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The
information in this Prospectus is not complete and may be changed. The
Trust may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This Prospectus
is not an offer to sell these securities and is not soliciting an offer to
buy these securities in any jurisdiction where the offer or sale is not
permitted. |
|
Subject
to Completion
Preliminary
Prospectus dated October 10, 2025
[
, ]
Prospectus
[
]
| VanEck Consumer Staples TruSector ETF
[
]
| VanEck Energy TruSector ETF
[
]
| VanEck Financials TruSector ETF
[
]
| VanEck Healthcare TruSector ETF
[
]
| VanEck Industrials TruSector ETF
[
]
| VanEck Materials TruSector ETF
[
]
| VanEck Real Estate TruSector ETF
[
]
| VanEck Utilities TruSector ETF
Principal
U.S. Listing Exchange for the Funds: [ ]
The
U.S. Securities and Exchange Commission and the Commodity Futures Trading
Commission have not approved or disapproved these securities or passed upon the
accuracy or adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
800.826.2333
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VanEck®
Consumer Staples TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Consumer Staples TruSector ETF (the “Fund”) is long-term
capital appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
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Total
Annual Fund Operating Expenses(b) |
[
] |
(a) Van
Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all expenses
of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b) “Other
Expenses” and “Acquired Fund Fees and Expenses” are based on estimated amounts
for the current fiscal year.
(c) “Acquired
Fund Fees and Expenses” include fees and expenses incurred indirectly by the
Fund as a result of investments in other investment companies. Because acquired
fund fees and expenses are not borne directly by the Fund, they will not be
reflected in the expense information in the Fund’s financial statements and the
information presented in the table will differ from that presented in the Fund’s
financial highlights included in the Fund’s report to shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
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| Year |
Expenses |
| 1 |
[
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| 3 |
[
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PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of consumer staples-related
companies or instruments that provide exposure to consumer staples-related
companies as determined by the Adviser. For purposes of this policy, the term
“assets” means net assets plus the amount of any borrowings for investment
purposes. Such companies may include those in the following industries: food and
consumer staples retailing, beverages, food products, household products, and
personal products.
The
Adviser utilizes a discretionary investment process that favors investments in
consumer staples-related companies that are well-established market leaders,
considering factors such as industry dominance, large market capitalization,
high growth, and strong operating performance. The Fund may gain exposure to
these companies through holdings in publicly traded common stocks,
exchange-traded funds that provide exposure to consumer staples companies, and
derivative instruments,
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such
as total return swaps on individual securities. The Fund’s exposure to such
derivatives will generally not exceed 20% of the notional value of the
portfolio.
Consumer
staples companies in the Fund are expected to be U.S. listed and may include
large- and medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “Investment Company Act of 1940”) and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the consumer staples sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Consumer
Staples Sector Risk.
The Fund’s assets will be concentrated in the consumer staples sector, which
means the Fund will be more affected by the performance of the consumer staples
sector than a fund that is more diversified. Consumer staples companies are
subject to government regulation affecting their products which may negatively
impact such companies’ performance. For instance, government regulations may
affect the permissibility of using various food additives and production methods
of companies that make food products, which could affect company profitability.
Tobacco companies may be adversely affected by the adoption of proposed
legislation and/or by litigation. Also, the success of food, beverage, household
and personal product companies may be strongly affected by consumer interest,
marketing campaigns and other factors affecting supply and demand, including
performance of the overall domestic and global economy, interest rates,
competition and consumer confidence and spending.
Derivatives
Risk.
Derivatives are financial instruments whose values are based on the value of one
or more reference assets or indicators, such as a security, currency, interest
rate, or index. The Fund’s use of derivatives involves risks different from, and
possibly greater than, the risks associated with investing directly in
securities and other more traditional investments. Moreover, although the value
of a derivative is based on an underlying asset or indicator, a derivative
typically does not carry the same rights as would be the case if the Fund
invested directly in the underlying securities, currencies or other
assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk. The
value of the equity securities held by the Fund may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by the Fund participate, or factors relating to specific
issuers in which the Fund invests. Equity securities are subordinated to
preferred securities and debt in a company’s capital structure with respect to
priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk.
The Fund’s performance may depend in part on the performance of the underlying
funds in which it invests. The Fund will pay indirectly a proportional share of
the fees and expenses of the underlying funds in which it invests,
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including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk. The
value of individual securities in the Fund’s portfolio can be more volatile than
the market as a whole and can perform differently from the value of the market
as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk.
The Fund may invest in large-capitalization companies and, therefore will be
subject to certain risks associated with large-capitalization companies.
Securities of large-capitalization companies could fall out of favor with the
market and underperform securities of small- or medium-capitalization companies.
Larger, more established companies may be slow to respond to challenges and may
grow more slowly than smaller companies.
Medium-Capitalization
Companies Risk.
Medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of medium-capitalization companies could trail the
returns on investments in securities of large-capitalization
companies.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Active
Management Risk.
In managing the Fund’s portfolio, the Adviser will apply investment techniques
and risk analyses in making investment decisions for the Fund, but there can be
no guarantee that these will produce the desired results. Investment decisions
made by the Adviser in seeking to achieve the Fund’s investment objective may
cause a decline in the value of the investments held by the Fund and, in turn,
cause the Fund’s shares to lose value or underperform other funds with similar
investment objectives.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Seed
Investor Risk. The
Adviser and/or its affiliates will make payments to one or more investors that
contribute seed capital to the Fund. Such payments may continue for a specified
period of time and/or until a specified dollar amount is reached. Those payments
will be made from the assets of the Adviser and/or such affiliates (and not the
Fund). Seed investors may contribute all or a majority of the assets in the
Fund. There is a risk that such seed investors may redeem all or part of their
investments in the Fund, particularly after payments from the Adviser and/or its
affiliates have ceased. The timing of a redemption by a seed investor could
benefit the seed investor. As with redemptions by other large shareholders, such
redemptions could have a significant negative impact on the Fund including by
reducing the Fund’s liquidity, causing the Fund to realize gains that will be
distributed and taxable to remaining shareholders and increasing the Fund’s
transaction costs. A large redemption may also have a material upward or
downward effect on the market price of the Fund’s Shares.
New
Fund Risk.
The Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s
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expenses
and its portfolio transaction costs may be higher than those of a fund with a
larger asset base. To the extent that the Fund does not grow to or maintain a
viable size, it may be liquidated, and the expenses, timing and tax consequences
of such liquidation may not be favorable to some shareholders.
No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. Further, secondary markets may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods in times of market stress because market makers and
Authorized Participants may step away from making a market in the Shares and in
executing creation and redemption orders, which could cause a material deviation
in the Fund’s market price from its net asset value.
Trading
Issues Risk.
Trading in shares on the exchange may be halted due to market conditions or for
reasons that, in the view of the exchange, make trading in shares inadvisable.
In addition, trading in shares on the exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk. The
Fund’s assets will be concentrated in any one industry or group of industries
within the consumer staples sector. To the extent that the Fund is concentrated
in such investments, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on such investments
may negatively impact the Fund to a greater extent than if the Fund’s assets
were invested in a wider variety of investments.
PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
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| [
] |
Deputy
Portfolio Manager |
[
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PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset value, Shares of the Fund may trade at a price greater than net
asset value (i.e.,
a “premium”) or less than net asset value (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
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Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains.
Any
return of capital will reduce the shareholder’s basis in their Fund Shares,
reducing any loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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VanEck®
Energy TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Energy TruSector ETF (the “Fund”) is long-term capital
appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
|
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|
| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
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|
Total
Annual Fund Operating Expenses(b) |
[
] |
(a) Van
Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all expenses
of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b) “Other
Expenses” and “Acquired Fund Fees and Expenses” are based on estimated amounts
for the current fiscal year.
(c) “Acquired
Fund Fees and Expenses” include fees and expenses incurred indirectly by the
Fund as a result of investments in other investment companies. Because acquired
fund fees and expenses are not borne directly by the Fund, they will not be
reflected in the expense information in the Fund’s financial statements and the
information presented in the table will differ from that presented in the Fund’s
financial highlights included in the Fund’s report to shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
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| Year |
Expenses |
| 1 |
[
] |
| 3 |
[
] |
PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of energy-related companies or
instruments that provide exposure to energy-related companies as determined by
the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: oil, gas and consumable fuels, and
energy equipment and services.
The
Adviser utilizes a discretionary investment process that favors investments in
energy-related companies that are well-established market leaders, considering
factors such as industry dominance, large market capitalization, high growth,
and strong operating performance. The Fund may gain exposure to these companies
through holdings in publicly traded common stocks, exchange-traded funds that
provide exposure to energy companies, and derivative instruments, such as total
return swaps on individual securities. The Fund’s exposure to such derivatives
will generally not exceed 20% of the notional value of the
portfolio.
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Energy
companies in the Fund are expected to be U.S. listed and may include large- and
medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “Investment Company Act of 1940”) and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the energy sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Energy
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, and the cost of providing the
specific utility services and other factors that they cannot control.
The
energy sector is cyclical and is highly dependent on commodity prices; prices
and supplies of energy may fluctuate significantly over short and long periods
of time due to, among other things, national and international political
changes, OPEC policies, changes in relationships among OPEC members and between
OPEC and oil-importing nations, the regulatory environment, taxation policies,
and the economy of the key energy-consuming countries. Commodity prices have
recently been subject to increased volatility and declines, which may negatively
affect companies in which the Fund may invest.
Companies
in the energy sector may be adversely affected by terrorism, natural disasters
or other catastrophes. Companies in the energy sector are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Disruptions in the oil industry or shifts in fuel
consumption may significantly impact companies in this sector. Significant oil
and gas deposits are located in emerging markets countries where corruption and
security may raise significant risks, in addition to the other risks of
investing in emerging markets.
Companies
in the energy sector may also be adversely affected by changes in exchange
rates, tax treatment, government regulation and intervention, negative
perception, efforts at energy conservation and world events in the regions in
which the companies operate (e.g., expropriation, nationalization, confiscation
of assets and property or the imposition of restrictions on foreign investments
and repatriation of capital, military coups, social unrest, violence or labor
unrest). Because a significant portion of revenues of companies in this sector
is derived from a relatively small number of customers that are largely
comprised of governmental entities and utilities, governmental budget
constraints may have a significant impact on the stock prices of companies in
this sector. Entities operating in the energy sector are subject to significant
regulation of nearly every aspect of their operations by federal, state and
local governmental agencies. Such regulation can change rapidly or over time in
both scope and intensity. Stricter laws, regulations or enforcement policies
could be enacted in the future which would likely increase compliance costs and
may materially adversely affect the financial performance of companies in the
energy sector.
A
downturn in the energy sector, adverse political, legislative or regulatory
developments or other events could have a larger impact on the Fund than on an
investment company that does not invest a substantial portion of its assets in
the energy sector. At times, the performance of securities of companies in the
energy sector may lag the performance of other sectors or the broader market as
a whole. The price of oil, natural gas and other fossil fuels may decline and/or
experience significant volatility, which could adversely impact companies
operating in the energy sector.
Derivatives
Risk. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to
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perform
its obligations under the transaction. If a counterparty were to default on its
obligations, the Fund’s contractual remedies against such counterparty may be
subject to bankruptcy and insolvency laws, which could affect the Fund’s rights
as a creditor (e.g., the Fund may not receive the net amount of payments that it
is contractually entitled to receive). Counterparty risk also refers to the
related risks of having concentrated exposure to such a counterparty. A liquid
secondary market may not always exist for the Fund’s derivative positions at any
time, and the Fund may not be able to initiate or liquidate a swap position at
an advantageous time or price, which may result in significant losses. The Fund
may also face the risk that it may not be able to meet margin and payment
requirements to maintain a derivatives position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk.
The Fund’s performance may depend in part on the performance of the underlying
funds in which it invests. The Fund will pay indirectly a proportional share of
the fees and expenses of the underlying funds in which it invests, including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk. The
Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk. The
value of individual securities in the Fund’s portfolio can be more volatile than
the market as a whole and can perform differently from the value of the market
as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk. The
Fund may invest in large-capitalization companies and, therefore will be subject
to certain risks associated with large-capitalization companies. Securities of
large-capitalization companies could fall out of favor with the market and
underperform securities of small- or medium-capitalization companies. Larger,
more established companies may be slow to respond to challenges and may grow
more slowly than smaller companies.
Medium-Capitalization
Companies Risk.
Medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of medium-capitalization companies could trail the
returns on investments in securities of large-capitalization
companies.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the
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value
of the investments held by the Fund and, in turn, cause the Fund’s shares to
lose value or underperform other funds with similar investment objectives.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Seed
Investor Risk. The
Adviser and/or its affiliates will make payments to one or more investors that
contribute seed capital to the Fund. Such payments may continue for a specified
period of time and/or until a specified dollar amount is reached. Those payments
will be made from the assets of the Adviser and/or such affiliates (and not the
Fund). Seed investors may contribute all or a majority of the assets in the
Fund. There is a risk that such seed investors may redeem all or part of their
investments in the Fund, particularly after payments from the Adviser and/or its
affiliates have ceased. The timing of a redemption by a seed investor could
benefit the seed investor. As with redemptions by other large shareholders, such
redemptions could have a significant negative impact on the Fund including by
reducing the Fund’s liquidity, causing the Fund to realize gains that will be
distributed and taxable to remaining shareholders and increasing the Fund’s
transaction costs. A large redemption may also have a material upward or
downward effect on the market price of the Fund’s Shares.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its
portfolio transaction costs may be higher than those of a fund with a larger
asset base. To the extent that the Fund does not grow to or maintain a viable
size, it may be liquidated, and the expenses, timing and tax consequences of
such liquidation may not be favorable to some shareholders.
No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. Further, secondary markets may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods in times of market stress because market makers and
Authorized Participants may step away from making a market in the Shares and in
executing creation and redemption orders, which could cause a material deviation
in the Fund’s market price from its net asset value.
Trading
Issues Risk. Trading
in shares on the exchange may be halted due to market conditions or for reasons
that, in the view of the exchange, make trading in shares inadvisable. In
addition, trading in shares on the exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the relevant exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of the exchange
occurs, a shareholder may be unable to purchase or sell Shares of the Fund.
There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk.
The Fund’s assets will be concentrated in any one industry or group of
industries within the energy sector. To the extent that the Fund is concentrated
in such investments, the Fund will be subject to the risk that economic,
political or other conditions that have a negative effect on such investments
may negatively impact the Fund to a greater extent than if the Fund’s assets
were invested in a wider variety of investments.
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PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
] |
| [
] |
Deputy
Portfolio Manager |
[
] |
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PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset value, Shares of the Fund may trade at a price greater than net
asset value (i.e.,
a “premium”) or less than net asset value (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains.
Any
return of capital will reduce the shareholder’s basis in their Fund Shares,
reducing any loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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VanEck®
Financials TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Financials TruSector ETF (the “Fund”) is long-term capital
appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
|
|
|
Total
Annual Fund Operating Expenses(b) |
[
] |
(a) Van
Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all expenses
of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b) “Other
Expenses” and “Acquired Fund Fees and Expenses” are based on estimated amounts
for the current fiscal year.
(c) “Acquired
Fund Fees and Expenses” include fees and expenses incurred indirectly by the
Fund as a result of investments in other investment companies. Because acquired
fund fees and expenses are not borne directly by the Fund, they will not be
reflected in the expense information in the Fund’s financial statements and the
information presented in the table will differ from that presented in the Fund’s
financial highlights included in the Fund’s report to shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
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| Year |
Expenses |
| 1 |
[
] |
| 3 |
[
] |
PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of financials-related companies or
instruments that provide exposure to financials-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: banks, capital markets, consumer
finance, insurance, and diversified financial services.
