As filed with the Securities and Exchange Commission on June 3, 2025
| Securities Act File No. 333-123257 | ||
| Investment Company Act File No. 811-10325 | ||
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933 | ý | |||||||
Pre-Effective Amendment No. | o | |||||||
Post Effective Amendment No. 2,899 | ý | |||||||
and/or | ||||||||
Registration Statement Under the Investment Company Act of 1940 | ý | |||||||
Amendment No. 2,903 | ý | |||||||
VANECK ETF TRUST
(Exact Name of Registrant as Specified in its Charter)
| 666 Third Avenue, 9th Floor | ||
| New York, New York 10017 | ||
| (Address of Principal Executive Offices) | ||
| (212) 293-2000 | ||
| Registrant’s Telephone Number | ||
| Jonathan R. Simon, Esq. | ||
| Senior Vice President and General Counsel | ||
| Van Eck Associates Corporation | ||
| 666 Third Avenue, 9th Floor | ||
| New York, New York 10017 | ||
| (Name and Address of Agent for Service) | ||
| Copy to: | ||
| Allison M. Fumai, Esq. | ||
| Dechert LLP | ||
| 1095 Avenue of the Americas | ||
| New York, New York 10036 | ||
Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this registration statement.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
| Immediately upon filing pursuant to paragraph (b) | |||||
| X | On June 4, 2025 pursuant to paragraph (b) | ||||
| 60 days after filing pursuant to paragraph (a)(1) | |||||
| On [date] pursuant to paragraph (a)(1) | |||||
| 75 days after filing pursuant to paragraph (a)(2) | |||||
| On [date] pursuant to paragraph (a)(2) of rule 485 | |||||
June 4, 2025 Prospectus |  | ||||
GPZ | Alternative Asset Manager ETF
Principal U.S. Listing Exchange for the Fund: NYSE Arca, Inc.
The U.S. Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
800.826.2333 | vaneck.com
TABLE OF CONTENTS | |||||
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VANECK® ALTERNATIVE ASSET MANAGER ETF
SUMMARY INFORMATION
INVESTMENT OBJECTIVE
VanEck Alternative Asset Manager ETF (the “Fund”) seeks to track as closely as possible, before fees and expenses, the price and yield performance of the MarketVector™ Alternative Asset Managers Index (the “Alternative Asset Managers Index” or the “Index”).
FUND FEES AND EXPENSES
The following tables describe the fees and expenses that you may pay if you buy, hold and sell shares of the Fund (“Shares”). You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the tables and examples below.
Shareholder Fees (fees paid directly from your investment) | None | ||||
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
| Management Fee | 0.40 | % | |||
Other Expenses(a)(b) | 0.00 | % | |||
Total Annual Fund Operating Expenses(b) | 0.40 | % | |||
(a) “Other Expenses” are based on estimated amounts for the current fiscal year.
(b) Van Eck Associates Corporation (the “Adviser”) will pay all expenses of the Fund, except for the fee payment under the investment management agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Notwithstanding the foregoing, the Adviser has agreed to pay the offering costs until at least February 1, 2027.
EXPENSE EXAMPLE
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account brokerage commissions that you pay when purchasing or selling Shares of the Fund.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell or hold all of your Shares at the end of those periods. The example also assumes that your investment has a 5% annual return and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
| Year | Expenses | ||||
| 1 | $41 | ||||
| 3 | $128 | ||||
PORTFOLIO TURNOVER
The Fund will pay transaction costs, such as commissions, when it purchases and sells securities (or “turns over” its portfolio). A higher portfolio turnover will cause the Fund to incur additional transaction costs and may result in higher taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, may affect the Fund’s performance. Because the Fund is newly organized, no portfolio turnover figures are available.
PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 80% of its total assets in securities that comprise the Fund’s benchmark index. For purposes of this policy, the term “assets” means net assets plus the amount of any borrowings for investment purposes. The Alternative Asset Managers Index is comprised of equity securities of companies in the alternative asset management industry. Alternative asset management companies are those with a significant portion of their revenue or operating assets from private equity and other alternative asset investing such as: private debt (commonly referred to as private credit), venture capital, buy-outs, private real estate, and private infrastructure. To be initially eligible to for inclusion in the Alternative Asset Managers Index, companies must derive at least 75% of their revenue or operating assets from alternative asset investing.
Alternative asset management companies may include small, medium- and large-capitalization companies which must be domiciled and listed in the U.S., Canadian and developed European markets, as further described in the section titled “MarketVector Alternative Asset Managers Index”. The Fund may invest in depositary receipts and securities denominated in foreign currencies. As of April 30, 2025, the Alternative Asset Managers Index included 20 securities of companies with a market capitalization range of between approximately $1.3 billion and $101.5 billion and a weighted average market capitalization of $52.6 billion. These amounts are subject to change. The Fund’s 80% investment policy is non-fundamental and may be changed without shareholder approval upon 60 days’ prior written notice to shareholders.
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The Alternative Asset Managers Index is published by MarketVector Indexes GmbH (the “Index provider”) which is a wholly owned subsidiary of the Adviser. The Alternative Asset Managers Index is reconstituted semiannually and rebalanced quarterly.
The Fund, using a “passive” or indexing investment approach, attempts to approximate the investment performance of the Alternative Asset Managers Index by investing in a portfolio of securities that generally tracks the Alternative Asset Managers Index. Unlike many investment companies that try to “beat” the performance of a benchmark index, the Fund does not try to “beat” the Alternative Asset Managers Index and does not seek temporary defensive positions that are inconsistent with its investment objective of seeking to track the Alternative Asset Managers Index.
The Fund is classified as a non-diversified fund under the Investment Company Act of 1940, as amended (the “Investment Company Act of 1940”), and, therefore, may invest a greater percentage of its assets in a particular issuer. The Fund may concentrate its investments in a particular industry or group of industries to the extent that the Alternative Asset Managers Index concentrates in an industry or group of industries. As of April 30, 2025, the financials sector represented a significant portion of the Alternative Asset Managers Index.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk. An investment in the Fund is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Therefore, you should consider carefully the following risks before investing in the Fund, each of which could significantly and adversely affect the value of an investment in the Fund.
Alternative Asset Managers Risk. There are certain risks inherent in investing in listed alternative asset managers, which encompass financial institutions or vehicles whose principal business is to make and facilitate private investments, including investing in, lending capital to, or providing services to privately held companies. Alternative asset investing can be speculative and entail substantial risks. Such risks include leverage risk, liquidity risk, risk of significant volatility, operational complexity risk and valuation risk. Generally, little public information exists for private and thinly traded companies, and there is a risk that investors in such companies may not be able to make a fully informed investment decision. The Fund is also subject to the risks which affect the underlying private investment vehicles in which the financial institutions held by the Fund invest. By investing in companies in the capital markets whose business is to lend money, there is a risk that the borrowers of the companies in which the Fund invests may default on their payments or declare bankruptcy.
Issuer-Specific Changes Risk. The value of individual securities in the Fund’s portfolio can be more volatile than the market as a whole and can perform differently from the value of the market as a whole, which may have a greater impact if the Fund’s portfolio is concentrated in a country, region, market, industry, sector or asset class. A change in the financial condition, market perception or the credit rating of an issuer of securities included in the Fund’s Index may cause the value of its securities to decline.
Financials Sector Risk. The Fund may be sensitive to, and its performance may depend to a greater extent on, the overall condition of the financials sector. Companies in the financials sector may be subject to extensive government regulation that affects the scope of their activities, the prices they can charge and the amount of capital they must maintain. The profitability of companies in the financials sector may be adversely affected by increases in interest rates, by loan losses, which usually increase in economic downturns, and by credit rating downgrades. In addition, the financials sector is undergoing numerous changes, including continuing consolidations, development of new products and structures and changes to its regulatory framework. Furthermore, some companies in the financials sector perceived as benefiting from government intervention in the past may be subject to future government-imposed restrictions on their businesses or face increased government involvement in their operations. Increased government involvement in the financials sector, including measures such as taking ownership positions in financial institutions, could result in a dilution of the Fund’s investments in financial institutions.
Equity Securities Risk. The value of the equity securities held by the Fund may fall due to general market and economic conditions, perceptions regarding the markets in which the issuers of securities held by the Fund participate, or factors relating to specific issuers in which the Fund invests. Equity securities are subordinated to preferred securities and debt in a company’s capital structure with respect to priority to a share of corporate income, and therefore will be subject to greater dividend risk than preferred securities or debt instruments. In addition, while broad market measures of equity securities have historically generated higher average returns than fixed income securities, equity securities have generally also experienced significantly more volatility in those returns.
Large-Capitalization Companies Risk. The Fund may invest in large-capitalization companies and, therefore will be subject to certain risks associated with large-capitalization companies. Securities of large-capitalization companies could fall out of favor with the market and underperform securities of small- or medium-capitalization companies. Larger, more established companies may be slow to respond to challenges and may grow more slowly than smaller companies.
Small- and Medium-Capitalization Companies Risk. The Fund may invest in small- and medium-capitalization companies and, therefore will be subject to certain risks associated with small- and medium-capitalization companies. These companies are often subject to less analyst coverage and may be in early and less predictable periods of their corporate existences, with little or no record of profitability. In addition, these companies often have greater price volatility, lower trading volume and less
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liquidity than larger more established companies. These companies tend to have smaller revenues, narrower product lines, less management depth and experience, smaller shares of their product or service markets, fewer financial resources and less competitive strength than large-capitalization companies. Returns on investments in securities of small- and medium-capitalization companies could trail the returns on investments in securities of larger companies.
Depositary Receipts Risk. The Fund may invest in depositary receipts (including American Depositary Receipts), which involve similar risks to those associated with investments in foreign securities. Depositary receipts are receipts listed on U.S. or foreign exchanges issued by banks or trust companies that entitle the holder to all dividends and capital gains that are paid out on the underlying foreign shares. The issuers of certain depositary receipts are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities. Investments in depositary receipts may be less liquid than the underlying shares in their primary trading market. The issuers of depositary receipts may discontinue issuing new depositary receipts and withdraw existing depositary receipts at any time, which may result in costs and delays in the distribution of the underlying assets to the Fund and may negatively impact the Fund’s performance.
Special Risk Considerations of Investing in Canadian Issuers. Investments in securities of Canadian issuers, including issuers located outside of Canada that generate significant revenue from Canada, involve risks and special considerations not typically associated with investments in the U.S. securities markets. The Canadian economy is very dependent on the demand for, and supply and price of, natural resources. The Canadian market is relatively concentrated in issuers involved in the production and distribution of natural resources. Canada is a major producer of commodities such as forest products, metals, agricultural products, and energy related products like oil, gas, and hydroelectricity. Accordingly, a change in the supply and demand of these resources, both domestically and internationally, can have a significant effect on Canadian market performance. Canada is a top producer of zinc and uranium and a global source of many other natural resources, such as gold, nickel, aluminum, and lead. Conditions that weaken demand for such products worldwide could have a negative impact on the Canadian economy as a whole. Additionally, the Canadian economy is heavily dependent on relationships with certain key trading partners, including the United States, countries in the European Union and China. Because the United States is Canada’s largest trading partner and foreign investor, the Canadian economy is dependent on and may be significantly affected by the U.S. economy. Reduction in spending on Canadian products and services or changes in the U.S. economy may adversely impact the Canadian economy. Trade agreements may further increase Canada’s dependency on the U.S. economy, and uncertainty as to the future of such trade agreements may cause a decline in the value of the Fund’s Shares. The imposition of additional tariffs by the U.S. may have implications for the trade arrangements between the U.S. and Canada, which could negatively affect the value of securities held by the Fund. Past periodic demands by the Province of Quebec for sovereignty have significantly affected equity valuations and foreign currency movements in the Canadian market and such demands may have this effect in the future. In addition, certain sectors of Canada’s economy may be subject to foreign ownership limitations. This may negatively impact the Fund’s ability to invest in Canadian issuers and to pursue its investment objective.
Special Risk Considerations of Investing in European Issuers. Investments in securities of European issuers involve risks and special considerations not typically associated with investments in the U.S. securities markets. The Economic and Monetary Union of the European Union requires member countries to comply with restrictions on inflation rates, deficits, interest rates, debt levels and fiscal and monetary controls, each of which may significantly affect every country in Europe. Decreasing imports or exports, changes in governmental or European Union regulations on trade, changes in the exchange rate of the euro, the default or threat of default by a European Union member country on its sovereign debt, and/or an economic recession in a European Union member country may have a significant adverse effect on the economies of other European Union countries and on major trading partners outside Europe. If any member country exits the Economic and Monetary Union, the departing country would face the risks of currency devaluation and its trading partners and banks and others around the world that hold the departing country’s debt would face the risk of significant losses. The European financial markets have previously experienced, and may continue to experience, volatility and have been adversely affected, and may in the future be affected, by concerns about economic downturns, credit rating downgrades, rising government debt levels and possible default on or restructuring of government debt in several European countries. These events have adversely affected, and may in the future affect, the value and exchange rate of the euro and may continue to significantly affect the economies of every country in Europe, including European Union member countries that do not use the euro and non-European Union member countries. Following the United Kingdom's withdrawal from the European Union on January 31, 2020 (“Brexit”), certain trading matters between the United Kingdom and the European Union (the “EU”) remain unresolved, including with respect to financial services. The continuing uncertainty could have an adverse impact on the U.K. economy and currency.
Foreign Securities Risk. Investments in the securities of foreign issuers involve risks beyond those associated with investments in U.S. securities. These additional risks include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity and political instability. Because certain foreign securities markets may be limited in size, the activity of large traders may have an undue influence on the prices of securities that trade in such markets. The Fund invests in securities of issuers located in countries whose economies are heavily dependent upon trading with key partners. Any reduction in this trading may have an adverse impact on the Fund’s investments. Foreign market trading hours, clearance and settlement procedures, and holiday schedules may limit the Fund's ability to buy and sell securities.
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Foreign Currency Risk. Because all or a portion of the income received by the Fund from its investments and/or the revenues received by the underlying issuers will generally be denominated in foreign currencies, the Fund’s exposure to foreign currencies and changes in the value of foreign currencies versus the U.S. dollar may result in reduced returns for the Fund, and the value of certain foreign currencies may be subject to a high degree of fluctuation. The Fund may also (directly or indirectly) incur costs in connection with conversions between U.S. dollars and foreign currencies.
Market Risk. The prices of securities are subject to the risks associated with investing in the securities market, including general economic conditions, sudden and unpredictable drops in value, exchange trading suspensions and closures and public health risks. These risks may be magnified if certain social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts, social unrest, recessions, inflation, interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions and other trade barriers) adversely interrupt the global economy; in these and other circumstances, such events or developments might affect companies world-wide. Overall securities values could decline generally or underperform other investments. An investment may lose money.
Operational Risk. The Fund is exposed to operational risk arising from a number of factors, including human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties, failed or inadequate processes and technology or system failures.
Index Tracking Risk. The Fund’s return may not match the return of the Index for a number of reasons. For example, the Fund incurs operating expenses, including taxes, not applicable to the Index and incurs costs associated with buying and selling securities and entering into derivatives transactions (if applicable), especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of the Index or (if applicable) raising cash to meet redemptions or deploying cash in connection with inflows into the Fund. Transaction costs, including brokerage costs, will decrease the Fund’s net asset value. Conversely, the Fund may generate earnings through its securities lending activities, which may increase the Fund’s return relative to the Index.
Market disruptions and regulatory restrictions could have an adverse effect on the Fund’s ability to adjust its exposure to the required levels in order to track the Index. The Index provider may rely on various sources of information to assess the criteria of components of the Index, including information that may be based on assumptions and estimates. Errors in the Index data, the Index computations and/or the construction of the Index in accordance with its methodology may occur from time to time, and the Index provider may not identify or correct them promptly or at all, which may have an adverse impact on the Fund and its shareholders. Shareholders should understand that any gains from the Index provider’s or others’ errors will be kept by the Fund and its shareholders and any losses or costs resulting from the Index provider’s or others’ errors will be borne by the Fund and its shareholders. Additionally, when the Index is rebalanced and the Fund in turn rebalances its portfolio to attempt to increase the correlation between the Fund’s portfolio and the Index, any transaction costs and market exposure arising from such portfolio rebalancing will be borne directly by the Fund and its shareholders. Apart from scheduled rebalances, the Index provider or its agents may carry out additional ad hoc rebalances to the Index. Therefore, errors and additional ad hoc rebalances carried out by the Index provider or its agents to the Index may increase the costs to and the tracking error risk of the Fund.
The Fund may not be fully invested at times either as a result of cash flows into the Fund or reserves of cash held by the Fund to pay expenses or to meet redemptions. In addition, the Fund may not invest in certain securities included in the Index, or invest in them in the exact proportions in which they are represented in the Index. The Fund’s performance may also deviate from the return of the Index for various reasons, including legal restrictions or limitations imposed by the governments of certain countries, certain exchange listing standards (where applicable), a lack of liquidity in markets in which such securities trade, potential adverse tax consequences or other regulatory reasons (such as diversification requirements). To the extent the Fund utilizes depositary receipts, the purchase of depositary receipts may negatively affect the Fund’s ability to track the performance of the Index and increase tracking error, which may be exacerbated if the issuer of the depositary receipt discontinues issuing new depositary receipts or withdraws existing depositary receipts.
The Fund may value certain of its investments, underlying currencies and/or other assets based on fair value prices. To the extent the Fund calculates its net asset value based on fair value prices and the value of the Index is based on securities’ closing prices on local foreign markets (i.e., the value of the Index is not based on fair value prices), the Fund’s ability to track the Index may be adversely affected. In addition, any issues the Fund encounters with regard to currency convertibility (including the cost of borrowing funds, if any), repatriation or economic sanctions may also increase the index tracking risk. The Fund’s performance may also deviate from the performance of the Index due to the impact of withholding taxes, late announcements relating to changes to the Index and high turnover of the Index. When markets are volatile, the ability to sell securities at fair value prices may be adversely impacted and may result in additional trading costs and/or increase the index tracking risk. The Fund may also need to rely on borrowings to meet redemptions, which may lead to increased expenses. For tax efficiency purposes, the Fund may sell certain securities, and such sale may cause the Fund to realize a loss and deviate from the performance of the Index. In light of the factors discussed above, the Fund’s return may deviate significantly from the return of the Index. Changes to the composition of the Index in connection with a rebalancing or reconstitution of the Index may cause the Fund to experience increased volatility, during which time the Fund’s index tracking risk may be heightened.
Authorized Participant Concentration Risk. The Fund may have a limited number of Authorized Participants, none of which are obligated to engage in creation and/or redemption transactions. To the extent that those Authorized Participants exit the
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business, or do not process creation and/or redemption orders, there may be a significantly diminished trading market for Shares or Shares may trade like closed-end funds at a discount (or premium) to net asset value and possibly face trading halts and/or de-listing. This can be reflected as a spread between the bid-ask prices for the Fund. The Authorized Participant concentration risk may be heightened with respect to certain types of assets or in cases where Authorized Participants have limited or diminished access to the capital required to post collateral.
New Fund Risk. The Fund is a new fund, with a limited or no operating history and a small asset base. There can be no assurance that the Fund will grow to or maintain a viable size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its portfolio transaction costs may be higher than those of a fund with a larger asset base. To the extent that the Fund does not grow to or maintain a viable size, it may be liquidated, and the expenses, timing and tax consequences of such liquidation may not be favorable to some shareholders.
No Guarantee of Active Trading Market Risk. There can be no assurance that an active trading market for the Shares will develop or be maintained, as applicable. Further, secondary markets may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods in times of market stress because market makers and Authorized Participants may step away from making a market in the Shares and in executing creation and redemption orders, which could cause a material deviation in the Fund’s market price from its net asset value.
Trading Issues Risk. Trading in shares on the exchange may be halted due to market conditions or for reasons that, in the view of the exchange, make trading in shares inadvisable. In addition, trading in shares on the exchange is subject to trading halts caused by extraordinary market volatility pursuant to the relevant exchange’s “circuit breaker” rules. If a trading halt or unanticipated early close of the exchange occurs, a shareholder may be unable to purchase or sell Shares of the Fund. There can be no assurance that requirements of the exchange necessary to maintain the listing of the Fund will continue to be met or will remain unchanged.
Passive Management Risk. Unlike many investment companies, the Fund is not “actively” managed. Therefore, unless a specific security/asset is removed from its Index, the Fund generally would not sell such a security/asset because the security’s issuer is in financial trouble. If a specific security/asset is removed from the Fund’s Index, the Fund may be forced to sell such security/asset at an inopportune time or for prices other than at current market values. An investment in the Fund involves risks similar to those of investing in any fund that invests in a similar asset class, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in security/asset prices. The Fund’s Index may not contain the appropriate or a diversified mix of securities and/or assets for any particular economic cycle. The timing of changes in the composition of the Fund’s portfolio in seeking to track its Index could have a negative effect on the Fund. Unlike with an actively managed fund, the Adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. Additionally, unusual market conditions may cause the Fund’s Index provider to postpone a scheduled rebalance or reconstitution, which could cause the Fund’s Index to vary from its normal or expected composition. This means that, based on market and economic conditions, the Fund’s performance could be lower than funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline or a decline in the value of one or more issuers.
Fund Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. The market price of the Shares may fluctuate in response to the Fund’s net asset value, the intraday value of the Fund’s holdings and supply and demand for Shares. Shares may trade above, below, or at their most recent net asset value. Factors including disruptions to creations and redemptions, the existence of market volatility or potential lack of an active trading market for Shares (including through a trading halt), may result in Shares trading at a significant premium or discount to net asset value or to the intraday value of the Fund’s holdings. If a shareholder purchases Shares at a time when the market price is at a premium to the net asset value or sells Shares at a time when the market price is at a discount to the net asset value, the shareholder may pay significantly more or receive significantly less than the underlying value of the Shares. The securities held by the Fund may be traded in markets that close at a different time than the exchange on which the Shares are traded. Liquidity in those securities may be reduced after the applicable closing times. Accordingly, during the time when the exchange is open but after the applicable market closing, fixing or settlement times, bid/ask spreads on the exchange and the resulting premium or discount to the Shares’ net asset value may widen. Additionally, in stressed market conditions, the market for the Fund’s Shares may become less liquid in response to deteriorating liquidity in the markets for the Fund’s underlying portfolio holdings and a shareholder may be unable to sell his or her Shares.
Non-Diversified Risk. The Fund is classified as a “non-diversified” fund under the Investment Company Act of 1940. The Fund is subject to the risk that it will be more volatile than a diversified fund because the Fund may invest a relatively high percentage of its assets in a smaller number of issuers or may invest a larger proportion of its assets in a single issuer. Moreover, the gains and losses on a single investment may have a greater impact on the Fund’s net asset value and may make the Fund more volatile than more diversified funds. The Fund may be particularly vulnerable to this risk if it is comprised of a limited number of investments.
Index-Related Concentration Risk. The Fund’s assets may be concentrated in a particular sector or sectors or industry or group of industries to reflect the Index’s allocation to such sector or sectors or industry or group of industries. The securities of many or all of the companies in the same sector or industry may decline in value due to developments adversely affecting such sector or industry. By concentrating its assets in a particular sector or sectors or industry or group of industries, the Fund is
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subject to the risk that economic, political or other conditions that have a negative effect on those sectors and/or industries may negatively impact the Fund to a greater extent than if the Fund’s assets were invested in a wider variety of securities.
PERFORMANCE
The Fund has not yet commenced operations and therefore does not have a performance history. Once available, the Fund’s performance information will be accessible on the Fund’s website at www.vaneck.com.
PORTFOLIO MANAGEMENT
Investment Adviser. Van Eck Associates Corporation.
Portfolio Managers. The following individuals are primarily responsible for the day-to-day management of the Fund’s portfolio:
| Title with Adviser | Title with Adviser | Date Began Managing the Fund | ||||||
| Peter H. Liao | Portfolio Manager | June 2025 | ||||||
Griffin Driscoll | Deputy Portfolio Manager | June 2025 | ||||||
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| SUMMARY INFORMATION ABOUT PURCHASES AND SALES OF FUND SHARES, TAXES AND PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES | ||
PURCHASE AND SALE OF FUND SHARES
Individual Shares of the Fund may only be purchased and sold in secondary market transactions through a broker or dealer at a market price. Shares of the Fund are listed on the Exchange, and because Shares trade at market prices rather than net asset value, Shares of the Fund may trade at a price greater than net asset value (i.e., a “premium”) or less than net asset value (i.e., a “discount”).
