resources Fund and International
Investors Gold Fund may invest up to 20% of its net assets in securities issued
by other investment companies (excluding money market funds), including open end
and closed end funds and exchange-traded funds (“ETFs”), subject to the
limitations under the 1940 Act. The Funds’ investments in money market funds are
not subject to this limitation. CM Commodity Index Fund may invest in securities
issued by other investment companies, including open end and closed end funds
and ETFs, subject to the limitations of under the 1940 Act. The Funds may invest
in investment companies which are sponsored or advised by each Adviser and/or
their affiliates (each, a “VanEck Investment Company”).
A
Fund’s investment in another investment company may subject such Fund indirectly
to the underlying risks of the investment company. Such Fund also will bear its
share of the underlying investment company’s fees and expenses, which are in
addition to the Fund’s own fees and expenses. Shares of closed-end funds and
ETFs may trade at prices that reflect a premium above or a discount below the
investment company’s net asset value, which may be substantial in the case of
closed-end funds. If investment company securities are purchased at a premium to
net asset value, the premium may not exist when those securities are sold and
the Fund could incur a loss.
Rule
12d1-4 under the 1940 Act, which became effective January 19, 2022, created a
regulatory framework for Funds’ investments in other funds. Rule 12d1-4 allows a
fund to acquire the securities of another investment company in excess of the
limitations imposed by Section 12 without obtaining an exemptive order from the
SEC, subject to certain limitations and conditions. Among those conditions is
the requirement that, prior to a fund relying on Rule 12d1-4 to acquire
securities of another fund in excess of the limits of Section 12(d)(1), the
acquiring fund must enter into a Fund of Funds Agreement with the acquired fund,
unless the acquiring fund’s investment adviser acts as the acquired fund’s
investment adviser and does not act as sub-adviser to either fund. In connection
with the adoption of Rule 12d1-4, the SEC also rescinded certain prior exemptive
relief. These regulatory changes may adversely impact a Fund’s investment
strategies and operations to the extent that it invests, or might otherwise have
invested, in shares issued by other investment companies.
FLOATING
RATE LIBOR RISK
Certain
financial instruments in which a Fund invests may pay interest based on, or
otherwise have payments tied to, the London Inter-bank Offered Rate (“LIBOR”),
Euro Interbank Offered Rate, Secured Overnight Financing Rate (“SOFR”),
Sterling
Overnight Interbank Average Rate (“SONIA”) and other similar types of reference
rates (each, a “Reference Rate”). Due to the uncertainty regarding the
future utilization of LIBOR and the nature of any replacement rate, the
potential effect of a transition away from LIBOR on a fund or the financial
instruments in which a Fund may invest cannot yet be determined.
All
Sterling, Japanese Yen, Swiss Franc, Euro and certain U.S. dollar LIBOR settings
ceased to be published at the end of 2021 and the remaining U.S. dollar LIBOR
settings will no longer be published after June 30, 2023. Certain U.S. dollar
LIBOR settings will continue to be published on a non-representative synthetic
basis from July 1, 2023 and will cease on September 30, 2024. A Fund may
continue to invest in instruments that reference or otherwise use such Reference
Rates until they cease to be published due to favorable liquidity or pricing.
These events and any additional regulatory or market changes may have an adverse
impact on a Fund or its investments.
In
anticipation of the transition away from LIBOR, regulators and market
participants have worked to identify or develop successor Reference Rates (e.g.,
the SOFR, which is likely to replace U.S. dollar LIBOR and spreads (if any) to
be utilized in existing contracts or instruments as part of the transition away
from LIBOR. Spreads (if any) to be utilized in existing contracts or instruments
may be amended through government regulations, market-wide protocols, fallback
contractual provisions, bespoke negotiations or amendments or otherwise.
Nonetheless, the termination of certain Reference Rates presents risks to the
Funds. It is not possible to exhaustively identify or predict the effect of any
such changes, any establishment of alternative Reference Rates or any other
reforms to Reference Rates that may be enacted in the United States or
elsewhere. The elimination of a Reference Rate or any other changes or reforms
to the determination or supervision of Reference Rates may affect the value,
liquidity, volatility or return on certain Fund investments and may result in
costs to a Fund, including costs incurred in connection with closing out
positions and entering into new trades, adversely impacting a Fund’s overall
financial condition or results of operations. The impact of any successor or
substitute Reference Rate, if any, will vary on an investment-by-investment
basis, and any differences may be material and/or create material economic
mismatches. The successor or substitute Reference Rate and any adjustments
selected may negatively impact a Fund’s investments, performance or financial
condition,including in ways unforeseen by the Advisers. In addition, any
successor or substitute Reference Rate and any pricing adjustments imposed by a
regulator or by counterparties or otherwise may adversely affect a Fund’s
performance and/or NAV, and may expose a Fund to additional tax, accounting and
regulatory risks.
MARKET
A
Fund could lose money over short periods due to short-term market movements and
over longer periods during more prolonged market downturns. The prices of
the securities in a Fund are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. Market risk arises mainly from uncertainty about
future values of financial instruments and may be influenced by price, currency
and interest rate movements. 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. As global systems, economies and
financial markets are increasingly interconnected, events that occur in one
country, region or financial market will, more frequently, adversely impact
issuers in other countries, regions or markets. During a general market
downturn, multiple asset classes may be negatively affected. Changes in
market conditions and interest rates generally do not have the same impact on
all types of securities and instruments.
MASTER
LIMITED PARTNERSHIPS
Other
equity securities in which Global Resources Fund may invest include master
limited partnerships (“MLPs”). MLPs are limited partnerships in which the
ownership units are publicly traded. MLP units are registered with the SEC and
are freely traded on a securities exchange or in the OTC market. MLPs often own
several properties or businesses (or own interests) that are related to oil and
gas industries, but they also may finance research and development and other
projects. Generally, an MLP is operated under the supervision of one or more
managing general partners. Limited partners are not involved in the day-to-day
management of the partnership. The risks of investing in an MLP are generally
those involved in investing in a partnership as opposed to a corporation.
Investments in securities of MLPs involve risks that differ from an investment
in common stock. Holders of the units of MLPs have more limited control and
limited rights to vote on matters affecting the partnership. There are also
certain tax risks associated with an investment in units of MLPs. In addition,
conflicts of interest may exist between common unit holders, subordinated unit
holders and the general partner of an MLP, including a conflict arising as a
result of incentive distribution payments.
OPTIONS,
FUTURES, WARRANTS AND SUBSCRIPTION RIGHTS
Options
Transactions.
Each Fund may purchase and sell (write) exchange-traded and OTC call and put
options on domestic and foreign securities, foreign currencies, stock and bond
indices and financial futures contracts. Global Resources Fund may also buy and
sell options linked to the price of global resources.
Purchasing
Call and Put Options.
Each of Emerging Markets Fund, Emerging Markets Leaders Fund, Global Resources,
International Investors Gold Fund and Emerging Markets Bond Fund may invest up
to 5% of its total assets in premiums on call and put options. The purchase of a
call option would enable a Fund, in return for the premium paid, to lock in a
purchase price for a security or currency during the term of the option. The
purchase of a put option would enable a Fund, in return for a premium paid, to
lock in a price at which it may sell a security or currency during the term of
the option. OTC options are typically purchased from or sold (written) to
dealers or financial institutions which have entered into direct agreements with
a Fund. With OTC options, such variables as expiration date, exercise price and
premium are typically agreed upon between the Fund and the transacting
dealer.
The
principal factors affecting the market value of a put or a call option include
supply and demand, interest rates, the current market price of the underlying
security or index in relation to the exercise price of the option, the
volatility of the underlying security or index, and the time remaining until the
expiration date. Accordingly, the successful use of options depends on the
ability of an Adviser to forecast correctly interest rates, currency exchange
rates and/or market movements.
When
a Fund sells put or call options it has previously purchased, the Fund may
realize a net gain or loss, depending on whether the amount realized on the sale
is more or less than the premium and other transaction costs paid on the put or
call option which is sold. There is no assurance that a liquid secondary market
will exist for options, particularly in the case of OTC options. In the event of
the bankruptcy of a broker through which a Fund engages in transactions in
options, such Fund could experience delays and/or losses in liquidating open
positions purchased or sold through the broker and/or incur a loss of all or
part of its margin deposits with the broker. In the case of OTC options, if the
transacting dealer fails to make or take delivery of the securities underlying
an option it has written, in accordance with the terms of that option, due to
insolvency or otherwise, a Fund would lose the premium paid for the option as
well as any anticipated benefit of the transaction. If trading were suspended in
an option purchased by a Fund, the Fund would not be able to close out the
option. If restrictions on exercise were imposed, the Fund might be unable to
exercise an option it has purchased.
A
call option on a foreign currency gives the purchaser of the option the right to
purchase the currency at the exercise price until the option expires. A put
option on a foreign currency gives the purchaser of the option the right to sell
a foreign currency at the exercise price until the option expires. The
markets in foreign currency options are relatively new and the Fund’s ability to
establish and close out positions on such options is subject to the maintenance
of a liquid secondary market. Currency options traded on U.S. or other exchanges
may be subject to position limits, which may limit the ability of a Fund to
reduce foreign currency risk using such options.
Writing
Covered Call and Put Options.
VanEck Emerging Markets Leaders Fund and VanEck Morningstar Wide Moat Fund may
write covered call options on portfolio securities. Emerging Markets Fund,
Environmental Sustainability Fund, Global Resources Fund, International
Investors Gold Fund and Emerging Markets Bond Fund may write covered call
options on portfolio securities to the extent that the value of all securities
with respect to which covered calls are written does not exceed 10% of the
Fund’s net asset value. When a Fund writes a covered call option, the Fund
incurs an obligation to sell the security underlying the option to the purchaser
of the call, at the option’s exercise price at any time during the option
period, at the purchaser’s election. When a Fund writes a put option, the Fund
incurs an obligation to buy the security underlying the option from the
purchaser of the put, at the option’s exercise price at any time during the
option period, at the purchaser’s election.
Such
Fund may be required, at any time during the option period, to deliver the
underlying security (or currency) against payment of the exercise price on any
calls it has written, or to make payment of the exercise price against delivery
of the underlying security (or currency) on any puts it has written. This
obligation is terminated upon the expiration of the option period or at such
earlier time as the writer effects a closing purchase transaction. A closing
purchase transaction is accomplished by purchasing an option of the same series
as the option previously written. However, once the Fund has been assigned an
exercise notice, the Fund will typically be unable to effect a closing purchase
transaction.
During
the option period, the Fund gives up, in return for the premium on the option,
the opportunity for capital appreciation above the exercise price should the
market price of the underlying security (or the value of its denominated
currency) increase, but retains the risk of loss should the price of the
underlying security (or the value of its denominated currency)
decline.
Futures
Contracts. The
Funds may buy and sell financial futures contracts which may include security
and interest-rate futures, stock and bond index futures contracts and foreign
currency futures contracts. Global Resources Fund may also buy and sell futures
contracts and options thereon linked to the price of global resources. CM
Commodity Index Fund may engage in these transactions for hedging purposes or
other purposes. A futures contract is an agreement between two parties to buy
and sell a security for a set price on a future date. An interest rate,
commodity, foreign currency or index futures contract
provides
for the future sale by one party and purchase by another party of a specified
quantity of a financial instrument, commodity, foreign currency or the cash
value of an index at a specified price and time.
Futures
contracts and options on futures contracts may be used to reduce a Fund’s
exposure to fluctuations in the prices of portfolio securities and may prevent
losses if the prices of such securities decline. Similarly, such investments may
protect a Fund against fluctuation in the value of securities in which a Fund is
about to invest.
The
Funds may purchase and write (sell) call and put options on futures contracts
and enter into closing transactions with respect to such options to terminate an
existing position. An option on a futures contract gives the purchaser the right
(in return for the premium paid), and the writer the obligation, to assume a
position in a futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise price at any time
during the term of the option. Upon exercise of the option, the delivery of the
futures position by the writer of the option to the holder of the option is
accompanied by delivery of the accumulated balance in the writer’s futures
margin account, which represents the amount by which the market price of the
futures contract at the time of exercise exceeds (in the case of a call) or is
less than (in the case of a put) the exercise price of the option
contract.
Future
contracts are traded on exchanges, so that, in most cases, either party can
close out its position on the exchange for cash, without delivering the security
or commodity. However, there is no assurance that a Fund will be able to
enter into a closing transaction.
Risks
of Transactions in Futures Contracts and Related Options.
There are several risks associated with the use of futures contracts and futures
options as hedging techniques. A purchase or sale of a futures contract may
result in losses in excess of the amount invested in the futures contract. There
can be no guarantee that there will be a correlation between price movements in
the hedging vehicle and in the Fund securities being hedged. In addition, there
are significant differences between the securities and futures markets that
could result in an imperfect correlation between the markets, causing a given
hedge not to achieve its objectives. As a result, a hedge may be unsuccessful
because of market behavior or unexpected interest rate trends.
Investments
in options, futures contracts and options on futures contracts may reduce the
gains which would otherwise be realized from the sale of the underlying
securities or assets which are being hedged. Additionally, positions in futures
contracts and options can be closed out only on an exchange that provides a
market for those instruments. There can be no assurances that such a market will
exist for a particular futures contract or option. If a Fund cannot close out an
exchange traded futures contract or option which it holds, it would have to
perform its contractual obligation or exercise its option to realize any profit,
and would incur transaction costs on the sale of the underlying
assets.
There
is a risk of loss by a Fund of the initial and variation margin deposits in the
event of bankruptcy of the futures commission merchant (“FCM”) with which the
Fund has an open position in a futures contract.
Futures
exchanges may limit the amount of fluctuation permitted in certain futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day’s settlement price at the end of the current trading
session. Once the daily limit has been reached in a futures contract subject to
the limit, no more trades may be made on that day at a price beyond that limit.
The daily limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.
There
can be no assurance that an active market will exist at a time when a Fund seeks
to close out a futures or a futures option position, and that Fund would remain
obligated to meet margin requirements until the position is closed. In such
situations, if a Fund had insufficient cash, it might have to sell securities to
meet margin requirements at a time when it would be disadvantageous to do so.
Losses incurred in futures transactions and the costs of these transactions will
affect the performance of a Fund. Positions in futures contracts may be closed
out only on the exchange on which they were entered into (or through a linked
exchange). No secondary market for such contract exists.
It
is the policy of each Fund to meet the requirements of the Code, to qualify as a
regulated investment company and thus to prevent double taxation of the Fund and
its shareholders. One of the requirements is that at least 90% of a Fund’s gross
income be derived from dividends, interest, payment with respect to securities
loans and gains from the sale or other disposition of stocks or other
securities. Gains from commodity futures contracts do not currently qualify as
income for purposes of the 90% test. The extent to which a Fund may engage in
options and futures contract transactions may be materially limited by this
test.
Risks
Associated With Commodity Futures Contracts.
There are several additional risks associated with transactions in commodity
futures which are discussed below:
Storage.
Unlike the financial futures markets, in the commodity futures markets there are
costs of physical storage associated with purchasing the underlying commodity.
The price of the commodity futures contract reflect the storage costs of
purchasing the physical commodity, including the time value of money invested in
the physical commodity. To the extent that the storage costs for an underlying
commodity change while the Fund is invested in futures contracts on that
commodity, the value of the futures contract may change
proportionately.
Reinvestment.
In the commodity futures markets, producers of the underlying commodity may
decide to hedge the price risk of selling the commodity by selling futures
contracts today to lock in the price of the commodity at delivery tomorrow. In
order to induce speculators to purchase the other side of the same futures
contract, the commodity producer generally must sell the futures contract at a
lower price than the expected future spot price. Conversely, if most hedgers in
the futures market are purchasing futures contracts to hedge against a rise in
prices, then speculators tend to only sell the other side of the futures
contract at a higher futures price than the expected future spot price of the
commodity. The changing nature of the hedgers and speculators in the commodity
markets influence whether futures prices are above or below the expected future
spot price, which can have significant implications for the Fund. If the nature
of hedgers and speculators in futures markets has shifted when it is time for
the Fund to reinvest the proceeds of a maturing contract in a new futures
contract, the Fund might reinvest at higher or lower futures prices, or choose
to pursue other investments.