The
Adviser utilizes a discretionary investment process that favors investments in
financials-related companies that are well-established market leaders,
considering factors such as industry dominance, large market capitalization,
high growth, and strong operating performance. The Fund may gain exposure to
these companies through holdings in publicly traded common stocks,
exchange-traded funds that provide exposure to financials companies, and
derivative instruments, such as total return swaps on individual securities. The
Fund’s exposure to such derivatives will generally not exceed 20% of the
notional value of the portfolio.
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Financials
companies in the Fund are expected to be U.S. listed and may include large- and
medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “Investment Company Act of 1940”) and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the financial sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Financials
Sector Risk. The
Fund may be sensitive to, and its performance may depend to a greater extent on,
the overall condition of the financials sector. Companies in the financials
sector may be subject to extensive government regulation that affects the scope
of their activities, the prices they can charge and the amount of capital they
must maintain. The profitability of companies in the financials sector may be
adversely affected by increases in interest rates, by loan losses, which usually
increase in economic downturns, and by credit rating downgrades. In addition,
the financials sector is undergoing numerous changes, including continuing
consolidations, development of new products and structures and changes to its
regulatory framework. Furthermore, some companies in the financials sector
perceived as benefiting from government intervention in the past may be subject
to future government-imposed restrictions on their businesses or face increased
government involvement in their operations. Increased government involvement in
the financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Derivatives
Risk.
Derivatives are financial instruments whose values are based on the value of one
or more reference assets or indicators, such as a security, currency, interest
rate, or index. The Fund’s use of derivatives involves risks different from, and
possibly greater than, the risks associated with investing directly in
securities and other more traditional investments. Moreover, although the value
of a derivative is based on an underlying asset or indicator, a derivative
typically does not carry the same rights as would be the case if the Fund
invested directly in the underlying securities, currencies or other
assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk.
The Fund’s performance may depend in part on the performance of the underlying
funds in which it invests. The Fund will pay indirectly a proportional share of
the fees and expenses of the underlying funds in which it invests, including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
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Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk.
The value of individual securities in the Fund’s portfolio can be more volatile
than the market as a whole and can perform differently from the value of the
market as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk. The
Fund may invest in large-capitalization companies and, therefore will be subject
to certain risks associated with large-capitalization companies. Securities of
large-capitalization companies could fall out of favor with the market and
underperform securities of small- or medium-capitalization companies. Larger,
more established companies may be slow to respond to challenges and may grow
more slowly than smaller companies.
Medium-Capitalization
Companies Risk.
Medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of medium-capitalization companies could trail the
returns on investments in securities of large-capitalization
companies.
Market
Risk. The
prices of securities are subject to the risks associated with investing in the
securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the value of the investments held by the Fund and, in turn, cause the
Fund’s shares to lose value or underperform other funds with similar investment
objectives.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Seed
Investor Risk.
The Adviser and/or its affiliates will make payments to one or more investors
that contribute seed capital to the Fund. Such payments may continue for a
specified period of time and/or until a specified dollar amount is reached.
Those payments will be made from the assets of the Adviser and/or such
affiliates (and not the Fund). Seed investors may contribute all or a majority
of the assets in the Fund. There is a risk that such seed investors may redeem
all or part of their investments in the Fund, particularly after payments from
the Adviser and/or its affiliates have ceased. The timing of a redemption by a
seed investor could benefit the seed investor. As with redemptions by other
large shareholders, such redemptions could have a significant negative impact on
the Fund including by reducing the Fund’s liquidity, causing the Fund to realize
gains that will be distributed and taxable to remaining shareholders and
increasing the Fund’s transaction costs. A large redemption may also have a
material upward or downward effect on the market price of the Fund’s
Shares.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its
portfolio transaction costs may be higher than those of a fund with a larger
asset base. To the extent that the Fund does not grow to or maintain a viable
size, it may be liquidated, and the expenses, timing and tax consequences of
such liquidation may not be favorable to some shareholders.
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No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. Further, secondary markets may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods in times of market stress because market makers and
Authorized Participants may step away from making a market in the Shares and in
executing creation and redemption orders, which could cause a material deviation
in the Fund’s market price from its net asset value.
Trading
Issues Risk. Trading
in shares on the exchange may be halted due to market conditions or for reasons
that, in the view of the exchange, make trading in shares inadvisable. In
addition, trading in shares on the exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the relevant exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of the exchange
occurs, a shareholder may be unable to purchase or sell Shares of the Fund.
There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk.
The Fund’s assets will be concentrated in any one industry or group of
industries within the financial sector. To the extent that the Fund is
concentrated in such investments, the Fund will be subject to the risk that
economic, political or other conditions that have a negative effect on such
investments may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of investments.
PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
] |
| [
] |
Deputy
Portfolio Manager |
[
] |
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PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset value, Shares of the Fund may trade at a price greater than net
asset value (i.e.,
a “premium”) or less than net asset value (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
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TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains.
Any
return of capital will reduce the shareholder’s basis in their Fund Shares,
reducing any loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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VanEck®
Healthcare TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Healthcare TruSector ETF (the “Fund”) is long-term capital
appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”).
You may pay other fees, such as brokerage commissions and other fees to
financial intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
|
|
|
Total
Annual Fund Operating Expenses(b) |
[
] |
(a)
Van Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all
expenses of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b)
“Other Expenses” and “Acquired Fund Fees and Expenses” are based on estimated
amounts for the current fiscal year.
(c)
“Acquired Fund Fees and Expenses” include fees and expenses incurred indirectly
by the Fund as a result of investments in other investment companies. Because
acquired fund fees and expenses are not borne directly by the Fund, they will
not be reflected in the expense information in the Fund’s financial statements
and the information presented in the table will differ from that presented in
the Fund’s financial highlights included in the Fund’s report to
shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
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| Year |
Expenses |
| 1 |
[
] |
| 3 |
[
] |
PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of healthcare-related companies or
instruments that provide exposure to healthcare-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: pharmaceuticals, biotechnology, life
sciences tools and services, healthcare equipment and supplies, and healthcare
providers and services.
The
Adviser utilizes a discretionary investment process that favors investments in
healthcare-related companies that are well-established market leaders,
considering factors such as industry dominance, large market capitalization,
high growth, and strong operating performance. The Fund may gain exposure to
these companies through holdings in publicly traded common stocks,
exchange-traded funds that provide exposure to healthcare companies, and
derivative instruments, such as total return swaps on individual securities. The
Fund’s exposure to such derivatives will generally not exceed 20% of the
notional value of the portfolio.
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Healthcare
companies in the Fund are expected to be U.S. listed and may include large- and
medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the "Investment Company Act of 1940") and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the healthcare sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Healthcare
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the health care sector. Companies in the healthcare
sector may be affected by extensive government regulation, restrictions on
government reimbursement for medical expenses, rising costs of medical products
and services, pricing pressure, an increased emphasis on outpatient services,
limited number of products, industry innovation, changes in technologies and
other market developments. Many healthcare companies are heavily dependent on
patent protection. The expiration of patents may adversely affect the
profitability of these companies. Many healthcare companies are subject to
extensive litigation based on product liability and similar claims.
Healthcare
companies are subject to competitive forces that may make it difficult to raise
prices and, in fact, may result in price discounting. Many new products in the
healthcare sector may be subject to regulatory approvals. The process of
obtaining such approvals may be long and costly. Companies in the healthcare
sector may be thinly capitalized and may be susceptible to product
obsolescence.
Derivatives
Risk. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk. The
value of the equity securities held by the Fund may fall due to general market
and economic conditions, perceptions regarding the markets in which the issuers
of securities held by the Fund participate, or factors relating to specific
issuers in which the Fund invests. Equity securities are subordinated to
preferred securities and debt in a company’s capital structure with respect to
priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk. The
Fund’s performance may depend in part on the performance of the underlying funds
in which it invests. The Fund will pay indirectly a proportional share of the
fees and expenses of the underlying funds in which it invests,
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including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk. The
value of individual securities in the Fund’s portfolio can be more volatile than
the market as a whole and can perform differently from the value of the market
as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk.
The Fund may invest in large-capitalization companies and, therefore will be
subject to certain risks associated with large-capitalization companies.
Securities of large-capitalization companies could fall out of favor with the
market and underperform securities of small- or medium-capitalization companies.
Larger, more established companies may be slow to respond to challenges and may
grow more slowly than smaller companies.
Medium-Capitalization
Companies Risk.
Medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of medium-capitalization companies could trail the
returns on investments in securities of large-capitalization
companies.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk. The
Fund is exposed to operational risk arising from a number of factors, including
human error, processing and communication errors, errors of the Fund’s service
providers, counterparties or other third-parties, failed or inadequate processes
and technology or system failures.
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the value of the investments held by the Fund and, in turn, cause the
Fund’s shares to lose value or underperform other funds with similar investment
objectives.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Seed
Investor Risk. The
Adviser and/or its affiliates will make payments to one or more investors that
contribute seed capital to the Fund. Such payments may continue for a specified
period of time and/or until a specified dollar amount is reached. Those payments
will be made from the assets of the Adviser and/or such affiliates (and not the
Fund). Seed investors may contribute all or a majority of the assets in the
Fund. There is a risk that such seed investors may redeem all or part of their
investments in the Fund, particularly after payments from the Adviser and/or its
affiliates have ceased. The timing of a redemption by a seed investor could
benefit the seed investor. As with redemptions by other large shareholders, such
redemptions could have a significant negative impact on the Fund including by
reducing the Fund’s liquidity, causing the Fund to realize gains that will be
distributed and taxable to remaining shareholders and increasing the Fund’s
transaction costs. A large redemption may also have a material upward or
downward effect on the market price of the Fund’s Shares.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s
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expenses
and its portfolio transaction costs may be higher than those of a fund with a
larger asset base. To the extent that the Fund does not grow to or maintain a
viable size, it may be liquidated, and the expenses, timing and tax consequences
of such liquidation may not be favorable to some shareholders.
No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. Further, secondary markets may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods in times of market stress because market makers and
Authorized Participants may step away from making a market in the Shares and in
executing creation and redemption orders, which could cause a material deviation
in the Fund’s market price from its net asset value.
Trading
Issues Risk.
Trading in shares on the exchange may be halted due to market conditions or for
reasons that, in the view of the exchange, make trading in shares inadvisable.
In addition, trading in shares on the exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk. The
Fund is classified as a “non-diversified” fund under the Investment Company Act
of 1940. The Fund is subject to the risk that it will be more volatile than a
diversified fund because the Fund may invest a relatively high percentage of its
assets in a smaller number of issuers or may invest a larger proportion of its
assets in a single issuer. Moreover, the gains and losses on a single investment
may have a greater impact on the Fund’s net asset value and may make the Fund
more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk. The
Fund’s assets will be concentrated in any one industry or group of industries
within the healthcare sector. To the extent that the Fund is concentrated in
such investments, the Fund will be subject to the risk that economic, political
or other conditions that have a negative effect on such investments may
negatively impact the Fund to a greater extent than if the Fund’s assets were
invested in a wider variety of investments.
PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
] |
| [
] |
Deputy
Portfolio Manager |
[
] |
|
|
|
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset value, Shares of the Fund may trade at a price greater than net
asset value (i.e.,
a “premium”) or less than net asset value (i.e.,
a
“discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
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| 800.826.2333
| vaneck.com |
|
21 |
Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains. Any return of
capital will reduce the shareholder’s basis in their Fund Shares, reducing any
loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
|
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|
| 800.826.2333
| vaneck.com |
|
22 |
VanEck®
Industrials TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Industrials TruSector ETF (the “Fund”) is long-term capital
appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”).
You may pay other fees, such as brokerage commissions and other fees to
financial intermediaries, which are not reflected in the tables and examples
below.
|
|
|
|
|
|
|
Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
|
|
|
Total
Annual Fund Operating Expenses(b) |
[
] |
(a)
Van Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all
expenses of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b)
“Other Expenses” and “Acquired Fund Fees and Expenses” are based on estimated
amounts for the current fiscal year.
(c)
“Acquired Fund Fees and Expenses” include fees and expenses incurred indirectly
by the Fund as a result of investments in other investment companies. Because
acquired fund fees and expenses are not borne directly by the Fund, they will
not be reflected in the expense information in the Fund’s financial statements
and the information presented in the table will differ from that presented in
the Fund’s financial highlights included in the Fund’s report to
shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
|
|
|
|
|
|
| Year |
Expenses |
| 1 |
[
] |
| 3 |
[
] |
PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of industrials-related companies or
instruments that provide exposure to industrials-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: aerospace and defense, industrial
conglomerates, construction and engineering, electrical equipment, machinery,
road and rail, and transportation infrastructure.
The
Adviser utilizes a discretionary investment process that favors investments in
industrials-related companies that are well-established market leaders,
considering factors such as industry dominance, large market capitalization,
high growth, and strong operating performance. The Fund may gain exposure to
these companies through holdings in publicly traded common stocks,
exchange-traded funds that provide exposure to industrials companies, and
derivative instruments, such as total return swaps on individual securities. The
Fund’s exposure to such derivatives will generally not exceed 20% of the
notional value of the portfolio.
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| 800.826.2333
| vaneck.com |
|
23 |
Industrials
companies in the Fund are expected to be U.S. listed and may include large- and
medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the "Investment Company Act of 1940") and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the industrials sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Industrials
Sector Risk. The
Fund may be sensitive to, and its performance may depend to a greater extent on,
the overall condition of the industrials sector. The industrials sector
comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates.
The
stock prices of companies in the industrials sector are affected by supply and
demand both for their specific product or service and for industrial sector
products in general. The products of manufacturing companies may face product
obsolescence due to rapid technological developments and frequent new product
introduction. In addition, the industrials sector may also be adversely affected
by changes or trends in commodity prices, which may be influenced or
characterized by unpredictable factors.
Derivatives
Risk. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk. The Fund’s performance may depend in part on the performance of
the underlying funds in which it invests. The Fund will pay indirectly a
proportional share of the fees and expenses of the underlying funds in which it
invests,
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| 800.826.2333
| vaneck.com |
|
24 |
including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk. The
value of individual securities in the Fund’s portfolio can be more volatile than
the market as a whole and can perform differently from the value of the market
as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk.
The Fund may invest in large-capitalization companies and, therefore will be
subject to certain risks associated with large-capitalization companies.
Securities of large-capitalization companies could fall out of favor with the
market and underperform securities of small- or medium-capitalization companies.
Larger, more established companies may be slow to respond to challenges and may
grow more slowly than smaller companies.
Medium-Capitalization
Companies Risk.
Medium-capitalization companies may be more volatile and more likely than
large-capitalization companies to have narrower product lines, fewer financial
resources, less management depth and experience and less competitive strength.
In addition, these companies often have greater price volatility, lower trading
volume and less liquidity than larger more established companies. Returns on
investments in securities of medium-capitalization companies could trail the
returns on investments in securities of large-capitalization
companies.
Market
Risk. The
prices of securities are subject to the risks associated with investing in the
securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the value of the investments held by the Fund and, in turn, cause the
Fund’s shares to lose value or underperform other funds with similar investment
objectives.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Seed
Investor Risk.
The Adviser and/or its affiliates will make payments to one or more investors
that contribute seed capital to the Fund. Such payments may continue for a
specified period of time and/or until a specified dollar amount is reached.
