UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-10325
VANECK VECTORS ETF TRUST
(Exact name of registrant as specified in charter)
666 Third Avenue, New York, NY 10017
(Address of principal executive offices) (Zip code)
Van Eck Associates Corporation
666 THIRD AVENUE, NEW YORK, NY 10017
(Name and address of agent for service)
Registrant’s telephone number, including area code: (212) 293-2000
Date of fiscal year end: SEPTEMBER 30
Date of reporting period: SEPTEMBER 30, 2020
Item 1. Report to Shareholders
ANNUAL REPORT September 30, 2020 |
VANECK VECTORS®
Biotech ETF | BBH |
Environmental Services ETF | EVX® |
Gaming ETF | BJK® |
Pharmaceutical ETF | PPH® |
Retail ETF | RTH® |
Semiconductor ETF | SMH® |
Video Gaming and eSports ETF | ESPO® |
800.826.2333 | vaneck.com |
Certain information contained in this report represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. The information contained herein regarding each index has been provided by the relevant index provider. Also, unless otherwise specifically noted, any discussion of the Funds’ holdings, the Funds’ performance, and the views of the investment adviser are as of September 30, 2020.
VANECK VECTORS ETFs
September 30, 2020 (unaudited)
Dear Fellow Shareholders:
The level of stimulus from the U.S. Federal Reserve (Fed) this year has been almost unprecedented and has had investment consequences. Financial markets have benefited from the Fed stimulus and the case for gold investing has become more solid.
Perhaps the surprise from this summer’s data is that the global economy is doing quite well, supporting the markets, despite the social distancing that we all feel in our personal lives. Important commodities like copper have regained pre-COVID-19 highs. In addition, China’s industrial recovery is pointing to all-time highs in activity, even though consumer activity is lagging a little.
One beneficiary is high yield bonds, particularly “fallen angels”—bonds that have been downgraded from investment grade. In a recessionary environment, some bonds are going to default or be downgraded. Fixed income markets this year generally started recovering after the Fed announced plans to intervene. We have already seen a record amount of new fallen angel bond volume—over $140B as of July 31, 20201—and expect more through the remainder of the calendar year.
Similar to 2016, when crude oil also swooned, we have seen a lot of energy companies become fallen angels, and the fallen angel strategy is buying those downgraded bonds. As reviewed in a recent blog, New Fallen Angel Bonds Drive Performance, these new energy fallen angels are among the top contributors to performance of the fallen angel strategy so far this year. As long as the Fed remains supportive, we believe this strategy should continue to do well.
We do, however, see two particular risks to this scenario: 1) an unforeseen rise in interest rates in the U.S. triggered by higher global growth or other factors; and 2) a bump in the return to full employment. An incredible number of people have been laid off in the U.S. and, regardless of GDP numbers, people are unlikely to quickly return to work at the same levels as the start of the year. Concern may be high enough for policy makers to take additional steps (any of which, however, remain, as yet, uncertain) that may impact the financial recovery.
The investing outlook sometimes does change suddenly, as it certainly has at times this year. To get our quarterly investment outlooks, please subscribe to “Investment Outlook” on vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit our website.
We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find a performance discussion and financial statements for each of the funds for the twelve month period ended September, 2020. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Jan F. van Eck
CEO and President
VanEck Vectors ETF Trust
October 19, 2020
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
1 | Source: FactSet, ICE Data Indices, LLC and Morningstar. |
1 |
VANECK VECTORS ETFs
MANAGEMENT DISCUSSION
September 30, 2020 (unaudited)
Biotech
Biotech stocks had an excellent year, with the Fund gaining 37.71%. Having started the 12 month period near the lows they later hit in the midst of the market’s plunge—in the third and fourth weeks in March—they recovered quickly thereafter, hitting a high on July 30 and ending the period having made a sizeable gain over the entire period. In an article1 in early August, The Wall Street Journal ascribed the “recent surge in biotech stocks” to not only investor interest in “potential vaccines to combat Covid-19”, but also anticipation of further investment by governments in “drug discovery and development.”
While, by the end of September 2019, the Food and Drug Administration (FDA) in the U.S. had approved just 28 new drugs, in the remaining three months of the year, a further 20 were approved.2 The pace of approvals accelerated in 2020 and, by mid-September, the FDA had approved 40 “novel drugs.”3
The three top positive contributions to the Fund’s performance came from: Moderna, Amgen and Regeneron Pharmaceuticals (5.1%, 14.9% and 5.0% of Fund net assets respectively†). The companies that detracted most from performance were Ionis Pharmaceuticals, Grifols and IQVIA Holdings (1.2%, sold by the Fund by period end and 4.5% of Fund net assets, respectively†).
Environmental Services
The Fund lost 4.23% over the 12 month period under review. Having reached a high toward the end of February, as with so many other stocks, environmental services stocks declined precipitously at the end of March to reach a low on March 23. Thereafter, however, they never fully recovered, ending slightly down on the year.
The slowdown in economic activity resulting from the COVID-19 virus led to solid waste volumes, especially industrial and commercial, plummeting.4 However, having bottomed out at the end of April, these started to rise both rapidly and significantly during the second quarter and into the third quarter. But the expectation remains that volumes for the year will certainly remain down in comparison to 2019.
While large-cap stocks contributed some positive total returns, both small- and mid-cap stocks detracted from the total return of the Fund. Darling International, Inc. (4.0% of Fund net assets†), Evoqua Water Technologies (4.1% of Fund net assets†) and STERIS (4.0% of Fund net assets†) were the top three contributors to positive total returns. Advanced Emissions Solutions (sold by Fund by period end†), Newpark Resources (sold by Fund by period end†) and Covanta Holding (3.6% of Fund net assets†) detracted the most from performance.
Gaming
While gaming stocks were hit hard by the COVID-19 pandemic, the Fund posted a gain of 10.03% for the 12 month period. Having reached a high in mid-January, as with so many other stocks, gaming stocks plummeted in March to reach a low on March 18. Thereafter, however, they clawed their way back up, ending slightly up on the year.
In Macau, China, the world’s biggest gaming hub, the devastating effect of COVID-19 on the gross revenue from “Games of Fortune” (as the Macau authorities describe them) is best illustrated by the figures for April and June. For these two months the figures were 754 million Macanese pataca (MOP) and MOP716 million respectively.5 In 2019 the figures for the same two months were MOP23,588 million and MOP23,812 million respectively. By October, however, revenues had improved somewhat, with a revenue in September of MOP2,211 million, up 66% on August’s figure of MOP1,330 million.6
The virus wreaked similar havoc in Nevada. In March, the “gaming win”7 stood at $618,129,278 (vs. $1,022,961,241 in 20198). However, in April, it crashed 99.61% to $3,646,658 (vs. $936,465,930 in 2019). In May it increased to $5,808,507. It was only in June that business improved to $566,806,790 (vs. $1,040,978,076 in 2019). The figure for the gaming win in August upped to $743,038,562, but was still down approximately 22% on August 2019’s figure of $953,623,896, and slightly down from July 2020’s figure of $756,793,269.
Ireland-, Sweden- and U.S.-listed companies were the leading contributors to performance. Eight countries detracted from performance, with Australian and Swedish companies detracting the most.
2 |
Pharmaceutical
Pharmaceutical stocks had a solid, if eventful, 12 months. By the end of September, they had largely recovered from the low they hit on March 23, 2020 and the Fund had gained 11.02%. As with biotech stocks, hopes for potential vaccines for COVID-19 and expectations of higher government spending on drug discovery and development have helped underpin investor optimism in the sector.
While Catalent, Novo Nordisk and Eli Lilly (4.6%, 5.2% and 4.9% of Fund net assets, respectively†) were the three largest positive contributors to performance, Amarin Corporation (0.1% of Fund net assets†), Mylan (3.4% of Fund net assets†) and Bausch Health Companies (2.4% of Fund net assets†) were the Fund’s three largest detractors.
Retail
Despite the COVID-19 pandemic, the Fund had an excellent year, returning 31.22% for the 12 month period under review. While “brick and mortar”, e.g., department stores, retail took a battering during the COVID-19 pandemic (no customers, no staff), those companies with well-developed ecommerce capabilities or deemed “essential” during the crisis thrived.
Businesses involved in Internet and catalog retail contributed by far the most to the positive performance of the Fund with Amazon (19.3% of Fund net assets†) contributing the most of any individual company in the Fund’s portfolio. While no single sector detracted from performance, companies in the health care providers and services contributed the least to performance.
Semiconductor
The Fund had an excellent year, returning 48.60% for the 12 month period under review. With global semiconductor sales of $412.1 billion (down 12.1%),9 2019 was not as good a year as 2018 with sales of $468.8 billion.10 However, seemingly little affected by the COVID-19 crisis, in each of the first two quarters of 2020, sales remained firm. While down somewhat in the first quarter, the second, with sales of $103.6 billion,11 showed an increase of 5.1% over the same periods in 2019.
Large-capitalization stocks continued to be key drivers of the Fund’s returns. NVIDIA, Taiwan Semiconductor Manufacturing Company and Advanced Micro Devices (8.2%, 11.0% and 4.8% of Fund net assets, respectively†) were the three top contributing companies. No one company detracted from performance, but Universal Display (1.1% of Fund net assets†), ON Semiconductor (0.8% of Fund net assets†) and NXP Semiconductors (4.4% of Fund net assets†) contributed the least.
Video Games and eSports
Video gaming and esports stocks provided outstanding returns during the period, performing the best of any of the VanEck Vectors industry ETFs, and returning a commendable 82.25%. The COVID-19 pandemic had an immediate and direct effect on the fortunes of video game companies, as consumers around the world were forced inside and left without traditional entertainment options. Against the pandemic backdrop, video game-related revenues and engagement metrics soared to all-time highs, leading to rising stock prices for the vast majority of companies participating.
Leading contributing companies over the period from inception were NVIDIA, Sea and Advanced Micro Devices (8.3%, 6.3% and 6.8% of the Fund’s net assets respectively†). Only three companies detracted from performance and, then, only minimally: Konami Holdings (1.9% of Fund net assets†), Gungho Online Entertainment (sold by Fund by period end†) and DeNA Co. (0.6% of Fund net assets†).
† | All Fund assets referenced are Total Net Assets as of September 30, 2020. |
1 | The Wall Street Journal: During Covid-19 Pandemic, Biotech IPOs Already Surpass Record, August 10, 2020, https://www.wsj.com/articles/during-covid-19-pandemic-biotech-ipos-already-surpass-record-11597051800 |
2 | U.S. Food & Drug Administration: New Drug Therapy Approvals 2019, January 2020, https://www.fda.gov/drugs/new-drugs-fda-cders-new-molecular-entities-and-new-therapeutic-biological-products/new-drug-therapy-approvals-2019#:~:text=Novel%20drugs%20approved%20in%202019,Wakix%2C%20Xpovio%2C%20and%20Zulresso. |
3 | U.S. Food & Drug Administration: Novel Drug Approvals for 2020, September 2, 2020, https://www.fda.gov/drugs/new-drugs-fda-cders-new-molecular-entities-and-new-therapeutic-biological-products/novel-drug-approvals-2020 |
3 |
VANECK VECTORS ETFs
MANAGEMENT DISCUSSION
September 30, 2020 (unaudited) (continued)
4 | Goldman Sachs: Americas Environmental Services—2Q’20 Preview: Raising our estimates as faster recovery materializes, July 27, 2020 | |
5 | Gaming Inspection and Coordination Bureau, Macao SAR: Monthly Gross Revenue from Games of Fortune, http://www.dicj.gov.mo/web/en/information/DadosEstat_mensal/2020/index.html | |
6 | Ibid. | |
7 | Or “gross revenue,” defined (in short) as: the total of all: | |
(a) | Cash received as winnings; | |
(b) | Cash received in payment for credit extended by a licensee to a patron for purposes of gaming; and | |
(c) | Compensation received for conducting any game, or any contest or tournament in conjunction with interactive gaming, in which the licensee is not party to a wager, less the total of all cash paid out as losses to patrons, those amounts paid to fund periodic payments and any other items made deductible as losses by NRS 463.3715. For the purposes of this section, cash or the value of noncash prizes awarded to patrons in a contest or tournament are not losses, except that losses in a contest or tournament conducted in conjunction with an inter-casino linked system may be deducted to the extent of the compensation received for the right to participate in that contest or tournament. For a full definition see Nevada Gaming Control Act, https://www.leg.state.nv.us/NRS/NRS-463.html#NRS463Sec0161 | |
8 | Nevada Gaming Control Board: Abbreviated Revenue Release, http://gaming.nv.gov/index.aspx?page=172 | |
9 | Semiconductor Industry Association: Worldwide Semiconductor Sales Decrease 12 Percent to $412 Billion in 2019, February 3, 2020, https://www.semiconductors.org/worldwide-semiconductor-sales-decrease-12-percent-to-412-billion-in-2019/ | |
10 | Semiconductor Industry Association: More Than 1 Trillion Semiconductors Sold Annually for the First Time Ever in 2018, February 14, 2019, https://www.semiconductors.org/more-than-1-trillion-semiconductors-sold-annually-for-the-first-time-ever-in-2018/ | |
11 | Semiconductor Industry Association: Global Semiconductor Sales Increase 5.1 Percent Year-to-Year in June; Q2 Sales Down Slightly Compared to Q1, August 3, 2020, https://www.semiconductors.org/global-semiconductor-sales-increase-5-1-percent-year-to-year-in-june-q2-sales-down-slightly-compared-to-q1/ |
4 |
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MVBBHTR1 | SPTR2 | |
One Year | 37.85% | 37.71% | 37.84% | 15.15% |
Five Year | 7.65% | 7.62% | 7.79% | 14.15% |
Life* | 19.29% | 19.27% | 19.47% | 14.36% |
* | Commencement of Fund: 12/20/11; First Day of Secondary Market Trading: 12/21/11. |
1 | MVIS® US Listed Biotech 25 Index (MVBBHTR) is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in the biotech industry. Biotechnology includes research (including research contractors), development as well as production, marketing and sales of drugs based on genetic analysis and diagnostic equipment (excluding pharmacies). |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 12 for more information.
5 |
VANECK VECTORS ENVIRONMENTAL SERVICES ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | AXENVTR1 | SPTR2 | |
One Year | (3.91)% | (4.23)% | (4.42)% | 15.15% |
Five Year | 12.30% | 12.03% | 12.51% | 14.15% |
Ten Year | 9.23% | 9.17% | 9.68% | 13.74% |
1 | NYSE Arca Environmental Services Index (AXENVTR) is a rules based, modified equal dollar weighted index intended to give investors a means of tracking the overall performance of the common stocks and depositary receipts of U.S. exchange-listed companies involved in environmental services. The Environmental Services Index is designed to measure the performance of widely held, highly capitalized companies engaged in business activities that may benefit from the global increase in demand for consumer waste disposal, removal and storage of industrial by-products, and the management of associated resources. |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Ten Year) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price over the past 10 years. The result is compared with the Fund’s benchmark and a broad-based index.
|
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 12 for more information.
6 |
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MVBJKTR1 | SPTR2 | |
One Year | 10.53% | 10.03% | 10.05% | 15.15% |
Five Year | 9.14% | 8.97% | 9.34% | 14.15% |
Ten Year | 6.61% | 6.54% | 6.94% | 13.74% |
1 | MVIS® Global Gaming Index (MVBJKTR) is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in the casino and gaming industry. Gaming includes casinos and casino hotels, sports betting (including internet gambling and racetracks) and lottery services as well as gaming services, gaming technology and gaming equipment. |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Index data prior to September 24, 2012 reflects that of the S-Network Global Gaming Index (WAGRT). Index history which includes periods prior to September 24, 2012 reflects a blend of the performance of WAGRT and MVBJKTR and is not intended for third party use. | |
Hypothetical Growth of $10,000 (Ten Year) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price over the past 10 years. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 12 for more information.
7 |
VANECK VECTORS PHARMACEUTICAL ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MVPPHTR1 | SPTR2 | |
One Year | 11.08% | 11.02% | 10.67% | 15.15% |
Five Year | 1.71% | 1.66% | 1.60% | 14.15% |
Life* | 8.78% | 8.64% | 8.56% | 14.36% |
* | Commencement of Fund: 12/20/11; First Day of Secondary Market Trading: 12/21/11. |
1 | MVIS® US Listed Pharmaceutical 25 Index (MVPPHTR) is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in the pharmaceutical industry. Pharmaceuticals include companies engaged primarily in research (including research contractors) and development as well as production, marketing and sales of pharmaceuticals (excluding pharmacies). |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 12 for more information.
8 |
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MVRTHTR1 | SPTR2 | |
One Year | 31.24% | 31.22% | 31.11% | 15.15% |
Five Year | 16.90% | 16.88% | 16.75% | 14.15% |
Life* | 18.67% | 18.53% | 18.35% | 14.36% |
* | Commencement of Fund: 12/20/11; First Day of Secondary Market Trading: 12/21/11. |
1 | MVIS® US Listed Retail 25 Index (MVRTHTR) is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in the retail industry. Retail includes companies engaged primarily in retail distribution; wholesalers; online, direct mail retailers; multi-line retailers; specialty retailers, such as apparel, automotive, computer and electronics, drug, home improvement and home furnishing retailers; and food and other staples retailers. |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 12 for more information.
9 |
VANECK VECTORS SEMICONDUCTOR ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MVSMHTR1 | SPTR2 | |
One Year | 48.42% | 48.60% | 48.51% | 15.15% |
Five Year | 30.40% | 30.38% | 30.39% | 14.15% |
Life* | 23.91% | 23.97% | 23.90% | 14.36% |
* | Commencement of Fund: 12/20/11; First Day of Secondary Market Trading: 12/21/11. |
1 | MVIS® US Listed Semiconductor 25 Index (MVSMHTR) is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in the semiconductor industry. Semiconductors include companies engaged primarily in the production of semiconductors and semiconductor equipment. |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 12 for more information.
10 |
VANECK VECTORS VIDEO GAMING AND ESPORTS ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MVESPOTR1 | SPTR2 | |
One Year | 82.53% | 82.25% | 82.48% | 15.15% |
Life* | 42.45% | 42.24% | 43.24% | 11.81% |
* | Commencement of Fund: 10/16/18; First Day of Secondary Market Trading: 10/17/18. |
1 | The MVIS® Global Video Gaming and eSports Index (MVESPOTR) is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in video gaming and eSports. |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 12 for more information.
11 |
VANECK VECTORS ETF TRUST
ABOUT FUND PERFORMANCE
(unaudited)
The price used to calculate market return (Share Price) is determined by using the closing price listed on its primary listing exchange. Since the shares of each Fund did not trade in the secondary market until after each Fund’s commencement, for the period from commencement to the first day of secondary market trading in shares of each Fund, the NAV of each Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted represents past performance. Past performance is not a guarantee of future results. Performance information for each Fund reflects temporary waivers of expenses and/or fees. Had each Fund incurred all expenses, investment returns would have been reduced. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the sale of Fund shares.
Investment return and value of the shares of each Fund will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund returns reflect reinvestment of dividends and capital gains distributions. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com.
Index returns assume the reinvestment of all income and do not reflect any management fees or brokerage expenses associated with Fund returns. Certain indices may take into account withholding taxes. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses.
The Biotech Index, Gaming Index, Pharmaceutical Index, Retail Index, Semiconductor Index and Global Video Gaming and eSports Index are published by MV Index Solutions GmbH (MVIS®), which is a wholly owned subsidiary of the Adviser, Van Eck Associates Corporation. The Environmental Services Index is published by ICE Data Indices, LLC (ICE Data).
MVIS and ICE Data are referred to herein as the “Index Providers.” The Index Providers do not sponsor, endorse, or promote the Funds and bear no liability with respect to the Funds or any security.
12 |
VANECK VECTORS ETF TRUST
(unaudited)
Hypothetical $1,000 investment at beginning of period
As a shareholder of a Fund, you incur operating expenses, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The disclosure is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, April 1, 2020 to September 30, 2020.
Actual Expenses
The first line in the table below provides information about account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period.”
Hypothetical Example for Comparison Purposes
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Annualized | Expenses Paid | |||||||||
Account | Account | Expense | During the Period* | |||||||||
Value | Value | Ratio | April 1, 2020 – | |||||||||
April 1, 2020 | September 30, 2020 | During Period | September 30, 2020 | |||||||||
Biotech ETF | ||||||||||||
Actual | $1,000.00 | $ | 1,266.70 | 0.35% | $1.98 | |||||||
Hypothetical** | $1,000.00 | $ | 1,023.25 | 0.35% | $1.77 | |||||||
Environmental Services ETF | ||||||||||||
Actual | $1,000.00 | $ | 1,287.10 | 0.55% | $3.14 | |||||||
Hypothetical** | $1,000.00 | $ | 1,022.25 | 0.55% | $2.78 | |||||||
Gaming ETF | ||||||||||||
Actual | $1,000.00 | $ | 1,513.20 | 0.65% | $4.08 | |||||||
Hypothetical** | $1,000.00 | $ | 1,021.75 | 0.65% | $3.29 | |||||||
Pharmaceutical ETF | ||||||||||||
Actual | $1,000.00 | $ | 1,151.70 | 0.35% | $1.88 | |||||||
Hypothetical** | $1,000.00 | $ | 1,023.25 | 0.35% | $1.77 | |||||||
Retail ETF | ||||||||||||
Actual | $1,000.00 | $ | 1,411.50 | 0.35% | $2.11 | |||||||
Hypothetical** | $1,000.00 | $ | 1,023.25 | 0.35% | $1.77 | |||||||
Semiconductor ETF | ||||||||||||
Actual | $1,000.00 | $ | 1,489.60 | 0.35% | $2.18 | |||||||
Hypothetical** | $1,000.00 | $ | 1,023.25 | 0.35% | $1.77 | |||||||
Video Gaming and eSports ETF | ||||||||||||
Actual | $1,000.00 | $ | 1,589.80 | 0.55% | $3.56 | |||||||
Hypothetical** | $1,000.00 | $ | 1,022.25 | 0.55% | $2.78 |
* | Expenses are equal to the Fund’s annualized expense ratio (for the six months ended September 30, 2020) multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year divided by the number of days in the fiscal year (to reflect the one-half year period). |
** | Assumes annual return of 5% before expenses |
13 |
September 30, 2020
Number of Shares | Value | |||||||
COMMON STOCKS: 100.0% | ||||||||
China / Hong Kong: 2.6% | ||||||||
43,876 | BeiGene Ltd. (ADR) * | $ | 12,567,842 | |||||
Germany: 1.6% | ||||||||
111,468 | BioNTech SE (ADR) * | 7,716,930 | ||||||
Netherlands: 3.0% | ||||||||
277,239 | QIAGEN NV (USD) * | 14,488,510 | ||||||
United States: 92.8% | ||||||||
185,008 | Alexion Pharmaceuticals, Inc. * | 21,170,466 | ||||||
86,439 | Alnylam Pharmaceuticals, Inc. * | 12,585,518 | ||||||
284,899 | Amgen, Inc. | 72,409,930 | ||||||
81,680 | Biogen, Inc. * | 23,170,982 | ||||||
169,748 | BioMarin Pharmaceutical, Inc. * | 12,914,428 | ||||||
64,584 | Charles River Laboratories International, Inc. * | 14,625,047 | ||||||
184,812 | Exact Sciences Corp. * † | 18,841,583 | ||||||
538,569 | Gilead Sciences, Inc. | 34,032,175 | ||||||
137,873 | Guardant Health, Inc. * | 15,411,444 | ||||||
67,330 | Illumina, Inc. * | 20,810,356 |
Number of Shares | Value | |||||||
United States: (continued) | ||||||||
296,489 | Immunomedics, Inc. * | $ | 25,210,460 | |||||
197,127 | Incyte Corp. * | 17,690,177 | ||||||
125,918 | Ionis Pharmaceuticals, Inc. * | 5,974,809 | ||||||
138,200 | IQVIA Holdings, Inc. * | 21,784,466 | ||||||
352,068 | Moderna, Inc. * | 24,908,811 | ||||||
85,673 | Neurocrine Biosciences, Inc. * | 8,238,316 | ||||||
75,415 | Novavax, Inc. * † | 8,171,215 | ||||||
37,085 | Quidel Corp. * | 8,135,707 | ||||||
43,588 | Regeneron Pharmaceuticals, Inc. * | 24,399,691 | ||||||
93,896 | Sarepta Therapeutics, Inc. * | 13,185,815 | ||||||
108,578 | Seattle Genetics, Inc. * | 21,247,629 | ||||||
95,436 | Vertex Pharmaceuticals, Inc. * | 25,970,044 | ||||||
450,889,069 | ||||||||
Total Common Stocks: 100.0% (Cost: $440,417,849) | 485,662,351 | |||||||
Liabilities in excess of other assets: (0.0)% | (212,140 | ) | ||||||
NET ASSETS: 100.0% | $ | 485,450,211 |
Definitions:
ADR | American Depositary Receipt |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $21,317,642. |
Summary of Investments by Sector | % of Investments | Value | ||||||
Biotechnology | 80.4 | % | $ | 390,406,821 | ||||
Health Care Services | 3.2 | 15,411,444 | ||||||
Health Care Supplies | 1.7 | 8,135,707 | ||||||
Life Sciences Tools & Services | 14.7 | 71,708,379 | ||||||
100.0 | % | $ | 485,662,351 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks* | $ | 485,662,351 | $ | — | $ | — | $ | 485,662,351 |
* | See Schedule of Investments for geographic sector breakouts. |
See Notes to Financial Statements
14 |
VANECK VECTORS ENVIRONMENTAL SERVICES ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number of Shares | Value | |||||||
COMMON STOCKS: 99.8% | ||||||||
Canada: 3.8% | ||||||||
55,480 | GFL Environmental, Inc. (USD) | $ | 1,179,505 | |||||
United States: 96.0% | ||||||||
31,558 | ABM Industries, Inc. | 1,156,916 | ||||||
25,782 | Cantel Medical Corp. | 1,132,861 | ||||||
21,530 | Casella Waste Systems, Inc. * | 1,202,450 | ||||||
20,961 | Clean Harbors, Inc. * | 1,174,445 | ||||||
144,037 | Covanta Holding Corp. | 1,116,287 | ||||||
34,513 | Darling International, Inc. * | 1,243,503 | ||||||
24,878 | Donaldson Co., Inc. | 1,154,837 | ||||||
15,196 | Ecolab, Inc. | 3,036,769 | ||||||
71,910 | Energy Recovery, Inc. * † | 589,662 | ||||||
58,816 | Evoqua Water Technologies Corp. * | 1,248,075 | ||||||
40,872 | Heritage-Crystal Clean, Inc. * | 545,641 | ||||||
32,696 | Republic Services, Inc. | 3,052,172 | ||||||
30,334 | Schnitzer Steel Industries, Inc. | 583,323 | ||||||
87,712 | Sharps Compliance Corp. * | 549,954 | ||||||
19,263 | Stericycle, Inc. * | 1,214,725 | ||||||
7,071 | STERIS Plc | 1,245,839 | ||||||
19,178 | Tennant Co. | 1,157,584 | ||||||
13,049 | Tetra Tech, Inc. | 1,246,179 | ||||||
18,013 | US Ecology, Inc. | 588,485 | ||||||
31,397 | Waste Connections, Inc. | 3,259,009 | ||||||
27,287 | Waste Management, Inc. | 3,088,070 | ||||||
29,586,786 | ||||||||
Total Common Stocks: 99.8% (Cost: $28,051,126) | 30,766,291 | |||||||
Other assets less liabilities: 0.2% | 49,553 | |||||||
NET ASSETS: 100.0% | $ | 30,815,844 |
Definitions:
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $229,633. |
Summary of Investments by Sector | % of Investments | Value | ||||||
Consumer Staples | 4.0 | % | $ | 1,243,503 | ||||
Health Care | 9.5 | 2,928,654 | ||||||
Industrials | 74.7 | 22,974,042 | ||||||
Materials | 11.8 | 3,620,092 | ||||||
100.0 | % | $ | 30,766,291 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks* | $ | 30,766,291 | $ | — | $ | — | $ | 30,766,291 |
* | See Schedule of Investments for geographic sector breakouts. |
See Notes to Financial Statements
15 |
SCHEDULE OF INVESTMENTS
September 30, 2020
Number of Shares | Value | |||||||
COMMON STOCKS: 99.7% | ||||||||
Australia: 11.0% | ||||||||
166,111 | Aristocrat Leisure Ltd. # | $ | 3,625,167 | |||||
93,385 | Crown Resorts Ltd. # | 593,637 | ||||||
234,744 | Star Entertainment Group Ltd. # | 518,196 | ||||||
538,160 | TABCORP Holdings Ltd. # | 1,296,857 | ||||||
6,033,857 | ||||||||
Cambodia: 1.1% | ||||||||
516,000 | Nagacorp Ltd. # | 616,698 | ||||||
China / Hong Kong: 17.4% | ||||||||
578,240 | Galaxy Entertainment Group Ltd. # | 3,909,330 | ||||||
119,000 | Melco International Development Ltd. # | 209,697 | ||||||
52,318 | Melco Resorts & Entertainment Ltd. (ADR) | 871,095 | ||||||
262,100 | MGM China Holdings Ltd. † # | 326,652 | ||||||
760,400 | Sands China Ltd. # | 2,947,490 | ||||||
658,000 | SJM Holdings Ltd. # | 780,041 | ||||||
309,600 | Wynn Macau Ltd. * # | 496,851 | ||||||
9,541,156 | ||||||||
France: 2.2% | ||||||||
32,927 | La Francaise des Jeux SAEM Reg S 144A # | 1,208,182 | ||||||
Greece: 1.0% | ||||||||
59,622 | OPAP SA # | 565,486 | ||||||
Ireland: 8.5% | ||||||||
29,206 | Flutter Entertainment Plc # | 4,636,028 | ||||||
Japan: 2.5% | ||||||||
19,400 | Heiwa Corp. † # | 318,879 | ||||||
15,279 | Sankyo Co. Ltd. # | 399,842 | ||||||
53,400 | Sega Sammy Holdings, Inc. # | 650,437 | ||||||
1,369,158 | ||||||||
Malaysia: 1.7% | ||||||||
638,700 | Genting Bhd # | 490,150 | ||||||
839,198 | Genting Malaysia Bhd # | 420,719 | ||||||
910,869 | ||||||||
Malta: 0.7% | ||||||||
54,816 | Kindred Group Plc (SDR) # | 397,151 | ||||||
New Zealand: 0.5% | ||||||||
133,430 | SkyCity Entertainment Group Ltd. # | 264,526 | ||||||
Singapore: 1.6% | ||||||||
1,777,100 | Genting Singapore Ltd. # | 877,181 |
Number of Shares | Value | |||||||
South Korea: 1.2% | ||||||||
26,775 | Kangwon Land, Inc. # | $ | 492,256 | |||||
14,556 | Paradise Co. Ltd. # | 170,727 | ||||||
662,983 | ||||||||
Sweden: 4.5% | ||||||||
30,116 | Evolution Gaming Group AB Reg S 144A # | 1,991,159 | ||||||
54,694 | NetEnt AB * # | 464,197 | ||||||
2,455,356 | ||||||||
United Kingdom: 5.2% | ||||||||
130,175 | GVC Holdings Plc * # | 1,633,437 | ||||||
61,922 | Playtech Ltd. # | 289,647 | ||||||
266,442 | William Hill Plc # | 948,917 | ||||||
2,872,001 | ||||||||
United States: 40.6% | ||||||||
18,855 | Boyd Gaming Corp. | 578,660 | ||||||
32,555 | Caesars Entertainment, Inc. * † | 1,825,033 | ||||||
7,543 | Churchill Downs, Inc. | 1,235,694 | ||||||
73,165 | DraftKings, Inc. * † | 4,305,029 | ||||||
44,898 | Gaming and Leisure Properties, Inc. | 1,658,083 | ||||||
31,463 | International Game Technology Plc † | 350,183 | ||||||
73,961 | Las Vegas Sands Corp. | 3,451,020 | ||||||
29,251 | MGM Growth Properties LLC | 818,443 | ||||||
102,040 | MGM Resorts International | 2,219,370 | ||||||
26,746 | Penn National Gaming, Inc. * † | 1,944,434 | ||||||
110,394 | VICI Properties, Inc. | 2,579,908 | ||||||
17,576 | Wynn Resorts Ltd. * | 1,262,133 | ||||||
22,227,990 | ||||||||
Total Common Stocks (Cost: $50,990,791) | 54,638,622 | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 0.0% (Cost: $109) | ||||||||
Money Market Fund: 0.0% | ||||||||
109 | State Street Navigator Securities Lending Government Money Market Portfolio | 109 | ||||||
Total Investments: 99.7% (Cost: $50,990,900) | 54,638,731 | |||||||
Other assets less liabilities: 0.3% | 154,126 | |||||||
NET ASSETS: 100.0% | $ | 54,792,857 |
See Notes to Financial Statements
16 |
Definitions:
ADR | American Depositary Receipt |
SDR | Swedish Depositary Receipt |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $7,905,823. |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $31,539,537 which represents 57.6% of net assets. |
Reg S | Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. |
144A | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $3,199,341, or 5.8% of net assets. |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Consumer Discretionary | 90.7 | % | $ | 49,582,188 | ||||
Real Estate | 9.3 | 5,056,434 | ||||||
100.0 | % | $ | 54,638,622 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks | |||||||||||||||||
Australia | $ | — | $ | 6,033,857 | $ | — | $ | 6,033,857 | |||||||||
Cambodia | — | 616,698 | — | 616,698 | |||||||||||||
China / Hong Kong | 871,095 | 8,670,061 | — | 9,541,156 | |||||||||||||
France | — | 1,208,182 | — | 1,208,182 | |||||||||||||
Greece | — | 565,486 | — | 565,486 | |||||||||||||
Ireland | — | 4,636,028 | — | 4,636,028 | |||||||||||||
Japan | — | 1,369,158 | — | 1,369,158 | |||||||||||||
Malaysia | — | 910,869 | — | 910,869 | |||||||||||||
Malta | — | 397,151 | — | 397,151 | |||||||||||||
New Zealand | — | 264,526 | — | 264,526 | |||||||||||||
Singapore | — | 877,181 | — | 877,181 | |||||||||||||
South Korea | — | 662,983 | — | 662,983 | |||||||||||||
Sweden | — | 2,455,356 | — | 2,455,356 | |||||||||||||
United Kingdom | — | 2,872,001 | — | 2,872,001 | |||||||||||||
United States | 22,227,990 | — | — | 22,227,990 | |||||||||||||
Money Market Fund | 109 | — | — | 109 | |||||||||||||
Total | $ | 23,099,194 | $ | 31,539,537 | $ | — | $ | 54,638,731 |
See Notes to Financial Statements
17 |
VANECK VECTORS PHARMACEUTICAL ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number of Shares | Value | |||||||
COMMON STOCKS: 99.8% | ||||||||
Denmark: 5.2% | ||||||||
177,243 | Novo Nordisk A/S (ADR) | $ | 12,305,982 | |||||
France: 4.9% | ||||||||
228,805 | Sanofi SA (ADR) | 11,479,147 | ||||||
Ireland: 7.6% | ||||||||
543,469 | Amarin Corp. Plc (ADR) * † | 2,288,005 | ||||||
64,936 | Jazz Pharmaceuticals Plc (USD) * | 9,259,224 | ||||||
136,974 | Perrigo Co. Plc (USD) | 6,288,476 | ||||||
17,835,705 | ||||||||
Israel: 4.6% | ||||||||
1,197,285 | Teva Pharmaceutical Industries Ltd. (ADR) * | 10,787,538 | ||||||
Japan: 4.5% | ||||||||
588,698 | Takeda Pharmaceutical Co. Ltd. (ADR) | 10,502,372 | ||||||
Switzerland: 5.0% | ||||||||
133,906 | Novartis AG (ADR) | 11,644,466 | ||||||
United Kingdom: 10.4% | ||||||||
220,231 | AstraZeneca Plc (ADR) | 12,068,659 | ||||||
267,469 | GlaxoSmithKline Plc (ADR) | 10,067,533 | ||||||
23,974 | GW Pharmaceuticals Plc (ADR) * † | 2,333,869 | ||||||
24,470,061 |
Number of Shares | Value | |||||||
United States: 57.6% | ||||||||
128,923 | AbbVie, Inc. | $ | 11,292,366 | |||||
110,519 | AmerisourceBergen Corp. | 10,711,501 | ||||||
356,279 | Bausch Health Cos, Inc. * | 5,536,576 | ||||||
199,953 | Bristol-Myers Squibb Co. | 12,055,166 | ||||||
125,376 | Catalent, Inc. * | 10,739,708 | ||||||
265,480 | Elanco Animal Health, Inc. * | 7,414,856 | ||||||
77,734 | Eli Lilly & Co. | 11,506,187 | ||||||
78,913 | Johnson & Johnson | 11,748,567 | ||||||
69,804 | McKesson Corp. | 10,395,910 | ||||||
139,175 | Merck & Co., Inc. | 11,544,566 | ||||||
542,403 | Mylan NV * | 8,043,837 | ||||||
63,004 | Patterson Companies, Inc. | 1,518,711 | ||||||
326,512 | Pfizer, Inc. | 11,982,990 | ||||||
66,905 | Zoetis, Inc. | 11,064,080 | ||||||
135,555,021 | ||||||||
Total Common Stocks (Cost: $262,480,657) | 234,580,292 | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 0.9% (Cost: $2,245,622) | ||||||||
Money Market Fund: 0.9% | ||||||||
2,245,622 | State Street Navigator Securities Lending Government Money Market Portfolio | 2,245,622 | ||||||
Total Investments: 100.7% (Cost: $264,726,279) | 236,825,914 | |||||||
Liabilities in excess of other assets: (0.7)% | (1,676,590 | ) | ||||||
NET ASSETS: 100.0% | $ | 235,149,324 |
Definitions:
ADR | American Depositary Receipt |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $4,386,374. |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Biotechnology | 5.8 | % | $ | 13,580,371 | ||||
Health Care Distributors | 9.6 | 22,626,122 | ||||||
Pharmaceuticals | 84.6 | 198,373,799 | ||||||
100.0 | % | $ | 234,580,292 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks* | $ | 234,580,292 | $ | — | $ | — | $ | 234,580,292 | |||||||||
Money Market Fund | 2,245,622 | — | — | 2,245,622 | |||||||||||||
Total | $ | 236,825,914 | $ | — | $ | — | $ | 236,825,914 |
* See Schedule of Investments for geographic sector breakouts.