Other
Economic Factors.
The commodities which underlie commodity futures contracts may be subject to
additional economic and non-economic variables, such as drought, floods,
weather, livestock disease, embargoes, tariffs, and international economic,
political and regulatory developments. These factors may have a larger impact on
commodity prices and commodity-linked instruments, including futures contracts,
than on traditional securities. Certain commodities are also subject to limited
pricing flexibility because of supply and demand factors. Others are subject to
broad price fluctuations as a result of the volatility of the prices for certain
raw materials and the instability of supplies of other materials. These
additional variables may create additional investment risks which subject the
Fund’s investments to greater volatility than investments in traditional
securities.
Combined
Positions.
CM Commodity Index Fund may purchase and write options in any combination. For
example, the Fund may purchase a put option and write a call option on the same
underlying instrument, in order to construct a combined position whose risk and
return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one strike
price and buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
Warrants
and Subscription Rights. The
Funds may invest in warrants, which are instruments that permit, but do not
obligate, the holder to subscribe for other securities. Subscription rights are
similar to warrants, but normally have a short duration and are distributed
directly by the issuer to its shareholders. Warrants and rights are not
dividend-paying investments and do not have voting rights like common stock.
They also do not represent any rights in the assets of the issuer. As a result,
warrants and rights may be considered more speculative than direct equity
investments. In addition, the value of warrants and rights do not necessarily
change with the value of the underlying securities and may cease to have value
if they are not exercised prior to their expiration dates.
PARTLY
PAID SECURITIES
Securities
paid for on an installment basis. A partly paid security trades net of
outstanding installment payments—the buyer “takes over payments.” The buyer’s
rights are typically restricted until the security is fully paid. If the value
of a partly-paid security declines before a Fund finishes paying for it, the
Fund will still owe the payments, but may find it hard to sell and as a result
may incur a loss.
PRIVATE
INVESTMENT IN PUBLIC EQUITY
The
Funds may acquire equity securities of an issuer that are issued through a
private investment in public equity (PIPE) transaction, including on a
when-issued basis. See “When, As and If Issued Securities.” A Fund will earmark
an amount of cash or high quality securities equal (on a daily mark to market
basis) to the amount of its commitment to purchase the when-issued securities.
PIPE transactions typically involve the purchase of securities directly from a
publicly traded company or its affiliates in a private placement transaction,
typically at a discount to the market price of the company’s securities. See
also “Direct Investments.” There is a risk that if the market price of the
securities drops below a set threshold, the company may have to issue additional
stock at a significantly reduced price, which may dilute the value of a Fund’s
investment. Shares in PIPES generally are not registered with the SEC until
after a certain time period from the date the private sale is completed. This
restricted period can last many months. Until the public registration process is
completed, PIPES are restricted as to resale
and
a Fund cannot freely trade the securities. Generally, such restrictions cause
the PIPES to be illiquid during this time. PIPES may contain provisions that the
issuer will pay specified financial penalties to the holder if the issuer does
not publicly register the restricted equity securities within a specified period
of time, but there is no assurance that the restricted equity securities will be
publicly registered, or that the registration will remain in effect. See “Rule
144A and Section 4(a)(2) Securities.”
PREFERRED
STOCK
The
Funds may invest in preferred stock. Preferred stock represents an equity
interest in a company that generally entitles the holder to receive, in
preference to the holders of other stocks such as common stocks, dividends and a
fixed share of the proceeds resulting from a liquidation of the company. Some
preferred stocks also entitle their holders to receive additional liquidation
proceeds on the same basis as holders of a company’s common stock, and thus also
represent an ownership interest in that company.
Preferred
stocks may pay fixed or adjustable rates of return. Preferred stock is subject
to issuer-specific and market risks applicable generally to equity securities.
In addition, a company’s preferred stock generally pays dividends only after the
company makes required payments to holders of its bonds and other debt. For this
reason, the value of preferred stock will usually react more strongly than bonds
and other debt to actual or perceived changes in the company’s financial
condition or prospects. Preferred stock of smaller companies may be more
vulnerable to adverse developments than preferred stock of larger
companies.
REAL
ESTATE SECURITIES
The
Funds may not purchase or sell real estate, except that the Funds may invest in
securities of issuers that invest in real estate or interests therein. These
include equity securities of real estate investment trusts (“REITs”) and other
real estate industry companies or companies with substantial real estate
investments. Global Resources Fund may invest more than 50% of its assets in
such securities. The Funds are therefore subject to certain risks associated
with direct ownership of real estate and with the real estate industry in
general. These risks include, among others: possible declines in the value of
real estate; possible lack of availability of mortgage funds; extended vacancies
of properties; risks related to general and local economic conditions;
overbuilding; increases in competition, property taxes and operating expenses;
changes in zoning laws; costs resulting from the clean-up of, and liability to
third parties for damages resulting from, environmental problems; casualty or
condemnation losses; uninsured damages from floods, earthquakes or other natural
disasters; limitations on and variations in rents; and changes in interest
rates.
REITs
are pooled investment vehicles whose assets consist primarily of interests in
real estate and real estate loans. REITs are generally classified as equity
REITs, mortgage REITs or hybrid REITs. Equity REITs own interest in property and
realize income from the rents and gain or loss from the sale of real estate
interests. Mortgage REITs invest in real estate mortgage loans and realize
income from interest payments on the loans. Hybrid REITs invest in both equity
and debt. Equity REITs may be operating or financing companies. An operating
company provides operational and management expertise to and exercises control
over, many if not most operational aspects of the property. REITS are not taxed
on income distributed to shareholders, provided they comply with several
requirements of the Code.
Investing
in REITs involves certain unique risks in addition to those risks associated
with investing in the real estate industry in general. Equity REITs may be
affected by changes in the value of the underlying property owned by the REITs,
while mortgage REITs may be affected by the quality of any credit extended.
REITs are dependent upon management skills, are not diversified, and are subject
to the risks of financing projects. REITs are subject to heavy cash flow
dependency, default by borrowers, self-liquidation and the possibilities of
failing to qualify for the exemption from tax for distributed income under the
Code. REITs (especially mortgage REITs) are also subject to interest rate risk
(i.e., as interest rates rise, the value of the REIT may decline).
Under
recent tax legislation, individuals (and certain other non-corporate entities)
are generally eligible for a 20% deduction with respect to taxable ordinary
dividends from REITs and certain taxable income from publicly traded
partnerships. Regulations issued by the Internal Revenue Service (“IRS”) enable
the Fund to pass through the special character of “qualified REIT dividends”
(i.e., ordinary REIT dividends other than capital gain dividends and portions of
REIT dividends designated as qualified dividend income), but not qualified
publicly traded partnership income, to a shareholder, provided both the Fund and
a shareholder meet certain holding period requirements with respect to their
shares. A noncorporate shareholder receiving such dividends would treat them as
eligible for the 20% deduction, provided the RIC shares were held by the
shareholder for more than 45 days during the 91-day period beginning on the date
that is 45 days before the date on which the shares become ex-dividend with
respect to such dividend. The amount of a RIC’s dividends eligible for the 20%
deduction for a taxable year is limited to the excess of the RIC’s qualified
REIT dividends for the taxable year over allocable expenses.
REGULATORY
Changes
in the laws or regulations of the United States or the Cayman Islands, including
any changes to applicable tax laws and regulations, could impair the ability of
the CM Commodity Index Fund and the International Investors Gold Fund to achieve
their investment objective and could increase the operating expenses of each of
these Funds or the wholly owned subsidiary of the International Investors Gold
Fund (the “Gold Subsidiary”) or the CMCI Subsidiary. For example, in 2012, the
CFTC adopted amendments to its rules that affect the ability of certain
investment advisers to registered investment companies and other entities to
rely on previously available exclusions or exemptions from registration under
the CEA and regulations thereunder. In addition, the CFTC or the SEC could at
any time alter the regulatory requirements governing the use of commodity
futures, options on commodity futures, structured notes or swap transactions by
investment companies, which could result in the inability of the International
Investors Gold Fund or the CM Commodity Index Fund to achieve its investment
objective through its current strategies.
REPURCHASE
AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each
of the Funds may enter into repurchase agreements. Repurchase agreements, which
may be viewed as a type of secured lending by a Fund, typically involve the
acquisition by a Fund of debt securities from a selling financial institution
such as a bank, savings and loan association or broker-dealer. The agreements
typically provide that a Fund will sell back to the institution, and that the
institution will repurchase, the underlying security serving as collateral at a
specified price and at a fixed time in the future, usually not more than seven
days from the date of purchase. The collateral is marked-to-market daily to
determine that the value of the collateral, as specified in the agreement, does
not decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added to the
account to maintain full collateralization. A Fund accrues interest from the
institution until the time when the repurchase is to occur.
The
Funds may also enter into reverse repurchase agreements. Reverse repurchase
agreements involve sales by the Funds of portfolio assets concurrently with an
agreement by the Fund to repurchase the same assets at a later date at a fixed
price. Such transactions are advantageous only if the interest cost to the Funds
of the reverse repurchase transaction is less than the cost of obtaining the
cash otherwise. Opportunities to achieve this advantage may not always be
available, and the Funds seek to use the reverse repurchase technique only when
it will be advantageous to the Funds. In addition, reverse repurchase agreements
may be viewed as a form of borrowing, and borrowed assets used for investment
creates leverage risk. Leverage can create interest expense that may lower the
Funds’ overall returns. Leverage may exaggerate the Funds’ volatility and risk
of loss.
RULE
144A AND SECTION 4(a)(2) SECURITIES
The
Funds may invest in securities which are subject to restrictions on resale
because they have not been registered under the Securities Act of 1933, as
amended (the “1933 Act”), or which are otherwise not readily
marketable.
Rule
144A under the 1933 Act allows a broader institutional trading market for
securities otherwise subject to restriction on resale to the general public.
Rule 144A establishes a “safe harbor” from the registration requirements of the
1933 Act of resale of certain securities to qualified institutional
buyers.
Each
Adviser monitors the liquidity determinations of restricted securities in the
Funds’ holdings pursuant to Rule 22e-4. The determination of whether a Rule 144A
security is liquid or illiquid generally takes into account relevant market,
trading, and investment-specific considerations consistent with applicable SEC
guidance. Additional factors that may be considered include: (1) the frequency
of trades and quotes for the security; (2) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers; (3)
dealer undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanisms of
the transfer).
In
addition, commercial paper may be issued in reliance on the “private placement”
exemption from registration afforded by Section 4(a)(2) of the 1933 Act. Such
commercial paper is restricted as to disposition under the federal securities
laws and, therefore, any resale of such securities must be effected in a
transaction exempt from registration under the 1933 Act.
Securities
eligible for resale pursuant to Rule 144A under the 1933 Act and commercial
paper issued in reliance on the Section 4(a)(2) exemption under the 1940 Act may
be determined to be liquid in accordance with Rule 22e-4 for purposes of
complying with investment restrictions applicable to investments by the Funds in
illiquid investments. To the extent such securities are determined to be
illiquid, they will be aggregated with other illiquid investments for purposes
of the limitation on illiquid investments.
RISKS
RELATED TO RUSSIAN INVASION OF UKRAINE
In
late February 2022, Russian military forces invaded Ukraine, significantly
amplifying already existing geopolitical tensions among Russia, Ukraine, Europe,
NATO, and the West. Russia’s invasion, the responses of countries and political
bodies to Russia’s actions, and the potential for wider conflict may increase
financial market volatility and could have severe adverse effects on regional
and global economic markets, including the markets for certain securities and
commodities such as oil and natural gas. Following Russia’s actions, various
countries, including the U.S., Canada, the United Kingdom, Germany, and France,
as well as the European Union, issued broad-ranging economic sanctions against
Russia. The sanctions consist of the prohibition of trading in certain Russian
securities and engaging in certain private transactions, the prohibition of
doing business with certain Russian corporate entities, large financial
institutions, officials and oligarchs, and the freezing of Russian assets. The
sanctions include a commitment by certain countries and the European Union to
remove selected Russian banks from the Society for Worldwide Interbank Financial
Telecommunications, commonly called “SWIFT,” the electronic network that
connects banks globally, and imposed restrictive measures to prevent the Russian
Central Bank from undermining the impact of the sanctions. A number of large
corporations and U.S. states have also announced plans to divest interests or
otherwise curtail business dealings with certain Russian
businesses.
The
imposition of these current sanctions (and potential further sanctions in
response to continued Russian military activity) and other actions undertaken by
countries and businesses may adversely impact various sectors of the Russian
economy, including but not limited to, the financials, energy, metals and
mining, engineering, and defense and defense-related materials sectors. Such
actions also may result in a weakening of the ruble, a downgrade of Russia’s
credit rating, and the decline of the value and liquidity of Russian securities,
and could impair the ability of a Fund to buy, sell, receive, or deliver those
securities. Moreover, the measures could adversely affect global financial and
energy markets and thereby negatively affect the value of a Fund's investments
beyond any direct exposure to Russian issuers or those of adjoining geographic
regions. In response to sanctions, the Russian Central Bank raised its interest
rates and banned sales of local securities by foreigners, which may include a
Fund. Russia may take additional counter measures or retaliatory actions, which
may further impair the value and liquidity of Russian securities and Fund
investments. Such actions could, for example, include restricting gas exports to
other countries, seizure of U.S. and European residents' assets, conducting
cyberattacks on other governments, corporations or individuals, or undertaking
or provoking other military conflict elsewhere in Europe, any of which could
exacerbate negative consequences on global financial markets and the economy.
The actions discussed above could have a negative effect on the performance of
Funds that have exposure to Russia. While diplomatic efforts have been ongoing,
the conflict between Russia and Ukraine is currently unpredictable and has the
potential to result in broadened military actions. The duration of ongoing
hostilities and corresponding sanctions and related events cannot be predicted
and may result in a negative impact on performance and the value of Fund
investments, particularly as it relates to Russia exposure.
Due
to difficulties transacting in impacted securities, a Fund may experience
challenges liquidating the applicable positions to continue to seek a Fund’s
investment objective. Additionally, due to current and potential future
sanctions or potential market closure impacting the ability to trade Russian
securities, a Fund may experience higher transaction costs. Furthermore, any
exposure that a Fund may have to Russian counterparties or counterparties that
are otherwise impacted by sanctions also could negatively impact the Fund’s
portfolio.
SECURITIES
LENDING
The
Funds may lend securities to approved borrowers, including affiliates of the
Funds’ securities lending agent, State Street Bank and Trust Company (“State
Street”). Securities lending allows a Fund to retain ownership of the securities
loaned and, at the same time, earn additional income. The borrower provides cash
or non-cash collateral equal to at least 102% (105% for foreign securities) of
the value of the securities loaned. Collateral is maintained by State Street on
behalf of the Funds. Cash received as collateral through loan transactions is
generally invested in shares of a money market fund. Investing this cash
subjects that investment, as well as the securities loaned, to market
appreciation or depreciation. Non-cash collateral consists of securities issued
or guaranteed by the United States government or one of its agencies and cannot
be re-hypothecated by the Funds. The Funds maintain the ability to vote or
consent on proxy proposals involving material events affecting securities
loaned. If the borrower defaults on its obligation to return the securities
loaned because of insolvency or other reasons, a Fund could experience delays
and costs in recovering the securities loaned or in gaining access to the
collateral. These delays and costs could be greater for foreign securities. If a
Fund is not able to recover the securities loaned, the collateral may be sold
and a replacement investment may be purchased in the market. The value of the
collateral could decrease below the value of the replacement investment by the
time the replacement investment is purchased.