An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase Shares of the Fund (bid) and the lowest price a seller is willing to accept for Shares (ask) when buying or selling Shares in the secondary market (the “bid-ask spread”).
Recent information, including information about the Fund’s net asset value, market price, premiums and discounts, and bid-ask spreads, is included on the Fund’s website at www.vaneck.com.
TAX INFORMATION
The Fund’s distributions (other than return of capital distributions) are taxable and will generally be taxed as ordinary income or capital gains. Any return of capital will reduce the shareholder's basis in their Fund Shares, reducing any loss or increasing any gain on a subsequent taxable disposition of Shares.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The Adviser and its related companies may pay broker-dealers or other financial intermediaries (such as a bank) for the sale of the Fund Shares and related services. These payments may create a conflict of interest by influencing your broker-dealer or other intermediary or its employees or associated persons to recommend the Fund over another investment. Ask your financial adviser or visit your financial intermediary’s website for more information.
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| ADDITIONAL INFORMATION ABOUT THE FUND’S INVESTMENT STRATEGIES AND RISKS | ||
PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 80% of its total assets in securities that comprise the Fund’s benchmark index. For purposes of this policy, the term “assets” means net assets plus the amount of any borrowings for investment purposes. The Alternative Asset Managers Index is comprised of equity securities of companies in the alternative asset management industry. Alternative asset management companies are those with a significant portion of their revenue or operating assets from private equity and other alternative asset investing such as: private debt (commonly referred to as private credit), venture capital, buy-outs, private real estate, and private infrastructure. To be initially eligible to for inclusion in the Alternative Asset Managers Index, companies must derive at least 75% of their revenue or operating assets from alternative asset investing.
Alternative asset management companies may include small, medium- and large-capitalization companies which must be domiciled and listed in the U.S., Canadian and developed European markets, as further described in the section titled “MarketVector Alternative Asset Managers Index”. The Fund may invest in depositary receipts and securities denominated in foreign currencies. As of April 30, 2025, the Alternative Asset Managers Index included 20 securities of companies with a market capitalization range of between approximately $1.3 billion and $101.5 billion and a weighted average market capitalization of $52.6 billion. These amounts are subject to change. The Fund’s 80% investment policy is non-fundamental and may be changed without shareholder approval upon 60 days’ prior written notice to shareholders.
The Alternative Asset Managers Index is published by the Index provider which is a wholly owned subsidiary of the Adviser. The Alternative Asset Managers Index is reconstituted semiannually and rebalanced quarterly.
The Fund, using a “passive” or indexing investment approach, attempts to approximate the investment performance of the Alternative Asset Managers Index by investing in a portfolio of securities that generally tracks the Alternative Asset Managers Index. Unlike many investment companies that try to “beat” the performance of a benchmark index, the Fund does not try to “beat” the Alternative Asset Managers Index and does not seek temporary defensive positions that are inconsistent with its investment objective of seeking to track the Alternative Asset Managers Index.
The Fund is classified as a non-diversified fund under the Investment Company Act of 1940, as amended (the “Investment Company Act of 1940”), and, therefore, may invest a greater percentage of its assets in a particular issuer. The Fund may concentrate its investments in a particular industry or group of industries to the extent that the Alternative Asset Managers Index concentrates in an industry or group of industries. As of April 30, 2025, the financials sector represented a significant portion of the Alternative Asset Managers Index.
FUNDAMENTAL AND NON-FUNDAMENTAL POLICIES
The Fund’s investment objective and each of its other investment policies are non-fundamental policies that may be changed by the Board of Trustees of the Trust (the “Board of Trustees”) of VanEck ETF Trust (the “Trust”) without shareholder approval, except as noted in this Prospectus or the Statement of Additional Information (“SAI”) under the section entitled “Investment Policies and Restrictions— Investment Restrictions.”
RISKS OF INVESTING IN THE FUND
The following section provides additional information regarding the principal risks identified under “Principal Risks of Investing in the Fund” in the Fund’s “Summary Information” section followed by additional risk information.
Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk. An investment in the Fund is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Therefore, you should consider carefully the following risks before investing in the Fund, each of which could significantly and adversely affect the value of an investment in the Fund.
Alternative Asset Managers Risk. There are certain risks inherent in investing in listed alternative asset managers, which encompass financial institutions or vehicles whose principal business is to make and facilitate private investments, including investing in, lending capital to, or providing services to privately held companies. Alternative asset investing can be speculative and entail substantial risks. Such risks include leverage risk, liquidity risk, risk of significant volatility, operational complexity risk and valuation risk. Generally, little public information exists for private and thinly traded companies, and there is a risk that investors in such companies may not be able to make a fully informed investment decision. The Fund is also subject to the risks which affect the underlying private investment vehicles in which the financial institutions held by the Fund invest. By investing in companies in the capital markets whose business is to lend money, there is a risk that the borrowers of the companies in which the Fund invests may default on their payments or declare bankruptcy.
Issuer-Specific Changes Risk. The value of individual securities in the Fund’s portfolio can be more volatile than the market as a whole and can perform differently from the value of the market as a whole, which may have a greater impact if the Fund’s portfolio is concentrated in a country, region, market, industry, sector or asset class. A change in the financial condition, market perception or the credit rating of an issuer of securities included in the Fund’s Index may cause the value of its securities to decline.
Financials Sector Risk. The Fund may be sensitive to, and its performance may depend to a greater extent on, the overall condition of the financials sector. Companies in the financials sector may be subject to extensive government regulation that affects the scope of their activities, the prices they can charge and the amount of capital they must maintain. The profitability of companies in the financials sector may be adversely affected by increases in interest rates, by loan losses, which usually
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increase in economic downturns, and by credit rating downgrades. In addition, the financials sector is undergoing numerous changes, including continuing consolidations, development of new products and structures and changes to its regulatory framework. Furthermore, some companies in the financials sector perceived as benefiting from government intervention in the past may be subject to future government-imposed restrictions on their businesses or face increased government involvement in their operations. Increased government involvement in the financials sector, including measures such as taking ownership positions in financial institutions, could result in a dilution of the Fund’s investments in financial institutions.
Equity Securities Risk. The value of the equity securities held by the Fund may fall due to general market and economic conditions, perceptions regarding the markets in which the issuers of securities held by the Fund participate, or factors relating to specific issuers in which the Fund invests. For example, an adverse event, such as an unfavorable earnings report, may result in a decline in the value of equity securities of an issuer held by the Fund; the price of the equity securities of an issuer may be particularly sensitive to general movements in the securities markets; or a drop in the securities markets may depress the price of most or all of the equities securities held by the Fund. In addition, the equity securities of an issuer in the Fund’s portfolio may decline in price if the issuer fails to make anticipated dividend payments. Equity securities are subordinated to preferred securities and debt in a company’s capital structure with respect to priority to a share of corporate income, and therefore will be subject to greater dividend risk than preferred securities or debt instruments. In addition, while broad market measures of equity securities have historically generated higher average returns than fixed income securities, equity securities have generally also experienced significantly more volatility in those returns.
Large-Capitalization Companies Risk. The Fund may invest in large-capitalization companies and, therefore will be subject to certain risks associated with large-capitalization companies. Securities of large-capitalization companies could fall out of favor with the market and underperform securities of small- or medium-capitalization companies. Larger, more established companies may be slow to respond to challenges and may grow more slowly than smaller companies.
Small- and Medium-Capitalization Companies Risk. The Fund may invest in small- and medium-capitalization companies and, therefore will be subject to certain risks associated with small- and medium-capitalization companies. These companies are often subject to less analyst coverage and may be in early and less predictable periods of their corporate existences, with little or no record of profitability. In addition, these companies often have greater price volatility, lower trading volume and less liquidity than larger more established companies. These companies tend to have smaller revenues, narrower product lines, less management depth and experience, smaller shares of their product or service markets, fewer financial resources and less competitive strength than large-capitalization companies. Returns on investments in securities of small- and medium-capitalization companies could trail the returns on investments in securities of larger companies.
Depositary Receipts Risk. The Fund may invest in depositary receipts (including American Depositary Receipts), which involve similar risks to those associated with investments in foreign securities. Depositary receipts are receipts listed on U.S. or foreign exchanges issued by banks or trust companies that entitle the holder to all dividends and capital gains that are paid out on the underlying foreign shares. The issuers of certain depositary receipts are under no obligation to distribute shareholder communications to the holders of such receipts, or to pass through to them any voting rights with respect to the deposited securities. Investments in depositary receipts may be less liquid than the underlying shares in their primary trading market. The issuers of depositary receipts may discontinue issuing new depositary receipts and withdraw existing depositary receipts at any time, which may result in costs and delays in the distribution of the underlying assets to the Fund and may negatively impact the Fund’s performance.
Special Risk Considerations of Investing in Canadian Issuers. Investments in securities of Canadian issuers, including issuers located outside of Canada that generate significant revenue from Canada, involve risks and special considerations not typically associated with investments in the U.S. securities markets. The Canadian economy is very dependent on the demand for, and supply and price of, natural resources. The Canadian market is relatively concentrated in issuers involved in the production and distribution of natural resources. Canada is a major producer of commodities such as forest products, metals, agricultural products, and energy related products like oil, gas, and hydroelectricity. Accordingly, a change in the supply and demand of these resources, both domestically and internationally, can have a significant effect on Canadian market performance. Canada is a top producer of zinc and uranium and a global source of many other natural resources, such as gold, nickel, aluminum, and lead. Conditions that weaken demand for such products worldwide could have a negative impact on the Canadian economy as a whole. Additionally, the Canadian economy is heavily dependent on relationships with certain key trading partners, including the United States, countries in the European Union and China. Because the United States is Canada’s largest trading partner and foreign investor, the Canadian economy is dependent on and may be significantly affected by the U.S. economy. Reduction in spending on Canadian products and services or changes in the U.S. economy may adversely impact the Canadian economy. Trade agreements may further increase Canada’s dependency on the U.S. economy, and uncertainty as to the future of such trade agreements may cause a decline in the value of the Fund’s Shares. The imposition of additional tariffs by the U.S. may have implications for the trade arrangements between the U.S. and Canada, which could negatively affect the value of securities held by the Fund. Past periodic demands by the Province of Quebec for sovereignty have significantly affected equity valuations and foreign currency movements in the Canadian market and such demands may have this effect in the future. In addition, certain sectors of Canada’s economy may be subject to foreign ownership limitations. This may negatively impact the Fund’s ability to invest in Canadian issuers and to pursue its investment objective.
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Special Risk Considerations of Investing in European Issuers. Investments in securities of European issuers involve risks and special considerations not typically associated with investments in the U.S. securities markets. The Economic and Monetary Union of the European Union requires member countries to comply with restrictions on inflation rates, deficits, interest rates, debt levels and fiscal and monetary controls, each of which may significantly affect every country in Europe. Decreasing imports or exports, changes in governmental or European Union regulations on trade, changes in the exchange rate of the euro, the default or threat of default by a European Union member country on its sovereign debt, and/or an economic recession in a European Union member country may have a significant adverse effect on the economies of other European Union countries and on major trading partners outside Europe. If any member country exits the Economic and Monetary Union, the departing country would face the risks of currency devaluation and its trading partners and banks and others around the world that hold the departing country’s debt would face the risk of significant losses. The European financial markets have previously experienced, and may continue to experience, volatility and have been adversely affected, and may in the future be affected, by concerns about economic downturns, credit rating downgrades, rising government debt levels and possible default on or restructuring of government debt in several European countries. These events have adversely affected, and may in the future affect, the value and exchange rate of the euro and may continue to significantly affect the economies of every country in Europe, including European Union member countries that do not use the euro and non-European Union member countries. Following the United Kingdom's withdrawal from the European Union on January 31, 2020 (“Brexit”), certain trading matters between the United Kingdom and the European Union (the “EU”) remain unresolved, including with respect to financial services. The continuing uncertainty could have an adverse impact on the U.K. economy and currency.
Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. The governments of European Union countries may be subject to change and such countries may experience social and political unrest. Unanticipated or sudden political or social developments may result in sudden and significant investment losses. The occurrence of terrorist incidents, outbreaks of war or ongoing regional armed conflict throughout Europe also could impact financial markets. Further defaults or restructurings by governments and other entities of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, one or more countries may abandon the euro and/or withdraw from the European Union. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far-reaching.
Foreign Securities Risk. Investments in the securities of foreign issuers involve risks beyond those associated with investments in U.S. securities. These additional risks include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity and political instability. Because certain foreign securities markets may be limited in size, the activity of large traders may have an undue influence on the prices of securities that trade in such markets. The Fund invests in securities of issuers located in countries whose economies are heavily dependent upon trading with key partners. Any reduction in this trading may have an adverse impact on the Fund’s investments. Foreign market trading hours, clearance and settlement procedures, and holiday schedules may limit the Fund's ability to buy and sell securities.
Certain foreign markets that have historically been considered relatively stable may become volatile in response to changed conditions or new developments. Increased interconnectivity of world economies and financial markets increases the possibility that adverse developments and conditions in one country or region will affect the stability of economies and financial markets in other countries or regions. Because the Fund may invest in securities denominated in foreign currencies and some of the income received by the Fund may be in foreign currencies, changes in currency exchange rates may negatively impact the Fund’s return.
Foreign issuers are often subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping than are U.S. issuers, and therefore, not all material information may be available or reliable. Securities exchanges or foreign governments may adopt rules or regulations that may negatively impact the Fund’s ability to invest in foreign securities or may prevent the Fund from repatriating its investments. The Fund may also invest in depositary receipts which involve similar risks to those associated with investments in foreign securities. In addition, the Fund may not receive shareholder communications or be permitted to vote the securities that it holds, as the issuers may be under no legal obligation to distribute shareholder communications.
Certain foreign markets may rely heavily on particular industries or foreign capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, entities and/or individuals, changes in international trade patterns, trade barriers, and other protectionist or retaliatory measures. The United States and other nations or international organizations may impose economic sanctions or take other actions that may adversely affect issuers of specific countries. Economic sanctions could, among other things, effectively restrict or eliminate the Fund’s ability to purchase or sell securities or groups of securities for a substantial period of time, and may make the Fund’s investments in such securities harder to value. These sanctions, any future sanctions or other actions, or even the threat of further sanctions or other actions, may negatively affect the value and liquidity of the Fund.
Also, certain issuers located in foreign countries in which the Fund invests may operate in, or have dealings with, countries subject to sanctions and/or embargoes imposed by the U.S. Government and the United Nations and/or countries identified by the U.S. Government as state sponsors of terrorism. As a result, an issuer may sustain damage to its reputation if it is
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identified as an issuer which operates in, or has dealings with, such countries. The Fund, as an investor in such issuers, will be indirectly subject to those risks.
Foreign Currency Risk. Because all or a portion of the income received by the Fund from its investments and/or the revenues received by the underlying issuers will generally be denominated in foreign currencies, the Fund’s exposure to foreign currencies and changes in the value of foreign currencies versus the U.S. dollar may result in reduced returns for the Fund, and the value of certain foreign currencies may be subject to a high degree of fluctuation. The Fund may also (directly or indirectly) incur costs in connection with conversions between U.S. dollars and foreign currencies.
Several factors may affect the price of euros and the British pound sterling, including the debt level and trade deficit of the Economic and Monetary Union and the United Kingdom, inflation and interest rates of the Economic and Monetary Union and the United Kingdom and investors’ expectations concerning inflation and interest rates and global or regional political, economic or financial events and situations. The European financial markets have experienced, and may continue to experience, volatility and have been adversely affected by concerns about economic downturns, credit rating downgrades, rising government debt levels and possible default on or restructuring of government debt in several European countries. These events have adversely affected, and may in the future affect, the value and exchange rate of the euro and may continue to significantly affect the economies of every country in Europe, including European Union member countries that do not use the euro and non-European Union member countries. Notwithstanding the EU-UK Trade and Cooperation Agreement, following the United Kingdom’s withdrawal from the European Union and the subsequent transition period, there is likely to be considerable uncertainty as to the United Kingdom’s post-transition framework. Significant uncertainty exists regarding the effects such withdrawal will have on the euro, European economies and the global markets. In addition, one or more countries may abandon the euro and the impact of these actions, especially if conducted in a disorderly manner, may have significant and far-reaching consequences on the euro.
The value of certain emerging market countries’ currencies may be subject to a high degree of fluctuation. This fluctuation may be due to changes in interest rates, investors’ expectations concerning inflation and interest rates, the emerging market country’s debt levels and trade deficit, the effects of monetary policies issued by the United States, foreign governments, central banks or supranational entities, the imposition of currency controls or other national or global political or economic developments. For example, certain emerging market countries have experienced economic challenges and liquidity issues with respect to their currency. The economies of certain emerging market countries can be significantly affected by currency devaluations. Certain emerging market countries may also have managed currencies which are maintained at artificial levels relative to the U.S. dollar rather than at levels determined by the market. This type of system could lead to sudden and large adjustments in the currency, which in turn, may have a negative effect on the Fund and its investments.
Market Risk. The prices of securities are subject to the risks associated with investing in the securities market, including general economic conditions, sudden and unpredictable drops in value, exchange trading suspensions and closures and public health risks. These risks may be magnified if certain social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts, social unrest, recessions, inflation, interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions and other trade barriers) adversely interrupt the global economy; in these and other circumstances, such events or developments might affect companies world-wide. Overall securities values could decline generally or underperform other investments. An investment may lose money.
Operational Risk. The Fund is exposed to operational risk arising from a number of factors, including human error, processing and communication errors, errors of the Fund’s service providers, counterparties or other third-parties, failed or inadequate processes and technology or system failures.
Index Tracking Risk. The Fund’s return may not match the return of the Index for a number of reasons. For example, the Fund incurs operating expenses, including taxes, not applicable to the Index and incurs costs associated with buying and selling securities and entering into derivatives transactions (if applicable), especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of the Index, or (if applicable) raising cash to meet redemptions or deploying cash in connection with inflows into the Fund. Transaction costs, including brokerage costs, will decrease the Fund’s net asset value. Conversely, the Fund may generate earnings through its securities lending activities, which may increase the Fund’s return relative to the Index.
Market disruptions and regulatory restrictions could have an adverse effect on the Fund’s ability to adjust its exposure to the required levels in order to track the Index. The Index provider may rely on various sources of information to assess the criteria of components of the Index, including information that may be based on assumptions and estimates. Errors in the Index data, the Index computations and/or the construction of the Index in accordance with its methodology may occur from time to time, and the Index provider may not identify or correct them promptly or at all, which may have an adverse impact on the Fund and its shareholders. There is no assurance that the Index provider or any agents that may act on its behalf will compile the Index accurately, or that the Index will be determined, composed or calculated accurately. Errors in respect of the quality, accuracy and completeness of the data used to compile the Index may occur from time to time and may not be identified and corrected by the Index provider, particularly where the indices are less commonly used as benchmarks by funds or managers. Therefore, gains, losses or costs associated with errors of the Index provider or its agents will generally be borne by the Fund and its shareholders. For example, during a period where the Index contains incorrect constituents, the Fund would have market
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exposure to such constituents and would be underexposed to the Index’s other constituents. Such errors may negatively or positively impact the Fund and its shareholders.
When the Index is rebalanced and the Fund in turn rebalances its portfolio to attempt to increase the correlation between the Fund’s portfolio and the Index, any transaction costs and market exposure arising from such portfolio rebalancing will be borne directly by the Fund and its shareholders. The Fund may not be fully invested at times either as a result of cash flows into the Fund or reserves of cash held by the Fund to pay expenses or to meet redemptions. In addition, the Fund may not invest in certain securities and/or other assets included in the Index, or invest in them in the exact proportions in which they are represented in the Index. The Fund’s performance may also deviate from the return of the Index for a variety of reasons, including legal restrictions or limitations imposed by the governments of certain countries, certain exchange listing standards (where applicable), a lack of liquidity in markets in which such securities trade, potential adverse tax consequences or other regulatory reasons (such as diversification requirements). A lack of liquidity may be due to various events, including market events, economic conditions or investor perceptions. Illiquid securities may be difficult to value and their value may be lower than the market price of comparable liquid securities, which would negatively affect the Fund’s performance. Moreover, the Fund may be delayed in purchasing or selling securities included in the Index. When markets are volatile, the ability to sell securities at fair value prices may be adversely impacted and may result in additional trading costs and/or increase the index tracking risk. To the extent the Fund encounters any issues with regard to currency convertibility (including the cost of borrowing funds, if any), repatriation or economic sanctions, such issues may also increase index tracking risk. The Fund may also need to rely on borrowings to meet redemptions, which may lead to increased expenses. For tax efficiency purposes, the Fund may sell certain securities, and such sale may cause the Fund to realize a loss and deviate from the performance of the Index. The Fund’s performance may also deviate from the performance of the Index due to the impact of withholding taxes, late announcements relating to changes to the Index and high turnover of the Index.
The Fund may fair value certain of its investments, underlying currencies and/or other assets. To the extent the Fund calculates its net asset value based on fair value prices and the value of the Index is based on securities’ closing prices on local foreign markets (i.e., the value of the Index is not based on fair value prices) or if the Fund otherwise calculates its net asset value based on prices that differ from those used in calculating the Index, the Fund’s ability to track the Index may be adversely affected. The need to comply with the tax diversification and other requirements of the Internal Revenue Code of 1986 may also impact the Fund’s ability to track the performance of the Index. In addition, if the Fund utilizes depositary receipts or other derivative instruments, its return may not correlate as well with the return of the Index as would be the case if the Fund purchased all the securities in the Index directly. To the extent the Fund utilizes depositary receipts, the purchase of depositary receipts may negatively affect the Fund’s ability to track the performance of the Index and increase tracking error, which may be exacerbated if the issuer of the depositary receipt discontinues issuing new depositary receipts or withdraws existing depositary receipts. Actions taken in response to proposed corporate actions could also result in increased tracking error. In light of the factors discussed above, the Fund’s return may deviate significantly from the return of the Index.
Apart from scheduled rebalances, the Index provider or its agents may carry out additional ad hoc rebalances to the Index in order, for example, to correct an error in the selection of index constituents. When the Index is rebalanced and the Fund in turn rebalances its portfolio to attempt to increase the correlation between the Fund’s portfolio and the Index, any transaction costs and market exposure arising from such portfolio rebalancing will be borne directly by the Fund and its shareholders. Therefore, errors and additional ad hoc rebalances carried out by the Index provider to the Index may increase the costs to and the tracking error risk of the Fund.
Index tracking risk may be heightened during times of increased market volatility or other unusual market conditions. Changes to the composition of the Index in connection with a rebalancing or reconstitution of the Index may cause the Fund to experience increased volatility, during which time the Fund’s index tracking risk may be heightened.
Authorized Participant Concentration Risk. The Fund may have a limited number of Authorized Participants, none of which are obligated to engage in creation and/or redemption transactions. To the extent that those Authorized Participants exit the business, or do not process creation and/or redemption orders, there may be a significantly diminished trading market for Shares or Shares may trade like closed-end funds at a discount (or premium) to net asset value and possibly face trading halts and/or de-listing. This can be reflected as a spread between the bid-ask prices for the Fund. The Authorized Participant concentration risk may be heightened with respect to certain types of assets or in cases where Authorized Participants have limited or diminished access to the capital required to post collateral.
New Fund Risk. The Fund is a new fund, with a limited or no operating history and a small asset base. There can be no assurance that the Fund will grow to or maintain a viable size. Due to the Fund’s small asset base, certain of the Fund’s expenses and its portfolio transaction costs may be higher than those of a fund with a larger asset base. To the extent that the Fund does not grow to or maintain a viable size, it may be liquidated, and the expenses, timing and tax consequences of such liquidation may not be favorable to some shareholders.