See Notes to Financial Statements
18 |
SCHEDULE OF INVESTMENTS
September 30, 2020
Number of Shares | Value | |||||||
COMMON STOCKS: 100.1% | ||||||||
Canada: 2.1% | ||||||||
11,449 | Lululemon Athletica, Inc. (USD) * | $ | 3,770,957 | |||||
China / Hong Kong: 4.5% | ||||||||
106,044 | JD.com, Inc. (ADR) * | 8,230,075 | ||||||
United States: 93.5% | ||||||||
11,130 | Amazon.com, Inc. * | 35,045,365 | ||||||
24,238 | AmerisourceBergen Corp. | 2,349,147 | ||||||
3,746 | AutoZone, Inc. * | 4,411,439 | ||||||
33,966 | Best Buy Co., Inc. | 3,780,076 | ||||||
40,814 | Cardinal Health, Inc. | 1,916,217 | ||||||
26,254 | Costco Wholesale Corp. | 9,320,170 | ||||||
137,503 | CVS Caremark Corp. | 8,030,175 | ||||||
38,387 | Dollar General Corp. | 8,046,683 | ||||||
36,579 | Dollar Tree, Inc. * | 3,341,126 | ||||||
30,679 | L Brands, Inc. | 975,899 | ||||||
57,011 | Lowe’s Companies, Inc. | 9,455,844 | ||||||
26,014 | McKesson Corp. | 3,874,265 |
Number of Shares | Value | |||||||
United States: (continued) | ||||||||
12,187 | O’Reilly Automotive, Inc. * | $ | 5,619,182 | |||||
51,909 | Ross Stores, Inc. | 4,844,148 | ||||||
77,327 | Sysco Corp. | 4,811,286 | ||||||
55,477 | Target Corp. | 8,733,189 | ||||||
55,234 | The Gap, Inc. | 940,635 | ||||||
71,727 | The Home Depot, Inc. | 19,919,305 | ||||||
118,290 | The Kroger Co. | 4,011,214 | ||||||
149,480 | TJX Cos, Inc. | 8,318,562 | ||||||
115,519 | Walgreens Boots Alliance, Inc. | 4,149,443 | ||||||
118,013 | Walmart, Inc. | 16,511,199 | ||||||
5,559 | Wayfair, Inc. * † | 1,617,725 | ||||||
170,022,294 | ||||||||
Total Common Stocks: 100.1% (Cost: $162,127,027) | 182,023,326 | |||||||
Liabilities in excess of other assets: (0.1)% | (171,542 | ) | ||||||
NET ASSETS: 100.0% | $ | 181,851,784 |
Definitions:
ADR | American Depositary Receipt |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $1,536,824. |
Summary of Investments by Sector | % of Investments | Value | ||||||
Consumer Discretionary | 69.8 | % | $ | 127,050,210 | ||||
Consumer Staples | 21.3 | 38,803,312 | ||||||
Health Care | 8.9 | 16,169,804 | ||||||
100.0 | % | $ | 182,023,326 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks* | $ | 182,023,326 | $ | — | $ | — | $ | 182,023,326 |
* | See Schedule of Investments for geographic sector breakouts. |
See Notes to Financial Statements
19 |
VANECK VECTORS SEMICONDUCTOR ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number of Shares | Value | |||||||
COMMON STOCKS: 100.1% | ||||||||
Netherlands: 9.3% | ||||||||
355,635 | ASML Holding N.V. (USD) | $ | 131,325,336 | |||||
925,822 | NXP Semiconductor N.V. (USD) | 115,551,844 | ||||||
246,877,180 | ||||||||
Switzerland: 3.0% | ||||||||
2,561,282 | STMicroelectronics N.V. (USD) † | 78,605,745 | ||||||
Taiwan: 11.0% | ||||||||
3,601,207 | Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) | 291,949,851 | ||||||
United States: 76.8% | ||||||||
1,560,303 | Advanced Micro Devices, Inc. * | 127,929,243 | ||||||
996,230 | Analog Devices, Inc. | 116,299,890 | ||||||
2,083,770 | Applied Materials, Inc. | 123,880,127 | ||||||
354,985 | Broadcom, Inc. | 129,328,135 | ||||||
820,395 | Cadence Design Systems, Inc. * | 87,478,719 | ||||||
2,988,855 | Intel Corp. | 154,762,912 | ||||||
430,159 | KLA-Tencor Corp. | 83,339,005 | ||||||
382,244 | Lam Research Corp. | 126,809,447 | ||||||
1,471,753 | Marvell Technology Group Ltd. | 58,428,594 | ||||||
785,616 | Maxim Integrated Products, Inc. | 53,115,498 | ||||||
643,078 | Microchip Technology, Inc. | 66,082,695 | ||||||
2,547,594 | Micron Technology, Inc. * | 119,635,014 | ||||||
402,637 | NVIDIA Corp. | 217,915,197 | ||||||
1,010,437 | ON Semiconductor Corp. * | 21,916,379 |
Number of Shares | Value | |||||||
United States: (continued) | ||||||||
361,246 | Qorvo, Inc. * | $ | 46,604,346 | |||||
1,120,893 | Qualcomm, Inc. | 131,906,688 | ||||||
542,871 | Skyworks Solutions, Inc. | 78,987,731 | ||||||
576,079 | Teradyne, Inc. | 45,775,237 | ||||||
914,980 | Texas Instruments, Inc. | 130,649,994 | ||||||
159,290 | Universal Display Corp. | 28,790,075 | ||||||
783,316 | Xilinx, Inc. | 81,652,860 | ||||||
2,031,287,786 | ||||||||
Total Common Stocks (Cost: $2,547,973,532) | 2,648,720,562 | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 0.3% (Cost: $8,908,520) | ||||||||
Money Market Fund: 0.3% | ||||||||
8,908,520 | State Street Navigator Securities Lending Government Money Market Portfolio | 8,908,520 | ||||||
Total Investments: 100.4% (Cost: $2,556,882,052) | 2,657,629,082 | |||||||
Liabilities in excess of other assets: (0.4)% | (11,364,405 | ) | ||||||
NET ASSETS: 100.0% | $ | 2,646,264,677 |
Definitions:
ADR | American Depositary Receipt |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $9,210,867. |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Application Software | 3.3 | % | $ | 87,478,719 | ||||
Semiconductor Equipment | 19.3 | 511,129,152 | ||||||
Semiconductors | 77.4 | 2,050,112,691 | ||||||
100.0 | % | $ | 2,648,720,562 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks* | $ | 2,648,720,562 | $ | — | $ | — | $ | 2,648,720,562 | |||||||||
Money Market Fund | 8,908,520 | — | — | 8,908,520 | |||||||||||||
Total | $ | 2,657,629,082 | $ | — | $ | — | $ | 2,657,629,082 | |||||||||
* | See Schedule of Investments for geographic sector breakouts. |
See Notes to Financial Statements
20 |
VANECK VECTORS VIDEO GAMING AND ESPORTS ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number of Shares | Value | |||||||
COMMON STOCKS: 100.1% | ||||||||
China / Hong Kong: 18.3% | ||||||||
496,165 | Bilibili, Inc. (ADR) * | $ | 20,640,464 | |||||
1,679,000 | Kingsoft Corp. Ltd. * † # | 8,458,944 | ||||||
53,475 | NetEase, Inc. (ADR) | 24,313,478 | ||||||
620,700 | Tencent Holdings Ltd. # | 41,924,440 | ||||||
95,337,326 | ||||||||
France: 3.0% | ||||||||
174,916 | Ubisoft Entertainment SA * # | 15,767,526 | ||||||
Japan: 23.1% | ||||||||
361,900 | Bandai Namco Holdings, Inc. # | 26,500,085 | ||||||
202,000 | Capcom Co. Ltd. # | 11,266,383 | ||||||
178,200 | DeNa Co. Ltd. # | 3,277,537 | ||||||
231,300 | Konami Holdings Corp. † # | 9,999,522 | ||||||
951,000 | Nexon Co. Ltd. # | 23,706,913 | ||||||
60,600 | Nintendo Co. Ltd. # | 34,320,328 | ||||||
175,100 | Square Enix Holdings Co. Ltd. # | 11,581,204 | ||||||
120,651,972 | ||||||||
Poland: 4.1% | ||||||||
197,881 | CD Project SA * # | 21,420,845 | ||||||
Singapore: 6.3% | ||||||||
213,261 | Sea Ltd. (ADR) * † | 32,850,724 | ||||||
South Korea: 6.3% | ||||||||
31,993 | NCSoft Corp. # | 22,047,435 | ||||||
76,562 | Netmarble Corp. Reg S 144A * † # | 10,831,805 | ||||||
32,879,240 | ||||||||
Sweden: 3.1% | ||||||||
444,592 | Embracer Group AB * # | 8,263,731 | ||||||
64,542 | Stillfront Group AB * # | 8,067,214 | ||||||
16,330,945 | ||||||||
Taiwan: 2.1% | ||||||||
2,362,000 | Micro-Star International Co. Ltd. # | 10,904,344 | ||||||
United States: 33.8% | ||||||||
348,850 | Activision Blizzard, Inc. | 28,239,407 | ||||||
431,416 | Advanced Micro Devices, Inc. * | 35,371,798 | ||||||
176,511 | Electronic Arts, Inc. * | 23,018,800 | ||||||
79,402 | NVIDIA Corp. | 42,973,950 | ||||||
143,240 | Take-Two Interactive Software, Inc. * | 23,666,113 | ||||||
2,500,621 | Zynga, Inc. * | 22,805,664 | ||||||
176,075,732 | ||||||||
Total Common Stocks (Cost: $393,123,079) | 522,218,654 |
Number of Shares | Value | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 0.0% (Cost: $309) | ||||||||
Money Market Fund: 0.0% | ||||||||
309 | State Street Navigator Securities Lending Government Money Market Portfolio | $ | 309 | |||||
Total Investments: 100.1% (Cost: $393,123,388) | 522,218,963 | |||||||
Liabilities in excess of other assets: (0.1)% | (651,430) | |||||||
NET ASSETS: 100.0% | $ | 521,567,533 |
See Notes to Financial Statements
21 |
VANECK VECTORS VIDEO GAMING AND ESPORTS ETF
SCHEDULE OF INVESTMENTS
(continued)
Definitions:
ADR | American Depositary Receipt |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $50,298,117. |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $268,338,256 which represents 51.4% of net assets. |
Reg S | Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. |
144A | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $10,831,805, or 2.1% of net assets. |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Communication Services | 76.2 | % | $ | 398,009,533 | ||||
Consumer Discretionary | 5.1 | 26,500,085 | ||||||
Information Technology | 18.7 | 97,709,036 | ||||||
100.0 | % | $ | 522,218,654 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks | |||||||||||||||||
China / Hong Kong | $ | 44,953,942 | $ | 50,383,384 | $ | — | $ | 95,337,326 | |||||||||
France | — | 15,767,526 | — | 15,767,526 | |||||||||||||
Japan | — | 120,651,972 | — | 120,651,972 | |||||||||||||
Poland | — | 21,420,845 | — | 21,420,845 | |||||||||||||
Singapore | 32,850,724 | — | — | 32,850,724 | |||||||||||||
South Korea | — | 32,879,240 | — | 32,879,240 | |||||||||||||
Sweden | — | 16,330,945 | — | 16,330,945 | |||||||||||||
Taiwan | — | 10,904,344 | — | 10,904,344 | |||||||||||||
United States | 176,075,732 | — | — | 176,075,732 | |||||||||||||
Money Market Fund | 309 | — | — | 309 | |||||||||||||
Total | $ | 253,880,707 | $ | 268,338,256 | $ | — | $ | 522,218,963 |
See Notes to Financial Statements
22 |
[This page intentionally left blank.]
23 |
VANECK VECTORS ETF TRUST
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2020
Biotech ETF | Environmental Services ETF | Gaming ETF | Pharmaceutical ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments, at value | ||||||||||||||||
Unaffiliated issuers (1)(2) | $ | 485,662,351 | $ | 30,766,291 | $ | 54,638,622 | $ | 234,580,292 | ||||||||
Short-term investments held as collateral for securities loaned (3) | — | — | 109 | 2,245,622 | ||||||||||||
Cash | 52,279 | 281,849 | — | 177,916 | ||||||||||||
Cash denominated in foreign currency, at value (4) | — | — | 12,472 | — | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 4,050,403 | 6,376,489 | 112,793 | — | ||||||||||||
Shares of beneficial interest sold | — | — | 3,913,772 | — | ||||||||||||
Dividends and interest | 11,507 | 28,204 | 97,896 | 555,306 | ||||||||||||
Prepaid expenses | 6,550 | 1,325 | 1,330 | 3,946 | ||||||||||||
Total assets | 489,783,090 | 37,454,158 | 58,776,994 | 237,563,082 | ||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | — | 3,592,195 | 3,810,544 | — | ||||||||||||
Collateral for securities loaned | — | — | 109 | 2,245,622 | ||||||||||||
Line of credit | — | — | — | — | ||||||||||||
Shares of beneficial interest redeemed | 4,050,139 | 2,978,951 | — | — | ||||||||||||
Due to Adviser | 131,557 | 887 | 12,432 | 57,054 | ||||||||||||
Due to custodian | — | — | 82,619 | — | ||||||||||||
Deferred Trustee fees | 48,779 | 2,702 | 6,805 | 28,323 | ||||||||||||
Accrued expenses | 102,404 | 63,579 | 71,628 | 82,759 | ||||||||||||
Total liabilities | 4,332,879 | 6,638,314 | 3,984,137 | 2,413,758 | ||||||||||||
NET ASSETS | $ | 485,450,211 | $ | 30,815,844 | $ | 54,792,857 | $ | 235,149,324 | ||||||||
Shares outstanding | 2,996,503 | 310,000 | 1,400,000 | 3,788,138 | ||||||||||||
Net asset value, redemption and offering price per share | $ | 162.01 | $ | 99.41 | $ | 39.14 | $ | 62.08 | ||||||||
Net Assets consist of: | ||||||||||||||||
Aggregate paid in capital | $ | 522,864,905 | $ | 41,336,755 | $ | 64,959,986 | $ | 332,307,287 | ||||||||
Total distributable earnings (loss) | (37,414,694 | ) | (10,520,911 | ) | (10,167,129 | ) | (97,157,963 | ) | ||||||||
NET ASSETS | $ | 485,450,211 | $ | 30,815,844 | $ | 54,792,857 | $ | 235,149,324 | ||||||||
(1) Value of securities on loan | $ | 21,317,642 | $ | 229,633 | $ | 7,905,823 | $ | 4,386,374 | ||||||||
(2) Cost of investments | $ | 440,417,849 | $ | 28,051,126 | $ | 50,990,791 | $ | 262,480,657 | ||||||||
(3) Cost of short-term investments held as collateral for securities loaned | $ | — | $ | — | $ | 109 | $ | 2,245,622 | ||||||||
(4) Cost of cash denominated in foreign currency | $ | — | $ | — | $ | 12,463 | $ | — |
See Notes to Financial Statements
24 |
Retail ETF | Semiconductor ETF | Video Gaming and eSports ETF | ||||||||
$ | 182,023,326 | $ | 2,648,720,562 | $ | 522,218,654 | |||||
— | 8,908,520 | 309 | ||||||||
— | — | 470,118 | ||||||||
— | — | 127,266 | ||||||||
— | 87,217,025 | 192,830 | ||||||||
— | 34,886,904 | 935 | ||||||||
47,057 | 2,389,718 | 173,492 | ||||||||
2,641 | 13,114 | 3,967 | ||||||||
182,073,024 | 2,782,135,843 | 523,187,571 | ||||||||
— | 17,440,624 | 898,473 | ||||||||
— | 8,908,520 | 309 | ||||||||
— | 3,984,928 | 476,860 | ||||||||
— | 104,658,387 | — | ||||||||
34,930 | 676,311 | 175,254 | ||||||||
115,366 | 15,203 | — | ||||||||
6,820 | 42,635 | 339 | ||||||||
64,124 | 144,558 | 68,803 | ||||||||
221,240 | 135,871,166 | 1,620,038 | ||||||||
$ | 181,851,784 | $ | 2,646,264,677 | $ | 521,567,533 | |||||
1,221,531 | 15,170,937 | 8,500,000 | ||||||||
$ | 148.87 | $ | 174.43 | $ | 61.36 | |||||
$ | 171,138,305 | $ | 2,601,629,377 | $ | 393,563,000 | |||||
10,713,479 | 44,635,300 | 128,004,533 | ||||||||
$ | 181,851,784 | $ | 2,646,264,677 | $ | 521,567,533 | |||||
$ | 1,536,824 | $ | 9,210,867 | $ | 50,298,117 | |||||
$ | 162,127,027 | $ | 2,547,973,532 | $ | 393,123,079 | |||||
$ | — | $ | 8,908,520 | $ | 309 | |||||
$ | — | $ | — | $ | 127,266 |
See Notes to Financial Statements
25 |
VANECK VECTORS ETF TRUST
For the Year Ended September 30, 2020
Biotech ETF | Environmental Services ETF | Gaming ETF | Pharmaceutical ETF | |||||||||||||
Income: | ||||||||||||||||
Dividends | $ | 3,018,101 | $ | 330,987 | $ | 687,362 | $ | 4,402,731 | ||||||||
Interest | 261 | 193 | 171 | 238 | ||||||||||||
Securities lending income | 45,614 | 18,977 | 10,807 | 27,601 | ||||||||||||
Foreign taxes withheld | (13,813 | ) | (4,192 | ) | (14,736 | ) | (217,388 | ) | ||||||||
Total income | 3,050,163 | 345,965 | 683,604 | 4,213,182 | ||||||||||||
Expenses: | ||||||||||||||||
Management fees | 1,411,239 | 169,331 | 165,791 | 705,625 | ||||||||||||
Professional fees | 68,721 | 70,310 | 70,443 | 66,794 | ||||||||||||
Custody and accounting fees | 29,245 | 27,356 | 39,184 | 30,143 | ||||||||||||
Reports to shareholders | 24,675 | 10,586 | 12,017 | 17,846 | ||||||||||||
IOPV fees | 5,712 | — | 5,509 | 4,062 | ||||||||||||
Trustees’ fees and expenses | 12,423 | 317 | 176 | 5,247 | ||||||||||||
Registration fees | 4,594 | 6,901 | 5,169 | 5,576 | ||||||||||||
Transfer agent fees | 200 | 200 | 200 | 200 | ||||||||||||
Insurance | 8,938 | 1,702 | 1,685 | 5,368 | ||||||||||||
Interest | 11,006 | — | 508 | 7,948 | ||||||||||||
Other | 5,320 | 1,000 | 3,779 | 2,933 | ||||||||||||
Total expenses | 1,582,073 | 287,703 | 304,461 | 851,742 | ||||||||||||
Waiver of management fees | (160,681 | ) | (101,413 | ) | (88,120 | ) | (138,347 | ) | ||||||||
Net expenses | 1,421,392 | 186,290 | 216,341 | 713,395 | ||||||||||||
Net investment income | 1,628,771 | 159,675 | 467,263 | 3,499,787 | ||||||||||||
Net realized gain (loss) on: | ||||||||||||||||
Investments | (40,769,794 | ) | (6,015,068 | ) | (3,697,559 | ) | (19,412,913 | ) | ||||||||
In-kind redemptions | 44,343,087 | 4,232,201 | 2,339,895 | 23,762,097 | ||||||||||||
Capital gain distributions received | — | — | 787 | — | ||||||||||||
Foreign currency transactions and foreign denominated assets and liabilities | — | 4 | (7,958 | ) | — | |||||||||||
Net realized gain (loss) | 3,573,293 | (1,782,863 | ) | (1,364,835 | ) | 4,349,184 | ||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments | 111,943,737 | 239,751 | 8,613,829 | 20,416,513 | ||||||||||||
Foreign currency transactions and foreign denominated assets and liabilities | — | — | 1,918 | — | ||||||||||||
Net change in unrealized appreciation (depreciation) | 111,943,737 | 239,751 | 8,615,747 | 20,416,513 | ||||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 117,145,801 | $ | (1,383,437 | ) | $ | 7,718,175 | $ | 28,265,484 |
See Notes to Financial Statements
26 |
Retail ETF | Semiconductor ETF | Video Gaming and eSports ETF | ||||||||
$ | 1,406,636 | $ | 33,430,296 | $ | 1,221,565 | |||||
326 | 6,455 | 255 | ||||||||
1,960 | 141,409 | 48,004 | ||||||||
— | (2,034,079 | ) | (128,229 | ) | ||||||
1,408,922 | 31,544,081 | 1,141,595 | ||||||||
375,184 | 6,658,157 | 935,048 | ||||||||
67,115 | 68,475 | 67,359 | ||||||||
28,561 | 52,200 | 45,093 | ||||||||
16,075 | 90,305 | 21,606 | ||||||||
5,656 | 5,711 | 3,381 | ||||||||
3,245 | 64,480 | 8,558 | ||||||||
5,172 | 6,111 | 9,272 | ||||||||
200 | 200 | 200 | ||||||||
3,628 | 15,240 | 2,436 | ||||||||
270 | 18,870 | 2,324 | ||||||||
1,689 | 22,791 | 1,557 | ||||||||
506,795 | 7,002,540 | 1,096,834 | ||||||||
(131,054 | ) | (345,202 | ) | (59,209 | ) | |||||
375,741 | 6,657,338 | 1,037,625 | ||||||||
1,033,181 | 24,886,743 | 103,970 | ||||||||
(4,786,723 | ) | (49,967,925 | ) | (906,768 | ) | |||||
12,056,803 | 589,773,697 | — | ||||||||
— | — | — | ||||||||
— | — | (19,565 | ) | |||||||
7,270,080 | 539,805,772 | (926,333 | ) | |||||||
24,679,366 | 193,386,180 | 126,217,930 | ||||||||
— | — | (633 | ) | |||||||
24,679,366 | 193,386,180 | 126,217,297 | ||||||||
$ | 32,982,627 | $ | 758,078,695 | $ | 125,394,934 |
See Notes to Financial Statements
27 |
VANECK VECTORS ETF TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Biotech ETF | Environmental Services ETF | |||||||||||||||
Year Ended September 30, 2020 | Year Ended September 30, 2019 | Year Ended September 30, 2020 | Year Ended September 30, 2019 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 1,628,771 | $ | 1,220,768 | $ | 159,675 | $ | 138,740 | ||||||||
Net realized gain (loss) | 3,573,293 | (5,451,394 | ) | (1,782,863 | ) | 3,118,604 | ||||||||||
Net change in unrealized appreciation (depreciation) | 111,943,737 | (54,057,304 | ) | 239,751 | (1,067,809 | ) | ||||||||||
Net increase (decrease) in net assets resulting from operations | 117,145,801 | (58,287,930 | ) | (1,383,437 | ) | 2,189,535 | ||||||||||
Distributions to shareholders: | ||||||||||||||||
From distributable earnings | (1,250,208 | ) | (1,899,023 | ) | (165,025 | ) | (95,100 | ) | ||||||||
Share transactions:* | ||||||||||||||||
Proceeds from sale of shares | 195,549,299 | 45,900,271 | 12,786,779 | 29,326,383 | ||||||||||||
Cost of shares redeemed | (144,293,768 | ) | (143,308,258 | ) | (16,911,063 | ) | (19,092,505 | ) | ||||||||
Increase (decrease) in net assets resulting from share transactions | 51,255,531 | (97,407,987 | ) | (4,124,284 | ) | 10,233,878 | ||||||||||
Total increase (decrease) in net assets | 167,151,124 | (157,594,940 | ) | (5,672,746 | ) | 12,328,313 | ||||||||||
Net Assets, beginning of year | 318,299,087 | 475,894,027 | 36,488,590 | 24,160,277 | ||||||||||||
Net Assets, end of year | $ | 485,450,211 | $ | 318,299,087 | $ | 30,815,844 | $ | 36,488,590 | ||||||||
* Shares of Common Stock Issued (no par value) | ||||||||||||||||
Shares sold | 1,275,000 | 400,000 | 130,000 | 300,000 | ||||||||||||
Shares redeemed | (975,000 | ) | (1,200,000 | ) | (170,000 | ) | (200,000 | ) | ||||||||
Net increase (decrease) | 300,000 | (800,000 | ) | (40,000 | ) | 100,000 |
See Notes to Financial Statements
28 |
Gaming ETF | Pharmaceutical ETF | |||||||||||||
Year Ended September 30, 2020 | Year Ended September 30, 2019 | Year Ended September 30, 2020 | Year Ended September 30, 2019 | |||||||||||
$ | 467,263 | $ | 769,118 | $ | 3,499,787 | $ | 3,577,677 | |||||||
(1,364,835 | ) | (2,157,504 | ) | 4,349,184 | (36,404,108 | ) | ||||||||
8,615,747 | 285,460 | 20,416,513 | 7,257,515 | |||||||||||
7,718,175 | (1,102,926 | ) | 28,265,484 | (25,568,916 | ) | |||||||||
(800,020 | ) | (849,750 | ) | (3,321,670 | ) | (3,869,339 | ) | |||||||
33,435,454 | 3,636,558 | 388,323,148 | 147,451,491 | |||||||||||
(9,359,864 | ) | (3,726,047 | ) | (319,778,063 | ) | (252,397,944 | ) | |||||||
24,075,590 | (89,489 | ) | 68,545,085 | (104,946,453 | ) | |||||||||
30,993,745 | (2,042,165 | ) | 93,488,899 | (134,384,708 | ) | |||||||||
23,799,112 | 25,841,277 | 141,660,425 | 276,045,133 | |||||||||||
$ | 54,792,857 | $ | 23,799,112 | $ | 235,149,324 | $ | 141,660,425 | |||||||
1,000,000 | 100,000 | 6,450,000 | 2,550,000 | |||||||||||
(250,000 | ) | (100,000 | ) | (5,150,000 | ) | (4,350,000 | ) | |||||||
750,000 | — | 1,300,000 | (1,800,000 | ) |
See Notes to Financial Statements
29 |
VANECK VECTORS ETF TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(continued)
Retail ETF | Semiconductor ETF | |||||||||||||||
Year Ended September 30, 2020 | Year Ended September 30, 2019 |
Year Ended | Year Ended September 30, 2019 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 1,033,181 | $ | 1,128,265 | $ | 24,886,743 | $ | 17,752,181 | ||||||||
Net realized gain (loss) | 7,270,080 | 2,451,083 | 539,805,772 | 113,864,810 | ||||||||||||
Net change in unrealized appreciation (depreciation) | 24,679,366 | (8,435,510 | ) | 193,386,180 | 17,079,544 | |||||||||||
Net increase in net assets resulting from operations | 32,982,627 | (4,856,162 | ) | 758,078,695 | 148,696,535 | |||||||||||
Distributions to shareholders: | ||||||||||||||||
From distributable earnings | (950,056 | ) | (1,300,386 | ) | (19,250,343 | ) | (14,202,995 | ) | ||||||||
Share transactions:* | ||||||||||||||||
Proceeds from sale of shares | 145,515,451 | 52,873,806 | 13,726,301,764 | 19,302,146,323 | ||||||||||||
Cost of shares redeemed | (66,852,325 | ) | (111,684,252 | ) | (13,179,602,021 | ) | (19,291,227,031 | ) | ||||||||
Increase in net assets resulting from share transactions | 78,663,126 | (58,810,446 | ) | 546,699,743 | 10,919,292 | |||||||||||
Total increase in net assets | 110,695,697 | (64,966,994 | ) | 1,285,528,095 | 145,412,832 | |||||||||||
Net Assets, beginning of period | 71,156,087 | 136,123,081 | 1,360,736,582 | 1,215,323,750 | ||||||||||||
Net Assets, end of period | $ | 181,851,784 | $ | 71,156,087 | $ | 2,646,264,677 | $ | 1,360,736,582 | ||||||||
* Shares of Common Stock Issued (no par value) | ||||||||||||||||
Shares sold | 1,150,000 | 500,000 | 99,350,000 | 188,800,000 | ||||||||||||
Shares redeemed | (550,000 | ) | (1,100,000 | ) | (95,600,000 | ) | (188,800,000 | ) | ||||||||
Net increase | 600,000 | (600,000 | ) | 3,750,000 | — |
* | Commencement of operations |
See Notes to Financial Statements
30 |
Video Gaming and eSports ETF | ||||||
Year Ended September 30, 2020 | For the Period October 16, 2018* through September 30, 2019 | |||||
$ | 103,970 | $ | 64,985 | |||
(926,333 | ) | (205,932 | ) | |||
126,217,297 | 2,877,646 | |||||
125,394,934 | 2,736,699 | |||||
(125,100 | ) | (2,000 | ) | |||
357,494,489 | 36,068,511 | |||||
— | — | |||||
357,494,489 | 36,068,511 | |||||
482,764,323 | 38,803,210 | |||||
38,803,210 | — | |||||
$ | 521,567,533 | $ | 38,803,210 | |||
7,350,000 | 1,150,000 | |||||
— | — | |||||
7,350,000 | 1,150,000 |
See Notes to Financial Statements
31 |
VANECK VECTORS ETF TRUST
For a share outstanding throughout each year:
(a) | Calculated based upon average shares outstanding |
(b) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the year. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(c) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
(d) | The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. |
See Notes to Financial Statements
32 |
VANECK VECTORS ETF TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year:
(a) | Calculated based upon average shares outstanding |
(b) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the year. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(c) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
See Notes to Financial Statements
33 |
VANECK VECTORS ETF TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year:
(a) | Calculated based upon average shares outstanding |
(b) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the year. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(c) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
(d) | For the year ended September 30, 2016, 0.06% of total return, representing $0.04 per share, consisted of a payment by the Adviser (See Note 3). |
See Notes to Financial Statements
34 |
VANECK VECTORS ETF TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
(a) | Calculated based upon average shares outstanding |
(b) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(c) | Not Annualized |
(d) | Annualized |
(e) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
(f) | Commencement of operations |
See Notes to Financial Statements
35 |
VANECK VECTORS ETF TRUST
September 30, 2020
Note 1—Fund Organization—VanEck Vectors ETF Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was incorporated in Delaware as a statutory trust on March 15, 2001. The Trust operates as a series fund, and offers multiple investment portfolios, each of which represents a separate series of the Trust. These financial statements relate only to the investment portfolios listed in the diversification table below (each a “Fund” and, collectively, the “Funds”).
Fund | Diversification Classification | |
Biotech ETF | Non-Diversified | |
Environmental Services ETF | Non-Diversified | |
Gaming ETF | Non-Diversified | |
Pharmaceutical ETF | Non-Diversified | |
Retail ETF | Non-Diversified | |
Semiconductor ETF | Non-Diversified | |
Video Gaming and eSports ETF | Non-Diversified |
Each Fund was created to provide investors with the opportunity to purchase a security representing a proportionate undivided interest in a portfolio of securities consisting of substantially all of the common stocks in approximately the same weighting as their index.
Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The Funds are investment companies and follow accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies.
The following summarizes the Funds’ significant accounting policies.
A. | Security Valuation—The Funds value their investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Securities traded on national exchanges are valued at the closing price on the markets in which the securities trade. Securities traded on the NASDAQ Stock Market LLC (“NASDAQ”) are valued at the NASDAQ official closing price. Over-the-counter securities not included on NASDAQ and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded they are categorized as Level 1 in the fair value hierarchy (described below). Certain foreign securities, whose values may be affected by market direction or events occurring before the Funds’ pricing time (4:00 p.m. Eastern Time) but after the last close of the securities’ primary market, are fair valued using a pricing service and are categorized as Level 2 in the fair value hierarchy. The pricing service, using methods approved by the Board of Trustees, considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. markets, based on indices of domestic securities and other appropriate indicators such as prices of relevant ADR’s and futures contracts. The Funds may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. Short-term debt securities with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are considered to be Level 1 in the fair value hierarchy. The Pricing Committee of Van Eck Associates Corporation (the “Adviser”) provides oversight of the Funds’ valuation policies and procedures, which are approved by the Funds’ Board of Trustees. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes they do not otherwise reflect the fair value of a security or asset, the security or asset will be fair valued by the Pricing Committee in accordance with the Funds’ valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis. |
36 |
Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be categorized either as Level 2 or Level 3 in the fair value hierarchy. The price which the Funds may realize upon sale of an investment may differ materially from the value presented in the Schedules of Investments. | |
The Funds utilize various methods to measure the fair value of their investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three levels of the fair value hierarchy are described below: | |
Level 1 — Quoted prices in active markets for identical securities. | |
Level 2 — Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). | |
Level 3 — Significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments). | |
A summary of the inputs and the levels used to value the Funds’ investments are located in the Schedules of Investments. Additionally, tables that reconcile the valuation of the Funds’ Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Schedules of Investments. | |
B. | Federal Income Taxes—It is each Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. |
C. | Distributions to Shareholders—Dividends to shareholders from net investment income and distributions from net realized capital gains, if any, are declared and paid annually by each Fund (except for dividends from net investment income on Pharmaceutical ETF, which are declared and paid quarterly). Income dividends and capital gain distributions are determined in accordance with U.S. income tax regulations, which may differ from such amounts determined in accordance with GAAP. |
D. | Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed in the financial statements. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Statements of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments, and liabilities are recorded as net realized gain (loss) and net change in unrealized appreciation (depreciation) on foreign currency transactions and foreign denominated assets and liabilities in the Statements of Operations. |
E. | Restricted Securities—The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included at the end of each Fund’s Schedule of Investments. |
F. | Offsetting Assets and Liabilities—In the ordinary course of business, the Funds enter into transactions subject to enforceable master netting or other similar agreements. Generally, the right of offset in those agreements allows the Funds to offset any exposure to a specific counterparty with any collateral received or delivered to that |
37 |
VANECK VECTORS ETF TRUST
NOTES TO FINANCIAL STATEMENTS
(continued)
counterparty based on the terms of the agreements. The Funds may pledge or receive cash and or securities as collateral for derivative instruments and securities lending. For financial reporting purposes, the Funds present securities lending assets and liabilities on a gross basis in the Statements of Assets and Liabilities. Cash collateral received for securities lending in the form of money market fund investments, if any, at September 30, 2020 is presented in the Schedules of Investments and in the Statements of Assets and Liabilities. Non-cash collateral is disclosed in Note 9 (Securities Lending). | |
G. | Other—Security transactions are accounted for on trade date. Realized gains and losses are determined based on the specific identification method. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized upon notification of the ex-dividend date. Interest income, including amortization of premiums and discounts, is accrued as earned. |
The Funds earn interest income on uninvested cash balances held at the custodian bank. Such amounts, if any, are presented as interest income in the Statements of Operations. | |
The character of distributions received from certain investments may be comprised of net investment income, capital gains, and return of capital. It is the Funds’ policy to estimate the character of distributions received from these investments based on historical data if actual amounts are not available. After each calendar year end, these investments report the actual tax character of these distributions. Differences between the estimated and actual amounts are reflected in the Funds’ records in the year in which they are reported by adjusting the related cost basis of investments, capital gains and income, as necessary. | |
In the normal course of business, the Funds enter into contracts that contain a variety of general indemnifications. The Funds’ maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote. |
Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Funds. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of each Fund’s average daily net assets. The Adviser has agreed, until at least February 1, 2021, to waive management fees and assume expenses to prevent each Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses) from exceeding the expense limitations listed in the table below.