Those payments will be made from the assets of the Adviser and/or such
affiliates (and not the Fund). Seed investors may contribute all or a majority
of the assets in the Fund. There is a risk that such seed investors may redeem
all or part of their investments in the Fund, particularly after payments from
the Adviser and/or its affiliates have ceased. The timing of a redemption by a
seed investor could benefit the seed investor. As with redemptions by other
large shareholders, such redemptions could have a significant negative impact on
the Fund including by reducing the Fund’s liquidity, causing the Fund to realize
gains that will be distributed and taxable to remaining shareholders and
increasing the Fund’s transaction costs. A large redemption may also have a
material upward or downward effect on the market price of the Fund’s
Shares.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s
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25 |
expenses
and its portfolio transaction costs may be higher than those of a fund with a
larger asset base. To the extent that the Fund does not grow to or maintain a
viable size, it may be liquidated, and the expenses, timing and tax consequences
of such liquidation may not be favorable to some shareholders.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. Further, secondary markets may be subject to
irregular trading activity, wide bid/ask spreads and extended trade settlement
periods in times of market stress because market makers and Authorized
Participants may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its net asset value.
Trading
Issues Risk.
Trading in shares on the exchange may be halted due to market conditions or for
reasons that, in the view of the exchange, make trading in shares inadvisable.
In addition, trading in shares on the exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The
market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk. The
Fund’s assets will be concentrated in any one industry or group of industries
within the industrials sector. To the extent that the Fund is concentrated in
such investments, the Fund will be subject to the risk that economic, political
or other conditions that have a negative effect on such investments may
negatively impact the Fund to a greater extent than if the Fund’s assets were
invested in a wider variety of investments.
PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
|
|
|
|
|
|
|
|
|
| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
] |
| [
] |
Deputy
Portfolio Manager |
[
] |
|
|
|
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset value, Shares of the Fund may trade at a price greater than net
asset value (i.e.,
a “premium”) or less than net asset value (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
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|
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| 800.826.2333
| vaneck.com |
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26 |
Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains. Any return of
capital will reduce the shareholder’s basis in their Fund Shares, reducing any
loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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| 800.826.2333
| vaneck.com |
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27 |
VanEck®
Materials
TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Materials TruSector ETF (the “Fund”) is long-term capital
appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”).
You may pay other fees, such as brokerage commissions and other fees to
financial intermediaries, which are not reflected in the tables and examples
below.
|
|
|
|
|
|
|
Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
|
|
|
|
|
|
| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
|
|
|
Total
Annual Fund Operating Expenses(b) |
[
] |
(a)
Van Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all
expenses of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b)
“Other Expenses” and “Acquired Fund Fees and Expenses” are based on estimated
amounts for the current fiscal year.
(c)
“Acquired Fund Fees and Expenses” include fees and expenses incurred indirectly
by the Fund as a result of investments in other investment companies. Because
acquired fund fees and expenses are not borne directly by the Fund, they will
not be reflected in the expense information in the Fund’s financial statements
and the information presented in the table will differ from that presented in
the Fund’s financial highlights included in the Fund’s report to
shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
|
|
|
|
|
|
| Year |
Expenses |
| 1 |
[
] |
| 3 |
[
] |
PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of materials-related companies or
instruments that provide exposure to materials-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: chemicals, construction materials,
containers and packaging, metals and mining, and paper and forest
products.
The
Adviser utilizes a discretionary investment process that favors investments in
materials-related companies that are well-established market leaders,
considering factors such as industry dominance, large market capitalization,
high growth, and strong operating performance. The Fund may gain exposure to
these companies through holdings in publicly traded common stocks,
exchange-traded funds that provide exposure to materials companies, and
derivative instruments, such as total return swaps on individual securities. The
Fund’s exposure to such derivatives will generally not exceed 20% of the
notional value of the portfolio.
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28 |
Materials
companies in the Fund are expected to be U.S. listed and may include large- and
medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the "Investment Company Act of 1940") and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the materials sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Materials
Sector Risk. The
Fund may be sensitive to, and its performance may depend to a greater extent on,
the overall condition of the materials sector. Companies engaged in the
production and distribution of materials may be adversely affected by changes in
world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations. At times, worldwide production of industrial materials has
exceeded demand as a result of over-building or economic downturns, leading to
poor investment returns or losses. Other risks may include liabilities for
environmental damage and general civil liabilities, and mandated expenditures
for safety and pollution control.
Derivatives
Risk. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk.
The Fund’s performance may depend in part on the performance of the underlying
funds in which it invests. The Fund will pay indirectly a proportional share of
the fees and expenses of the underlying funds in which it invests, including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its
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affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk.
The value of individual securities in the Fund’s portfolio can be more volatile
than the market as a whole and can perform differently from the value of the
market as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk. The
Fund may invest in large-capitalization companies and, therefore will be subject
to certain risks associated with large-capitalization companies. Securities of
large-capitalization companies could fall out of favor with the market and
underperform securities of small- or medium-capitalization companies. Larger,
more established companies may be slow to respond to challenges and may grow
more slowly than smaller companies.
Medium-Capitalization
Companies Risk. Medium-capitalization
companies may be more volatile and more likely than large-capitalization
companies to have narrower product lines, fewer financial resources, less
management depth and experience and less competitive strength. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. Returns on investments in
securities of medium-capitalization companies could trail the returns on
investments in securities of large-capitalization companies.
Market
Risk. The
prices of securities are subject to the risks associated with investing in the
securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk. The
Fund is exposed to operational risk arising from a number of factors, including
human error, processing and communication errors, errors of the Fund’s service
providers, counterparties or other third-parties, failed or inadequate processes
and technology or system failures.
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the value of the investments held by the Fund and, in turn, cause the
Fund’s shares to lose value or underperform other funds with similar investment
objectives.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Seed
Investor Risk.
The Adviser and/or its affiliates will make payments to one or more investors
that contribute seed capital to the Fund. Such payments may continue for a
specified period of time and/or until a specified dollar amount is reached.
Those payments will be made from the assets of the Adviser and/or such
affiliates (and not the Fund). Seed investors may contribute all or a majority
of the assets in the Fund. There is a risk that such seed investors may redeem
all or part of their investments in the Fund, particularly after payments from
the Adviser and/or its affiliates have ceased. The timing of a redemption by a
seed investor could benefit the seed investor. As with redemptions by other
large shareholders, such redemptions could have a significant negative impact on
the Fund including by reducing the Fund’s liquidity, causing the Fund to realize
gains that will be distributed and taxable to remaining shareholders and
increasing the Fund’s transaction costs. A large redemption may also have a
material upward or downward effect on the market price of the Fund’s
Shares.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its
portfolio transaction costs may be higher than those of a fund with a larger
asset base. To the extent that the Fund does not grow to or maintain a viable
size, it may be liquidated, and the expenses, timing and tax consequences of
such liquidation may not be favorable to some shareholders.
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No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. Further, secondary markets may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods in times of market stress because market makers and
Authorized Participants may step away from making a market in the Shares and in
executing creation and redemption orders, which could cause a material deviation
in the Fund’s market price from its net asset value.
Trading
Issues Risk. Trading
in shares on the exchange may be halted due to market conditions or for reasons
that, in the view of the exchange, make trading in shares inadvisable. In
addition, trading in shares on the exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the relevant exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of the exchange
occurs, a shareholder may be unable to purchase or sell Shares of the Fund.
There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk.
The Fund’s assets will be concentrated in any one industry or group of
industries within the materials sector. To the extent that the Fund is
concentrated in such investments, the Fund will be subject to the risk that
economic, political or other conditions that have a negative effect on such
investments may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of investments.
PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
] |
| [
] |
Deputy
Portfolio Manager |
[
] |
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PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset value, Shares of the Fund may trade at a price greater than net
asset value (i.e.,
a “premium”) or less than net asset value (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
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TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains. Any return of
capital will reduce the shareholder’s basis in their Fund Shares, reducing any
loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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VanEck®
Real
Estate TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Real Estate TruSector ETF (the “Fund”) is long-term capital
appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”).
You may pay other fees, such as brokerage commissions and other fees to
financial intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
|
|
|
Total
Annual Fund Operating Expenses(b) |
[
] |
(a)
Van Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all
expenses of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b)
“Other Expenses” and “Acquired Fund Fees and Expenses” are based on estimated
amounts for the current fiscal year.
(c)
“Acquired Fund Fees and Expenses” include fees and expenses incurred indirectly
by the Fund as a result of investments in other investment companies. Because
acquired fund fees and expenses are not borne directly by the Fund, they will
not be reflected in the expense information in the Fund’s financial statements
and the information presented in the table will differ from that presented in
the Fund’s financial highlights included in the Fund’s report to
shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
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| Year |
Expenses |
| 1 |
[
] |
| 3 |
[
] |
PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of real estate-related companies or
instruments that provide exposure to real estate-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: real estate investment trusts
(REITs), real estate management and development, and diversified real estate
activities.
The
Adviser utilizes a discretionary investment process that favors investments in
real estate-related companies that are well-established market leaders,
considering factors such as industry dominance, large market capitalization,
high growth, and strong operating performance. The Fund may gain exposure to
these companies through holdings in publicly traded common stocks,
exchange-traded funds that provide exposure to real estate companies, and
derivative instruments, such as total return swaps on individual securities. The
Fund’s exposure to such derivatives will generally not exceed 20% of the
notional value of the portfolio.
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Real
estate companies in the Fund are expected to be U.S. listed and may include
large- and medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “Investment Company Act of 1940”) and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the real estate sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Real
Estate Sector Risk.
Companies
in the real estate sector include companies that invest in real estate, such as
REITs and real estate management and development companies. The Fund may be
sensitive to changes in, and its performance may depend to a greater extent on,
the overall condition of the real estate sector. Companies that invest in real
estate are subject to the risks of owning real estate directly as well as to
risks that relate specifically to the way that such companies operate, including
management risk (such companies are dependent upon the management skills of a
few key individuals and may have limited financial resources). Adverse economic,
business or political developments affecting real estate could have a major
effect on the values of the Fund’s investments. Investing in real estate is
subject to such risks as decreases in real estate values, overbuilding,
increased competition and other risks related to local or general economic
conditions, increases in operating costs and property taxes, changes in zoning
laws, casualty or condemnation losses, possible environmental liabilities,
regulatory limitations on rent, possible lack of availability of mortgage
financing, market saturation, fluctuations in rental income and the value of
underlying properties and extended vacancies of properties. Certain real estate
securities have a relatively small market capitalization, which may tend to
increase the volatility of the market price of these securities. Real estate
securities have limited diversification and are, therefore, subject to risks
inherent in operating and financing a limited number of projects. Real estate
securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.
REITs
Risk.
Investing in REITs exposes investors to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which REITs
are organized and operated. REITs generally invest directly in real estate, in
mortgages or in some combination of the two. Operating REITs requires
specialized management skills and the Fund indirectly bears management expenses
along with the direct expenses of the Fund. Individual REITs may own a limited
number of properties and may concentrate in a particular region or property
type. REITs may also be subject to heavy cash flow dependency, default by
borrowers or tenants and self-liquidation. REITs also must satisfy specific
requirements of the Internal Revenue Code of 1986 in order to qualify for
tax-free pass-through income. The failure of a company to qualify as a REIT
could have adverse consequences for the Fund, including significantly reducing
the return to the Fund on its investment in such company. In addition, REITs,
like mutual funds, have expenses, including management and administration fees,
that are paid by their shareholders. As a result, shareholders will absorb their
proportionate share of duplicate levels of fees when the Fund invests in
REITs.
Derivatives
Risk. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
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Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk.
The Fund’s performance may depend in part on the performance of the underlying
funds in which it invests. The Fund will pay indirectly a proportional share of
the fees and expenses of the underlying funds in which it invests, including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk.
The value of individual securities in the Fund’s portfolio can be more volatile
than the market as a whole and can perform differently from the value of the
market as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk. The
Fund may invest in large-capitalization companies and, therefore will be subject
to certain risks associated with large-capitalization companies. Securities of
large-capitalization companies could fall out of favor with the market and
underperform securities of small- or medium-capitalization companies. Larger,
more established companies may be slow to respond to challenges and may grow
more slowly than smaller companies.
Medium-Capitalization
Companies Risk. Medium-capitalization
companies may be more volatile and more likely than large-capitalization
companies to have narrower product lines, fewer financial resources, less
management depth and experience and less competitive strength. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. Returns on investments in
securities of medium-capitalization companies could trail the returns on
investments in securities of large-capitalization companies.
Market
Risk. The
prices of securities are subject to the risks associated with investing in the
securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk. The
Fund is exposed to operational risk arising from a number of factors, including
human error, processing and communication errors, errors of the Fund’s service
providers, counterparties or other third-parties, failed or inadequate processes
and technology or system failures.
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the value of the investments held by the Fund and, in turn, cause the
Fund’s shares to lose value or underperform other funds with similar investment
objectives.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant
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concentration
risk may be heightened with respect to certain types of assets or in cases where
Authorized Participants have limited or diminished access to the capital
required to post collateral.
Seed
Investor Risk.
The Adviser and/or its affiliates will make payments to one or more investors
that contribute seed capital to the Fund. Such payments may continue for a
specified period of time and/or until a specified dollar amount is reached.
Those payments will be made from the assets of the Adviser and/or such
affiliates (and not the Fund). Seed investors may contribute all or a majority
of the assets in the Fund. There is a risk that such seed investors may redeem
all or part of their investments in the Fund, particularly after payments from
the Adviser and/or its affiliates have ceased. The timing of a redemption by a
seed investor could benefit the seed investor. As with redemptions by other
large shareholders, such redemptions could have a significant negative impact on
the Fund including by reducing the Fund’s liquidity, causing the Fund to realize
gains that will be distributed and taxable to remaining shareholders and
increasing the Fund’s transaction costs. A large redemption may also have a
material upward or downward effect on the market price of the Fund’s
Shares.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its
portfolio transaction costs may be higher than those of a fund with a larger
asset base. To the extent that the Fund does not grow to or maintain a viable
size, it may be liquidated, and the expenses, timing and tax consequences of
such liquidation may not be favorable to some shareholders.
No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. Further, secondary markets may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods in times of market stress because market makers and
Authorized Participants may step away from making a market in the Shares and in
executing creation and redemption orders, which could cause a material deviation
in the Fund’s market price from its net asset value.
Trading
Issues Risk. Trading
in shares on the exchange may be halted due to market conditions or for reasons
that, in the view of the exchange, make trading in shares inadvisable. In
addition, trading in shares on the exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the relevant exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of the exchange
occurs, a shareholder may be unable to purchase or sell Shares of the Fund.
There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk.
The Fund’s assets will be concentrated in any one industry or group of
industries within the real estate sector. To the extent that the Fund is
concentrated in such investments, the Fund will be subject to the risk that
economic, political or other conditions that have a negative effect on such
investments may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of investments.
PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
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Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
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| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
] |
| [
] |
Deputy
Portfolio Manager |
[
] |
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PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset value, Shares of the Fund may trade at a price greater than net
asset value (i.e.,
a “premium”) or less than net asset value (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains. Any return of
capital will reduce the shareholder’s basis in their Fund Shares, reducing any
loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
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VanEck®
Utilities
TruSector ETF
SUMMARY
INFORMATION
INVESTMENT
OBJECTIVE
The
objective of VanEck Utilities TruSector ETF (the “Fund”) is long-term capital
appreciation.
FUND
FEES AND EXPENSES
The
following tables describe the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund (“Shares”).
You may pay other fees, such as brokerage commissions and other fees to
financial intermediaries, which are not reflected in the tables and examples
below.