No Guarantee of Active Trading Market Risk. There can be no assurance that an active trading market for the Shares will develop or be maintained, as applicable. Further, secondary markets may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods in times of market stress because market makers and Authorized Participants may step away from making a market in the Shares and in executing creation and redemption orders, which could cause a material deviation in the Fund’s market price from its net asset value.
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Van Eck Securities Corporation, the distributor of the Shares, does not maintain a secondary market in the Shares. Investors purchasing and selling Shares in the secondary market may not experience investment results consistent with those experienced by those Authorized Participants creating and redeeming directly with the Fund.
Decisions by market makers or Authorized Participants to reduce their role or “step away” from these activities in times of market stress could inhibit the effectiveness of the arbitrage process in maintaining the relationship between the underlying value of the Fund’s portfolio securities and the Fund’s market price. This reduced effectiveness could result in Fund Shares trading at a price which differs materially from net asset value and also in greater than normal intraday bid/ask spreads for Fund Shares.
Trading Issues Risk. Trading in shares on the exchange may be halted due to market conditions or for reasons that, in the view of the exchange, make trading in shares inadvisable. In addition, trading in shares on the exchange is subject to trading halts caused by extraordinary market volatility pursuant to the relevant exchange’s “circuit breaker” rules. If a trading halt or unanticipated early close of the exchange occurs, a shareholder may be unable to purchase or sell Shares of the Fund. There can be no assurance that requirements of the exchange necessary to maintain the listing of the Fund will continue to be met or will remain unchanged.
Passive Management Risk. Unlike many investment companies, the Fund is not “actively” managed. Therefore, unless a specific security/asset is removed from its Index, the Fund generally would not sell such a security/asset because the security’s issuer is in financial trouble. If a specific security/asset is removed from the Fund’s Index, the Fund may be forced to sell such security/asset at an inopportune time or for prices other than at current market values. An investment in the Fund involves risks similar to those of investing in any fund that invests in a similar asset class, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in security/asset prices. The Fund’s Index may not contain the appropriate or a diversified mix of securities and/or assets for any particular economic cycle. The timing of changes in the composition of the Fund’s portfolio in seeking to track its Index could have a negative effect on the Fund. Unlike with an actively managed fund, the Adviser does not use techniques or defensive strategies designed to lessen the effects of market volatility or to reduce the impact of periods of market decline. Additionally, unusual market conditions may cause the Fund’s Index provider to postpone a scheduled rebalance or reconstitution, which could cause the Fund’s Index to vary from its normal or expected composition. This means that, based on market and economic conditions, the Fund’s performance could be lower than funds that may actively shift their portfolio assets to take advantage of market opportunities or to lessen the impact of a market decline or a decline in the value of one or more issuers.
Fund Shares Trading, Premium/Discount Risk and Liquidity of Fund Shares. Disruptions to creations and redemptions, the existence of market volatility or potential lack of an active trading market for Shares (including through a trading halt), as well as other factors, may result in Shares trading at a significant premium or discount to net asset value or to the intraday value of the Fund’s holdings. The net asset value of the Shares will fluctuate with changes in the market value of the Fund’s securities holdings. The market price of Shares may fluctuate, in some cases materially, in accordance with changes in net asset value and the intraday value of the Fund’s holdings, as well as supply and demand on the Exchange. Shares may trade below, at or above their net asset value. While the creation/redemption feature is designed to make it likely that Shares normally will trade close to the value of the Fund’s holdings, market prices are not expected to correlate exactly to the Fund’s net asset value due to timing reasons, supply and demand imbalances and other factors. The price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Shares may be closely related to, but not necessarily identical to, the same forces influencing the prices of the securities of the Fund’s portfolio of investments trading individually or in the aggregate at any point in time. If a shareholder purchases Shares at a time when the market price is at a premium to the net asset value or sells Shares at a time when the market price is at a discount to the net asset value, the shareholder may pay significantly more or receive significantly less than the underlying value of the Shares that were bought or sold or the shareholder may be unable to sell his or her Shares. Any of these factors, discussed above and further below, may lead to the Shares trading at a premium or discount to the Fund’s net asset value. In addition, because certain of the Fund’s underlying securities may trade on exchanges that are closed when the exchange that Shares of the Fund trade on is open, there are likely to be deviations between the expected value of an underlying security and the closing security’s price (i.e., the last quote from its closed foreign market) resulting in premiums or discounts to net asset value that may be greater than those experienced by other ETFs. In addition, the securities held by the Fund may be traded in markets that close at a different time than the Exchange. Liquidity in those securities may be reduced after the applicable closing times. Accordingly, during the time when the Exchange is open but after the applicable market closing, fixing or settlement times, bid/ask spreads and the resulting premium or discount to the Shares’ net asset value may widen. Additionally, in stressed market conditions, the market for the Fund’s Shares may become less liquid in response to deteriorating liquidity in the markets for the Fund’s underlying portfolio holdings.
When you buy or sell Shares of the Fund through a broker, you will likely incur a brokerage commission or other charges imposed by brokers. In addition, the market price of Shares, like the price of any exchange-traded security, includes a bid/ask spread charged by the market makers or other participants that trade the particular security. The spread of the Fund’s Shares varies over time based on the Fund’s trading volume and market liquidity and may increase if the Fund’s trading volume, the spread of the Fund’s underlying securities, or market liquidity decrease. In times of severe market disruption, including when trading of the Fund’s holdings may be halted, the bid/ask spread may increase significantly. This means that Shares may trade at a discount to the Fund’s net asset value, and the discount is likely to be greatest during significant market volatility.
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Non-Diversified Risk. The Fund is classified as a “non-diversified” fund under the Investment Company Act of 1940. The Fund is subject to the risk that it will be more volatile than a diversified fund because the Fund may invest a relatively high percentage of its assets in a smaller number of issuers or may invest a larger proportion of its assets in a single issuer. Moreover, the gains and losses on a single investment may have a greater impact on the Fund’s net asset value and may make the Fund more volatile than more diversified funds. The Fund may be particularly vulnerable to this risk if it is comprised of a limited number of investments.
Index-Related Concentration Risk. The Fund’s assets may be concentrated in a particular sector or sectors or industry or group of industries to reflect the Index’s allocation to such sector or sectors or industry or group of industries. The securities of many or all of the companies in the same sector or industry may decline in value due to developments adversely affecting such sector or industry. By concentrating its assets in a particular sector or sectors or industry or group of industries, the Fund is subject to the risk that economic, political or other conditions that have a negative effect on those sectors and/or industries may negatively impact the Fund to a greater extent than if the Fund’s assets were invested in a wider variety of securities.
ADDITIONAL NON-PRINCIPAL INVESTMENT STRATEGIES
The Fund may invest in securities not included in the Index, money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments, convertible securities, structured notes (notes on which the amount of principal repayment and interest payments are based on the movement of one or more specified factors, such as the movement of a particular stock or stock index) and/or certain derivatives, which the Adviser believes will help the Fund track the Index. Depositary receipts not included in the Fund’s Index may be used by the Fund in seeking performance that corresponds to the Index and in managing cash flows, and may count towards compliance with the Fund’s 80% policy. The Fund may also invest, to the extent permitted by the Investment Company Act of 1940, in other affiliated and unaffiliated funds, such as open-end or closed-end management investment companies, including other ETFs. The Fund does not have a temporary defensive strategy to protect against potential stock market declines.
BORROWING MONEY
The Fund may borrow money from a bank up to a limit of one-third of the market value of its assets. The Fund is expected to enter into a credit facility to borrow money for temporary, emergency or other purposes, including the funding of shareholder redemption requests, trade settlements and as necessary to distribute to shareholders any income required to maintain the Fund’s status as a regulated investment company. To the extent that the Fund borrows money, it may be leveraged; at such times, the Fund will appreciate or depreciate in value more rapidly than the Index. Leverage generally has the effect of increasing the amount of loss or gain the Fund might realize, and may increase volatility in the value of the Fund’s investments.
LENDING PORTFOLIO SECURITIES
The Fund may lend its portfolio securities to brokers, dealers and other financial institutions desiring to borrow securities to complete transactions and for other purposes. In connection with such loans, the Fund receives cash, U.S. government securities and stand-by letters of credit not issued by the Fund’s bank lending agent equal to at least 102% of the value of the portfolio securities being loaned. This collateral is marked-to-market on a daily basis. Although the Fund will receive collateral in connection with all loans of its securities holdings, the Fund would be exposed to a risk of loss should a borrower fail to return the borrowed securities (e.g., the Fund would have to buy replacement securities and the loaned securities may have appreciated beyond the value of the collateral held by the Fund) or become insolvent. The Fund may pay fees to the party arranging the loan of securities. In addition, the Fund will bear the risk that it may lose money because the borrower of the loaned securities fails to return the securities in a timely manner or at all. The Fund could also lose money in the event of a decline in the value of any cash collateral or in the value of investments made with the cash collateral. These events could trigger adverse tax consequences for the Fund. Substitute payments for dividends received by the Fund for securities loaned out by the Fund will not be considered qualified dividend income.
ADDITIONAL NON-PRINCIPAL RISKS
Derivatives Risk. Derivatives and other similar instruments (referred to collectively as “derivatives”) are financial instruments whose values are based on the value of one or more reference assets or indicators, such as a security, currency, interest rate, or index. The Fund’s use of derivatives involves risks different from, and possibly greater than, the risks associated with investing directly in securities and other more traditional investments. Moreover, although the value of a derivative is based on an underlying asset or indicator, a derivative typically does not carry the same rights as would be the case if the Fund invested directly in the underlying securities, currencies or other assets.
Derivatives are subject to a number of risks, such as potential changes in value in response to market developments or, in the case of “over-the-counter” derivatives, as a result of a counterparty’s credit quality and the risk that a derivative transaction may not have the effect the Adviser anticipated. Derivatives also involve the risk of mispricing or improper valuation and the risk that changes in the value of a derivative may not achieve the desired correlation with the underlying asset or indicator. Derivative transactions can create investment leverage and may be highly volatile, and the Fund could lose more than the amount it invests. The use of derivatives may increase the amount and affect the timing and character of taxes payable by shareholders of the Fund.
Many derivative transactions are entered into “over-the-counter” without a central clearinghouse; as a result, the value of such a derivative transaction will depend on, among other factors, the ability and the willingness of the Fund’s counterparty to perform its obligations under the transaction. If a counterparty were to default on its obligations, the Fund’s contractual
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remedies against such counterparty may be subject to bankruptcy and insolvency laws, which could affect the Fund’s rights as a creditor (e.g., the Fund may not receive the net amount of payments that it is contractually entitled to receive). Counterparty risk also refers to the related risks of having concentrated exposure to such a counterparty. A liquid secondary market may not always exist for the Fund’s derivative positions at any time, and the Fund may not be able to initiate or liquidate a swap position at an advantageous time or price, which may result in significant losses. The Fund may also face the risk that it may not be able to meet margin and payment requirements and maintain a derivatives position.
Derivatives are also subject to operational and legal risks. Operational risk generally refers to risk related to potential operational issues, including documentation issues, settlement issues, system failures, inadequate controls, and human errors. Legal risk generally refers to insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract.
Under Rule 18f-4 (the “derivatives rule”), funds need to trade derivatives and other transactions that create future fund payment or delivery obligations subject to a value-at-risk (“VaR”) leverage limit, and certain derivatives risk management program and reporting requirements. Generally, these requirements apply unless a fund qualifies as a “limited derivatives user,” as defined in the derivatives rule. Under the derivatives rule, when a fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the fund’s asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether a fund is a limited derivatives user, but for funds subject to the VaR testing, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. The Securities and Exchange Commission also provided guidance in connection with the derivatives rule regarding use of securities lending collateral that may limit a fund's securities lending activities. In addition, under the derivatives rule, the Fund is permitted to invest in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, and the transaction will be deemed not to involve a senior security under the Investment Company Act of 1940, provided that (i) the Fund intends to physically settle the transaction and (ii) the transaction will settle within 35 days of its trade date (the “Delayed-Settlement Securities Provision”). The Fund may otherwise engage in such transactions that do not meet the conditions of the Delayed-Settlement Securities Provision so long as the Fund treats any such transaction as a “derivatives transaction” for purposes of compliance with the derivatives rule. Furthermore, under the derivatives rule, the Fund is permitted to enter into an unfunded commitment agreement, and such unfunded commitment agreement is not subject to the asset coverage requirements under the Investment Company Act of 1940, if the Fund reasonably believes, at the time it enters into such agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all such agreements as they come due.
Shareholder Risk. Certain shareholders, including other funds advised by the Adviser, may from time to time own a substantial amount of the Fund’s Shares. In addition, a third-party investor, the Adviser or an affiliate of the Adviser, an Authorized Participant, a market maker, or another entity may invest in the Fund and hold its investment for a limited period of time. There can be no assurance that any large shareholder would not redeem (through an Authorized Participant) its investment. Redemptions by shareholders (through an Authorized Participant) could have a negative impact on the Fund. In addition, transactions by large shareholders may account for a large percentage of the trading volume on the exchange and may, therefore, have a material effect on the market price of the Shares.
Leverage Risk. To the extent that the Fund borrows money or utilizes certain derivatives, it may be leveraged. Leveraging generally exaggerates the effect on net asset value of any increase or decrease in the market value of the Fund’s portfolio securities. The Fund is required to comply with the derivatives rule when it engages in transactions that create future Fund payment or delivery obligations. The Fund is required to comply with the asset coverage requirements under the Investment Company Act of 1940 when it engages in borrowings and/or transactions treated as borrowings.
Credit Risk. Credit risk refers to the possibility that the issuer or guarantor of a security will be unable and/or unwilling to honor its payment obligations and/or default completely on securities. The Fund’s securities are subject to varying degrees of credit risk, depending on the issuer’s financial condition and on the terms of the securities, which may be reflected in credit ratings. There is a possibility that the credit rating of a security may be downgraded after purchase or the perception of an issuer’s creditworthiness may decline, which may adversely affect the value of the security. Lower credit quality may also affect liquidity and make it difficult for the Fund to sell the security.
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| TAX ADVANTAGED PRODUCT STRUCTURE | ||
Unlike many conventional mutual funds which are only bought and sold at closing net asset values, the Shares of the Fund have been designed to be tradable in a secondary market on an intra-day basis and to be redeemed principally in-kind in Creation Units at each day’s market close. These in-kind arrangements are designed to mitigate the adverse effects on the Fund’s portfolio that could arise from frequent cash redemption transactions that affect the net asset value of the Fund. Moreover, in contrast to conventional mutual funds, where frequent redemptions can have an adverse tax impact on taxable shareholders because of the need to sell portfolio securities which, in turn, may generate taxable gain, the in-kind redemption mechanism of the Fund, to the extent used, generally is not expected to lead to a tax event for shareholders whose Shares are not being redeemed.
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| PORTFOLIO HOLDINGS | ||
A description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund’s SAI.
| MANAGEMENT OF THE FUND | ||
Board of Trustees. The Board of Trustees of the Trust has responsibility for the general oversight of the management of the Fund, including general supervision of the Adviser and other service providers, but is not involved in the day-to-day management of the Trust. A list of the Trustees and the Trust officers, and their present positions and principal occupations, is provided in the Fund’s SAI.
Investment Adviser. Under the terms of an investment management agreement between the Trust and Van Eck Associates Corporation with respect to the Fund (the “Investment Management Agreement”), Van Eck Associates Corporation serves as the adviser to the Fund and, subject to the supervision of the Board of Trustees, is responsible for the day-to-day investment management of the Fund. As of April 30, 2025, the Adviser managed approximately $116.64 billion in assets. The Adviser has been an investment adviser since 1955 and also acts as adviser or sub-adviser to mutual funds, other ETFs, other pooled investment vehicles and separate accounts. The Adviser’s principal business address is 666 Third Avenue, 9th Floor, New York, New York 10017. A discussion regarding the Board of Trustees’ approval of the Investment Management Agreement will be available in the Trust’s filing on Form N-CSR for the period ended March 31, 2025.
Pursuant to the Investment Management Agreement, the Adviser is responsible for all expenses of the Fund, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. For its services to the Fund, the Fund has agreed to pay the Adviser an annual unitary management fee equal to 0.40% of its average daily net assets. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale, (b) Securities and Exchange Commission and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay all such offering costs until at least February 1, 2027.
Manager of Managers Structure. The Adviser and the Trust may rely on an exemptive order (the “Order”) from the Securities and Exchange Commission that permits the Adviser to enter into investment sub-advisory agreements with unaffiliated sub-advisers without obtaining shareholder approval. The Adviser, subject to the review and approval of the Board of Trustees, may select one or more sub- advisers for the Fund and supervise, monitor and evaluate the performance of each sub-adviser.
The Order also permits the Adviser, subject to the approval of the Board of Trustees, to replace sub-advisers and amend investment sub-advisory agreements, including applicable fee arrangements, without shareholder approval whenever the Adviser and the Board of Trustees believe such action will benefit the Fund and its shareholders. The Adviser thus would have the responsibility (subject to the oversight of the Board of Trustees) to recommend the hiring and replacement of sub-advisers as well as the discretion to terminate any sub-adviser and reallocate the Fund’s assets for management among any other sub-adviser(s) and itself. This means that the Adviser would be able to reduce the sub-advisory fees and retain a larger portion of the management fee, or increase the sub-advisory fees and retain a smaller portion of the management fee. The Adviser would compensate each sub-adviser out of its management fee.
Administrator, Custodian and Transfer Agent. Van Eck Associates Corporation is the administrator for the Fund (the “Administrator”), and State Street Bank and Trust Company is the custodian of the Fund’s assets and provides transfer agency and fund accounting services to the Fund. The Administrator is responsible for certain clerical, recordkeeping and/or bookkeeping services which are required to be provided pursuant to the Investment Management Agreement.
Distributor. Van Eck Securities Corporation is the distributor of the Shares (the “Distributor”). The Distributor will not distribute Shares in less than a specified number of Shares, each called a “Creation Unit,” and does not maintain a secondary market in the Shares. The Shares are traded in the secondary market.
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PORTFOLIO MANAGERS | ||
The portfolio managers currently responsible for the day-to-day management of the Fund’s portfolio are Peter H. Liao, CFA and Griffin Driscoll.
Mr. Liao has been employed by the Adviser as an analyst since the summer of 2004 and has been a portfolio manager since 2006. Mr. Liao graduated from New York University in 2004 with a Bachelor of Arts in Economics and Mathematics.
Mr. Driscoll is deputy portfolio manager of the Fund. He has been employed with the Adviser since 2018 and has over 6 years' experience in the financial markets. Mr. Driscoll received his Bachelor of Science in Finance from Providence College.
Each of Messrs. Driscoll and Liao serve as a portfolio manager of other funds of the Trust. Messrs. Driscoll and Liao also serve as portfolio managers for certain other investment companies and pooled investment vehicles advised by the Adviser. See the Fund’s SAI for additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers and their respective ownership of Shares of the Fund.
| SHAREHOLDER INFORMATION | ||
DETERMINATION OF NAV
The net asset value (“NAV”) per Share for the Fund is computed by dividing the value of the net assets of the Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding. Expenses and fees, including the management fee, are accrued daily and taken into account for purposes of determining NAV. The NAV of the Fund is determined each business day as of the close of trading (ordinarily 4:00 p.m., Eastern time) on the New York Stock Exchange.
The values of the Fund’s portfolio securities are based on the securities’ closing prices on the markets on which the securities trade, when available. Due to the time differences between the United States and certain countries in which the Fund invests, securities on these exchanges may not trade at times when Shares of the Fund will trade. In the absence of a last reported sales price, or if no sales were reported, and for other assets for which market quotes are not readily available, values may be based on quotes obtained from a quotation reporting system, established market makers or by an outside independent pricing service. Debt instruments with remaining maturities of more than 60 days are valued at the evaluated mean price provided by an outside independent pricing service. If an outside independent pricing service is unable to provide a valuation, the instrument is valued at the mean of the highest bid and the lowest asked quotes obtained from one or more brokers or dealers selected by the Adviser. Prices obtained by an outside independent pricing service may use information provided by market makers or estimates of market values obtained from yield data related to investments or securities with similar characteristics and may use a computerized grid matrix of securities and its evaluations in determining what it believes is the fair value of the portfolio securities. Short-term debt instruments having a maturity of 60 days or less are valued at amortized cost. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources. If a market quotation for a security or other asset is not readily available or the Adviser believes it does not otherwise accurately reflect the market value of the security or asset at the time the Fund calculates its NAV, the Board of Trustees has designated the Adviser as the valuation designee pursuant to Rule 2a-5 under the Investment Company Act of 1940 to perform fair valuation for such security or asset in accordance with the Trust’s and Adviser’s valuation policies and procedures approved by the Board of Trustees. The Fund may also use fair value pricing in a variety of circumstances, including but not limited to, situations when the value of a security in the Fund’s portfolio has been materially affected by events occurring after the close of the market on which the security is principally traded (such as a corporate action or other news that may materially affect the price of a security) or trading in a security has been suspended or halted. In addition, the Fund currently expects that it will fair value certain of the foreign equity securities held by the Fund, if any, each day the Fund calculates its NAV, except those securities principally traded on exchanges that close at the same time the Fund calculates its NAV.
Accordingly, the Fund’s NAV may reflect certain portfolio securities’ fair values rather than their market prices at the time the exchanges on which they principally trade close. Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security or other asset is materially different than the value that could be realized upon the sale of such security or asset. In addition, fair value pricing could result in a difference between the prices used to calculate the Fund’s NAV and the prices used by the Fund’s Index. This may adversely affect the Fund’s ability to track its Index. With respect to securities that are principally traded on foreign exchanges, the value of the Fund’s portfolio securities may change on days when you will not be able to purchase or sell your Shares.
INTRADAY VALUE
The trading prices of the Fund’s Shares in the secondary market generally differ from the Fund’s daily NAV and are affected by market forces such as the supply of and demand for Fund Shares and underlying securities held by the Fund, economic conditions and other factors. Information regarding the intraday value of the Fund’s Shares (“IIV”) may be disseminated throughout each trading day by the Exchange or by market data vendors or other information providers. The IIV is based on the current market value of the securities and/or cash required to be deposited in exchange for a Creation Unit. The IIV does not necessarily reflect the precise composition of the current portfolio of securities held by the Fund at a particular point in time or the best possible valuation of the current portfolio. Therefore, the IIV should not be viewed as a “real-time” update of the Fund’s NAV, which is computed only once a day. The IIV is generally determined by using current market quotations and/or price quotations obtained from broker-dealers and other market intermediaries that may trade in the portfolio securities held
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by the Fund and valuations based on current market rates. The quotations and/or valuations of certain Fund holdings may not be updated during U.S. trading hours if such holdings do not trade in the United States. The Fund is not involved in, or responsible for, the calculation or dissemination of the IIV and makes no warranty as to its accuracy.
RULE 144A AND OTHER UNREGISTERED SECURITIES
An Authorized Participant (i.e., a person eligible to place orders with the Distributor to create or redeem Creation Units of the Fund) that is not a “qualified institutional buyer,” as such term is defined under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”), will not be able to receive, as part of a redemption, restricted securities eligible for resale under Rule 144A or other unregistered securities.
BUYING AND SELLING EXCHANGE-TRADED SHARES
The Shares of the Fund are expected to be listed on the Exchange. If you buy or sell Shares in the secondary market, you will incur customary brokerage commissions and charges and may pay some or all of the “spread,” which is any difference between the bid price and the ask price. The spread varies over time for the Fund’s Shares based on the Fund’s trading volume and market liquidity, and is generally lower if the Fund has high trading volume and market liquidity, and generally higher if the Fund has little trading volume and market liquidity (which is often the case for funds that are newly launched or small in size). In times of severe market disruption or low trading volume in the Fund’s Shares, this spread can increase significantly. It is anticipated that the Shares will trade in the secondary market at prices that may differ to varying degrees from the NAV of the Shares. During periods of disruptions to creations and redemptions or the existence of extreme market volatility, the market prices of Shares are more likely to differ significantly from the Shares’ NAV.