The management fee rates and expense limitations for the year ended September 30, 2020, are as follows:
Management | Expense | |||||||
Fund | Fees Rates | Limitations | ||||||
Biotech ETF | 0.35 | % | 0.35 | % | ||||
Environmental Services ETF | 0.50 | 0.55 | ||||||
Gaming ETF | 0.50 | 0.65 | ||||||
Pharmaceutical ETF | 0.35 | 0.35 | ||||||
Retail ETF | 0.35 | 0.35 | ||||||
Semiconductor ETF | 0.35 | 0.35 | ||||||
Video Gaming and eSports ETF | 0.50 | 0.55 |
Refer to the Statements of Operations for amounts waived/assumed by the Adviser.
In addition, Van Eck Securities Corporation, an affiliate of the Adviser, acts as the Funds’ distributor (the “Distributor”). Certain officers and a Trustee of the Trust are officers, directors or stockholders of the Adviser and Distributor.
During the year ended September 30, 2016, the Adviser voluntarily reimbursed the Semiconductor ETF $340,000 for transactional losses. The per share and total return impact to the Fund is reflected in the Financial Highlights.
Effective November 4, 2019, State Street Bank and Trust Company is the Funds’ custodian, securities lending agent and transfer agent. Prior to November 4, 2019, Bank of New York Mellon provided these services to the Funds.
For the year ended September 30, 2020, there were offsets to custodian fees under an expense offset agreement and these amounts are reflected in custody expense in the Statements of Operations.
38 |
Note 4—Capital Share Transactions—As of September 30, 2020, there were an unlimited number of capital shares of beneficial interest authorized by the Trust with no par value. Fund shares are not individually redeemable and are issued and redeemed at their net asset value per share only through certain authorized broker-dealers (“Authorized Participants”) in blocks of shares (“Creation Units”), or multiples thereof, as follows:
Fund | Creation Units |
Biotech ETF* | 25,000 |
Environmental Services ETF* | 25,000 |
Gaming ETF* | 25,000 |
Pharmaceutical ETF | 50,000 |
Retail ETF | 50,000 |
Semiconductor ETF | 50,000 |
Video Gaming and eSports ETF | 50,000 |
* | Effective September 1, 2020 Creation Units changed from 50,000 to 25,000 shares. |
The consideration for the purchase or redemption of Creation Units of the Funds generally consists of the in-kind contribution or distribution of securities constituting the Funds’ underlying index (“Deposit Securities”) plus a balancing cash component to equate the transaction to the net asset value per share of the Fund on the transaction date. Cash may also be substituted in an amount equivalent to the value of certain Deposit Securities, generally as a result of market circumstances, or when the securities are not available in sufficient quantity for delivery, or are not eligible for trading by the Authorized Participant. The Funds may issue Creation Units in advance of receipt of Deposit Securities subject to various conditions, including, for the benefit of the Funds, a requirement to maintain cash collateral on deposit at the custodian equal to at least 115% of the daily marked to market value of the missing Deposit Securities.
Authorized Participants purchasing and redeeming Creation Units may pay transaction fees directly to the transfer agent. In addition, the Funds may impose certain variable fees for creations and redemptions with respect to transactions in Creation Units for cash, or on transactions effected outside the clearing process, which are treated as increases in capital. These variable fees, if any, are reflected in share transactions in the Statements of Changes in Net Assets.
Note 5—Investments—For the year ended September 30, 2020, purchases and sales of investments (excluding short-term investments and in-kind capital share transactions) and purchases and sales of investments resulting from in-kind capital share transactions (excluding short-term investments) were as follows:
In-kind Capital Share Transactions | ||||||||||||||||
Fund | Purchases | Sales | Purchases | Sales | ||||||||||||
Biotech ETF | $ | 160,463,971 | $ | 163,088,286 | $ | 191,607,417 | $ | 137,136,837 | ||||||||
Environmental Services ETF | 12,995,337 | 15,595,338 | 12,784,674 | 14,312,415 | ||||||||||||
Gaming ETF | 12,399,952 | 9,772,229 | 33,230,698 | 12,255,536 | ||||||||||||
Pharmaceutical ETF | 37,165,797 | 37,060,417 | 350,007,325 | 281,495,236 | ||||||||||||
Retail ETF | 12,694,656 | 15,550,957 | 145,519,780 | 63,792,606 | ||||||||||||
Semiconductor ETF | 279,532,245 | 267,992,654 | 9,113,947,128 | 8,570,483,528 | ||||||||||||
Video Gaming and eSports ETF | 82,235,388 | 48,271,270 | 324,165,502 | — |
Note 6—Income Taxes—As of September 30, 2020, for Federal income tax purposes, the identified cost of investments owned, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) of investments owned were as follows:
Gross | Gross | Net Unrealized | ||||||||||||||
Tax Cost of | Unrealized | Unrealized | Appreciation | |||||||||||||
Fund | Investments | Appreciation | Depreciation | (Depreciation) | ||||||||||||
Biotech ETF | $ | 441,117,913 | $ | 76,559,861 | $ | (32,015,423 | ) | $ | 44,544,438 | |||||||
Environmental Services ETF | 28,052,504 | 3,997,490 | (1,283,701 | ) | 2,713,789 | |||||||||||
Gaming ETF | 52,224,520 | 8,077,279 | (5,663,068 | ) | 2,414,211 | |||||||||||
Pharmaceutical ETF | 264,875,886 | 10,019,152 | (38,069,122 | ) | (28,049,970 | ) | ||||||||||
Retail ETF | 162,145,330 | 26,394,450 | (6,516,454 | ) | 19,877,996 | |||||||||||
Semiconductor ETF | 2,556,882,052 | 183,223,077 | (82,476,047 | ) | 100,747,030 | |||||||||||
Video Gaming and eSports ETF | 394,192,783 | 131,785,656 | (3,759,477 | ) | 128,026,180 |
39 |
VANECK VECTORS ETF TRUST
NOTES TO FINANCIAL STATEMENTS
(continued)
At September 30, 2020, the components of distributable earnings (loss) on a tax basis, for each Fund, were as follows:
Undistributed | Accumulated | Other | Net Unrealized | Total | ||||||||||||||||
Ordinary | Capital | Temporary | Appreciation | Distributable | ||||||||||||||||
Fund | Income | Losses | Differences | (Depreciation) | Earnings (Loss) | |||||||||||||||
Biotech ETF | $ | 1,162,803 | $ | (83,073,156 | ) | $ | (48,779 | ) | $ | 44,544,438 | $ | (37,414,694 | ) | |||||||
Environmental Services ETF | 99,096 | (13,331,095 | ) | (2,701 | ) | 2,713,789 | (10,520,911 | ) | ||||||||||||
Gaming ETF | 325,168 | (12,900,594 | ) | (6,805 | ) | 2,415,102 | (10,167,129 | ) | ||||||||||||
Pharmaceutical ETF | 888,954 | (69,968,625 | ) | (28,322 | ) | (28,049,970 | ) | (97,157,963 | ) | |||||||||||
Retail ETF | 614,848 | (9,772,545 | ) | (6,820 | ) | 19,877,996 | 10,713,479 | |||||||||||||
Semiconductor ETF | 19,750,196 | (75,819,291 | ) | (42,635 | ) | 100,747,030 | 44,635,300 | |||||||||||||
Video Gaming and eSports ETF | 869,436 | (890,112 | ) | (339 | ) | 128,025,548 | 128,004,533 |
The tax character of dividends paid to shareholders during the years ended September 30, 2020 and September 30, 2019 was as follows:
2020 | 2019 | |||||||
Ordinary | Ordinary | |||||||
Income | Income | |||||||
Fund | Dividends | Dividends | ||||||
Biotech ETF | $ | 1,250,208 | $ | 1,899,023 | ||||
Environmental Services ETF | 165,025 | 95,100 | ||||||
Gaming ETF | 800,020 | 849,750 | ||||||
Pharmaceutical ETF | 3,321,670 | 3,869,339 | ||||||
Retail ETF | 950,056 | 1,300,386 | ||||||
Semiconductor ETF | 19,250,343 | 14,202,995 | ||||||
Video Gaming and eSports ETF | 125,100 | 2,000 |
At September 30, 2020, the Funds had capital loss carryforwards available to offset future capital gains as follows:
Short-Term | Long-Term | |||||||||||
Capital Losses | Capital Losses | |||||||||||
Fund | with No Expiration | with No Expiration | Total | |||||||||
Biotech ETF | $ | (5,870,462 | ) | $ | (77,202,694 | ) | $ | (83,073,156 | ) | |||
Environmental Services ETF | (4,230,864 | ) | (9,100,231 | ) | (13,331,095 | ) | ||||||
Gaming ETF | (3,465,157 | ) | (9,435,437 | ) | (12,900,594 | ) | ||||||
Pharmaceutical ETF | (3,967,224 | ) | (66,001,401 | ) | (69,968,625 | ) | ||||||
Retail ETF | (2,692,096 | ) | (7,080,449 | ) | (9,772,545 | ) | ||||||
Semiconductor ETF | (61,040,390 | ) | (14,778,901 | ) | (75,819,291 | ) | ||||||
Video Gaming and eSports ETF | (724,941 | ) | (165,171 | ) | (890,112 | ) |
During the period ended September 30, 2020, as a result of permanent book to tax differences primarily due to the tax treatment of in-kind redemptions, the Funds incurred differences that affected distributable earnings (loss) and aggregate paid in capital by the amounts in the table below. Net assets were not affected by these reclassifications.
Increase | Increase | |||||||
(Decrease) in | (Decrease) | |||||||
Distributable | in Aggregate | |||||||
Fund | Earnings (Loss) | Paid in Capital | ||||||
Biotech ETF | $ | (41,825,656 | ) | $ | 41,825,656 | |||
Environmental Services ETF | (4,222,183 | ) | 4,222,183 | |||||
Gaming ETF | (2,171,228 | ) | 2,171,228 | |||||
Pharmaceutical ETF | (21,837,097 | ) | 21,837,097 | |||||
Retail ETF | (12,055,639 | ) | 12,055,639 | |||||
Semiconductor ETF | (589,711,560 | ) | 589,711,560 | |||||
Video Gaming and eSports ETF | — | — |
The Funds recognize the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Funds do not have exposure for additional years that might still be open in
40 |
certain foreign jurisdictions. Therefore, no provision for income tax is required in the Funds’ financial statements. However, certain Funds are subject to foreign taxes on the appreciation in value of certain investments. The Funds provide for such taxes on both realized and unrealized appreciation.
The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended September 30, 2020, the Funds did not incur any interest or penalties.
Note 7—Principal Risks—Non-diversified funds generally hold securities of fewer issuers than diversified funds (See Note 1) and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers. The Funds may purchase securities on foreign exchanges. Securities of foreign issuers involve special risks and considerations not typically associated with investing in U.S. issuers. These risks include devaluation of currencies, currency controls, less reliable information about issuers, different securities transaction clearance and settlement practices, future adverse political and economic developments and local/regional conflicts or natural or other disasters, such as the recent coronavirus outbreak. These risks are heightened for investments in emerging market countries. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of comparable U.S. issuers.
A recent outbreak of respiratory disease caused by a novel coronavirus, which was first detected in China in December 2019, has subsequently spread internationally and has been declared a pandemic by the World Health Organization. The coronavirus has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, loss of life, as well as general concern and uncertainty. The coronavirus has already negatively impacted the economies of many nations, individual companies, and the market. This pandemic is expected to have a continued impact in ways that cannot necessarily be foreseen presently.
A more complete description of risks is included in each Fund’s Prospectus and Statement of Additional Information.
Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Plan”) for Trustees under which the Trustees can elect to defer receipt of their trustee fees until retirement, disability or termination from the Board of Trustees. The fees otherwise payable to the participating Trustees are deemed invested in shares of the Funds as directed by the Trustees.
The expense for the Plan is included in “Trustees’ fees and expenses” in the Statements of Operations. The liability for the Plan is shown as “Deferred Trustee fees” in the Statements of Assets and Liabilities.
Note 9—Securities Lending—To generate additional income, each of the Funds may lend its securities pursuant to a securities lending agreement with the securities lending agent. Each Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, cash equivalents, U.S. government securities, or any combination of cash and such securities at all times equal to at least 102% (105% for foreign securities) of the market value on the securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Funds will continue to receive any dividends, interest or amounts equivalent thereto, on the securities loaned while receiving a fee from the borrower and or earning interest on the investment of the cash collateral. Such fees and interest are shared with the securities lending agent under the terms of the securities lending agreement. Securities lending income is disclosed as such in the Statements of Operations. Cash collateral is maintained on the Funds’ behalf by the lending agent and is invested in the State Street Navigator Securities Lending Government Money Market Portfolio. Non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities, and is not disclosed in the Funds’ Schedules of Investments or Statements of Assets and Liabilities as it is held by the agent on behalf of the Funds, and the Funds do not have the ability to re-hypothecate those securities. Loans are subject to termination at the option of the borrower or the Funds. Upon termination of the loan, the borrower will return to the Fund securities identical to the securities loaned. The Funds bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. The value of loaned securities and related collateral, if any, at September 30, 2020 are presented on a gross basis in the Schedules of Investments and Statements of Assets and Liabilities. The following is a summary of the Funds’ securities on loan and related collateral as of September 30, 2020:
41 |
VANECK VECTORS ETF TRUST
NOTES TO FINANCIAL STATEMENTS
(continued)
Market Value | ||||||||||||||||
of Securities | Cash | Non-Cash | Total | |||||||||||||
Fund | on Loan | Collateral | Collateral | Collateral | ||||||||||||
Biotech ETF | $ | 21,317,642 | $ | — | $ | 21,725,290 | $ | 21,725,290 | ||||||||
Environmental Services ETF | 229,633 | — | 240,092 | 240,092 | ||||||||||||
Gaming ETF | 7,905,823 | 109 | 8,068,278 | 8,068,387 | ||||||||||||
Pharmaceutical ETF | 4,386,374 | 2,245,622 | 2,235,647 | 4,481,269 | ||||||||||||
Retail ETF | 1,536,824 | — | 1,614,114 | 1,614,114 | ||||||||||||
Semiconductor ETF | 9,210,867 | 8,908,520 | 493,419 | 9,401,939 | ||||||||||||
Video Gaming and eSports ETF | 50,298,117 | 309 | 53,020,808 | 53,021,117 |
The following table presents money market fund investments held as collateral by type of security on loan as of September 30, 2020:
Gross Amount of Recognized Liabilities for Securities Lending Transactions* in the Statements of Assets and Liabilities | ||||
Fund | Equity Securities | |||
Gaming ETF | $ | 109 | ||
Pharmaceutical ETF | 2,245,622 | |||
Semiconductor ETF | 8,908,520 | |||
Video Gaming and eSports ETF | 309 |
* | Remaining contractual maturity: overnight and continuous |
Note 10—Bank Line of Credit—The Funds may participate in a $200 million committed credit facility (the “Facility”) to be utilized for temporary financing for the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Funds at the request of the shareholders and other temporary or emergency purposes. The Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the Funds based on prevailing market rates in effect at the time of borrowings. During the year ended September 30, 2020, the following Funds borrowed under this Facility:
Days | Average Daily | Average | ||||||||||
Fund | Outstanding | Loan Balance | Interest Rate | |||||||||
Biotech ETF | 171 | $ | 924,253 | 1.73 | % | |||||||
Environmental Services ETF* | 72 | 1,127,562 | 1.72 | |||||||||
Gaming ETF | 46 | 173,214 | 2.39 | |||||||||
Pharmaceutical ETF | 279 | 519,627 | 2.19 | |||||||||
Retail ETF | 50 | 179,889 | 2.26 | |||||||||
Semiconductor ETF | 182 | 1,734,924 | 2.10 | |||||||||
Video Gaming and eSports ETF | 132 | 394,467 | 1.76 |
* | The custodian voluntarily waived interest expense for this borrowing activity in the amount of $3,793 during the year ended September 30, 2020. |
Outstanding loan balances as of September 30, 2020, if any, are reflected in the Statements of Assets and Liabilities.
Note 11—Recent Accounting Pronouncements—The Funds adopted all provisions of the Accounting Standards Update No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) that eliminate and modify certain disclosure requirements for fair value measurements. Based on management’s evaluation, the adoption of the ASU 2018-13 had no material impact on the financial statements and related disclosures.
Note 12—Subsequent Event Review—The Funds have evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued.
42 |
VANECK VECTORS ETF TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of VanEck Vectors Biotech ETF, VanEck Vectors Environmental Services ETF, VanEck Vectors Gaming ETF, VanEck Vectors Pharmaceutical ETF, VanEck Vectors Retail ETF, VanEck Vectors Semiconductor ETF and VanEck Vectors Video Gaming and eSports ETF and the Board of Trustees of VanEck Vectors ETF Trust
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of VanEck Vectors Biotech ETF, VanEck Vectors Environmental Services ETF, VanEck Vectors Gaming ETF, VanEck Vectors Pharmaceutical ETF, VanEck Vectors Retail ETF, VanEck Vectors Semiconductor ETF and VanEck Vectors Video Gaming and eSports ETF (collectively referred to as the “Funds”) (seven of the series constituting VanEck Vectors ETF Trust (the “Trust”)), including the schedules of investments, as of September 30, 2020, and the related statements of operations, changes in net assets, and the financial highlights for each of the periods indicated in the table below and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds (seven of the series constituting VanEck Vectors ETF Trust) at September 30, 2020, and the results of their operations, changes in net assets and financial highlights for each of the periods indicated in the table below, in conformity with U.S. generally accepted accounting principles.
Individual fund constituting the VanEck Vectors ETF Trust | Statement of operations | Statements of changes in net assets | Financial highlights | ||||
VanEck Vectors Biotech ETF | For the year ended September 30, 2020 | For each of the two years in the period ended September 30, 2020 | For each of the five years in the period ended September 30, 2020 | ||||
VanEck Vectors Environmental Services ETF | |||||||
VanEck Vectors Gaming ETF | |||||||
VanEck Vectors Pharmaceutical ETF | |||||||
VanEck Vectors Retail ETF | |||||||
VanEck Vectors Semiconductor ETF | |||||||
VanEck Vectors Video Gaming and eSports ETF | For the year ended September 30, 2020 | For the year ended September 30, 2020 and the period October 16, 2018 (commencement of operations) through September 30, 2019 | For the year ended September 30, 2020 and the period October 16, 2018 (commencement of operations) through September 30, 2019 |
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2020, by correspondence with the custodian and
43 |
VANECK VECTORS ETF TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(continued)
brokers or by other appropriate auditing procedures where replies from broker were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the VanEck investment companies since 1999.
New York, New York
November 23, 2020
44 |
VANECK VECTORS ETF TRUST
(unaudited)
The information set forth below relates to distributions paid during each Fund’s current fiscal year as required by federal laws. Shareholders, however, must report dividends on a calendar year basis for income tax purposes, which may include dividends for portions of two fiscal years of a Fund.
Accordingly, the information needed by shareholders for calendar year 2020 income tax purposes will be sent to them in early 2021. Please consult your tax advisor for proper treatment of this information.
The following information is provided with respect to the distributions paid during the taxable year ended September 30, 2020:
Video | |||||||||||||||||||||||||||||||
Biotech | Environmental | Gaming | Retail | Semiconductor | Gaming | ||||||||||||||||||||||||||
ETF | Services ETF | ETF | ETF | ETF | and eSports | ||||||||||||||||||||||||||
Record Date | 12/24/2019 | 12/24/2019 | 12/24/2019 | 12/24/2019 | 12/24/2019 | 12/24/2019 | |||||||||||||||||||||||||
Ex Date | 12/23/2019 | 12/23/2019 | 12/23/2019 | 12/23/2019 | 12/23/2019 | 12/23/2019 | |||||||||||||||||||||||||
Payable Date | 12/30/2019 | 12/30/2019 | 12/30/2019 | 12/30/2019 | 12/30/2019 | 12/30/2019 | |||||||||||||||||||||||||
Amount Paid Per Share | $0.047240 | $0.471500 | $1.230800 | $1.090100 | $2.122200 | $0.083400 | |||||||||||||||||||||||||
Ordinary Income: | |||||||||||||||||||||||||||||||
Qualified Dividend Income for Individuals | 100.00 | % | 100.00 | % | 63.71 | %* | 100.00 | % | 66.78 | % | 100.00 | %* | |||||||||||||||||||
Dividends Qualifying for the Dividends Received Deduction for Corporations | 100.00 | % | 100.00 | % | 23.33 | %* | 100.00 | % | 52.75 | % | 12.12 | %* | |||||||||||||||||||
Foreign Source Income | — | — | 64.92 | %* | — | — | 64.97 | %* | |||||||||||||||||||||||
Foreign Taxes Paid Per Share | $ | — | $ | — | $ | 0.020989 | ** | $ | — | $ | — | $ | 0.012329 | ** | |||||||||||||||||
Pharmaceutical ETF | |||||||||||||||||||||||||||||||
Record Date | 10/02/2019 | 12/31/2019 | 04/02/2020 | 07/02/2020 | |||||||||||||||||||||||||||
Ex Date | 10/01/2019 | 12/30/2019 | 04/01/2020 | 07/01/2020 | |||||||||||||||||||||||||||
Payable Date | 10/07/2019 | 01/06/2020 | 04/07/2020 | 07/08/2020 | |||||||||||||||||||||||||||
Amount Paid Per Share | $0.292000 | $0.172900 | $0.337400 | $0.249300 | |||||||||||||||||||||||||||
Ordinary Income: | |||||||||||||||||||||||||||||||
Qualified Dividend Income for Individuals | 100.00 | %* | 100.00 | % | 100.00 | % | 100.00 | % | |||||||||||||||||||||||
Dividends Qualifying for the Dividends Received Deduction for Corporations | 59.27 | %* | 82.60 | % | 59.76 | % | 59.76 | % | |||||||||||||||||||||||
Foreign Source Income | — | — | — | — | |||||||||||||||||||||||||||
Foreign Taxes Paid Per Share | $ | — | $ | — | $ | — | $ | — |
* | Expressed as a percentage of the cash distribution grossed up for foreign taxes. |
** | The foreign taxes paid represent taxes incurred by the Fund on income received by the Fund from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax adviser regarding the appropriate treatment of foreign taxes paid. |
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VANECK VECTORS ETF TRUST
BOARD OF TRUSTEES AND OFFICERS
September 30, 2020 (unaudited)
Name, Address1 and Year of Birth | Position(s) Held with the Trust | Term of Office2 and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex3 Overseen | Other Directorships Held Outside the Fund Complex3 During Past Five Years | |||||
Independent Trustees | ||||||||||
David H. Chow, 1957*† | Chairman Trustee | Since 2008 Since 2006 | Founder and CEO, DanCourt Management LLC (financial/ strategy consulting firm and Registered Investment Adviser), March 1999 to present. | 55 | Director, Forward Management LLC and Audit Committee Chairman, May 2008 to June 2015; Trustee, Berea College of Kentucky, May 2009 to present and currently Chairman of the Investment Committee; Member of the Governing Council of the Independent Directors Council, October 2012 to present; President, July 2013 to June 2015, and Board Member of the CFA Society of Stamford, July 2009 to present; Trustee, MainStay Fund Complex4, January 2016 to present and currently Chairman of the Risk and Compliance Committee. | |||||
Laurie A. Hesslein, 1959*† | Trustee | Since 2019 | Citigroup, Managing Director, and Business Head, Local Consumer Lending North America, and CEO and President, CitiFinancial Servicing LLC (2013 - 2017). | 55 | Trustee, Eagle Growth and Income Opportunities Fund; Trustee, THL Credit Senior Loan Fund. | |||||
R. Alastair Short, 1953*† | Trustee | Since 2006 | President, Apex Capital Corporation (personal investment vehicle). | 66 | Chairman and Independent Director, EULAV Asset Management; Trustee, Kenyon Review; Trustee, Children’s Village. Formerly, Independent Director, Tremont offshore funds. | |||||
Peter J. Sidebottom, 1962*† | Trustee | Since 2012 | Lead Partner, North America Banking and Capital Markets Strategy, Accenture, May 2017 to present; Partner, PWC/Strategy & Financial Services Advisory, February 2015 to March 2017; Founder and Board Member, AspenWoods Risk Solutions, September 2013 to February 2016; Independent consultant, June 2013 to February 2015; Partner, Bain & Company (management consulting firm), April 2012 to December 2013; Executive Vice President and Senior Operating Committee Member, TD Ameritrade (on-line brokerage firm), February 2009 to January 2012. | 55 | Board Member, Special Olympics, New Jersey, November 2011 to September 2013; Director, The Charlotte Research Institute, December 2000 to 2009; Board Member, Social Capital Institute, University of North Carolina Charlotte, November 2004 to January 2012; Board Member, NJ-CAN, July 2014 to 2016. | |||||
Richard D. Stamberger, 1959*† | Trustee | Since 2006 | President and CEO, SmartBrief, LLC (business media company). | 66 | Director, Food and Friends, Inc. | |||||
Interested Trustee | ||||||||||
Jan F. van Eck, 19635 | Trustee, Chief Executive Officer and President | Trustee (Since 2006); Chief Executive Officer and President (Since 2009) | Director, President and Chief Executive Officer of Van Eck Associates Corporation (VEAC), Van Eck Absolute Return Advisers Corporation (VEARA) and Van Eck Securities Corporation (VESC); Officer and/or Director of other companies affiliated with VEAC and/or the Trust | 66 | Director, National Committee on US-China Relations. |
1 | The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
2 | Each Trustee serves until resignation, death, retirement or removal. Officers are elected yearly by the Trustees. |
3 | The Fund Complex consists of the VanEck Funds, VanEck VIP Trust and the Trust. |
4 | The MainStay Fund Complex consists of MainStay Funds, MainStay Funds Trust, MainStay VP Funds Trust and MainStay MacKay Defined Term Municipal Opportunities Fund. |
5 | “Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC. |
* | Member of the Audit Committee. |
† | Member of the Nominating and Corporate Governance Committee. |
46 |
Officer’s Name, Address1 and Year of Birth | Position(s) Held with the Trust | Term of Office2 and Length of Time Served | Principal Occupation(s) During Past Five Years | |||
Officer Information | ||||||
Matthew A. Babinsky, 1983 | Assistant Vice President and Assistant Secretary | Since 2016 | Assistant Vice President, Assistant General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Associate, Clifford Chance US LLP. | |||
Russell G. Brennan, 1964 | Assistant Vice President and Assistant Treasurer | Since 2008 | Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA. | |||
Charles T. Cameron, 1960 | Vice President | Since 2006 | Portfolio Manager of VEAC; Officer and/or Portfolio Manager of other investment companies advised by VEAC and VEARA. Formerly, Director of Trading of VEAC. | |||
John J. Crimmins, 1957 | Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (Since 2012); Treasurer (Since 2009) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. | |||
Eduardo Escario, 1975 | Vice President | Since 2012 | Regional Director, Business Development/Sales for Southern Europe and South America of VEAC. | |||
Henry Glynn, 1983 | Assistant Vice President | Since 2018 | Head of ETF Capital Markets Europe of Van Eck Switzerland AG. Formerly, Member of the Capital Markets team at Vanguard Group. | |||
F. Michael Gozzillo, 1965 | Chief Compliance Officer | Since 2018 | Vice President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance Officer of VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC and City National Rochdale Funds. | |||
Laura Hamilton, 1977 | Vice President | Since 2019 | Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates. | |||
Nicholas Jackson, 1974 | Assistant Vice President | Since 2018 | Vice President, Business Development of VanEck Australia Pty Ltd. | |||
Laura I. Martínez, 1980 | Vice President and Assistant Secretary | Vice President (Since 2016); Assistant Secretary (Since 2008) | Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of VEAC, VEARA and VESC. | |||
Matthew McKinnon, 1970 | Assistant Vice President | Since 2018 | Head of Business Development of Asia Pacific of VanEck Australia Pty Ltd. Formerly, Director, Intermediaries and Institutions of VanEck Australia Pty Ltd. | |||
Arian Neiron, 1979 | Vice President | Since 2018 | Managing Director and Head of Asia Pacific of VanEck Australia Pty Ltd.; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | |||
James Parker, 1969 | Assistant Treasurer | Since 2014 | Assistant Vice President of VEAC; Manager, Portfolio Administration of VEAC and VEARA. Officer of other investment companies advised by VEAC and VEARA. | |||
Adam Phillips, 1970 | Vice President | Since 2018 | ETF Chief Operating Officer of VEAC; Director of other companies affiliated with VEAC. | |||
Philipp Schlegel, 1974 | Vice President | Since 2016 | Managing Director of Van Eck Switzerland AG. | |||
Jonathan R. Simon, 1974 | Senior Vice President, Secretary and Chief Legal Officer | Senior Vice President (Since 2016); Secretary and Chief Legal Officer (Since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
1 | The address for each Officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
2 | Officers are elected yearly by the Trustees. |
47 |
VANECK VECTORS ETF TRUST
APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
September 30, 2020 (unaudited)
At a meeting held on June 11, 2020 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved the continuation of the investment management agreements between the Trust and Van Eck Associates Corporation (the “Adviser”) (the “Investment Management Agreements”) with respect to the VanEck Vectors Biotech ETF, Environmental Services ETF, Gaming ETF, Long/Flat Trend ETF (formerly NDR CMG Long/Flat Allocation ETF), Morningstar Durable Dividend ETF, Morningstar Global Wide Moat ETF, Morningstar International Moat ETF, Morningstar Wide Moat ETF, Pharmaceutical ETF, Retail ETF, Semiconductor ETF, and Video Gaming and eSports ETF (each, a “Fund” and together, the “Funds”).
The Board’s approval of the Investment Management Agreements was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.
In preparation for the Renewal Meeting, the Trustees held a meeting on May 7, 2020. At that meeting, the Trustees discussed the information the Adviser and Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party data provider, had provided to them in advance. The information provided to the Trustees included, among other things, information about the performance and expenses of the Funds and the Funds’ peer funds (certain other index-based exchange-traded funds (“ETFs”)), information about the advisory services provided to the Funds and the personnel providing those services, and the profitability and other benefits enjoyed by the Adviser and its affiliates as a result of the Adviser’s relationship with the Funds. In reviewing performance information for the Funds against their peer groups, the Trustees considered that each Fund seeks to track a different index than the funds in its designated peer group and, therefore, each Fund’s performance will differ from its peers. In addition, as noted below, the Trustees reviewed certain performance information for each Fund which was not provided by Broadridge and which did not compare each Fund’s performance to the performance of its peer group. For these and other reasons, the Trustees noted that the peer group performance information did not necessarily provide meaningful direct comparisons to the Funds.
The Independent Trustees’ consideration of the Investment Management Agreements was based, in part, on their review of information obtained through discussions with the Adviser at the Renewal Meeting and with the Adviser at the May 7, 2020 meeting regarding the management of the Funds and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser, including the background and experience of the portfolio managers and others involved in the management and administration of the Funds. The Trustees also considered the terms of, and scope of services that the Adviser provides under, the Investment Management Agreements, including, where applicable, the Adviser’s commitment to waive certain fees and/or pay expenses of each of the Funds to the extent necessary to prevent the operating expenses of each of the Funds from exceeding agreed upon limits for a period of time.
The Trustees concluded that the Adviser and its personnel have the requisite expertise and skill to manage the Funds’ portfolios. In evaluating the performance of each Fund, the Trustees reviewed various performance metrics but relied principally on a comparison of the “gross” performance of each Fund (i.e., measured without regard to the impact of fees and expenses) to the performance of its benchmark index, in each case incorporating any systematic fair value adjustments to the underlying securities. Based on the foregoing, the Trustees concluded that the investment performance of the Funds was satisfactory.
The Trustees also considered information relating to the financial condition of the Adviser and the current status, as they understood it, of the Adviser’s compliance environment.
As noted above, the Trustees were also provided various data from Broadridge comparing the Funds’ expenses and performance to that of certain other ETFs. The Trustees noted that the information provided showed that each Fund had management fees (after the effect of any applicable fee waiver) below the average and median of its respective peer group of funds, except for each of VanEck Vectors Morningstar International Moat ETF and Morningstar Wide Moat ETF, which had management fees (after the effect of any applicable fee waiver) greater than the average and median of its respective peer group of funds. The Trustees also noted that the information provided showed that each Fund had a total expense ratio (after the effect of any applicable expense limitation) below the average and median of its respective peer group of funds, except for each of VanEck Vectors Gaming ETF, Morningstar Global Wide Moat ETF, Morningstar International Moat ETF, Morningstar Wide Moat ETF, Long/Flat Trend ETF and Video Gaming and eSports
48 |
ETF, which had a total expense ratio (after the effect of any applicable expense limitation) greater than the average and/or median of its respective peer group of funds. With respect to these Funds, the Trustees reviewed the amount by which these Funds’ management fees and/or total expense ratios (after the effect of any applicable expense limitation) exceeded the average and/or median of their respective peer groups and information provided by the Adviser providing context for these comparisons. The Trustees concluded, in light of this information and the other information available to them, that the fees paid by the Funds were reasonable in light of the performance of the Funds and the quality of services received.
The Trustees also considered the benefits, other than the fees under the Investment Management Agreements, received by the Adviser from serving as adviser to the Funds.
The Trustees also considered information provided by the Adviser about the overall profitability of the Adviser and its profitability or loss in respect of each Fund. The Trustees reviewed each Fund’s asset size, expense ratio and expense cap and noted that the Investment Management Agreements do not include breakpoints in the advisory fee rates as asset levels in a Fund increase. The Trustees considered the volatility of the asset classes in which certain of the Funds invest, potential variability in the net assets of these Funds and the sustainability of any potential economies of scale which may exist given where fees are currently set. The Trustees also evaluated the extent to which management fees for the Funds effectively incorporate the benefits of economies of scale. The Trustees noted that the Adviser has capped expenses on each Fund since its inception, although the cap was not necessarily exceeded each year. Based on the foregoing and the other information available to them, the Trustees determined that the advisory fee rate for each Fund is reasonable and appropriate in relation to the current asset size of each Fund and the other factors discussed above and that the advisory fee rate for each Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist. The Trustees also determined that the profits earned by the Adviser with respect to the Funds that were profitable to the Adviser were reasonable in light of the nature and quality of the services received by such Funds.