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Shareholder
Fees
(fees
paid directly from your investment) |
None |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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| Management
Fee |
[
] |
|
Other
Expenses(a)(b) |
[
] |
|
Acquired
Fund Fees and Expenses(b)(c) |
[
] |
|
|
|
Total
Annual Fund Operating Expenses(b) |
[
] |
(a)
Van Eck Absolute Return Advisers Corporation (the “Adviser”) will pay all
expenses of the Fund, except for the fee payment under the investment management
agreement, acquired fund fees and expenses, interest expense, offering costs,
trading expenses, taxes and extraordinary expenses. Notwithstanding the
foregoing, the Adviser has agreed to pay the offering costs until at least [
].
(b)
“Other Expenses” and “Acquired Fund Fees and Expenses” are based on estimated
amounts for the current fiscal year.
(c)
“Acquired Fund Fees and Expenses” include fees and expenses incurred indirectly
by the Fund as a result of investments in other investment companies. Because
acquired fund fees and expenses are not borne directly by the Fund, they will
not be reflected in the expense information in the Fund’s financial statements
and the information presented in the table will differ from that presented in
the Fund’s financial highlights included in the Fund’s report to
shareholders.
EXPENSE
EXAMPLE
This
example is intended to help you compare the cost of investing in the Fund with
the cost of investing in other funds. This example does not take into account
brokerage commissions that you pay when purchasing or selling Shares of the
Fund.
The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell or hold all of your Shares at the end of those periods.
The example also assumes that your investment has a 5% annual return and that
the Fund’s operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
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| Year |
Expenses |
| 1 |
[
] |
| 3 |
[
] |
PORTFOLIO
TURNOVER
The
Fund will pay transaction costs, such as commissions, when it purchases and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
will cause the Fund to incur additional transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, may
affect the Fund’s performance. Because the Fund is newly organized, no portfolio
turnover figures are available.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of utilities-related companies or
instruments that provide exposure to utilities-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: electric utilities, gas utilities,
multi-utilities, water utilities, and independent power producers and energy
traders.
The
Adviser utilizes a discretionary investment process that favors investments in
utilities-related companies that are well-established market leaders,
considering factors such as industry dominance, large market capitalization,
high growth, and strong operating performance. The Fund may gain exposure to
these companies through holdings in publicly traded common stocks,
exchange-traded funds that provide exposure to utilities companies, and
derivative instruments, such as total return swaps on individual securities. The
Fund’s exposure to such derivatives will generally not exceed 20% of the
notional value of the portfolio.
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Utilities
companies in the Fund are expected to be U.S. listed and may include large- and
medium-capitalization companies. The Fund’s 80% investment policy is
non-fundamental and may be changed without shareholder approval upon 60 days’
prior written notice to shareholders.
The
Fund is classified as a non-diversified fund under the Investment Company Act of
1940, as amended (the “Investment Company Act of 1940”) and, therefore, may
invest a greater percentage of its assets in a particular issuer. The Fund will
concentrate its investments in any one industry or group of industries within
the utilities sector.
PRINCIPAL
RISKS OF INVESTING IN THE FUND
Investors
in the Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
the Fund involves a substantial degree of risk. An investment in the Fund is not
a deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Therefore, you should
consider carefully the following risks before investing in the Fund, each of
which could significantly and adversely affect the value of an investment in the
Fund.
Utilities
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the utilities sector. Issuers in the utilities
sector are subject to a variety of factors that may adversely affect their
business or operations, including high interest costs in connection with capital
construction and improvement programs, difficulty in raising capital in adequate
amounts on reasonable terms in periods of high inflation and unsettled capital
markets, and the effects of economic slowdowns and surplus capacity. Companies
in the utilities sector are subject to extensive regulation, including
governmental regulation of rates charged to customers, and may face difficulty
in obtaining regulatory approval of new technologies. The effects of a U.S.
national energy policy and lengthy delays and greatly increased costs and other
problems associated with the design, construction, licensing, regulation and
operation of nuclear facilities for electric generation, including, among other
considerations, the problems associated with the use of radioactive materials
and the disposal of radioactive wastes, may adversely affect companies in the
utilities sector. Certain companies in the utilities sector may be inexperienced
and may suffer potential losses resulting from a developing deregulatory
environment. Technological innovations may render existing plants, equipment or
products obsolete. Companies in the utilities sector may face increased
competition from other providers of utility services. The potential impact of
terrorist activities on companies in the utilities sector and its customers and
the impact of natural or man-made disasters may adversely affect the utilities
sector. Issuers in the utilities sector also may be subject to regulation by
various governmental authorities and may be affected by the imposition of
special tariffs and changes in tax laws, regulatory policies and accounting
standards.
Derivatives
Risk. Derivatives
are financial instruments whose values are based on the value of one or more
reference assets or indicators, such as a security, currency, interest rate, or
index. The Fund’s use of derivatives involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other more traditional investments. Moreover, although the value of a derivative
is based on an underlying asset or indicator, a derivative typically does not
carry the same rights as would be the case if the Fund invested directly in the
underlying securities, currencies or other assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. Equity securities are subordinated
to preferred securities and debt in a company’s capital structure with respect
to priority to a share of corporate income, and therefore will be subject to
greater dividend risk than preferred securities or debt instruments. In
addition, while broad market measures of equity securities have historically
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generated
higher average returns than fixed income securities, equity securities have
generally also experienced significantly more volatility in those
returns.
Investing
in ETFs Risk.
The Fund’s performance may depend in part on the performance of the underlying
funds in which it invests. The Fund will pay indirectly a proportional share of
the fees and expenses of the underlying funds in which it invests, including
their investment advisory and administration fees, while continuing to pay its
own management fee. As a result, the Fund’s shareholders will indirectly bear
the expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk.
The value of individual securities in the Fund’s portfolio can be more volatile
than the market as a whole and can perform differently from the value of the
market as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
Large-Capitalization
Companies Risk. The
Fund may invest in large-capitalization companies and, therefore will be subject
to certain risks associated with large-capitalization companies. Securities of
large-capitalization companies could fall out of favor with the market and
underperform securities of small- or medium-capitalization companies. Larger,
more established companies may be slow to respond to challenges and may grow
more slowly than smaller companies.
Medium-Capitalization
Companies Risk. Medium-capitalization
companies may be more volatile and more likely than large-capitalization
companies to have narrower product lines, fewer financial resources, less
management depth and experience and less competitive strength. In addition,
these companies often have greater price volatility, lower trading volume and
less liquidity than larger more established companies. Returns on investments in
securities of medium-capitalization companies could trail the returns on
investments in securities of large-capitalization companies.
Market
Risk. The
prices of securities are subject to the risks associated with investing in the
securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Operational
Risk. The
Fund is exposed to operational risk arising from a number of factors, including
human error, processing and communication errors, errors of the Fund’s service
providers, counterparties or other third-parties, failed or inadequate processes
and technology or system failures.
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the value of the investments held by the Fund and, in turn, cause the
Fund’s shares to lose value or underperform other funds with similar investment
objectives.
Authorized
Participant Concentration Risk. The
Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Seed
Investor Risk.
The Adviser and/or its affiliates will make payments to one or more investors
that contribute seed capital to the Fund. Such payments may continue for a
specified period of time and/or until a specified dollar amount is reached.
Those payments will be made from the assets of the Adviser and/or such
affiliates (and not the Fund). Seed investors may contribute all or a majority
of the assets in the Fund. There is a risk that such seed investors may redeem
all or part of their investments in the Fund, particularly after payments from
the Adviser and/or its affiliates have ceased. The timing of a redemption by a
seed investor could benefit the seed investor. As with redemptions by other
large shareholders, such redemptions could have a significant negative impact on
the Fund including by reducing the Fund’s liquidity, causing the Fund
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to
realize gains that will be distributed and taxable to remaining shareholders and
increasing the Fund’s transaction costs. A large redemption may also have a
material upward or downward effect on the market price of the Fund’s
Shares.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its
portfolio transaction costs may be higher than those of a fund with a larger
asset base. To the extent that the Fund does not grow to or maintain a viable
size, it may be liquidated, and the expenses, timing and tax consequences of
such liquidation may not be favorable to some shareholders.
No
Guarantee of Active Trading Market Risk.
There can be no assurance that an active trading market for the Shares will
develop or be maintained, as applicable. Further, secondary markets may be
subject to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods in times of market stress because market makers and
Authorized Participants may step away from making a market in the Shares and in
executing creation and redemption orders, which could cause a material deviation
in the Fund’s market price from its net asset value.
Trading
Issues Risk. Trading
in shares on the exchange may be halted due to market conditions or for reasons
that, in the view of the exchange, make trading in shares inadvisable. In
addition, trading in shares on the exchange is subject to trading halts caused
by extraordinary market volatility pursuant to the relevant exchange’s “circuit
breaker” rules. If a trading halt or unanticipated early close of the exchange
occurs, a shareholder may be unable to purchase or sell Shares of the Fund.
There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
The market price of the Shares may fluctuate in response to the Fund’s net asset
value, the intraday value of the Fund’s holdings and supply and demand for
Shares. Shares may trade above, below, or at their most recent net asset value.
Factors including disruptions to creations and redemptions, the existence of
market volatility or potential lack of an active trading market for Shares
(including through a trading halt), may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. If a shareholder purchases Shares at a time when the market
price is at a premium to the net asset value or sells Shares at a time when the
market price is at a discount to the net asset value, the shareholder may pay
significantly more or receive significantly less than the underlying value of
the Shares. The securities held by the Fund may be traded in markets that close
at a different time than the exchange on which the Shares are traded. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when the exchange is open but after the applicable
market closing, fixing or settlement times, bid/ask spreads on the exchange and
the resulting premium or discount to the Shares’ net asset value may widen.
Additionally, in stressed market conditions, the market for the Fund’s Shares
may become less liquid in response to deteriorating liquidity in the markets for
the Fund’s underlying portfolio holdings and a shareholder may be unable to sell
his or her Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
Concentration
Risk.
The Fund’s assets will be concentrated in any one industry or group of
industries within the utilities sector. To the extent that the Fund is
concentrated in such investments, the Fund will be subject to the risk that
economic, political or other conditions that have a negative effect on such
investments may negatively impact the Fund to a greater extent than if the
Fund’s assets were invested in a wider variety of investments.
PERFORMANCE
The
Fund has not yet commenced operations and therefore does not have a performance
history. Once available, the Fund’s performance information will be accessible
on the Fund’s website at www.vaneck.com.
PORTFOLIO
MANAGEMENT
Investment
Adviser.
Van Eck Absolute Return Advisers Corporation.
Portfolio
Managers.
The following individuals are primarily and jointly responsible for the
day-to-day management of the Fund’s portfolio:
|
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|
|
| Name |
Title
with Adviser |
Date
Began Managing the Fund |
| [
] |
Portfolio
Manager |
[
] |
| [
] |
Deputy
Portfolio Manager |
[
] |
|
|
|
PURCHASE
AND SALE OF FUND SHARES
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through a broker or dealer at a market price. Shares of the Fund
are listed on the Exchange, and because Shares trade at market prices rather
than net asset
|
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| 800.826.2333
| vaneck.com |
|
41 |
value,
Shares of the Fund may trade at a price greater than net asset value
(i.e.,
a “premium”) or less than net asset value (i.e.,
a “discount”).
An
investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase Shares of the Fund (bid) and the
lowest price a seller is willing to accept for Shares (ask) when buying or
selling Shares in the secondary market (the “bid-ask spread”).
Recent
information, including information about the Fund’s net asset value, market
price, premiums and discounts, and bid-ask spreads, is included on the Fund’s
website at www.vaneck.com.
TAX
INFORMATION
The
Fund’s distributions (other than return of capital distributions) are taxable
and will generally be taxed as ordinary income or capital gains. Any return of
capital will reduce the shareholder’s basis in their Fund Shares, reducing any
loss or increasing any gain on a subsequent taxable disposition of
Shares.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of the Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer or other intermediary or its employees or associated persons to
recommend the Fund over another investment. Ask your financial adviser or visit
your financial intermediary’s website for more information.
|
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|
|
| 800.826.2333
| vaneck.com |
|
42 |
|
|
|
|
ADDITIONAL
INFORMATION ABOUT THE FUNDS’ INVESTMENT STRATEGIES AND
RISKS |
PRINCIPAL
INVESTMENT STRATEGIES
(Only
with respect to VanEck Consumer Staples TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of consumer staples-related
companies or instruments that provide exposure to consumer staples-related
companies as determined by the Adviser. For purposes of this policy, the term
“assets” means net assets plus the amount of any borrowings for investment
purposes. Such companies may include those in the following industries: food and
consumer staples retailing, beverages, food products, household products, and
personal products.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
(Only
with respect to VanEck Financials TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of financials-related companies or
instruments that provide exposure to financials-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: banks, capital markets, consumer
finance, insurance, and diversified financial services.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
(Only
with respect to VanEck Energy TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of energy-related companies or
instruments that provide exposure to energy-related companies as determined by
the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: oil, gas and consumable fuels; and
energy equipment and services.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
(Only
with respect to VanEck Healthcare TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of healthcare-related companies or
instruments that provide exposure to healthcare-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: pharmaceuticals, biotechnology, life
sciences tools and services, healthcare equipment and supplies, and healthcare
providers and services.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
(Only
with respect to VanEck Industrials TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of industrials-related companies or
instruments that provide exposure to industrials-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: aerospace and defense, industrial
conglomerates, construction and engineering, electrical equipment, machinery,
road and rail, and transportation infrastructure.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
(Only
with respect to VanEck Materials TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of materials-related companies or
instruments that provide exposure to materials-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: chemicals, construction materials,
containers and packaging, metals and mining, and paper and forest
products.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
|
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|
|
|
|
| 800.826.2333
| vaneck.com |
|
43 |
(Only
with respect to VanEck Real Estate TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of real estate-related companies or
instruments that provide exposure to real estate-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: real estate investment trusts
(REITs), real estate management and development, and diversified real estate
activities.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
(Only
with respect to VanEck Utilities TruSector ETF)
The
Fund is an actively managed exchange-traded fund that seeks to achieve its
investment objective by investing, under normal market circumstances, at least
80% of its total assets in equity securities of utilities-related companies or
instruments that provide exposure to utilities-related companies as determined
by the Adviser. For purposes of this policy, the term “assets” means net assets
plus the amount of any borrowings for investment purposes. Such companies may
include those in the following industries: electric utilities, gas utilities,
multi-utilities, water utilities, and independent power producers and energy
traders.
The
Fund’s 80% investment policy is non-fundamental and may be changed without
shareholder approval upon 60 days’ prior written notice to
shareholders.
FUNDAMENTAL
AND NON-FUNDAMENTAL POLICIES
Each
Fund’s investment objective and each of its other investment policies are
non-fundamental policies that may be changed by the Board of Trustees (the
"Board of Trustees") of VanEck ETF Trust (the "Trust") without shareholder
approval, except as noted in this Prospectus or the Statement of Additional
Information (“SAI”) under the section entitled “Investment Policies and
Restrictions—Investment Restrictions.”
RISKS
OF INVESTING IN THE FUNDS
The
following section provides additional information regarding the principal risks
identified under “Principal Risks of Investing in the Fund” in each Fund’s
“Summary Information” section and additional non-principal risks, if applicable.
The risks checked in the chart below apply to each Fund as indicated. For a
description of the risks listed in the chart, please see "Glossary – Investment
Risks" below the chart. See also the Funds' Statement of Additional Information
for information on certain other investments in which each Fund may invest and
other investment techniques in which each Fund may engage from time to time and
related risks.
Investors
in a Fund should be willing to accept a high degree of volatility in the price
of the Fund’s Shares and the possibility of significant losses. An investment in
a Fund involves a substantial degree of risk. An
investment in a Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Therefore, you should consider carefully the following risks before
investing in a Fund, each of which could significantly and adversely affect the
value of an investment in a Fund.