The Depository Trust Company (“DTC”) serves as securities depository for the Shares. (The Shares may be held only in book- entry form; stock certificates will not be issued.) DTC, or its nominee, is the record or registered owner of all outstanding Shares. Beneficial ownership of Shares will be shown on the records of DTC or its participants (described below). Beneficial owners of Shares are not entitled to have Shares registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and are not considered the registered holder thereof. Accordingly, to exercise any rights of a holder of Shares, each beneficial owner must rely on the procedures of: (i) DTC; (ii) “DTC Participants,” i.e., securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC; and (iii) “Indirect Participants,” i.e., brokers, dealers, banks and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly, through which such beneficial owner holds its interests. The Trust understands that under existing industry practice, in the event the Trust requests any action of holders of Shares, or a beneficial owner desires to take any action that DTC, as the record owner of all outstanding Shares, is entitled to take, DTC would authorize the DTC Participants to take such action and that the DTC Participants would authorize the Indirect Participants and beneficial owners acting through such DTC Participants to take such action and would otherwise act upon the instructions of beneficial owners owning through them. As described above, the Trust recognizes DTC or its nominee as the owner of all Shares for all purposes. For more information, see the section entitled “Book Entry Only System” in the Fund’s SAI.
The Exchange is open for trading Monday through Friday and is closed on weekends and the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Because non-U.S. exchanges may be open on days when the Fund does not price its Shares, the value of the securities in the Fund’s portfolio may change on days when shareholders will not be able to purchase or sell the Fund’s Shares.
The right of redemption by an AP may be suspended or the date of payment postponed (1) for any period during which the Exchange is closed (other than customary weekend and holiday closings); (2) for any period during which trading on the Exchange is suspended or restricted; (3) for any period during which an emergency exists as a result of which disposal of the Shares of the Fund or determination of its NAV is not reasonably practicable; or (4) in such other circumstance as is permitted by the Securities and Exchange Commission.
Market Timing and Related Matters. The Fund imposes no restrictions on the frequency of purchases and redemptions. Frequent purchases and redemptions of Fund Shares may attempt to take advantage of a potential arbitrage opportunity presented by a lag between a change in the value of the Fund’s portfolio securities after the close of the primary markets for the Fund’s portfolio securities and the reflection of that change in the Fund’s NAV (“market timing”). The Board of Trustees considered the nature of the Fund (i.e., a fund whose Shares are expected to trade intraday), that the Adviser monitors the trading activity of Authorized Participants for patterns of abusive trading, that the Fund reserves the right to reject orders that may be disruptive to the management of or otherwise not in the Fund’s best interests, and that the Fund may fair value certain of its securities. Given this structure, the Board of Trustees determined that it is not necessary to impose restrictions on the frequency of purchases and redemptions for the Fund at the present time.
DISTRIBUTIONS
Net Investment Income and Capital Gains. As a shareholder of the Fund, you are entitled to your share of the Fund’s distributions of net investment income and net realized capital gains on its investments. The Fund pays out substantially all of its net earnings to its shareholders as “distributions.”
The Fund typically earns income dividends from stocks and interest from debt securities. These amounts, net of expenses, are typically passed along to Fund shareholders as dividends from net investment income. The Fund realizes capital gains or losses
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whenever it sells securities. Net capital gains are distributed to shareholders as “capital gain distributions.” Distributions from the Fund’s net investment income, including net short-term capital gains, if any, are taxable to you as ordinary income. Any long-term capital gains distributions you receive from the Fund are taxable as long-term capital gains.
Net investment income and net realized capital gains, if any, are typically distributed to shareholders annually. Dividends may be declared and paid more frequently to improve index tracking or to comply with the distribution requirements of the U.S. Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). In addition, in situations where the Fund acquires investment securities after the beginning of a dividend period, the Fund may elect to distribute at least annually amounts representing the full dividend yield net of expenses on the underlying investment securities, as if the Fund owned the underlying investment securities for the entire dividend period. If the Fund so elects, some portion of each distribution may result in a return of capital, which, for tax purposes, is treated as a return of your investment in Shares. You will be notified regarding the portion of the distribution which represents a return of capital.
Distributions in cash may be reinvested automatically in additional Shares of the Fund only if the broker through which you purchased Shares makes such option available.
TAX INFORMATION
As with any investment, you should consider how your Fund investment will be taxed. The tax information in this Prospectus is provided as general information. You should consult your own tax professional about the tax consequences of an investment in the Fund, including the possible application of foreign, state and local taxes. Unless your investment in the Fund is through a tax-exempt entity or tax-deferred retirement account, such as a 401(k) plan, you need to be aware of the possible tax consequences when: (i) the Fund makes distributions, (ii) you sell Shares in the secondary market or (iii) you create or redeem Creation Units.
Taxes on Distributions. As noted above, the Fund expects to distribute any net investment income, and any net realized long-term or short-term capital gains, if any, annually. The Fund may also pay a special distribution at any time to comply with U.S. federal tax requirements.
In general, your distributions are subject to U.S. federal income tax when they are paid, whether you take them in cash or reinvest them in the Fund. Distributions of net investment income, including net short-term gains, if any, are generally taxable as ordinary income. Whether distributions of capital gains represent long-term or short-term capital gains is determined by how long the Fund owned the investments that generated them, rather than how long you have owned your Shares. Distributions of net short-term capital gains in excess of net long-term capital losses, if any, are generally taxable as ordinary income. Distributions of net long- term capital gains in excess of net short-term capital losses, if any, that are properly reported as capital gain dividends are generally taxable as long-term capital gains. Long-term capital gains of a non-corporate shareholder are generally taxable at a maximum rate of 15% or 20%, depending on whether the shareholder’s income exceeds certain threshold amounts.
The Fund may receive dividends, the distribution of which the Fund may report as qualified dividends. In the event that the Fund receives such a dividend and reports the distribution of such dividend as a qualified dividend, the dividend may be taxed at the maximum capital gains rates of 15% or 20%, provided holding period and other requirements are met at both the shareholder and the Fund level. There can be no assurance that any significant portion of the Fund’s distributions will be eligible for qualified dividend treatment.
Distributions in excess of the Fund’s current and accumulated earnings and profits are treated as a tax-free return of your investment to the extent of your basis in the Shares, and generally as capital gain thereafter. A return of capital, which for tax purposes is treated as a return of your investment, reduces your basis in Shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition of Shares. A distribution will reduce the Fund’s NAV per Share and may be taxable to you as ordinary income or capital gain even though, from an economic standpoint, the distribution may constitute a return of capital.
Dividends, interest and gains from non-U.S. investments of the Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may, in some cases, reduce or eliminate such taxes.
If more than 50% of the Fund’s total assets at the end of its taxable year consist of foreign securities, the Fund may elect to “pass through” to its investors certain foreign income taxes paid by the Fund, with the result that each investor will (i) include in gross income, even though not actually received, the investor’s pro rata share of the Fund’s foreign income taxes, and (ii) either deduct (in calculating U.S. taxable income) or credit (in calculating U.S. federal income), subject to certain holding period and other limitations, the investor’s pro rata share of the Fund’s foreign income taxes.
Backup Withholding. The Fund may be required to withhold a percentage of your distributions and proceeds if you have not provided a taxpayer identification number or social security number or otherwise established a basis for exemption from backup withholding. The backup withholding rate for individuals is currently 24%. This is not an additional tax and may be refunded, or credited against your U.S. federal income tax liability, provided certain required information is furnished to the Internal Revenue Service.
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Taxes on the Sale or Cash Redemption of Exchange Listed Shares. Currently, any capital gain or loss realized upon a sale of Shares is generally treated as long-term capital gain or loss if the Shares have been held for more than one year and as a short-term capital gain or loss if held for one year or less. However, any capital loss on a sale of Shares held for six months or less is treated as long-term capital loss to the extent that capital gain dividends were paid with respect to such Shares. The ability to deduct capital losses may be limited. To the extent that the Fund shareholder’s Shares are redeemed for cash, this is normally treated as a sale for tax purposes.
Taxes on Creations and Redemptions of Creation Units. A person who exchanges securities for Creation Units generally will recognize a gain or loss. The gain or loss will be equal to the difference between the market value of the Creation Units at the time of exchange and the sum of the exchanger’s aggregate basis in the securities surrendered and the amount of any cash paid for such Creation Units. A person who exchanges Creation Units for securities will generally recognize a gain or loss equal to the difference between the exchanger’s basis in the Creation Units and the sum of the aggregate market value of the securities received. The Internal Revenue Service, however, may assert that a loss realized upon an exchange of primarily securities for Creation Units cannot be deducted currently under the rules governing “wash sales,” or on the basis that there has been no significant change in economic position. Persons exchanging securities for Creation Units or redeeming Creation Units should consult their own tax adviser with respect to whether wash sale rules apply and when a loss might be deductible and the tax treatment of any creation or redemption transaction.
Under current U.S. federal income tax laws, any capital gain or loss realized upon a redemption (or creation) of Creation Units held as capital assets is generally treated as long-term capital gain or loss if the Shares (or securities surrendered) have been held for more than one year and as a short-term capital gain or loss if the Shares (or securities surrendered) have been held for one year or less.
If you create or redeem Creation Units, you will be sent a confirmation statement showing how many Shares you created or sold and at what price.
Medicare Tax. An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Fund and net gains from redemptions or other taxable dispositions of Fund Shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.
Non-U.S. Shareholders. Dividends paid by the Fund to Non-U.S. shareholders are generally subject to withholding tax at a 30% rate or a reduced rate specified by an applicable income tax treaty to the extent derived from investment income and short-term capital gains. Dividends paid by the Fund from net tax-exempt income or long-term capital gains are generally not subject to such withholding tax. Properly-reported dividends are generally exempt from U.S. federal withholding tax where they (i) are paid in respect of the Fund’s “qualified net interest income” (generally, the Fund’s U.S. source interest income, other than certain contingent interest and interest from obligations of a corporation or partnership in which the Fund is at least a 10% shareholder, reduced by expenses that are allocable to such income); or (ii) are paid in respect of the Fund’s “qualified short-term capital gains” (generally, the excess of the Fund’s net short-term capital gain over the Fund’s long-term capital loss for such taxable year). However, depending on its circumstances, the Fund may report all, some or none of its potentially eligible dividends as such qualified net interest income or as qualified short-term capital gains and/or treat such dividends, in whole or in part, as ineligible for this exemption from withholding.
Any capital gain realized by a Non-U.S. shareholder upon a sale of Shares of the Fund will generally not be subject to U.S. federal income or withholding tax unless (i) the gain is effectively connected with the shareholder’s trade or business in the United States, or in the case of a shareholder who is a nonresident alien individual, the shareholder is present in the United States for 183 days or more during the taxable year and certain other conditions are met or (ii) the Fund is or has been a U.S. real property holding corporation, as defined below, at any time within the five-year period preceding the date of disposition of the Fund’s Shares or, if shorter, within the period during which the Non-U.S. shareholder has held the Shares. Generally, a corporation is a U.S. real property holding corporation if the fair market value of its U.S. real property interests, as defined in the Internal Revenue Code and applicable regulations, equals or exceeds 50% of the aggregate fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. The Fund may be, or may prior to a Non-U.S. shareholder’s disposition of Shares become, a U.S. real property holding corporation. If the Fund is or becomes a U.S. real property holding corporation, so long as the Fund’s Shares are regularly traded on an established securities market, only a Non-U.S. shareholder who holds or held (at any time during the shorter of the five year period preceding the date of disposition or the holder’s holding period) more than 5% (directly or indirectly as determined under applicable attribution rules of the Internal Revenue Code) of the Fund’s Shares will be subject to United States federal income tax on the disposition of Shares.
As part of the Foreign Account Tax Compliance Act, (“FATCA”), the Fund may be required to withhold 30% tax on certain types of U.S. sourced income (e.g., dividends, interest, and other types of passive income) paid to (i) foreign financial institutions (“FFIs”), including non-U.S. investment funds, unless they agree to collect and disclose to the IRS information regarding their direct and indirect U.S. account holders and (ii) certain nonfinancial foreign entities (“NFFEs”), unless they certify certain information regarding their direct and indirect U.S. owners. To avoid possible withholding, FFIs will need to enter into agreements with the IRS which state that they will provide the IRS information, including the names, account numbers and balances, addresses and taxpayer identification numbers of U.S. account holders and comply with due diligence procedures
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with respect to the identification of U.S. accounts as well as agree to withhold tax on certain types of withholdable payments made to non-compliant foreign financial institutions or to applicable foreign account holders who fail to provide the required information to the IRS, or similar account information and required documentation to a local revenue authority, should an applicable intergovernmental agreement be implemented. NFFEs will need to provide certain information regarding each substantial U.S. owner or certifications of no substantial U.S. ownership, unless certain exceptions apply, or agree to provide certain information to the Internal Revenue Service.
The Fund may be subject to the FATCA withholding obligation, and also will be required to perform due diligence reviews to classify foreign entity investors for FATCA purposes. Investors are required to agree to provide information necessary to allow the Fund to comply with the FATCA rules. If the Fund is required to withhold amounts from payments pursuant to FATCA, investors will receive distributions that are reduced by such withholding amounts.
Non-U.S. shareholders are advised to consult their tax advisors with respect to the particular tax consequences to them of an investment in the Fund, including the possible applicability of the U.S. estate tax.
The foregoing discussion summarizes some of the consequences under current U.S. federal income tax law of an investment in the Fund. It is not a substitute for personal tax advice. Consult your own tax advisor about the potential tax consequences of an investment in the Fund under all applicable tax laws. Changes in applicable tax authority could materially affect the conclusions discussed above and could adversely affect the Fund, and such changes often occur.
| INDEX PROVIDER | ||
The Index provider is MarketVector Indexes GmbH.
| 800.826.2333 | vaneck.com | 24 | |||||||
| MARKETVECTOR ALTERNATIVE ASSET MANAGERS INDEX | ||
The Alternative Asset Managers Index is a rules-based, modified capitalization weighted, float adjusted index composed of equity securities, which may include depositary receipts, of publicly traded U.S., Canadian and developed European alternative asset management companies. To be initially eligible for the Alternative Asset Managers Index, companies must derive at least 75% of their revenues or operating assets (50% for current Index components) from alternative asset investing. Alternative asset investing comprises private equity and other alternative asset investing categories, such as: investments in debt, venture capital, buy-outs, and equity investing in non-publicly traded companies and/or investments in private real estate or infrastructure assets.
It is expected that the Index will include only common securities and securities with similar characteristics from financial markets that are freely investable for foreign investors and that provide real-time and historical component and currency pricing, excluding limited partnerships and business development companies. In addition, the Index has free-float, capitalization and average trading volume criteria that are specified in the rulebook.
As of April 30, 2025, the Alternative Asset Managers Index included 20 securities of companies with a market capitalization range of between approximately $1.3 billion and $101.5 billion and a weighted average market capitalization of $52.6 billion.
The Alternative Asset Managers Index is reconstituted semiannually and rebalanced quarterly. Upon an index rebalance, components selected to the Alternative Asset Managers Index will be weighted according to a modified float-adjusted market cap weighting strategy.
MarketVector may delay or change a scheduled rebalancing or reconstitution of the Index or the implementation of certain rules at its sole discretion.
As of the date of this prospectus, companies must be incorporated or headquartered and listed on an exchange in one of the following countries to qualify for inclusion: Austria, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Spain, Sweden, Switzerland, the United Kingdom, or the United States. This list is subject to change.
| 800.826.2333 | vaneck.com | 25 | |||||||
| LICENSE AGREEMENT AND DISCLAIMERS | ||
The Adviser has entered into a licensing agreement with MarketVector Indexes GmbH, the Index provider, to use the Index. The Fund is entitled to use its Index pursuant to a sub-licensing arrangement with the Adviser.
Shares of the Fund are not sponsored, endorsed, sold or promoted by the Index provider. The Index provider makes no representation or warranty, express or implied, to the owners of the Shares of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Shares of the Fund particularly or the ability of the Index to track the performance of its respective securities markets. The Index is determined and composed by the Index provider without regard to the Adviser or the Shares of the Fund. The Index provider has no obligation to take the needs of the Adviser or the owners of the Shares of the Fund into consideration in determining or composing the Index. The Index provider is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Shares of the Fund to be issued or in the determination or calculation of the equation by which the Shares of the Fund are to be converted into cash. The Index provider has no obligation or liability in connection with the administration, marketing or trading of the Shares of the Fund.
THE INDEX PROVIDER DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN AND THE INDEX PROVIDER SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN. THE INDEX PROVIDER MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX, OR THE FUND OR ANY DATA INCLUDED THEREIN. THE INDEX PROVIDER MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
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| FINANCIAL HIGHLIGHTS | ||
The Fund has not yet commenced operations as of the date of this Prospectus and therefore does not have a financial history.
| 800.826.2333 | vaneck.com | 27 | |||||||
| PREMIUM/DISCOUNT INFORMATION | ||
The Fund has not yet commenced operations and, therefore, does not have information about the differences between the Fund’s daily market price on the Exchange and its NAV. Information regarding how often the closing trading price of the Shares of the Fund was above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund for the most recently completed calendar year and the most recently completed calendar quarter(s) since that year (or the life of the Fund, if shorter) can be found at www.vaneck.com.
| GENERAL INFORMATION | ||
CONTINUOUS OFFERING
The method by which Creation Units are created and traded may raise certain issues under applicable securities laws. Because new Creation Units are issued and sold by the Trust on an ongoing basis, a “distribution,” as such term is used in the Securities Act may occur at any point. Broker dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act.
For example, a broker dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into constituent Shares, and sells such Shares directly to customers, or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for Shares. A determination of whether one is an underwriter for purposes of the Securities Act must take into account all the facts and circumstances pertaining to the activities of the broker dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to a categorization as an underwriter.
Broker dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with Shares that are part of an “unsold allotment” within the meaning of Section 4(a)(3)(C) of the Securities Act, would be unable to take advantage of the prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act. This is because the prospectus delivery exemption in Section 4(a)(3) of the Securities Act is not available in respect of such transactions as a result of Section 24(d) of the Investment Company Act of 1940. As a result, broker dealer firms should note that dealers who are not underwriters but are participating in a distribution (as contrasted with ordinary secondary market transactions) and thus dealing with the Shares that are part of an overallotment within the meaning of Section 4(a)(3)(A) of the Securities Act would be unable to take advantage of the prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act. Firms that incur a prospectus delivery obligation with respect to Shares are reminded that, under Rule 153 of the Securities Act, a prospectus delivery obligation under Section 5(b)(2) of the Securities Act owed to an exchange member in connection with a sale on the Exchange is satisfied by the fact that the prospectus is available at the Exchange upon request. The prospectus delivery mechanism provided in Rule 153 is only available with respect to transactions on an exchange.
In addition, certain affiliates of the Fund and the Adviser may purchase and resell Fund Shares pursuant to this Prospectus.
OTHER INFORMATION
The Trust was organized as a Delaware statutory trust on March 15, 2001. Its Declaration of Trust currently permits the Trust to issue an unlimited number of Shares of beneficial interest. If shareholders are required to vote on any matters, each Share outstanding would be entitled to one vote. Annual meetings of shareholders will not be held except as required by the Investment Company Act of 1940 and other applicable law. See the Fund’s SAI for more information concerning the Trust’s form of organization. Section 12(d)(1) of the Investment Company Act of 1940 restricts investments by investment companies in the securities of other investment companies, including Shares of the Fund. Registered investment companies are permitted to invest in the Fund beyond the limits set forth in Section 12(d)(1) subject to certain terms and conditions set forth in Securities and Exchange Commission regulations, including that such investment companies enter into an agreement with the Fund.
The Prospectus, SAI and any other Fund communication do not create any contractual obligations between the Fund’s shareholders and the Trust, the Fund, the Adviser and/or the Trustees. Further, shareholders are not intended third party beneficiaries of any contracts entered into by (or on behalf of) the Fund, including contracts with the Adviser or other parties who provide services to the Fund.
Dechert LLP serves as counsel to the Trust, including the Fund. PricewaterhouseCoopers LLP serves as the Trust’s independent registered public accounting firm and will audit the Fund’s financial statements annually.
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ADDITIONAL INFORMATION
This Prospectus does not contain all the information included in the Registration Statement filed with the Securities and Exchange Commission with respect to the Fund's Shares. The Fund's Registration Statement, including this Prospectus, the Fund's SAI and the exhibits are available on the EDGAR database at the Securities and Exchange Commission’s website (http://www.sec.gov), and copies may be obtained, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.
The SAI for the Fund, which has been filed with the Securities and Exchange Commission, provides more information about the Fund. The SAI for the Fund dated June 4, 2025, as may be supplemented from time to time, is incorporated herein by reference and is legally part of this Prospectus.
Shareholder inquiries may be directed to the Fund in writing to 666 Third Avenue, 9th Floor, New York, New York 10017 or by calling 800.826.2333.
The Fund's SAI is available at www.vaneck.com.
(Investment Company Act file no. 811-10325)
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For more detailed information about the Fund, see the SAI dated, June 4, 2025, as may be supplemented from time to time.
Additional information about the Fund’s investments is or will be available in the Fund’s annual and semi-annual reports to shareholders and in Form N-CSR. In the Fund’s annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year. In Form N-CSR, you will find the Fund’s annual and semi-annual financial statements.
Call VanEck at 800.826.2333 or write to the Fund at Van Eck Securities Corporation, the Fund’s Distributor, at 666 Third Avenue, 9th Floor, New York, New York 10017 to request, free of charge, the annual or semi-annual reports, the SAI, the Fund’s financial statements or other information about the Fund or to make shareholder inquiries. You may also obtain the SAI, the Fund’s financial statements or the Fund’s annual or semi-annual reports by visiting the VanEck website at www.vaneck.com.