The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 7, 2020 meeting as part of their consideration of the Agreements.
In voting to approve the continuation of the Investment Management Agreements, the Trustees, including the Independent Trustees, concluded that the terms of each Investment Management Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that each Investment Management Agreement is in the best interest of each Fund and such Fund’s shareholders.
49 |
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the respective Fund’s prospectus and summary prospectus, which includes more complete information. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
Additional information about the VanEck Vectors ETF Trust’s (the “Trust”) Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Trust’s Form N-PORT filings are available on the Commission’s website at https://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Fund’s complete schedule of portfolio holdings is also available by calling 800.826.2333 or by visiting vaneck.com.
Investment Adviser: Distributor: | Van Eck Associates Corporation Van Eck Securities Corporation 666 Third Avenue, New York, NY 10017 vaneck.com | |
Account Assistance: | 800.826.2333 | INDUAR |
ANNUAL REPORT September 30, 2020 |
VANECK VECTORS®
Long/Flat Trend ETF | LFEQ® |
Morningstar Durable Dividend ETF | DURA® |
Morningstar Global Wide Moat ETF | GOAT® |
Morningstar International Moat ETF | MOTI® |
Morningstar Wide Moat ETF | MOAT® |
Real Asset Allocation ETF | RAAX® |
800.826.2333 | vaneck.com |
Certain information contained in this report represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. The information contained herein regarding each index has been provided by the relevant index provider. Also, unless otherwise specifically noted, any discussion of the Funds’ holdings, the Funds’ performance, and the views of the investment adviser are as of September 30, 2020.
VANECK VECTORS ETFs
PRESIDENT’S LETTER
September 30, 2020 (unaudited)
Dear Fellow Shareholders:
The level of stimulus from the U.S. Federal Reserve (Fed) this year has been almost unprecedented and has had investment consequences. Financial markets have benefited from the Fed stimulus and the case for gold investing has become more solid.
Perhaps the surprise from this summer’s data is that the global economy is doing quite well, supporting the markets, despite the social distancing that we all feel in our personal lives. Important commodities like copper have regained pre-COVID-19 highs. In addition, China’s industrial recovery is pointing to all-time highs in activity, even though consumer activity is lagging a little.
One beneficiary is high yield bonds, particularly “fallen angels”—bonds that have been downgraded from investment grade. In a recessionary environment, some bonds are going to default or be downgraded. Fixed income markets this year generally started recovering after the Fed announced plans to intervene. We have already seen a record amount of new fallen angel bond volume—over $140B as of July 31, 20201—and expect more through the remainder of the calendar year.
Similar to 2016, when crude oil also swooned, we have seen a lot of energy companies become fallen angels, and the fallen angel strategy is buying those downgraded bonds. As reviewed in a recent blog, New Fallen Angel Bonds Drive Performance, these new energy fallen angels are among the top contributors to performance of the fallen angel strategy so far this year. As long as the Fed remains supportive, we believe this strategy should continue to do well.
We do, however, see two particular risks to this scenario: 1) an unforeseen rise in interest rates in the U.S. triggered by higher global growth or other factors; and 2) a bump in the return to full employment. An incredible number of people have been laid off in the U.S. and, regardless of GDP numbers, people are unlikely to quickly return to work at the same levels as the start of the year. Concern may be high enough for policy makers to take additional steps (any of which, however, remain, as yet, uncertain) that may impact the financial recovery.
The investing outlook sometimes does change suddenly, as it certainly has at times this year. To get our quarterly investment outlooks, please subscribe to “Investment Outlook” on vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit our website.
We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find a performance discussion and financial statements for each of the funds for the twelve month period ended September, 2020. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Jan F. van Eck
CEO and President
VanEck Vectors ETF Trust
October 19, 2020
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
1 | Source: FactSet, ICE Data Indices, LLC and Morningstar. |
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VANECK VECTORS ETFs
September 30, 2020 (unaudited)
Market Review
All funds were affected by both the wide market sell off in late-February and ensuing market volatility, sparked by the evolving COVID-19 pandemic—both domestically in the U.S. and internationally. However, remedial measures, both financial and fiscal, taken by central governments around the world in response to the crisis (including the asset purchasing program of the U.S. Federal Reserve), resulted in a positive “bounce back” in markets in April.
Long/Flat Trend
VanEck Vectors® Long/Flat Trend ETF (LFEQ®) returned +14.22%* in the 12 month period ended September 30, 2020. The Fund takes a guided allocation approach designed to help investors manage risk in the U.S. equity market. The Fund seeks to track the Ned Davis Research CMG US Large Cap Long/Flat Index (NDRCMGLF) from Ned Davis Research (NDR), a world-renowned provider of institutional quality research. It is a rules-based index that follows a proprietary model developed by NDR and CMG Capital Management Group, Inc. (CMG).
The model measures the overall health of the market through an evaluation of market breadth. In this case, market breadth refers to advancing and declining price trends and countertrends at the GICS®1 industry group level. The model computes a robust moving average score daily to capture multi-industry and multi-term trend and countertrend measures to gauge overall market health. It then calculates the score’s directional trend to see if it is improving or declining. Collectively, the score and its directional trend determine the equity allocation of either 100%, 50%, or 0%. At 0%, the allocation would be entirely to cash.
The heightened volatility and broad market selloff in early 2020 nearly led to the model going to cash. However, the model’s long-term trend indicators remained bullish and kept the model fully invested, which allowed the Fund to fully participate in the market rebound after the selloff. The Fund’s allocation to equities remained unchanged over the 12 month period.2
Morningstar Durable Dividend
VanEck Vectors Morningstar Durable Dividend ETF (DURA®) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Morningstar® US Dividend Valuation IndexSM (MSUSDVTU). The index is intended to track the overall performance of high dividend yielding U.S. companies with strong financial health and attractive valuations according to Morningstar.
The Fund returned -1.26%* over the 12 month period under review. The consumer staples, information technology and health care sectors were the top contributors to positive performance and the energy sector detracted by far the most from performance for the period, with the financial and communications services sectors also both detracting from performance.
Morningstar Global Wide Moat
The newest addition to our Morningstar Moat Index investment lineup, VanEck Vectors Morningstar Global Wide Moat ETF (GOAT®) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Morningstar® Global Wide Moat Focus IndexSM (MSGWMFNU). The index is intended to track the overall performance of global companies with sustainable competitive advantages, i.e., “moats,” and attractive valuations according to Morningstar’s equity research team. The index contains at least 50 stocks that are reviewed each quarter.
VanEck Vectors Morningstar Global Wide Moat ETF returned +13.70%* for the 12 month period under review. The information technology, health care and communication services sectors contributed most to performance and the energy and financial sectors detracted the most. Companies in the United States contributed by far the most to performance, while those in Mexico, Canada and Belgium detracted the most.
Morningstar International Moat
Launched over five years ago as a means to capture moat-based opportunities abroad, VanEck Vectors Morningstar International Moat ETF (MOTI®) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN). The index
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is intended to track the overall performance of wide and narrow moat rated companies in developed and emerging markets outside the U.S. with sustainable competitive advantages at attractive prices according to Morningstar’s equity research team. The index contains at least 50 stocks that are reviewed each quarter.
For the 12 month period under review, the fund returned -0.14%.* Of several sectors contributing positively to performance, the industrials sector contributed by far the most. Three sectors, financial, communication services and real estate, detracted the most from performance. While companies in Germany contributed the most to performance, those in the U.K. detracted the most.
Morningstar Wide Moat
VanEck Vectors Morningstar Wide Moat ETF (MOAT®), now with an eight year track record, seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Morningstar® Wide Moat Focus IndexSM (MWMFTR). The index targets U.S. companies with sustainable competitive advantages, i.e., “moats,” and attractive valuations in the view of Morningstar’s team of more than 100 equity analysts.3
According to the forward-looking process of Morningstar’s Equity Research group, companies with moats have the potential to create above-average returns for longer periods of time. The index’s approach to investing in U.S. companies with wide economic moats when they are attractively priced has resulted in long-term outperformance versus the broad U.S. equity market.4
The Fund returned +10.40%* for the 12 month period under review. The primary driver of performance was the Fund’s exposure to the information technology sector. In addition, stocks in the health care and consumer discretionary sectors contributed to solid positive returns. The energy sector was the largest detractor from the Fund’s performance.
Real Asset Allocation
In its pursuit of long-term total return, VanEck Vectors® Real Asset Allocation ETF (RAAX®) seeks to maximize real returns, while seeking to reduce downside risk during sustained market declines. The Fund seeks to achieve this by allocating primarily to exchange-traded products that provide exposure to real assets, which include commodities, real estate, natural resources, master limited partnerships (MLPs) and infrastructure. The Fund seeks to reduce downside risk by using a rules-based approach to determine when to allocate to cash and cash equivalents.
Over the 12 month period, the Fund returned -18.32%.* While gold and gold equities contributed by far the most positively to the Fund’s total return, their contributions were far outweighed by the aggregated negative returns of natural resources equities, followed by those of U.S. Real Estate Investment Trusts (REITs), master limited partnerships (MLPs) and infrastructure.
* | Returns based on NAV. |
1 | Global Industry Classification Standard (GICS®) is a widely accepted equity securities classification system developed by Morgan Stanley Capital International (MSCI) and Standard & Poor’s. |
2 | Allocations to equities (long) represented by the S&P 500® Index. The S&P 500 Index consists of 500 widely held U.S. common stocks covering the industrial, utility, financial and transportation sectors. Allocations to cash (flat) represented by the Solactive 13-week U.S. T-bill Index. The Solactive 13-week U.S. T-bill Index is a rules-based index mirroring the performance of the current U.S. 13-week T-bill. |
3 | Equity analysts referred to are part of Morningstar’s Equity Research group which consists of various wholly-owned subsidiaries of Morningstar, Inc., including but not limited to, Morningstar Research Services LLC. |
4 | Based on the Morningstar Wide Moat Focus Index versus the Morningstar US Market Index from the period 2/14/2007–9/30/2020. |
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VANECK VECTORS LONG/FLAT TREND ETF
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | NDRCMGLF1 | SPTR2 | |
One Year | 14.52% | 14.22% | 15.15% | 15.15% |
Life* | 9.20% | 9.10% | 9.78% | 12.05% |
* | Commencement of Fund: 10/04/17; First Day of Secondary Market Trading: 10/05/17. |
1 | The Ned Davis Research CMG US Large Cap Long/Flat Index (the “NDR CMG Index”) (NDRCMGLF) is a rules-based index that follows a proprietary model developed by Ned Davis Research, Inc. in conjunction with CMG Capital Management Group, Inc. To help limit potential loss associated with adverse market conditions, the model produces trade signals to dictate the NDR CMG Index’s equity allocation ranging from 100% fully invested (i.e., “long”) to 100% in cash (i.e., “flat”). |
When the NDR CMG Index is long, or 100% fully invested, it will be allocated to the S&P 500 Index. When the NDR CMG Index is flat, or 100% cash, it will be allocated to the Solactive 13-week U.S. T-bill Index. | |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 10 for more information.
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VANECK VECTORS MORNINGSTAR DURABLE DIVIDEND ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MSUSDVTU1 | SPTR2 | |
One Year | (1.11)% | (1.26)% | (1.06)% | 15.15% |
Life* | 6.19% | 6.08% | 6.35% | 14.78% |
* | Commencement of Fund: 10/30/18; First Day of Secondary Market Trading: 10/31/2018. |
1 | The Morningstar® US Dividend Valuation IndexSM (MSUSDVTU) is a rules-based index intended to offer exposure to companies that the Index Provider determines have a high dividend yield, strong financial health and an attractive uncertainty-adjusted valuation. |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 10 for more information.
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VANECK VECTORS MORNINGSTAR GLOBAL WIDE MOAT ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MSGWMFNU1 | SPTR2 | |
One Year | 13.82% | 13.70% | 13.69% | 15.15% |
Life* | 15.20% | 15.01% | 15.18% | 14.78% |
* | Commencement of Fund: 10/30/18; First Day of Secondary Market Trading: 10/31/2018. |
1 | The Morningstar® Global Wide Moat Focus IndexSM (MSGWMFNU) is a rules-based index intended to offer exposure to companies that the Index Provider determines have sustainable competitive advantages based on a proprietary methodology that considers quantitative and qualitative factors. |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 10 for more information.
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VANECK VECTORS MORNINGSTAR INTERNATIONAL MOAT ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MGEUMFUN1 | SPTR2 | |
One Year | (0.08)% | (0.14)% | 0.06% | 15.15% |
Five Year | 5.26% | 5.30% | 5.93% | 14.15% |
Life* | 2.44% | 2.48% | 3.09% | 11.69% |
* | Commencement of Fund: 7/13/15; First Day of Secondary Market Trading: 7/14/15. |
1 | Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN) is a rules-based index intended to offer exposure to companies that Morningstar, Inc. determines have sustainable competitive advantages based on a proprietary methodology that considers quantitative and qualitative factors (“wide and narrow moat companies”). |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 10 for more information.
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VANECK VECTORS MORNINGSTAR WIDE MOAT ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MWMFTR1 | SPTR2 | |
One Year | 10.27% | 10.40% | 10.73% | 15.15% |
Five Year | 16.05% | 16.04% | 16.61% | 14.15% |
Life* | 13.90% | 13.91% | 14.46% | 13.54% |
* | Commencement of Fund: 4/24/12; First Day of Secondary Market Trading: 4/25/12. |
1 | Morningstar® Wide Moat Focus IndexSM (MWMFTR) is a rules-based index intended to offer exposure to companies that Morningstar, Inc. determines have sustainable competitive advantages based on a proprietary methodology that considers quantitative and qualitative factors (“wide moat companies”). |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 10 for more information.
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VANECK VECTORS REAL ASSET ALLOCATION ETF
PERFORMANCE COMPARISON
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | BCOMTR1 | RABLND2 | |
One Year | (18.36)% | (18.32)% | (8.20)% | (9.28)% |
Life* | (7.51)% | (7.53)% | (6.88)% | (3.26)% |
* | Commencement of Fund: 4/9/2018; First Day of Secondary Market Trading: 4/10/2018. |
1 | On January 31, 2020, the Bloomberg Commodity Index (BCOMTR) replaced the Real Asset Blended Index (RABLND) as the Fund’s broad-based benchmark index. The Fund changed its index as it believes the Bloomberg Commodity Index is more representative of broad commodities exposure. BCOMTR is calculated on an excess return basis and reflects commodity futures price movements. |
2 | The Blended Real Asset Index (RABLND) is calculated by Van Eck Absolute Return Advisers Corporation and comprises an equally weighted blend of the returns of Bloomberg Commodity Index, S&P Real Assets Equity Index and VanEck® Natural Resources Index. Equal weightings are reset monthly. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad-based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 10 for more information.
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VANECK VECTORS ETF TRUST
ABOUT FUND PERFORMANCE
(unaudited)
The price used to calculate market return (Share Price) is determined by using the closing price listed on its primary listing exchange. Since the shares of each Fund did not trade in the secondary market until after each Fund’s commencement, for the period from commencement to the first day of secondary market trading in shares of each Fund, the NAV of each Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted represents past performance. Past performance is not a guarantee of future results. Performance information for each Fund reflects temporary waivers of expenses and/or fees. Had each Fund incurred all expenses, investment returns would have been reduced. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the sale of Fund shares.
Investment return and value of the shares of each Fund will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund returns reflect reinvestment of dividends and capital gains distributions. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com.
Index returns assume the reinvestment of all income and do not reflect any management fees or brokerage expenses associated with Fund returns. Certain indices may take into account withholding taxes. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses.
The Morningstar® Global ex-US Moat Focus IndexSM, Morningstar® Global Wide Moat Focus IndexSM, Morningstar® US Dividend Valuation IndexSM and Morningstar® Wide Moat Focus IndexSM are published by Morningstar. The Morningstar name and logo are registered trademarks of Morningstar. Morningstar Global ex-US Moat Focus IndexSM, Morningstar Global Wide Moat Focus IndexSM, Morningstar® US Dividend Valuation IndexSM and Morningstar Wide Moat Focus IndexSM are service marks of Morningstar. The Ned Davis Research CMG US Large Cap Long/Flat Index is published by Ned Davis Research, Inc. (“NDR”). The Blended Real Asset Index is calculated by VanEck Absolute Advisers Corporation. On January 31, 2020, the Bloomberg Commodity Index replaced the Blended Real Asset Index as the Fund’s broad-based benchmark index. The Fund changed its index as it believes the Bloomberg Commodity Index is more representative of broad commodities exposure.
Morningstar and NDR are referred to herein as the “Index Providers”. The Index Providers do not sponsor, endorse, or promote the Funds and bear no liability with respect to the Funds or any security.
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VANECK VECTORS ETF TRUST
(unaudited)
Hypothetical $1,000 investment at beginning of period
As a shareholder of a Fund, you incur operating expenses, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The disclosure is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, April 1, 2020 to September 30, 2020.
Actual Expenses
The first line in the table below provides information about account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period.”
Hypothetical Example for Comparison Purposes
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning | Ending | Annualized | Expenses Paid | ||||||
Account | Account | Expense | During the Period* | ||||||
Value | Value | Ratio | April 1, 2020 – | ||||||
April 1, 2020 | September 30, 2020 | During Period | September 30, 2020 | ||||||
Long/Flat Trend ETF | |||||||||
Actual | $1,000.00 | $1,305.80 | 0.55% | $3.17 | |||||
Hypothetical** | $1,000.00 | $1,022.25 | 0.55% | $2.78 | |||||
Morningstar Durable Dividend ETF | |||||||||
Actual | $1,000.00 | $1,161.00 | 0.29% | $1.57 | |||||
Hypothetical** | $1,000.00 | $1,023.55 | 0.29% | $1.47 | |||||
Morningstar Global Wide Moat ETF | |||||||||
Actual | $1,000.00 | $1,287.20 | 0.52% | $2.97 | |||||
Hypothetical** | $1,000.00 | $1,022.40 | 0.52% | $2.63 | |||||
Morningstar International Moat ETF | |||||||||
Actual | $1,000.00 | $1,206.50 | 0.60% | $3.31 | |||||
Hypothetical** | $1,000.00 | $1,022.00 | 0.60% | $3.03 | |||||
Morningstar Wide Moat ETF | |||||||||
Actual | $1,000.00 | $1,246.10 | 0.47% | $2.64 | |||||
Hypothetical** | $1,000.00 | $1,022.65 | 0.47% | $2.38 | |||||
Real Asset Allocation ETF | |||||||||
Actual | $1,000.00 | $1,055.20 | 0.55% | $2.83 | |||||
Hypothetical** | $1,000.00 | $1,022.25 | 0.55% | $2.78 |
* | Expenses are equal to the Fund’s annualized expense ratio (for the six months ended September 30, 2020) multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year divided by the number of days in the fiscal year (to reflect the one-half year period). |
** | Assumes annual return of 5% before expenses |
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VANECK VECTORS LONG/FLAT TREND ETF
September 30, 2020
Number | ||||||||
of Shares | Value | |||||||
EXCHANGE TRADED FUND: 99.9% (a) (Cost: $28,400,480) | ||||||||
102,427 | Vanguard S&P 500 ETF | $ | 31,511,667 | |||||
Total Investments: 99.9% (Cost: $28,400,480) | 31,511,667 | |||||||
Other assets less liabilities: 0.1% | 37,131 | |||||||
NET ASSETS: 100.0% | $ | 31,548,798 |
Footnotes:
(a) | The underlying fund’s shareholder reports and registration documents are available free of charge on the SEC’s website at https://www.sec.gov |
Summary of Investments by Sector | % of Investments | Value | ||||||
Exchange Traded Fund | 100.0 | % | $ | 31,511,667 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 2 | Level 3 | ||||||||||||||||
Level 1 | Significant | Significant | |||||||||||||||
Quoted | Observable | Unobservable | |||||||||||||||
Prices | Inputs | Inputs | Value | ||||||||||||||
Exchange Traded Fund | $ | 31,511,667 | $ | — | $ | — | $ | 31,511,667 |
See Notes to Financial Statements
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VANECK VECTORS MORNINGSTAR DURABLE DIVIDEND ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number | ||||||||
of Shares | Value | |||||||
COMMON STOCKS: 99.4% | ||||||||
Capital Goods: 11.7% | ||||||||
7,867 | 3M Co. | $ | 1,260,136 | |||||
4,379 | Eaton Corp. Plc | 446,789 | ||||||
5,890 | Honeywell International, Inc. | 969,553 | ||||||
540 | Hubbell, Inc. | 73,894 | ||||||
475 | Lincoln Electric Holdings, Inc. | 43,719 | ||||||
2,381 | Lockheed Martin Corp. | 912,590 | ||||||
817 | MSC Industrial Direct Co. | 51,700 | ||||||
604 | Snap-on, Inc. | 88,867 | ||||||
3,847,248 | ||||||||
Consumer Services: 4.6% | ||||||||
652 | Dunkin’ Brands Group, Inc. | 53,405 | ||||||
6,669 | McDonald’s Corp. | 1,463,779 | ||||||
1,517,184 | ||||||||
Diversified Financials: 5.2% | ||||||||
1,476 | BlackRock, Inc. | 831,800 | ||||||
222 | Cohen & Steers, Inc. | 12,374 | ||||||
1,721 | Eaton Vance Corp. | 65,656 | ||||||
593 | Evercore, Inc. | 38,818 | ||||||
1,738 | Federated Investors, Inc. | 37,384 | ||||||
5,633 | Franklin Resources, Inc. | 114,632 | ||||||
4,336 | Janus Henderson Group Plc | 94,178 | ||||||
3,359 | TD Ameritrade Holding Corp. | 131,505 | ||||||
10,770 | The Bank of New York Mellon Corp. | 369,842 | ||||||
1,696,189 | ||||||||
Energy: 0.2% | ||||||||
3,325 | Cabot Oil & Gas Corp. | 57,722 | ||||||
Food, Beverage & Tobacco: 20.7% | ||||||||
35,755 | Altria Group, Inc. | 1,381,573 | ||||||
2,011 | Campbell Soup Co. | 97,272 | ||||||
3,324 | Kellogg Co. | 214,697 | ||||||
11,356 | PepsiCo, Inc. | 1,573,942 | ||||||
19,592 | Philip Morris International, Inc. | 1,469,204 | ||||||
31,199 | The Coca-Cola Co. | 1,540,295 | ||||||
1,352 | The J.M. Smucker Co. | 156,183 | ||||||
12,208 | The Kraft Heinz Co. | 365,630 | ||||||
6,798,796 | ||||||||
Insurance: 3.3% | ||||||||
4,326 | Chubb Ltd. | 502,335 | ||||||
2,787 | The Allstate Corp. | 262,368 | ||||||
2,849 | Travelers Cos, Inc. | 308,233 | ||||||
1,072,936 | ||||||||
Materials: 0.4% | ||||||||
1,016 | International Flavors & Fragrances, Inc. | 124,409 | ||||||
456 | Sensient Technologies Corp. | 26,329 | ||||||
150,738 | ||||||||
Pharmaceuticals / Biotechnology: 27.7% | ||||||||
17,299 | AbbVie, Inc. | 1,515,219 | ||||||
26,105 | Bristol-Myers Squibb Co. | 1,573,870 | ||||||
19,746 | Gilead Sciences, Inc. | 1,247,750 | ||||||
10,743 | Johnson & Johnson | 1,599,418 | ||||||
18,417 | Merck & Co., Inc. | 1,527,690 | ||||||
43,874 | Pfizer, Inc. | 1,610,176 | ||||||
9,074,123 |
Number | ||||||||
of Shares | Value | |||||||
Semiconductor: 0.6% | ||||||||
2,965 | Maxim Integrated Products, Inc. | $ | 200,464 | |||||
Software & Services: 1.4% | ||||||||
4,042 | Paychex, Inc. | 322,430 | ||||||
5,955 | The Western Union Co. | 127,616 | ||||||
450,046 | ||||||||
Technology Hardware & Equipment: 1.0% | ||||||||
4,363 | Juniper Networks, Inc. | 93,805 | ||||||
2,454 | TE Connectivity Ltd. | 239,854 | ||||||
333,659 | ||||||||
Telecommunication Services: 9.9% | ||||||||
56,306 | AT&T, Inc. | 1,605,284 | ||||||
663 | Cogent Communications Group, Inc. | 39,813 | ||||||
26,756 | Verizon Communications, Inc. | 1,591,714 | ||||||
3,236,811 | ||||||||
Utilities: 12.7% | ||||||||
2,393 | Ameren Corp. | 189,238 | ||||||
1,125 | Atmos Energy Corp. | 107,539 | ||||||
15,172 | Dominion Energy, Inc. | 1,197,526 | ||||||
2,484 | DTE Energy Co. | 285,759 | ||||||
13,093 | Duke Energy Corp. | 1,159,516 | ||||||
1,643 | Hawaiian Electric Industries, Inc. | 54,613 | ||||||
3,869 | OGE Energy Corp. | 116,031 | ||||||
19,499 | Southern Co. | 1,057,236 | ||||||
4,167,458 | ||||||||
Total Common Stocks: 99.4% (Cost: $32,279,610) | 32,603,374 | |||||||
Other assets less liabilities: 0.6% | 198,020 | |||||||
NET ASSETS: 100.0% | $ | 32,801,394 |
See Notes to Financial Statements
13 |
VANECK VECTORS MORNINGSTAR DURABLE DIVIDEND ETF
SCHEDULE OF INVESTMENTS
(continued)
Summary of Investments by Sector | % of Investments | Value | ||||||
Communication Services | 9.9 | % | $ | 3,236,811 | ||||
Consumer Discretionary | 4.7 | 1,517,184 | ||||||
Consumer Staples | 20.8 | 6,798,796 | ||||||
Energy | 0.2 | 57,722 | ||||||
Financials | 8.5 | 2,769,125 | ||||||
Health Care | 27.8 | 9,074,123 | ||||||
Industrials | 11.8 | 3,847,248 | ||||||
Information Technology | 3.0 | 984,169 | ||||||
Materials | 0.5 | 150,738 | ||||||
Utilities | 12.8 | 4,167,458 | ||||||
100.0 | % | $ | 32,603,374 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 2 | Level 3 | ||||||||||||||||
Level 1 | Significant | Significant | |||||||||||||||
Quoted | Observable | Unobservable | |||||||||||||||
Prices | Inputs | Inputs | Value | ||||||||||||||
Common Stocks* | $ | 32,603,374 | $ | — | $ | — | $ | 32,603,374 |
* | See Schedule of Investments for industry sector breakouts. |
See Notes to Financial Statements
14 |
VANECK VECTORS MORNINGSTAR GLOBAL WIDE MOAT ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number | ||||||||
of Shares | Value | |||||||
COMMON STOCKS: 100.2% | ||||||||
Australia: 1.0% | ||||||||
12,969 | Brambles Ltd. # | $ | 98,543 | |||||
Canada: 3.8% | ||||||||
6,024 | Enbridge, Inc. | 175,432 | ||||||
1,325 | Royal Bank of Canada | 92,738 | ||||||
2,029 | Toronto-Dominion Bank | 93,646 | ||||||
361,816 | ||||||||
China / Hong Kong: 7.5% | ||||||||
3,400 | Alibaba Group Holding Ltd. (ADR) * # | 124,819 | ||||||
1,575 | Baidu, Inc. (ADR) * | 199,379 | ||||||
3,100 | Tencent Holdings Ltd. # | 209,386 | ||||||
3,622 | Yum China Holdings, Inc. (USD) * | 191,785 | ||||||
725,369 | ||||||||
Denmark: 1.0% | ||||||||
1,345 | Novo Nordisk AS # | 93,219 | ||||||
France: 1.9% | ||||||||
1,798 | Sanofi SA # | 180,212 | ||||||
Germany: 2.7% | ||||||||
1,180 | Bayer AG # | 72,811 | ||||||
5,422 | GEA Group AG # | 190,009 | ||||||
262,820 | ||||||||
Ireland: 2.0% | ||||||||
1,888 | Medtronic Plc (USD) | 196,201 | ||||||
Japan: 6.4% | ||||||||
1,300 | Hoshizaki Corp. # | 103,671 | ||||||
2,500 | Kao Corp. # | 187,561 | ||||||
6,000 | Nabtesco Corp. # | 217,704 | ||||||
2,700 | Yaskawa Electric Corp. # | 105,567 | ||||||
614,503 | ||||||||
Switzerland: 3.8% | ||||||||
4,316 | Julius Baer Group Ltd. # | 183,770 | ||||||
524 | Roche Holding AG # | 179,941 | ||||||
363,711 | ||||||||
United Kingdom: 6.7% | ||||||||
14,815 | BAE Systems Plc # | 92,183 | ||||||
5,115 | British American Tobacco Plc # | 183,830 | ||||||
9,342 | Consumers Packaging, Inc. # | 175,472 | ||||||
1,006 | Reckitt Benckiser Group Plc # | 98,277 | ||||||
1,591 | Unilever Plc # | 98,276 | ||||||
648,038 |
Number | ||||||||
of Shares | Value | |||||||
United States: 63.4% | ||||||||
128 | Alphabet, Inc. * | $ | 187,597 | |||||
2,240 | Altria Group, Inc. | 86,554 | ||||||
33 | Amazon.com, Inc. * | 103,908 | ||||||
382 | Amgen, Inc. | 97,089 | ||||||
3,311 | Applied Materials, Inc. | 196,839 | ||||||
958 | Berkshire Hathaway, Inc. * | 203,996 | ||||||
698 | Biogen, Inc. * | 198,009 | ||||||
175 | BlackRock, Inc. | 98,621 | ||||||
3,289 | Bristol-Myers Squibb Co. | 198,294 | ||||||
708 | Caterpillar, Inc. | 105,598 | ||||||
2,611 | Cerner Corp. | 188,749 | ||||||
2,330 | Comcast Corp. | 107,786 | ||||||
3,638 | Compass Minerals International, Inc. | 215,915 | ||||||
505 | Constellation Brands, Inc. | 95,703 | ||||||
6,780 | Corteva, Inc. | 195,332 | ||||||
1,115 | Dominion Energy, Inc. | 88,007 | ||||||
2,904 | Emerson Electric Co. | 190,415 | ||||||
358 | Facebook, Inc. * | 93,760 | ||||||
592 | General Dynamics Corp. | 81,951 | ||||||
2,711 | Gilead Sciences, Inc. | 171,308 | ||||||
1,735 | Guidewire Software, Inc. * | 180,908 | ||||||
3,510 | Intel Corp. | 181,748 | ||||||
2,839 | Kellogg Co. | 183,371 | ||||||
326 | Lam Research Corp. | 108,150 | ||||||
455 | McDonald’s Corp. | 99,868 | ||||||
2,325 | Merck & Co., Inc. | 192,859 | ||||||
967 | Microchip Technology, Inc. | 99,369 | ||||||
920 | Microsoft Corp. | 193,504 | ||||||
950 | NIKE, Inc. | 119,263 | ||||||
715 | PepsiCo, Inc. | 99,099 | ||||||
5,467 | Pfizer, Inc. | 200,639 | ||||||
2,481 | Philip Morris International, Inc. | 186,050 | ||||||
1,422 | Raytheon Technologies Corp. | 81,822 | ||||||
870 | Salesforce.com, Inc. * | 218,648 | ||||||
438 | ServiceNow, Inc. * | 212,430 | ||||||
2,000 | The Coca-Cola Co. | 98,740 | ||||||
736 | The Walt Disney Co. * | 91,323 | ||||||
8,600 | The Western Union Co. | 184,298 | ||||||
820 | Tiffany & Co. | 94,997 | ||||||
275 | Tyler Technologies, Inc. * | 95,854 | ||||||
362 | Veeva Systems, Inc. * | 101,791 | ||||||
1,424 | Zimmer Biomet Holdings, Inc. | 193,863 | ||||||
6,124,025 | ||||||||
Total Common Stocks: 100.2% (Cost: $8,318,147) | 9,668,457 | |||||||
Liabilities in excess of other assets: (0.2)% | (16,122 | ) | ||||||
NET ASSETS: 100.0% | $ | 9,652,335 |
See Notes to Financial Statements
15 |
VANECK VECTORS MORNINGSTAR GLOBAL WIDE MOAT ETF
SCHEDULE OF INVESTMENTS
(continued)
Definitions:
ADR | American Depositary Receipt |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $2,595,251 which represents 26.9% of net assets. |
Summary of Investments by Sector | % of Investments | Value | ||||||
Communication Services | 9.2 | % | $ | 889,231 | ||||
Consumer Discretionary | 7.6 | 734,640 | ||||||
Consumer Staples | 13.6 | 1,317,461 | ||||||
Energy | 1.8 | 175,432 | ||||||
Financials | 7.0 | 672,771 | ||||||
Health Care | 25.2 | 2,440,457 | ||||||