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|
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|
|
|
|
|
| Risk |
Consumer
Staples TruSector ETF
[
] |
Financials
TruSector ETF
[
] |
Energy
TruSector ETF
[
] |
Healthcare
TruSector ETF
[
] |
Industrials
TruSector ETF
[
] |
Materials
TruSector ETF
[
] |
Real
Estate TruSector ETF
[
] |
Utilities
TruSector ETF
[
] |
|
√
Principal Risk | X Additional Non-Principal Risk |
|
| Active
Management Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
|
|
|
|
|
|
|
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|
|
|
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|
|
| Authorized
Participant Concentration Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
|
|
|
|
|
|
|
|
|
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|
Concentration
Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
|
|
|
|
|
|
|
|
| Consumer
Staples Sector Risk |
√ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
| Derivatives
Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
|
|
|
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|
| Energy
Sector Risk |
|
|
√ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity
Securities Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
|
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|
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|
|
|
|
|
|
| Financials
Sector Risk |
|
√ |
|
|
|
|
|
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|
| 800.826.2333
| vaneck.com |
|
44 |
|
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|
| Risk |
Consumer
Staples TruSector ETF
[
] |
Financials
TruSector ETF
[
] |
Energy
TruSector ETF
[
] |
Healthcare
TruSector ETF
[
] |
Industrials
TruSector ETF
[
] |
Materials
TruSector ETF
[
] |
Real
Estate TruSector ETF
[
] |
Utilities
TruSector ETF
[
] |
|
√
Principal Risk | X Additional Non-Principal Risk |
|
| Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund
Shares |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
|
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|
Healthcare
Sector Risk |
|
|
|
√ |
|
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|
| Industrials
Sector Risk |
|
|
|
|
√ |
|
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|
Investing
in ETFs Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Investment
Restrictions Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Issuer-Specific
Changes Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
|
|
|
|
|
|
|
|
|
Large
Capitalization Companies Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Leverage
Risk |
X |
X |
X |
X |
X |
X |
X |
X |
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|
|
| Market
Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
Materials
Sector Risk |
|
|
|
|
|
√ |
|
|
| Medium-Capitalization
Companies Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
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|
| New
Fund Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
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|
| No
Guarantee of Active Trading Market Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Non-Diversified
Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
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|
|
| Operational
Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
|
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|
|
| Real
Estate Sector Risk |
|
|
|
|
|
|
√ |
|
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|
|
| REITs
Risk |
|
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√ |
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| Seed
Investor Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
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| Shareholder
Risk |
X |
X |
X |
X |
X |
X |
X |
X |
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| Trading
Issues Risk |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
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| Utilities
Sector Risk |
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√ |
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GLOSSARY
– INVESTMENT RISKS
Active
Management Risk. In
managing the Fund’s portfolio, the Adviser will apply investment techniques and
risk analyses in making investment decisions for the Fund, but there can be no
guarantee that these will produce the desired results. Investment decisions made
by the Adviser in seeking to achieve the Fund’s investment objective may cause a
decline in the value of the investments held by the Fund and, in turn, cause the
Fund’s shares to lose value or underperform other funds with similar investment
objectives.
Authorized
Participant Concentration Risk.
The Fund may have a limited number of Authorized Participants, none of which are
obligated to engage in creation and/or redemption transactions. To the extent
that those Authorized Participants exit the business, or do not process creation
and/or redemption orders, there may be a significantly diminished trading market
for Shares or Shares may trade like closed-end funds at a discount (or premium)
to net asset value and possibly face trading halts and/or de-listing. This can
be reflected as a spread between the bid-ask prices for the Fund. The Authorized
Participant concentration risk may be heightened with respect to certain types
of assets or in cases where Authorized Participants have limited or diminished
access to the capital required to post collateral.
Consumer
Staples Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the consumer staples sector. The consumer staples
sector comprises companies whose businesses are less sensitive to economic
cycles, such as manufacturers and distributors of food and beverages and
producers of non-durable
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45 |
household
goods and personal products. Companies in the consumer staples sector may be
adversely affected by changes in the worldwide economy, consumer spending,
competition, demographics and consumer preferences, exploration and production
spending. Companies in this sector are also affected by changes in government
regulation, world events and economic conditions.
Concentration
Risk.
The Fund’s assets will be concentrated in an industry or group of industries
within its respective sector. To the extent that the Fund is concentrated in
such investments, the Fund will be subject to the risk that economic, political
or other conditions that have a negative effect on such investments may
negatively impact the Fund to a greater extent than if the Fund’s assets were
invested in a wider variety of investments.
Derivatives
Risk.
Derivatives are financial instruments whose values are based on the value of one
or more reference assets or indicators, such as a security, currency, interest
rate, or index. The Fund’s use of derivatives involves risks different from, and
possibly greater than, the risks associated with investing directly in
securities and other more traditional investments. Moreover, although the value
of a derivative is based on an underlying asset or indicator, a derivative
typically does not carry the same rights as would be the case if the Fund
invested directly in the underlying securities, currencies or other
assets.
Derivatives
are subject to a number of risks, such as potential changes in value in response
to market developments or, in the case of “over-the-counter” derivatives, as a
result of a counterparty’s credit quality and the risk that a derivative
transaction may not have the effect the Adviser anticipated. Derivatives also
involve the risk of mispricing or improper valuation and the risk that changes
in the value of a derivative may not achieve the desired correlation with the
underlying asset or indicator. Derivative transactions can create investment
leverage and may be highly volatile, and the Fund could lose more than the
amount it invests. The use of derivatives may increase the amount and affect the
timing and character of taxes payable by shareholders of the Fund.
Many
derivative transactions are entered into “over-the-counter” without a central
clearinghouse; as a result, the value of such a derivative transaction will
depend on, among other factors, the ability and the willingness of the Fund’s
counterparty to perform its obligations under the transaction. If a counterparty
were to default on its obligations, the Fund’s contractual remedies against such
counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net
amount of payments that it is contractually entitled to receive). Counterparty
risk also refers to the related risks of having concentrated exposure to such a
counterparty. A liquid secondary market may not always exist for the Fund’s
derivative positions at any time, and the Fund may not be able to initiate or
liquidate a swap position at an advantageous time or price, which may result in
significant losses. The Fund may also face the risk that it may not be able to
meet margin and payment requirements to maintain a derivatives
position.
Derivatives
are also subject to operational and legal risks. Operational risk generally
refers to risk related to potential operational issues, including documentation
issues, settlement issues, system failures, inadequate controls, and human
errors. Legal risk generally refers to insufficient documentation, insufficient
capacity or authority of counterparty, or legality or enforceability of a
contract.
Under
Rule 18f-4 (the “derivatives rule”), funds need to trade derivatives and other
transactions that create future fund payment or delivery obligations subject to
a value-at-risk (“VaR”) leverage limit, and certain derivatives risk management
program and reporting requirements. Generally, these requirements apply unless a
fund qualifies as a “limited derivatives user,” as defined in the derivatives
rule. Under the derivatives rule, when a fund trades reverse repurchase
agreements or similar financing transactions, including certain tender option
bonds, it needs to aggregate the amount of indebtedness associated with the
reverse repurchase agreements or similar financing transactions with the
aggregate amount of any other senior securities representing indebtedness when
calculating the fund’s asset coverage ratio or treat all such transactions as
derivatives transactions. Reverse repurchase agreements or similar financing
transactions aggregated with other indebtedness do not need to be included in
the calculation of whether a fund is a limited derivatives user, but for funds
subject to the VaR testing, reverse repurchase agreements and similar financing
transactions must be included for purposes of such testing whether treated as
derivatives transactions or not. The Securities and Exchange Commission also
provided guidance in connection with the derivatives rule regarding use of
securities lending collateral that may limit a fund's securities lending
activities. In addition, under the derivatives rule, the Fund is permitted to
invest in a security on a when-issued or forward-settling basis, or with a
non-standard settlement cycle, and the transaction will be deemed not to involve
a senior security under the Investment Company Act of 1940, provided that (i)
the Fund intends to physically settle the transaction and (ii) the transaction
will settle within 35 days of its trade date (the “Delayed-Settlement Securities
Provision”). The Fund may otherwise engage in such transactions that do not meet
the conditions of the Delayed-Settlement Securities Provision so long as the
Fund treats any such transaction as a “derivatives transaction” for purposes of
compliance with the derivatives rule. Furthermore, under the derivatives rule,
the Fund is permitted to enter into an unfunded commitment agreement, and such
unfunded commitment agreement is not subject to the asset coverage requirements
under the Investment Company Act of 1940, if the Fund reasonably believes, at
the time it enters into such agreement, that it will have sufficient cash and
cash equivalents to meet its obligations with respect to all such agreements as
they come due.
Energy
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the energy sector. Companies operating in the
energy sector are subject to risks including, but not limited to, economic
growth, worldwide demand, political instability in the regions that the
companies operate, government regulation stipulating rates charged by utilities,
interest rate sensitivity, oil price volatility, energy conservation,
environmental policies, depletion of resources, and the cost of providing the
specific utility services and other factors that they cannot control.
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46 |
The
energy sector is cyclical and is highly dependent on commodity prices; prices
and supplies of energy may fluctuate significantly over short and long periods
of time due to, among other things, national and international political
changes, OPEC policies, changes in relationships among OPEC members and between
OPEC and oil-importing nations, the regulatory environment, taxation policies,
and the economy of the key energy-consuming countries. Commodity prices have
recently been subject to increased volatility and declines, which may negatively
affect companies in which the Fund may invest.
Companies
in the energy sector may be adversely affected by terrorism, natural disasters
or other catastrophes. Companies in the energy sector are at risk of civil
liability from accidents resulting in injury, loss of life or property,
pollution or other environmental damage claims and risk of loss from terrorism
and natural disasters. Disruptions in the oil industry or shifts in fuel
consumption may significantly impact companies in this sector. Significant oil
and gas deposits are located in emerging markets countries where corruption and
security may raise significant risks, in addition to the other risks of
investing in emerging markets.
Companies
in the energy sector may also be adversely affected by changes in exchange
rates, tax treatment, government regulation and intervention, negative
perception, efforts at energy conservation and world events in the regions in
which the companies operate (e.g., expropriation, nationalization, confiscation
of assets and property or the imposition of restrictions on foreign investments
and repatriation of capital, military coups, social unrest, violence or labor
unrest). Because a significant portion of revenues of companies in this sector
is derived from a relatively small number of customers that are largely
comprised of governmental entities and utilities, governmental budget
constraints may have a significant impact on the stock prices of companies in
this sector. Entities operating in the energy sector are subject to significant
regulation of nearly every aspect of their operations by federal, state and
local governmental agencies. Such regulation can change rapidly or over time in
both scope and intensity. Stricter laws, regulations or enforcement policies
could be enacted in the future which would likely increase compliance costs and
may materially adversely affect the financial performance of companies in the
energy sector.
A
downturn in the energy sector, adverse political, legislative or regulatory
developments or other events could have a larger impact on the Fund than on an
investment company that does not invest a substantial portion of its assets in
the energy sector. At times, the performance of securities of companies in the
energy sector may lag the performance of other sectors or the broader market as
a whole. The price of oil, natural gas and other fossil fuels may decline and/or
experience significant volatility, which could adversely impact companies
operating in the energy sector.
Equity
Securities Risk.
The value of the equity securities held by the Fund may fall due to general
market and economic conditions, perceptions regarding the markets in which the
issuers of securities held by the Fund participate, or factors relating to
specific issuers in which the Fund invests. For example, an adverse event, such
as an unfavorable earnings report, may result in a decline in the value of
equity securities of an issuer held by the Fund; the price of the equity
securities of an issuer may be particularly sensitive to general movements in
the securities markets; or a drop in the securities markets may depress the
price of most or all of the equities securities held by the Fund. In addition,
the equity securities of an issuer in the Fund’s portfolio may decline in price
if the issuer fails to make anticipated dividend payments. Equity securities are
subordinated to preferred securities and debt in a company’s capital structure
with respect to priority to a share of corporate income, and therefore will be
subject to greater dividend risk than preferred securities or debt instruments.
In addition, while broad market measures of equity securities have historically
generated higher average returns than fixed income securities, equity securities
have generally also experienced significantly more volatility in those returns.
Financials
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the financials sector. Companies in the financials
sector may be subject to extensive government regulation that affects the scope
of their activities, the prices they can charge and the amount of capital they
must maintain. The profitability of companies in the financials sector may be
adversely affected by increases in interest rates, by loan losses, which usually
increase in economic downturns, and by credit rating downgrades. In addition,
the financials sector is undergoing numerous changes, including continuing
consolidations, development of new products and structures and changes to its
regulatory framework. Furthermore, some companies in the financials sector
perceived as benefiting from government intervention in the past may be subject
to future government-imposed restrictions on their businesses or face increased
government involvement in their operations. Increased government involvement in
the financials sector, including measures such as taking ownership positions in
financial institutions, could result in a dilution of the Fund’s investments in
financial institutions.
Fund
Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares.
Disruptions to creations and redemptions, the existence of market volatility or
potential lack of an active trading market for Shares (including through a
trading halt), as well as other factors, may result in Shares trading at a
significant premium or discount to net asset value or to the intraday value of
the Fund’s holdings. The net asset value of the Shares will fluctuate with
changes in the market value of the Fund’s securities holdings. The market price
of Shares may fluctuate, in some cases materially, in accordance with changes in
net asset value and the intraday value of the Fund’s holdings, as well as supply
and demand on the Exchange. Shares may trade below, at or above their net asset
value. While the creation/redemption feature is designed to make it likely that
Shares normally will trade close to the value of the Fund’s holdings, market
prices are not expected to correlate exactly to the Fund’s net asset value due
to timing reasons, supply and demand imbalances and other factors. The price
differences may be due, in large part, to the fact that supply and demand forces
at work in the secondary trading market for Shares may be closely related to,
but not necessarily identical to, the same forces influencing the prices of the
securities of the Fund’s portfolio of investments trading individually or in the
aggregate at any point in time. If a shareholder purchases Shares at a time when
the market price is at a premium to the net asset value or sells Shares at a
time when the market price is at a discount to the net
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47 |
asset
value, the shareholder may pay significantly more or receive significantly less
than the underlying value of the Shares that were bought or sold or the
shareholder may be unable to sell his or her Shares. Any of these factors,
discussed above and further below, may lead to the Shares trading at a premium
or discount to the Fund’s net asset value. In addition, because certain of the
Fund’s underlying securities may trade on exchanges that are closed when the
exchange that Shares of the Fund trade on is open, there are likely to be
deviations between the expected value of an underlying security and the closing
security’s price (i.e., the last quote from its closed foreign market) resulting
in premiums or discounts to net asset value that may be greater than those
experienced by other ETFs. In addition, the securities held by the Fund may be
traded in markets that close at a different time than the Exchange. Liquidity in
those securities may be reduced after the applicable closing times. Accordingly,
during the time when the Exchange is open but after the applicable market
closing, fixing or settlement times, bid/ask spreads and the resulting premium
or discount to the Shares’ net asset value may widen. Additionally, in stressed
market conditions, the market for the Fund’s Shares may become less liquid in
response to deteriorating liquidity in the markets for the Fund’s underlying
portfolio holdings.