Reports and other information about the Fund are available on the EDGAR Database on the Securities and Exchange Commission’s internet site at http://www.sec.gov. In addition, copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.
 | |||||
Transfer Agent: State Street Bank and Trust Company SEC Registration Number: 333-123257 1940 Act Registration Number: 811-10325 GPZPRO | 800.826.2333 | vaneck.com | ||||
VANECK ETF TRUST
This Statement of Additional Information (“SAI”) is not a prospectus. It should be read in conjunction with the current prospectuses (each, a “Prospectus” and together, the “Prospectuses”) of each fund (each, a “Fund” and together, the “Funds”) listed below for the VanEck® ETF Trust (the “Trust”), relating to each of the series of the Trust listed below, as it may be revised from time to time.
| Fund | Principal U.S. Listing Exchange | Ticker | Fiscal Year End* | Prospectus Date | ||||||||||
Statement of Additional Information February 1, 2025, as revised on May 1, 2025 and June 4, 2025 | ||||||||||||||
| Biotech ETF | The NASDAQ Stock Market LLC | BBH | September 30th | February 1st | ||||||||||
| Commodity Strategy ETF | Cboe BZX Exchange, Inc. | PIT | September 30th | February 1st | ||||||||||
| Digital Transformation ETF | The NASDAQ Stock Market LLC | DAPP | September 30th | February 1st | ||||||||||
| Durable High Dividend ETF | Cboe BZX Exchange, Inc. | DURA | September 30th | February 1st | ||||||||||
| Energy Income ETF | NYSE Arca, Inc. | EINC | September 30th | February 1st | ||||||||||
| Environmental Services ETF | NYSE Arca, Inc. | EVX | September 30th | February 1st | ||||||||||
| Fabless Semiconductor ETF | The NASDAQ Stock Market LLC | SMHX | September 30th | February 1st | ||||||||||
| Gaming ETF | The NASDAQ Stock Market LLC | BJK | September 30th | February 1st | ||||||||||
| Green Infrastructure ETF | The NASDAQ Stock Market LLC | RNEW | September 30th | February 1st | ||||||||||
| Long/Flat Trend ETF | NYSE Arca, Inc. | LFEQ | September 30th | February 1st | ||||||||||
| Morningstar ESG Moat ETF | Cboe BZX Exchange, Inc. | MOTE | September 30th | February 1st | ||||||||||
| Morningstar Global Wide Moat ETF | Cboe BZX Exchange, Inc. | MOTG | September 30th | February 1st | ||||||||||
Morningstar International Moat ETF | Cboe BZX Exchange, Inc. | MOTI | September 30th | February 1st | ||||||||||
| Morningstar SMID Moat ETF | Cboe BZX Exchange, Inc. | SMOT | September 30th | February 1st | ||||||||||
| Morningstar Wide Moat ETF | Cboe BZX Exchange, Inc. | MOAT® | September 30th | February 1st | ||||||||||
| Morningstar Wide Moat Growth ETF | Cboe BZX Exchange, Inc. | MGRO | September 30th | February 1st | ||||||||||
| Morningstar Wide Moat Value ETF | Cboe BZX Exchange, Inc. | MVAL | September 30th | February 1st | ||||||||||
| Pharmaceutical ETF | The NASDAQ Stock Market LLC | PPH | September 30th | February 1st | ||||||||||
Real Assets ETF** | NYSE Arca, Inc. | RAAX | September 30th | February 1st | ||||||||||
| Retail ETF | The NASDAQ Stock Market LLC | RTH | September 30th | February 1st | ||||||||||
| Robotics ETF | The NASDAQ Stock Market LLC | IBOT | September 30th | February 1st | ||||||||||
| Semiconductor ETF | The NASDAQ Stock Market LLC | SMH | September 30th | February 1st | ||||||||||
| Social Sentiment ETF | NYSE Arca, Inc. | BUZZ | September 30th | February 1st | ||||||||||
| Video Gaming and eSports ETF | The NASDAQ Stock Market LLC | ESPO | September 30th | February 1st | ||||||||||
| Fund | Principal U.S. Listing Exchange | Ticker | Fiscal Year End* | Prospectus Date | ||||||||||
Statement of Additional Information May 1, 2025, as revised on June 4, 2025 | ||||||||||||||
AA-BB CLO ETF | NYSE Arca, Inc. | CLOB | December 31st | May 1st | ||||||||||
| Africa Index ETF | NYSE Arca, Inc. | AFK | December 31st | May 1st | ||||||||||
| Agribusiness ETF | NYSE Arca, Inc. | MOO® | December 31st | May 1st | ||||||||||
| BDC Income ETF | NYSE Arca, Inc. | BIZD | December 31st | May 1st | ||||||||||
| Brazil Small-Cap ETF | NYSE Arca, Inc. | BRF | December 31st | May 1st | ||||||||||
| China Bond ETF | NYSE Arca, Inc. | CBON | December 31st | May 1st | ||||||||||
| ChiNext ETF | NYSE Arca, Inc. | CNXT | December 31st | May 1st | ||||||||||
| CLO ETF | NYSE Arca, Inc. | CLOI | December 31st | May 1st | ||||||||||
| CMCI Commodity Strategy ETF | Cboe BZX Exchange, Inc. | CMCI | December 31st | May 1st | ||||||||||
| Digital India ETF | NYSE Arca, Inc. | DGIN | December 31st | May 1st | ||||||||||
| Gold Miners ETF | NYSE Arca, Inc. | GDX® | December 31st | May 1st | ||||||||||
| Green Metals ETF | NYSE Arca, Inc. | GMET | December 31st | May 1st | ||||||||||
| India Growth Leaders ETF | NYSE Arca, Inc. | GLIN | December 31st | May 1st | ||||||||||
| Indonesia Index ETF | NYSE Arca, Inc. | IDX | December 31st | May 1st | ||||||||||
| International High Yield Bond ETF | NYSE Arca, Inc. | IHY | December 31st | May 1st | ||||||||||
| Israel ETF | NYSE Arca, Inc. | ISRA | December 31st | May 1st | ||||||||||
| J.P. Morgan EM Local Currency Bond ETF | NYSE Arca, Inc. | EMLC | December 31st | May 1st | ||||||||||
| Junior Gold Miners ETF | NYSE Arca, Inc. | GDXJ® | December 31st | May 1st | ||||||||||
| Low Carbon Energy ETF | NYSE Arca, Inc. | SMOG | December 31st | May 1st | ||||||||||
| Mortgage REIT Income ETF | NYSE Arca, Inc. | MORT | December 31st | May 1st | ||||||||||
| Natural Resources ETF | NYSE Arca, Inc. | HAP | December 31st | May 1st | ||||||||||
| Office and Commercial REIT ETF | NYSE Arca, Inc. | DESK | December 31st | May 1st | ||||||||||
| Oil Refiners ETF | NYSE Arca, Inc. | CRAK | December 31st | May 1st | ||||||||||
| Oil Services ETF | NYSE Arca, Inc. | OIH | December 31st | May 1st | ||||||||||
| Preferred Securities ex Financials ETF | NYSE Arca, Inc. | PFXF | December 31st | May 1st | ||||||||||
| Rare Earth and Strategic Metals ETF | NYSE Arca, Inc. | REMX | December 31st | May 1st | ||||||||||
Russia ETF 1 | Not Applicable | RSX | December 31st | May 1st | ||||||||||
Russia Small-Cap ETF 1 | Not Applicable | RSXJ | December 31st | May 1st | ||||||||||
| Steel ETF | NYSE Arca, Inc. | SLX | December 31st | May 1st | ||||||||||
| Uranium and Nuclear ETF | NYSE Arca, Inc. | NLR | December 31st | May 1st | ||||||||||
| Vietnam ETF | Cboe BZX Exchange, Inc. | VNM | December 31st | May 1st | ||||||||||
Statement of Additional Information September 1, 2024, as revised on September 11, 2024, December 20, 2024, February 1, 2025, May 1, 2025 and June 4, 2025 | ||||||||||||||
| CEF Muni Income ETF | Cboe BZX Exchange, Inc. | XMPT | April 30th | September 1st | ||||||||||
| Emerging Markets High Yield Bond ETF | NYSE Arca, Inc. | HYEM | April 30th | September 1st | ||||||||||
| Fallen Angel High Yield Bond ETF | The NASDAQ Stock Market LLC | ANGL | April 30th | September 1st | ||||||||||
| Green Bond ETF | NYSE Arca, Inc. | GRNB | April 30th | September 1st | ||||||||||
| High Yield Muni ETF | Cboe BZX Exchange, Inc. | HYD | April 30th | September 1st | ||||||||||
HIP Sustainable Muni ETF | Cboe BZX Exchange, Inc. | SMI | April 30th | September 1st | ||||||||||
* Certain information provided in this SAI is indicated to be as of the end of a Fund’s last fiscal year or during a Fund’s last fiscal year. The term “last fiscal year” means the most recently completed fiscal year for each Fund.
** Prior to December 30, 2024, the Fund's name was VanEck® Inflation Allocation ETF.
1 On September 29, 2022, the Board of Trustees of the Trust (the “Board” or “Trustees”) unanimously voted to approve a Plan of Liquidation and Termination of each of VanEck Russia ETF and VanEck Russia Small-Cap ETF (together, the “Russia Funds”), contingent on receiving any necessary relief from the SEC. On December 28, 2022, the Securities and Exchange Commission (the “SEC”) granted exemptive relief to the Russia Funds permitting the Russia Funds to suspend the right of redemption with respect to their shares and, if necessary, postpone the date of payment of redemption proceeds with respect to redemption orders received but not yet paid until the Russia Funds complete the liquidation of their portfolios and distribute all their assets to remaining shareholders. The process of paying any proceeds of the liquidation was initiated on January 12, 2023. The Russia Funds will make one or more liquidating distributions. It is possible that the liquidation of the Russia Funds will take an extended period of time if circumstances involving Russian securities do not improve. While the Russia Funds are in the process of liquidating their portfolios, each of the Russia Funds will hold cash and securities that may not be consistent with their investment objectives and strategies and are likely to incur higher tracking error than is typical for each Russia Fund. Furthermore, because of the delisting of the Russia Funds from Cboe BZX Exchange, Inc., and the liquidation of the Russia Funds, the Russia Funds are no longer exchange-traded funds, and there will be no trading market for your shares. Upon payment of the final liquidating distribution, it is anticipated that the Russia Funds will be terminated. MarketVector™ Indexes GmbH discontinued the MVIS® Russia Index and the MVIS® Russia Small-Cap Index on July 31, 2023.
A copy of each Prospectus may be obtained without charge by writing to the Trust or the Distributor (defined herein). The Trust’s address is 666 Third Avenue, 9th Floor, New York, New York 10017. Capitalized terms used herein that are not defined have the same meaning as in the Prospectuses, unless otherwise noted. The audited financial statements, including the financial highlights, appearing in the Trust’s most recent Annual Report to shareholders or filing on Form N-CSR for each Fund’s corresponding fiscal year end and filed electronically with the SEC, are incorporated by reference into the section of this SAI entitled “Financial Statements”, unless otherwise specified. No other portions of any of the Trust’s Annual Reports, Semi-Annual Reports or filings on Form N-CSR are incorporated by reference or made part of this SAI.
TABLE OF CONTENTS
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i
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Officer Information | |||||
ii
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iii
GENERAL DESCRIPTION OF THE TRUST
The Trust is an open-end management investment company. The Trust currently consists of 69 investment portfolios. This SAI relates to all Funds of the Trust as set forth on the cover page. The Trust was organized as a Delaware statutory trust on March 15, 2001. The shares of each Fund are referred to herein as “Shares.”
Each Fund that is classified as a “diversified” fund under the Investment Company Act of 1940, as amended (the “1940 Act”) is required to meet certain diversification requirements under the 1940 Act. Each Fund that is classified as a “non-diversified” fund under the 1940 Act may invest a relatively high percentage of its assets in a smaller number of issuers or may invest a larger proportion of its assets in a single issuer. The following chart indicates the diversification classification for each Fund:
| Fund | Classification as Diversified or Non-Diversified | ||||
| Municipal ETFs | |||||
| CEF Muni Income ETF* | Diversified | ||||
| High Yield Muni ETF | Diversified | ||||
| HIP Sustainable Muni ETF | Non-Diversified | ||||
| Intermediate Muni ETF | Diversified | ||||
| Long Muni ETF | Diversified | ||||
| Short High Yield Muni ETF | Diversified | ||||
| Short Muni ETF | Diversified | ||||
| CLO/Equity/Fixed Income ETFs | |||||
AA-BB CLO ETF | Non-Diversified | ||||
| BDC Income ETF | Diversified | ||||
| China Bond ETF | Non-Diversified | ||||
| CLO ETF | Non-Diversified | ||||
| Durable High Dividend ETF* | Diversified | ||||
| Emerging Markets High Yield Bond ETF | Diversified | ||||
| Energy Income ETF | Non-Diversified | ||||
| Fallen Angel High Yield Bond ETF* | Diversified | ||||
| Green Bond ETF | Diversified | ||||
| IG Floating Rate ETF | Non-Diversified | ||||
| International High Yield Bond ETF | Diversified | ||||
| J.P. Morgan EM Local Currency Bond ETF | Non-Diversified | ||||
| Moody's Analytics BBB Corporate Bond ETF | Non-Diversified | ||||
| Moody's Analytics IG Corporate Bond ETF | Diversified | ||||
| Mortgage REIT Income ETF | Non-Diversified | ||||
| Office and Commercial REIT ETF | Non-Diversified | ||||
| Preferred Securities ex Financials ETF | Non-Diversified | ||||
| Thematic/Strategic Equity ETFs | |||||
Alternative Asset Manager ETF | Non-Diversified | ||||
| Biotech ETF | Non-Diversified | ||||
| Digital Transformation ETF | Non-Diversified | ||||
| Environmental Services ETF | Non-Diversified | ||||
Fabless Semiconductor ETF | Non-Diversified | ||||
| Gaming ETF | Non-Diversified | ||||
| Green Infrastructure ETF | Non-Diversified | ||||
1
| Fund | Classification as Diversified or Non-Diversified | ||||
| Long/Flat Trend ETF* | Diversified | ||||
| Morningstar ESG Moat ETF | Diversified | ||||
| Morningstar Global Wide Moat ETF* | Diversified | ||||
| Morningstar International Moat ETF* | Diversified | ||||
| Morningstar SMID Moat ETF | Non-Diversified | ||||
| Morningstar Wide Moat ETF* | Diversified | ||||
| Morningstar Wide Moat Growth ETF | Non-Diversified | ||||
| Morningstar Wide Moat Value ETF | Non-Diversified | ||||
| Pharmaceutical ETF | Non-Diversified | ||||
Real Assets ETF | Diversified | ||||
| Retail ETF | Non-Diversified | ||||
| Robotics ETF | Non-Diversified | ||||
| Semiconductor ETF | Non-Diversified | ||||
| Social Sentiment ETF | Diversified | ||||
| Video Gaming and eSports ETF | Non-Diversified | ||||
Commodity Strategy/Natural Resources ETFs | |||||
| Agribusiness ETF | Non-Diversified | ||||
| CMCI Commodity Strategy ETF | Non-Diversified | ||||
| Commodity Strategy ETF | Non-Diversified | ||||
| Gold Miners ETF | Non-Diversified | ||||
| Green Metals ETF | Non-Diversified | ||||
| Junior Gold Miners ETF | Non-Diversified | ||||
| Low Carbon Energy ETF | Non-Diversified | ||||
| Natural Resources ETF | Diversified | ||||
| Oil Refiners ETF | Non-Diversified | ||||
| Oil Services ETF | Non-Diversified | ||||
| Rare Earth and Strategic Metals ETF | Non-Diversified | ||||
| Steel ETF | Non-Diversified | ||||
| Uranium and Nuclear ETF | Non-Diversified | ||||
| Country/Regional ETFs | |||||
| Africa Index ETF | Diversified | ||||
| Brazil Small-Cap ETF | Diversified | ||||
| ChiNext ETF* | Diversified | ||||
| Digital India ETF | Non-Diversified | ||||
India Growth Leaders ETF* | Diversified | ||||
| Indonesia Index ETF | Non-Diversified | ||||
| Israel ETF | Non-Diversified | ||||
| Russia ETF | Non-Diversified | ||||
| Russia Small-Cap ETF | Non-Diversified | ||||
| Vietnam ETF | Non-Diversified | ||||
*Each of VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck India Growth Leaders ETF, VanEck Long/Flat Trend ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF and VanEck Morningstar Wide Moat ETF intends to be diversified in approximately the same proportion as its underlying index is diversified. Each of VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck India Growth Leaders ETF, VanEck Long/Flat Trend ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF and VanEck Morningstar Wide Moat ETF may become
2
non-diversified, as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of its underlying index.
The Funds offer and issue Shares at their net asset value (“NAV”) only in aggregations of a specified number of Shares (each, a “Creation Unit”). Similarly, Shares are redeemable by the Funds only in Creation Units, as further described in the chart below. The Shares of the Funds are listed on either NYSE Arca, Inc. (“NYSE Arca”), The NASDAQ Stock Market LLC (“NASDAQ”) or the Cboe BZX Exchange, Inc. (“Cboe”) as set forth on the cover page of this SAI, and Shares of each Fund trade in the secondary market at market prices that may differ from the Shares’ NAV. NYSE Arca, NASDAQ and Cboe are each referred to as an “Exchange” and collectively, the “Exchanges.” The Trust reserves the right to permit or require a “cash” option for creations and redemptions of Shares (subject to applicable legal requirements) to the extent Shares are not created or redeemed wholly in cash.
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Creation and Redemption Features
The chart below sets forth certain relevant information regarding the creation and redemption features pertaining to each Fund.
| Fund Name | In Kind | In Cash | Partially In Cash/Partially In Kind | Primarily in Cash/Partially In Kind | Primarily In Kind/Partially in Cash | Standard Transaction Fee* | ||||||||||||||
| Municipal ETFs | ||||||||||||||||||||
| CEF Muni Income ETF | X | $250 | ||||||||||||||||||
| High Yield Muni ETF | X | $250 | ||||||||||||||||||
| HIP Sustainable Muni ETF | X | $250 | ||||||||||||||||||
| Intermediate Muni ETF | X | $250 | ||||||||||||||||||
| Long Muni ETF | X | $250 | ||||||||||||||||||
| Short High Yield Muni ETF | X | $250 | ||||||||||||||||||
| Short Muni ETF | X | $250 | ||||||||||||||||||
| CLO/Equity/Fixed Income ETFs | ||||||||||||||||||||
AA-BB CLO ETF | X | $250 | ||||||||||||||||||
| BDC Income ETF | X | $250 | ||||||||||||||||||
| China Bond ETF | X | $100 | ||||||||||||||||||
| CLO ETF | X | $250 | ||||||||||||||||||
| Durable High Dividend ETF | X | $250 | ||||||||||||||||||
| Emerging Markets High Yield Bond ETF | X | $800 | ||||||||||||||||||
| Energy Income ETF | X | $250 | ||||||||||||||||||
| Fallen Angel High Yield Bond ETF | X | $450 | ||||||||||||||||||
| Green Bond ETF | X | $500 | ||||||||||||||||||
| IG Floating Rate ETF | X | $200 | ||||||||||||||||||
| International High Yield Bond ETF | X | $800 | ||||||||||||||||||
| J.P. Morgan EM Local Currency Bond ETF | X | $1,000 | ||||||||||||||||||
| Moody's Analytics BBB Corporate Bond ETF | X | $250 | ||||||||||||||||||
| Moody's Analytics IG Corporate Bond ETF | X | $250 | ||||||||||||||||||
| Mortgage REIT Income ETF | X | $250 | ||||||||||||||||||
| Office and Commercial REIT ETF | X | $250 | ||||||||||||||||||
| Preferred Securities ex Financials ETF | X | $250 | ||||||||||||||||||
| Thematic/Strategic Equity ETFs | ||||||||||||||||||||
Alternative Asset Manager ETF | X | $250 | ||||||||||||||||||
| Biotech ETF | X | $250 | ||||||||||||||||||
| Digital Transformation ETF | X | $400 | ||||||||||||||||||
| Environmental Services ETF | X | $250 | ||||||||||||||||||
Fabless Semiconductor ETF | X | $250 | ||||||||||||||||||
| Gaming ETF | X | $500 | ||||||||||||||||||
| Green Infrastructure ETF | X | $250 | ||||||||||||||||||
| Long/Flat Trend ETF | X | $250 | ||||||||||||||||||
| Morningstar ESG Moat ETF | X | $250 | ||||||||||||||||||
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| Fund Name | In Kind | In Cash | Partially In Cash/Partially In Kind | Primarily in Cash/Partially In Kind | Primarily In Kind/Partially in Cash | Standard Transaction Fee* | ||||||||||||||
| Morningstar Global Wide Moat ETF | X | $500 | ||||||||||||||||||
| Morningstar International Moat ETF | X | $750 | ||||||||||||||||||
| Morningstar SMID Moat ETF | X | $250 | ||||||||||||||||||
| Morningstar Wide Moat ETF | X | $250 | ||||||||||||||||||
| Morningstar Wide Moat Growth ETF | X | $250 | ||||||||||||||||||
| Morningstar Wide Moat Value ETF | X | $250 | ||||||||||||||||||
| Pharmaceutical ETF | X | $250 | ||||||||||||||||||
Real Assets ETF | X | $250 | ||||||||||||||||||
| Retail ETF | X | $250 | ||||||||||||||||||
| Robotics ETF | X | $400 | ||||||||||||||||||
| Semiconductor ETF | X | $300 | ||||||||||||||||||
| Social Sentiment ETF | X | $250 | ||||||||||||||||||
| Video Gaming and eSports ETF | X | $500 | ||||||||||||||||||
| Commodity Strategy/Natural Resources ETFs | ||||||||||||||||||||
| Agribusiness ETF | X | $500 | ||||||||||||||||||
| CMCI Commodity Strategy ETF | X | $100 | ||||||||||||||||||
| Commodity Strategy ETF | X | $100 | ||||||||||||||||||
| Gold Miners ETF | X | $500 | ||||||||||||||||||
| Green Metals ETF | X | $400 | ||||||||||||||||||
| Junior Gold Miners ETF | X | $750 | ||||||||||||||||||
| Low Carbon Energy ETF | X | $500 | ||||||||||||||||||
| Natural Resources ETF | X | $1,000 | ||||||||||||||||||
| Oil Refiners ETF | X | $500 | ||||||||||||||||||
| Oil Services ETF | X | $300 | ||||||||||||||||||
| Rare Earth and Strategic Metals ETF | X | $500 | ||||||||||||||||||
| Steel ETF | X | $250 | ||||||||||||||||||
| Uranium and Nuclear ETF | X | $500 | ||||||||||||||||||
| Country/Regional ETFs | ||||||||||||||||||||
| Africa Index ETF | X | $750 | ||||||||||||||||||
| Brazil Small-Cap ETF | X | $500 | ||||||||||||||||||
| ChiNext ETF | X | $250 | ||||||||||||||||||
| Digital India ETF | X | $250 | ||||||||||||||||||
India Growth Leaders ETF | X | $250 | ||||||||||||||||||
| Indonesia Index ETF | X | $750 | ||||||||||||||||||
| Israel ETF | X | $800 | ||||||||||||||||||
| Vietnam ETF | X | $250 | ||||||||||||||||||
5
INVESTMENT POLICIES AND RESTRICTIONS
General
Each of VanEck Long/Flat Trend ETF (to the extent the Fund is holding shares of one or more exchange-traded funds (“ETFs”) rather than investing directly in the shares of the companies comprising the S&P 500 Index), VanEck CEF Muni Income ETF and VanEck Real Assets ETF is a “fund of funds.” Each of VanEck CEF Muni Income ETF, VanEck Real Assets ETF and VanEck Long/Flat Trend ETF invests all or a portion of its assets in other funds it invests in (the “Underlying Funds”). The performance of VanEck CEF Muni Income ETF is dependent on the performance of the Underlying Funds. VanEck CEF Muni Income ETF will be subject to the risks of the Underlying Funds’ investments. Because the investment characteristics of VanEck CEF Muni Income ETF will correspond directly to those of the Underlying Funds, the following applies to both VanEck CEF Muni Income ETF and the Underlying Funds, as applicable, and except where otherwise indicated, this SAI uses the term “Fund,” when referring to VanEck CEF Muni Income ETF to mean VanEck CEF Muni Income ETF and the Underlying Funds, as applicable. The VanEck Real Assets ETF invests all or a portion of its assets in exchange-traded products that are registered under the federal securities laws (“Exchange-Traded Products”), including ETFs and exchange-traded notes (“ETNs”). The performance of VanEck Real Assets ETF is dependent on the performance of the Exchange-Traded Products. VanEck Real Assets ETF will be subject to the risks of the Exchange-Traded Products’ investments. The performance of VanEck Long/Flat Trend ETF (to the extent the Fund is holding shares of one or more ETFs rather than investing directly in the shares of the companies comprising the S&P 500 Index) is dependent on the performance of the ETFs it invests in. VanEck Long/Flat Trend ETF will be subject to the risks of the ETFs' investments.
VanEck CEF Muni Income ETF, VanEck China Bond ETF, VanEck Emerging Markets High Yield Bond ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck Green Bond ETF, VanEck High Yield Muni ETF, VanEck Intermediate Muni ETF, VanEck International High Yield Bond ETF, VanEck IG Floating Rate ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck Long Muni ETF, VanEck Moody's Analytics BBB Corporate Bond ETF, VanEck Moody's Analytics IG Corporate Bond ETF, VanEck Short High Yield Muni ETF and VanEck Short Muni ETF are each defined as a “Fixed Income Fund” and collectively as the “Fixed Income Funds.”
VanEck India Growth Leaders ETF seeks to achieve its investment objective by investing substantially all of its assets in a wholly-owned subsidiary in Mauritius, MV SCIF Mauritius, a private company limited by shares incorporated in Mauritius (the “Mauritius Subsidiary”), that has the same investment objective as VanEck India Growth Leaders ETF. Because the investment characteristics of VanEck India Growth Leaders ETF will correspond directly to those of the Mauritius Subsidiary (which is managed by and its decisions are taken by its independent Board of Directors), the following applies to both VanEck India Growth Leaders ETF and the Mauritius Subsidiary, as applicable, and except where otherwise indicated, this SAI uses the term “Fund” when referring to VanEck India Growth Leaders ETF to mean VanEck India Growth Leaders ETF and/or the Mauritius Subsidiary, as applicable.
VanEck CLO ETF seeks to achieve its investment objective by investing, under normal circumstances, primarily in investment grade-rated debt tranches of collateralized loan obligations (“CLOs”) of any maturity. Investment grade CLOs are rated inclusive and above BBB- by S&P Global Ratings or Baa3 Moody’s Investors Service, Inc. (or equivalent rating issued by a nationally recognized statistical rating organization (“NRSRO”)), or if unrated, determined to be of comparable credit quality by the Adviser (as defined below) and/or PineBridge Investments, LLC, the Fund’s sub-adviser (the “Sub-Adviser”).