Industrials | 13.1 | 1,267,463 | ||||||
Information Technology | 17.3 | 1,671,748 | ||||||
Materials | 4.3 | 411,247 | ||||||
Utilities | 0.9 | 88,007 | ||||||
100.0 | % | $ | 9,668,457 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 2 | Level 3 | |||||||||||||||||
Level 1 | Significant | Significant | ||||||||||||||||
Quoted | Observable | Unobservable | ||||||||||||||||
Prices | Inputs | Inputs | Value | |||||||||||||||
Common Stocks | ||||||||||||||||||
Australia | $ | — | $ | 98,543 | $ | — | $ | 98,543 | ||||||||||
Canada | 361,816 | — | — | 361,816 | ||||||||||||||
China / Hong Kong | 391,164 | 334,205 | — | 725,369 | ||||||||||||||
Denmark | — | 93,219 | — | 93,219 | ||||||||||||||
France | — | 180,212 | — | 180,212 | ||||||||||||||
Germany | — | 262,820 | — | 262,820 | ||||||||||||||
Ireland | 196,201 | — | — | 196,201 | ||||||||||||||
Japan | — | 614,503 | — | 614,503 | ||||||||||||||
Switzerland | — | 363,711 | — | 363,711 | ||||||||||||||
United Kingdom | — | 648,038 | — | 648,038 | ||||||||||||||
United States | 6,124,025 | — | — | 6,124,025 | ||||||||||||||
Total | $ | 7,073,206 | $ | 2,595,251 | $ | — | $ | 9,668,457 |
See Notes to Financial Statements
16 |
VANECK VECTORS MORNINGSTAR INTERNATIONAL MOAT ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number | ||||||||
of Shares | Value | |||||||
COMMON STOCKS: 98.8% | ||||||||
Australia: 7.0% | ||||||||
59,220 | Computershare Ltd. # | $ | 524,268 | |||||
79,388 | Crown Resorts Ltd. † # | 504,660 | ||||||
189,627 | Link Administration Holdings Ltd. # | 512,439 | ||||||
136,305 | Pendal Group Ltd. # | 539,864 | ||||||
25,837 | Perpetual Ltd. # | 521,850 | ||||||
492,645 | Telstra Corp. Ltd. # | 987,087 | ||||||
3,590,168 | ||||||||
Canada: 4.8% | ||||||||
7,369 | Canadian Imperial Bank of Commerce | 549,082 | ||||||
96,522 | Comeco Corp. | 971,904 | ||||||
32,909 | Enbridge, Inc. | 958,383 | ||||||
2,479,369 | ||||||||
China / Hong Kong: 30.6% | ||||||||
1,605,000 | Agricultural Bank of China Ltd. # | 503,580 | ||||||
8,601 | Baidu, Inc. (ADR) * | 1,088,801 | ||||||
2,969,000 | Bank of China Ltd. # | 923,425 | ||||||
184,500 | BOC Hong Kong Holdings Ltd. # | 489,110 | ||||||
642,000 | China Construction Bank Corp. # | 417,156 | ||||||
140,800 | China Gas Holdings Ltd. # | 402,930 | ||||||
149,000 | China Mobile Ltd. # | 956,479 | ||||||
82,500 | CK Asset Holdings Ltd. # | 405,385 | ||||||
286,000 | CSPC Pharmaceutical Group Ltd. # | 558,289 | ||||||
120,000 | Hangzhou Hikvision Digital Technology Co. Ltd. # | 677,861 | ||||||
1,708,000 | Industrial & Commercial Bank of China Ltd. # | 889,695 | ||||||
794,400 | MGM China Holdings Ltd. † # | 990,052 | ||||||
249,600 | Sands China Ltd. # | 967,509 | ||||||
309,300 | Shanghai Pharmaceuticals Holding Co. Ltd. # | 518,779 | ||||||
849,000 | SJM Holdings Ltd. # | 1,006,466 | ||||||
79,000 | Sun Hung Kai Properties Ltd. # | 1,018,042 | ||||||
197,000 | Swire Properties Ltd. # | 521,971 | ||||||
19,988 | Trip.com Group Ltd. (ADR) * | 622,426 | ||||||
15,597 | Weibo Corp. (ADR) * | 568,199 | ||||||
1,199,500 | WH Group Ltd. Reg S 144A # | 978,447 | ||||||
300,800 | Wynn Macau Ltd. * # | 482,728 | ||||||
317,200 | Zhengzhou Yutong Bus Co. Ltd. # | 737,354 | ||||||
15,724,684 | ||||||||
Denmark: 2.0% | ||||||||
74,964 | Danske Bank A/S * # | 1,014,314 | ||||||
France: 0.8% | ||||||||
41,155 | Orange SA # | 428,725 | ||||||
Germany: 8.2% | ||||||||
14,601 | Bayer AG # | 900,944 | ||||||
15,003 | Bayerische Motoren Werke AG # | 1,089,061 | ||||||
4,826 | Continental AG # | 523,075 | ||||||
21,658 | Fresenius SE & Co. KGaA # | 985,050 | ||||||
8,172 | KION Group AG # | 697,920 | ||||||
4,196,050 | ||||||||
Italy: 0.9% | ||||||||
1,164,786 | Telecom Italia SpA # | 466,930 |
Number | ||||||||
of Shares | Value | |||||||
Japan: 9.8% | ||||||||
36,100 | Calbee, Inc. # | $ | 1,188,328 | |||||
53,700 | Japan Tobacco, Inc. # | 979,087 | ||||||
8,600 | Murata Manufacturing Co. Ltd. # | 558,889 | ||||||
8,000 | Nidec Corp. # | 749,761 | ||||||
17,300 | Seven & i Holdings Co. Ltd. # | 537,181 | ||||||
28,500 | Takeda Pharmaceutical Co. Ltd. † # | 1,018,046 | ||||||
5,031,292 | ||||||||
Mexico: 2.0% | ||||||||
1,610,000 | America Movil SAB de CV | 1,012,278 | ||||||
Netherlands: 2.7% | ||||||||
63,903 | ING Groep NV * # | 456,145 | ||||||
391,544 | Koninklijke KPN NV # | 918,844 | ||||||
1,374,989 | ||||||||
Singapore: 3.9% | ||||||||
509,300 | CapitaLand Ltd. # | 1,018,238 | ||||||
163,362 | Oversea-Chinese Banking Corp. Ltd. # | 1,015,868 | ||||||
2,034,106 | ||||||||
South Korea: 2.2% | ||||||||
5,706 | SK Telecom Co. Ltd. # | 1,159,923 | ||||||
Spain: 2.0% | ||||||||
35,266 | Grifols SA # | 1,014,252 | ||||||
Sweden: 3.4% | ||||||||
53,603 | Elekta AB † # | 674,041 | ||||||
69,286 | Swedbank AB # | 1,085,423 | ||||||
1,759,464 | ||||||||
Switzerland: 10.9% | ||||||||
15,881 | Cie Financiere Richemont SA # | 1,068,965 | ||||||
97,571 | Credit Suisse Group AG # | 976,460 | ||||||
23,578 | Julius Baer Group Ltd. # | 1,003,920 | ||||||
11,484 | LafargeHolcim Ltd. # | 524,055 | ||||||
2,863 | Roche Holding AG # | 983,149 | ||||||
2,495 | The Swatch Group AG # | 583,004 | ||||||
43,038 | UBS Group AG # | 482,063 | ||||||
5,621,616 | ||||||||
Taiwan: 0.9% | ||||||||
4,000 | Largan Precision Co. Ltd. # | 468,438 | ||||||
United Kingdom: 6.7% | ||||||||
27,930 | British American Tobacco Plc # | 1,003,787 | ||||||
219,684 | ConvaTec Group PLC Reg S 144A # | 507,047 | ||||||
25,942 | Imperial Brands Plc # | 459,096 | ||||||
59,874 | Smiths Group Plc # | 1,061,160 | ||||||
316,834 | Vodafone Group Plc # | 420,738 | ||||||
3,451,828 | ||||||||
Total Common Stocks (Cost: $52,816,155) | 50,828,426 | |||||||
PREFERRED STOCKS: 1.1% | ||||||||
Germany: 1.1% (Cost: $495,211) | ||||||||
5,285 | Henkel AG & Co. KGaA, 2.07% # | 552,834 | ||||||
Total Investments Before Collateral for Securities Loaned: 99.9% (Cost: $53,311,366) | 51,381,260 |
See Notes to Financial Statements
17 |
VANECK VECTORS MORNINGSTAR INTERNATIONAL MOAT ETF
SCHEDULE OF INVESTMENTS
(continued)
Number | ||||||||
of Shares | Value | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 0.2% (Cost: $70,249) | ||||||||
Money Market Fund: 0.2% | ||||||||
70,249 | State Street Navigator Securities Lending Government Money Market Portfolio | $ | 70,249 | |||||
Total Investments: 100.1% (Cost: $53,381,615) | 51,451,509 | |||||||
Liabilities in excess of other assets: (0.1)% | (35,132 | ) | ||||||
NET ASSETS: 100.0% | $ | 51,416,377 |
Definitions:
ADR | American Depositary Receipt |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $1,938,574. |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $45,610,187 which represents 88.7% of net assets. |
Reg S | Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. |
144A | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $1,485,494, or 2.9% of net assets. |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Communication Services | 15.6 | % | $ | 8,008,004 | ||||
Consumer Discretionary | 15.3 | 7,837,946 | ||||||
Consumer Staples | 11.1 | 5,698,760 | ||||||
Energy | 3.8 | 1,930,287 | ||||||
Financials | 21.1 | 10,867,955 | ||||||
Health Care | 13.9 | 7,159,597 | ||||||
Industrials | 6.3 | 3,246,195 | ||||||
Information Technology | 5.3 | 2,741,895 | ||||||
Materials | 1.0 | 524,055 | ||||||
Real Estate | 5.8 | 2,963,636 | ||||||
Utilities | 0.8 | 402,930 | ||||||
100.0 | % | $ | 51,381,260 |
See Notes to Financial Statements
18 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 2 | Level 3 | ||||||||||||||||
Level 1 | Significant | Significant | |||||||||||||||
Quoted | Observable | Unobservable | |||||||||||||||
Prices | Inputs | Inputs | Value | ||||||||||||||
Common Stocks | |||||||||||||||||
Australia | $ | — | $ | 3,590,168 | $ | — | $ | 3,590,168 | |||||||||
Canada | 2,479,369 | — | — | 2,479,369 | |||||||||||||
China / Hong Kong | 2,279,426 | 13,445,258 | — | 15,724,684 | |||||||||||||
Denmark | — | 1,014,314 | — | 1,014,314 | |||||||||||||
France | — | 428,725 | — | 428,725 | |||||||||||||
Germany | — | 4,196,050 | — | 4,196,050 | |||||||||||||
Italy | — | 466,930 | — | 466,930 | |||||||||||||
Japan | — | 5,031,292 | — | 5,031,292 | |||||||||||||
Mexico | 1,012,278 | — | — | 1,012,278 | |||||||||||||
Netherlands | — | 1,374,989 | — | 1,374,989 | |||||||||||||
Singapore | — | 2,034,106 | — | 2,034,106 | |||||||||||||
South Korea | — | 1,159,923 | — | 1,159,923 | |||||||||||||
Spain | — | 1,014,252 | — | 1,014,252 | |||||||||||||
Sweden | — | 1,759,464 | — | 1,759,464 | |||||||||||||
Switzerland | — | 5,621,616 | — | 5,621,616 | |||||||||||||
Taiwan | — | 468,438 | — | 468,438 | |||||||||||||
United Kingdom | — | 3,451,828 | — | 3,451,828 | |||||||||||||
Preferred Stocks* | — | 552,834 | — | 552,834 | |||||||||||||
Money Market Fund | 70,249 | — | — | 70,249 | |||||||||||||
Total | $ | 5,841,322 | $ | 45,610,187 | $ | — | $ | 51,451,509 |
* | See Schedule of Investments for geographic sector breakouts. |
See Notes to Financial Statements
19 |
VANECK VECTORS MORNINGSTAR WIDE MOAT ETF
SCHEDULE OF INVESTMENTS
September 30, 2020
Number | ||||||||
of Shares | Value | |||||||
COMMON STOCKS: 99.9% | ||||||||
Banks: 7.0% | ||||||||
3,343,637 | Bank of America Corp. | $ | 80,548,215 | |||||
2,261,322 | US Bancorp | 81,068,394 | ||||||
3,331,541 | Wells Fargo & Co. | 78,324,529 | ||||||
239,941,138 | ||||||||
Capital Goods: 10.9% | ||||||||
492,130 | Boeing Co. * | 81,329,404 | ||||||
318,668 | Caterpillar, Inc. | 47,529,332 | ||||||
628,206 | Emerson Electric Co. | 41,191,467 | ||||||
561,620 | General Dynamics Corp. | 77,745,057 | ||||||
112,028 | Lockheed Martin Corp. | 42,938,092 | ||||||
1,364,326 | Raytheon Technologies Corp. | 78,503,318 | ||||||
369,236,670 | ||||||||
Consumer Durables & Apparel: 2.4% | ||||||||
1,636,939 | Harley-Davidson, Inc. | 40,170,483 | ||||||
459,468 | Polaris Industries, Inc. | 43,346,211 | ||||||
83,516,694 | ||||||||
Diversified Financials: 8.9% | ||||||||
829,112 | American Express Co. | 83,118,478 | ||||||
426,915 | Berkshire Hathaway, Inc. * | 90,907,280 | ||||||
77,043 | BlackRock, Inc. | 43,417,583 | ||||||
2,358,748 | The Charles Schwab Corp. | 85,457,440 | ||||||
302,900,781 | ||||||||
Energy: 2.4% | ||||||||
1,736,449 | Cheniere Energy, Inc. * | 80,345,495 | ||||||
Food, Beverage & Tobacco: 10.9% | ||||||||
1,994,939 | Altria Group, Inc. | 77,084,443 | ||||||
454,791 | Constellation Brands, Inc. | 86,187,442 | ||||||
1,263,019 | Kellogg Co. | 81,578,397 | ||||||
1,104,341 | Philip Morris International, Inc. | 82,814,532 | ||||||
900,520 | The Coca-Cola Co. | 44,458,672 | ||||||
372,123,486 | ||||||||
Health Care Equipment & Services: 7.6% | ||||||||
558,423 | Cerner Corp. | 40,368,399 | ||||||
840,620 | Medtronic Plc | 87,357,230 | ||||||
159,294 | Veeva Systems, Inc. * | 44,791,880 | ||||||
634,136 | Zimmer Biomet Holdings, Inc. | 86,331,275 | ||||||
258,848,784 | ||||||||
Materials: 5.4% | ||||||||
1,620,234 | Compass Minerals International, Inc. † | 96,160,888 | ||||||
3,017,284 | Corteva, Inc. | 86,927,952 | ||||||
183,088,840 |
Number | ||||||||
of Shares | Value | |||||||
Media & Entertainment: 3.6% | ||||||||
1,049,064 | Comcast Corp. | $ | 48,529,701 | |||||
2,317,752 | John Wiley & Sons, Inc. | 73,495,916 | ||||||
122,025,617 | ||||||||
Pharmaceuticals / Biotechnology: 12.6% | ||||||||
310,420 | Biogen, Inc. * | 88,059,946 | ||||||
1,463,868 | Bristol-Myers Squibb Co. | 88,256,602 | ||||||
1,204,939 | Gilead Sciences, Inc. | 76,140,095 | ||||||
1,034,716 | Merck & Co., Inc. | 85,829,692 | ||||||
2,433,722 | Pfizer, Inc. | 89,317,597 | ||||||
427,603,932 | ||||||||
Retailing: 5.0% | ||||||||
13,207 | Amazon.com, Inc. * | 41,585,277 | ||||||
369,248 | Tiffany & Co. | 42,777,381 | ||||||
936,718 | Yum! Brands, Inc. | 85,522,353 | ||||||
169,885,011 | ||||||||
Semiconductor: 8.9% | ||||||||
1,472,300 | Applied Materials, Inc. | 87,528,235 | ||||||
1,560,148 | Intel Corp. | 80,784,463 | ||||||
143,421 | Lam Research Corp. | 47,579,917 | ||||||
834,752 | Microchip Technology, Inc. | 85,779,116 | ||||||
301,671,731 | ||||||||
Software & Services: 13.1% | ||||||||
750,252 | Aspen Technology, Inc. * | 94,974,401 | ||||||
1,443,076 | Blackbaud, Inc. * | 80,566,933 | ||||||
772,087 | Guidewire Software, Inc. * | 80,505,512 | ||||||
204,256 | Microsoft Corp. | 42,961,164 | ||||||
387,530 | Salesforce.com, Inc. * | 97,394,040 | ||||||
100,995 | ServiceNow, Inc. * | 48,982,575 | ||||||
445,384,625 | ||||||||
Utilities: 1.2% | ||||||||
501,751 | Dominion Energy, Inc. | 39,603,206 | ||||||
Total Common Stocks: 99.9% (Cost: $3,308,510,191) | 3,396,176,010 | |||||||
Other assets less liabilities: 0.1% | 1,791,136 | |||||||
NET ASSETS: 100.0% | $ | 3,397,967,146 |
See Notes to Financial Statements
20 |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $3,602,367. |
Summary of Investments by Sector | % of Investments | Value | ||||||
Communication Services | 3.6 | % | $ | 122,025,617 | ||||
Consumer Discretionary | 7.4 | 253,401,705 | ||||||
Consumer Staples | 10.9 | 372,123,486 | ||||||
Energy | 2.4 | 80,345,495 | ||||||
Financials | 16.0 | 542,841,919 | ||||||
Health Care | 20.2 | 686,452,716 | ||||||
Industrials | 10.9 | 369,236,670 | ||||||
Information Technology | 22.0 | 747,056,356 | ||||||
Materials | 5.4 | 183,088,840 | ||||||
Utilities | 1.2 | 39,603,206 | ||||||
100.0 | % | $ | 3,396,176,010 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 2 | Level 3 | ||||||||||||||||
Level 1 | Significant | Significant | |||||||||||||||
Quoted | Observable | Unobservable | |||||||||||||||
Prices | Inputs | Inputs | Value | ||||||||||||||
Common Stocks* | $ | 3,396,176,010 | $ | — | $ | — | $ | 3,396,176,010 |
* | See Schedule of Investments for industry sector breakouts. |
See Notes to Financial Statements
21 |
VANECK VECTORS REAL ASSET ALLOCATION ETF
CONSOLIDATED SCHEDULE OF INVESTMENTS
September 30, 2020
Number | ||||||||
of Shares | Value | |||||||
EXCHANGE TRADED FUNDS: 100.0% (a) | ||||||||
14,607 | Energy Select Sector SPDR Fund | $ | 437,480 | |||||
103,036 | Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF † | 1,408,502 | ||||||
32,177 | iShares Global Infrastructure ETF † | 1,241,389 | ||||||
56,626 | iShares Gold Trust * | 1,018,702 | ||||||
12,277 | iShares MSCI Global Metals & Mining Producers ETF | 328,778 | ||||||
54,262 | SPDR Gold MiniShares Trust * | 1,020,126 | ||||||
9,762 | VanEck Vectors Agribusiness ETF ‡ † | 659,441 | ||||||
4,483 | VanEck Vectors Coal ETF ‡ | 349,211 | ||||||
11,807 | VanEck Vectors Energy Income ETF ‡ | 404,867 | ||||||
12,085 | VanEck Vectors Gold Miners ETF ‡ | 473,870 | ||||||
3,995 | VanEck Vectors Low Carbon Energy ETF ‡ * | 437,983 | ||||||
2,499 | VanEck Vectors Oil Services ETF ‡ | 244,277 | ||||||
11,053 | VanEck Vectors Steel ETF ‡ † | 341,239 | ||||||
4,785 | VanEck Vectors Unconventional Oil & Gas ETF ‡ | 265,145 | ||||||
5,514 | Vanguard Real Estate ETF † | 435,385 | ||||||
Total Exchange Traded Funds (Cost: $8,302,206) | 9,066,395 |
Number | ||||||||
of Shares | Value | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 7.7% (Cost: $695,909) | ||||||||
Money Market Fund: 7.7% | ||||||||
695,909 | State Street Navigator Securities Lending Government Money Market Portfolio | $ | 695,909 | |||||
Total Investments: 107.7% (Cost: $8,998,115) | 9,762,304 | |||||||
Liabilities in excess of other assets: (7.7)% | (696,373 | ) | ||||||
NET ASSETS: 100.0% | $ | 9,065,931 |
Footnotes:
(a) | Each underlying fund’s shareholder reports and registration documents are available free of charge on the SEC’s website at https://www.sec.gov |
‡ | Affiliated issuer – as defined under the Investment Company Act of 1940. |
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $2,310,109. |
A summary of the Fund’s transactions in securities of affiliates for the year ended September 30, 2020 is set forth below:
Affiliates | Value 09/30/19 | Purchases | Sales Proceeds | Realized Gain (Loss) | Dividend Income | Net Change in Unrealized Appreciation (Depreciation) | Value 09/30/20 | |||||||||||||||||||||
VanEck Vectors Agribusiness ETF | $ | 629,819 | $ | 3,016,848 | $ | (2,750,206 | ) | $ | (287,299 | ) | $ | 28,789 | $ 50,279 | $ | 659,441 | |||||||||||||
VanEck Vectors Coal ETF | 438,018 | 3,422,059 | (3,010,449 | ) | (582,832 | ) | 103,333 | 82,415 | 349,211 | |||||||||||||||||||
VanEck Vectors Energy Income ETF | — | 2,463,624 | (1,119,028 | ) | (867,133 | )* | 199 | (38,586 | )** | 404,867 | ||||||||||||||||||
VanEck Vectors Gold Miners ETF | 623,358 | 5,850,646 | (5,555,370 | ) | (481,446 | ) | 9,748 | 36,682 | 473,870 | |||||||||||||||||||
VanEck Vectors Low Carbon Energy ETF | — | 1,828,662 | (1,297,127 | ) | (184,542 | ) | — | 90,990 | 437,983 | |||||||||||||||||||
VanEck Vectors Oil Services ETF | 645,333 | 2,196,673 | (1,695,501 | ) | (921,563 | ) | 25,910 | 19,335 | 244,277 | |||||||||||||||||||
VanEck Vectors Steel ETF | 658,101 | 1,738,728 | (1,468,812 | ) | (630,662 | ) | — | 43,884 | 341,239 | |||||||||||||||||||
VanEck Vectors Unconventional Oil & Gas ETF | 459,934 | 2,163,716 | (1,531,258 | ) | (824,998 | ) | 21,437 | (2,249 | ) | 265,145 | ||||||||||||||||||
$ | 3,454,563 | $ | 22,680,956 | $ | (18,427,751 | ) | $ | (4,780,475 | ) | $ | 189,416 | $ 282,750 | $ | 3,176,033 |
* | Includes Return of Capital distribution reclassification of $26,938. | |
** | Includes Return of Capital distribution reclassification of $7,072. |
See Notes to Financial Statements
22 |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Agribusiness | 7.3 | % | $ | 659,441 | ||||
Coal | 3.9 | 349,211 | ||||||
Diversified Commodities Futures | 15.5 | 1,408,502 | ||||||
Energy | 9.3 | 842,347 | ||||||
Global Metals and Mining | 3.6 | 328,778 | ||||||
Gold Bullion | 22.5 | 2,038,828 | ||||||
Gold Mining | 5.2 | 473,870 | ||||||
Low Carbon Energy | 4.8 | 437,983 | ||||||
Oil Services | 2.7 | 244,277 | ||||||
Steel | 3.8 | 341,239 | ||||||
Unconventional Oil & Gas | 2.9 | 265,145 | ||||||
US Real Estate Investment Trusts | 4.8 | 435,385 | ||||||
Utilities | 13.7 | 1,241,389 | ||||||
100.0 | % | $ | 9,066,395 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 2 | Level 3 | ||||||||||||||||
Level 1 | Significant | Significant | |||||||||||||||
Quoted | Observable | Unobservable | |||||||||||||||
Prices | Inputs | Inputs | Value | ||||||||||||||
Exchange Traded Funds | $ | 9,066,395 | $ | — | $ | — | $ | 9,066,395 | |||||||||
Money Market Fund | 695,909 | — | — | 695,909 | |||||||||||||
Total | $ | 9,762,304 | $ | — | $ | — | $ | 9,762,304 |
See Notes to Financial Statements
23 |
VANECK VECTORS ETF TRUST
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2020
Long/Flat Trend ETF | Morningstar Durable Dividend ETF | Morningstar Global Wide Moat ETF | Morningstar International Moat ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments, at value (1) | ||||||||||||||||
Unaffiliated issuers (2) | $ | 31,511,667 | $ | 32,603,374 | $ | 9,668,457 | $ | 51,381,260 | ||||||||
Affiliated issuers (3) | — | — | — | — | ||||||||||||
Short-term investments held as collateral for securities loaned (4) | — | — | — | 70,249 | ||||||||||||
Cash | — | 17,976 | 12,510 | — | ||||||||||||
Cash denominated in foreign currency, at value (5) | — | — | 10 | 32,913 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | — | 138,588 | — | 23,667 | ||||||||||||
Shares of beneficial interest sold | — | — | — | — | ||||||||||||
Due from Adviser | 6,236 | 7,744 | 12,910 | — | ||||||||||||
Dividends and interest | 134,026 | 84,688 | 12,847 | 173,411 | ||||||||||||
Prepaid expenses | 1,326 | 1,323 | 1,312 | 2,629 | ||||||||||||
Total assets | 31,653,255 | 32,853,693 | 9,708,046 | 51,684,129 | ||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | — | — | — | 23,688 | ||||||||||||
Collateral for securities loaned | — | — | — | 70,249 | ||||||||||||
Line of credit | — | — | — | — | ||||||||||||
Due to Adviser | — | — | — | 11,472 | ||||||||||||
Due to custodian | 47,184 | — | — | 94,967 | ||||||||||||
Deferred Trustee fees | 699 | 90 | 49 | 1,217 | ||||||||||||
Accrued expenses | 56,574 | 52,209 | 55,662 | 66,159 | ||||||||||||
Total liabilities | 104,457 | 52,299 | 55,711 | 267,752 | ||||||||||||
NET ASSETS | $ | 31,548,798 | $ | 32,801,394 | $ | 9,652,335 | $ | 51,416,377 | ||||||||
Shares outstanding | 1,000,000 | 1,225,000 | 300,000 | 1,750,000 | ||||||||||||
Net asset value, redemption and offering price per share | $ | 31.55 | $ | 26.78 | $ | 32.17 | $ | 29.38 | ||||||||
Net Assets consist of: | ||||||||||||||||
Aggregate paid in capital | $ | 30,954,750 | $ | 36,166,184 | $ | 8,005,979 | $ | 63,368,901 | ||||||||
Total distributable earnings (loss) | 594,048 | (3,364,790 | ) | 1,646,356 | (11,952,524 | ) | ||||||||||
NET ASSETS | $ | 31,548,798 | $ | 32,801,394 | $ | 9,652,335 | $ | 51,416,377 | ||||||||
(1) Value of securities on loan | $ | — | $ | — | $ | — | $ | 1,938,574 | ||||||||
(2) Cost of investments—Unaffiliated issuers | $ | 28,400,480 | $ | 32,279,610 | $ | 8,318,147 | $ | 53,311,366 | ||||||||
(3) Cost of investments—Affiliated issuers | $ | — | $ | — | $ | — | $ | — | ||||||||
(4) Cost of short-term investments held as collateral for securities loaned | $ | — | $ | — | $ | — | $ | 70,249 | ||||||||
(5) Cost of cash denominated in foreign currency | $ | — | $ | — | $ | 10 | $ | 32,755 |
(a) | Represents Consolidated Statement of Assets and Liabilities |
See Notes to Financial Statements
24 |
Morningstar Wide Moat ETF | Real Asset Allocation ETF (a) | |||||||
$ | 3,396,176,010 | $ | 5,890,362 | |||||
— | 3,176,033 | |||||||
— | 695,909 | |||||||
68 | 46,246 | |||||||
— | — | |||||||
— | 1,337,976 | |||||||
19,069,226 | — | |||||||
— | 6,910 | |||||||
6,122,737 | 2,145 | |||||||
19,627 | 1,315 | |||||||
3,421,387,668 | 11,156,896 | |||||||
19,073,676 | 1,337,967 | |||||||
— | 695,909 | |||||||
2,841,106 | — | |||||||
1,271,590 | — | |||||||
— | — | |||||||
64,940 | 241 | |||||||
169,210 | 56,848 | |||||||
23,420,522 | 2,090,965 | |||||||
$ | 3,397,967,146 | $ | 9,065,931 | |||||
62,200,000 | 450,000 | |||||||
$ | 54.63 | $ | 20.15 | |||||
$ | 3,604,604,201 | $ | 17,877,691 | |||||
(206,637,055 | ) | (8,811,760 | ) | |||||
$ | 3,397,967,146 | $ | 9,065,931 | |||||
$ | 3,602,367 | $ | 2,310,109 | |||||
$ | 3,308,510,191 | $ | 5,158,014 | |||||
$ | — | $ | 3,144,192 | |||||
$ | — | $ | 695,909 | |||||
$ | — | $ | — |
See Notes to Financial Statements
25 |
VANECK VECTORS ETF TRUST
For the Year Ended September 30, 2020
Long/Flat Trend ETF | Morningstar Durable Dividend ETF | Morningstar Global Wide Moat ETF | Morningstar International Moat ETF | |||||||||||||
Income: | ||||||||||||||||
Dividends—unaffiliated issuers | $ | 998,263 | $ | 1,023,280 | $ | 172,136 | $ | 1,845,617 | ||||||||
Dividends—affiliated issuers | — | — | — | — | ||||||||||||
Interest | 497 | 37 | 4 | 31 | ||||||||||||
Securities lending income | 1,664 | 100 | 265 | 23,502 | ||||||||||||
Foreign taxes withheld | — | — | (8,946 | ) | (156,787 | ) | ||||||||||
Total income | 1,000,424 | 1,023,417 | 163,459 | 1,712,363 | ||||||||||||
Expenses: | ||||||||||||||||
Management fees | 259,201 | 79,598 | 35,682 | 320,356 | ||||||||||||
Professional fees | 68,709 | 70,370 | 70,313 | 72,297 | ||||||||||||
Custody and accounting fees | 28,315 | 26,486 | 31,506 | 52,454 | ||||||||||||
Reports to shareholders | 16,087 | 9,512 | 8,840 | 13,922 | ||||||||||||
IOPV fees | 5,904 | 3,366 | 3,366 | 5,643 | ||||||||||||
Trustees’ fees and expenses | 1,022 | 650 | 208 | 1,951 | ||||||||||||
Registration fees | 10,052 | 7,508 | 6,477 | 5,234 | ||||||||||||
Transfer agent fees | 200 | 200 | 200 | 200 | ||||||||||||
Insurance | 3,046 | 1,575 | 1,549 | 3,643 | ||||||||||||
Interest | 34 | 37 | — | 12,064 | ||||||||||||
Other | 1,721 | 1,117 | 3,896 | 1,628 | ||||||||||||
Total expenses | 394,291 | 200,419 | 162,037 | 489,392 | ||||||||||||
Waiver of management fees | (109,661 | ) | (79,598 | ) | (35,682 | ) | (118,906 | ) | ||||||||
Expenses assumed by the Adviser | — | (41,323 | ) | (85,083 | ) | — | ||||||||||
Net expenses | 284,630 | 79,498 | 41,272 | 370,486 | ||||||||||||
Net investment income | 715,794 | 943,919 | 122,187 | 1,341,877 | ||||||||||||
Net realized gain (loss) on: | ||||||||||||||||
Investments—unaffiliated issuers | — | (3,909,819 | ) | 207,445 | (6,058,419 | ) | ||||||||||
Investments—affiliated issuers | — | — | — | — | ||||||||||||
In-kind redemptions—unaffiliated issuers | (675,324 | ) | 2,403,325 | — | 918,546 | |||||||||||
In-kind redemptions—affiliated issuers | — | — | — | — | ||||||||||||
Foreign currency transactions and foreign denominated assets and liabilities | — | — | 257 | 3,485 | ||||||||||||
Net realized gain (loss) | (675,324 | ) | (1,506,494 | ) | 207,702 | (5,136,388 | ) | |||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments—unaffiliated issuers | (1,380,712 | ) | 253,694 | 908,266 | 2,142,050 | |||||||||||
Investments—affiliated issuers | — | — | — | — | ||||||||||||
Foreign currency transactions and foreign denominated assets and liabilities | — | — | (33 | ) | 10,069 | |||||||||||
Net change in unrealized appreciation (depreciation) | (1,380,712 | ) | 253,694 | 908,233 | 2,152,119 | |||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (1,340,242 | ) | $ | (308,881 | ) | $ | 1,238,122 | $ | (1,642,392 | ) |
(a) | Represents consolidated Statement of Operations. |
See Notes to Financial Statements
26 |
Morningstar Wide Moat ETF | Real Asset Allocation ETF (a) | |||||||
$ | 70,208,847 | $ | 292,785 | |||||
— | 189,416 | |||||||
20,905 | 29,489 | |||||||
82,460 | 34,813 | |||||||
(172,127 | ) | — | ||||||
70,140,085 | 546,503 | |||||||
14,106,785 | 108,692 | |||||||
75,346 | 67,398 | |||||||
62,950 | 30,931 | |||||||
183,692 | 13,502 | |||||||
5,643 | 3,749 | |||||||
82,953 | 358 | |||||||
74,349 | 14,682 | |||||||
200 | 400 | |||||||
29,744 | 1,681 | |||||||
36,233 | — | |||||||
45,769 | 1,006 | |||||||
14,703,664 | 242,399 | |||||||
— | (108,692 | ) | ||||||
— | (14,365 | ) | ||||||
14,703,664 | 119,342 | |||||||
55,436,421 | 427,161 | |||||||
(135,560,727 | ) | (1,919,576 | ) | |||||
— | (4,012,256 | ) | ||||||
385,772,112 | (697,441 | ) | ||||||
— | (768,219 | ) | ||||||
— | — | |||||||
250,211,385 | (7,397,492 | ) | ||||||
(32,450,558 | ) | (281,365 | ) | |||||
— | 282,750 | |||||||
— | — | |||||||
(32,450,558 | ) | 1,385 | ||||||
$ | 273,197,248 | $ | (6,968,946 | ) |
See Notes to Financial Statements
27 |
VANECK VECTORS ETF TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Long/Flat Trend ETF | Morningstar Durable Dividend ETF | |||||||||||||||
Year Ended September 30, 2020 | Year Ended September 30, 2019 | Year Ended September 30, 2020 | For the Period October 30, 2018* through September 30, 2019 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 715,794 | $ | 869,293 | $ | 943,919 | $ | 251,795 | ||||||||
Net realized gain (loss) | (675,324 | ) | (1,822,896 | ) | (1,506,494 | ) | 712,818 | |||||||||
Net change in unrealized appreciation (depreciation) | (1,380,712 | ) | 2,238,147 | 253,694 | 70,071 | |||||||||||
Net increase (decrease) in net assets resulting from operations | (1,340,242 | ) | 1,284,544 | (308,881 | ) | 1,034,684 | ||||||||||
Distributions to shareholders: | ||||||||||||||||
From distributable earnings | (1,000,040 | ) | (550,200 | ) | (991,310 | ) | (130,030 | ) | ||||||||
Share transactions:** | ||||||||||||||||
Proceeds from sale of shares | 18,877,077 | 23,560,640 | 33,663,334 | 21,719,158 | ||||||||||||
Cost of shares redeemed | (50,838,556 | ) | (10,687,796 | ) | (17,916,809 | ) | (4,268,752 | ) | ||||||||
Increase (decrease) in net assets resulting from share transactions | (31,961,479 | ) | 12,872,844 | 15,746,525 | 17,450,406 | |||||||||||
Total increase (decrease) in net assets | (34,301,761 | ) | 13,607,188 | 14,446,334 | 18,355,060 | |||||||||||
Net Assets, beginning of year | 65,850,559 | 52,243,371 | 18,355,060 | — | ||||||||||||
Net Assets, end of year | $ | 31,548,798 | $ | 65,850,559 | $ | 32,801,394 | $ | 18,355,060 | ||||||||
** Shares of Common Stock Issued (no par value) | ||||||||||||||||
Shares sold | 650,000 | 900,000 | 1,250,000 | 800,000 | ||||||||||||
Shares redeemed | (2,000,000 | ) | (400,000 | ) | (675,000 | ) | (150,000 | ) | ||||||||
Net increase (decrease) | (1,350,000 | ) | 500,000 | 575,000 | 650,000 |
(a) | Represents Consolidated Statement of Changes in Net Assets. |
* | Commencement of operations |
See Notes to Financial Statements
28 |
Morningstar | Morningstar | Morningstar | Real Asset | |||||||||||||||||||||||||||
Global Wide Moat ETF | International Moat ETF | Wide Moat ETF | Allocation ETF (a) | |||||||||||||||||||||||||||
Year Ended September 30, 2020 | For the Period October 30, 2018* through September 30, 2019 | Year Ended September 30, 2020 | Year Ended September 30, 2019 | Year Ended September 30, 2020 | Year Ended September 30, 2019 | Year Ended September 30, 2020 | Year Ended September 30, 2019 | |||||||||||||||||||||||
$ | 122,187 | $ | 70,454 | $ | 1,341,877 | $ | 2,724,202 | $ | 55,436,421 | $ | 38,743,341 | $ | 427,161 | $ | 274,945 | |||||||||||||||
207,702 | 87,961 | (5,136,388 | ) | (4,499,913 | ) | 250,211,385 | 155,959,301 | (7,397,492 | ) | (851,309 | ) | |||||||||||||||||||
908,233 | 442,069 | 2,152,119 | (3,098,724 | ) | (32,450,558 | ) | 7,136,244 | 1,385 | 704,784 | |||||||||||||||||||||
1,238,122 | 600,484 | (1,642,392 | ) | (4,874,435 | ) | 273,197,248 | 201,838,886 | (6,968,946 | ) | 128,420 | ||||||||||||||||||||
(181,250 | ) | (11,000 | ) | (2,750,000 | ) | (2,801,050 | ) | (43,002,000 | ) | (29,003,400 | ) | (700,005 | ) | (83,400 | ) | |||||||||||||||
2,802,272 | 5,203,707 | 7,963,287 | 21,706,439 | 2,395,475,138 | 1,740,552,075 | 7,646,301 | 30,284,674 | |||||||||||||||||||||||
— | — | (34,704,740 | ) | (20,939,444 | ) | (1,714,078,307 | ) | (997,112,445 | ) | (21,216,119 | ) | (15,258,996 | ) | |||||||||||||||||
2,802,272 | 5,203,707 | (26,741,453 | ) | 766,995 | 681,396,831 | 743,439,630 | (13,569,818 | ) | 15,025,678 | |||||||||||||||||||||
3,859,144 | 5,793,191 | (31,133,845 | ) | (6,908,490 | ) | 911,592,079 | 916,275,116 | (21,238,769 | ) | 15,070,698 | ||||||||||||||||||||
5,793,191 | — | 82,550,222 | 89,458,712 | 2,486,375,067 | 1,570,099,951 | 30,304,700 | 15,234,002 | |||||||||||||||||||||||
$ | 9,652,335 | $ | 5,793,191 | $ | 51,416,377 | $ | 82,550,222 | $ | 3,397,967,146 | $ | 2,486,375,067 | $ | 9,065,931 | $ | 30,304,700 | |||||||||||||||
100,000 | 200,000 | 250,000 | 700,000 | 45,150,000 | 36,700,000 | 300,000 | 1,200,000 | |||||||||||||||||||||||
— | — | (1,200,000 | ) | (700,000 | ) | (32,550,000 | ) | (20,700,000 | ) | (1,050,000 | ) | (600,000 | ) | |||||||||||||||||
100,000 | 200,000 | (950,000 | ) | — | 12,600,000 | 16,000,000 | (750,000 | ) | 600,000 |
See Notes to Financial Statements
29 |
VANECK VECTORS ETF TRUST
For a share outstanding throughout each period:
(a) | Commencement of operations |
(b) | Calculated based upon average shares outstanding |
(c) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(d) | Not Annualized |
(e) | Annualized |
(f) | The ratios presented do not reflect the Fund’s proportionate share of income and expenses from the Fund’s investment in underlying funds. |
(g) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
(h) | The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchaes of shares in relation to fluctuating market values of the investments of the Fund. |
See Notes to Financial Statements
30 |
VANECK VECTORS ETF TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
(a) | Commencement of operations |
(b) | Calculated based upon average shares outstanding |
(c) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(d) | Not Annualized |
(e) | Annualized |
(f) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
See Notes to Financial Statements
31 |
VANECK VECTORS ETF TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
(a) | Commencement of operations |
(b) | Calculated based upon average shares outstanding |
(c) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(d) | Not Annualized |
(e) | Annualized |
(f) | The ratios presented do not reflect the Fund’s proportionate share of income and expenses from the Fund’s investment in underlying funds. |
(g) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
(h) | Represents Consolidated Financial Highlights |
See Notes to Financial Statements
32 |
VANECK VECTORS ETF TRUST
September 30, 2020
Note 1—Fund Organization—VanEck Vectors ETF Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was incorporated in Delaware as a statutory trust on March 15, 2001. The Trust operates as a series fund, and offers multiple investment portfolios, each of which represents a separate series of the Trust. These financial statements relate only to the investment portfolios listed in the diversification table below (each a “Fund” and, collectively, the “Funds”).