SHORT
SALES
The
Funds may short sell equity securities. A short sale of an equity security is
the sale of a security that the seller does not own. In order to deliver the
security to the purchaser, the short seller borrows the security, typically from
a broker-dealer or an institutional investor, for a fee. The short seller later
closes out the position by returning the security to the lender, typically by
purchasing the same security on the open market. A short sale theoretically
carries the risk of an unlimited loss, because the price of the underlying
security could increase without limit, thus increasing the cost of buying that
security to cover the short position. In addition, there can be no assurance
that the security needed to cover a short position will be available for
purchase. Also, the purchase of a security to close out the short position can
itself cause the price of the security to rise further, thereby exacerbating the
loss. Short selling is often used to profit from an expected downward price
movement in a security.
SPECIAL
PURPOSE ACQUISITION COMPANIES
The
Funds may invest in stock, warrants, and other securities of special purpose
acquisition companies (SPACs) or similar special purpose entities. A SPAC is
typically a publicly traded company that raises investment capital via an IPO
for the purpose of acquiring the equity securities of one or more existing
companies (or interests therein) via merger, combination, acquisition or other
similar transactions. A Fund may acquire an interest in a SPAC in an IPO or a
secondary market transaction. See also “Equity Securities” and “Options,
Futures, Warrants and Subscription Rights.”
Unless
and until an acquisition is completed, a SPAC generally invests its assets (less
a portion retained to cover expenses) in U.S. government securities, money
market securities and cash. To the extent the SPAC is invested in cash or
similar securities, this may negatively affect a Fund’s performance. Because
SPACs and similar entities are in essence blank check companies without
operating history or ongoing business other than seeking acquisitions, the value
of their securities is particularly dependent on the ability of the entity’s
management to identify and complete a profitable acquisition. There is no
guarantee that the SPACs in which a Fund invests will complete an acquisition or
that any acquisitions that are completed will be profitable. Some SPACs may
pursue acquisitions only within certain industries or regions, which may
increase the volatility of their prices. In addition, these securities, which
are typically traded in the over-the-counter market, may be considered illiquid
and/or be subject to restrictions on resale.
Other
risks of investing in SPACs include that a significant portion of the monies
raised by the SPAC may be expended during the search for a target transaction;
an attractive transaction may not be identified at all (or any requisite
approvals may not be obtained) and the SPAC may dissolve and be required to
return any remaining monies to shareholders, causing a Fund to incur the
opportunity cost of missed investment opportunities the Fund otherwise could
have benefited from; a transaction once identified or effected may prove
unsuccessful and an investment in the SPAC may lose value; the warrants or other
rights with respect to the SPAC held by a Fund may expire worthless or may be
repurchased or retired by the SPAC at an unfavorable price; and an investment in
a SPAC may be diluted by additional later offerings of interests in the SPAC or
by other investors exercising existing rights to purchase shares of the SPAC. In
addition, a SPAC target company may have limited operating experience, a smaller
size, limited product lines, markets, distribution channels and financial and
managerial resources. Investing in the securities of smaller companies involves
greater risk, and portfolio price volatility.
SUBSIDIARY
International
Investors Gold Fund’s investments in the Gold Subsidiary and CM Commodity Index
Fund’s investments in the CMCI Subsidiary are expected to provide such Funds
with exposure to the commodity markets within the limitations of Subchapter M of
the Code and the Internal Revenue Service (“IRS”) revenue rulings, as discussed
below under “Taxation.” Each of the Gold Subsidiary and the CMCI Subsidiary is a
company organized under the laws of the Cayman Islands and is overseen by its
own board of directors. International Investors Gold Fund is the sole
shareholder of the Gold Subsidiary, and it is not currently expected that shares
of the Gold Subsidiary will be sold or offered to other investors. CM Commodity
Index Fund is the sole shareholder of the CMCI Subsidiary, and it is not
currently expected that shares of the CMCI Subsidiary will be sold or offered to
other investors. It is expected that the Gold Subsidiary will primarily invest
in gold bullion, gold futures and other instruments that provide direct or
indirect exposure to gold, including ETFs, and also may invest in silver,
platinum and palladium bullion and futures. It is expected that the CMCI
Subsidiary will primarily invest in commodity-linked derivative instruments,
including swap agreements, futures and options on futures. To the extent that
International Investors Gold Fund invests in the Gold Subsidiary, such Fund may
be subject to the risks associated with those instruments and other securities.
To the extent that the CM Commodity Index Fund invests in the CMCI Subsidiary,
such Fund may be subject to the risks associated with those derivative
instruments and other securities.
While
each of the Gold Subsidiary and the CMCI Subsidiary may be considered similar to
investment companies, they are not registered under the 1940 Act and, unless
otherwise noted in the applicable Prospectus and this SAI, is not subject to all
of the investor protections of the 1940 Act and other U.S. regulations. Changes
in the laws of the United States and/or the
Cayman
Islands could result in the inability of International Investors Gold Fund
and/or the Gold Subsidiary and/or CM Commodity Index Fund and/or the CMCI
Subsidiary to operate as described in the applicable Prospectus and this SAI and
could eliminate or severely limit such Fund’s ability to invest in the Gold
Subsidiary or the CMCI Subsidiary (as applicable) which may adversely affect
such Funds and their shareholders.
SWAPS
The
Funds may enter into swap agreements. A swap is a derivative in the form of an
agreement to exchange the return generated by one instrument for the return
generated by another instrument. The payment streams are calculated by reference
to a specified index and agreed upon notional amount. The term “specified index”
includes currencies, fixed interest rates, prices, total return on interest rate
indices, fixed income indices, stock indices and commodity indices (as well as
amounts derived from arithmetic operations on these indices). For example, a
Fund may agree to swap the return generated by a fixed income index for the
return generated by a second fixed income index. The currency swaps in which a
Fund may enter will generally involve an agreement to pay interest streams in
one currency based on a specified index in exchange for receiving interest
streams denominated in another currency. Such swaps may involve initial and
final exchanges that correspond to the agreed upon notional amount. The swaps in
which the CM Commodity Index Fund may engage also include rate caps, floors and
collars under which one party pays a single or periodic fixed amount(s) (or
premium), and the other party pays periodic amounts based on the movement of a
specified index.
A
Fund may also enter into credit default swaps, index swaps and interest rate
swaps. Credit default swaps may have as reference obligations one or more
securities or a basket of securities that are or are not currently held by the
Fund. The protection “buyer” in a credit default contract is generally obligated
to pay the protection “seller” an upfront or a periodic stream of payments over
the term of the contract provided that no credit event, such as a default, on a
reference obligation has occurred. If a credit event occurs, the seller
generally must pay the buyer the “par value” (full notional value) of the swap
in exchange for an equal face amount of deliverable obligations of the reference
entity described in the swap, or the seller may be required to deliver the
related net cash amount, if the swap is cash settled. Interest rate swaps
involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of fixed rate payments
for floating rate payments. Index swaps, also called total return swaps,
involves a Fund entering into a contract with a counterparty in which the
counterparty makes payments to the Fund based on the positive returns of an
index, such as a corporate bond index, in return for the Fund paying to the
counterparty a fixed or variable interest rate, as well as paying to the
counterparty any negative returns on the index. In a sense, a Fund is purchasing
exposure to an index in the amount of the notional principal in return for
making interest rate payments on the notional principal. As with interest-rate
swaps, the notional principal does not actually change hands at any point in the
transaction. Cross-currency swaps are interest rate swaps in which the notional
amount upon which the fixed interest rate is accrued is denominated in another
currency and the notional amount upon which the floating rate is accrued is
denominated in another currency. The notional amounts are typically determined
based on the spot exchange rate at the inception of the trade. The swaps in
which a Fund may engage also include rate caps, floors and collars under which
one party pays a single or periodic fixed amount(s) (or premium), and the other
party pays periodic amounts based on the movement of a specified index. Global
Resources Fund may also enter into other asset swaps. Asset swaps are similar to
swaps in that the performance of one global resource (e.g., gold) may be
“swapped” for another (e.g., energy).
Swaps
do not typically involve the delivery of securities, other underlying assets, or
principal. Accordingly, the risk of loss with respect to swaps is limited to the
net amount of payments that a Fund is contractually obligated to make. If the
other party to a swap defaults, a Fund’s risk of loss consists of the net amount
of payments that a Fund is contractually entitled to receive. Currency swaps
usually involve the delivery of the entire principal value of one designated
currency in exchange for the other designated currency. Therefore, the entire
principal value of a currency swap is subject to the risk that the other party
to the swap will default on its contractual delivery obligations. If there is a
default by the counterparty, a Fund may have contractual remedies pursuant to
the agreements related to the transaction. In addition, as of the date of this
SAI, UBS Financial Services, Inc. was the only available counterparty with which
the CM Commodity Index Fund may enter into swaps contracts on the CMCI.
Accordingly, this increases the CM Commodity Index Fund’s exposure to these
counterparty risks. The use of swaps is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary fund securities transactions. If an Adviser is incorrect in its
forecasts of market values, interest rates, and currency exchange rates, the
investment performance of a Fund would be less favorable than it would have been
if this investment technique were not used. Also, if a counterparty’s
creditworthiness declines, the value of the swap would likely
decline.
Certain
standardized swaps are subject to mandatory central clearing and
exchange-trading. Central clearing is intended to reduce counterparty credit
risk and increase liquidity, but central clearing does not eliminate these risks
and may involve additional costs and risks not involved with uncleared swaps.
Credit risk of cleared swap participants is concentrated in a few
clearinghouses, and the consequences of insolvency of a clearinghouse are not
clear. There is also a risk of loss by a Fund of the initial and variation
margin deposits in the event of bankruptcy of the FCM with which the Fund has an
open position, or the central counterparty in a swap contract.
TRACKING
ERROR
The
returns of VanEck Morningstar Wide Moat Fund and CM Commodity Index Fund’s
return may not match the return of the indexes that each of these funds seeks to
track due to, among other factors, the Fund incurring operating expenses, and
not being fully invested at all times as a result of cash inflows and cash
reserves to meet redemptions.
U.S.
GOVERNMENT AND RELATED OBLIGATIONS
U.S.
government obligations include U.S. Treasury obligations and securities issued
or guaranteed by various agencies of the U.S. government or by various
instrumentalities which have been established or sponsored by the U.S.
government. U.S. Treasury obligations and securities issued or guaranteed by
various agencies of the U.S. government differ in their interest rates,
maturities and time of issuance, as well as with respect to whether they are
guaranteed by the U.S. government. U.S. government and related obligations may
be structured as fixed-, variable- or floating-rate obligations.
While
U.S. Treasury obligations are backed by the “full faith and credit” of the U.S.
government, securities issued or guaranteed by federal agencies and U.S.
government-sponsored instrumentalities may or may not be backed by the full
faith and credit of the U.S. government. These securities may be supported by
the ability to borrow from the U.S. Treasury or only by the credit of the
issuing agency or instrumentality and, as a result, may be subject to greater
credit risk than securities issued or guaranteed by the U.S. Treasury.
Obligations of U.S. government agencies, authorities, instrumentalities and
sponsored enterprises historically have involved limited risk of loss of
principal if held to maturity. However, no assurance can be given that the U.S.
government would provide financial support to any of these entities if it is not
obligated to do so by law. Additionally, from time to time uncertainty regarding
the status of negotiations in the U.S. government to increase the statutory debt
limit, commonly called the “debt ceiling,” could increase the risk that the U.S.
government may default on payments on certain U.S. government securities, cause
the credit rating of the U.S. government to be downgraded, increase volatility
in the stock and bond markets, result in higher interest rates, reduce prices of
U.S. Treasury securities, and/or increase the costs of various kinds of debt. If
a U.S. government-sponsored entity is negatively impacted by legislative or
regulatory action, is unable to meet its obligations, or its creditworthiness
declines, the performance of a Fund that holds securities of that entity will be
adversely impacted.
WHEN,
AS AND IF ISSUED SECURITIES
Each
Fund may purchase securities on a “when, as and if issued” basis, under which
the issuance of the security depends upon the occurrence of a subsequent event,
such as approval of a merger, corporate reorganization or debt restructuring. At
that time, the Fund will record the transaction and, in determining its net
asset value, will reflect the value of the security daily. An increase in the
percentage of the Fund assets committed to the purchase of securities on a
“when, as and if issued” basis may increase the volatility of its net asset
value. A Fund may also sell securities on a “when, as and if issued” basis
provided that the issuance of the security will result automatically from the
exchange or conversion of a security owned by the Fund at the time of
sale.
ADDITIONAL
INFORMATION ABOUT THE CMCI
The
following is a more complete description of the UBS Constant Maturity Commodity
Total Return Index (the “CMCI” or the “Index”), including, without limitation,
information about the composition, weighting, method of calculation and
procedures for changes in components and weights.
Overview
of the CMCI
The
CMCI represents a basket of commodity futures contracts with 29 commodity
components (as of February 28, 2023). Exposure to each component is allocated
across a range of maturity pillars ranging from three months up to a maximum of
three years. Not all commodities have the full range of maturity exposures. In
contrast, traditional commodity indices typically invest in front-month and
next-month futures contracts which have shorter tenors (time to maturity) than
the average CMCI tenor.
The
CMCI also employs a “constant maturity” approach by relying on a continuous roll
methodology in which the Index invests in and out of future contracts on a daily
basis in order to maintain the average maturity of each pillar. This methodology
differs from traditional commodity indices, which usually are pre-defined to
roll during a fixed window of days on a monthly or bi-monthly basis. The CMCI
represents commodities in five primary sectors: Energy, Agriculture, Industrial
Metals, Precious Metals and Livestock. The underlying commodities trade on
various exchanges.
The
return of the CMCI is generated by two components: (i) uncollateralized returns
from holding and rolling of futures contracts comprising the Index and (ii) the
fixed income return reflecting the Secured Overnight Financing Rate
(“SOFR”)-based
interest earned on a hypothetical portfolio theoretically deposited as full
collateral for the notional exposure of hypothetical positions in the futures
contracts comprising the Index.
As
of February 28, 2023, the Index consisted of the following commodity sectors
with the following relative target weights: Energy (31.9%), Agriculture (30.9%),
Industrial Metals (25.9%), Precious Metals (6.7%) and Livestock
(4.5%).
Component
Selection and Target Weights
The
weighting process for the Index is designed to reflect the economic significance
and market liquidity of each commodity. The Index sponsors use a two-step
approach to determine Target Weights: first, economic indicators (regional
Consumer Price Indexes (CPI), Producer Price Indexes (PPI) and Gross Domestic
Product (GDP)), along with liquidity analysis, are used to determine the sector
weights (Energy, Agriculture, Industrial Metals, Precious Metals and Livestock);
secondly, global consumption data in conjunction with further liquidity analysis
is used to calculate the individual component target weights.
Changes
in the Target Weights and/or Index Composition
Target
weights for each Index commodity futures contract are established on an annual
basis. The Index is rebalanced to the new Target Weights during the maintenance
period, which is the final three business days of July.
Tenors
of Contracts
The
CMCI represents a weighted average of all available CMCI constant maturities
(ranging from three months to over three years). The distribution of weights to
available tenors (time to maturity) is a function of relative liquidity of the
underlying futures contracts. As of February 28, 2023, the average tenor of the
futures contracts comprising the Index is approximately 6.6 months. Since the
relative liquidity of commodity futures contracts for a given commodity tends to
decline as time to maturity increases, the weights of the longer-dated tenors
are typically lower than those for the short-dated tenors for a given
commodity.
Rebalancing
of the Index Components
Due
to price movements, the weight of each component in the Index will fluctuate
from its Target Weight over time. The weight of each Index component is
rebalanced over the final three CMCI Business Days of each month in order to
bring each underlying commodity risk position back to its Target Weight for each
tenor. The process is automatic and is implemented via a pre-defined
methodology. The Index provider may delay or change a scheduled rebalancing or
reconstitution of the CMCI or the implementation of certain rules at its sole
discretion.
Calculation
of the Index
The
CMCI is calculated and disseminated by MerQube, Inc. with a daily closing Index
level published on each Trading Day. Index information is available via
Bloomberg on pages CUBS, CMCN or CMCX and from Reuters on page UBSCMCI. For
further information on CMCI methodology and CMCI index values, investors can go
to http://www.ubs.com/cmci or https://merqube.com/index/CMCITR.