VanEck AA-BB CLO ETF seeks to achieve its investment objective by investing, under normal circumstances, primarily in CLOs of any maturity that are rated between and inclusive of AA+ and BB- (or equivalent rating issued by a nationally NRSRO at the time of purchase, or if unrated, determined to be of comparable credit quality by the Adviser and/or the Sub-Adviser.
VanEck Commodity Strategy ETF seeks to achieve its investment objective by investing, under normal circumstances, in exchange-traded commodity futures contracts, exchange-traded and over-the-counter (“OTC”) commodity-linked instruments, and pooled investment vehicles, including exchange-traded products that provide exposure to commodities (“Commodities Instruments”) and cash and certain fixed income investments.
VanEck CMCI Commodity Strategy ETF seeks to achieve its investment objective by investing under normal circumstances in instruments that derive their value from the performance of the Index. In seeking to replicate the Index, the Fund invests in (i) commodity-linked derivative instruments, including commodity index-linked notes, swap agreements, commodity futures contracts and options on futures contracts that provide economic exposure to the investment returns of the commodities markets, as represented by the Index and its constituents and in (ii) bonds, debt securities and other fixed income instruments issued by various U.S. public- or private-sector entities.
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Municipal Securities
Certain Funds may invest in securities issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies or authorities. Municipal securities share the attributes of debt/fixed income securities in general, but are generally issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies or authorities. The municipal securities that each Fund may purchase include general obligation bonds and limited obligation bonds (or revenue bonds), including industrial development bonds issued pursuant to former federal tax law. General obligation bonds are obligations involving the credit of an issuer possessing taxing power and are payable from such issuer’s general revenues and not from any particular source. Limited obligation bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Tax-exempt industrial development bonds generally are also revenue bonds and thus are not payable from the issuer’s general revenues. The credit and quality of industrial development bonds are usually related to the credit of the corporate user of the facilities. Payment of interest on and repayment of principal of such bonds is the responsibility of the corporate user (and/or any guarantor). In addition, certain Funds may invest in lease obligations. Lease obligations may take the form of a lease or an installment purchase contract issued by public authorities to acquire a wide variety of equipment and facilities. The securities of state and municipal governments and their political subdivisions are not considered to be issued by members of any industry.
Investments in municipal securities are subject to the risk that the issuer could default on its obligations. Such a default could result from the inadequacy of the sources or revenues from which interest and principal payments are to be made, including property tax collections, sales tax revenue, income tax revenue and local, state and federal government funding, or the assets collateralizing such obligations. Municipal securities and their issuers may be more susceptible to downgrade, default, and bankruptcy as a result of recent periods of economic stress. During and following the economic downturn beginning in 2008, several municipalities have filed for bankruptcy protection or have indicated that they may seek bankruptcy protection in the future. In addition, many states and municipalities have been adversely impacted by the COVID-19 pandemic as a result of declines in revenues and increased expenditures required to manage and mitigate the outbreak. Revenue bonds, including private activity bonds, are backed only by specific assets or revenue sources and not by the full faith and credit of the governmental issuer.
Repurchase Agreements
The Funds may invest in repurchase agreements with commercial banks, brokers or dealers to generate income from their excess cash balances and to invest securities lending cash collateral. A repurchase agreement is an agreement under which a Fund acquires a money market instrument (generally a security issued by the U.S. Government or an agency thereof, a banker’s acceptance or a certificate of deposit) from a seller, subject to resale to the seller at an agreed-upon price and date (normally, the next business day). A repurchase agreement may be considered a loan collateralized by securities. The resale price reflects an agreed upon interest rate effective for the period the instrument is held by a Fund and is unrelated to the interest rate on the underlying instrument.
In these repurchase agreement transactions, the securities acquired by a Fund (including accrued interest earned thereon) must have a total value at least equal to the value of the repurchase agreement and are held by the Trust’s custodian bank until repurchased. In addition, the Board has established guidelines and standards for review of the creditworthiness of any bank, broker or dealer counterparty to a repurchase agreement with each Fund. No more than an aggregate of 15% of each Fund’s net assets will be invested in repurchase agreements having maturities longer than seven days.
The use of repurchase agreements involves certain risks. For example, if the other party to the agreement defaults on its obligation to repurchase the underlying security at a time when the value of the security has declined, the Funds may incur a loss upon disposition of the security. If the other party to the agreement becomes insolvent and subject to liquidation or reorganization under the Bankruptcy Code or other laws, a court may determine that the underlying security is collateral not within the control of a Fund and, therefore, the Fund may incur delays in disposing of the security and/or may not be able to substantiate its interest in the underlying security and may be deemed an unsecured creditor of the other party to the agreement.
Reverse Repurchase Agreements
The Funds may enter into reverse repurchase agreements with respect to its portfolio investments subject to the investment restrictions set forth herein. Reverse repurchase agreements involve the sale of securities held by a Fund with an agreement by the Fund to repurchase the securities at an agreed upon price, date and interest payment. The use by a Fund of reverse repurchase agreements involves the risks of leverage since the proceeds derived from such reverse repurchase agreements may be invested in additional securities. Reverse repurchase agreements involve the risk that the market value of the securities acquired in connection with the reverse repurchase agreement may decline below the price of the securities a Fund
7
has sold but is obligated to repurchase. Also, reverse repurchase agreements involve the risk that the market value of the securities retained in lieu of sale by the Fund in connection with the reverse repurchase agreement may decline in price.
If the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may receive an extension of time to determine whether to enforce a Fund's obligation to repurchase the securities, and the Fund's use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision. Also, a Fund would bear the risk of loss to the extent that the proceeds of the reverse repurchase agreement are less than the value of the securities subject to such agreement.
In October 2020, the SEC adopted a final rule related to the use of derivatives, short sales, reverse repurchase agreements and certain other transactions by registered investment companies (the “derivatives rule”). Under the derivatives rule, when a fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness (e.g., bank borrowings, if applicable) when calculating a fund’s asset coverage ratio or treat all such transactions as derivatives transactions. See “SEC Regulatory Matters” below.
Futures Contracts and Options
Futures contracts generally provide for the future purchase or sale of a specified instrument, index or commodity at a specified future time and at a specified price. Stock or bond index futures contracts and other types of futures contracts are settled daily with a payment by the Fund (or exchange) to an exchange (or Fund) of a cash amount based on the difference between the level of the stock or bond index or underlying instrument specified in the contract from one day to the next. Futures contracts are standardized as to maturity date and underlying instrument and are traded on futures exchanges. The Funds may use futures contracts and options on futures contracts which (i) in the case of all Funds other than VanEck AA-BB CLO ETF,VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF, VEAC (the “Adviser” with respect to all Funds other than VanEck BDC Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF) or VEARA (the “Adviser” with respect to VanEck BDC Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, and VanEck Real Assets ETF and, together with VEAC, the “Advisers”) believes to be representative of each Fund’s respective benchmark index (each, an “Index”), (ii) in the case of VanEck AA-BB CLO ETF, VanEck CLO ETF and VanEck HIP Sustainable Muni ETF, VEAC believes to be appropriate and (iii) in the case of VanEck Commodity Strategy ETF and VanEck Real Assets ETF, VEARA believes to be appropriate based on other indices or combinations of indices.
An option is a contract that provides the holder of the option the right to buy or sell shares or other assets at a fixed price, within a specified period of time. An American call option gives the option holder the right to buy the underlying security from the option writer at the option exercise price at any time prior to the expiration of the option. A European call option gives the option holder the right to buy the underlying security from the option writer only on the option expiration date. An American put option gives the option holder the right to sell the underlying security to the option writer at the option exercise price at any time prior to the expiration of the option. A European put option gives the option holder the right to sell the underlying security to the option writer at the option exercise price only on the option expiration date.
Although futures contracts (other than cash settled futures contracts, including most stock or bond index futures contracts) by their terms call for actual delivery or acceptance of the underlying instrument or commodity, in most cases the contracts are closed out before the maturity date without the making or taking of delivery. Closing out an open futures position is done by taking an opposite position (buying the same contract which was previously sold or selling the same contract previously purchased) in an identical contract to terminate the position. Brokerage commissions are incurred when a futures contract position is opened or closed.
Futures traders are required to make a margin deposit (typically in cash or government securities) with a broker or custodian to initiate and maintain open positions in futures contracts. A margin deposit is intended to assure completion of the contract (delivery or acceptance of the underlying instrument or commodity or payment of the cash settlement amount) if it is not terminated prior to the specified delivery date. Brokers may establish deposit requirements that are higher than the exchange minimums. Futures contracts are customarily purchased and sold on margin deposits that may vary.
After a futures contract position is opened, the value of the contract is marked-to-market daily. If the futures contract price changes to the extent that the margin on deposit does not satisfy margin requirements, payment of additional “variation” margin will be required.
8
Conversely, a change in the contract value may reduce the required margin, resulting in a repayment of excess margin to the contract holder. Variation margin payments are made to and from the futures broker for as long as the contract remains open. The Funds expect to earn interest income on their margin deposits in the form of cash.
The Funds may use futures contracts and options thereon, together with positions in cash and money market instruments, to simulate full investment in each Fund’s respective Index. Under such circumstances, the Adviser may seek to utilize other instruments that it believes to be correlated to the Fund’s Index components or a subset of the components. Liquid futures contracts may not be currently available for the Index of each Fund.
Positions in futures contracts and options may be closed out only on an exchange that provides a secondary market therefor. However, there can be no assurance that a liquid secondary market will exist for any particular futures contract or option at any specific time. Thus, it may not be possible to close a futures or options position. In the event of adverse price movements, the Funds would continue to be required to make daily cash payments to maintain its required margin. In such situations, if a Fund has insufficient cash, it may have to sell portfolio securities to meet daily margin requirements at a time when it may be disadvantageous to do so. In addition, the Funds may be required to make delivery of the instruments underlying futures contracts they have sold.
The Funds may seek to minimize the risk that they will be unable to close out a futures or options contract by only entering into futures and options for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts or uncovered call options in some strategies (e.g., selling uncovered stock index futures contracts) is potentially unlimited. The Funds do not plan to use futures and options contracts in this way. The risk of a futures position may still be large as traditionally measured due to the low margin deposits required. In many cases, a relatively small price movement in a futures contract may result in immediate and substantial loss or gain to the investor relative to the size of a required margin deposit.
Utilization of futures transactions by certain Funds involves the risk of imperfect or even negative correlation to each Fund’s respective Index if the index underlying the futures contracts differs from the Index. There is also the risk of loss by the Funds of margin deposits in the event of the bankruptcy or other similar insolvency with respect to a broker with whom a Fund has an open position in the futures contract or option.
Certain financial futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of future positions and subjecting some futures traders to substantial losses.
Except as otherwise specified in the Funds’ Prospectuses or this SAI, there are no limitations on the extent to which the Funds may engage in transactions involving futures and options thereon. With respect to certain Funds, under applicable Indian securities regulations, there are position limits on foreign portfolio investor (“FPI”) investments in index futures and index futures contracts on a particular underlying index under the Foreign Portfolio Investors Regulations, 2019 (“FPI Regulations”) of the Securities and Exchange Board of India (“SEBI”). The Funds also are required to comply with the derivatives rule when they engage in transactions involving futures and options thereon. See “SEC Regulatory Matters” below.
Swaps
OTC swap agreements are contracts between parties in which one party agrees to make payments to the other party based on the change in market value or level of a specified index or asset. In return, the other party agrees to make payments to the first party based on the return of a different specified index or asset, usually an interest rate. Although OTC swap agreements entail the risk that a party will default on its payment obligations thereunder, each Fund seeks to reduce this risk generally by receiving (or paying) collateral daily and entering into agreements that involve payments no less frequently than quarterly. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each swap is accrued on a daily basis and an amount of cash or highly liquid securities having an aggregate value at least equal to the accrued excess is maintained in an account at the Trust’s custodian bank.
In addition, certain Funds may enter into interest rate swaps and credit default swaps. Interest rate swaps are typically exchange-traded contracts in which a party agrees to make periodic payments on certain referenced interest rates (e.g., a fixed rate or a floating rate) applied to a specified notional amount. A credit default swap on a security is a bilateral
9
contract that enables an investor to buy or sell protection against a defined-issuer credit event. Credit default swaps referencing fixed income indices are generally traded on exchanges. Certain Funds may enter into credit default swap agreements either as a buyer or a seller. A Fund may buy protection to attempt to mitigate the risk of default or credit quality deterioration in one or more of its individual holdings or in a segment of the fixed income securities market to which it has exposure, or to take a “short” position in individual bonds or market segments which it does not own. A Fund may sell protection in an attempt to gain exposure to the credit quality characteristics of particular bonds or market segments without investing directly in those bonds or market segments. As the protection seller in a credit default swap, a Fund effectively adds economic leverage to its portfolio because, in addition to being subject to investment exposure on its total net assets, the Fund is subject to investment exposure on the notional amount of the swap.
The use of such swap agreements involves certain risks. For example, if the counterparty under an OTC swap agreement defaults on its obligation to make payments due from it as a result of its bankruptcy or otherwise, the Funds may lose such payments altogether or collect only a portion thereof, which collection could involve costs or delays.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and related regulatory developments require the clearing and exchange-trading of certain standardized OTC derivative instruments that the CFTC and the SEC defined as “swaps” and “security-based swaps,” respectively. Mandatory exchange-trading and clearing is occurring on a phased-in basis based on the type of market participant and CFTC approval of contracts for central clearing and exchange trading. In a cleared swap, a Fund’s ultimate counterparty is a central clearinghouse rather than a swap dealer, bank or other financial institution. A Fund enters into cleared swaps through an executing broker. Such transactions are then submitted for clearing and, if cleared, will be held at regulated futures commission merchants (“FCMs”) that are members of the clearinghouse that serves as the central counterparty. When a Fund enters into a cleared swap, it must deliver to the central counterparty (via an FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central counterparty, but an FCM may require additional initial margin above the amount required by the central counterparty. During the term of the swap agreement, a “variation margin” amount may also be required to be paid by a Fund or may be received by the Fund in accordance with margin controls set for such accounts, depending upon changes in the price of the underlying reference asset subject to the swap agreement. At the conclusion of the term of the swap agreement, if a Fund has a loss equal to or greater than the margin amount, the margin amount is paid to the FCM along with any loss in excess of the margin amount. If a Fund has a loss of less than the margin amount, the excess margin is returned to the Fund. If a Fund has a gain, the full margin amount and the amount of the gain is paid to the Fund.
Central clearing is designed to reduce counterparty credit risk compared to uncleared swaps because central clearing interposes the central clearinghouse as the counterparty to each participant’s swap, but it does not eliminate those risks completely. There is also a risk of loss by a Fund of the initial and variation margin deposits in the event of bankruptcy of the FCM with which the Fund has an open position in a swap contract. The assets of a Fund may not be fully protected in the event of the bankruptcy of the FCM or central counterparty because the Fund might be limited to recovering only a pro rata share of all available funds and margin segregated on behalf of an FCM’s customers or central counterparty’s clearing members. If the FCM does not provide accurate reporting, a Fund is also subject to the risk that the FCM could use the Fund’s assets, which are held in an omnibus account with assets belonging to the FCM’s other customers, to satisfy its own financial obligations or the payment obligations of another customer to the central counterparty. Certain swaps have begun trading on exchanges called swap execution facilities. Exchange-trading is expected to, but may not necessarily, increase the liquidity of swaps trading.
In addition, with respect to cleared swaps, a Fund may not be able to obtain as favorable terms as it would be able to negotiate for an uncleared swap. In addition, an FCM may unilaterally impose position limits or additional margin requirements for certain types of swaps in which a Fund may invest. Central counterparties and FCMs generally can require termination of existing cleared swap transactions at any time, and can also require increases in margin above the margin that is required at the initiation of the swap agreement. Margin requirements for cleared swaps vary on a number of factors, and the margin required under the rules of the clearinghouse and FCM may be in excess of the collateral required to be posted by a Fund to support its obligations under a similar uncleared swap. However, regulators recently adopted rules imposing certain margin requirements, including minimums and required daily margin transfers on uncleared swaps.
The Funds are also subject to the risk that, after entering into a cleared swap with an executing broker, no FCM or central counterparty is willing or able to clear the transaction. In such an event, the central counterparty would void the trade. Before a Fund can enter into a new trade, market conditions may become less favorable to the Fund.
The Adviser will continue to monitor developments regarding trading and execution of cleared swaps on exchanges, particularly to the extent regulatory changes affect a Fund’s ability to enter into swap agreements and the costs and risks associated with such investments.
SEBI has prohibited FPIs (in their capacity as issuers of offshore derivative instruments (“ODIs”)) from issuing ODIs that have derivatives as their underlying instruments, unless such exposure is for hedging purposes. ODIs are defined
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under the FPI Regulations as any instrument issued overseas by an FPI against securities held by it that are listed or proposed to be listed on any recognized stock exchange in India or unlisted debt securities or securitized debt instruments as its underlying instrument.
SEC Regulatory Matters
Subject to certain exceptions, the derivatives rule requires a Fund to trade derivatives and other transactions that create future payment or delivery obligations subject to a value-at-risk (“VaR”) leverage limit and certain derivatives risk management program and reporting requirements. Generally, these requirements apply unless a fund satisfies a “limited derivatives users” exception that is included in the derivatives rule. Under the derivatives rule, when a fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness (e.g., bank borrowings, if applicable) when calculating a Fund’s asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether a fund satisfies the limited derivatives users exception, but for funds subject to the VaR testing requirement, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. In addition, under the derivatives rule, a Fund is permitted to invest in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, and the transaction will be deemed not to involve a senior security under the 1940 Act, provided that (i) the Fund intends to physically settle the transaction and (ii) the transaction will settle within 35 days of its trade date (the “Delayed-Settlement Securities Provision”). A Fund may otherwise engage in such transactions that do not meet the conditions of the Delayed-Settlement Securities Provision so long as the Fund treats any such transaction as a “derivatives transaction” for purposes of compliance with the derivatives rule. Furthermore, under the derivatives rule, a Fund will be permitted to enter into an unfunded commitment agreement, and such unfunded commitment agreement will not be subject to the asset coverage requirements under the 1940 Act, if the Fund reasonably believes, at the time it enters into such agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all such agreements as they come due. The Advisers cannot predict the effects of these regulations on the Funds. The Advisers intend to monitor developments and seek to manage each Fund in a manner consistent with achieving the Fund’s investment objective.
Warrants and Subscription Rights
Warrants are equity securities in the form of options issued by a corporation which give the holder the right, but not the obligation, to purchase stock, usually at a price that is higher than the market price at the time the warrant is issued. A purchaser takes the risk that the warrant may expire worthless because the market price of the common stock fails to rise above the price set by the warrant.
Currency Forwards
A currency forward transaction is a contract to buy or sell a specified quantity of currency at a specified date in the future at a specified price which may be any fixed number of days from the date of the contract agreed upon by the parties at a price set at the time of the contract. Currency forward contracts may be used to increase or reduce exposure to currency price movements.
The use of currency forward transactions involves certain risks. For example, if the counterparty under the contract defaults on its obligation to make payments due from it as a result of its bankruptcy or otherwise, a Fund may lose such payments altogether or collect only a portion thereof, which collection could involve costs or delays.
The Funds also are required to comply with the derivatives rule when they engage in currency forward transactions that create future Fund payment or delivery obligations. See “SEC Regulatory Matters”above.
Convertible Securities
A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities generally have characteristics similar to both debt and equity securities. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Convertible securities ordinarily provide a stream of income with generally higher yields than those of common stock of the same or similar issuers. Convertible securities generally rank senior to common stock in a corporation’s capital structure but are
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usually subordinated to comparable nonconvertible securities. Convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities although the market prices of convertible securities may be affected by any dividend changes or other changes in the underlying securities.
Initial Public Offerings
A Fund may invest in initial public offerings (“IPOs”) of common stock or other primary or secondary syndicated offerings of equity or debt securities issued by a corporate issuer. A purchase of IPO securities often involves higher transaction costs than those associated with the purchase of securities already traded on exchanges or markets. IPO securities are subject to market risk and liquidity risk. The market value of recently issued IPO securities may fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading and speculation, a potentially small number of securities available for trading, limited information about the issuer, and other factors. A Fund may hold IPO securities for a period of time, or may sell them soon after the purchase. Investments in IPOs could have a magnified impact – either positive or negative – on a Fund’s performance while a Fund’s assets are relatively small. The impact of an IPO on a Fund’s performance may tend to diminish as a Fund’s assets grow. In circumstances when investments in IPOs make a significant contribution to the Fund’s performance, there can be no assurance that similar contributions from IPOs will continue in the future.
Special Purpose Acquisition Companies
A Fund may invest in stock, warrants, and other securities of special purpose acquisition companies (“SPACs”) or similar special purpose entities. A SPAC is typically a publicly traded company that raises investment capital via an IPO for the purpose of acquiring the equity securities of one or more existing companies (or interests therein) via merger, combination, acquisition or other similar transactions. A Fund may acquire an interest in a SPAC in an IPO or a secondary market transaction.
Unless and until an acquisition is completed, a SPAC generally invests its assets (less a portion retained to cover expenses) in U.S. government securities, money market securities and cash. To the extent the SPAC is invested in cash or similar securities, this may negatively affect a Fund’s performance. Because SPACs and similar entities are in essence blank check companies without operating history or ongoing business other than seeking acquisitions, the value of their securities is particularly dependent on the ability of the entity’s management to identify and complete a profitable acquisition. There is no guarantee that the SPACs in which a Fund invests will complete an acquisition or that any acquisitions that are completed will be profitable. Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices. In addition, these securities, which are typically traded in the over-the-counter market, may be considered illiquid and/or be subject to restrictions on resale.
Other risks of investing in SPACs include that a significant portion of the monies raised by the SPAC may be expended during the search for a target transaction; an attractive transaction may not be identified at all (or any requisite approvals may not be obtained) and the SPAC may dissolve and be required to return any remaining monies to shareholders, causing a Fund to incur the opportunity cost of missed investment opportunities a Fund otherwise could have benefited from; a transaction once identified or effected may prove unsuccessful and an investment in the SPAC may lose value; the warrants or other rights with respect to the SPAC held by a Fund may expire worthless or may be repurchased or retired by the SPAC at an unfavorable price; and an investment in a SPAC may be diluted by additional later offerings of interests in the SPAC or by other investors exercising existing rights to purchase shares of the SPAC. In addition, a SPAC target company may have limited operating experience, a smaller size, limited product lines, markets, distribution channels and financial and managerial resources. Investing in the securities of smaller companies involves greater risk, and portfolio price volatility.
Market Risk
A Fund could lose money over short periods due to short-term market movements and over longer periods during more prolonged market downturns. The prices of the securities in a Fund are subject to the risks associated with investing in the securities market, including general economic conditions, sudden and unpredictable drops in value, exchange trading suspensions and closures and public health risks. Market risk arises mainly from uncertainty about future values of financial instruments and may be influenced by price, currency and interest rate movements. These risks may be magnified if certain social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts, social unrest, recessions, inflation, interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions and other trade barriers) adversely interrupt the global economy; in these and other circumstances, such events or developments might affect companies world-wide. As global systems, economies and financial markets are increasingly interconnected, events that occur in one country, region or financial market will, more frequently, adversely impact issuers in other countries, regions or markets. During a general market downturn, multiple asset classes may be negatively affected. Changes in market conditions and interest rates generally do not have the same impact on all types of securities and instruments. International trade
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tensions may give rise to concerns about economic and geopolitical stability and have had and likely will continue to have an adverse impact on global economic conditions. Trade disputes between the United States and other countries may be an ongoing source of instability, potentially resulting in significant currency fluctuations, or have other adverse effects on international markets, international trade agreements, or other existing cross-border cooperation arrangements. Tariffs, trade restrictions, economic sanctions, export controls, or retaliatory measures, or the threat or potential of one or more such events and developments , may result in material adverse effects on the global economy and a Fund. Such events could adversely impact issuers, markets and economies over the short- and long-term, including in ways that cannot necessarily be foreseen.