Fund | Diversification Classification |
Long/Flat Trend ETF* | Non-Diversified |
Morningstar Durable Dividend ETF | Non-Diversified |
Morningstar Global Wide Moat ETF | Non-Diversified |
Morningstar International Moat ETF | Diversified |
Morningstar Wide Moat ETF | Diversified |
Real Asset Allocation ETF | Non-Diversified |
* | Formerly known as NDR CMG Long/Flat Allocation ETF |
Each Fund, except for Real Asset Allocation ETF, was created to provide investors with the opportunity to purchase a security representing a proportionate undivided interest in a portfolio of securities consisting of substantially all of the common stocks in approximately the same weighting as their index. The Real Asset Allocation ETF seeks to achieve its investment objective by investing primarily in exchange traded products (“ETPs”) that provide exposure to real assets, which include commodities, real estate, natural resources, and infrastructure, using a proprietary, rules-based real asset allocation model.
Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The Funds are investment companies and follow accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies.
The following summarizes the Funds’ significant accounting policies.
A. | Security Valuation—The Funds value their investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Securities traded on national exchanges are valued at the closing price on the markets in which the securities trade. Securities traded on the NASDAQ Stock Market LLC (“NASDAQ”) are valued at the NASDAQ official closing price. Over-the-counter securities not included on NASDAQ and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded they are categorized as Level 1 in the fair value hierarchy (described below). Certain foreign securities, whose values may be affected by market direction or events occurring before the Funds’ pricing time (4:00 p.m. Eastern Time) but after the last close of the securities’ primary market, are fair valued using a pricing service and are categorized as Level 2 in the fair value hierarchy. The pricing service, using methods approved by the Board of Trustees, considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. markets, based on indices of domestic securities and other appropriate indicators such as prices of relevant ADR’s and futures contracts. The Funds may also fair value securities in other situations, such as, when a particular foreign market is closed but the Fund is open. Short-term obligations with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are considered to be Level 1 in the fair value hierarchy. The Pricing Committee of the Van Eck Associate Corporation (“VEAC”) and Van Eck Absolute Return Advisers Corporation (“VEARA”) (VEAC and VEARA, collectively referred to as the “Adviser”) provides oversight of the Funds’ valuation policies and procedures, which are approved by the Funds’ Board of Trustees. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes they do not otherwise reflect the fair value of a security or asset, the security or asset will be fair valued by the Pricing Committee in accordance with the Funds’ valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, |
33 |
VANECK VECTORS ETF TRUST
NOTES TO FINANCIAL STATEMENTS
(continued)
including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis.
Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be categorized either as Level 2 or Level 3 in the fair value hierarchy. The price which the Funds may realize upon sale of an investment may differ materially from the value presented in the Schedules of Investments.
The Funds utilize various methods to measure the fair value of their investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three levels of the fair value hierarchy are described below:
Level 1 — Quoted prices in active markets for identical securities.
Level 2 — Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3 — Significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments).
A summary of the inputs and the levels used to value the Funds’ investments are located in the Schedules of Investments. Additionally, tables that reconcile the valuation of the Funds’ Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Schedules of Investments.
B. | Basis for Consolidation—The Real Asset Allocation ETF invests in certain ETPs through the Real Asset Allocation Subsidiary (the “Subsidiary”), a wholly-owned subsidiary organized under the laws of the Cayman Islands. The Fund’s investment in the Subsidiary may not exceed 25% of the value of the Fund’s total assets at each quarter-end of the Fund’s fiscal year. Consolidated financial statements of the Fund present the financial position and results of operations for the Fund and its wholly-owned Subsidiary. All interfund account balances and transactions between the Fund and Subsidiary have been eliminated in consolidation. |
C. | Federal Income Taxes—It is each Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. |
D. | Distributions to Shareholders—Dividends to shareholders from net investment income and distributions from net realized capital gains, if any, are declared and paid annually by each Fund (except for dividends from net investment income from Morningstar Durable Dividend ETF, which are declared and paid quarterly). Income dividends and capital gain distributions are determined in accordance with U.S. income tax regulations, which may differ from such amounts determined in accordance with GAAP. |
E. | Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed in the financial statements. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Statements of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments, and liabilities are recorded as net realized gain (loss) and net change in unrealized appreciation (depreciation) on foreign currency transactions and foreign denominated assets and liabilities in the Statements of Operations. |
34 |
F. | Restricted Securities—The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included at the end of each Fund’s Schedule of Investments. |
G. | Offsetting Assets and Liabilities—In the ordinary course of business, the Funds enter into transactions subject to enforceable master netting or other similar agreements. Generally, the right of offset in those agreements allows the Funds to offset any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of the agreements. The Funds may pledge or receive cash and or securities as collateral for derivative instruments and securities lending. For financial reporting purposes, the Funds present securities lending assets and liabilities on a gross basis in the Statements of Assets and Liabilities. Cash collateral received for securities lending in the form of money market fund investments, if any, at September 30, 2020 is presented in the Schedules of Investments and in the Statements of Assets and Liabilities. Non-cash collateral is disclosed in Note 9 (Securities Lending). |
I. | Other—Security transactions are accounted for on trade date. Realized gains and losses are determined based on the specific identification method. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized upon notification of the ex-dividend date. Interest income, including amortization of premiums and discounts, is accrued as earned. |
The Funds earn interest income on uninvested cash balances held at the custodian bank. Such amounts, if any, are presented as interest income in the Statements of Operations.
The character of distributions received from certain investment in underlying funds may be comprised of net investment income, capital gains, and return of capital. It is the Funds’ policy to estimate the character of distributions received from these investments based on historical data provided by the underlying funds if actual amounts are not available. After each calendar year end, the underlying funds report the actual tax character of these distributions. Differences between the estimated and actual amounts are reflected in the Funds’ records in the year in which they are reported by adjusting the related cost basis of investments, capital gains and income, as necessary.
In the normal course of business, the Funds enter into contracts that contain a variety of general indemnifications. The Funds’ maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote.
Note 3—Investment Management and Other Agreements—VEAC is the investment adviser to the Long/Flat Trend ETF, Morningstar Durable Dividend ETF, Morningstar Global Wide Moat ETF, Morningstar International Moat ETF and Morningstar Wide Moat ETF. VEARA is the investment adviser to the Real Asset Allocation ETF and its Subsidiary. VEARA is a wholly-owned subsidiary of VEAC. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of each Fund’s average daily net assets. The Adviser has agreed, until at least February 1, 2021, to waive management fees and assume expenses to prevent each Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses) from exceeding expense limitations listed in the following table.
The current management fee rate and expense limitations for the year ended September 30, 2020, are as follows:
Fund | Waiver of Management Fees | Expense Limitations | ||||||
Long/Flat Trend ETF | 0.50 | % | 0.55 | % | ||||
Morningstar Durable Dividend ETF | 0.29 | 0.29 | ||||||
Morningstar Global Wide Moat ETF | 0.45 | 0.52 | ||||||
Morningstar International Moat ETF | 0.50 | 0.56 | ||||||
Morningstar Wide Moat ETF | 0.45 | 0.49 | ||||||
Real Asset Allocation ETF | 0.50 | 0.55 |
Refer to the Statements of Operations for amounts waived/assumed by the Adviser.
35 |
VANECK VECTORS ETF TRUST
NOTES TO FINANCIAL STATEMENTS
(continued)
In addition, Van Eck Securities Corporation, an affiliate of the Adviser, acts as the Funds’ distributor (“Distributor”). Certain officers and a Trustee of the Trust are officers, directors or stockholders of the Adviser and Distributor.
The Adviser waives the management fees it charges the Funds by the amount it collects as a management fee from underlying funds managed by the Adviser. For the year ended September 30, 2020, the Adviser waived management fees of $22,397 due to such investments held in the Real Asset Allocation ETF.
At September 30, 2020, the Adviser owned approximately 12% of Morningstar Durable Dividend ETF.
Effective November 4, 2019, State Street Bank and Trust Company is the Funds’ custodian, securities lending agent and transfer agent. Prior to November 4, 2019, Bank of New York Mellon provided these services to the Funds.
For the year ended September 30, 2020, there were offsets to custodian fees under an expense offset agreement and these amounts are reflected in custody expense in the Statements of Operations.
Note 4—Capital Share Transactions—As of September 30, 2020, there were an unlimited number of capital shares of beneficial interest authorized by the Trust with no par value. Fund shares are not individually redeemable and are issued and redeemed at their net asset value per share only through certain authorized broker-dealers (“Authorized Participants”) in blocks of shares (“Creation Units”), or multiples thereof, as follows:
Long/Flat Trend ETF* | 25,000 | |
Morningstar Durable Dividend ETF* | 25,000 | |
Morningstar Global Wide Moat ETF | 50,000 | |
Morningstar International Moat ETF | 50,000 | |
Morningstar Wide Moat ETF | 50,000 | |
Real Asset Allocation ETF* | 25,000 |
* | Effective September 1, 2020 Creation Units changed from 50,000 to 25,000 shares. |
The consideration for the purchase or redemption of Creation Units of the Funds generally consists of the in-kind contribution or distribution of securities constituting the Funds’ underlying index (“Deposit Securities”) plus a balancing cash component to equate the transaction to the net asset value per share of the Fund on the transaction date. Cash may also be substituted in an amount equivalent to the value of certain Deposit Securities, generally as a result of market circumstances, or when the securities are not available in sufficient quantity for delivery, or are not eligible for trading by the Authorized Participant. The Funds may issue Creation Units in advance of receipt of Deposit Securities subject to various conditions, including, for the benefit of the Funds, a requirement to maintain cash collateral on deposit at the custodian equal to at least 115% of the daily marked to market value of the missing Deposit Securities.
Authorized Participants purchasing and redeeming Creation Units may pay transaction fees directly to the transfer agent. In addition, the Funds may impose certain variable fees for creations and redemptions with respect to transactions in Creation Units for cash, or on transactions effected outside the clearing process, which are treated as increases in capital. These variable fees, if any, are reflected in share transactions in the Statements of Changes in Net Assets.
Note 5—Investments—For the year ended September 30, 2020, purchases and sales of investments (excluding short-term investments and in-kind capital share transactions) and purchases and sales of investments resulting from in-kind capital share transactions (excluding short-term investments) were as follows:
In-kind Capital Share Transactions | ||||||||||||||||
Fund | Purchases | Sales | Purchases | Sales | ||||||||||||
Long/Flat Trend ETF | $ | 440,629 | $ | — | $ | 18,877,017 | $ | 51,588,022 | ||||||||
Morningstar Durable Dividend ETF | 18,019,147 | 17,896,673 | 33,666,317 | 18,112,036 | ||||||||||||
Morningstar Global Wide Moat ETF | 5,303,649 | 5,337,912 | 2,797,791 | — | ||||||||||||
Morningstar International Moat ETF | 60,661,360 | 62,891,742 | 7,840,962 | 33,864,774 | ||||||||||||
Morningstar Wide Moat ETF | 1,510,164,835 | 1,492,708,419 | 2,295,658,598 | 1,620,484,117 | ||||||||||||
Real Asset Allocation ETF* | 46,323,340 | 41,047,967 | 20,340,782 | 25,780,505 |
* | Represents consolidated cost of investments purchased and proceeds from investments sold. |
36 |
Note 6—Income Taxes—As of September 30, 2020, for Federal income tax purposes, the identified cost, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) of investments were as follows:
Gross | Gross | Net Unrealized | ||||||||||||||
Tax Cost | Unrealized | Unrealized | Appreciation | |||||||||||||
Fund | of Investments | Appreciation | (Depreciation) | (Depreciation) | ||||||||||||
Long/Flat Trend ETF | $ | 28,400,480 | $ | 3,111,493 | $ | (306 | ) | $ | 3,111,187 | |||||||
Morningstar Durable Dividend ETF | 32,290,055 | 1,247,491 | (934,171 | ) | 313,320 | |||||||||||
Morningstar Global Wide Moat ETF | 8,322,502 | 1,513,003 | (167,048 | ) | 1,345,955 | |||||||||||
Morningstar International Moat ETF | 53,397,676 | 3,502,741 | (5,448,908 | ) | (1,946,167 | ) | ||||||||||
Morningstar Wide Moat ETF | 3,309,349,200 | 279,096,557 | (192,269,746 | ) | 86,826,810 | |||||||||||
Real Asset Allocation ETF | 9,024,968 | 987,821 | (232,464 | ) | 755,357 |
At September 30, 2020, the components of distributable earnings (loss) on a tax basis, for each Fund, were as follows:
Undistributed | ||||||||||||||||||||
Undistributed | Realized Gains / | Other | Net Unrealized | Total | ||||||||||||||||
Ordinary | Accumulated | Temporary | Appreciation | Distributable | ||||||||||||||||
Fund | Income | Capital (Losses) | Differences | (Depreciation) | Earnings (Loss) | |||||||||||||||
Long/Flat Trend ETF | $ | 389,266 | $ | (2,905,706 | ) | $ | (699 | ) | $ | 3,111,187 | $ | 594,048 | ||||||||
Morningstar Durable Dividend ETF | 221,205 | (3,899,226 | ) | (91 | ) | 313,320 | (3,364,792 | ) | ||||||||||||
Morningstar Global Wide Moat ETF | 188,324 | 112,134 | (49 | ) | 1,345,947 | 1,646,356 | ||||||||||||||
Morningstar International Moat ETF | 980,710 | (10,992,693 | ) | (1,217 | ) | (1,939,324 | ) | (11,952,524 | ) | |||||||||||
Morningstar Wide Moat ETF | 41,856,807 | (335,255,731 | ) | (64,940 | ) | 86,826,810 | (206,637,054 | ) | ||||||||||||
Real Asset Allocation ETF | 798,908 | (8,944,908 | ) | (1,429,948 | ) | 764,188 | (8,811,760 | ) |
The tax character of dividends paid to shareholders during the years ended September 30, 2020 and September 30, 2019 were as follows:
2020 | 2019 | |||||||
Dividends | Dividends | |||||||
Ordinary | Ordinary | |||||||
Fund | Income* | Income* | ||||||
Long/Flat Trend ETF | $ | 1,000,040 | $ | 550,200 | ||||
Morningstar Durable Dividend ETF | 991,310 | 130,030 | ||||||
Morningstar Global Wide Moat ETF | 181,250 | 11,000 | ||||||
Morningstar International Moat ETF | 2,750,000 | 2,801,050 | ||||||
Morningstar Wide Moat ETF | 43,002,000 | 29,003,400 | ||||||
Real Asset Allocation ETF | 700,005 | 83,400 |
* | Includes short-term capital gains (if any) |
At September 30, 2020, the Funds had capital loss carryforwards available to offset future capital gains, as follows:
Short-Term | Long-Term | |||||||||||
Capital Losses | Capital Losses | |||||||||||
Fund | with No Expiration | with No Expiration | Total | |||||||||
Long/Flat Trend ETF | $ | (2,821,262 | ) | $ | (84,444 | ) | $ | (2,905,706 | ) | |||
Morningstar Durable Dividend ETF | (3,054,484 | ) | (844,742 | ) | (3,899,226 | ) | ||||||
Morningstar International Moat ETF | (3,614,090 | ) | (7,378,603 | ) | (10,992,693 | ) | ||||||
Morningstar Wide Moat ETF | (233,935,842 | ) | (101,319,889 | ) | (335,255,731 | ) | ||||||
Real Asset Allocation ETF | (8,944,908 | ) | — | (8,944,908 | ) |
During the year ended September 30, 2020, as a result of permanent book to tax differences primarily due to the tax treatment of in-kind redemptions and the accumulated earnings applicable to the redemption of shares, the Funds incurred differences that affected distributable earnings / (loss) and aggregate paid in capital by the amounts in the table below. Net assets were not affected by these reclassifications.
37 |
VANECK VECTORS ETF TRUST
NOTES TO FINANCIAL STATEMENTS
(continued)
Fund | Increase (Decrease) in Distributable Earnings | Increase (Decrease) in Aggregate Paid in Capital | ||||||
Long/Flat Trend ETF | $ | 675,324 | $ | (675,324 | ) | |||
Morningstar Durable Dividend ETF | (2,403,156 | ) | 2,403,156 | |||||
Morningstar International Moat ETF | (914,178 | ) | 914,178 | |||||
Morningstar Wide Moat ETF | (381,666,649 | ) | 381,666,649 | |||||
Real Asset Allocation ETF | (466,006 | ) | 466,006 |
The Funds recognize the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Funds do not have exposure for additional years that might still be open in certain foreign jurisdictions. Therefore, no provision for income tax is required in the Funds’ financial statements. However, the Funds are subject to foreign taxes on the appreciation in value of certain investments. The Funds provide for such taxes on both realized and unrealized appreciation.
The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended September 30, 2020, the Funds did not incur any interest or penalties.
Note 7—Principal Risks—Non-diversified funds generally hold securities of fewer issuers than diversified funds (See Note 1) and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers. The Funds may purchase securities on foreign exchanges. Securities of foreign issuers involve special risks and considerations not typically associated with investing in U.S. issuers. These risks include devaluation of currencies, currency controls, less reliable information about issuers, different securities transaction clearance and settlement practices, future adverse political and economic developments and local/regional conflicts or natural or other disasters, such as the recent coronavirus outbreak. These risks are heightened for investments in emerging market countries. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of comparable U.S. issuers.
Long/Flat Trend ETF may invest in shares of other funds, including ETFs that track the S&P 500 Index. As a result, the Fund will indirectly be exposed to the risks of an investment in the underlying funds. Shares of other funds have many of the same risks as direct investments in common stocks or bonds. In addition, the market value of the Fund’s shares is expected to rise and fall as the value of the underlying index or bond rises and falls. The market value of such funds’ shares may differ from the net asset value of the particular fund.
Real Asset Allocation ETF may concentrate its investments in ETPs that invest directly in, or have exposure to, equity and debt securities, as well as real asset categories such as commodities, real estate, natural resources and infrastructure. Such investments may subject the ETPs to greater volatility than investments in traditional securities. The Fund is dependent on the performance of underlying funds and is subject to the risks of those funds. Changes in laws or government regulations by the United States and/or the Cayman Islands could adversely affect the operations of the Fund.
A recent outbreak of respiratory disease caused by a novel coronavirus, which was first detected in China in December 2019, has subsequently spread internationally and has been declared a pandemic by the World Health Organization. The coronavirus has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, loss of life, as well as general concern and uncertainty. The coronavirus has already negatively impacted the economies of many nations, individual companies, and the market. This pandemic is expected to have a continued impact in ways that cannot necessarily be foreseen presently.
A more complete description of risks is included in each Fund’s Prospectus and Statement of Additional Information.
Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Plan”) for Trustees under which the Trustees can elect to defer receipt of their trustee fees until retirement, disability or termination from the Board of Trustees. The fees otherwise payable to the participating Trustees are deemed invested in shares of the Funds as directed by the Trustees.
The expense for the Plan is included in “Trustees’ fees and expenses” in the Statements of Operations. The liability for the Plan is shown as “Deferred Trustee fees” in the Statements of Assets and Liabilities.
38 |
Note 9—Securities Lending—To generate additional income, each of the Funds may lend its securities pursuant to a securities lending agreement with the securities lending agent. Each Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, cash equivalents, U.S. government securities, or any combination of cash and such securities at all times equal to at least 102% (105% for foreign securities) of the market value on the securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Funds will continue to receive any dividends, interest or amounts equivalent thereto, on the securities loaned while receiving a fee from the borrower and or earning interest on the investment of the cash collateral. Such fees and interest are shared with the securities lending agent under the terms of the securities lending agreement. Securities lending income is disclosed as such in the Statements of Operations. Cash collateral is maintained on the Funds’ behalf by the lending agent and is invested in the State Street Navigator Securities Lending Government Money Market Portfolio. Non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities, and is not disclosed in the Funds’ Schedules of Investments or Statements of Assets and Liabilities as it is held by the agent on behalf of the Funds, and the Funds do not have the ability to re-hypothecate those securities. Loans are subject to termination at the option of the borrower or the Funds. Upon termination of the loan, the borrower will return to the Fund securities identical to the securities loaned. The Funds bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. The value of loaned securities and related collateral, if any, at September 30, 2020 are presented on a gross basis in the Schedules of Investments and Statements of Assets and Liabilities. The following is a summary of the Funds’ securities on loan and related collateral as of September 30, 2020:
Fund | Market Value of Securities on Loan | Cash Collateral | Non-Cash Collateral | Total Collateral | ||||||||||||
Morningstar International Moat ETF | $ | 1,938,574 | $ | 70,249 | $ | 1,987,827 | $ | 2,058,076 | ||||||||
Morningstar Wide Moat ETF | 3,602,367 | — | 3,648,200 | 3,648,200 | ||||||||||||
Real Asset Allocation ETF | 2,310,109 | 695,909 | 1,643,436 | 2,339,345 |
The following table presents money market fund investments held as collateral by type of security on loan as of September 30, 2020:
Gross Amount of Recognized Liabilities for Securities Lending Transactions* in the Statements of Assets and Liabilities | ||||
Fund | Equity Securities | |||
Morningstar International Moat ETF | $ | 70,249 | ||
Real Asset Allocation ETF | 695,909 |
* | Remaining contractual maturity: overnight and continuous |
Note 10—Bank Line of Credit—The Funds may participate in a $200 million committed credit facility (the “Facility”) to be utilized for temporary financing for the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Funds at the request of the shareholders and other temporary or emergency purposes. The Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the Funds based on prevailing market rates in effect at the time of borrowings. During the year ended September 30, 2020, the following Funds borrowed under this Facility:
Fund | Days Outstanding | Average Daily Loan Balance | Average Interest Rate | |||||||||
Morningstar Durable Dividend ETF* | 21 | $ | 124,860 | 1.42 | % | |||||||
Morningstar International Moat ETF | 225 | 431,577 | 2.13 | |||||||||
Morningstar Wide Moat ETF | 172 | 3,641,941 | 2.10 | |||||||||
Real Asset Allocation ETF* | 18 | 521,169 | 2.92 |
* | The custodian voluntarily waived interest expense for this borrowing activity in the amount of $104 for Morningstar Durable Dividend ETF and $749 for Real Asset Allocation ETF. |
Outstanding loan balances as of September 30, 2020, if any, are reflected in the Statements of Assets and Liabilities.
39 |
VANECK VECTORS ETF TRUST
NOTES TO FINANCIAL STATEMENTS
(continued)
Note 12—Recent Accounting Pronouncements—The Funds adopted all provisions of the Accounting Standards Update No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) that eliminate and modify certain disclosure requirements for fair value measurements. Based on management’s evaluation, the adoption of the ASU 2018-13 had no material impact on the financial statements and related disclosures.
Note 13—Subsequent Event Review—The Funds have evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued.
40 |
VANECK VECTORS ETF TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of VanEck Vectors Long/Flat Trend ETF, VanEck Vectors Morningstar Durable Dividend ETF, VanEck Vectors Morningstar Global Wide Moat ETF, VanEck Vectors Morningstar International Moat ETF, VanEck Vectors Morningstar Wide Moat ETF and VanEck Vectors Real Asset Allocation ETF and the Board of Trustees of VanEck Vectors ETF Trust
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities (consolidated as it relates to VanEck Vectors Real Asset Allocation ETF) of VanEck Vectors Long/Flat Trend ETF, VanEck Vectors Morningstar Durable Dividend ETF, VanEck Vectors Morningstar Global Wide Moat ETF, VanEck Vectors Morningstar International Moat ETF, VanEck Vectors Morningstar Wide Moat ETF and VanEck Vectors Real Asset Allocation ETF (collectively referred to as the “Funds”) (six of the series constituting VanEck Vectors ETF Trust (the “Trust”)), including the schedules of investments (consolidated as it relates to VanEck Vectors Real Asset Allocation ETF), as of September 30, 2020, and the related statements of operations, changes in net assets, and the financial highlights (consolidated as it relates to VanEck Vectors Real Asset Allocation ETF) for each of the periods indicated in the table below and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position (consolidated as it relates to VanEck Vectors Real Asset Allocation ETF) of each of the Funds (six of the series constituting VanEck Vectors ETF Trust) at September 30, 2020, and the results of their operations, changes in net assets and financial highlights (consolidated as it relates to VanEck Vectors Real Asset Allocation ETF) for each of the periods indicated in the table below, in conformity with U.S. generally accepted accounting principles.
Individual fund constituting the VanEck Vectors ETF Trust | Statement of operations | Statements of changes in net assets | Financial highlights | ||||
VanEck Vectors Long/Flat Trend ETF | For the year ended September 30, 2020 | For each of the two years in the period ended September 30, 2020 | For each of the two years in the period ended September 30, 2020 and the period from October 4, 2017 (commencement of operations) through September 30, 2018 | ||||
VanEck Vectors Morningstar Durable Dividend ETF | For the year ended September 30, 2020 | For the year ended September 30, 2020 and the period from October 30, 2018 (commencement of | For the year ended September 30, 2020 and the period from October 30, 2018 (commencement of | ||||
VanEck Vectors Morningstar Global Wide Moat ETF | operations) through September 30, 2019 | operations) through September 30, 2019 | |||||
VanEck Vectors Morningstar International Moat ETF | For the year ended September 30, 2020 | For each of the two years in the period ended September 30, 2020 | For each of the five years in the period ended September 30, 2020 | ||||
VanEck Vectors Morningstar Wide Moat ETF | |||||||
VanEck Vectors Real Asset Allocation ETF | For the year ended September 30, 2020 | For each of the two years in the period ended September 30, 2020 | For each of the two years in the period ended September 30, 2020 and the period from April 9, 2018 (commencement of operations) through September 30, 2018 |
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an
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VANECK VECTORS ETF TRUST
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2020, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from broker were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the VanEck investment companies since 1999.
New York, New York
November 23, 2020
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VANECK VECTORS ETF TRUST
(unaudited)
The information set forth below relates to distributions paid during each Fund’s current fiscal year as required by federal laws. Shareholders, however, must report dividends on a calendar year basis for income tax purposes, which may include dividends for portions of two fiscal years of a Fund.
Accordingly, the information needed by shareholders for calendar year 2020 income tax purposes will be sent to them in early 2021.
Please consult your tax advisor for proper treatment of this information.
The following information is provided with respect to the distributions paid during the taxable year ended September 30, 2020:
Morningstar Durable Dividend ETF | Morningstar Global Wide Moat ETF | |||||||||||||||||||||||||||||
Record Date | 10/02/2019 | 12/31/2019 | 04/02/2020 | 07/02/2020 | 12/24/2019 | |||||||||||||||||||||||||
Ex Date | 10/01/2019 | 12/30/2019 | 04/01/2020 | 07/01/2020 | 12/23/2019 | |||||||||||||||||||||||||
Payable Date | 10/07/2019 | 01/06/2020 | 04/07/2020 | 07/08/2020 | 12/30/2019 | |||||||||||||||||||||||||
Ordinary Income Amount Paid Per Share | $ | 0.202900 | $ | 0.386700 | $ | 0.200400 | $0.307500 | $0.725000 | ||||||||||||||||||||||
Ordinary Income: | ||||||||||||||||||||||||||||||
Qualified Dividend Income for Individuals | 67.62 | % | 78.21 | % | 100.00 | % | 100.00 | % | 61.58 | % | ||||||||||||||||||||
Dividends Qualifying for the Dividends Received Deduction for Corporations | 66.26 | % | 75.33 | % | 100.00 | % | 100.00 | % | 27.21 | % | ||||||||||||||||||||
Qualified Short-Term Capital Gains **** | $ | — | $ | 0.195700 | $ | — | $ | — | $0.385000 | |||||||||||||||||||||
Morningstar International Moat ETF | Morningstar Wide Moat ETF | Long/Flat Trend ETF | Real Asset Allocation ETF | |||||||||||||||||||||||||||
Record Date | 12/24/2019 | 12/24/2019 | 12/24/2019 | 12/24/2019 | ||||||||||||||||||||||||||
Ex Date | 12/23/2019 | 12/23/2019 | 12/23/2019 | 12/23/2019 | ||||||||||||||||||||||||||
Payable Date | 12/30/2019 | 12/30/2019 | 12/30/2019 | 12/30/2019 | ||||||||||||||||||||||||||
Ordinary Income Amount Paid Per Share | $ | 1.250000 | $ | 0.716700 | $ | 0.434800 | $0.608700 | |||||||||||||||||||||||
Ordinary Income: | ||||||||||||||||||||||||||||||
Qualified Dividend Income for Individuals | 80.19 | %* | 100.00 | % | 100.00 | % | 28.79 | % | ||||||||||||||||||||||
Dividends Qualifying for the Dividends Received Deduction for Corporations | 0.70 | %* | 99.63 | % | 100.00 | % | 15.59 | % | ||||||||||||||||||||||
Qualified Business Income Deduction | — | — | — | 8.20 | % | |||||||||||||||||||||||||
Foreign Source Income | 98.52 | %* | — | — | — | |||||||||||||||||||||||||
Foreign Taxes Paid Per Share | 0.114391 | ** | — | — | — | |||||||||||||||||||||||||
Federal Obligation Interest | — | — | 17.34 | %*** | 12.35 | %*** |
* | Expressed as a percentage of the cash distribution grossed up for foreign taxes. |
** | The foreign taxes paid represent taxes incurred by the Fund on income received by the Fund from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. |
*** | Certain states may exempt the portion of dividends derived from assets backed by the full faith and credit of the U.S. Government. |
**** | These amounts represent Qualified Short-Term Capital Gains which may be exempt from United States withholding tax when distributed to non-U.S. shareholders with proper documentation. |
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VANECK VECTORS ETF TRUST
BOARD OF TRUSTEES AND OFFICERS
September 30, 2020 (unaudited)
Name, Address1 and Year of Birth | Position(s) Held with the Trust | Term of Office2 and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex3 Overseen | Other Directorships Held Outside the Fund Complex3 During Past Five Years | |||||
Independent Trustees | ||||||||||
David H. Chow, 1957*† | Chairman Trustee | Since 2008 Since 2006 | Founder and CEO, DanCourt Management LLC (financial/ strategy consulting firm and Registered Investment Adviser), March 1999 to present. | 55 | Director, Forward Management LLC and Audit Committee Chairman, May 2008 to June 2015; Trustee, Berea College of Kentucky, May 2009 to present and currently Chairman of the Investment Committee; Member of the Governing Council of the Independent Directors Council, October 2012 to present; President, July 2013 to June 2015, and Board Member of the CFA Society of Stamford, July 2009 to present; Trustee, MainStay Fund Complex4, January 2016 to present and currently Chairman of the Risk and Compliance Committee. | |||||
Laurie A. Hesslein, 1959*† | Trustee | Since 2019 | Citigroup, Managing Director, and Business Head, Local Consumer Lending North America, and CEO and President, CitiFinancial Servicing LLC (2013 - 2017). | 55 | Trustee, Eagle Growth and Income Opportunities Fund; Trustee, THL Credit Senior Loan Fund. | |||||
R. Alastair Short, 1953*† | Trustee | Since 2006 | President, Apex Capital Corporation (personal investment vehicle). | 66 | Chairman and Independent Director, EULAV Asset Management; Trustee, Kenyon Review; Trustee, Children’s Village. Formerly, Independent Director, Tremont offshore funds. | |||||
Peter J. Sidebottom, 1962*† | Trustee | Since 2012 | Lead Partner, North America Banking and Capital Markets Strategy, Accenture, May 2017 to present; Partner, PWC/Strategy & Financial Services Advisory, February 2015 to March 2017; Founder and Board Member, AspenWoods Risk Solutions, September 2013 to February 2016; Independent consultant, June 2013 to February 2015; Partner, Bain & Company (management consulting firm), April 2012 to December 2013; Executive Vice President and Senior Operating Committee Member, TD Ameritrade (on-line brokerage firm), February 2009 to January 2012. | 55 | Board Member, Special Olympics, New Jersey, November 2011 to September 2013; Director, The Charlotte Research Institute, December 2000 to 2009; Board Member, Social Capital Institute, University of North Carolina Charlotte, November 2004 to January 2012; Board Member, NJ-CAN, July 2014 to 2016. | |||||
Richard D. Stamberger, 1959*† | Trustee | Since 2006 | President and CEO, SmartBrief, LLC (business media company). | 66 | Director, Food and Friends, Inc. | |||||
Interested Trustee | ||||||||||
Jan F. van Eck, 19635 | Trustee, Chief Executive Officer and President | Trustee (Since 2006); Chief Executive Officer and President (Since 2009) | Director, President and Chief Executive Officer of Van Eck Associates Corporation (VEAC), Van Eck Absolute Return Advisers Corporation (VEARA) and Van Eck Securities Corporation (VESC); Officer and/or Director of other companies affiliated with VEAC and/or the Trust | 66 | Director, National Committee on US-China Relations. |
1 | The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
2 | Each Trustee serves until resignation, death, retirement or removal. Officers are elected yearly by the Trustees. |
3 | The Fund Complex consists of the VanEck Funds, VanEck VIP Trust and the Trust. |
4 | The MainStay Fund Complex consists of MainStay Funds, MainStay Funds Trust, MainStay VP Funds Trust and MainStay MacKay Defined Term Municipal Opportunities Fund. |
5 | “Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC. |
* | Member of the Audit Committee. |
† | Member of the Nominating and Corporate Governance Committee. |
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Officer’s Name, Address1 and Year of Birth | Position(s) Held with the Trust | Term of Office2 and Length of Time Served | Principal Occupation(s) During Past Five Years | |||
Officer Information | ||||||
Matthew A. Babinsky, 1983 | Assistant Vice President and Assistant Secretary | Since 2016 | Assistant Vice President, Assistant General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Associate, Clifford Chance US LLP. | |||
Russell G. Brennan, 1964 | Assistant Vice President and Assistant Treasurer | Since 2008 | Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA. | |||
Charles T. Cameron, 1960 | Vice President | Since 2006 | Portfolio Manager of VEAC; Officer and/or Portfolio Manager of other investment companies advised by VEAC and VEARA. Formerly, Director of Trading of VEAC. | |||
John J. Crimmins, 1957 | Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (Since 2012); Treasurer (Since 2009) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. | |||
Eduardo Escario, 1975 | Vice President | Since 2012 | Regional Director, Business Development/Sales for Southern Europe and South America of VEAC. | |||
Henry Glynn, 1983 | Assistant Vice President | Since 2018 | Head of ETF Capital Markets Europe of Van Eck Switzerland AG. Formerly, Member of the Capital Markets team at Vanguard Group. | |||
F. Michael Gozzillo, 1965 | Chief Compliance Officer | Since 2018 | Vice President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance Officer of VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC and City National Rochdale Funds. | |||
Laura Hamilton, 1977 | Vice President | Since 2019 | Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates. | |||
Nicholas Jackson, 1974 | Assistant Vice President | Since 2018 | Vice President, Business Development of VanEck Australia Pty Ltd. | |||
Laura I. Martínez, 1980 | Vice President and Assistant Secretary | Vice President (Since 2016); Assistant Secretary (Since 2008) | Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of VEAC, VEARA and VESC. | |||
Matthew McKinnon, 1970 | Assistant Vice President | Since 2018 | Head of Business Development of Asia Pacific of VanEck Australia Pty Ltd. Formerly, Director, Intermediaries and Institutions of VanEck Australia Pty Ltd. | |||
Arian Neiron, 1979 | Vice President | Since 2018 | Managing Director and Head of Asia Pacific of VanEck Australia Pty Ltd.; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | |||
James Parker, 1969 | Assistant Treasurer | Since 2014 | Assistant Vice President of VEAC; Manager, Portfolio Administration of VEAC and VEARA. Officer of other investment companies advised by VEAC and VEARA. | |||
Adam Phillips, 1970 | Vice President | Since 2018 | ETF Chief Operating Officer of VEAC; Director of other companies affiliated with VEAC. | |||
Philipp Schlegel, 1974 | Vice President | Since 2016 | Managing Director of Van Eck Switzerland AG. | |||
Jonathan R. Simon, 1974 | Senior Vice President, Secretary and Chief Legal Officer | Senior Vice President (Since 2016); Secretary and Chief Legal Officer (Since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
1 | The address for each Officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
2 | Officers are elected yearly by the Trustees. |
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VANECK VECTORS ETF TRUST
APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
September 30, 2020 (unaudited)
At a meeting held on June 11, 2020 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved the continuation of the investment management agreements between the Trust and Van Eck Associates Corporation (the “Adviser”) (the “Investment Management Agreements”) with respect to the VanEck Vectors Biotech ETF, Environmental Services ETF, Gaming ETF, Long/Flat Trend ETF (formerly NDR CMG Long/Flat Allocation ETF), Morningstar Durable Dividend ETF, Morningstar Global Wide Moat ETF, Morningstar International Moat ETF, Morningstar Wide Moat ETF, Pharmaceutical ETF, Retail ETF, Semiconductor ETF, and Video Gaming and eSports ETF (each, a “Fund” and together, the “Funds”).