Total
Return
CMCI
is a “total return” index. In addition to uncollateralized returns generated
from the futures contracts comprising the Index, a daily fixed-income return is
added, which reflects the interest earned on a hypothetical fixed income
portfolio which theoretically collateralizes 100% of the notional value of the
hypothetical positions in the futures contracts comprising the Index. The rate
used to calculate the daily fixed income return is the SOFR, as published by the
New York Federal Reserve Bank every business day and generally made effective
with respect to the Index on the following Trading Day.
UBS
may delay or change a scheduled rebalancing or reconstitution of the Index or
the implementation of certain rules as its sole discretion.
ADDITIONAL
INFORMATION ABOUT MORNINGSTAR WIDE MOAT FOCUS INDEX
The
Wide Moat Focus Index is a rules-based index intended to offer exposure to
companies that the Index Provider determines have sustainable competitive
advantages based on a proprietary methodology that considers quantitative and
qualitative factors (“wide moat companies”). Wide moat companies are selected
from the universe of companies represented in the Morningstar® US Market
IndexSM,
a broad market index representing 97% of U.S. market capitalization. The Wide
Moat Focus Index targets a select group of wide moat companies: those that
according to Morningstar’s equity research team are attractively priced as of
each Wide Moat Focus Index review. Out of the companies in the Morningstar US
Market Index that the Index Provider determines are wide moat companies, the
Index Provider selects companies to be included in the Wide Moat Focus Index as
determined by the ratio of the Index Provider’s estimate of fair value of the
issuer’s common stock to the price. The Index Provider’s equity research team’s
fair value estimates are calculated using a standardized, proprietary valuation
model.
A
selection committee, comprising members of Morningstar’s equity research team,
makes the final determination of whether a company is a wide moat company. Only
those companies with one or more of the identifiable competitive advantages, as
determined by the Index Provider’s equity research team and agreed to by the
selection committee, are wide moat companies. The quantitative factors used to
identify competitive advantages include historical and projected returns on
invested capital relative to cost of capital. The qualitative factors used to
identify competitive advantages include customer switching cost (i.e., the costs
of customers switching to competitors), internal cost advantages, intangible
assets (e.g., intellectual property and brands), network effects (i.e., whether
products or services become more valuable as the number of customers grows) and
efficient scale (i.e., whether the company effectively serves a limited market
that potential rivals have little incentive to enter into). The Index Provider’s
equity research team uses a standardized, proprietary valuation model to assign
fair values to potential Wide Moat Focus Index constituents’ common
stock.
The
Index Provider’s equity research team estimates the issuer’s future free cash
flows and then calculates an enterprise value using weighted average costs of
capital as the discount rate. The Index Provider’s equity research team then
assigns each issuer’s common stock a fair value by adjusting the enterprise
value to account for net debt and other adjustments.
A
buffer rule is applied to the current Wide Moat Focus Index constituents. Those
that are ranked in the top 150% of stocks representing the lowest current market
price/fair value price eligible for inclusion in the Wide Moat Focus Index will
remain in the Wide Moat Focus Index at the time of reconstitution and those that
fall outside of the top 150% are excluded from the Index. The maximum weight of
an individual sector in the Wide Moat Focus Index is capped at 10% more than its
corresponding weight in the Morningstar US Market Index at the time of
reconstitution, or 40%, whichever is higher.
As
of December 31, 2022, the Wide Moat Focus Index included 49 securities of
companies with a market capitalization range of between approximately $5.1
billion and $1,787.7 billion and a weighted average market capitalization of
$235.2 billion. These amounts are subject to change.
The
Wide Moat Focus Index employs a staggered rebalance methodology. The Wide Moat
Focus Index is divided into two equally-weighted sub-portfolios, and each is
reconstituted and rebalanced semi-annually on alternating quarters. Each
subportfolio will contain 40 equally-weighted securities at its semi-annual
reconstitution and weights will vary with market prices until the next
reconstitution date. Due to the staggered rebalance methodology, constituents
and weightings may vary between sub-portfolios. Each sub-portfolio is reweighted
to 50% of the total Wide Moat Focus Index every six months. Adjustments to one
sub-portfolio are performed after the close of business on the third Friday of
March and September and adjustments to the other sub-portfolio are performed
after the close of business on the third Friday of June and December, and all
adjustments are effective on the following Monday. If the Monday is a market
holiday, reconstitution and rebalancing occurs on the Tuesday immediately
following. The Index provider may delay or change a scheduled rebalancing or
reconstitution of the Wide Moat Focus Index or the implementation of certain
rules at its sole discretion.
Rebalancing
data, including constituent weights and related information, is posted on the
Index Provider’s website at the end of each quarter-end month. Target weights of
the constituents are not otherwise adjusted between quarters except in the event
of certain types of corporate actions.
FUNDAMENTAL
INVESTMENT RESTRICTIONS
The
following investment restrictions are in addition to those described in the
Prospectuses. These investment restrictions are “fundamental” and may be changed
with respect to the Fund only with the approval of the holders of a majority of
the Fund’s “outstanding voting securities”, (which for this purpose and under
the 1940 Act, means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented; or (ii) more
than 50% of the outstanding shares). As to any of the following investment
restrictions, if a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a change
in value of portfolio securities or amount of net assets will not be considered
a violation of the investment restriction. In the case of borrowing, however, a
Fund will promptly take action to reduce the amount of the Fund’s borrowings
outstanding if, because of changes in the net asset value of the Fund due to
market action, the amount of such borrowings exceeds one-third of the value of
the Fund’s net assets. The fundamental investment restrictions are as
follows:
Each
Fund may not:
1.Borrow
money, except as permitted under the 1940 Act, as amended and as interpreted or
modified by regulation from time to time.
2.Engage
in the business of underwriting securities issued by others, except to the
extent that the Fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities or in
connection with its investments in other investment companies.
3.Make
loans, except that the Fund may (i) lend portfolio securities, (ii) enter into
repurchase agreements, (iii) purchase all or a portion of an issue of debt
securities, bank loan participation interests, bank certificates of deposit,
bankers’ acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities, and (iv)
participate in an interfund lending program with other registered investment
companies.
4.Issue
senior securities, except as permitted under the 1940 Act, as amended and as
interpreted or modified by regulation from time to time.
5.Purchase
or sell real estate, except that the Fund may (i) invest in securities of
issuers that invest in real estate or interests therein, (ii) invest in
mortgage-related securities and other securities that are secured by real estate
or interests therein, and (iii) hold and sell real estate acquired by the Fund
as a result of the ownership of securities.
Each
of the Emerging Markets Fund, Emerging Markets Leaders Fund, Environmental
Sustainability Fund, Global Resources Fund and International Investors Gold Fund
may not:
6.Purchase
or sell commodities, unless acquired as a result of owning securities or other
instruments, but it may purchase, sell or enter into financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments and may invest in securities or
other instruments backed by commodities, except that International Investors
Gold Fund may invest in gold and silver coins which are legal tender in the
country of issue and gold and silver bullion, and palladium and platinum group
metals bullion.
7.Purchase
any security if, as a result of that purchase, 25% or more of its total assets
would be invested in securities of issuers having their principal business
activities in the same industry, except that (i) Global Resources Fund will
invest 25% or more of its total assets in “global resource” industries as
defined in its Prospectus; (ii) Environmental Sustainability Fund will invest
25% or more of its total assets in industries relating to environmental
sustainability as defined in its Prospectus; and (iii) International Investors
Gold Fund may invest 25% or more of its total assets in the gold-mining
industry. This limit does not apply to securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities.
Emerging
Markets Bond Fund may not:
6. Purchase
or sell commodities, unless acquired as a result of owning securities or other
instruments, but it may purchase, sell or enter into financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments and may invest in securities or
other instruments backed by commodities.
7. Purchase
any security if, as a result of that purchase, 25% or more of its total assets
would be invested in securities of issuers having their principal business
activities in the same industry. This limit does not apply to (i) securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
or (ii) securities of other investment companies.
CM
Commodity Index Fund may not:
6. Purchase
or sell commodities, unless acquired as a result of owning securities or other
instruments, but it may purchase, sell or enter into financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments and may invest in securities or
other instruments backed by commodities.
7. Purchase
any security if, as a result of that purchase, 25% or more of its total assets
would be invested in securities of issuers having their principal business
activities in the same industry, provided that this restriction does not limit
the Fund’s investments in (i) securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, (ii) securities of other
investment companies, and provided further that (iii) to the extent the
benchmark index for the Fund is concentrated in a particular industry, the Fund
will necessarily be concentrated in that industry.
VanEck
Morningstar Wide Moat Fund may not:
6. Purchase
or sell commodities, unless acquired as a result of owning securities or other
instruments, but it may purchase, sell or enter into financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments and may invest in securities or
other instruments backed by commodities.
7. Purchase
any security if, as a result of that purchase, 25% or more of its total assets
would be invested in securities of issuers having their principal business
activities in the same industry, except that the Fund may invest 25% or more of
the value of its total assets in securities of issuers in any one industry or
group of industries if the index that the Fund replicates concentrates in an
industry or group of industries. This limit does not apply to securities issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities.
In
addition, each of CM Commodity Index Fund, Emerging Markets Fund, Global
Resources Fund and VanEck Morningstar Wide Moat Fund may not invest in a manner
inconsistent with each of their classifications as a “diversified company” as
provided by (i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from time to
time, or (iii) an exemption or other relief applicable to the Fund from the
provisions of the 1940 Act, as amended from time to time.
For
purposes of Restriction 1, the 1940 Act generally permits a Fund to borrow money
in amounts of up to one-third of the Fund’s total assets from banks, and to
borrow up to 5% of the Fund’s total assets from banks or other lenders for
temporary purposes. To limit the risks attendant to borrowing, the 1940 Act
generally requires a Fund to maintain at all times an “asset coverage” of at
least 300% of the amount of its borrowings. Asset coverage generally means the
ratio that the value of a Fund’s total assets, minus liabilities other than
borrowings, bears to the aggregate amount of all borrowings.
For
purposes of Restriction 4, “senior securities” are generally Fund obligations
that have a priority over the Fund’s shares with respect to the payment of
dividends or the distribution of Fund assets. The 1940 Act generally prohibits a
Fund from issuing senior securities, except that the Fund may borrow money in
amounts of up to one-third of the Fund’s total assets from banks. A Fund also
may borrow an amount equal to up to 5% of the Fund’s total assets from banks or
other lenders for temporary purposes, and these borrowings are not considered
senior securities.
For
the purposes of Restriction 7, companies in different geographical locations
will not be deemed to be in the same industry if the investment risks associated
with the securities of such companies are substantially different. For example,
although generally considered to be “interest rate-sensitive,” investing in
banking institutions in different countries is generally dependent upon
substantially different risk factors, such as the condition and prospects of the
economy in a particular country and in particular industries, and political
conditions. Similarly, each foreign government issuing securities (together with
its agencies and instrumentalities) will be treated as a separate industry.
Also, for the purposes of Restriction 7, investment companies are not considered
to be part of an industry. To the extent a Fund invests its assets in underlying
investment companies, 25% or more of such Fund’s total assets may be indirectly
exposed to a particular industry or group of related industries through its
investment in one or more underlying investment companies. In accordance with
each of VanEck Morningstar Wide Moat Fund’s principal investment strategies as
set forth in its Prospectus, each Fund invests its assets in underlying
investment companies.
VanEck
Morningstar Wide Moat Fund may invest its remaining assets in securities not
included in the Moat Index, money market instruments or funds which reinvest
exclusively in money market instruments, exchange traded products, in stocks
that are in the relevant market but not the Fund’s Index, and/or in combinations
of certain stock index futures contracts, options on such futures contracts,
stock options, stock index options, options on the shares, and stock index swaps
and swaptions, each with a view towards providing the Fund with exposure to the
securities in its respective Index. These investments may be made to invest
uncommitted cash balances or, in limited circumstances, to assist in meeting
shareholder redemptions. The Fund will not invest in money market instruments as
part of a temporary defensive strategy to protect against potential stock market
declines.
PORTFOLIO
HOLDINGS DISCLOSURE
The
Funds have adopted policies and procedures governing the disclosure of
information regarding the Funds’ portfolio holdings. They are reasonably
designed to prevent selective disclosure of the Funds’ portfolio holdings to
third parties, other than disclosures that are consistent with the best
interests of the Funds’ shareholders. The Board is responsible for overseeing
the implementation of these policies and procedures, and will review them
annually to ensure their adequacy.
These
policies and procedures apply to employees of the Advisers, administrator,
principal underwriter, and all other service providers to the Funds that, in the
ordinary course of their activities, come into possession of information about
the Funds’ portfolio holdings. These policies and procedures are made available
to each service provider.
The
following outlines the policies and procedures adopted by the Funds regarding
the disclosure of portfolio-related information:
Generally,
it is the policy of the Funds that no current or potential investor (or their
representative), including any Fund shareholder (collectively, “Investors”),
shall be provided information about a Fund’s portfolio on a preferential basis
in advance of the provision of that same information to other
investors.
Disclosure
to Investors.
Portfolio holdings information for the Funds is available to all investors on
the VanEck website at vaneck.com. Information regarding the Funds’ top holdings
and country and sector weightings, updated as of each month-end, is located on
this website. Generally, this information is posted to the website within 10
business days of the end of the applicable month. The Funds may also publish a
detailed list of the securities held by such Fund as of each month-end, which is
generally posted to the website within 10 business days after the end of the
applicable month. This information generally remains available on the website
until new information is posted. Each Fund reserves the right to exclude any
portion of these portfolio holdings from publication when deemed in the best
interest of the Fund, and to discontinue the posting of portfolio holdings
information at any time, without prior notice.
Best
Interest of the Funds:
Information regarding the Funds’ specific security holdings, sector weightings,
geographic distribution, issuer allocations and related information
(“Portfolio-Related Information”), shall be disclosed to the public only (i) as
required by applicable laws, rules or regulations, (ii) pursuant to the Funds’
Portfolio-Related Information disclosure policies and procedures, or (iii)
otherwise when the disclosure of such information is determined by the Trust’s
officers to be in the best interest of Fund shareholders.
Conflicts
of Interest:
Should a conflict of interest arise between a Fund and any of the Fund’s service
providers regarding the possible disclosure of Portfolio-Related Information,
the Trust’s officers shall resolve any conflict of interest in favor of the
Fund’s interest. In the event that an officer of the Fund is unable to resolve
such a conflict of interest, the matter shall be referred to the Trust’s Audit
Committee for resolution.
Equality
of Dissemination:
Shareholders of the same Fund shall be treated alike in terms of access to the
Fund’s portfolio holdings. With the exception of certain selective disclosures,
noted in the paragraph below, Portfolio-Related Information with respect to a
Fund shall not be disclosed to any Investor prior to the time the same
information is disclosed publicly (e.g., posted on the Fund’s website).
Accordingly, all Investors will have equal access to such
information.
Selective
Disclosure of Portfolio-Related Information in Certain
Circumstances:
In some instances, it may be appropriate for a Fund to selectively disclose a
Fund’s Portfolio-Related Information (e.g., for due diligence purposes,
disclosure to a newly hired adviser or sub-adviser, or disclosure to a rating
agency) prior to public dissemination of such information.
Conditional
Use of Selectively-Disclosed Portfolio-Related Information:
To the extent practicable, each of the Trust’s officers shall condition the
receipt of Portfolio-Related Information upon the receiving party’s written
agreement to both keep such information confidential and not to trade Fund
shares based on this information.
Compensation:
No person, including officers of the Funds or employees of other service
providers or their affiliates, shall receive any compensation in connection with
the disclosure of Portfolio-Related Information. Notwithstanding the foregoing,
the Funds reserve the right to charge a nominal processing fee, payable to the
Funds, to non-shareholders requesting Portfolio-Related Information. This fee is
designed to offset the Fund’s costs in disseminating such
information.