Economies and financial markets throughout the world have experienced periods of increased volatility, uncertainty and distress. To the extent these conditions continue, the risks associated with an investment in the Fund, including those described below, could be heightened and the Fund’s investments (and thus a shareholder’s investment in the Fund) may be particularly susceptible to sudden and substantial losses, reduced yield or income or other adverse developments.
Structured Notes
A structured note is a derivative security for which the amount of principal repayment and/or interest payments is based on the movement of one or more “factors.” These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate), referenced bonds and stock indices. Some of these factors may or may not correlate to the total rate of return on one or more underlying instruments referenced in such notes. Investments in structured notes involve risks including interest rate risk, credit risk and market risk. Depending on the factor(s) used and the use of multipliers or deflators, changes in interest rates and movement of such factor(s) may cause significant price fluctuations. Structured notes may be less liquid than other types of securities and more volatile than the reference factor underlying the note.
Participation Notes
Participation notes (“P-Notes”) are issued by banks or broker-dealers and are designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes can have the characteristics or take the form of various instruments, including, but not limited to, certificates or warrants. The holder of a P-Note that is linked to a particular underlying security may, among other things, be entitled to receive any dividends paid in connection with the underlying security. However, the holder of a P-Note generally does not receive voting rights as it would if it directly owned the underlying security. P-Notes constitute direct, general and unsecured contractual obligations of the banks or broker-dealers that issue them, which therefore subject the subscriber to counterparty risk, as discussed below. Investments in P-Notes involve certain risks in addition to those associated with a direct investment in the underlying foreign securities or foreign securities markets whose return they seek to replicate. For instance, there can be no assurance that the trading price of a P-Note will equal the value of the underlying foreign security or foreign securities market that it seeks to replicate. As the purchaser of a P-Note, a Fund is relying on the creditworthiness of the counterparty issuing the P-Note and has no rights under a P-Note against the issuer of the underlying security. Therefore, if such counterparty were to become insolvent, a Fund would lose its investment. The risk that a Fund may lose its investments due to the insolvency of a single counterparty may be amplified to the extent the Fund purchases P-Notes issued by one issuer or a small number of issuers. P-Notes also include transaction costs in addition to those applicable to a direct investment in securities. In addition, a Fund’s use of P-Notes may cause the Fund’s performance to deviate from the performance of the portion of the Index to which the Fund is gaining exposure through subscription to P-Notes.
Due to liquidity and transfer restrictions, the secondary markets on which P-Notes are traded may be less liquid than the markets for other securities, which may lead to the absence of readily available market quotations for securities in a Fund’s portfolio and may cause the value of the P-Notes to decline. The ability of a Fund to value its securities becomes more difficult and the Adviser’s and/or Sub-Adviser’s judgment in the application of fair value procedures may play a greater role in the valuation of a Fund’s securities due to reduced availability of reliable objective pricing data. Consequently, while such determinations will be made in good faith, it may nevertheless be more difficult for a Fund to accurately assign a daily value to such securities.
Indian SEBI Takeover Regulations
Under the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Code”), any acquirer who acquires, together with persons acting in concert with him, 5% or more of the shares or voting rights of a listed public Indian company, is required to notify the company and the stock exchanges on which the shares of such company are listed about its holding within the prescribed time period (including changes in holdings by more than certain thresholds).
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Upon the acquisition of 25% or more of shares or voting rights or an acquisition of control of the company, whether directly or indirectly, the acquirer is required to make an open offer to the other shareholders offering to purchase at least 26% of all the outstanding shares of the company at an offer price as determined pursuant to the provisions of the Takeover Code.
Collateralized Loan Obligations (VanEck AA-BB CLO ETF and VanEck CLO ETF only)
A CLO is a type of structured credit typically organized as a trust or other special purpose vehicle. The CLO issues debt and equity interests and uses the proceeds from this issuance to acquire a portfolio of bank loans. The underlying loans are generally senior-secured/first-priority loans; however, the CLO may also include an allowance for second-lien and/or unsecured debt. Additionally, the underlying loans may include domestic and foreign senior secured loans, senior unsecured loans and subordinate corporate loans, some of which may individually be below investment grade or the equivalent if unrated. The portfolio of underlying loans is actively managed by the CLO manager for a fixed period of time (“reinvestment period”). During the reinvestment period, the CLO manager may buy and sell individual loans to create trading gains or mitigate losses. The CLO portfolio will generally be required to adhere to certain diversification rules established by the CLO issuer to mitigate against the risk of concentrated defaults within a given industry or sector. After a specified period of time, the majority owner of equity interests in the CLO may seek to call the CLO’s outstanding debt or refinance its position. If not called or refinanced, when the reinvestment period ends, the CLO uses cash flows from the underlying loans to pay down the outstanding debt tranches and wind up the CLO’s operations.
Interests in the CLOs are divided into two or more separate debt and equity tranches, each with a different credit rating and risk/return profile based upon its priority of claim on the cashflows produced by the underlying loan pool. Tranches are categorized as senior, mezzanine and subordinated/equity, according to their degree of credit risk. If there are defaults or the CLO’s collateral otherwise underperforms, scheduled payments to senior tranches take precedence over those of mezzanine tranches, and scheduled payments to mezzanine tranches take precedence over those to subordinated/equity tranches. The riskiest portion is the “Equity” tranche, which bears the bulk of defaults from the loans in the CLO and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Senior and mezzanine tranches are typically rated, with the former receiving ratings of A/A to AAA/Aaa and the latter receiving ratings of B/B2 to BBB/Baa2. The ratings reflect both the credit quality of underlying collateral as well as how much protection a given tranche is afforded by tranches that are subordinate to it. Normally, CLOs are privately offered and sold, and thus are not registered under the securities laws. CLOs themselves, and the loan obligations underlying the CLOs, are typically subject to certain restrictions on transfer and sale, potentially making them less liquid than other types of securities. Additionally, when each Fund purchases a newly issued CLO directly from the issuer (rather than from the secondary market), there will be a delayed settlement period, during which time the liquidity of the CLO may be further reduced. During periods of limited liquidity and higher price volatility, each Fund’s ability to acquire or dispose of CLOs at a price and time each Fund deems advantageous may be severely impaired. CLOs are generally considered to be long-term investments and there is no guarantee that an active secondary market will exist or be maintained for any given CLO. CLOs are typically structured such that, after a specified period of time, the majority investor in the equity tranche can call (i.e., redeem) the security in full. Each Fund may not be able to accurately predict when or which of the Fund’s CLO investments will be called, resulting in each Fund having to reinvest the proceeds in unfavorable circumstances, resulting in a decline in each Fund’s income. As interest rates decrease, issuers of the underlying loan obligations may refinance any floating rate loans, which will result in a reduction in the principal value of the CLO’s portfolio and require each Fund to reinvest cash at inopportune times. Conversely, as interest rates rise, borrowers with floating rate loans may experience difficulty in making payments, resulting and delinquencies and defaults, which will result in a reduction in cash flow to the CLO and the CLO’s investors.
Future Developments
The Funds may take advantage of opportunities in the area of options, futures contracts, options on futures contracts, warrants, swaps and any other investments which are not presently contemplated for use or which are not currently available, but which may be developed, to the extent such investments are considered suitable for a Fund by the Advisers or Sub-Adviser.
Investment Restrictions
The Trust and the Board of Directors of the Mauritius Subsidiary (to the extent that such restrictions are applicable to the VanEck India Growth Leaders ETF) have adopted the following investment restrictions as fundamental policies with respect to each Fund (and the Mauritius Subsidiary), unless otherwise noted. These restrictions cannot be changed with respect to a Fund (or the Mauritius Subsidiary) without the approval of the holders of a majority of such Fund’s (or Mauritius Subsidiary’s) outstanding voting securities. For purposes of the 1940 Act, a majority of the outstanding voting securities of a Fund means the vote, at an annual or a special meeting of the security holders of the Trust, of the lesser of (1) 67% or more of
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the voting securities of the Fund present at such meeting, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Fund. Similar voting requirements apply with respect to a change in the fundamental investment policies of the Mauritius Subsidiary. If VanEck India Growth Leaders ETF, as an investor in the Mauritius Subsidiary, is requested to vote on a change in the fundamental investment policies of the Mauritius Subsidiary, the Fund will either call a meeting of its shareholders and will vote its shares in the Mauritius Subsidiary in accordance with instructions it receives from its shareholders or otherwise vote as required under the 1940 Act.
The following investment restrictions are applicable to each Fund (unless otherwise noted) except the VanEck Energy Income ETF:
1.Each Fund may not make loans, except that a Fund may (i) lend portfolio securities, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of debt securities, bank loan or participation interests, bank certificates of deposit, bankers’ acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities and (iv) participate in an interfund lending program with other registered investment companies;
2.Each Fund may not borrow money, except as permitted under the 1940 Act, and as interpreted or modified by regulation from time to time;
3.Each Fund may not issue senior securities except as permitted under the 1940 Act, and as interpreted or modified by regulation from time to time;
4.Each of VanEck Africa Index ETF, VanEck BDC Income ETF, VanEck Brazil Small-Cap ETF, VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend ETF, VanEck Emerging Markets High Yield Bond ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck High Yield Muni ETF, VanEck India Growth Leaders ETF, VanEck Real Assets ETF, VanEck Intermediate Muni ETF, VanEck International High Yield Bond ETF, VanEck Long/Flat Trend ETF, VanEck Long Muni ETF, VanEck Moody’s Analytics IG Corporate Bond ETF, VanEck Morningstar ESG Moat ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF, VanEck Morningstar Wide Moat ETF, VanEck Natural Resources ETF, VanEck Short High Yield Muni ETF, VanEck Short Muni ETF and VanEck Social Sentiment ETF may not invest in a manner inconsistent with its classification as a “diversified company” as provided by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time;
5.VanEck Africa Index ETF, VanEck Agribusiness ETF, VanEck Brazil Small-Cap ETF, VanEck Environmental Services ETF, VanEck Gaming ETF, VanEck Gold Miners ETF, VanEck High Yield Muni ETF, VanEck Indonesia ETF, VanEck Intermediate Muni ETF, VanEck Long Muni ETF, VanEck Low Carbon Energy ETF, VanEck Natural Resources ETF, VanEck Russia ETF, VanEck Short Muni ETF, VanEck Steel ETF, VanEck Uranium and Nuclear ETF and VanEck Vietnam ETF may not purchase a security (other than obligations of the U.S. Government, its agencies or instrumentalities) if, as a result, 25% or more of its total assets would be invested in a single issuer;
6.Each Fund may not purchase or sell real estate, except that a Fund may (i) invest in securities of issuers that invest in real estate or interests therein; (ii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein; and (iii) hold and sell real estate acquired by the Fund as a result of the ownership of securities;
7.Each Fund may not engage in the business of underwriting securities issued by others, except to the extent that the Fund may be considered an underwriter within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), in the disposition of restricted securities or in connection with its investments in other investment companies;
8.Each Fund may not purchase or sell commodities, unless acquired as a result of owning securities or other instruments, but it may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments and may invest in securities or other instruments backed by commodities. In addition, VanEck Gold Miners ETF may invest up to 25% of its total assets in gold and silver coins, which are legal tender in the country of issue and gold and silver bullion, and palladium and platinum group metals bullion; and
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9.Each Fund (except VanEck AA-BB CLO ETF, VanEck Alternative Asset Manager ETF, VanEck BDC Income ETF, VanEck Biotech ETF, VanEck CLO ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck Digital India ETF, VanEck Digital Transformation ETF, VanEck Gold Miners ETF, VanEck Green Infrastructure ETF, VanEck Green Metals ETF, VanEck HIP Sustainable Muni ETF, VanEck Low Carbon Energy ETF, VanEck Moody's Analytics BBB Corporate Bond ETF, VanEck Moody's Analytics IG Corporate Bond ETF, VanEck Morningstar ESG Moat ETF, VanEck Morningstar SMID Moat ETF, VanEck Morningstar Wide Moat Growth ETF, VanEck Morningstar Wide Moat Value ETF, VanEck Mortgage REIT Income ETF, VanEck Office and Commercial REIT ETF, VanEck Oil Services ETF, VanEck Pharmaceutical ETF, VanEck Real Assets ETF, VanEck Retail ETF, VanEck Robotics ETF, VanEck Semiconductor ETF and VanEck Social Sentiment ETF) may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry, except that the Fund may invest 25% or more of the value of its total assets in securities of issuers in any one industry or group of industries if the index that the Fund replicates concentrates in an industry or group of industries. Each of VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry.VanEck Gold Miners ETF may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry except that the Fund will invest 25% or more of its total assets in the gold-mining industry. VanEck Low Carbon Energy ETF may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry except that the Fund will invest 25% or more of its total assets in the alternative energy industry. Each of VanEck BDC Income ETF, VanEck Biotech ETF, VanEck Mortgage REIT Income ETF, VanEck Oil Services ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF and VanEck Semiconductor ETF may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry, except that the Fund will invest 25% or more of the value of its total assets in securities of issuers in any one industry or group of industries if the index that the Fund replicates concentrates in an industry or group of industries. Each of VanEck Alternative Asset Manager ETF, VanEck CMCI Commodity Strategy ETF, VanEck Digital India ETF, VanEck Digital Transformation ETF, VanEck Green Infrastructure ETF, VanEck Green Metals ETF, VanEck Moody's Analytics BBB Corporate Bond ETF, VanEck Moody's Analytics IG Corporate Bond ETF, VanEck Morningstar ESG Moat ETF, VanEck Morningstar SMID Moat ETF, VanEck Morningstar Wide Moat Growth ETF, VanEck Morningstar Wide Moat Value ETF, VanEck Office and Commercial REIT ETF, VanEck Robotics ETF and VanEck Social Sentiment ETF may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry, except that the Fund may invest 25% or more of the value of its total assets in securities of issuers in any one industry or group of industries if the index that the Fund tracks concentrates in an industry or group of industries. VanEck AA-BB CLO ETF and VanEck CLO ETF may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry or group of industries. VanEck Commodity Strategy ETF may not purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry or group of industries, except that the Fund may invest 25% or more of its total assets in investments that provide exposure to commodities. These limits do not apply to securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
In addition, each of VanEck High Yield Muni ETF, VanEck Intermediate Muni ETF, VanEck Long Muni ETF, VanEck Short High Yield Muni ETF and VanEck Short Muni ETF (collectively, the “Municipal Funds”) has adopted a fundamental investment policy to invest at least 80% of its assets in investments suggested by its name. For purposes of this policy, the term “assets” means net assets plus the amount of borrowings for investment purposes. Accordingly, each Municipal Fund will invest at least 80% of its assets in municipal securities. Each of VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF has adopted a fundamental investment policy to invest at least 80% of its total assets in investments the income from which is exempt from U.S. federal income tax (other than the Alternative Minimum Tax (“AMT”)). For purposes of this policy, the term “total assets” means net assets plus the amount of any borrowings for investment purposes. Each of VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF may count securities that generate income subject to the AMT toward the 80% investment requirement.
In addition to the investment restrictions (and with respect to the Municipal Funds, VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF, the applicable policy) adopted as fundamental policies as set forth above, each Fund (except the VanEck Energy Income ETF) observes the following non-fundamental investment restrictions, which may be changed by the Board without a shareholder vote. Under these restrictions:
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1.Each Fund will not invest in securities which are “illiquid” securities if the result is that more than 15% of the Fund’s net assets would be invested in such securities.
2.Each Fund will not make short sales of securities.
3.Each Fund (except for VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF) will not purchase any security on margin, except for such short-term loans as are necessary for clearance of securities transactions. The deposit or payment by a Fund of initial or variation margin in connection with futures contracts or related options thereon is not considered the purchase of a security on margin. Each of VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF will not purchase any security on margin, except for such short-term loans as are necessary for clearance of securities transactions. The deposit or payment by each of VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF of initial or variation margin in connection with futures contracts, options on futures contracts or other derivative instruments shall not constitute the purchase of a security on margin.
4.Each Fund will not participate in a joint or joint-and-several basis in any trading account in securities, although transactions for the Funds and any other account under common or affiliated management may be combined or allocated between a Fund and such account.
In addition to the fundamental and non-fundamental investment restrictions set forth above, each of VanEck Agribusiness ETF, VanEck Biotech ETF, VanEck Brazil Small-Cap ETF, VanEck Emerging Markets High Yield Bond ETF, VanEck Gold Miners ETF, VanEck Green Bond ETF, VanEck Indonesia Index ETF, VanEck International High Yield Bond ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck Junior Gold Miners ETF, VanEck Moody's Analytics BBB Corporate Bond ETF, VanEck Moody's Analytics IG Corporate Bond ETF, VanEck Morningstar Wide Moat ETF, VanEck Natural Resources ETF, VanEck Oil Services ETF, VanEck Pharmaceutical ETF, VanEck Preferred Securities ex Financials ETF, VanEck Rare Earth and Strategic Metals ETF, VanEck Russia ETF, VanEck Steel ETF and VanEck Semiconductor ETF observes the following additional restrictions, which may be changed by the Board without a shareholder vote: under normal market conditions (i) any borrowings by the Fund will be on a temporary basis and will not exceed 10% of the Fund’s net assets; and (ii) the Fund’s investments in the securities of other pooled investment vehicles will not exceed 10% of the Fund’s net assets. For purposes of restriction (ii), real estate investment trusts are not considered to be pooled investment vehicles. In addition, each of VanEck Gold Miners ETF, VanEck India Growth Leaders ETF, VanEck Junior Gold Miners ETF, VanEck Low Carbon Energy ETF and VanEck Semiconductor ETF will invest at least 51% of its net assets in equity securities. This may be changed by the Board without a shareholder vote.
If a percentage limitation is adhered to at the time of investment or contract, a later increase or decrease in percentage resulting from any change in value or total or net assets will not result in a violation of such restriction, except that the percentage limitation with respect to the borrowing of money described above in fundamental restriction 2 will be continuously complied with.
With respect to fundamental restriction 2, the 1940 Act permits each Fund to borrow money from banks in an amount up to one-third of its total assets (including the amount borrowed) less its liabilities (not including any borrowings but including the fair market value at the time of computation of any other senior securities then outstanding). Each Fund may also borrow an additional 5% of its total assets without regard to the foregoing limitation for temporary purposes such as clearance of portfolio transactions. Practices and investments that may involve leverage but are not considered to be borrowings are not subject to the policy.
With respect to fundamental restriction 3, the 1940 Act prohibits each Fund from issuing senior securities, except that the Fund may borrow money in amounts of up to one-third of the Fund’s total assets from banks for any purpose. Each Fund may also borrow money or engage in economically similar transactions if those transactions do not constitute “senior securities” under the 1940 Act. The policy above will be interpreted not to prevent collateral arrangements with respect to swaps, options, forward or futures contracts or other derivatives, or the posting of initial or variation margin.
With respect to fundamental restriction 4, each of VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck India Growth Leaders ETF, VanEck Long/Flat Trend ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF and VanEck Morningstar Wide Moat ETF intends to be diversified in approximately the same proportion as its underlying index is diversified. Each of VanEck CEF Muni Income ETF, VanEck ChiNext ETF, VanEck Durable High Dividend ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck India Growth Leaders ETF, VanEck Long/Flat Trend ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF and VanEck Morningstar Wide Moat ETF may become non-diversified, as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of its underlying index. With respect to fundamental restriction 9, investment companies are not considered to be part of an industry. Additionally, the securities of state and municipal governments and their political
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subdivisions are not considered to be issued by members of any industry. In accordance with each of VanEck AA-BB CLO ETF’s, VanEck CLO ETF’s, VanEck Real Assets ETF’s and VanEck Long/Flat Trend ETF’s principal investment strategies as set forth in its Prospectus, each of VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Real Assets ETF and VanEck Long/Flat Trend ETF may invest its assets in underlying investment companies. Although each of VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Real Assets ETF and VanEck Long/Flat Trend ETF does not have a policy to concentrate its investments in a particular industry, 25% or more of VanEck AA-BB CLO ETF’s, VanEck CLO ETF’s, VanEck Real Assets ETF’s and VanEck Long/Flat Trend ETF’s total assets may be indirectly exposed to a particular industry or group of related industries through its investment in one or more underlying investment companies.
Each of VanEck AA-BB CLO ETF, VanEck CLO ETF and VanEck Real Assets ETF may invest its remaining assets in securities, which may include but may not be limited to, money market instruments or funds which reinvest exclusively in money market instruments, stocks that are in the relevant market and/or in combinations of certain stock index futures contracts, options on such futures contracts, stock options, stock index options, options on the Shares, and stock index swaps and swaptions. These investments may be made to invest uncommitted cash balances or, in limited circumstances, to assist in meeting shareholder redemptions of Creation Units. Each of VanEck AA-BB CLO ETF, VanEck CLO ETF and VanEck Real Assets ETF may also invest in money market instruments for cash management purposes or as part of a temporary defensive strategy to protect against potential stock market declines.
VanEck Commodity Strategy ETF expects to invest its assets in any one or more of the following to provide liquidity, serve as margin or collateralize the Fund’s investments in certain Commodities Instruments: U.S. Treasuries, other U.S. government obligations, money market funds and funds that invest in short-term bonds, cash and cash-like equivalents (e.g., high quality commercial paper and similar instruments that are rated investment grade or, if unrated, of comparable quality, as the Adviser determines), mortgage-backed securities issued or guaranteed by U.S. government agencies, instrumentalities or sponsored enterprises of the U.S. government (whether or not the securities are U.S. government securities), municipal debt securities, Treasury inflation-protected securities, sovereign debt obligations of non-U.S. countries, and repurchase agreements.
Each Fixed Income Fund may invest its remaining assets in securities not included in its respective Index, municipal bonds (with respect to VanEck CEF Muni Income ETF), money market instruments, repurchase agreements or funds which reinvest exclusively in money market instruments, convertible securities (with respect to VanEck Green Bond ETF), structured notes (notes on which the amount of principal repayment and interest payments are based on the movement of one or more specified factors, such as the movement of a particular stock or stock index) (with respect to VanEck Green Bond ETF), certain derivatives (with respect to VanEck Green Bond ETF), in bonds that are in the relevant market but not the Fund’s respective Index and/or in combinations of certain bond index futures contracts, options on such futures contracts, bond options, bond index options, options on the Shares, and bond index swaps and swaptions, each with a view towards providing each Fund with exposure to the securities in its respective Index.
Each Fund (other than the Fixed Income Funds, VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF) may invest its remaining assets in securities not included in its respective Index, which may include but is not limited to money market instruments or funds which reinvest exclusively in money market instruments, in stocks that are in the relevant market but not its Index, and/or in combinations of certain stock index futures contracts, options on such futures contracts, stock options, stock index options, options on the Shares, and stock index swaps and swaptions, each with a view towards providing each Fund with exposure to the securities in its respective Index.
These investments may be made to invest uncommitted cash balances or, in limited circumstances, to assist in meeting shareholder redemptions of Creation Units. Each Fund (except VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF) does not take temporary defensive positions that are inconsistent with its investment objective of seeking to replicate/track (as applicable) its Index.
The following fundamental investment restrictions are applicable to only the VanEck Energy Income ETF. The VanEck Energy Income ETF may not:
1.Concentrate its investments in an industry or group of industries (i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except that the Fund will concentrate to approximately the same extent that its Index concentrates in the stocks of such particular industry or group of industries. For purposes of this limitation, securities of the U.S. government (including its agencies and instrumentalities), repurchase agreements collateralized by U.S. government securities and securities of state or municipal governments and their political subdivisions are not considered to be issued by members of any industry.
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2.Borrow money or issue senior securities (as defined under the 1940 Act), except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time.
3.Make loans, except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time.
4.Purchase or sell commodities or real estate, except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time.
5.Underwrite securities issued by other persons, except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time.
In addition to the investment restrictions adopted as fundamental policies as set forth above, the VanEck Energy Income ETF observes the following non-fundamental investment restrictions, which may be changed by the Board without a shareholder vote. Under these restrictions:
1.The Fund will not invest in securities which are “illiquid” securities if the result is that more than 15% of a Fund’s net assets would be invested in such securities.