When
you buy or sell Shares of the Fund through a broker, you will likely incur a
brokerage commission or other charges imposed by brokers. In addition, the
market price of Shares, like the price of any exchange-traded security, includes
a bid/ask spread charged by the market makers or other participants that trade
the particular security. The spread of the Fund’s Shares varies over time based
on the Fund’s trading volume and market liquidity and may increase if the Fund’s
trading volume, the spread of the Fund’s underlying securities, or market
liquidity decrease. In times of severe market disruption, including when trading
of the Fund’s holdings may be halted, the bid/ask spread may increase
significantly. This means that Shares may trade at a discount to the Fund’s net
asset value, and the discount is likely to be greatest during significant market
volatility.
Healthcare
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the healthcare sector. Companies in the healthcare
sector may be affected by extensive government regulation, restrictions on
government reimbursement for medical expenses, rising costs of medical products
and services, pricing pressure, an increased emphasis on outpatient services,
limited number of products, industry innovation, changes in technologies and
other market developments. Many healthcare companies are heavily dependent on
patent protection. The expiration of patents may adversely affect the
profitability of these companies. Many healthcare companies are subject to
extensive litigation based on product liability and similar claims.
Healthcare
companies are subject to competitive forces that may make it difficult to raise
prices and, in fact, may result in price discounting. Many new products in the
healthcare sector may be subject to regulatory approvals. The process of
obtaining such approvals may be long and costly. Companies in the healthcare
sector may be thinly capitalized and may be susceptible to product
obsolescence.
Industrials
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the industrials sector. The industrials sector
comprises companies who produce capital goods used in construction and
manufacturing, such as companies that make and sell machinery, equipment and
supplies that are used to produce other goods. Companies in the industrials
sector may be adversely affected by changes in government regulation, world
events and economic conditions. In addition, companies in the industrials sector
may be adversely affected by environmental damages, product liability claims and
exchange rates.
The
stock prices of companies in the industrials sector are affected by supply and
demand both for their specific product or service and for industrial sector
products in general. The products of manufacturing companies may face product
obsolescence due to rapid technological developments and frequent new product
introduction. In addition, the industrials sector may also be adversely affected
by changes or trends in commodity prices, which may be influenced or
characterized by unpredictable factors.
Investing
in ETFs Risk. The
Fund’s performance may depend in part on the performance of the underlying funds
in which it invests. The Fund will pay indirectly a proportional share of the
fees and expenses of the underlying funds in which it invests, including their
investment advisory and administration fees, while continuing to pay its own
management fee. As a result, the Fund’s shareholders will indirectly bear the
expenses of the underlying funds, absorbing duplicative levels of fees.
Investment
Restrictions Risk.
The Fund is subject to the conditions set forth in certain provisions of the
Investment Company Act of 1940 and Securities and Exchange Commission
regulations thereunder that limit the amount that the Fund and its affiliates,
in the aggregate, can invest in the outstanding voting securities of an
unaffiliated investment company or business development company. The Fund and
its affiliates may not actively acquire “control” of an investment company or
business development company, which is presumed once ownership of an investment
company’s outstanding voting securities exceeds 25%. Also, to comply with
provisions of the Investment Company Act of 1940 and regulations thereunder, the
Adviser may be required to vote shares of an investment company or business
development company in the same general proportion as shares held by other
shareholders of the investment company or business development
company.
Issuer-Specific
Changes Risk. The
value of individual securities in the Fund’s portfolio can be more volatile than
the market as a whole and can perform differently from the value of the market
as a whole, which may have a greater impact if the Fund’s portfolio is
concentrated in a country, region, market, industry, sector or asset class. A
change in the financial condition, market perception or the credit rating of an
issuer of securities included in the Fund may cause the value of its securities
to decline.
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48 |
Large-Capitalization
Companies Risk.
The Fund may invest in large-capitalization companies and, therefore will be
subject to certain risks associated with large-capitalization companies.
Securities of large-capitalization companies could fall out of favor with the
market and underperform securities of small- or medium-capitalization companies.
Larger, more established companies may be slow to respond to challenges and may
grow more slowly than smaller companies.
Leverage
Risk.
To the extent that the Fund borrows money or utilizes certain derivatives, it
may be leveraged. Leveraging generally exaggerates the effect on net asset value
of any increase or decrease in the market value of the Fund’s portfolio
securities. The Fund is required to comply with the derivatives rule when it
engages in transactions that create future Fund payment or delivery obligations.
The Fund is required to comply with the asset coverage requirements under the
Investment Company Act of 1940 when it engages in borrowings and/or transactions
treated as borrowings.
Materials
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the materials sector. Companies engaged in the
production and distribution of materials may be adversely affected by changes in
world events, political and economic conditions, energy conservation,
environmental policies, commodity price volatility, changes in exchange rates,
imposition of import controls, increased competition, depletion of resources and
labor relations. At times, worldwide production of industrial materials has
exceeded demand as a result of over-building or economic downturns, leading to
poor investment returns or losses. Other risks may include liabilities for
environmental damage and general civil liabilities, and mandated expenditures
for safety and pollution control.
Market
Risk.
The prices of securities are subject to the risks associated with investing in
the securities market, including general economic conditions, sudden and
unpredictable drops in value, exchange trading suspensions and closures and
public health risks. These risks may be magnified if certain social, political,
economic and other conditions and events (such as natural disasters, epidemics
and pandemics, terrorism, conflicts, social unrest, recessions, inflation,
interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions
and other trade barriers) adversely interrupt the global economy; in these and
other circumstances, such events or developments might affect companies
world-wide. Overall securities values could decline generally or underperform
other investments. An investment may lose money.
Medium-Capitalization
Companies Risk.
The Fund may invest in medium-capitalization companies and, therefore will be
subject to certain risks associated with medium-capitalization companies. These
companies are often subject to less analyst coverage and may be in early and
less predictable periods of their corporate existences, with little or no record
of profitability. In addition, these companies often have greater price
volatility, lower trading volume and less liquidity than larger more established
companies. These companies tend to have smaller revenues, narrower product
lines, less management depth and experience, smaller shares of their product or
service markets, fewer financial resources and less competitive strength than
large-capitalization companies. Returns on investments in securities of
medium-capitalization companies could trail the returns on investments in
securities of larger companies.
New
Fund Risk. The
Fund is a new fund, with a limited or no operating history and a small asset
base. There can be no assurance that the Fund will grow to or maintain a viable
size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its
portfolio transaction costs may be higher than those of a fund with a larger
asset base. To the extent that the Fund does not grow to or maintain a viable
size, it may be liquidated, and the expenses, timing and tax consequences of
such liquidation may not be favorable to some shareholders.
No
Guarantee of Active Trading Market Risk. There
can be no assurance that an active trading market for the Shares will develop or
be maintained, as applicable. Further, secondary markets may be subject to
irregular trading activity, wide bid/ask spreads and extended trade settlement
periods in times of market stress because market makers and Authorized
Participants may step away from making a market in the Shares and in executing
creation and redemption orders, which could cause a material deviation in the
Fund’s market price from its net asset value.
Van
Eck Securities Corporation, the distributor of the Shares, does not maintain a
secondary market in the Shares. Investors purchasing and selling Shares in the
secondary market may not experience investment results consistent with those
experienced by those Authorized Participants creating and redeeming directly
with the Fund.
Decisions
by market makers or Authorized Participants to reduce their role or “step away”
from these activities in times of market stress could inhibit the effectiveness
of the arbitrage process in maintaining the relationship between the underlying
value of the Fund’s portfolio securities and the Fund’s market price. This
reduced effectiveness could result in Fund Shares trading at a price which
differs materially from net asset value and also in greater than normal intraday
bid/ask spreads for Fund Shares.
Non-Diversified
Risk.
The Fund is classified as a “non-diversified” fund under the Investment Company
Act of 1940. The Fund is subject to the risk that it will be more volatile than
a diversified fund because the Fund may invest a relatively high percentage of
its assets in a smaller number of issuers or may invest a larger proportion of
its assets in a single issuer. Moreover, the gains and losses on a single
investment may have a greater impact on the Fund’s net asset value and may make
the Fund more volatile than more diversified funds. The Fund may be particularly
vulnerable to this risk if it is comprised of a limited number of
investments.
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Operational
Risk.
The Fund is exposed to operational risk arising from a number of factors,
including human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or system failures.
Real
Estate Sector Risk. Companies
in the real estate sector include companies that invest in real estate, such as
REITs and real estate management and development companies. The Fund may be
sensitive to changes in, and its performance may depend to a greater extent on,
the overall condition of the real estate sector. Companies that invest in real
estate are subject to the risks of owning real estate directly as well as to
risks that relate specifically to the way that such companies operate, including
management risk (such companies are dependent upon the management skills of a
few key individuals and may have limited financial resources). Adverse economic,
business or political developments affecting real estate could have a major
effect on the values of the Fund’s investments. Investing in real estate is
subject to such risks as decreases in real estate values, overbuilding,
increased competition and other risks related to local or general economic
conditions, increases in operating costs and property taxes, changes in zoning
laws, casualty or condemnation losses, possible environmental liabilities,
regulatory limitations on rent, possible lack of availability of mortgage
financing, market saturation, fluctuations in rental income and the value of
underlying properties and extended vacancies of properties. Certain real estate
securities have a relatively small market capitalization, which may tend to
increase the volatility of the market price of these securities. Real estate
securities have limited diversification and are, therefore, subject to risks
inherent in operating and financing a limited number of projects. Real estate
securities are also subject to heavy cash flow dependency and defaults by
borrowers or tenants.
REITs
Risk.
Investing in REITs exposes investors to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which REITs
are organized and operated. REITs generally invest directly in real estate, in
mortgages or in some combination of the two. Operating REITs requires
specialized management skills and the Fund indirectly bears management expenses
along with the direct expenses of the Fund. Individual REITs may own a limited
number of properties and may concentrate in a particular region or property
type. REITs may also be subject to heavy cash flow dependency, default by
borrowers or tenants and self-liquidation. REITs typically use leverage to
acquire assets, which increases the risk of investing in REITs and can cause the
values of the Fund's investments in REITs to be more volatile and to decline if
interest rates increase. REITs also must satisfy specific requirements of the
Internal Revenue Code of 1986 in order to qualify for tax-free pass-through
income. The failure of a company to qualify as a REIT could have adverse
consequences for the Fund, including significantly reducing the return to the
Fund on its investment in such company. In addition, REITs, like mutual funds,
have expenses, including management and administration fees, that are paid by
their shareholders. As a result, shareholders will absorb their proportionate
share of duplicate levels of fees when the Fund invests in REITs.
Individuals
(and certain other non-corporate entities) are generally eligible for a
deduction of up to 20% on taxable ordinary dividends from REITs and certain
other types of business income through 2025. Internal Revenue Service
regulations permit a regulated investment company to pass through to its
shareholders qualified REIT dividends eligible for the 20% deduction. Some
portion of the distributions by the Fund may be taxable ordinary dividends from
REITs.
Seed
Investor Risk.
The Adviser and/or its affiliates will make payments to one or more investors
that contribute seed capital to the Fund. Such payments may continue for a
specified period of time and/or until a specified dollar amount is reached.
Those payments will be made from the assets of the Adviser and/or such
affiliates (and not the Fund). Seed investors may contribute all or a majority
of the assets in the Fund. There is a risk that such seed investors may redeem
all or part of their investments in the Fund, particularly after payments from
the Adviser and/or its affiliates have ceased. The timing of a redemption by a
seed investor could benefit the seed investor. As with redemptions by other
large shareholders, such redemptions could have a significant negative impact on
the Fund including by reducing the Fund’s liquidity, causing the Fund to realize
gains that will be distributed and taxable to remaining shareholders and
increasing the Fund’s transaction costs. A large redemption may also have a
material upward or downward effect on the market price of the Fund’s
Shares.
Shareholder
Risk.
Certain shareholders, including other funds advised by the Adviser, may from
time to time own a substantial amount of the Fund’s Shares. In addition, a
third-party investor, the Adviser or an affiliate of the Adviser, an Authorized
Participant, a market maker, or another entity may invest in the Fund and hold
its investment for a limited period of time. There can be no assurance that any
large shareholder would not redeem (through an Authorized Participant) its
investment. Redemptions by shareholders (through an Authorized Participant)
could have a negative impact on the Fund. In addition, transactions by large
shareholders may account for a large percentage of the trading volume on the
exchange and may, therefore, have a material effect on the market price of the
Shares.
Trading
Issues Risk.
Trading in shares on the exchange may be halted due to market conditions or for
reasons that, in the view of the exchange, make trading in shares inadvisable.
In addition, trading in shares on the exchange is subject to trading halts
caused by extraordinary market volatility pursuant to the relevant exchange’s
“circuit breaker” rules. If a trading halt or unanticipated early close of the
exchange occurs, a shareholder may be unable to purchase or sell Shares of the
Fund. There can be no assurance that requirements of the exchange necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Utilities
Sector Risk.
The Fund may be sensitive to, and its performance may depend to a greater extent
on, the overall condition of the utilities sector. Issuers in the utilities
sector are subject to a variety of factors that may adversely affect their
business or operations, including high interest costs in connection with capital
construction and improvement programs,
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difficulty
in raising capital in adequate amounts on reasonable terms in periods of high
inflation and unsettled capital markets, and the effects of economic slowdowns
and surplus capacity. Companies in the utilities sector are subject to extensive
regulation, including governmental regulation of rates charged to customers, and
may face difficulty in obtaining regulatory approval of new technologies. The
effects of a U.S. national energy policy and lengthy delays and greatly
increased costs and other problems associated with the design, construction,
licensing, regulation and operation of nuclear facilities for electric
generation, including, among other considerations, the problems associated with
the use of radioactive materials and the disposal of radioactive wastes, may
adversely affect companies in the utilities sector. Certain companies in the
utilities sector may be inexperienced and may suffer potential losses resulting
from a developing deregulatory environment. Technological innovations may render
existing plants, equipment or products obsolete. Companies in the utilities
sector may face increased competition from other providers of utility services.
The potential impact of terrorist activities on companies in the utilities
sector and its customers and the impact of natural or man-made disasters may
adversely affect the utilities sector. Issuers in the utilities sector also may
be subject to regulation by various governmental authorities and may be affected
by the imposition of special tariffs and changes in tax laws, regulatory
policies and accounting standards.
ADDITIONAL
NON-PRINCIPAL INVESTMENT STRATEGIES
Each
Fund may also invest in fixed income securities and money market instruments,
including repurchase agreements or other funds which invest exclusively in money
market instruments. For temporary defensive purposes, the Funds may invest
without limit in money market instruments, including repurchase agreements or
other funds which invest exclusively in money market instruments. Each Fund may
also pursue 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 the Fund may receive from
a market increase. When a Fund utilizes a temporary defensive strategy, it may
not achieve its investment objective.
BORROWING
MONEY
Each
Fund may borrow money from a bank up to a limit of one-third of the market value
of its assets. Each Fund is expected to enter into a credit facility to borrow
money for temporary, emergency or other purposes, including the funding of
shareholder redemption requests, trade settlements and as necessary to
distribute to shareholders any income required to maintain a Fund’s status as a
regulated investment company. To the extent that a Fund borrows money, it may be
leveraged. Leverage generally has the effect of increasing the amount of loss or
gain a Fund might realize, and may increase volatility in the value of a Fund’s
investments.
LENDING
PORTFOLIO SECURITIES
Each
Fund may lend its portfolio securities to brokers, dealers and other financial
institutions desiring to borrow securities to complete transactions and for
other purposes. In connection with such loans, a Fund receives cash, U.S.
government securities and stand-by letters of credit not issued by a Fund’s bank
lending agent equal to at least 102% of the value of the portfolio securities
being loaned. This collateral is marked-to-market on a daily basis. Although a
Fund will receive collateral in connection with all loans of its securities
holdings, the Fund would be exposed to a risk of loss should a borrower fail to
return the borrowed securities (e.g.,
the Fund would have to buy replacement securities and the loaned securities may
have appreciated beyond the value of the collateral held by the Fund) or become
insolvent. Each Fund may pay fees to the party arranging the loan of securities.