Source
of Portfolio-Related Information:
All Portfolio-Related Information shall be based on information provided by the
Fund’s administrator(s)/accounting agent.
The
Funds may provide non-public portfolio holdings information to third parties in
the normal course of their performance of services to the Funds, including to
the Funds’ auditors; custodian; financial printers; counsel to the Funds or
counsel to the Funds’ independent trustees; regulatory authorities; and
securities exchanges and other listing organizations. In addition, the Funds may
provide non-public portfolio holdings information to data providers, fund
ranking/rating services, and
fair
valuation services. The entities to which the Funds voluntarily disclose
portfolio holdings information are required, either by explicit agreement or by
virtue of their respective duties to the Funds, to maintain the confidentiality
of the information disclosed.
There
can be no assurance that the Funds’ policies and procedures regarding selective
disclosure of the Funds’ portfolio holdings will protect the Funds from
potential misuse of that information by individuals or entities to which it is
disclosed.
The
Board shall be responsible for overseeing the implementation of these policies
and procedures. These policies and procedures shall be reviewed by the Board on
an annual basis for their continuing appropriateness.
Additionally,
the Funds shall maintain and preserve permanently in an easily accessible place
a written copy of these policies and procedures. The Fund shall also maintain
and preserve, for a period not less than six years (the first two years in an
easily accessible place), all Portfolio-Related Information disclosed to the
public.
INVESTMENT
ADVISORY SERVICES
The
following information supplements and should be read in conjunction with the
section in the Prospectuses entitled “Shareholder Information – Management of
the Funds.”
Van
Eck Associates Corporation acts as investment manager to all the Funds (except
CM Commodity Index Fund) and, subject to the supervision of the Board, is
responsible for the day-to-day investment management of the Funds. VEAC is a
private company with headquarters in New York and acts as adviser or sub-adviser
to other mutual funds, ETFs, other pooled investment vehicles and separate
accounts. Van Eck Absolute Return Advisers Corporation acts as investment
manager to CM Commodity Index Fund and, subject to the supervision of the Board,
is responsible for the day-to-day investment management of CM Commodity Index
Fund. VEARA is a private company with headquarters in New York and acts as
adviser to other pooled investment vehicles. VEARA is a wholly owned subsidiary
of VEAC and is registered with the SEC as an investment adviser under the
Investment Advisers Act of 1940, as amended, and with the CFTC as a CPO and a
CTA under the CEA.
VEAC
and VEARA each serve as investment manager to the applicable Funds pursuant to
an investment advisory agreement between the Trust and such Adviser (each, an
“Advisory Agreement”). The advisory fee paid pursuant to each Advisory Agreement
is computed daily and paid monthly by each Fund to its Adviser at the following
annual rates: CM Commodity Index Fund pays VEARA a fee at the annual rate of
0.65% of the Fund’s average daily net assets, which includes the fee paid to
VEARA for accounting and administrative services; Emerging Markets Fund pays
VEAC a fee at the annual rate of 0.75% of average daily net assets of the Fund;
Emerging Markets Leaders Fund pays VEAC a fee at the annual rate of 0.75% of the
Fund's average daily net assets, which includes the fee paid to VEAC for
accounting and administrative services; Environmental Sustainability Fund pays
VEAC a fee at the annual rate of 0.75% of the Fund's average daily net assets,
which includes the fee paid to VEAC for accounting and administrative services;
Global Resources Fund pays VEAC a fee at the annual rate of 1.00% of the first
$2.5 billion of average daily net assets of the Fund and 0.90% of average daily
net assets in excess of $2.5 billion, which includes the fee paid to VEAC for
accounting and administrative services; International Investors Gold Fund pays
VEAC a fee at the annual rate of 0.75% of the first $500 million of average
daily net assets of the Fund, 0.65% of the next $250 million of average daily
net assets and 0.50% of average daily net assets in excess of $750 million;
Emerging Markets Bond Fund pays VEAC a fee at the annual rate of 0.80% of the
first $1.5 billion of average daily net assets of the Fund and 0.75% of average
daily net assets in excess of $1.5 billion, which includes the fee paid to VEAC
for accounting and administrative services; and VanEck Morningstar Wide Moat
Fund pays VEAC a fee at the annual rate of 0.45% of average daily net assets,
which includes the fee paid to VEAC for accounting and administrative services.
Each class of a Fund’s shares pays its proportionate share of the Fund’s fee.
For purposes of calculating these fees for the International Investors Gold Fund
and CM Commodity Index Fund, the net assets of each Fund include the value of
each Fund’s interest in the Gold Subsidiary and the CMCI Subsidiary,
respectively. Each of the Gold Subsidiary and the CMCI Subsidiary does not pay
VEAC or VEARA, respectively, a fee for managing the Gold Subsidiary’s or the
CMCI Subsidiary’s portfolio.
Under
its respective Advisory Agreement, each Adviser, subject to the supervision of
the Board and in conformity with the stated investment policies of each Fund to
which it serves as an adviser, manages the investment of such Fund’s assets.
Each Adviser is responsible for placing purchase and sale orders and providing
continuous supervision of the investment portfolio of the Funds it
manages.
Each
Adviser has agreed to waive fees and/or pay Fund expenses to the extent
necessary to prevent the operating expenses of each Fund (excluding acquired
fund fees and expenses, interest expense, trading expenses, dividends and
interest payments on securities sold short, taxes and extraordinary expenses)
from exceeding the following:
|
|
|
|
|
|
|
|
|
|
FUND |
EXPENSE
CAP |
FEE
ARRANGEMENT
DURATION DATE |
| CM
Commodity Index Fund |
|
|
| Class
A |
0.95% |
May
1, 2024 |
| Class
I |
0.65% |
May
1, 2024 |
| Class
Y |
0.70% |
May
1, 2024 |
|
|
|
| Emerging
Markets Fund |
|
|
| Class
A |
1.60% |
May
1, 2024 |
| Class
C |
2.50% |
May
1, 2024 |
| Class
I |
1.00% |
May
1, 2024 |
| Class
Y |
1.10% |
May
1, 2024 |
| Class
Z |
0.90% |
May
1, 2024 |
|
|
|
| Emerging
Markets Leaders Fund |
|
|
| Class
A |
1.45% |
May
1, 2024 |
| Class
I |
0.85% |
May
1, 2024 |
| Class
Y |
0.95% |
May
1, 2024 |
| Class
Z |
0.75% |
May
1, 2024 |
|
|
|
| Environmental
Sustainability Fund |
|
|
| Class
A |
1.25% |
May
1, 2024 |
| Class
I |
0.95% |
May
1, 2024 |
| Class
Y |
1.05% |
May
1, 2024 |
|
|
|
| Global
Resources Fund |
|
|
| Class
A |
1.38% |
May
1, 2024 |
| Class
C |
2.20% |
May
1, 2024 |
| Class
I |
0.95% |
May
1, 2024 |
| Class
Y |
1.13% |
May
1, 2024 |
|
|
|
| International
Investors Gold Fund |
|
|
| Class
A |
1.45% |
May
1, 2024 |
| Class
C |
2.20% |
May
1, 2024 |
| Class
I |
1.00% |
May
1, 2024 |
| Class
Y |
1.10% |
May
1, 2024 |
|
|
|
| Emerging
Markets Bond Fund |
|
|
| Class
A |
1.25% |
May
1, 2024 |
| Class
I |
0.95% |
May
1, 2024 |
| Class
Y |
1.00% |
May
1, 2024 |
|
|
|
| VanEck
Morningstar Wide Moat Fund |
|
|
| Class
I |
0.59% |
May
1, 2024 |
| Class
Z |
0.49% |
May
1, 2024 |
|
|
|
|
|
|
During
such time, the expense limitation is expected to continue until the Board of
Trustees acts to discontinue all or a portion of such expense
limitation.
In
addition to providing investment advisory services, VEAC also performs
accounting and administrative services for Emerging Markets Fund and
International Investors Gold Fund pursuant to a written agreement. For these
accounting and administrative services, a fee is calculated daily and paid
monthly at the following annual rates: Emerging Markets Fund pays VEAC a fee of
0.25% of average daily net assets and International Investors Gold Fund pays the
VEAC a fee equal to 0.25% on the first $750 million of average daily net assets,
and 0.20% of average daily net assets in excess of $750
million.
Pursuant
to each Advisory Agreement, the Trust has agreed to indemnify each Adviser for
certain liabilities, including certain liabilities arising under the federal
securities laws, unless such loss or liability results from willful misfeasance,
bad faith or gross negligence in the performance of its duties or the reckless
disregard of its obligations and duties.
Investments
in the securities of underlying funds involve duplication of advisory fees and
certain other expenses. By investing in an underlying fund, VanEck Morningstar
Wide Moat Fund becomes a shareholder of that underlying fund. As a result,
VanEck Morningstar Wide Moat Fund’s shareholders will indirectly bear the Fund’s
proportionate share of the fees and expenses paid by shareholders of the
underlying fund, in addition to the fees and expenses the Fund’s shareholders
directly bear in connection with the Fund’s own operations. To minimize the
duplication of fees, VEAC has agreed to waive the management fee it charges to
VanEck Morningstar Wide Moat Fund by any amount it collects as a management fee
from an underlying fund managed by VEAC, as a result of an investment of the
Fund’s assets in such underlying fund.
The
management fees earned and the expenses waived or assumed by each Adviser for
the past three fiscal years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANAGEMENT
FEES |
|
EXPENSES
WAIVED/ASSUMED
BY
THE ADVISERS |
|
CM
Commodity Index Fund1 |
2022 |
|
$5,482,985 |
|
|
$2,156,029 |
|
| |
2021 |
|
$4,548,328 |
|
|
$1,647,713 |
|
|
2020 |
|
$2,864,439 |
|
|
$1,215,797 |
|
| Emerging
Markets Fund |
2022 |
|
$10,272,610 |
|
|
$1,817,800 |
|
| |
2021 |
|
$21,335,483 |
|
|
$2,172,992 |
|
| |
2020 |
|
$16,458,393 |
|
|
$1,500,126 |
|
| Global
Resources Fund |
2022 |
|
$9,585,474 |
|
|
$927,930 |
|
| |
2021 |
|
$7,263,373 |
|
|
$878,369 |
|
| |
2020 |
|
$5,098,274 |
|
|
$994,614 |
|
| International
Investors Gold Fund |
2022 |
|
$5,378,333 |
|
|
$194,811 |
|
| |
2021 |
|
$6,356,810 |
|
|
$59,592 |
|
| |
2020 |
|
$6,284,731 |
|
|
$38,726 |
|
| Emerging
Markets Bond Fund |
2022 |
|
$97,787 |
|
|
$183,588 |
|
| |
2021 |
|
$216,678 |
|
|
$256,091 |
|
| |
2020 |
|
$199,421 |
|
|
$245,466 |
|
|
Emerging
Markets Leaders Fund2 |
2022 |
|
$32,178 |
|
|
$173,782 |
|
|
2021 |
|
N/A |
|
N/A |
|
2020 |
|
N/A |
|
N/A |
|
Environmental
Sustainability Fund3 |
2022 |
|
$32,493 |
|
|
$155,553 |
|
|
2021 |
|
$17,772 |
|
|
$109,925 |
|
|
2020 |
|
N/A |
|
N/A |
|
VanEck
Morningstar Wide Moat Fund |
2022 |
|
$75,893 |
|
|
$155,382 |
|
|
2021 |
|
$73,458 |
|
|
$199,586 |
|
|
|
2020 |
|
$42,069 |
|
|
$210,224 |
|
1
Effective January 1, 2023, CM Commodity Index Fund’s management fee rate was
lowered to 0.65%.
2
Emerging
Markets Leaders Fund commenced operations on March 1, 2022.
3
Environmental Sustainability Fund commenced operations on July 14,
2021.
Each
Advisory Agreement provides that it shall continue in effect from year to year
as long as it is approved at least annually by (1) the Board or (2) a vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
each Fund, provided that in either event such continuance also is approved by a
majority of the Trustees who are not interested persons (as defined in the 1940
Act) of the Trust by a vote cast in person at a meeting called for the purpose
of voting on such approval. Each Advisory Agreement is terminable without
penalty, on 60 days’ notice, by the Board or by a vote of the holders of a
majority (as defined in the 1940 Act) of a Fund’s outstanding voting securities.
Each Advisory Agreement is also terminable upon 60 days’ notice by the
applicable Adviser and will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
THE
DISTRIBUTOR
Shares
of the Funds are offered on a continuous basis and are distributed through Van
Eck Securities Corporation, the Distributor, 666 Third Avenue, New York, New
York, 10017, a wholly owned subsidiary of VEAC and an affiliate of VEARA. The
Board has approved a Distribution Agreement appointing the Distributor as
distributor of shares of the Funds.
The
Trust has authorized one or more intermediaries (who are authorized to designate
other intermediaries) to accept purchase and redemption orders on the Trust’s
behalf. The Trust will be deemed to have received a purchase or redemption order
when the authorized broker or its designee accepts the order. Orders will be
priced at the net asset value next computed after they are accepted by the
authorized broker or its designee.
The
Distribution Agreement provides that the Distributor will pay all fees and
expenses in connection with printing and distributing prospectuses and reports
for use in offering and selling shares of the Funds and preparing, printing and
distributing advertising or promotional materials. The Funds will pay all fees
and expenses in connection with registering and qualifying their shares under
federal and state securities laws. The Distribution Agreement is reviewed and
approved annually by the Board.
The
Distributor retained underwriting commissions on sales of shares of the Funds
during the past three fiscal years, after reallowance to dealers, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VAN
ECK SECURITIES
CORPORATION |
REALLOWANCE
TO
DEALERS |
| CM
Commodity Index Fund |
2022 |
|
$3,207 |
|
$21,192 |
|
| |
2021 |
|
$7,037 |
|
$44,256 |
|
| |
2020 |
|
$840 |
|
$5,260 |
|
| Emerging
Markets Fund |
2022 |
|
$2,492 |
|
$28,249 |
|
| |
2021 |
|
$13,225 |
|
$99,383 |
|
| |
2020 |
|
$6,461 |
|
$218,370 |
|
| Global
Resources Fund |
2022 |
|
$34,890 |
|
$314,006 |
|
| |
2021 |
|
$32,827 |
|
$497,518 |
|
| |
2020 |
|
$7,602 |
|
$84,345 |
|
| International
Investors Gold Fund |
2022 |
|
$28,961 |
|
$229,891 |
|
| |
2021 |
|
$61,679 |
|
$489,186 |
|
| |
2020 |
|
$97,286 |
|
$769,893 |
|
| Emerging
Markets Bond Fund |
2022 |
|
$2,085 |
|
$13,142 |
|
| |
2021 |
|
$1,066 |
|
$7,181 |
|
| |
2020 |
|
$1,739 |
|
$11,589 |
|
|
Emerging
Markets Leaders Fund1 |
2022 |
|
$— |
|
$— |
|
|
2021 |
|
N/A |
N/A |
|
2020 |
|
N/A |
N/A |
|
Environmental
Sustainability Fund2 |
2022 |
|
$221 |
|
$1,379 |
|
|
2021 |
|
$— |
|
$— |
|
|
2020 |
|
N/A |
N/A |
| VanEck
Morningstar Wide Moat Fund |
2022 |
|
N/A |
N/A |
| |
2021 |
|
N/A |
N/A |
|
2020 |
|
N/A |
N/A |
1
Emerging Markets Leaders Fund commenced operations on March 1,
2022.
2
Environmental Sustainability Fund commenced operations on July 14,
2021.
PLAN
OF DISTRIBUTION (12B-1 PLAN)
Each
Fund has adopted a plan of distribution pursuant to Rule 12b-1 (collectively,
the “Plan”) on behalf of its Class A and Class C shares (where applicable) which
provides for the compensation of brokers and dealers who sell shares of the
Funds and/or provide servicing. The Plan is a compensation-type plan. Pursuant
to the Plan, the Distributor provides the Funds at least quarterly with a
written report of the amounts expended under the Plan and the purpose for which
such expenditures were made. The Board reviews such reports on a quarterly
basis.