The Board’s approval of the Investment Management Agreements was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.
In preparation for the Renewal Meeting, the Trustees held a meeting on May 7, 2020. At that meeting, the Trustees discussed the information the Adviser and Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party data provider, had provided to them in advance. The information provided to the Trustees included, among other things, information about the performance and expenses of the Funds and the Funds’ peer funds (certain other index-based exchange-traded funds (“ETFs”)), information about the advisory services provided to the Funds and the personnel providing those services, and the profitability and other benefits enjoyed by the Adviser and its affiliates as a result of the Adviser’s relationship with the Funds. In reviewing performance information for the Funds against their peer groups, the Trustees considered that each Fund seeks to track a different index than the funds in its designated peer group and, therefore, each Fund’s performance will differ from its peers. In addition, as noted below, the Trustees reviewed certain performance information for each Fund which was not provided by Broadridge and which did not compare each Fund’s performance to the performance of its peer group. For these and other reasons, the Trustees noted that the peer group performance information did not necessarily provide meaningful direct comparisons to the Funds.
The Independent Trustees’ consideration of the Investment Management Agreements was based, in part, on their review of information obtained through discussions with the Adviser at the Renewal Meeting and with the Adviser at the May 7, 2020 meeting regarding the management of the Funds and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser, including the background and experience of the portfolio managers and others involved in the management and administration of the Funds. The Trustees also considered the terms of, and scope of services that the Adviser provides under, the Investment Management Agreements, including, where applicable, the Adviser’s commitment to waive certain fees and/or pay expenses of each of the Funds to the extent necessary to prevent the operating expenses of each of the Funds from exceeding agreed upon limits for a period of time.
The Trustees concluded that the Adviser and its personnel have the requisite expertise and skill to manage the Funds’ portfolios. In evaluating the performance of each Fund, the Trustees reviewed various performance metrics but relied principally on a comparison of the “gross” performance of each Fund (i.e., measured without regard to the impact of fees and expenses) to the performance of its benchmark index, in each case incorporating any systematic fair value adjustments to the underlying securities. Based on the foregoing, the Trustees concluded that the investment performance of the Funds was satisfactory.
The Trustees also considered information relating to the financial condition of the Adviser and the current status, as they understood it, of the Adviser’s compliance environment.
As noted above, the Trustees were also provided various data from Broadridge comparing the Funds’ expenses and performance to that of certain other ETFs. The Trustees noted that the information provided showed that each Fund had management fees (after the effect of any applicable fee waiver) below the average and median of its respective peer group of funds, except for each of VanEck Vectors Morningstar International Moat ETF and Morningstar Wide Moat ETF, which had management fees (after the effect of any applicable fee waiver) greater than the average and median of its respective peer group of funds. The Trustees also noted that the information provided showed that each Fund had a total expense ratio (after the effect of any applicable expense limitation) below the average and median of its respective peer group of funds, except for each of VanEck Vectors Gaming ETF, Morningstar Global Wide Moat ETF, Morningstar International Moat ETF, Morningstar Wide Moat ETF, Long/Flat Trend ETF and Video Gaming and eSports
46 |
ETF, which had a total expense ratio (after the effect of any applicable expense limitation) greater than the average and/or median of its respective peer group of funds. With respect to these Funds, the Trustees reviewed the amount by which these Funds’ management fees and/or total expense ratios (after the effect of any applicable expense limitation) exceeded the average and/or median of their respective peer groups and information provided by the Adviser providing context for these comparisons. The Trustees concluded, in light of this information and the other information available to them, that the fees paid by the Funds were reasonable in light of the performance of the Funds and the quality of services received.
The Trustees also considered the benefits, other than the fees under the Investment Management Agreements, received by the Adviser from serving as adviser to the Funds.
The Trustees also considered information provided by the Adviser about the overall profitability of the Adviser and its profitability or loss in respect of each Fund. The Trustees reviewed each Fund’s asset size, expense ratio and expense cap and noted that the Investment Management Agreements do not include breakpoints in the advisory fee rates as asset levels in a Fund increase. The Trustees considered the volatility of the asset classes in which certain of the Funds invest, potential variability in the net assets of these Funds and the sustainability of any potential economies of scale which may exist given where fees are currently set. The Trustees also evaluated the extent to which management fees for the Funds effectively incorporate the benefits of economies of scale. The Trustees noted that the Adviser has capped expenses on each Fund since its inception, although the cap was not necessarily exceeded each year. Based on the foregoing and the other information available to them, the Trustees determined that the advisory fee rate for each Fund is reasonable and appropriate in relation to the current asset size of each Fund and the other factors discussed above and that the advisory fee rate for each Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist. The Trustees also determined that the profits earned by the Adviser with respect to the Funds that were profitable to the Adviser were reasonable in light of the nature and quality of the services received by such Funds.
The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 7, 2020 meeting as part of their consideration of the Agreements.
In voting to approve the continuation of the Investment Management Agreements, the Trustees, including the Independent Trustees, concluded that the terms of each Investment Management Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that each Investment Management Agreement is in the best interest of each Fund and such Fund’s shareholders.
VanEck Vectors Real Asset Allocation ETF
At a meeting held on June 11, 2020 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved the continuation of the investment management agreement between the Trust and Van Eck Absolute Return Advisers Corporation (the “Adviser”) (the “Investment Management Agreement”) with respect to the VanEck Vectors Real Asset Allocation ETF (the “Fund”).
The Board’s approval of the Investment Management Agreement was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.
In preparation for the Renewal Meeting, the Trustees held a meeting on May 7, 2020. At that meeting, the Trustees discussed the information the Adviser and Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party data provider, had provided to them in advance. The information provided to the Trustees included, among other things, information about the performance and expenses of the Fund and the Fund’s peer funds (certain other exchange-traded funds (“ETFs”)), information about the advisory services provided to the Fund and the personnel providing those services, and the profitability and other benefits enjoyed by the Adviser and its affiliates as a result of the Adviser’s relationship with the Fund. In addition, as noted below, the Trustees reviewed certain performance information for the Fund which was not provided by Broadridge and which did not compare the Fund’s performance
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VANECK VECTORS ETF TRUST
APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
September 30, 2020 (unaudited) (continued)
to the performance of its peer group. For these and other reasons, the Trustees noted that the peer group performance information did not necessarily provide meaningful direct comparisons to the Fund.
The Independent Trustees’ consideration of the Investment Management Agreement was based, in part, on their review of information obtained through discussions with the Adviser at the Renewal Meeting and with the Adviser at the May 7, 2020 meeting regarding the management of the Fund and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser, including the background and experience of the portfolio managers and others involved in the management and administration of the Fund. The Trustees also considered the terms of, and scope of services that the Adviser provides under, the Investment Management Agreement, including the Adviser’s commitment to waive certain fees and/or pay expenses of the Fund to the extent necessary to prevent the operating expenses of the Fund from exceeding an agreed upon limit for a period of time.
In evaluating the performance of the Fund, the Trustees reviewed various performance metrics, including various data from Broadridge comparing the Fund’s performance to that of certain other ETFs. The Trustees also considered information from the Adviser regarding the performance of the Fund against its benchmark and the Adviser’s statement that the Fund’s performance against its benchmark is more relevant than performance against its peer group, given the small number of funds with directly competing strategies. Information provided by the Adviser showed that the Fund had outperformed its benchmark since its inception on April 10, 2018 through May 27, 2020, and although the Fund underperformed its benchmark during 2019, the Fund’s risk profile was lower than that of its benchmark. Based on the foregoing, the Trustees concluded that the Adviser and its personnel have the requisite expertise and skill to manage the Fund’s portfolio.
The Trustees also considered information relating to the financial condition of the Adviser and the current status, as they understood it, of the Adviser’s compliance environment.
As noted above, the Trustees were also provided various data from Broadridge comparing the Fund’s expenses and performance to that of certain other ETFs. The Trustees noted that the information provided showed that the Fund had management fees below the average and equal to the median of its peer group of funds. The Trustees also noted that the information provided showed that the Fund had a total expense ratio greater than the average and median of its peer group of funds. The Trustees reviewed the amount by which the Fund’s total expense ratio exceeded the average and median of its peer group and information provided by the Adviser providing context for these comparisons. The Trustees concluded, in light of this information and the other information available to them, that the fees paid by the Fund were reasonable in light of the performance of the Fund and the quality of services received.
The Trustees also considered the benefits, other than the fees under the Investment Management Agreement, received by the Adviser from serving as adviser to the Fund.
The Trustees also considered information provided by the Adviser about the overall profitability of the Adviser and the fact that the Adviser did not earn any profits from managing the Fund. The Trustees reviewed the Fund’s asset size, expense ratio and expense cap and noted that the Investment Management Agreement does not include breakpoints in the advisory fee rates as asset levels in the Fund increase. The Trustees considered the volatility of the asset classes in which the Fund invests, potential variability in the net assets of the Fund and the sustainability of any potential economies of scale which may exist given where fees are currently set. The Trustees also evaluated the extent to which management fees for the Fund effectively incorporate the benefits of economies of scale. The Trustees noted that the Adviser has capped expenses on the Fund since its inception. Based on the foregoing and the other information available to them, the Trustees determined that the advisory fee rate for the Fund is reasonable and appropriate in relation to the current asset size of the Fund and the other factors discussed above and that the advisory fee rate for the Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist.
The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 7, 2020 meeting as part of their consideration of the Investment Management Agreement.
In voting to approve the continuation of the Investment Management Agreement, the Trustees, including the Independent Trustees, concluded that the terms of the Investment Management Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that the Investment Management Agreement is in the best interest of the Fund and the Fund’s shareholders.
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VanEck Vectors Innovation ETF
At a meeting held on June 11, 2020 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved the continuation of the investment management agreement between the Trust and Van Eck Associates Corporation (the “Adviser”) (the “Investment Management Agreement”) with respect to the VanEck Vectors Innovation ETF (the “Fund”).
The Board’s approval of the Investment Management Agreement was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.
In preparation for the Renewal Meeting, the Trustees held a meeting on May 7, 2020. At that meeting, the Trustees received materials from the Adviser. The Independent Trustees’ consideration of the Investment Management Agreement was based, in part, on information obtained through discussions with the Adviser at the Renewal Meeting and with the Adviser at the May 7, 2020 meeting regarding the proposed management of the Fund and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser, including the background and experience of the portfolio managers and others proposed to be involved in the management and administration of the Fund. In evaluating the terms of the Investment Management Agreement at the Renewal Meeting and the May 7, 2020 meeting, the Trustees considered the terms and scope of services that the Adviser would provide under the Investment Management Agreement, including the Adviser’s commitment to waive certain fees and/or pay expenses of the Fund to the extent necessary to prevent the operating expenses of the Fund from exceeding an agreed upon limit for a period of at least one year following the effective date of the Fund’s registration statement. The Trustees concluded that the Adviser and its personnel have the requisite expertise and skill to manage the Fund’s portfolio.
The Trustees did not consider historical information about the cost of the services provided by the Adviser or the profitability of the Fund to the Adviser because the Fund has not yet commenced operations. The Trustees could not consider the historical performance or actual management fees or operating expenses of, or the quality of services previously provided to, the Fund by the Adviser, although they concluded that the nature, quality, and extent of the services to be provided by the Adviser were appropriate based on the Trustees’ knowledge of the Adviser and its personnel and the operations of the other series of the Trust.
The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 7, 2020 meeting as part of their consideration of the Investment Management Agreement.
In voting to approve the continuation of the Investment Management Agreement, the Trustees, including the Independent Trustees, concluded that the terms of the Investment Management Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that the Investment Management Agreement is in the best interest of the Fund and its shareholders.
49 |
This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the respective Fund’s prospectus and summary prospectus, which includes more complete information. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
Additional information about the VanEck Vectors ETF Trust’s (the “Trust”) Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Trust’s Form N-PORT filings are available on the Commission’s website at https://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Fund’s complete schedule of portfolio holdings is also available by calling 800.826.2333 or by visiting vaneck.com.
Investment Adviser: | Van Eck Associates Corporation | |
Distributor: | Van Eck Securities Corporation | |
666 Third Avenue, New York, NY 10017 | ||
vaneck.com | ||
Account Assistance: | 800.826.2333 | STRATAR |
ANNUAL REPORT September 30, 2020 |
VANECK VECTORS® | |
Energy Income ETF | EINC® |
800.826.2333 | vaneck.com |
Certain information contained in this shareholder letter represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Also, unless otherwise specifically noted, any discussion of the Funds’ holdings, the Funds’ performance, and the views of the investment adviser are as of September 30, 2020.
VANECK VECTORS ENERGY INCOME ETF
September 30, 2020 (unaudited)
Dear Fellow Shareholders:
The level of stimulus from the U.S. Federal Reserve (Fed) this year has been almost unprecedented and has had investment consequences. Financial markets have benefited from the Fed stimulus and the case for gold investing has become more solid.
Perhaps the surprise from this summer’s data is that the global economy is doing quite well, supporting the markets, despite the social distancing that we all feel in our personal lives. Important commodities like copper have regained pre-COVID-19 highs. In addition, China’s industrial recovery is pointing to all-time highs in activity, even though consumer activity is lagging a little.
One beneficiary is high yield bonds, particularly “fallen angels”—bonds that have been downgraded from investment grade. In a recessionary environment, some bonds are going to default or be downgraded. Fixed income markets this year generally started recovering after the Fed announced plans to intervene. We have already seen a record amount of new fallen angel bond volume—over $140B as of July 31, 20201—and expect more through the remainder of the calendar year.
Similar to 2016, when crude oil also swooned, we have seen a lot of energy companies become fallen angels, and the fallen angel strategy is buying those downgraded bonds. As reviewed in a recent blog, New Fallen Angel Bonds Drive Performance, these new energy fallen angels are among the top contributors to performance of the fallen angel strategy so far this year. As long as the Fed remains supportive, we believe this strategy should continue to do well.
We do, however, see two particular risks to this scenario: 1) an unforeseen rise in interest rates in the U.S. triggered by higher global growth or other factors; and 2) a bump in the return to full employment. An incredible number of people have been laid off in the U.S. and, regardless of GDP numbers, people are unlikely to quickly return to work at the same levels as the start of the year. Concern may be high enough for policy makers to take additional steps (any of which, however, remain, as yet, uncertain) that may impact the financial recovery.
The investing outlook sometimes does change suddenly, as it certainly has at times this year. To get our quarterly investment outlooks, please subscribe to “Investment Outlook” on vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit our website.
We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find a performance discussion and financial statements for the Fund for the ten month period ended September, 2020. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Jan F. van Eck
CEO and President
VanEck Vectors ETF Trust
October 19, 2020
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
1 | Source: FactSet, ICE Data Indices, LLC and Morningstar. |
1 |
VANECK VECTORS ENERGY INCOME ETF
September 30, 2020 (unaudited)
The global pandemic has certainly impacted energy commodity prices and, in turn, midstream energy companies, including MLPs (master limited partnerships) during the period under review—particularly through the market turmoil of the spring of 2020.
Crude oil prices declined with global equity markets as they began their COVID-19-induced slide in February 2020. Fears of weakening demand and excess supply became heightened into April. WTI (West Texas Intermediate) crude oil futures prices, for the first time ever, closed with a negative value on April 20, 2020, as a confluence of factors, including weakening demand, steady North American production and sparse storage capacity caused short-term confusion in the markets. Crude prices subsequently recovered slightly, but finished the period well below levels from December 2019. The outlook for energy infrastructure remains somewhat unknown as demand has declined in the U.S. for gasoline, diesel and, most starkly, jet oil.
Energy Income
The Fund changed its fiscal year-end from November 30 to September 30. For the 10 months ended September 30, 2020, the VanEck Vectors Energy Income ETF lost 29.74% on a total return basis.*
For the period under review, the Fund suffered the vast majority of its losses as a result of its exposure to MLPs involved in oil, gas and consumable fuels. While a number of MLPs did provide positive returns, these were minimal and failed signally to counterbalance the aggregate negative performance of other MLPs.
* | Returns based on NAV. |
NB: During the period under review, the Fund implemented several changes affecting its composition effective December 2, 2019. Of relevance, the Fund began seeking to track a new benchmark index, MVIS North America Energy Infrastructure Index which is intended to track the overall performance of North American companies involved in the midstream energy segment, which includes MLPs and corporations involved in oil and gas storage and transportation.
2 |
VANECK VECTORS ENERGY INCOME ETF
September 30, 2020 (unaudited)
Average Annual Total Returns | ||||
Share Price | NAV | MVEINCTG1 | SPTR2 | |
One Year | (33.79)% | (33.85)% | (34.66)% | 15.15% |
Five Year | (11.97)% | (11.98)% | (13.06)% | 14.15% |
Life* | (14.72)% | (14.69)% | (14.58)% | 13.38% |
* | Commencement of Fund: 3/12/12; First Day of Secondary Market Trading: 3/13/12. |
1 | MVIS North America Energy Infrastructure Index (MVEINCTG) is a rules-based, modified capitalization weighted, float adjusted index intended to give investors a means to track the overall performance of North American companies involved in the midstream energy segment, which includes MLPs and corporations involved in oil and gas storage and transportation. |
Index data prior to December 2, 2019 reflects that of the Solactive High Income MLP Index (the “MLP Index” or “YMLPTR”), a rules-based index designed to provide investors a means of tracking the performance of selected MLPs which are publicly traded on a U.S. securities exchange. All Index history reflects a blend of the performance of the aforementioned Indexes. | |
2 | The S&P 500 Index (SPTR) is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the index proportionate to its market value. |
VanEck Vectors Energy Income ETF (the “Fund”) is the successor to the Yorkville High Income MLP ETF pursuant to a reorganization that took place on February 22, 2016. Prior to that date, the Fund had no investment operations. Accordingly, for periods prior to that date, the Fund performance information is that of the Yorkville High Income MLP ETF. |
Hypothetical Growth of $10,000 (Since Inception) | ||
This chart shows the value of a hypothetical $10,000 investment in the Fund at NAV and at Share Price since inception. The result is compared with the Fund’s benchmark and a broad based index. |
Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
See “About Fund Performance” on page 4 for more information.
3 |
VANECK VECTORS ENERGY INCOME ETF
ABOUT FUND PERFORMANCE
(unaudited)
The price used to calculate market return (Share Price) is determined by using the closing price listed on its primary listing exchange. Since the shares of the Fund did not trade in the secondary market until after the Fund’s commencement, for the period from commencement to the first day of secondary market trading in shares of the Fund, the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted represents past performance. Past performance is not a guarantee of future results. Investment return and value of the shares of the funds will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the sale of Fund shares.
Investment return and value of the shares of the Fund will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund returns reflect reinvestment of dividends and capital gains distributions. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com.
Energy Income Index is published by MV Index Solutions GmbH (MVIS®), which is a wholly owned subsidiary of the Adviser, Van Eck Associates Corporation.
MVIS and Solactive are referred to herein as the “Index Providers.”
The Index Providers do not sponsor, endorse, or promote the Funds and bear no liability with respect to the Funds or any security. Index returns assume the reinvestment of all income and do not reflect any management fees, interest expense, brokerage expenses or income tax benefit/(expense) associated with Fund returns. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses.
4 |
VANECK VECTORS ENERGY INCOME ETF
(unaudited)
Hypothetical $1,000 investment at beginning of period
As a shareholder of a Fund, you incur operating expenses, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The disclosure is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, April 1, 2019 to September 30, 2020.
Actual Expenses
The first line in the table below provides information about account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period.”
Hypothetical Example for Comparison Purposes
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value April 1, 2020 | Ending Account Value September 30, 2020 | Annualized Expense Ratio During Period | Expenses Paid During the Period* April 1, 2020 – September 30, 2020 | |
Energy Income ETF | ||||
Actual | $1,000.00 | $1,287.70 | 0.45% | $2.58 |
Hypothetical** | $1,000.00 | $1,022.74 | 0.45% | $2.28 |
* | Expenses are equal to the Fund’s annualized expense ratio (for the six months ended September 30, 2020 multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year divided by the number of days in the fiscal year (to reflect the one-half year period). |
** | Assumes annual return of 5% before expenses. |
5 |
VANECK VECTORS ENERGY INCOME ETF
September 30, 2020
Number | ||||||||
of Shares | Value | |||||||
COMMON STOCKS: 75.1% | ||||||||
Energy: 72.4% | ||||||||
89,503 | Antero Midstream Corp. | $ | 480,631 | |||||
24,200 | Cheniere Energy, Inc. * | 1,119,734 | ||||||
54,725 | Enbridge, Inc. | 1,597,970 | ||||||
65,922 | EnLink Midstream LLC | 154,917 | ||||||
99,463 | Equitrans Midstream Corp. | 841,457 | ||||||
41,979 | Gibson Energy, Inc. (CAD) | 680,340 | ||||||
92,572 | Inter Pipeline Ltd. (CAD) | 908,652 | ||||||
55,921 | Keyera Corp. (CAD) | 844,138 | ||||||
114,929 | Kinder Morgan, Inc. | 1,417,075 | ||||||
7,173 | New Fortress Energy, Inc. | 315,684 | ||||||
40,984 | ONEOK, Inc. | 1,064,764 | ||||||
53,004 | Pembina Pipeline Corp. | 1,125,275 | ||||||
50,926 | Plains GP Holdings LP | 310,139 | ||||||
63,342 | Targa Resources Corp. | 888,688 | ||||||
37,512 | TC Energy Corp. | 1,576,254 | ||||||
67,119 | Williams Cos, Inc. | 1,318,888 | ||||||
14,644,606 | ||||||||
Transportation: 2.7% | ||||||||
20,351 | Macquarie Infrastructure Corp. | 547,238 | ||||||
Total Common Stocks (Cost: $21,289,259) | 15,191,844 |
Number | ||||||||
of Shares | Value | |||||||
MASTER LIMITED PARTNERSHIPS: 23.4% | ||||||||
Energy: 23.4% | ||||||||
6,447 | Cheniere Energy Partners LP | $ | 214,427 | |||||
6,024 | Crestwood Equity Partners LP | 75,059 | ||||||
8,073 | DCP Midstream LP | 90,176 | ||||||
161,177 | Energy Transfer LP | 873,579 | ||||||
56,134 | Enterprise Products Partners LP | 886,356 | ||||||
24,527 | Magellan Midstream Partners LP | 838,824 | ||||||
47,436 | MPLX LP | 746,643 | ||||||
8,463 | NuStar Energy LP | 89,877 | ||||||
7,189 | Phillips 66 Partners LP | 165,635 | ||||||
52,900 | Plains All American Pipeline LP | 316,342 | ||||||
14,764 | Shell Midstream Partners LP | 139,668 | ||||||
4,835 | TC PipeLines LP | 123,679 | ||||||
21,506 | Western Midstream Partners LP | 172,048 | ||||||
Total Master Limited Partnerships (Cost: $7,516,107) | 4,732,313 | |||||||
Total Investments: 98.5% (Cost: $28,805,366) | 19,924,157 | |||||||
Other assets less liabilities: 1.5% | 297,619 | |||||||
NET ASSETS: 100.0% | $ | 20,221,776 |
Definitions:
CAD—Canadian Dollar
Footnotes:
* Non-income producing
Summary of Investments by Sector | % of Investments | Value | ||||||
Energy | 97.3 | % | $ | 19,376,919 | ||||
Transportation | 2.7 | 547,238 | ||||||
100.0 | % | $ | 19,924,157 |
The summary of inputs used to value the Fund’s investments as of September 30, 2020 is as follows:
Level 2 | Level 3 | ||||||||||||||||
Level 1 | Significant | Significant | |||||||||||||||
Quoted | Observable | Unobservable | |||||||||||||||
Prices | Inputs | Inputs | Value | ||||||||||||||
Common Stocks* | $ | 15,191,844 | $ | — | $ | — | $ | 15,191,844 | |||||||||
Master Limited Partnerships | 4,732,313 | — | — | 4,732,313 | |||||||||||||
Total | $ | 19,924,157 | $ | — | $ | — | $ | 19,924,157 |
* | See Schedule of Investments for industry sector breakouts. |
See Notes to Financial Statements.
6 |
VANECK VECTORS ENERGY INCOME ETF
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2020
Assets: | ||||
Investments, at value (1) | $ | 19,924,157 | ||
Cash. | 189,997 | |||
Receivables: | ||||
Dividends | 43,689 | |||
Federal and State income taxes | 72,091 | |||
Total assets | 20,229,934 | |||
Liabilities: | ||||
Payables: | ||||
Due to Adviser. | 8,158 | |||
Total liabilities | 8,158 | |||
NET ASSETS | $ | 20,221,776 | ||
Shares outstanding | 589,720 | |||
Net asset value, redemption and offering price per share | $ | 34.29 | ||
Net Assets consist of: | ||||
Aggregate paid in capital | $ | 140,663,021 | ||
Total distributable earnings (loss) | (120,441,245 | ) | ||
NET ASSETS | $ | 20,221,776 | ||
(1) Cost of investments | $ | 28,805,366 |
See Notes to Financial Statements.
7 |
VANECK VECTORS ENERGY INCOME ETF
September 30, 2020
For the Period | For the | |||||||||
Ended | Year Ended | |||||||||
September 30, | November 30, | |||||||||
2020 (a) | 2019 | |||||||||
Income: | ||||||||||
Dividends | $ | 1,076,375 | $ | 1,052,233 | ||||||
Distributions from master limited partnerships | 515,852 | 3,107,036 | ||||||||
Interest | 1,636 | — | ||||||||
Securities lending income | 12,846 | — | ||||||||
Foreign taxes withheld | (73,942 | ) | — | |||||||
Less: return of capital distributions | (945,524 | ) | (3,867,690 | ) | ||||||
Total income | 587,243 | 291,579 | ||||||||
Expenses: | ||||||||||
Management fees | 100,109 | 327,476 | ||||||||
Interest | 1,228 | 1,091 | ||||||||
Total expenses | 101,337 | 328,567 | ||||||||
Net investment income (loss), before taxes | 485,906 | �� | (36,988 | ) | ||||||
Income tax benefit/(expense), net of change in valuation allowance | (199,600 | ) | (235,000 | ) | ||||||
Reimbursement from Adviser for income tax expense (See Note 6) | 199,600 | — | ||||||||
Net investment income (loss) | 485,906 | (271,988 | ) | |||||||
Net realized gain (loss) on: | ||||||||||
Investments | (1,671,968 | ) | 1,226,721 | |||||||
In-kind redemptions | (107,246 | ) | — | |||||||
Foreign currency transactions and foreign denominated assets and liabilities | (4,646 | ) | — | |||||||
Net realized gain (loss) | (1,783,860 | ) | 1,226,721 | |||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||
Investments | (8,835,179 | ) | (2,149,500 | ) | ||||||
Foreign currency transactions and foreign denominated assets and liabilities | 97 | — | ||||||||
Net change in unrealized appreciation (depreciation) | (8,835,082 | ) | (2,149,500 | ) | ||||||
Net Decrease in Net Assets Resulting from Operations | $ | (10,133,036 | ) | $ | (1,194,767 | ) |
(a) | The Fund changed its fiscal year-end from November 30 to September 30. |
See Notes to Financial Statements.
8 |
VANECK VECTORS ENERGY INCOME ETF
STATEMENT OF CHANGES IN NET ASSETS
Period Ended | Year Ended | Year Ended | |||||||||||||
September 30, | November 30, | November 30, | |||||||||||||
2020 (a) | 2019 | 2018 | |||||||||||||
Operations: | |||||||||||||||
Net investment income (loss) | $ | 485,906 | $ | (271,988 | ) | $ | 76,603 | ||||||||
Net realized gain (loss) | (1,783,860 | ) | 1,226,721 | (2,130,647 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) | (8,835,082 | ) | (2,149,500 | ) | (1,285,104 | ) | |||||||||
Net decrease in net assets resulting from operations | (10,133,036 | ) | (1,194,767 | ) | (3,339,148 | ) | |||||||||
Distributions to shareholders: | |||||||||||||||
From distributable earnings | — | (1,204,891 | ) | — | |||||||||||
Return of capital | (1,350,025 | ) | (2,453,758 | ) | (4,890,172 | ) | |||||||||
Total distributions | (1,350,025 | ) | (3,658,649 | ) | (4,890,172 | ) | |||||||||
Share transactions:** | |||||||||||||||
Proceeds from sale of shares | 3,706,837 | 18,778,764 | 2,236,285 | ||||||||||||
Cost of shares redeemed | (23,530,656 | ) | (7,487,335 | ) | (13,281,849 | ) | |||||||||
Increase (decrease) in net assets resulting from share transactions | (19,823,819 | ) | 11,291,429 | (11,045,564 | ) | ||||||||||
Total increase (decrease) in net assets | (31,306,880 | ) | 6,438,013 | (19,274,884 | ) | ||||||||||
Net Assets, beginning of period | 51,528,656 | 45,090,643 | 64,365,527 | ||||||||||||
Net Assets, end of period | $ | 20,221,776 | $ | 51,528,656 | $ | 45,090,643 | |||||||||
** Shares of Common Stock Issued (no par value) (b) | |||||||||||||||
Shares sold | 83,333 | 366,667 | 33,333 | ||||||||||||
Shares redeemed | (500,000 | ) | (133,333 | ) | (200,000 | ) | |||||||||
Net increase (decrease) | (416,667 | ) | 233,334 | (166,667 | ) |
(a) | The Fund changed its fiscal year-end from November 30 to September 30. |
(b) | Share activity has been adjusted to reflect the 1 for 3 reverse share split which took place on April 15, 2020 (See Note 10). |
See Notes to Financial Statements.
9 |
VANECK VECTORS ENERGY INCOME ETF
For a share outstanding throughout each period:
For the | ||||||||||||||||||||||||
Period | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
September 30, | Year Ended November 30, | |||||||||||||||||||||||
2020 (1) (2) | 2019 | 2018 | 2017 | 2016 (3) | 2015 | |||||||||||||||||||
Net asset value, beginning of period | $51.20 | $58.32 | $68.49 | $76.29 | $93.90 | $222.15 | ||||||||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) (a) | 0.76 | (0.39 | ) | 0.09 | 0.42 | (0.06 | ) | 0.30 | ||||||||||||||||
Net realized and unrealized loss on investments | (15.58 | ) | (1.42 | ) | (4.44 | ) | (2.25 | ) | (9.93 | ) | (108.45 | ) | ||||||||||||
Total from investment operations | (14.82 | ) | (1.81 | ) | (4.35 | ) | (1.83 | ) | (9.99 | ) | (108.15 | ) | ||||||||||||
Less: | ||||||||||||||||||||||||
Dividends from net investment income | — | (1.77 | ) | — | — | — | — | |||||||||||||||||
Return of capital | (2.09 | ) | (3.54 | ) | (5.82 | ) | (5.97 | ) | (7.62 | ) | (20.10 | ) | ||||||||||||
Total dividends | (2.09 | ) | (5.31 | ) | (5.82 | ) | (5.97 | ) | (7.62 | ) | (20.10 | ) | ||||||||||||
Net asset value, end of period | $34.29 | $51.20 | $58.32 | $68.49 | $76.29 | $93.90 | ||||||||||||||||||
Total return (b) | (29.74 | )%(c) | (3.66 | )% | (7.16 | )% | (2.67 | )% | (8.40 | )% | (51.42 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s) | $ | 20,222 | $ | 51,529 | $ | 45,091 | $ | 64,366 | $ | 94,563 | $ | 124,034 | ||||||||||||
Ratio of total expenses to average net assets | 0.45 | %(d)(e) | 1.41 | %(g) | 0.73 | %(h) | 0.86 | %(i) | 0.88 | % | 0.56 | %(j) | ||||||||||||
Ratio of net investment income (loss) to average net assets | 2.17 | %(d)(f) | (0.68 | )%(g) | 0.13 | %(h) | 0.55 | %(i) | (0.34 | )% | 0.19 | %(j) | ||||||||||||
Portfolio turnover rate (k) | 24 | %(c) | 106 | % | 34 | % | 40 | % | 46 | % | 62 | % |
The financial highlights include the financial information of the Predecessor Fund through February 21, 2016 (See Note 1).