In addition, a Fund will bear the risk that it may lose money because the
borrower of the loaned securities fails to return the securities in a timely
manner or at all. The Funds could also lose money in the event of a decline in
the value of any cash collateral or in the value of investments made with the
cash collateral. These events could trigger adverse tax consequences for the
Funds. Substitute payments for dividends received by a Fund for securities
loaned out by a Fund will not be considered qualified dividend
income.
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TAX
ADVANTAGED PRODUCT STRUCTURE |
Unlike
many conventional mutual funds which are only bought and sold at closing net
asset values, the Shares of each Fund have been designed to be tradable in a
secondary market on an intra-day basis and to be created and redeemed
principally in-kind in Creation Units at each day’s market close. These in-kind
arrangements are designed to mitigate the adverse effects on a Fund’s portfolio
that could arise from frequent cash purchase and redemption transactions that
affect the net asset value of the Fund. Moreover, in contrast to conventional
mutual funds, where frequent redemptions can have an adverse tax impact on
taxable shareholders because of the need to sell portfolio securities which, in
turn, may generate taxable gain, the in-kind redemption mechanism of each Fund,
to the extent used, generally is not expected to lead to a tax event for
shareholders whose Shares are not being redeemed.
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A
description of each Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio securities is available in the Funds’
SAI.
Board
of Trustees.
The Board of Trustees has responsibility for the general oversight of the
management of the Funds, including general supervision of the Adviser and other
service providers, but is not involved in the day-to-day management of the
Trust. A list of the Trustees and the Trust officers, and their present
positions and principal occupations, is provided in the Funds’ SAI.
Investment
Adviser.
Under the terms of an investment management agreement between the Trust and the
Adviser with respect to each Fund (the “Investment Management Agreement”), the
Adviser serves as the adviser to each Fund and, subject to the supervision of
the Board of Trustees, is responsible for the day-to-day investment management
of the Funds. As of [ ], the Adviser managed approximately $[ ] billion in
assets. The Adviser has been an investment adviser since 1955 and also acts as
adviser or sub-adviser to mutual funds, other ETFs, other pooled investment
vehicles and separate accounts .The Adviser is registered with the Commodity
Futures Trading Commission as a “commodity pool operator” and commodity trading
advisor under the Commodity Exchange Act. The Adviser is a wholly-owned
subsidiary of Van Eck Associates Corporation (“VEAC”).The Adviser’s principal
business address is 666 Third Avenue, 9th Floor, New York, New York 10017. A
discussion regarding the Board of Trustees’ approval of the Investment
Management Agreement will be available in the Trust’s [filing on Form N-CSR] for
the period ended [ ].
Pursuant
to the Investment Management Agreement, the Adviser is responsible for all
expenses of the Funds, including the costs of transfer agency, custody, fund
administration, legal, audit and other services, except for the fee payment
under the Investment Management Agreement, acquired fund fees and expenses,
interest expense, offering costs, trading expenses, taxes and extraordinary
expenses. For its services to each Fund, each Fund has agreed to pay the Adviser
an annual unitary management fee equal to [ ] of its average daily net assets.
Offering costs excluded from the annual unitary management fee are: (a) legal
fees pertaining to a Fund’s Shares offered for sale, (b) Securities and Exchange
Commission and state registration fees; and (c) initial fees paid for Shares of
a Fund to be listed on an exchange. Notwithstanding the foregoing, the Adviser
has agreed to pay all such offering costs until at least [ ].
Manager
of Managers Structure.
The Adviser and the Trust may rely on an exemptive order (the “Order”) from the
Securities and Exchange Commission that permits the Adviser to enter into
investment sub-advisory agreements with unaffiliated sub-advisers without
obtaining shareholder approval. The Adviser, subject to the review and approval
of the Board of Trustees, may select one or more sub- advisers for the Funds and
supervise, monitor and evaluate the performance of each
sub-adviser.
The
Order also permits the Adviser, subject to the approval of the Board of
Trustees, to replace sub-advisers and amend investment sub-advisory agreements,
including applicable fee arrangements, without shareholder approval whenever the
Adviser and the Board of Trustees believe such action will benefit the Funds and
their shareholders. The Adviser thus would have the responsibility (subject to
the oversight of the Board of Trustees) to recommend the hiring and replacement
of sub-advisers as well as the discretion to terminate any sub-adviser and
reallocate a Fund’s assets for management among any other sub-adviser(s) and
itself. This means that the Adviser would be able to reduce the sub-advisory
fees and retain a larger portion of the management fee, or increase the
sub-advisory fees and retain a smaller portion of the management fee. The
Adviser would compensate each sub-adviser out of its management
fee.
Administrator,
Custodian and Transfer Agent.
Van Eck Absolute Return Advisers Corporation is the administrator for the Funds
(the “Administrator”), and State Street Bank and Trust Company is the custodian
of each Fund’s assets and provides transfer agency and fund accounting services
to the Funds. The Administrator is responsible for certain clerical,
recordkeeping and/or bookkeeping services which are required to be provided
pursuant to the Investment Management Agreements.
Distributor.
Van Eck Securities Corporation is the distributor of the Shares (the
“Distributor”). The Distributor will not distribute Shares in less than a
specified number of Shares, each called a “Creation Unit,” and does not maintain
a secondary market in the Shares. The Shares are traded in the secondary
market.
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The
portfolio managers who currently share joint responsibility for the day-to-day
management of each of the Funds’ portfolios are [ ] and [ ].
[
]
See
the Funds’ SAI for additional information about the portfolio managers’
compensation, other accounts managed by the portfolio managers and their
respective ownership of Shares.
DETERMINATION
OF NAV
The
net asset value (“NAV”) per Share for each Fund is computed by dividing the
value of the net assets of the Fund (i.e.,
the value of its total assets less total liabilities) by the total number of
Shares outstanding. Expenses and fees, including the management fee, are accrued
daily and taken into account for purposes of determining NAV. The NAV of each
Fund is determined each business day as of the close of trading (ordinarily 4:00
p.m., Eastern time) on the New York Stock Exchange.
The
values of each Fund’s portfolio securities are based on the securities’ closing
prices on the markets on which the securities trade, when available. Due to the
time differences between the United States and certain countries in which
certain Funds invest, securities on these exchanges may not trade at times when
Shares of the Fund will trade. In the absence of a last reported sales price, or
if no sales were reported, and for other assets for which market quotes are not
readily available, values may be based on quotes obtained from a quotation
reporting system, established market makers or by an outside independent pricing
service. Debt instruments with remaining maturities of more than 60 days are
valued at the evaluated mean price provided by an outside independent pricing
service. If an outside independent pricing service is unable to provide a
valuation, the instrument is valued at the mean of the highest bid and the
lowest asked quotes obtained from one or more brokers or dealers selected by the
Adviser. Prices obtained by an outside independent pricing service may use
information provided by market makers or estimates of market values obtained
from yield data related to investments or securities with similar
characteristics and may use a computerized grid matrix of securities and its
evaluations in determining what it believes is the fair value of the portfolio
securities. Short-term debt instruments having a maturity of 60 days or less are
valued at amortized cost. Any assets or liabilities denominated in currencies
other than the U.S. dollar are converted into U.S. dollars at the current market
rates on the date of valuation as quoted by one or more sources. If a market
quotation for a security or other asset is not readily available or the Adviser
believes it does not otherwise accurately reflect the market value of the
security or asset at the time each Fund calculates its NAV, the Board of
Trustees has designated the Adviser as the valuation designee pursuant to Rule
2a-5 under the Investment Company Act of 1940 to perform fair valuation for such
security or asset in accordance with the Trust’s and Adviser’s valuation
policies and procedures approved by the Board of Trustees. Each Fund may also
use fair value pricing in a variety of circumstances, including but not limited
to, situations when the value of a security in the Fund’s portfolio has been
materially affected by events occurring after the close of the market on which
the security is principally traded (such as a corporate action or other news
that may materially affect the price of a security) or trading in a security has
been suspended or halted. In addition, each Fund currently expects that it will
fair value certain of the foreign equity securities held by the Fund, if any,
each day the Fund calculates its NAV, except those securities principally traded
on exchanges that close at the same time the Fund calculates its
NAV.
Accordingly,
a Fund’s NAV may reflect certain portfolio securities’ fair values rather than
their market prices at the time the exchanges on which they principally trade
close. Fair value pricing involves subjective judgments and it is possible that
a fair value determination for a security or other asset is materially different
than the value that could be realized upon the sale of such security or asset.
With respect to securities that are principally traded on foreign exchanges, the
value of a Fund’s portfolio securities may change on days when you will not be
able to purchase or sell your Shares.
INTRADAY
VALUE
The
trading prices of the Funds’ Shares in the secondary market generally differ
from the Funds’ daily NAV and are affected by market forces such as the supply
of and demand for Fund Shares and underlying securities held by each Fund,
economic conditions and other factors. Information regarding the intraday value
of the Funds’ Shares (“IIV”) may be disseminated throughout each trading day by
the Exchange or by market data vendors or other information providers. The IIV
is based on the current market value of the securities and/or cash required to
be deposited in exchange for a Creation Unit. The IIV does not necessarily
reflect the precise composition of the current portfolio of securities held by
each Fund at a particular point in time or the best possible valuation of the
current portfolio. Therefore, the IIV should not be viewed as a “real-time”
update of the Funds’ NAV, which is computed only once a day. The IIV is
generally determined by using current market quotations and/or price quotations
obtained from broker-dealers and other market intermediaries that may trade in
the portfolio securities held by each Fund and valuations based on current
market rates. The quotations and/or valuations of certain Fund holdings may not
be updated during U.S. trading hours if such holdings do not trade in the United
States. Each Fund is not involved in, or responsible for, the calculation or
dissemination of the IIV and makes no warranty as to its accuracy.
RULE
144A AND OTHER UNREGISTERED SECURITIES
An
Authorized Participant (i.e.,
a person eligible to place orders with the Distributor to create or redeem
Creation Units of a Fund) that is not a “qualified institutional buyer,” as such
term is defined under Rule 144A of the Securities Act of 1933, as
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amended
(the “Securities Act”), will not be able to receive, as part of a redemption,
restricted securities eligible for resale under Rule 144A or other unregistered
securities.
BUYING
AND SELLING EXCHANGE-TRADED SHARES
The
Shares of the Funds are expected to be listed on the Exchange. If you buy or
sell Shares in the secondary market, you will incur customary brokerage
commissions and charges and may pay some or all of the “spread,” which is any
difference between the bid price and the ask price. The spread varies over time
for a Fund’s Shares based on a Fund’s trading volume and market liquidity, and
is generally lower if the Funds have high trading volume and market liquidity,
and generally higher if the Funds have little trading volume and market
liquidity (which is often the case for funds that are newly launched or small in
size). In times of severe market disruption or low trading volume in a Fund’s
Shares, this spread can increase significantly. It is anticipated that the
Shares will trade in the secondary market at prices that may differ to varying
degrees from the NAV of the Shares. During periods of disruptions to creations
and redemptions or the existence of extreme market volatility, the market prices
of Shares are more likely to differ significantly from the Shares’
NAV.
The
Depository Trust Company (“DTC”) serves as securities depository for the Shares.
(The Shares may be held only in book- entry form; stock certificates will not be
issued.) DTC, or its nominee, is the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on the records
of DTC or its participants (described below). Beneficial owners of Shares are
not entitled to have Shares registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and are
not considered the registered holder thereof. Accordingly, to exercise any
rights of a holder of Shares, each beneficial owner must rely on the procedures
of: (i) DTC; (ii) “DTC Participants,” i.e.,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives) own
DTC; and (iii) “Indirect Participants,” i.e.,
brokers, dealers, banks and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly,
through which such beneficial owner holds its interests. The Trust understands
that under existing industry practice, in the event the Trust requests any
action of holders of Shares, or a beneficial owner desires to take any action
that DTC, as the record owner of all outstanding Shares, is entitled to take,
DTC would authorize the DTC Participants to take such action and that the DTC
Participants would authorize the Indirect Participants and beneficial owners
acting through such DTC Participants to take such action and would otherwise act
upon the instructions of beneficial owners owning through them. As described
above, the Trust recognizes DTC or its nominee as the owner of all Shares for
all purposes. For more information, see the section entitled “Book Entry Only
System” in the Funds’ SAI.
The
Exchange is open for trading Monday through Friday and is closed on weekends and
the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Because
non-U.S. exchanges may be open on days when a Fund does not price its Shares,
the value of the securities in the Fund’s portfolio may change on days when
shareholders will not be able to purchase or sell a Fund’s Shares.
The
right of redemption by an Authorized Participant may be suspended or the date of
payment postponed (1) for any period during which the Exchange is closed (other
than customary weekend and holiday closings); (2) for any period during which
trading on the Exchange is suspended or restricted; (3) for any period during
which an emergency exists as a result of which disposal of the Shares of a Fund
or determination of its NAV is not reasonably practicable; or (4) in such other
circumstance as is permitted by the Securities and Exchange
Commission.
Market
Timing and Related Matters.
The Funds impose no restrictions on the frequency of purchases and redemptions.
Frequent purchases and redemptions of Fund Shares may attempt to take advantage
of a potential arbitrage opportunity presented by a lag between a change in the
value of a Fund’s portfolio securities after the close of the primary markets
for a Fund’s portfolio securities and the reflection of that change in a Fund’s
NAV (“market timing”). The Board of Trustees considered the nature of each Fund
(i.e.,
a fund whose shares are expected to trade intraday), that the Adviser monitors
the trading activity of Authorized Participants for patterns of abusive trading,
that the Funds reserve the right to reject orders that may be disruptive to the
management of or otherwise not in the Funds’ best interests, and that each Fund
may fair value certain of its securities. Given this structure, the Board of
Trustees determined that it is not necessary to impose restrictions on the
frequency of purchases and redemptions for the Funds at the present time.
DISTRIBUTIONS
Net
Investment Income and Capital Gains.
As a shareholder of a Fund, you are entitled to your share of such Fund’s
distributions of net investment income and net realized capital gains on its
investments. Each Fund pays out substantially all of its net earnings to its
shareholders as “distributions.”
Each
Fund typically earns income dividends from stocks and interest from debt
securities. These amounts, net of expenses, are typically passed along to Fund
shareholders as dividends from net investment income. Each Fund realizes capital
gains or losses whenever it sells securities. Net capital gains are distributed
to shareholders as “capital gain distributions.” Distributions from a Fund’s net
investment income, including net short-term capital gains, if any, are taxable
to you as ordinary income. Any long-term capital gains distributions you receive
from a Fund are taxable as long-term capital gains.
Net
investment income, if any, is typically distributed quarterly and net realized
capital gains, if any, are typically distributed to shareholders annually.
Dividends may be declared and paid more frequently to comply with the
distribution requirements of the U.S. Internal Revenue Code of 1986, as amended
(the “Internal Revenue Code”). In addition, in situations where a Fund
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acquires
investment securities after the beginning of a dividend period, a Fund may elect
to distribute at least annually amounts representing the full dividend yield net
of expenses on the underlying investment securities, as if the Fund owned the
underlying investment securities for the entire dividend period. If a Fund so
elects, some portion of each distribution may result in a return of capital,
which, for tax purposes, is treated as a return of your investment in Shares.
You will be notified regarding the portion of the distribution which represents
a return of capital.
Distributions
in cash may be reinvested automatically in additional Shares of a Fund only if
the broker through which you purchased Shares makes such option
available.