The
Plan is reapproved annually for each Fund’s Class A and Class C shares (where
applicable) by the Board, including a majority of the Trustees who are not
“interested persons” of the Fund and who have no direct or indirect financial
interest in the operation of the Plan.
The
Plan shall continue in effect as to each Fund’s Class A and Class C shares,
provided such continuance is approved annually by a vote of the Board in
accordance with the 1940 Act. The Plan may not be amended to increase materially
the amount to be spent for the services described therein without approval of
the Class A or Class C shareholders of the Funds (as applicable), and all
material amendments to the Plan must also be approved by the Board in the manner
described above. The Plan may be terminated at any time, without payment of any
penalty, by vote of a majority of the Trustees who are not “interested persons”
of a Fund and who have no direct or indirect financial interest in the operation
of the Plan, or by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund’s Class A or Class C shares (as applicable)
on written notice to any other party to the Plan. The Plan will automatically
terminate in the event of its assignment (as defined in the 1940 Act). So long
as the Plan is in effect, the election and nomination of Trustees who are not
“interested persons” of the Trust shall be committed to the discretion of the
Trustees who are not “interested persons.” The Board has determined that, in its
judgment, there is a reasonable likelihood that the Plan will benefit the Funds
and their shareholders. The Funds will preserve copies of the Plan and any
agreement or report made pursuant to Rule 12b-1 under the 1940 Act, for a period
of not less than six years from the date of the Plan or such agreement or
report, the first two years in an easily accessible place. For additional
information regarding the Plan, see the Prospectuses.
For
the fiscal year ended December 31, 2022, it is estimated that the Distributor
spent the amounts received under the Plan in the following ways:
|
|
|
|
|
|
|
|
CM
COMMODITY INDEX
FUND |
| |
Class
A |
| |
|
| Total
12b-1 Fees |
$76,837 |
| |
|
| Compensation
to Dealers |
(76,786) |
| |
|
| Net
12b-1 Fees |
51 |
| Expenditures: |
|
| Printing
and Mailing |
(129) |
| Telephone
and Internal Sales |
(360) |
| Marketing
Department |
(45,878) |
| External
Wholesalers |
(79,779) |
| Total
Expenditures |
(126,146) |
| |
|
| Expenditures
in Excess of Net 12b-1 Fees |
(126,095)(1) |
(1)
Represents 0.02% of the Fund’s net assets as of December 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMERGING
MARKETS FUND |
|
GLOBAL
RESOURCES
FUND |
| |
Class
A |
|
Class
C |
|
Class
A |
|
Class
C |
| Total
12b-1 Fees |
$218,403 |
|
$145,765 |
|
$359,010 |
|
$93,999 |
| Compensation
to Dealers |
(202,705) |
|
(145,578) |
|
(336,773) |
|
(93,915) |
| Net
12b-1 Fees |
15,698 |
|
187 |
|
22,237 |
|
84 |
| Expenditures: |
|
|
|
|
|
|
|
| Printing
and Mailing |
(129) |
|
(129) |
|
(466) |
|
(466) |
| Telephone
and Internal Sales |
(1,337) |
|
(81) |
|
(3,161) |
|
(89) |
| Marketing
Department |
(115,139) |
|
(20,469) |
|
(194,394) |
|
(17,932) |
| External
Wholesalers |
(217,474) |
|
(41,493) |
|
(313,243) |
|
(35,644) |
| Total
Expenditures |
(334,079) |
|
(62,172) |
|
(511,264) |
|
(54,131) |
| Expenditures
in Excess of Net 12b-1 Fees |
(318,381)(2) |
|
(61,985)(3) |
|
(489,028)(4) |
|
(54,047)(3) |
(2)Represents
0.03% of the Fund’s net assets as of December 31, 2022.
(3)Represents
0.01% of the Fund’s net assets as of December 31, 2022.
(4)Represents
0.05% of the Fund’s net assets as of December 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
INTERNATIONAL
INVESTORS
GOLD FUND |
|
EMERGING
MARKETS
BOND FUND |
|
| |
Class
A |
|
Class
C |
|
Class
A |
|
| Total
12b-1 Fees |
$647,101 |
|
$351,354 |
|
$13,667 |
|
| Compensation
to Dealers |
(536,303) |
|
(350,068) |
|
(11,128) |
|
| Net
12b-1 Fees |
110,798 |
|
1,286 |
|
2,539 |
|
| Expenditures: |
|
|
|
|
|
|
| Printing
and Mailing |
(129) |
|
(129) |
|
(129) |
|
| Telephone
and Internal Sales |
(7,789) |
|
(264) |
|
(54) |
|
| Marketing
Department |
(344,267) |
|
(54,297) |
|
(7,096) |
|
| External
Wholesalers |
(557,073) |
|
(102,336) |
|
(10,602) |
|
| Total
Expenditures |
(909,258) |
|
(157,026) |
|
(17,881) |
|
| Expenditures
in Excess of Net 12b-1 Fees |
(798,460)(5) |
|
(155,740)(1) |
|
(15,342)(6) |
|
(5)Represents
0.12% of the Fund’s net assets as of December 31, 2022.
(6)Represents
0.16% of the Fund's net assets as of December 31, 2022.
(7)Represents
0.08% of the Fund's net assets as of December 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
ENVIRONMENTAL
SUSTAINABILITY FUND |
|
EMERGING
MARKETS LEADERS FUND |
| |
|
Class
A |
|
Class
A |
| Total
12b-1 Fees |
|
$3,515 |
|
$1,613 |
| Compensation
to Dealers |
|
(1,504) |
|
164 |
| Net
12b-1 Fees |
|
2,011 |
|
1,777 |
| Expenditures: |
|
|
|
|
| Printing
and Mailing |
|
(129) |
|
(492) |
| Telephone
and Internal Sales |
|
(7) |
|
(2) |
| Marketing
Department |
|
(1,120) |
|
(1,091) |
| External
Wholesalers |
|
(1,396) |
|
(1,360) |
| Total
Expenditures |
|
(2,652) |
|
(2,945) |
| Expenditures
in Excess of Net 12b-1 Fees |
|
(641)(1) |
|
(1,168)(1) |
(1)
Represents 0.02% of the Fund’s net assets as of December 31, 2022.
ADMINISTRATIVE
AND PROCESSING SUPPORT PAYMENTS
The
Funds may make payments (either directly or as reimbursement to the Distributor
or an affiliate of the Distributor for payments made by the Distributor) to
financial intermediaries (such as brokers or third party administrators) for
providing the types of services that would typically be provided by the Funds’
transfer agent, including sub-accounting, sub-transfer agency or similar
recordkeeping services, shareholder reporting, shareholder transaction
processing, and/or the provision of call center support. These payments will be
in lieu of, and may differ from, amounts paid to the Funds’ transfer agent for
providing similar services to other accounts. These payments may be in addition
to any amounts the intermediary may receive as compensation for distribution or
shareholder servicing pursuant to the Plan or as part of any revenue sharing or
similar arrangement with the Distributor or its affiliates, as described
elsewhere in the Prospectuses.
PORTFOLIO
MANAGER COMPENSATION
The
Advisers’ portfolio managers are paid a fixed base salary and a bonus. The bonus
is based upon the quality of investment analysis and management of the funds for
which they serve as portfolio manager. Portfolio managers who oversee accounts
with significantly different fee structures are generally compensated by
discretionary bonus rather than a set formula to help reduce potential conflicts
of interest. At times, the Adviser and affiliates may manage accounts with
incentive fees.
The
Advisers’ portfolio managers may serve as portfolio managers to other clients.
Such “Other Clients” may have investment objectives or may implement investment
strategies similar to those of the Funds. When the portfolio managers implement
investment strategies for Other Clients that are similar or directly contrary to
the positions taken by a Fund, the prices of the Fund’s securities may be
negatively affected. The compensation that a Fund’s portfolio manager receives
for managing other client accounts may be higher than the compensation the
portfolio manager receives for managing the Fund. The portfolio managers do not
believe that their activities materially disadvantage the Fund. The Advisers
have implemented procedures to monitor trading across funds and its Other
Clients.
PORTFOLIO
MANAGER SHARE OWNERSHIP
As
of December 31, 2022, the dollar range of equity securities in a Fund
beneficially owned by such Fund’s portfolio manager(s) and deputy portfolio
manager (if any) is shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund |
None |
$1
to
$10,000 |
$10,001
to
$50,000 |
$50,001
to
$100,000 |
$100,001
to
$500,000 |
$500,001
to
$1,000,000 |
Over
$1,000,000 |
| David
Austerweil |
| Emerging
Markets Bond Fund (Deputy Portfolio Manager) |
|
|
|
|
X |
|
|
| Charles
Cameron |
| Global
Resources Fund (Deputy Portfolio Manager) |
|
|
|
|
|
X |
|
| Imaru
Casanova |
| International
Investors Gold Fund (Portfolio Manager) |
|
|
|
|
X |
|
|
|
Ola
El-Shawarby1
|
| Emerging
Markets Fund (Deputy Portfolio Manager) |
|
|
|
X |
|
|
|
| Emerging
Markets Leaders Fund (Deputy Portfolio Manager) |
X |
|
|
|
|
|
|
| Eric
Fine |
| Emerging
Markets Bond Fund (Portfolio Manager) |
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
| Gregory
F. Krenzer, CFA |
| CM
Commodity Index Fund (Deputy Portfolio Manager) |
|
|
X |
|
|
|
|
| VanEck
Morningstar Wide Moat Fund (Deputy Portfolio Manager) |
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund |
None |
$1
to
$10,000 |
$10,001
to
$50,000 |
$50,001
to
$100,000 |
$100,001
to
$500,000 |
$500,001
to
$1,000,000 |
Over
$1,000,000 |
| Peter
H. Liao |
| VanEck
Morningstar Wide Moat Fund (Portfolio Manager) |
|
|
X |
|
|
|
|
| Roland
Morris, Jr. |
| CM
Commodity Index Fund (Portfolio Manager) |
|
|
|
X |
|
|
|
| Shawn
Reynolds |
| Global
Resources Fund (Portfolio Manager) |
|
|
|
|
|
X |
|
| Environmental
Sustainability Fund (Portfolio Manager) |
|
|
|
X |
|
|
|
| David
Semple |
| Emerging
Markets Fund (Portfolio Manager) |
|
|
|
|
|
|
X |
| Emerging
Markets Leaders Fund (Portfolio Manager) |
X |
|
|
|
|
|
|
| Angus
Shillington |
| Emerging
Markets Fund (Deputy Portfolio Manager) |
|
|
|
X |
|
|
|
| Emerging
Markets Leaders Fund (Deputy Portfolio Manager) |
X |
|
|
|
|
|
|
| Veronica
Zhang |
|
| Environmental
Sustainability Fund (Deputy Portfolio Manager) |
|
|
X |
|
|
|
|
1
Ms.
El-Shawarby became Deputy Portfolio Manager on May 1, 2023.
OTHER
ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
The
following table provides the number of other accounts managed (excluding the
Fund) and the total assets managed of such accounts by each Fund’s portfolio
manager(s) and deputy portfolio manager (if any) within each category of
accounts, as of December 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund |
Name
of Portfolio
Manager/Deputy
Portfolio Manager |
Category
of Account |
Other
Accounts Managed
(As of December 31, 2022) |
Accounts
with respect to which the
advisory fee is based on the
performance
of the account |
Number
of
Accounts |
Total
Assets in
Accounts |
Number
of
Accounts |
Total
Assets in
Accounts |
| CM
Commodity Index Fund |
Roland
Morris, Jr.
(Portfolio Manager) |
Registered
investment companies |
0 |
$0 |
0 |
$0 |
| Other
pooled investment vehicles |
0 |
$0 |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| CM
Commodity Index Fund |
Gregory
F.
Krenzer, CFA (Deputy Portfolio Manager) |
Registered
investment companies |
2 |
$36.24
Million |
0 |
$0 |
| Other
pooled investment vehicles |
0 |
$0 |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| VanEck
Morningstar Wide Moat Fund |
Gregory
F.
Krenzer, CFA (Deputy Portfolio Manager) |
Registered
investment companies |
2 |
$603.56
Million |
0 |
$0 |
| Other
pooled investment vehicles |
0 |
$0 |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund |
Name
of Portfolio
Manager/Deputy
Portfolio Manager |
Category
of Account |
Other
Accounts Managed
(As of December 31, 2022) |
Accounts
with respect to which the
advisory fee is based on the
performance
of the account |
Number
of
Accounts |
Total
Assets in
Accounts |
Number
of
Accounts |
Total
Assets in
Accounts |
| Emerging
Markets Fund |
David
Semple (Portfolio Manager) |
Registered
investment companies |
4 |
$298.78
Million |
0 |
$0 |
| Other
pooled investment vehicles |
2 |
$138.05
Million |
0 |
$0 |
| Other
accounts |
2 |
$39.27
Million |
0 |
$0 |
| Emerging
Markets Fund |
Ola
El-Shawarby1
(Deputy Portfolio Manager) |
Registered
investment companies |
0 |
$0 |
0 |
$0 |
| Other
pooled investment vehicles |
0 |
$0 |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| Emerging
Markets Fund |
Angus
Shillington (Deputy Portfolio Manager) |
Registered
investment companies |
4 |
$298.78
Million |
0 |
$0 |
| Other
pooled investment vehicles |
2 |
$138.05
Million |
0 |
$0 |
| Other
accounts |
1 |
$39.09
Million |
0 |
$0 |
| Emerging
Markets Leaders Fund |
David
Semple (Portfolio Manager) |
Registered
investment companies |
4 |
$1,216.88
Million |
0 |
$0 |
| Other
pooled investment vehicles |
2 |
$138.05
Million |
0 |
$0 |
| Other
accounts |
2 |
$39.27
Million |
0 |
$0 |
| Emerging
Markets Leaders Fund |
Ola
El-Shawarby1
(Deputy
Portfolio Manager) |
Registered
investment companies |
0 |
$0 |
0 |
$0 |
| Other
pooled investment vehicles |
0 |
$0 |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| Emerging
Markets Leaders Fund |
Angus
Shillington (Deputy Portfolio Manager) |
Registered
investment companies |
4 |
$1,216.88
Million |
0 |
$0 |
| Other
pooled investment vehicles |
2 |
$138.05
Million |
0 |
$0 |
| Other
accounts |
1 |
$39.09
Million |
0 |
$0 |
| Environmental
Sustainability Fund |
Shawn
Reynolds (Portfolio Manager) |
Registered
investment companies |
4 |
$2191.19
Million |
0 |
$0 |
| Other
pooled investment vehicles |
1 |
$31.02
Million |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| Global
Resources Fund |
Charles
Cameron (Deputy Portfolio Manager) |
Registered
investment companies |
2 |
$1,229.85
Million |
0 |
$0 |
| Other
pooled investment vehicles |
1 |
$31.02
Million |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| Global
Resources Fund |
Shawn
Reynolds (Portfolio Manager) |
Registered
investment companies |
4 |
$1,236.50
Million |
0 |
$0 |
| Other
pooled investment vehicles |
1 |
$31.02
Million |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| International
Investors Gold Fund |
Imaru
Casanova (Portfolio Manager) |
Registered
investment companies |
1 |
$45.81
Million |
0 |
$0 |
| Other
pooled investment vehicles |
2 |
$44.21
Million |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund |
Name
of Portfolio
Manager/Deputy
Portfolio Manager |
Category
of Account |
Other
Accounts Managed
(As of December 31, 2022) |
Accounts
with respect to which the
advisory fee is based on the
performance
of the account |
Number
of
Accounts |
Total
Assets in
Accounts |
Number
of
Accounts |
Total
Assets in
Accounts |
| Emerging
Markets Bond Fund |
David
Austerweil (Deputy Portfolio Manager) |
Registered
investment companies |
1 |
$17.19
Million |
0 |
$0 |
| Other
pooled investment vehicles |
3 |
$263.83
Million |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| Emerging
Markets Bond Fund |
Eric
Fine (Portfolio Manager) |
Registered
investment companies |
1 |
$17.19
Million |
0 |
$0 |
| Other
pooled investment vehicles |
3 |
$263.83
Million |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| Environmental
Sustainability Fund |
Veronica
Zhang (Deputy Portfolio Manager) |
Registered
investment companies |
0 |
$0 |
0 |
$0 |
| Other
pooled investment vehicles |
0 |
$0 |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
| VanEck
Morningstar Wide Moat Fund |
Peter
H. Liao (Portfolio Manager) |
Registered
investment companies |
46 |
$37,782.78
Million |
0 |
$0 |
| Other
pooled investment vehicles |
0 |
$0 |
0 |
$0 |
| Other
accounts |
0 |
$0 |
0 |
$0 |
1
Ms. El-Shawarby became Deputy Portfolio Manager on May 1, 2023.