(1) | The Fund changed is fiscal year-end from November 30 to September 30. |
(2) | On April 15, 2020, the Fund effected a 1 for 3 reverse share split (See Note 10). Per share data prior to April 15, 2020 has been adjusted to reflect the share split. |
(3) | On June 29, 2016, the Fund effected a 1 for 5 reverse share split (See Note 10). Per share data prior to June 29, 2016 has been adjusted to reflect the share split. |
(a) | Calculated based upon average shares outstanding |
(b) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return includes adjustments in accordance with U.S. generally accepted accounting principles and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. |
(c) | Not Annualized |
(d) | Annualized |
(e) | Includes income tax expense of 1.56% and adviser reimbursement of (1.56%). If the adviser had not reimbursed the Fund, the ratio would have been higher. (See Note 6). |
(f) | Includes income tax expense of 1.56% and adviser reimbursement of (1.56%). If the adviser had not reimbursed the Fund, the ratio would have been lower. (See Note 6). |
(g) | Includes income tax expense of 0.59% related to the Fund’s tax status as a C-Corporation prior to its reorganization as a regulated investment company. |
(h) | Includes income tax benefit of 0.11% related to the Fund’s tax status as a C-Corporation prior to its reorganization as a regulated investment company. |
(i) | Includes income tax expense of 0.04% related to the Fund’s tax status as a C-Corporation prior to its reorganization as a regulated investment company. |
(j) | Includes income tax benefit of 0.29% related to the Fund’s tax status as a C-Corporation prior to its reorganization as a regulated investment company. |
(k) | Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions. |
See Notes to Financial Statements.
10 |
VANECK VECTORS ENERGY INCOME ETF
September 30, 2020
Note 1—Fund Organization—VanEck Vectors ETF Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was incorporated in Delaware as a statutory trust on March 15, 2001. The Trust operates as a series fund, and offers multiple investment portfolios, each of which represents a separate series of the Trust.
The financial statements relate only to the Energy Income ETF (the “Fund”). The Fund seeks to provide investment results that correspond generally to the performance, before fees and expenses, of the MVIS® North America Energy Infrastructure Index (the “Index”). The Fund is classified as “non-diversified”. This means that the Fund may invest more of its assets in securities of a single issuer than that of a diversified fund. Van Eck Associates Corporation (the “Adviser”) serves as the investment adviser for the Fund and is subject to the supervision of the Board of Trustees (the “Board”).
Effective February 22, 2016, the shareholders of the Yorkville High Income MLP ETF (the “Predecessor Fund”) approved a proposed agreement and plan of reorganization (the “Reorganization”) that provided for the transfer of all the assets and assumption of certain of the liabilities of the Predecessor Fund, the issuance of shares of the Fund to the shareholders of the Predecessor Fund and the liquidation and termination of the Predecessor Fund. The Predecessor Fund had substantially similar investment objectives, investment strategies, policies and restrictions as those of the Fund. The financial statements and financial highlights include the financial information of the Predecessor Fund through February 21, 2016.
Effective December 2, 2019, the Fund’s underlying benchmark index changed from the Solactive High Income MLP Index to the MVIS North American Energy Infrastructure Index, the Fund’s federal tax status changed from a taxable C-corporation into a regulated investment company (“RIC”) and the unitary management fee rate changed from 0.82% to 0.45%.
In September 2020, the Board approved changing the Fund’s fiscal year-end from November 30 to September 30.
Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The Fund is an investment company and follows accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies.
The following summarizes the Fund’s significant accounting policies.
A. | Return of Capital Estimates—Distributions received by the Fund generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on historical information available to the Fund and other industry sources. These estimates may subsequently be revised based on information received from Master Limited Partnerships (“MLPs’’) after the MLP’s tax reporting periods are concluded. |
B. | Master Limited Partnerships—Entities commonly referred to as “MLPs” are generally organized under state law as limited partnerships or limited liability companies. The Fund invests a portion of its total assets in MLPs receiving partnership taxation treatment under the Internal Revenue Code of 1986 (the “Code”), and whose interests or “units” are traded on securities exchanges like shares of corporate stock. To be treated as a partnership for U.S. federal income tax purposes, an MLP must receive at least 90% of its income from qualifying sources such as interest, dividends, real estate rents, gain from the sale or disposition of real property, income and gain from mineral or natural resources activities, income and gain from the transportation or storage of certain fuels, and, in certain circumstances, income and gain from commodities or futures, forwards and options with respect to commodities. The MLPs themselves generally do not pay U.S. federal income taxes (although some states do impose a net income tax on partnerships). Thus, unlike investors in corporate securities, direct MLP investors are generally not subject to double taxation (i.e., corporate level tax and tax on corporate dividends). The Fund invests the remainder of its assets in MLPs that are treated as C corporations for tax purposes. |
C. | Security Valuation—The Fund values its investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Securities traded on national exchanges are valued at the closing price on the markets in which the securities trade. Securities traded on the NASDAQ Stock Market LLC |
11 |
VANECK VECTORS ENERGY INCOME ETF
NOTES TO FINANCIAL STATEMENTS
(continued)
(“NASDAQ”) are valued at the NASDAQ official closing price. Over-the-counter securities not included on NASDAQ and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded they are categorized as Level 1 in the fair value hierarchy (described below). Short-term obligations with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are categorized as Level 1 in the fair value hierarchy. The Pricing Committee of the Adviser provides oversight of the Fund’s valuation policies and procedures, which are approved by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes they do not otherwise reflect the fair value of a security or asset, the security or asset will be fair valued by the Pricing Committee in accordance with the Fund’s valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis.
Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be categorized either as Level 2 or Level 3 in the fair value hierarchy. The price which the Fund may realize upon sale of an investment may differ materially from the value presented in the Schedule of Investments.
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three levels of the fair value hierarchy are described below:
Level 1 — Quoted prices in active markets for identical securities.
Level 2 — Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3 — Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
A summary of the inputs and the levels used to value the Fund’s investments are located in the Schedule of Investments. Additionally, tables that reconcile the valuation of the Fund’s Level 3 investments and that present additional information about the valuation methodologies and unobservable inputs, if applicable, are located in the Schedule of Investments.
D. | Federal and Other Income Taxes—Effective December 2, 2019, the Fund changed its investment objective such that it is now the Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to a RIC for current and future tax years. The Fund intends to distribute all of its taxable income to its shareholders. |
E. | Dividends and Distributions to Shareholders—On a quarterly basis, the Fund distributes substantially all of its dividends and distributions received less Fund expenses. All distributions are recorded on the ex-dividend date. The estimated characterization of the distributions paid will be either an ordinary income, capital gain or return of capital. The Fund anticipates that a portion of current year distributions will be treated as return of capital. The actual tax characterization of the distributions made during the current year will not be determined until after the end of the fiscal year when the Fund can determine its earnings and profits and, therefore, may differ from the preliminary estimates. |
F. | Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing |
12 |
when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed in the financial statements. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Statement of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments, and liabilities are recorded as net realized gain (loss) on foreign currency transactions and foreign denominated assets and liabilities in the Statement of Operations. | |
G. | Offsetting Assets and Liabilities—In the ordinary course of business, the Fund enters into transactions subject to enforceable master netting or other similar agreements. Generally, the right of offset in those agreements allows the Fund to offset any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of the agreements. The Fund may pledge or receive cash and/or securities as collateral for securities lending. For financial reporting purposes, the Fund presents securities lending assets and liabilities on a gross basis in the Statement of Assets and Liabilities. Cash collateral held in the form of money market fund investments, if any, at September 30, 2020 is presented in the Schedule of Investments and in the Statement of Assets and Liabilities. Non-cash collateral is disclosed in Note 9 (Securities Lending). |
H. | Other—Security transactions are accounted for on trade date. Realized gains and losses are determined based on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premiums and discounts, is accrued as earned. |
The Fund earns interest income on uninvested cash balances held at the custodian bank. Such amounts, if any, are presented as interest income in the Statements of Operations. | |
In the normal course of business, the Fund enters into contracts that contain a variety of general indemnifications. The Fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote. |
Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Fund. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of 0.45% of the Fund’s average daily net assets. Prior to December 2, 2019, the Adviser received a management fee, calculated daily and payable monthly based on an annual rate of 0.82% of the Fund’s average daily net assets. The Adviser has agreed to pay all expenses incurred by the Fund except for the advisory fee, interest, taxes, brokerage commissions and other expenses incurred in placing orders for the purchase and sale of securities and other investment instruments, acquired fund fees and expenses, accrued deferred tax liability and extraordinary expenses.
The Adviser voluntarily agreed to reimburse the Fund for any differences between the estimated and actual taxes remaining from its prior treatment as a C corporation (See Note 6). These amounts are reflected in the Statement of Operations and in the Financial Highlights.
Van Eck Securities Corporation, an affiliate of the Adviser, acts as the Fund’s distributor (the “Distributor”). Certain officers and a Trustee of the Trust are officers, directors or stockholders of the Adviser and Distributor.
Effective November 4, 2019, State Street Bank and Trust Company is the Fund’s custodian, securities lending agent and transfer agent. Prior to November 4, 2019, Bank of New York Mellon provided these services to the Fund.
Note 4—Capital Share Transactions—As of September 30, 2020, there were an unlimited number of capital shares of beneficial interest authorized by the Trust with no par value. Fund shares are not individually redeemable and are issued and redeemed at their net asset value per share only through certain authorized broker-dealers (“Authorized Participants”) in blocks of shares (“Creation Units”), consisting of 25,000 shares, or multiples thereof. Prior to September 1, 2020, Creation Units consisted of 50,000 shares.
The consideration for the purchase or redemption of Creation Units of the Fund generally consists of the in-kind contribution or distribution of securities constituting the Fund’s underlying index (“Deposit Securities”) plus a balancing cash component to equate the transaction to the net asset value per share of the Fund on the transaction date. Cash may also be substituted in an amount equivalent to the value of certain Deposit Securities, generally as a result of market circumstances, or when the securities are not available in sufficient quantity for delivery, or are not eligible for trading by the Authorized Participant. The Fund may issue Creation Units in advance of receipt of Deposit Securities
13 |
VANECK VECTORS ENERGY INCOME ETF
NOTES TO FINANCIAL STATEMENTS
(continued)
subject to various conditions, including, for the benefit of the Fund, a requirement to maintain cash collateral on deposit at the custodian equal to at least 115% of the daily marked to market value of the missing Deposit Securities.
Authorized Participants purchasing and redeeming Creation Units may pay transaction fees directly to the transfer agent. In addition, the Fund may impose certain variable fees for creations and redemptions with respect to transactions in Creation Units for cash, or on transactions effected outside the clearing process, which are treated as increases in capital. These variable fees, if any, are reflected in share transactions in the Statement of Changes in Net Assets.
Note 5—Investments—For the period ended September 30, 2020, purchases and sales of investments (excluding short-term investments and in-kind capital share transactions) and the purchases and sales of investments resulting from in-kind capital share transactions (excluding short-term investments) were as follows:
In-kind Capital Share Transactions | ||||||
Purchases | Sales | Purchases | Sales | |||
$8,480,382 | $6,609,765 | $3,812,901 | $22,965,456 |
Note 6—Income Taxes—Beginning December 2, 2019, the Fund changed its investment objective such that it is now the Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies (“RIC”) for current and future tax years. As a result, the Fund generally will no longer pay corporate level taxes on its income and capital gains that are distributed to shareholders.
The Fund was required, however, to pay corporate tax for the year ended November 30, 2019 and is also required to pay corporate tax on any net built-in-gains as of that date that are recognized within a five year period. The Fund estimated its tax expense / liability for these amounts as of November 30, 2019 based on the best information available from the MLPs at that time. The Adviser agreed to make the Fund whole for any differences between the estimated and actual taxes.
For the period ended September 30, 2020, the Fund has revised its prior year tax estimate and recorded an additional tax expense and reimbursement of tax expense from the Adviser as follows:
Current tax expense | $ | 231,183 | ||
Deferred tax expense / (benefit) | 45,897,419 | |||
Change in valuation allowance | (45,929,002 | ) | ||
Total tax benefit/(expense) before Adviser reimbursement | $ | (199,600 | ) | |
Reimbursement of tax expense by Adviser | 199,600 | |||
Net tax expense to the Fund | $ | — |
These estimates may be further adjusted as additional information becomes available from the MLPs and the Fund’s tax returns are filed.
As of September 30, 2020, for Federal income tax purposes, the identified cost, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) of investments were as follows:
Gross | Gross | Net Unrealized | ||||
Tax Cost | Unrealized | Unrealized | Appreciation | |||
of Investments | Appreciation | Depreciation | (Depreciation) | |||
$28,256,303 | $589,994 | $(8,922,140) | $(8,332,146) |
14 |
At September 30, 2020, the components of distributable earnings (loss) on a tax basis were as follows:
Undistributed | Accumulated | Other | Net Unrealized | Total | ||||
Ordinary | Capital | Temporary | Appreciation | Distributable | ||||
Income | (Losses) | Differences | (Depreciation) | Earnings (Loss) | ||||
$— | $(111,781,735) | $(327,461) | $(8,332,049) | $(120,441,245) |
The tax character of dividends paid to shareholders were as follows:
Period Ended | Year Ended | |||||||||
September 30, 2020 | November 30, 2019 | |||||||||
Ordinary income | $ | — | $ | 1,204,891 | ||||||
Return of capital | 1,350,025 | 2,453,758 | ||||||||
Total | $ | 1,350,025 | $ | 3,658,649 |
At September 30, 2020, the Fund had the following capital loss carryforwards available to offset future capital gains:
Year of | Short-Term | ||||
Expiration | Capital Losses | ||||
9/30/2021 | $ | (89,478,335 | ) | ||
9/30/2022 | (12,847,636 | ) | |||
9/30/2023 | (6,679,603 | ) | |||
9/30/2024 | (1,612,600 | ) | |||
No expiration | (1,163,561 | ) | |||
Total | $ | (111,781,735 | ) |
During the period ended September 30, 2020, $81,997,394 of the Fund’s capital loss carryover available from prior years expired un-utilized.
During the period ended September 30, 2020, as a result of permanent book to tax differences primarily due to the expiration of a capital loss carryover, treatment of tax gains / losses on in-kind redemptions, and book/tax differences from the Fund’s conversion to a RIC, the Fund incurred differences that affected distributable earnings / (loss) and aggregate paid in capital by the amounts in the table below. Net assets were not affected by these reclassifications.
Increase (Decrease) in Distributable Earnings / (Loss) | Increase (Decrease) in Aggregate Paid in Capital | |
$(109,001,962) | $(109,001,962) |
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Fund does not have exposure for additional years that might still be open in certain foreign jurisdictions. Therefore, no provision for income tax is required in the Fund’s financial statements.
The Fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the period ended September 30, 2020, the Fund did not incur any interest or penalties.
Note 7—Principal Risks—The Fund’s assets are concentrated in a limited number of sectors or industries. By concentrating the Fund’s assets, the Fund is subject to the risk that economic, political or other conditions that have a negative effect on that sector or industry will negatively impact the Fund to a greater extent than if the Fund’s net assets were invested in a wider variety of sectors or industries.
Under normal circumstances, the Fund invests in securities of MLPs, which are subject to certain risks, such as supply and demand risk, depletion and exploration risk, and the risk associated with the hazards inherent in midstream energy industry activities. A portion of the cash flow received by the Fund is derived from investment in equity securities of MLPs. The amount of cash that an MLP has available for distributions and the tax character of such distributions are dependent upon the amount of cash generated by the MLP’s operations.
15 |
VANECK VECTORS ENERGY INCOME ETF
NOTES TO FINANCIAL STATEMENTS
(continued)
A recent outbreak of respiratory disease caused by a novel coronavirus, which was first detected in China in December 2019, has subsequently spread internationally and has been declared a pandemic by the World Health Organization. The coronavirus has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, loss of life, as well as general concern and uncertainty. The coronavirus has already negatively impacted the economies of many nations, individual companies and the market. This pandemic is expected to have a continued impact in ways that cannot necessarily be foreseen presently.
A more complete description of risks is included in the Fund’s Prospectus and Statement of Additional Information.
Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Plan”) for Trustees under which the Trustees can elect to defer receipt of trustee fees until retirement, disability or termination from the Board of Trustees. The fees otherwise payable to the participating Trustees are deemed invested in shares of the Fund as directed by the Trustees. The Fund has adopted a unitary management fee where the Adviser is responsible for all expenses of the Fund. Therefore, the expense for the Plan for this Fund is included in “Management fees.”
Note 9—Securities Lending—To generate additional income, the Fund may lend its securities pursuant to a securities lending agreement with the securities lending agent. The Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, cash equivalents, U.S. government securities, or any combination of cash and such securities at all times equal to at least 102% (105% for foreign securities) of the market value plus accrued interest on the securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Fund will continue to receive any dividends, interest or amounts equivalent thereto, on the securities loaned while receiving a fee from the borrower and or earning interest on the investment of the cash collateral. Such fees and interest are shared with the securities lending agent under the terms of the securities lending agreement. Securities lending income is disclosed as such in the Statement of Operations. Cash collateral is maintained on the Fund’s behalf by the lending agent and is invested in the State Street Navigator Securities Lending Government Money Market Portfolio. Non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities, and is not disclosed in the Fund’s Schedule of Investments or Statement of Assets and Liabilities as it is held by the agent on behalf of the Fund, and the Fund does not have the ability to re-hypothecate those securities. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the securities loaned. The Fund bears the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. The value of loaned securities and related cash collateral, if any, at September 30, 2020 are presented on a gross basis in the Schedule of Investments and Statement of Assets and Liabilities. The Fund had no securities on loan as of September 30, 2020.
Note 10—Share Split—The Fund executed a one-for-five reverse share split for shareholders of record before the open of markets on June 29, 2016. The fund executed a one-for-three reverse share split for shareholders of record before the open of markets on April 15, 2020.
Note 11—Bank Line of Credit—The Fund, along with other funds of the Trust, may participate in a $200 million committed credit facility (the “Facility”) to be utilized for temporary financing for the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Funds at the request of the shareholders and other temporary or emergency purposes. The Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the Funds based on prevailing market rates in effect at the time of borrowings. During the period ended September 30, 2020, the Fund borrowed under this Facility:
Outstanding Loan | ||||||
Days | Average Daily | Average | Balance as of | |||
Outstanding | Loan Balance | Interest Rate | September 30, 2020 | |||
71 | $212,469 | 2.87% | $— |
Outstanding loan balances as of September 30, 2020, if any, are reflected in the Statements of Assets and Liabilities.
16 |
Note 12—Recent Accounting Pronouncements—The Funds adopted all provisions of the Accounting Standards Update No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) that eliminate and modify certain disclosure requirements for fair value measurements. Based on management’s evaluation, the adoption of the ASU 2018-13 had no material impact on the financial statements and related disclosures.
Note 13—Subsequent Events—The Fund has evaluated the need for additional disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued.
17 |
VANECK VECTORS ENERGY INCOME ETF
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of VanEck Vectors Energy Income ETF and the Board of Trustees of VanEck Vectors ETF Trust
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of VanEck Vectors Energy Income ETF (the “Fund”) (one of the series constituting VanEck Vectors ETF Trust (the “Trust”)), including the schedule of investments, as of September 30, 2020, and the related statements of operations for the period December 1, 2019 to September 30, 2020 and the year ended November 30, 2019, the statements of changes in net assets for the period December 1, 2019 to September 30, 2020 and each of the two years in the period ended November 30, 2019, the financial highlights for the period December 1, 2019 to September 30, 2020 and each of the four years in the period ended November 30, 2019 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the series constituting the Trust) at September 30, 2020, and the results of its operations for the period December 1, 2019 to September 30, 2020 and the year ended November 30, 2019, the changes in its net assets for the period December 1, 2019 to September 30, 2020 and each of the two years in the period ended November 30, 2019 and its financial highlights for the period December 1, 2019 to September 30, 2020 and each of the four years in the period ended November 30, 2019, in conformity with U.S. generally accepted accounting principles. The financial highlights for year ended November 30, 2015 were audited by another independent registered public accounting firm whose report, dated January 29, 2016, expressed an unqualified opinion on those financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2020, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from broker were not received. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. provides a reasonable basis for our opinion.
We have served as the auditor of one or more of the VanEck investment companies since 1999.
New York, New York
November 23, 2020
18 |
VANECK VECTORS ENERGY INCOME ETF
(unaudited)
During the period ended September 30, 2020, all of the distributions paid by the Fund were considered to be a return of capital. The Fund will inform shareholders of the final tax character of the distributions on IRS Form 1099-DIV in February 2021.
A return of capital is not considered taxable income to shareholders. Pursuant to IRC Section 301(c), the portion of a distribution which is a dividend (as defined under IRC Section 316) is includable in gross income while the portion of the distribution which is not a dividend shall be applied against and reduces the adjusted basis of the stock. Accordingly, shareholders who received these distributions should not include these amounts in taxable income, but instead pursuant to Internal Revenue Code Sections 301(c)(2) and 1016(a)(4), should treat them as a reduction of the cost basis of the applicable shares upon which these distributions were paid. In order to compute the required adjustment to cost basis, a shareholder should multiply the per share amount of each of the respective distributions by the number of shares held at each of the respective record dates.
Please consult your tax advisor for proper treatment of this information.
Return | |||||||||||||||
of Capital | Total | ||||||||||||||
Ticker | Payable | Income | (Non Dividend) | Distribution | |||||||||||
Symbol | Date | Dividends | Distribution | Per Share | |||||||||||
EINC | 02/14/2020 | $ | — | $ | 0.284500 | (a) | $ | 0.284500 | (a) | ||||||
EINC | 05/15/2020 | — | 0.574500 | 0.574500 | |||||||||||
EINC | 08/14/2020 | — | 0.660100 | 0.660100 | |||||||||||
$ | — | $ | 1.519100 | $ | 1.519100 |
(a) | This amount has not been adjusted for the 1 for 3 reverse stock split that occurred as of the market open on April 15, 2020. |
19 |
VANECK VECTORS ENERGY INCOME ETF
BOARD OF TRUSTEES AND OFFICERS
September 20, 2020 (unaudited)
Name, Address1 and Year of Birth | Position(s) Held with the Trust | Term of Office2 and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex3 Overseen | Other Directorships Held Outside the Fund Complex3 During Past Five Years | |||||
Independent Trustees | ||||||||||
David H. Chow, 1957*† | Chairman Trustee | Since 2008 Since 2006 | Founder and CEO, DanCourt Management LLC (financial/ strategy consulting firm and Registered Investment Adviser), March 1999 to present. | 55 | Director, Forward Management LLC and Audit Committee Chairman, May 2008 to June 2015; Trustee, Berea College of Kentucky, May 2009 to present and currently Chairman of the Investment Committee; Member of the Governing Council of the Independent Directors Council, October 2012 to present; President, July 2013 to June 2015, and Board Member of the CFA Society of Stamford, July 2009 to present; Trustee, MainStay Fund Complex4, January 2016 to present and currently Chairman of the Risk and Compliance Committee. | |||||
Laurie A. Hesslein, 1959*† | Trustee | Since 2019 | Citigroup, Managing Director, and Business Head, Local Consumer Lending North America, and CEO and President, CitiFinancial Servicing LLC (2013 - 2017). | 55 | Trustee, Eagle Growth and Income Opportunities Fund; Trustee, THL Credit Senior Loan Fund. | |||||
R. Alastair Short, 1953*† | Trustee | Since 2006 | President, Apex Capital Corporation (personal investment vehicle). | 66 | Chairman and Independent Director, EULAV Asset Management; Trustee, Kenyon Review; Trustee, Children’s Village. Formerly, Independent Director, Tremont offshore funds. | |||||
Peter J. Sidebottom, 1962*† | Trustee | Since 2012 | Lead Partner, North America Banking and Capital Markets Strategy, Accenture, May 2017 to present; Partner, PWC/Strategy & Financial Services Advisory, February 2015 to March 2017; Founder and Board Member, AspenWoods Risk Solutions, September 2013 to February 2016; Independent consultant, June 2013 to February 2015; Partner, Bain & Company (management consulting firm), April 2012 to December 2013; Executive Vice President and Senior Operating Committee Member, TD Ameritrade (on-line brokerage firm), February 2009 to January 2012. | 55 | Board Member, Special Olympics, New Jersey, November 2011 to September 2013; Director, The Charlotte Research Institute, December 2000 to 2009; Board Member, Social Capital Institute, University of North Carolina Charlotte, November 2004 to January 2012; Board Member, NJ-CAN, July 2014 to 2016. | |||||
Richard D. Stamberger, 1959*† | Trustee | Since 2006 | President and CEO, SmartBrief, LLC (business media company). | 66 | Director, Food and Friends, Inc. | |||||
Interested Trustee | ||||||||||
Jan F. van Eck, 19635 | Trustee, Chief Executive Officer and President | Trustee (Since 2006); Chief Executive Officer and President (Since 2009) | Director, President and Chief Executive Officer of Van Eck Associates Corporation (VEAC), Van Eck Absolute Return Advisers Corporation (VEARA) and Van Eck Securities Corporation (VESC); Officer and/or Director of other companies affiliated with VEAC and/or the Trust | 66 | Director, National Committee on US-China Relations. |
1 | The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
2 | Each Trustee serves until resignation, death, retirement or removal. Officers are elected yearly by the Trustees. |
3 | The Fund Complex consists of the VanEck Funds, VanEck VIP Trust and the Trust. |
4 | The MainStay Fund Complex consists of MainStay Funds, MainStay Funds Trust, MainStay VP Funds Trust and MainStay MacKay Defined Term Municipal Opportunities Fund. |
5 | “Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC. |
* | Member of the Audit Committee. |
† | Member of the Nominating and Corporate Governance Committee. |
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Officer’s Name, Address1 and Year of Birth | Position(s) Held with the Trust | Term of Office2 and Length of Time Served | Principal Occupation(s) During Past Five Years | |||
Officer Information | ||||||
Matthew A. Babinsky, 1983 | Assistant Vice President and Assistant Secretary | Since 2016 | Assistant Vice President, Assistant General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Associate, Clifford Chance US LLP. | |||
Russell G. Brennan, 1964 | Assistant Vice President and Assistant Treasurer | Since 2008 | Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA. | |||
Charles T. Cameron, 1960 | Vice President | Since 2006 | Portfolio Manager of VEAC; Officer and/or Portfolio Manager of other investment companies advised by VEAC and VEARA. Formerly, Director of Trading of VEAC. | |||
John J. Crimmins, 1957 | Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (Since 2012); Treasurer (Since 2009) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. | |||
Eduardo Escario, 1975 | Vice President | Since 2012 | Regional Director, Business Development/Sales for Southern Europe and South America of VEAC. | |||
Henry Glynn, 1983 | Assistant Vice President | Since 2018 | Head of ETF Capital Markets Europe of Van Eck Switzerland AG. Formerly, Member of the Capital Markets team at Vanguard Group. | |||
F. Michael Gozzillo, 1965 | Chief Compliance Officer | Since 2018 | Vice President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance Officer of VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC and City National Rochdale Funds. | |||
Laura Hamilton, 1977 | Vice President | Since 2019 | Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates. | |||
Nicholas Jackson, 1974 | Assistant Vice President | Since 2018 | Vice President, Business Development of VanEck Australia Pty Ltd. | |||
Laura I. Martínez, 1980 | Vice President and Assistant Secretary | Vice President (Since 2016); Assistant Secretary (Since 2008) | Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of VEAC, VEARA and VESC. | |||
Matthew McKinnon, 1970 | Assistant Vice President | Since 2018 | Head of Business Development of Asia Pacific of VanEck Australia Pty Ltd. Formerly, Director, Intermediaries and Institutions of VanEck Australia Pty Ltd. | |||
Arian Neiron, 1979 | Vice President | Since 2018 | Managing Director and Head of Asia Pacific of VanEck Australia Pty Ltd.; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | |||
James Parker, 1969 | Assistant Treasurer | Since 2014 | Assistant Vice President of VEAC; Manager, Portfolio Administration of VEAC and VEARA. Officer of other investment companies advised by VEAC and VEARA. | |||
Adam Phillips, 1970 | Vice President | Since 2018 | ETF Chief Operating Officer of VEAC; Director of other companies affiliated with VEAC. | |||
Philipp Schlegel, 1974 | Vice President | Since 2016 | Managing Director of Van Eck Switzerland AG. | |||
Jonathan R. Simon, 1974 | Senior Vice President, Secretary and Chief Legal Officer | Senior Vice President (Since 2016); Secretary and Chief Legal Officer (Since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
1 | The address for each Officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
2 | Officers are elected yearly by the Trustees. |
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VANECK VECTORS ENERGY INCOME ETF
APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
September 30, 2020 (unaudited)
At a meeting held on June 11, 2020 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved the continuation of the investment management agreement between the Trust and Van Eck Associates Corporation (the “Adviser”) (the “Investment Management Agreement”) with respect to the VanEck Vectors Energy Income ETF (formerly VanEck Vectors High Income MLP ETF) (the “Fund”).
The Board’s approval of the Investment Management Agreement was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.
In preparation for the Renewal Meeting, the Trustees held a meeting on May 7, 2020. At that meeting, the Trustees discussed the information the Adviser and Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party data provider, had provided to them in advance. The information provided to the Trustees included, among other things, information about the performance and expenses of the Fund and the Fund’s peer funds (certain other index-based exchange-traded funds (“ETFs”)), information about the advisory services provided to the Fund and the personnel providing those services, and the profitability and other benefits enjoyed by the Adviser and its affiliates as a result of the Adviser’s relationship with the Fund. In reviewing performance information for the Fund against its peer group, the Trustees considered that the Fund seeks to track a different index than the funds in its designated peer group and, therefore, the Fund’s performance will differ from its peers. In addition, as noted below, the Trustees reviewed certain performance information for the Fund which was not provided by Broadridge and which did not compare the Fund’s performance to the performance of its peer group. For these and other reasons, the Trustees noted that the peer group performance information did not necessarily provide meaningful direct comparisons to the Fund.
The Independent Trustees’ consideration of the Investment Management Agreement was based, in part, on their review of information obtained through discussions with the Adviser at the Renewal Meeting and the May 7, 2020 meeting regarding the management of the Fund and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser, including the background and experience of the portfolio managers and others involved in the management and administration of the Fund. The Trustees also considered the terms of, and scope of services that the Adviser provides, under the Investment Management Agreement, including the Adviser’s agreement to pay all of the direct expenses of the Fund (excluding the fee payment under the Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses).
The Trustees concluded that the Adviser and its personnel have the requisite expertise and skill to manage the Fund’s portfolio. In evaluating the performance of the Fund, the Trustees reviewed various performance metrics but relied principally on a comparison of the “gross” performance of the Fund (i.e., measured without regard to the impact of fees and expenses) to the performance of its benchmark index. Based on the foregoing, the Trustees concluded that the investment performance of the Fund was satisfactory.
The Trustees also considered information relating to the financial condition of the Adviser and the current status, as they understood it, of the Adviser’s compliance environment.
As noted above, the Trustees were also provided various data from Broadridge comparing the Fund’s expenses and performance to that of certain other ETFs. The Trustees noted that the information provided showed that the Fund had management fees below the average and equal to the median of its peer group of funds. The Trustees also noted that the information provided showed that the Fund had a total expense ratio below the average and equal to the median of its peer group of funds. The Trustees concluded, in light of this information and the other information available to them, that the fees paid by the Fund were reasonable in light of the performance of the Fund and the quality of services received.
The Trustees also considered the benefits, other than fees under the Investment Management Agreement, received by the Adviser from serving as adviser to the Fund.
The Trustees also considered information provided by the Adviser about the overall profitability of the Adviser and the fact that the Adviser did not earn any profits from managing the Fund. The Trustees reviewed the Fund’s asset size and expense ratio and noted that the Investment Management Agreement does not include breakpoints in the advisory fee rates as asset levels in the Fund increase. The Trustees considered the volatility of the asset class in which the Fund
22 |
invests, potential variability in the net assets of the Fund and the sustainability of any potential economies of scale which may exist given where fees are currently set. The Trustees also evaluated the extent to which management fees for the Fund effectively incorporate the benefits of economies of scale. The Trustees also considered the risks being assumed by the Adviser under the unitary fee structure arrangement and the potential expense stability that may inure to the benefit of shareholders. Based on the foregoing and the other information available to them, the Trustees determined that the advisory fee rate for the Fund is reasonable and appropriate in relation to the current asset size of the Fund and the other factors discussed above and that the advisory fee rate for the Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist.
The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 7, 2020 meeting as part of their consideration of the Investment Management Agreement.
In voting to approve the continuation of the Investment Management Agreement, the Trustees, including the Independent Trustees, concluded that the terms of the Investment Management Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that the Investment Management Agreement is in the best interest of the Fund and the Fund’s shareholders.
23 |
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by a VanEck Vectors ETF Trust (the “Trust”) prospectus and summary prospectus, which includes more complete information. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
Additional information about the Trust’s Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at http://www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Trust’s Form N-PORT is available on the Commission’s website at http://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Funds’ complete schedules of portfolio holdings are also available by calling 800.826.2333 or by visiting vaneck.com.
Investment Adviser: | Van Eck Associates Corporation | |
Distributor: | Van Eck Securities Corporation | |
666 Third Avenue, New York, NY 10017 | ||
vaneck.com | ||
Account Assistance: | 800.826.2333 | EINCAR |
Item 2. | CODE OF ETHICS. |
(a) | The Registrant has adopted a code of ethics (the “Code of Ethics”) that applies to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. |
(b) | The Registrant’s code of ethics is reasonably described in this Form N-CSR. |
(c) | The Registrant has not amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto. |
(d) | The Registrant has not granted a waiver or an implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto. |
(e) | Not applicable. |
(f) | The Registrant’s Code of Ethics is attached as an Exhibit hereto. |
Item 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Registrant’s Board of Trustees has determined that David Chow, Laurie A. Hesslein, R. Alastair Short, Peter Sidebottom and Richard Stamberger, members of the Audit and Governance Committees, are “audit committee financial experts” and “independent” as such terms are defined in the instructions to Form N-CSR Item 3(a)(2).
Item 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
The principal accountant fees disclosed in Item 4(a), 4(b), 4(c), 4(d) and 4(g) are for the Funds of the Registrant for which the fiscal year end is September 30.
(a) | Audit Fees. The aggregate Audit Fees of Ernst & Young for professional services billed for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for the fiscal years ended September 30, 2020 and September 30, 2019, were $390,306 and $326,740 respectively. |
(b) | Audit-Related Fees. Not applicable. |
(c) | Tax Fees. The aggregate Tax Fees of Ernst & Young for professional services billed for the review of Federal, state and excise tax returns and other tax compliance consultations for the fiscal years ended September 30, 2020 and September 30, 2019 were $220,039 and $306,528 respectively. |
(d) | All Other Fees |
None.
(e) | The Audit Committee will pre-approve all audit and non-audit services, to be provided to the Fund, by the independent accountants as required by Section 10A of the Securities Exchange Act of 1934. The Audit Committee has authorized the Chairman of the Audit Committee to approve, between meeting dates, appropriate non-audit services. |
The Audit Committee after considering all factors, including a review of independence issues, will recommend to the Board of Trustees the independent auditors to be selected to audit the financial statements of the Funds. |
(f) | Not applicable. |
(g) | Not applicable. |
(h) | Not applicable. |
Item 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
The Registrant’s Board has an Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)) consisting of five Independent Trustees. Messrs. Chow, Hesslein, Short, Sidebottom and Stamberger currently serve as members of the Audit Committee. Mr. Short is the Chairman of the Audit Committee.
Item 6. | SCHEDULE OF INVESTMENTS. |
Information included in Item 1.
Item 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 9. | PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
Item 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
Item 11. | CONTROLS AND PROCEDURES. |
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3 (c)) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15 (b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT COMPANIES. |
Not applicable.
Item 13. | EXHIBITS. |
(a)(1) | The code of ethics is attached as EX-99.CODE ETH |
(b) | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is furnished as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) VANECK VECTORS ETF TRUST
By | (Signature and Title) | /s/ John J. Crimmins, Treasurer and CFO | |
Date | December 8, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By | (Signature and Title) | /s/ Jan F. van Eck, CEO | |
Date | December 8, 2020 | |
By | (Signature and Title) | /s/ John J. Crimmins, Treasurer and CFO | |
Date | December 8, 2020 |