TAX
INFORMATION
As
with any investment, you should consider how your Fund investment will be taxed.
The tax information in this Prospectus is provided as general information. You
should consult your own tax professional about the tax consequences of an
investment in the Funds, including the possible application of foreign, state
and local taxes. Unless your investment in a Fund is through a tax-exempt entity
or tax-deferred retirement account, such as a 401(k) plan, you need to be aware
of the possible tax consequences when: (i) a Fund makes distributions, (ii) you
sell Shares in the secondary market or (iii) you create or redeem Creation
Units.
Taxes
on Distributions.
As noted above, each Fund expects to distribute net investment income, if any,
at least quarterly, and any net realized long-term or short-term capital gains,
if any, annually. Each Fund may also pay a special distribution at any time to
comply with U.S. federal tax requirements.
In
general, your distributions are subject to U.S. federal income tax when they are
paid, whether you take them in cash or reinvest them in a Fund. Distributions
from a Fund’s of net investment income, including net short-term gains, if any,
are generally taxable as ordinary income. Whether distributions of capital gains
represent long-term or short-term capital gains is determined by how long a Fund
owned the investments that generated them, rather than how long you have owned
your Shares. Distributions of net short-term capital gain in excess of net
long-term capital losses, if any, are generally taxable as ordinary income.
Distributions of net long- term capital gains in excess of net short-term
capital losses, if any, that are properly reported as capital gain dividends are
generally taxable as long-term capital gains. Long-term capital gains of a
non-corporate shareholder are generally taxable at a maximum rate of 15% or 20%,
depending on whether the shareholder’s income exceeds certain threshold
amounts.
The
Funds may receive dividends, the distribution of which a Fund may report as
qualified dividends. In the event that a Fund receives such a dividend and
reports the distribution of such dividend as a qualified dividend, the dividend
may be taxed at the maximum capital gains rates of 15% or 20%, provided holding
period and other requirements are met at both the shareholder and the Fund
level. There can be no assurance that any significant portion of a Fund’s
distributions will be eligible for qualified dividend treatment.
Distributions
in excess of a Fund’s current and accumulated earnings and profits are treated
as a tax-free return of your investment to the extent of your basis in the
Shares, and generally as capital gain thereafter. A return of capital, which for
tax purposes is treated as a return of your investment, reduces your basis in
Shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition of Shares. A distribution will reduce a Fund’s NAV per Share and may
be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of
capital.
Dividends,
interest and gains from non-U.S. investments of a Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may, in some cases, reduce or
eliminate such taxes.
If
more than 50% of a Fund’s total assets at the end of its taxable year consist of
foreign securities or if at least 50% of the value of the Fund’s total assets at
the close of each quarter end is represented by interests in regulated
investment companies, the Fund may elect to “pass through” to its investors
certain foreign income taxes paid by the Fund, with the result that each
investor will (i) include in gross income, even though not actually received,
the investor’s pro rata share of the Fund’s foreign income taxes, and (ii)
either deduct (in calculating U.S. taxable income) or credit (in calculating
U.S. federal income), subject to certain holding period and other limitations,
the investor’s pro rata share of the Fund’s foreign income taxes.
Backup
Withholding. Each
Fund
may be required to withhold a percentage of your distributions and proceeds if
you have not provided a taxpayer identification number or social security number
or otherwise established a basis for exemption from backup withholding. The
backup withholding rate for individuals is currently 24%. This is not an
additional tax and may be refunded, or credited against your U.S. federal income
tax liability, provided certain required information is timely furnished to the
Internal Revenue Service.
Taxes
on the Sale or Cash Redemption of Exchange Listed Shares.
Currently, any capital gain or loss realized upon a sale of Shares is generally
treated as long-term capital gain or loss if the Shares have been held for more
than one year and as a short-term capital gain or loss if held for one year or
less. However, any capital loss on a sale of Shares held for six months or less
is treated as long-term capital loss to the extent that capital gain dividends
were paid with respect to such Shares. The ability to deduct capital losses may
be limited. To the extent that a Fund’s shareholder’s Shares are redeemed for
cash, this is normally treated as a sale for tax purposes.
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Taxes
on Creations and Redemptions of Creation Units.
A person who exchanges securities for Creation Units generally
will
recognize a gain or loss. The gain or loss will be equal to the difference
between the market value of the Creation Units at the time of exchange and the
sum of the exchanger’s aggregate basis in the securities surrendered and the
amount of any cash paid for such Creation Units. A person who exchanges Creation
Units for securities will generally recognize a gain or loss equal to the
difference between the exchanger’s basis in the Creation Units and the sum of
the aggregate market value
of
the securities received. The Internal Revenue Service, however, may assert that
a loss realized upon an exchange of primarily securities for Creation Units
cannot be deducted currently under the rules governing “wash sales,” or on the
basis that there has been no significant change in economic position. Persons
exchanging securities for Creation Units or redeeming Creation Units should
consult their own tax adviser with respect to whether wash sale rules apply and
when a loss might be deductible and the tax treatment of any creation or
redemption transaction.
Under
current U.S. federal income tax laws, any capital gain or loss realized upon a
redemption (or creation) of Creation Units held as capital assets is generally
treated as long-term capital gain or loss if the Shares (or securities
surrendered) have been held for more than one year and as a short-term capital
gain or loss if the Shares (or securities surrendered) have been held for one
year or less.
If
you create or redeem Creation Units, you will be sent a confirmation statement
showing how many Shares you created or sold and at what price.
Medicare
Tax.
An additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
Non-U.S.
Shareholders.
Dividends
paid by a Fund to Non-U.S. shareholders are generally subject to withholding tax
at a 30% rate or a reduced rate specified by an applicable income tax treaty to
the extent derived from investment income and short-term capital gains.
Dividends paid by a Fund from net tax-exempt income or long-term capital gains
are generally not subject to such withholding tax. Properly-reported dividends
are generally exempt from U.S. federal withholding tax where they (i) are paid
in respect of a Fund’s “qualified net interest income” (generally, a Fund’s U.S.
source interest income, other than certain contingent interest and interest from
obligations of a corporation or partnership in which a Fund is at least a 10%
shareholder, reduced by expenses that are allocable to such income); or (ii) are
paid in respect of a Fund’s “qualified short-term capital gains” (generally, the
excess of a Fund’s net short-term capital gain over a Fund’s long-term capital
loss for such taxable year). However, depending on its circumstances, a Fund may
report all, some or none of its potentially eligible dividends as such qualified
net interest income or as qualified short-term capital gains and/or treat such
dividends, in whole
or
in part, as ineligible for this exemption from withholding.
Any
capital gain realized by a Non-U.S. shareholder upon a sale of Shares of a Fund
will generally not be subject to U.S. federal income or withholding tax unless
(i) the gain is effectively connected with the shareholder’s trade or business
in the United States, or in the case of a shareholder who is a nonresident alien
individual, the shareholder is present in the United States for 183 days or more
during the taxable year and certain other conditions are met or (ii) the Fund is
or has been a U.S. real property holding corporation, as defined below, at any
time within the five-year period preceding the date of disposition of the Fund’s
Shares or, if shorter, within the period during which the Non-U.S. shareholder
has held the Shares. Generally, a corporation is a U.S. real property holding
corporation if the fair market value of its U.S. real property interests, as
defined in the Internal Revenue Code and applicable regulations, equals or
exceeds 50% of the aggregate fair market value of its worldwide real property
interests and its other assets used or held for use in a trade or business. A
Fund may be, or may prior to a Non-U.S. shareholder’s disposition of Shares
become, a U.S. real property holding corporation. If a Fund is or becomes a U.S.
real property holding corporation, so long as the Fund’s Shares are regularly
traded on an established securities market, only a Non-U.S. shareholder who
holds or held (at any time during the shorter of the five year period preceding
the date of disposition or the holder’s holding period) more than 5% (directly
or indirectly as determined under applicable attribution rules of the Internal
Revenue Code) of the Fund’s Shares will be subject to United States federal
income tax on the disposition of Shares.
As
part of the Foreign Account Tax Compliance Act, (“FATCA”), a Fund may be
required to withhold 30% tax on certain types of U.S. sourced income
(e.g.,
dividends, interest, and other types of passive income) paid to (i) foreign
financial institutions (“FFIs”), including non-U.S. investment funds, unless
they agree to collect and disclose to the Internal Revenue Service information
regarding their direct and indirect U.S. account holders and (ii) certain
nonfinancial foreign entities (“NFFEs”), unless they certify certain information
regarding their direct and indirect U.S. owners. To avoid possible withholding,
FFIs will need to enter into agreements with the Internal Revenue Service which
state that they will provide the Internal Revenue Service information, including
the names, account numbers and balances, addresses and taxpayer identification
numbers of U.S. account holders and comply with due
diligence
procedures with respect to the identification of U.S. accounts as well as agree
to withhold tax on certain types of withholdable payments made to non-compliant
FFIs or to applicable foreign account holders who fail to provide the required
information to the Internal Revenue Service, or similar account information and
required documentation to a local revenue authority, should an applicable
intergovernmental agreement be implemented. NFFEs will need to provide
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certain
information regarding each substantial U.S. owner or certifications of no
substantial U.S. ownership, unless certain exceptions apply, or agree to provide
certain information to the Internal Revenue Service.
A
Fund may be subject to the FATCA withholding obligation, and also will be
required to perform due diligence reviews to classify foreign entity investors
for FATCA purposes. Investors are required to agree to provide information
necessary to allow a Fund to comply with the FATCA rules. If a Fund is required
to withhold amounts from payments pursuant to FATCA, investors will receive
distributions that are reduced by such withholding amounts.
Non-U.S.
shareholders are advised to consult their tax advisors with respect to the
particular tax consequences to them of an investment in the Funds, including the
possible applicability of the U.S. estate tax.
The
foregoing discussion summarizes some of the consequences under current U.S.
federal income tax law of an investment in a Fund. It is not a substitute for
personal tax advice. Consult your own tax advisor about the potential tax
consequences of an investment in a Fund under all applicable tax laws. Changes
in applicable tax authority could materially affect the conclusions discussed
above and could adversely affect the Funds, and such changes often
occur.
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Each
Fund has not yet commenced operations as of the date of this Prospectus and
therefore does not have a financial history.
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| PREMIUM/DISCOUNT
INFORMATION |
Each
Fund has not yet commenced operations and, therefore, does not have information
about the differences between the Fund’s daily market price on the Exchange and
its NAV. Information regarding how often the closing trading price of the
Shares of each Fund was above (i.e.,
at a premium) or below (i.e.,
at a discount) the NAV of the Fund for the most recently completed calendar year
and the most recently completed calendar quarter(s) since that year (or the life
of the Fund, if shorter) can be found at www.vaneck.com.
CONTINUOUS
OFFERING
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Trust on an ongoing basis, a “distribution,” as such term is used in the
Securities Act may occur at any point. Broker dealers and other persons are
cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery and liability provisions of the Securities Act.
For
example, a broker dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent Shares, and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker
dealers who are not “underwriters” but are participating in a distribution (as
contrasted to ordinary secondary trading transactions), and thus dealing with
Shares that are part of an “unsold allotment” within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
This is because the prospectus delivery exemption in Section 4(a)(3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the Investment Company Act of 1940. As a result, broker dealer
firms should note that dealers who are not underwriters but are participating in
a distribution (as contrasted with ordinary secondary market transactions) and
thus dealing with the Shares that are part of an overallotment within the
meaning of Section 4(a)(3)(A) of the Securities Act would be unable to take
advantage of the prospectus delivery exemption provided by Section 4(a)(3) of
the Securities Act. Firms that incur a prospectus delivery obligation with
respect to Shares are reminded that, under Rule 153 of the Securities Act, a
prospectus delivery obligation under Section 5(b)(2) of the Securities Act owed
to an exchange member in connection with a sale on the Exchange is satisfied by
the fact that the prospectus is available at the Exchange upon request. The
prospectus delivery mechanism provided in Rule 153 is only available with
respect to transactions on an exchange.
In
addition, certain affiliates of the Funds and the Adviser may purchase and
resell Fund Shares pursuant to this Prospectus.
OTHER
INFORMATION
The
Trust was organized as a Delaware statutory trust on March 15, 2001. Its
Declaration of Trust currently permits the Trust to issue an unlimited number of
Shares of beneficial interest. If shareholders are required to vote on any
matters, each Share outstanding would be entitled to one vote. Annual meetings
of shareholders will not be held except as required by the Investment Company
Act of 1940 and other applicable law. See the Funds’ SAI for more information
concerning the Trust’s form of organization. Section 12(d)(1) of the Investment
Company Act of 1940 restricts investments by investment companies in the
securities of other investment companies, including Shares of the Funds.
Registered investment companies are permitted to invest in the Funds beyond the
limits set forth in Section 12(d)(1) subject to certain terms and conditions set
forth in Securities and Exchange Commission regulations, including that such
investment companies enter into an agreement with such Fund.
The
Prospectus, SAI and any other Fund communication do not create any contractual
obligations between the Funds’ shareholders and the Trust, the Funds, the
Adviser and/or the Trustees. Further, shareholders are not intended third party
beneficiaries of any contracts entered into by (or on behalf of) any Fund,
including contracts with the Adviser or other parties who provide services to
the Funds.
Dechert
LLP serves as counsel to the Trust, including the Funds. [ ] serves as the
Trust’s independent registered public accounting firm and will audit the Funds’
financial statements annually.
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ADDITIONAL
INFORMATION
This
Prospectus does not contain all the information included in the Registration
Statement filed with the Securities and Exchange Commission with respect to the
Funds’ Shares. The Funds’ Registration Statement, including this Prospectus, the
Funds’ SAI and the exhibits are available on the EDGAR database at the
Securities and Exchange Commission’s website (http://www.sec.gov), and copies
may be obtained, after paying a duplicating fee, by electronic request at the
following email address: [email protected].
The
SAI for the Funds, which has been filed with the Securities and Exchange
Commission, provides more information about the Funds. The SAI for the Funds is
incorporated herein by reference and is legally part of this Prospectus.
Shareholder
inquiries may be directed to the Funds in writing to 666 Third Avenue, 9th
Floor, New York, New York 10017 or by calling 800.826.2333.
The
Funds’ SAI is available at www.vaneck.com.
(Investment
Company Act file no. 811-10325)
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For
more detailed information about the Funds, see the SAI dated [ ], 2025, as may
be supplemented from time to time. Additional information about the Funds’
investments is or will be available in the Funds’ annual and semi-annual reports
to shareholders and in Form N-CSR. In the Funds’ annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Funds’ performance during their last fiscal year. In Form N-CSR,
you will find the Funds’ annual and semi-annual financial
statements.
Call
VanEck at 800.826.2333 or write to the Funds at Van Eck Securities Corporation,
the Funds’ Distributor, at 666 Third Avenue, 9th Floor, New York, New York 10017
to request, free of charge, the annual or semi-annual reports, the SAI, the
Funds’ financial statements or other information about the Funds or to make
shareholder inquiries. You may also obtain the SAI, a Fund’s financial
statements or a Fund’s annual or semi-annual reports, by visiting the VanEck
website at www.vaneck.com.
Reports
and other information about the Funds are available on the EDGAR Database on the
Securities and Exchange Commission’s internet site at http://www.sec.gov. In
addition, copies of this information may be obtained, after paying a duplicating
fee, by electronic request at the following email address:
[email protected].
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Transfer
Agent: State Street Bank and Trust Company
SEC
Registration Number: 333-123257
1940
Act Registration Number: 811-10325
[
]PRO |
800.826.2333
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