SECURITIES
LENDING ARRANGEMENTS
Pursuant
to a securities lending agreement (the “Securities Lending Agreement”) between
the Funds and State Street (in such capacity, the “Securities Lending Agent”),
the Funds may lend their securities through the Securities Lending Agent to
certain qualified borrowers. The Securities Lending Agent administers the Funds’
securities lending program. During the fiscal year ended December 31, 2022,
these services include arranging the securities loans with approved borrowers
and collecting fees and rebates due to the Funds from each borrower. The
Securities Lending Agent maintains records of loans made and income derived
therefrom and makes available such records that the Funds deem necessary to
monitor the securities lending program.
For
the fiscal year ended December 31, 2022, each of the Funds listed below earned
income and incurred the following costs and expenses, during its respective
fiscal year, as a result of its securities lending activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fund |
Gross
Income(1) |
Revenue
Split(2) |
Cash
Collateral Management Fees(3) |
Administrative
Fees(4) |
Indemnification
Fees(5) |
Rebates
to Borrowers |
Other
Fees |
Total
Costs of the Securities Lending Activities |
Net
Income from the Securities Lending Activities |
| CM
Commodity Index Fund |
$ |
449,959 |
|
$ |
20,053 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
250,460 |
|
$ |
— |
|
$ |
270,513 |
|
$ |
179,446 |
|
| Emerging
Markets Bond Fund |
5,730 |
|
225 |
|
— |
|
— |
|
— |
|
3,479 |
|
— |
|
3,704 |
|
2,026 |
|
| Emerging
Markets Fund |
422,531 |
|
31,646 |
|
— |
|
— |
|
— |
|
109,322 |
|
— |
|
140,968 |
|
281,563 |
|
| Emerging
Markets Leaders Funds |
1,567 |
|
93 |
|
|
|
|
631 |
|
|
724 |
|
843 |
|
| Environmental
Sustainability Fund |
23,294 |
|
2,155 |
|
— |
|
— |
|
— |
|
1,715 |
|
— |
|
3,870 |
|
19,424 |
|
| Global
Resources Fund |
1,105,846 |
|
77,359 |
|
— |
|
— |
|
— |
|
335,142 |
|
— |
|
412,501 |
|
693,345 |
|
| International
Investors Gold Fund |
333,180 |
|
16,021 |
|
— |
|
— |
|
— |
|
174,062 |
|
— |
|
190,083 |
|
143,097 |
|
| VanEck
Morningstar Wide Moat Fund |
226 |
|
22 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
22 |
|
204 |
|
1Gross
income includes income from the reinvestment of cash collateral and rebates paid
by the borrower.
2Revenue
split represents the share of revenue generated by the securities lending
program and paid to the Securities Lending Agent.
3Cash
collateral management fees include fees deducted from a pooled cash collateral
reinvestment vehicle that are not included in the revenue split.
4These
administrative fees are not included in the revenue split.
5These
indemnification fees are not included in the revenue split.
PORTFOLIO
TRANSACTIONS AND BROKERAGE
When
selecting brokers and dealers to handle the purchase and sale of portfolio
securities, each Adviser looks for prompt execution of the order at a favorable
price. Generally, an Adviser works with recognized dealers in these securities,
except when a better price and execution of the order can be obtained elsewhere.
The Funds will not deal with affiliates in principal transactions unless
permitted by exemptive order or applicable rule or regulation. Each Adviser owes
a duty to its clients to provide best execution on trades effected.
Each
Adviser assumes general supervision over placing orders on behalf of the Trust
for the purchase or sale of portfolio securities. If purchases or sales of
portfolio securities of the Trust and one or more other investment companies or
clients supervised by an Adviser are considered at or about the same time,
transactions in such securities are allocated among the several investment
companies and clients in a manner deemed equitable to all by the Adviser. In
some cases, this procedure could have a detrimental effect on the price or
volume of the security so far as the Trust is concerned.
The
portfolio managers may deem it appropriate for one fund or account they manage
to sell a security while another fund or account they manage is purchasing the
same security. Under such circumstances, the portfolio managers may arrange to
have the purchase and sale transactions effected directly between the funds
and/or accounts (“cross transactions”). Cross transactions will be effected in
accordance with procedures adopted pursuant to Rule 17a-7 under the 1940
Act.
Portfolio
turnover may vary from year to year, as well as within a year. High turnover
rates are likely to result in comparatively greater brokerage expenses. The
overall reasonableness of brokerage commissions is evaluated by each Adviser
based upon its knowledge of available information as to the general level of
commissions paid by other institutional investors for comparable
services.
The
Advisers may cause the Funds to pay a broker-dealer who furnishes brokerage
and/or research services, a commission that is in excess of the commission
another broker-dealer would have received for executing the transaction, if it
is determined that such commission is reasonable in relation to the value of the
brokerage and/or research services as defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended, which have been provided. Such research
services may include, among other things, analyses and reports concerning
issuers, industries, securities, economic factors and trends and portfolio
strategy. Any such research and other information provided by brokers to an
Adviser is considered to be in addition to and not in lieu of services required
to be performed by the Adviser under its Advisory Agreement with the Trust. The
research services provided by broker-dealers can be useful to an Adviser in
serving its other clients or clients of the Adviser’s affiliates. The Board
periodically reviews an Adviser’s performance of its responsibilities in
connection with the placement of portfolio transactions on behalf of the Funds.
The Board also reviews the commissions paid by the Funds over representative
periods of time to determine if they are reasonable in relation to the benefits
to the Funds.
The
aggregate amount of brokerage transactions directed to a broker during the
fiscal year ended December 31, 2022 for, among other things, research services,
and the commissions and concessions related to such transactions were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
| |
Transaction
Amount |
|
Commissions
and
Concessions |
| CM
Commodity Index Fund |
$0 |
|
$0 |
| Emerging
Markets Fund |
$230,318,505 |
|
$372,555 |
|
Emerging
Markets Leaders Fund1 |
$1,203,546 |
|
$1,920 |
| Global
Resources Fund |
$486,489,761 |
|
$343,192 |
| International
Investors Gold Fund |
$309,004,508 |
|
$278,952 |
| Emerging
Markets Bond Fund |
$0 |
|
$0 |
| Environmental
Sustainability Fund |
$305,448 |
|
$373 |
| VanEck
Morningstar Wide Moat Fund |
$0 |
|
$0 |
1
Emerging Markets Leaders Fund commenced operations on March 1,
2022.
The
table below shows the aggregate amount of brokerage commissions paid on
purchases and sales of portfolio securities by each Fund during the Fund’s three
most recent fiscal years ended December 31. None of such amounts were paid to
brokers or dealers which furnished daily quotations to the Fund for the purpose
of calculating daily per share net asset value or to brokers and dealers which
sold shares of the Fund.
|
|
|
|
|
|
|
2022
COMMISSIONS |
| CM
Commodity Index Fund |
$0 |
|
|
| Emerging
Markets Fund |
$860,703 |
|
|
| Emerging
Markets Leaders Fund |
$6,320 |
|
|
| Global
Resources Fund |
$413,191 |
|
|
| International
Investors Gold Fund |
$395,885 |
|
|
| Emerging
Markets Bond Fund |
$32 |
|
|
| Environmental
Sustainability Fund |
$763 |
|
|
| VanEck
Morningstar Wide Moat Fund |
$4,612 |
|
|
|
2021
COMMISSIONS |
|
|
| CM
Commodity Index Fund |
$0 |
|
|
| Emerging
Markets Fund |
$2,755,550 |
|
|
| Emerging
Markets Leaders Fund |
N/A |
|
|
| Global
Resources Fund |
$218,486 |
|
|
| International
Investors Gold Fund |
$429,221 |
|
|
| Emerging
Markets Bond Fund |
$0 |
|
|
| Environmental
Sustainability Fund |
$1,618 |
|
|
| VanEck
Morningstar Wide Moat Fund |
$3,955 |
|
|
| |
2020
COMMISSIONS |
| |
|
| CM
Commodity Index Fund |
$0 |
| |
|
| Emerging
Markets Fund |
$2,181,053 |
|
|
| Emerging
Markets Leaders Fund |
N/A |
| |
|
| Global
Resources Fund |
$459,587 |
| |
|
| International
Investors Gold Fund |
$599,347 |
|
|
|
|
|
|
| |
|
| Emerging
Markets Bond Fund |
$0 |
| |
|
| Environmental
Sustainability Fund |
N/A |
| |
|
| VanEck
Morningstar Wide Moat Fund |
$3,040 |
| |
|
Each
Adviser does not consider sales of shares of the Funds as a factor in the
selection of broker-dealers to execute portfolio transactions for the Funds.
Each Adviser has implemented policies and procedures pursuant to Rule 12b-1(h)
that are reasonably designed to prevent the consideration of the sales of fund
shares when selecting broker-dealers to execute trades.
Due
to the potentially high rate of turnover, the Funds may pay a greater amount in
brokerage commissions than a similar size fund with a lower turnover rate. The
portfolio turnover rates of all Funds may vary greatly from year to year. See
“Taxes” in the Prospectus and the SAI.
TRUSTEES
AND OFFICERS
LEADERSHIP
STRUCTURE AND THE BOARD
The
Board has general oversight responsibility with respect to the operation of the
Trust and the Funds. The Board has engaged VEAC to serve as the investment
adviser for the Emerging Markets Fund, Emerging Markets Leaders Fund,
Environmental Sustainabilty Fund, Global Resources Fund, International Investors
Gold Fund, Emerging Markets Bond Fund and VanEck Morningstar Wide Moat Fund, and
has engaged VEARA to serve as the investment adviser for the CM Commodity Index
Fund. The Board is responsible for overseeing the provision of services to the
Trust and the Funds by each Adviser and the other service providers in
accordance with the provisions of the 1940 Act and other applicable laws. The
Board is currently composed of six (6) Trustees, five of whom are Independent
Trustees. In addition to five (5) regularly scheduled meetings per year, the
Independent Trustees meet regularly in executive sessions among themselves and
with their counsel to consider a variety of matters affecting the Trust. These
sessions generally occur prior to, or during, scheduled Board meetings and at
such other times as the Trustees may deem necessary. Each Independent Trustee
(other than Jayesh Bhansali, who began serving as Trustee on July 1, 2022)
attended at least 75% of the total number of meetings of the Board in the year
ending December 31, 2022. As discussed in further detail below, the Board has
established three (3) standing committees to assist the Board in performing its
oversight responsibilities.
The
Board believes that the Board’s leadership structure is appropriate in light of
the characteristics and circumstances of the Trust and each of the Funds,
including factors such as the number of Funds that comprise the Trust, the
variety of asset classes in which those Funds invest, the net assets of the
Funds, the committee structure of the Trust, and the management, distribution
and other service arrangements of the Funds. In connection with its
determination, the Board considered that the Board is comprised primarily of
Independent Trustees, and that the Chairperson of the Board and the Chairperson
of each of the Audit Committee and the Governance Committee is an Independent
Trustee. The Board believes having an interested trustee on the Board and as
Chairperson of the Investment Oversight Committee provides it with additional
access to the perspectives and resources of the Advisers and their affiliates.
In addition, to further align the Trustees’ interests with those of Fund
shareholders, the Board has, among other things, adopted a policy requiring each
Trustee to maintain a minimum direct or indirect investment in the
Funds.
The
Chairperson presides at all meetings of the Board and participates in the
preparation of the agenda for such meetings. She also serves as a liaison with
management, service providers, officers, attorneys, and the other Trustees
generally between meetings. The Chairperson may also perform other such
functions as may be delegated by the Board from time to time. The Trustees
believe that the Chairperson’s independence facilitates meaningful dialogue
between each Adviser and the Independent Trustees. Except for any duties
specified herein or pursuant to the Trust’s Master Trust Agreement, the
designation of Chairperson does not impose on such Independent Trustee any
duties, obligations or liability that is greater than the duties, obligations or
liability imposed on such person as a member of the Board,
generally.
The
Independent Trustees regularly meet outside the presence of management and are
advised by independent legal counsel. The Board believes that its Committees
help ensure that the Trust has effective and independent governance and
oversight. The Board also believes that its leadership structure facilitates the
orderly and efficient flow of information to the Trustees from management of the
Trust, and from the Advisers.
RISK
OVERSIGHT
The
Funds and the Trust are subject to a number of risks, including investment,
compliance, operational, and valuation risks. Day-to-day risk management
functions are within the responsibilities of the Advisers, the Distributor and
the other service providers (depending on the nature of the risk) that carry out
the Funds’ investment management, distribution and business affairs. Each of the
Advisers, the Distributor and the other service providers have their own,
independent interests and responsibilities in risk management, and their
policies and methods of carrying out risk management functions will depend, in
part, on their individual priorities, resources and controls.
Risk
oversight forms part of the Board’s general oversight of the Funds and the Trust
and is addressed through various activities of the Board and its Committees. As
part of its regular oversight of the Funds and Trust, the Board, directly or
through a Committee, meets with representatives of various service providers and
reviews reports from, among others, the Advisers, the Distributor, the Chief
Compliance Officer of the Funds, and the independent registered public
accounting firm for the Funds regarding risks faced by the Funds and relevant
risk management functions. The Board or Investment Oversight Committee, with the
assistance of management, reviews investment policies and related risks in
connection with its review of the Funds’ performance and its evaluation of the
nature and quality of the services provided by each Adviser. The Board has
appointed a Chief Compliance Officer for the Funds who oversees the
implementation and testing of the Funds’ compliance program and reports to the
Board regarding compliance matters for the Funds and their principal service
providers. The Chief Compliance Officer’s designation, removal and compensation
must be approved by the Board, including a majority of the Independent Trustees.
Material changes to the compliance program are reviewed by and approved by the
Board. In addition, as part of the Board’s periodic review of the Funds’
advisory, distribution and other service provider agreements, the Board may
consider
risk
management aspects of their operations and the functions for which they are
responsible, including the manner in which such service providers implement and
administer their codes of ethics and related policies and procedures. For
certain of its service providers, such as the Advisers and Distributor, the
Board also receives reports periodically regarding business continuity and
disaster recovery plans, as well as actions being taken to address cybersecurity
and other information technology risks. With respect to valuation, the Board
approves and periodically reviews valuation policies and procedures applicable
to valuing the Funds’ shares. Each Adviser is responsible for the implementation
and day-to-day administration of these valuation policies and procedures and
provides reports periodically to the Board regarding these and related matters.
In addition, the Board or the Audit Committee of the Board receives reports at
least annually from the independent registered public accounting firm for the
Funds regarding tests performed by such firm on the valuation of all securities.
Reports received from the Advisers and the independent registered public
accounting firm assist the Board in performing its oversight function of
valuation activities and related risks.
The
Board recognizes that not all risks that may affect the Funds and the Trust can
be identified, that it may not be practical or cost-effective to eliminate or
mitigate certain risks, that it may be necessary to bear certain risks to
achieve the Funds’ or Trust’s goals, and that the processes, procedures and
controls employed to address certain risks may be limited in their
effectiveness. Moreover, reports received by the Board that may relate to risk
management matters are typically summaries of the relevant information. As a
result of the foregoing and other factors, the function of the Board with
respect to risk management is one of oversight and not active involvement in, or
coordination of, day-to-day risk management activities for the Funds or Trust.
The Board may, at any time and in its discretion, change the manner in which it
conducts its risk oversight role.
TRUSTEE
INFORMATION
The
Trustees of the Trust, their address, position with the Trust, age and principal
occupations during the past five years are set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRUSTEE’S
NAME,
ADDRESS(1)
AND
YEAR
OF BIRTH |
POSITION(S)
HELD WITH TRUST,
TERM
OF OFFICE(2)
AND
LENGTH
OF TIME SERVED |
PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS |
NUMBER
OF
PORTFOLIOS
IN
FUND
COMPLEX(3)
OVERSEEN
BY
TRUSTEE |
OTHER
DIRECTORSHIPS
HELD
OUTSIDE THE
FUND
COMPLEX(3)
DURING
THE PAST FIVE
YEARS |
| INDEPENDENT
TRUSTEES: |
|
Jayesh
Bhansali
1964
(A)(G)(I) |
Trustee
(since 2022) |
Chief
Investment Officer, IRIQIV LLC (a multi-family office). Formerly, Managing
Director and Lead Portfolio Manager, Nuveen, a TIAA company. |
12 |
Trustee
of Judge Baker Children’s Center; Director of Under One Roof. |
Jon
Lukomnik
1956 (A)(G)(I) |
Trustee
(since 2006); Chairperson of the Audit Committee (since 2021) |
Managing
Partner, Sinclair Capital LLC (consulting firm). Formerly, Executive
Director, Investor Responsibility Research Center Institute; Pembroke
Visiting Professor of International Finance, Judge Business School,
Cambridge. |
12 |
Member
of the Deloitte Audit Quality Advisory Committee; Director, The
Shareholder Commons; Director of VanEck ICAV (an Irish UCITS); VanEck
Vectors UCITS ETF plc (an Irish UCITS). Formerly, Director of VanEck (a
Luxembourg UCITS); Member of the Standing Advisory Group to the Public
Company Accounting Oversight Board; Chairman of the Advisory Committee of
Legion Partners. |
Jane
DiRenzo Pigott
1957(A)(G) (I) |
Trustee
(since 2007); Chairperson of the Board (since 2020) |
Managing
Director, R3 Group LLC (consulting firm). |
12 |
Trustee
of Northwestern University, Lyric Opera of Chicago and the Chicago
Symphony Orchestra.
Formerly,
Director and Chair of Audit Committee of 3E Company (services relating to
hazardous material safety); Director of MetLife Investment Funds,
Inc. |
R.
Alastair Short
1953 (A)(G)(I) |
Trustee
(since 2004) |
President,
Apex Capital Corporation (personal investment vehicle). |
82 |
Chairman
and Independent Director, EULAV Asset Management; Lead
Independent
Director, Total
Fund Solution; Independent
Director,
Contingency
Capital, LLC;Trustee, Kenyon Review; Trustee, Children's
Village. Formerly,
Independent Director, Tremont offshore
funds. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRUSTEE’S
NAME,
ADDRESS(1)
AND
YEAR
OF BIRTH |
POSITION(S)
HELD WITH TRUST,
TERM
OF OFFICE(2)
AND
LENGTH
OF TIME SERVED |
PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS |
NUMBER
OF
PORTFOLIOS
IN
FUND
COMPLEX(3)
OVERSEEN
BY
TRUSTEE |
OTHER
DIRECTORSHIPS
HELD
OUTSIDE THE
FUND
COMPLEX(3)
DURING
THE PAST FIVE
YEARS |
Richard
D. Stamberger
1959 (A)(G)(I) |
Trustee
(since 1995);
Chairperson of the
Governance Committee
(since
2022) |
Senior
Vice President, B2B, Future Plc (global media company), July 2020 to
August 2022; President, CEO and co-founder, SmartBrief, Inc., 1999 to
2020. |
82 |
Director,
Food and Friends, Inc. |
| INTERESTED
TRUSTEE: |
|
Jan
F. van Eck(4)
1963
(I) |
Trustee
(Since 2019); Chairperson of the Investment Oversight Committee (since
2020); Chief Executive Officer and President (Since 2010) |
Director,
President and Chief Executive Officer of VEAC, VEARA and VESC; Officer
and/or Director of other companies affiliated with VEAC and/or the
Trust. |
82 |
Director,
National Committee on US-China Relations. |
(1)The
address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York,
New York 10017.
(2)Trustee
serves until resignation, death, retirement or removal.
(3) The
Fund Complex consists of VanEck Funds, VanEck VIP Trust and VanEck ETF
Trust.
(4) “Interested
person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an
officer of VEAC, VEARA and VESC. In addition, Mr. van Eck and members of his
family own 100% of the voting stock of VEAC, which in turns owns 100% of the
voting stock of each of VEARA and VESC.
(A) Member
of the Audit Committee.
(G) Member
of the Governance Committee.
(I) Member
of the Investment Oversight Committee.
Set
forth below is additional information relating to the professional experience,
attributes and skills of each Trustee relevant to such individual’s
qualifications to serve as a Trustee:
Jayesh
Bhansali
has extensive business and financial experience and currently serves as the
Chief Investment Officer
of
IRIQIV LLC, a multi-family office. He was previously a Managing Director and
Lead Portfolio Manager at
Nuveen,
a TIAA company, and has over 25 years of experience in the investment management
industry. Mr. Bhansali
also
serves as a member of the board for multiple not-for-profit
organizations.
Jon
Lukomnik
has extensive business and financial experience, particularly in the investment
management industry. He currently serves as: Managing Partner of Sinclair
Capital LLC, a consulting firm to the investment management industry; and is a
member of Deloitte LLP’s Audit Quality Advisory Council. He previously served as
chairman of the Advisory Committee of Legion Partners Asset Management, a
registered investment advisor that provides investment management and consulting
services to various institutional clients; and was a member of the Standing
Advisory Group to the Public Company Accounting Oversight Board.
Jane
DiRenzo Pigott
has extensive business and financial experience and serves as Managing Director
of R3 Group LLC, a firm specializing in talent retention, development and
matriculation consulting services. Ms. Pigott has prior experience as an
independent trustee of other mutual funds and previously served as chair of the
global Environmental Law practice group at Winston & Strawn
LLP.
R.
Alastair Short
has extensive business and financial experience, particularly in the investment
management industry. He has served as a president, board member or executive
officer of various businesses, including asset management and private equity
investment firms.
Richard
D. Stamberger
has extensive business and financial experience as founder, president and CEO of
SmartBrief, Inc. and previous service as the Senior Vice President of B2B,
Future Plc, a global media company. Mr. Stamberger
has
experience as a member of the board of directors of numerous not-for-profit
organizations and has more than 20 years of experience as a member of the Board
of the Trust.
Jan
F. van Eck
has extensive business and financial experience, particularly in the investment
management industry. He currently serves as president, executive officer
and/or board member of various businesses, including VEAC, VESC, and
VEARA.
The
forgoing information regarding the experience, qualifications, attributes and
skills of each Trustee is provided pursuant to requirements of the SEC, and does
not constitute holding out of the Board or any Trustee as having any special
expertise or experience, and shall not impose any greater responsibility or
liability on any such person or on the Board by reason thereof.
COMMITTEE
STRUCTURE
The
Board has established a standing Audit Committee, a standing Governance
Committee, and a standing Investment Oversight Committee to assist the Board in
the oversight and direction of the business and affairs of the Trust.
Audit
Committee.
The duties of this Committee include meeting with representatives of the Trust’s
independent registered public accounting firm to review fees, services,
procedures, conclusions and recommendations of independent registered public
accounting firm and to discuss the Trust’s system of internal controls.
Thereafter, the Committee reports to the Board the Committee’s findings and
recommendations concerning internal accounting matters as well as its
recommendation for retention or dismissal of the auditing firm. Except for any
duties specified herein or pursuant to the Trust’s charter document, the
designation of Chairperson of the Audit Committee does not impose on such
Independent Trustee any duties, obligations or liability that is greater than
the duties, obligations or liability imposed on such person as a member of the
Board, generally. The Audit Committee met four times during the last fiscal
year, and currently consists of the following Trustees: Mr. Lukomnik
(Chairperson), Mr. Short, Mr. Stamberger, Ms. Pigott and Mr.
Bhansali.
Governance
Committee.
The duties of this Committee include the consideration of recommendations to the
Trustees for the Board nominations for Trustees, review of the composition of
the Board, compensation and similar matters. In addition, the Governance
Committee periodically reviews the performance of the Board and its Committees,
including the effectiveness and composition of the overall Board, Board’s
Committees, and the Chairperson of the Board and other related matters. When
considering potential nominees for election to the Board and to fill vacancies
occurring on the Board, where shareholder approval is not required, and as part
of the annual self-evaluation, the Governance Committee reviews the mix of
skills and other relevant experiences of the Trustees. The Governance Committee
met four times during the last fiscal year, and currently consists of the
following Trustees: Mr. Stamberger (Chairperson), Mr. Lukomnik, Mr. Short, Ms.
Pigott and Mr. Bhansali.
The
Independent Trustees shall, when identifying candidates for the position of
Independent Trustee, consider candidates recommended by a shareholder of a Fund
if such recommendation provides sufficient background information concerning the
candidate and evidence that the candidate is willing to serve as an Independent
Trustee if selected, and is received in a sufficiently timely manner.
Shareholders should address recommendations in writing to the attention of the
Governance Committee, c/o the Secretary of the Trust, at 666 Third Avenue, 9th
Floor, New York, NY 10017. The Secretary shall retain copies of any shareholder
recommendations which meet the foregoing requirements for a period of not more
than 12 months following receipt. The Secretary shall have no obligation to
acknowledge receipt of any shareholder recommendations.
Investment
Oversight Committee.
The
duties of this Committee include the review of investment performance of the
Funds, meeting with relevant Adviser personnel and outside experts, and
overseeing the provision of investment-related services for the Funds. In
addition, the Committee will review on a periodic basis and consider a variety
of matters, such as proposed material changes to, each Fund’s investment
strategy (if applicable), investment processes, investment personnel,
non-personnel resources, and relevant investment markets. The Investment
Oversight Committee was established by vote of the Board, effective January 1,
2020. This Committee currently consists of all the Trustees, and Mr. van Eck
serves as Chairperson.
OFFICER
INFORMATION
The
executive officers of the Trust, their age and address, the positions they hold
with the Trust, their term of office and length of time served and their
principal business occupations during the past five years are shown
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
OFFICER’S
NAME,
ADDRESS(1)
AND
YEAR OF BIRTH |
POSITION(S)
HELD
WITH TRUST |
TERM
OF OFFICE AND
LENGTH
OF TIME
SERVED(2) |
PRINCIPAL
OCCUPATIONS
DURING THE PAST FIVE YEARS |
| Matthew
A. Babinsky, 1983 |
Assistant
Vice President and Assistant Secretary |
Since
2016 |
Assistant
Vice President, Assistant General Counsel and Assistant Secretary of VEAC,
VEARA and Van Eck Securities Corporation (VESC); Officer of other
investment companies advised by VEAC and VEARA.
|
| Russell
G. Brennan, 1964 |
Assistant
Vice President and Assistant Treasurer |
Since
2008 |
Assistant
Vice President of VEAC; Officer of other investment companies advised by
VEAC and VEARA. |
| Charles
T. Cameron, 1960 |
Vice
President |
Since
1996 |
Portfolio
Manager for VEAC; Officer and/or Portfolio Manager of other investment
companies advised by VEAC and VEARA. Formerly, Director of Trading of
VEAC.
|
John
J. Crimmins,
1957 |
Vice
President, Treasurer, Chief Financial Officer and Principal Accounting
Officer |
Vice
President, Chief Financial Officer and Principal Accounting Officer (since
2012); Treasurer (since 2009) |
Vice
President of VEAC and VEARA; Officer of other investment companies advised
by VEAC and VEARA. Formerly, Vice President of VESC.
|
| Susan
Curry, 1966 |
Assistant
Vice President |
Since
2022 |
Assistant
Vice President of VEAC, VEARA and VESC; Formerly, Managing Director, Legg
Mason, Inc. |
F.
Michael Gozzillo,
1965 |
Chief
Compliance Officer |
Since
2018 |
Vice
President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance
Officer of VESC; Officer of other investment companies advised by VEAC and
VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC
and City National Rochdale Funds.
|
Laura
Hamilton,
1977
|
Vice
President |
Since
2019 |
Assistant
Vice President of VEAC and VESC; Officer of other investment companies
advised by VEAC and VEARA. Formerly, Operations Manager of Royce &
Associates.
|
Laura
I. Martínez,
1980 |
Vice
President and Assistant Secretary |
Vice
President (since 2016); Assistant Secretary (since 2008)
|
Vice
President, Associate General Counsel and Assistant Secretary of VEAC,
VEARA and VESC; Officer of other investment companies advised by VEAC and
VEARA. Formerly, Assistant Vice President VEAC, VEARA and
VESC.
|
| Lisa
A. Moss |
Assistant
Vice President and Assistant Secretary |
Since
2022 |
Assistant
Vice President of VEAC, VEARA and VESC; Officer of other investment
companies advised by VEAC and VEARA. Formerly Senior Counsel, Perkins Coie
LLP; Assistant General Counsel, Fred Alger Management, Inc. |
James
Parker,
1969 |
Assistant
Treasurer |
Since
2014 |
Assistant
Vice President of VEAC and VEARA; Manager, Portfolio Administration of
VEAC and VEARA; Officer of other investment companies advised by VEAC and
VEARA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OFFICER’S
NAME,
ADDRESS(1)
AND
YEAR OF BIRTH |
POSITION(S)
HELD
WITH TRUST |
TERM
OF OFFICE AND
LENGTH
OF TIME
SERVED(2) |
PRINCIPAL
OCCUPATIONS
DURING THE PAST FIVE YEARS |
| Jonathan
R. Simon, 1974 |
Senior
Vice President; Secretary and Chief Legal Officer |
Senior
Vice President (since 2016); Secretary and Chief Legal Officer (since
2014) |
Senior
Vice President, General Counsel and Secretary of VEAC, VEARA and VESC;
Officer and/or Director of other companies affiliated with VEAC and/or the
Trust. Formerly, Vice President of VEAC, VEARA and VESC.
|
Andrew
Tilzer,
1972 |
Assistant
Vice President |
Since
2021 |
Vice
President of VEAC and VEARA; Vice
President of Portfolio Administration
of VEAC.
Formerly, Assistant Vice President, Portfolio
Operations of
VEAC. |
(1)The
address for each Executive Officer is 666 Third Avenue, 9th Floor, New York, NY
10017.
(2)Officers
are elected yearly by the Board.
TRUSTEE
SHARE OWNERSHIP
For
each Trustee, the dollar range of equity securities beneficially owned by the
Trustee in the Funds and in all registered investment companies advised by the
Advisers or their affiliates (“Family of Investment Companies”) that are
overseen by the Trustee is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Name
of Trustee |
|
Dollar
Range of Equity
Securities in CM
Commodity Index Fund
(As of
December 31,
2022) |
|
Dollar
Range of Equity
Securities in
Emerging Markets
Bond Fund
(As
of December 31,
2022) |
|
Dollar
Range of Equity
Securities in Emerging
Markets Fund
(As of
December 31,
2022) |
|
Dollar
Range of Equity
Securities in Emerging Markets Leaders Fund
(As of
December 31,
2022) |
|
|
Jayesh
Bhansali(1) |
|
None |
|
None |
|
None |
|
None |
|
| |
Jon
Lukomnik |
|
Over $100,000* |
|
Over $100,000* |
|
Over
$100,000* |
|
None |
|
| |
Jane
DiRenzo Pigott |
|
Over
$100,000* |
|
None |
|
Over
$100,000 |
|
None |
|
| |
R.
Alastair Short |
|
None |
|
None |
|
$10,001
- $50,000 |
|
None |
|
| |
Richard
D. Stamberger |
|
$50,001
- $100,000* |
|
None |
|
Over
$100,000* |
|
|