If a percentage limitation is adhered to at the time of investment or contract, a later increase or decrease in percentage resulting from any change in value or total or net assets will not result in a violation of such restriction, except that the percentage limitation with respect to the borrowing of money described above in fundamental restriction 2 will be continuously complied with.
With respect to fundamental restriction 2, the 1940 Act permits the Fund to borrow money from banks in an amount up to one-third of its total assets (including the amount borrowed) less its liabilities (not including any borrowings but including the fair market value at the time of computation of any other senior securities then outstanding). The Fund may also borrow an additional 5% of its total assets without regard to the foregoing limitation for temporary purposes such as clearance of portfolio transactions. Practices and investments that may involve leverage but are not considered to be borrowings are not subject to the policy.
With respect to fundamental restriction 2, the 1940 Act prohibits the Fund from issuing senior securities, except that a Fund may borrow money in amounts of up to one-third of the Fund’s total assets from banks for any purpose. The Fund may also borrow money or engage in economically similar transactions if those transactions do not constitute “senior securities” under the 1940 Act. The policy above will be interpreted not to prevent collateral arrangements with respect to swaps, options, forward or futures contracts or other derivatives, or the posting of initial or variation margin.
The VanEck Energy Income ETF may invest its remaining assets in securities not included in its Index, which may include but is not limited to money market instruments or funds which reinvest exclusively in money market instruments, in stocks that are in the relevant market but not the Fund’s Index, and/or in combinations of certain stock index futures contracts, options on such futures contracts, stock options, stock index options, options on the Shares, and stock index swaps and swaptions, each with a view towards providing the Fund with exposure to the securities in its Index. These investments may be made to invest uncommitted cash balances or, in limited circumstances, to assist in meeting shareholder redemptions of Creation Units. The Fund does not take temporary defensive positions that are inconsistent with its investment objective of seeking to replicate its Index.
Indian Investment Restrictions
The investment restrictions described below only apply to investments in Indian issuers made by VanEck India Growth Leaders ETF (or the Mauritius Subsidiary) and VanEck Digital India ETF.
Each of the Mauritius Subsidiary and VanEck Digital India ETF is registered as a Category I FPI with the SEBI. As such, the universe of permissible investments for these entities is limited pursuant to FPI Regulations and other applicable regulations.
FPIs are not allowed to short sell in the Indian market except in certain limited circumstances as specified by the SEBI. Further, sales against open purchases are not permitted for FPIs and FPIs can sell such securities only after their settlement.
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The extent to which percentage positions may be taken in index options and index futures by the Mauritius Subsidiary and VanEck Digital India ETF would be restricted to the limits prescribed by applicable regulators from time to time. Separately, there are multiple restrictions including regarding ownership and use of derivatives as a result of applicable Indian regulations.
SPECIAL CONSIDERATIONS AND RISKS
A discussion of the risks associated with an investment in each Fund is contained in each Fund’s Prospectus under the headings “Summary Information—Principal Risks of Investing in the Fund” with respect to the applicable Fund and “Additional Information About the Funds’ Investment Strategies and Risks—Risks of Investing in the Funds.” The discussion below supplements, and should be read in conjunction with, such sections of each Fund’s Prospectus.
General
An investment in each Fund should be made with an understanding that the value of the Fund’s portfolio securities may fluctuate in accordance with changes in the financial condition of the issuers of the portfolio securities, the value of securities generally and other factors.
(All Funds except VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF)
An investment in each Fixed Income Fund should be made with an understanding of the risks inherent in an investment in fixed income securities. An issuer may have the right to redeem or “call” a bond before maturity, in which case the investor may have to reinvest the proceeds at lower market rates. Most bonds bear interest income at a “coupon” rate that is fixed for the life of the bond. The value of a fixed rate bond usually rises when market interest rates fall, and falls when market interest rates rise. Accordingly, a fixed rate bond’s yield (income as a percent of the bond’s current value) may differ from its coupon rate as its value rises or falls. Other types of bonds bear income at an interest rate that is adjusted periodically. Because of their adjustable interest rates, the values of “floating-rate” or “variable-rate” bonds generally fluctuate less in response to market interest rate movements than the value of similar fixed rate bonds. The Fixed Income Funds may treat some of these bonds as having a shorter maturity for purposes of calculating the weighted average maturity of its investment portfolio. Generally, prices of higher quality issues tend to fluctuate more with changes in market interest rates than prices of lower quality issues and prices of longer maturity issues tend to fluctuate more than prices of shorter maturity issues. Bonds may be senior or subordinated obligations. Senior obligations generally have the first claim on a corporation’s earnings and assets and, in the event of liquidation, are paid before subordinated obligations. Bonds may be unsecured (backed only by the issuer’s general creditworthiness) or secured (also backed by specified collateral).
An investment in each Fund (other than the Fixed Income Funds) should be made with an understanding of the risks inherent in an investment in equity securities, including the risk that the financial condition of issuers may become impaired or that the general condition of the stock market may deteriorate (either of which may cause a decrease in the value of the portfolio securities and thus in the value of Shares). Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. These investor perceptions are based on various and unpredictable factors, including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic and banking crises. Holders of common stocks incur more risk than holders of preferred stocks and debt obligations because common stockholders, as owners of the issuer, have generally inferior rights to receive payments from the issuer in comparison with the rights of creditors of, or holders of debt obligations or preferred stocks issued by, the issuer. Further, unlike debt securities which typically have a stated principal amount payable at maturity (whose value, however, will be subject to market fluctuations prior thereto), or preferred stocks which typically have a liquidation preference and which may have stated optional or mandatory redemption provisions, common stocks have neither a fixed principal amount nor a maturity. Common stock values are subject to market fluctuations as long as the common stock remains outstanding. In the event that the securities in a Fund’s Index (except with respect to the Fixed Income Funds) are not listed on a national securities exchange, the principal trading market for some may be in the over the counter market.
The existence of a liquid trading market for certain securities may depend on whether dealers will make a market in such securities. There can be no assurance that a market will be made or maintained or that any such market will be or remain liquid. The price at which securities may be sold and the value of a Fund’s Shares will be adversely affected if trading markets for a Fund’s portfolio securities are limited or absent or if bid/ask spreads are wide.
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With the exception of VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF, the Funds are not actively managed by traditional methods, and therefore the adverse financial condition of any one issuer may not result in the elimination of its securities from the securities held by a Fund unless the securities of such issuer are removed from its respective Index.
An investment in each Fund should be made with an understanding that the Fund will not be able to replicate/track (as applicable) exactly the performance of its respective Index because the total return generated by the securities will be reduced by transaction costs incurred in adjusting the actual balance of the securities and other Fund expenses, whereas such transaction costs and expenses are not included in the calculation of its respective Index. In addition, certain Funds’ use of a representative sampling approach may cause each such Fund to not be as well correlated with the return of its respective Index as would be the case if the Fund purchased all of the securities in its respective Index in the proportions represented in such Index. The risk of non-correlation may be higher than other ETFs which utilize a sampling approach to the extent that a Fund invests a portion of its assets in securities that have economic characteristics that are substantially identical to the securities comprising its respective Index, but which are not included in such Index. It is also possible that for periods of time, a Fund may not fully replicate the performance of its respective Index due to the temporary unavailability of certain Index securities in the secondary market or due to other extraordinary circumstances. Such events are unlikely to continue for an extended period of time because the Fund is required to correct such imbalances by means of adjusting the composition of the securities. It is also possible that the composition of a Fund may not exactly replicate the composition of its respective Index if the Fund has to adjust its portfolio holdings in order to continue to qualify as a regulated investment company (“RIC”) under the U.S. Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), or, in the case of VanEck BDC Income ETF, to comply with the provisions of the 1940 Act that limit the amount the Fund and its affiliates, in the aggregate, can invest in any one business development company.
Each Fund is subject to the risks of an investment in an economic sector or industry in which the Fund’s Index is highly concentrated. In addition, because it is the policy of each Fund to generally invest in the securities that comprise the Fund’s respective Index, the portfolio of securities (“Fund Securities”) held by such Fund also will be concentrated in that economic sector or industry.
Regulatory developments affecting the exchange-traded and OTC derivatives markets may impair a Fund’s ability to manage or hedge its investment portfolio through the use of derivatives. The Dodd-Frank Act and the rules promulgated thereunder may limit the ability of a Fund to enter into one or more exchange-traded or OTC derivatives transactions.
(All Funds except VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck Real Assets ETF, VanEck Mortgage REIT Income ETF and VanEck Office and Commercial REIT ETF)
VEAC, on behalf of the Funds, has filed a notice of eligibility with the National Futures Association claiming an exclusion from the definition of the term “commodity pool operator” (“CPO”) pursuant to CFTC Regulation 4.5, as promulgated under the Commodity Exchange Act (“CEA”), with respect to the Funds’ operations. Therefore, neither the Funds nor VEAC (with respect to the Funds) is subject to registration or regulation as a commodity pool or CPO under the CEA. If a Fund becomes subject to these requirements, a Fund may incur additional compliance and other expenses.
Each Fund’s use of derivatives may also be limited by the requirements of the Internal Revenue Code for qualification as a RIC for U.S. federal income tax purposes.
With respect to investments in swap transactions, commodity futures, commodity options or certain other derivatives used for purposes other than bona fide hedging purposes, an investment company must meet one of the following tests under the amended regulations in order to claim an exemption from being considered a “commodity pool” or CPO. First, the aggregate initial margin and premiums required to establish an investment company’s positions in such investments may not exceed five percent (5%) of the liquidation value of the investment company’s portfolio (after accounting for unrealized profits and unrealized losses on any such investments). Alternatively, the aggregate net notional value of such instruments, determined at the time of the most recent position established, may not exceed one hundred percent (100%) of the liquidation value of the investment company’s portfolio (after accounting for unrealized profits and unrealized losses on any such positions). In addition to meeting one of the foregoing trading limitations, the investment company may not market itself as a commodity pool or otherwise as a vehicle for trading in the commodity futures, commodity options or swaps and derivatives markets. In the event that an Adviser is required to register as a CPO, the disclosure and operations of the Funds would need to comply with all applicable CFTC regulations. Compliance with these additional registration and regulatory requirements would increase operational expenses. Other potentially adverse regulatory initiatives could also develop.
(VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Mortgage REIT Income ETF and VanEck Office and Commercial REIT ETF only)
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Each of VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Mortgage REIT Income ETF and VanEck Office and Commercial REIT ETF has claimed a temporary exemption from the definition of the term CPO under the CEA, and therefore, is not currently subject to registration or regulation as commodity pools under the CEA. When the temporary exemption expires, to the extent VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Mortgage REIT Income ETF or VanEck Office and Commercial REIT ETF are not otherwise eligible to claim an exclusion from CFTC regulation, VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Mortgage REIT Income ETF or VanEck Office and Commercial REIT ETF, as applicable, may determine to operate subject to CFTC regulation and may incur additional expenses.
Specific Risks Applicable to the Municipal Funds, VanEck CEF Muni Income ETF and VanEck HIP Sustainable Muni ETF
Municipal Securities Risk. Municipal securities are subject to the risk that litigation, legislation or other political events, local business or economic conditions, credit rating downgrades or the bankruptcy, of the issuer could have a significant effect on an issuer’s ability to make payments of principal and/or interest or otherwise affect the value of such securities. In addition, there is a risk that, as a result of the recent economic crisis, the ability of any issuer to pay, when due, the principal or interest on its municipal bonds may be materially affected. Certain municipalities may have difficulty meeting their obligations due to, among other reasons, changes in underlying demographics.
Municipal securities can be significantly affected by political changes as well as uncertainties in the municipal market related to government regulation, taxation, legislative changes or the rights of municipal security holders. Because many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation, utilities and water and sewer, conditions in those sectors can affect the overall municipal market. In addition, changes in the financial condition of an individual municipal insurer can affect the overall municipal market. Municipal instruments may be susceptible to periods of economic stress, which could affect the market values and marketability of many or all municipal obligations of issuers in a state, U.S. territory, or possession. A number of municipalities have had significant financial problems recently, and these and other municipalities could, potentially, continue to experience significant financial problems resulting from lower tax revenues and/or decreased aid from state and local governments in the event of an economic downturn. This could potentially decrease the Fund’s income or hurt its ability to preserve capital and liquidity. Municipal securities may include revenue bonds, which are generally backed by revenue from a specific project or tax. The issuer of a revenue bond makes interest and principal payments from revenues generated from a particular source or facility, such as a tax on particular property or revenues generated from a municipal water or sewer utility or an airport. Revenue bonds generally are not backed by the full faith and credit and general taxing power of the issuer. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the discontinuance of the taxation supporting the project or assets or the inability to collect revenues for the project or from the assets due to factors such as lower property tax collections as a result of lower home values, lower sales tax revenues as a result of consumers cutting back spending and lower income tax revenue as a result of a higher unemployment rate. In addition, since some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to the Fund could increase if the banking or financial sector suffers an economic downturn and/or if the credit ratings of the institutions issuing the guarantee are downgraded or at risk of being downgraded by a national rating organization.
If the IRS determines that an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could become taxable and the security could decline significantly in value.
The market for municipal bonds may be less liquid than for taxable bonds. There may also be less publicly available information on the financial condition of issuers of municipal securities than for public corporations. This means that it may be harder to buy and sell municipal securities, especially on short notice, and municipal securities may be more difficult for a Fund (and the Underlying Funds in which VanEck CEF Muni Income ETF invest) to value accurately than securities of public corporations. Since the Fund (and the Underlying Funds in which VanEck CEF Muni Income ETF invest) invest a significant portion of their portfolio in municipal securities, each Fund’s (and each Underlying Fund’s) portfolio may have greater exposure to liquidity risk than a fund that invests in non-municipal securities. In addition, the value and liquidity of many municipal securities have decreased as a result of the recent financial crisis, which has also adversely affected many municipal securities issuers and may continue to do so. The markets for many credit instruments, including municipal securities, have experienced periods of illiquidity and extreme volatility since the latter half of 2007. In response to the global economic downturn, governmental cost burdens may be reallocated among federal, state and local governments. In addition, issuers of municipal securities may seek protection under the bankruptcy or similar laws. For example, Chapter 9 of the Bankruptcy Code provides a financially distressed municipality protection from its creditors while it develops and negotiates a plan for reorganizing its debts. “Municipality” is defined broadly by the Bankruptcy Code as a “political subdivision or public agency or instrumentality of a state” and may include various issues of securities in which the Fund invests. The reorganization of a municipality’s debts may include extending debt maturities, reducing the amount of principal or interest,
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refinancing the debt or taking other measures, which may significantly affect the rights of creditors and the value of the securities issued by the municipality and the value of a Fund’s investments.
Many state and local governments that issue municipal securities are currently under significant economic and financial stress and may not be able to satisfy their obligations. The taxing power of any governmental entity may be limited and an entity’s credit may depend on factors which are beyond the entity’s control.
Education Bond Risk. In general, there are two types of education-related bonds: those issued to finance projects for public and private colleges and universities, and those representing pooled interests in student loans. Bonds issued to supply educational institutions with funds are subject to the risk of unanticipated revenue decline, primarily the result of decreasing student enrollment or decreasing state and federal funding. Among the factors that may lead to declining or insufficient revenues are restrictions on students’ ability to pay tuition, availability of state and federal funding, and general economic conditions. Student loan revenue bonds are generally offered by state (or sub-state) authorities or commissions and are backed by pools of student loans. Underlying student loans may be guaranteed by state guarantee agencies and may be subject to reimbursement by the United States Department of Education through its guaranteed student loan program. Others may be private, uninsured loans made to parents or students which are supported by reserves or other forms of credit enhancement. Recoveries of principal due to loan defaults may be applied to redemption of bonds or may be used to re-lend, depending on program latitude and demand for loans. Cash flows supporting student loan revenue bonds are impacted by numerous factors, including the rate of student loan defaults, seasoning of the loan portfolio and student repayment deferral periods of forbearance. Other risks associated with student loan revenue bonds include potential changes in federal legislation regarding student loan revenue bonds, state guarantee agency reimbursement and continued federal interest and other program subsidies currently in effect.
Electric Utilities Bond Risk. The electric utilities industry has been experiencing, and may continue to experience, increased competitive pressures. Federal legislation may open transmission access to any electricity supplier, although it is not presently known to what extent competition will evolve. Other risks include: (a) the availability and cost of fuel; (b) the availability and cost of capital; (c) the effects of conservation on energy demand; (d) the effects of rapidly changing environmental, safety and licensing requirements, and other federal, state and local regulations, (e) timely and sufficient rate increases and governmental limitations on rates charged to customers; (f) the effects of opposition to nuclear power; (g) increases in operating costs; and (h) obsolescence of existing equipment, facilities and products.
General Obligation Bond Risk. General obligation bonds are not backed by revenues from a specific project or source. Instead, general obligation bonds are backed by the “full faith and credit” of the issuer, which has the power to tax residents to pay bondholders. Timely payments depend on the issuer’s credit quality, ability to raise tax revenues and ability to maintain an adequate tax base.
Health Care Bond Risk. The health care industry is subject to regulatory action by a number of private and governmental agencies, including federal, state and local governmental agencies. A major source of revenues for the health care industry is payments from Medicare and Medicaid programs. As a result, the industry is sensitive to legislative changes and reductions in governmental spending for such programs. Numerous other factors may also affect the industry and the value and credit quality of health care bonds, such as general and local economic conditions, demand for services, expenses (including malpractice insurance premiums) and competition among health care providers. The following elements may adversely affect health care facility operations: the implementation of national and/or state-specific health insurance exchanges; other national, state or local health care reform measures; medical and technological advances which dramatically alter the need for health services or the way in which such services are delivered; changes in medical coverage which alter the traditional fee-for-service revenue stream; efforts by employers, insurers, and governmental agencies to reduce the costs of health insurance and health care services; and increases and decreases in the cost and availability of medical products.
Housing Bond Risk. Housing revenue bonds are generally issued by a state, county, city, local housing authority or other public agency. They generally are secured by the revenues derived from mortgages purchased with the proceeds of the bond issue. It is extremely difficult to predict the supply of available mortgages to be purchased with the proceeds of an issue or the future cash flow from the underlying mortgages. Consequently, there are risks that proceeds will exceed supply, resulting in early retirement of bonds, or that homeowner repayments will create an irregular cash flow. Many factors may affect the financing of multi-family housing projects, including acceptable completion of construction, proper management, occupancy and rent levels, economic conditions and changes to current laws and regulations.
Industrial Development Bond Risk. Industrial development bonds are revenue bonds issued by or on behalf of public authorities to obtain funds to finance various public and/or privately operated facilities, including those for business and manufacturing, housing, sports, pollution control, airport, mass transit, port and parking facilities. These bonds are normally secured only by the revenues from the project and not by state or local government tax payments. Consequently, the credit quality of these securities is dependent upon the ability of the user of the facilities financed by the bonds and any guarantor to meet its financial obligations. Payment of interest on and repayment of principal of such bonds are the responsibility of the
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user and/or any guarantor. These bonds are subject to a wide variety of risks, many of which relate to the nature of the specific project. Generally, the value and credit quality of these bonds are sensitive to the risks related to an economic slowdown.
There is no guarantee that a Fund’s income will be exempt from federal or state income taxes. Events occurring after the date of issuance of a municipal bond or after a Fund’s acquisition of a municipal bond may result in a determination that interest on that bond is includible in gross income for U.S. federal income tax purposes retroactively to its date of issuance. Such a determination may cause a portion of prior distributions by a Fund to its shareholders to be taxable to those shareholders in the year of receipt. Federal or state changes in income or alternative minimum tax rates or in the tax treatment of municipal bonds may make municipal bonds less attractive as investments and cause them to lose value.
Lease Obligations Risk. Lease obligations may have risks not normally associated with general obligation or other revenue bonds. Leases and installment purchase or conditional sale contracts (which may provide for title to the leased asset to pass eventually to the issuer) have developed as a means for governmental issuers to acquire property and equipment without the necessity of complying with the constitutional statutory requirements generally applicable for the issuance of debt. Certain lease obligations contain “non-appropriation” clauses that provide that the governmental issuer has no obligation to make future payments under the lease or contract unless money is appropriated for that purpose by the appropriate legislative body on an annual or other periodic basis. Consequently, continued lease payments on those lease obligations containing “non-appropriation” clauses are dependent on future legislative actions. If these legislative actions do not occur, the holders of the lease obligation may experience difficulty in exercising their rights, including disposition of the property. In such circumstances, a Fund might not recover the full principal amount of the obligation.
Municipal Market Disruption Risk. The value of municipal securities may be affected by uncertainties in the municipal market related to legislation or litigation involving the taxation of municipal securities or the rights of municipal securities holders in the event of a bankruptcy. Proposals to restrict or eliminate the federal income tax exemption for interest on municipal securities are introduced before Congress from time to time. Proposals also may be introduced before state legislatures that would affect the state tax treatment of a municipal fund’s distributions. If such proposals were enacted, the availability of municipal securities and the value of a municipal fund’s holdings would be affected. Municipal bankruptcies are relatively rare, and certain provisions of the U.S. Bankruptcy Code governing such bankruptcies are unclear and remain untested. Further, the application of state law to municipal issuers could produce varying results among the states or among municipal securities issuers within a state. These legal uncertainties could affect the municipal securities market generally, certain specific segments of the market, or the relative credit quality of particular securities. There is also the possibility that as a result of litigation or other conditions, the power or ability of issuers to meet their obligations for the payment of interest and principal on their municipal securities may be materially affected or their obligations may be found to be invalid or unenforceable. Such litigation or conditions may from time to time have the effect of introducing uncertainties in the market for municipal securities or certain segments thereof, or of materially affecting the credit risk with respect to particular bonds. Adverse economic, business, legal or political developments might affect all or a substantial portion of the Funds’ municipal securities in the same manner. Any of these effects could have a significant impact on the prices of some or all of the municipal securities held by a Fund.
Resource Recovery Bond Risk. Resource recovery bonds are a type of revenue bond issued to build facilities such as solid waste incinerators or waste-to-energy plants. Typically, a private corporation is involved, at least during the construction phase, and the revenue stream is secured by fees or rents paid by municipalities for use of the facilities. These bonds are normally secured only by the revenues from the project and not by state or local government tax receipts. Consequently, the credit quality of these securities is dependent upon the ability of the user of the facilities financed by the bonds and any guarantor to meet its financial obligations. The viability of a resource recovery project, environmental protection regulations, and project operator tax incentives may affect the value and credit quality of resource recovery bonds.
Special Tax Bond Risk. Special tax bonds are usually backed and payable through a single tax, or series of special taxes such as incremental property taxes. The failure of the tax levy to generate adequate revenue to pay the debt service on the bonds may cause the value of the bonds to decline. Adverse conditions and developments affecting a particular project may result in lower revenues to the issuer of the municipal securities, which may adversely affect the value of a Fund’s portfolio.
Tobacco Bond Risk. Tobacco settlement revenue bonds are generally neither general nor legal obligations of a state or any of its political subdivisions and neither the full faith and credit nor the taxing power nor any other assets or revenues of a state or of any political subdivision will be pledged to the payment of any such bonds. In addition, tobacco companies’ profits from the sale of tobacco products are inherently variable and difficult to estimate. There can be no guarantee that tobacco companies will earn enough revenues to cover the payments due under tobacco bonds. The revenues of tobacco companies may be adversely affected by the adoption of new legislation and/or by litigation.
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Transportation Bond Risk. Transportation debt may be issued to finance the construction of airports, toll roads, highways or other transit facilities. Airport bonds are dependent on the general stability of the airline industry and on the stability of a specific carrier who uses the airport as a hub. Air traffic generally follows broader economic trends and is also affected by the price and availability of fuel. Toll road bonds are also affected by the cost and availability of fuel as well as toll levels, the presence of competing roads and the general economic health of an area. Fuel costs and availability also affect other transportation-related securities, as do the presence of alternate forms of transportation, such as public transportation. Municipal securities that are issued to finance a particular transportation project often depend solely on revenues from that project to make principal and interest payments. Adverse conditions and developments affecting a particular project may result in lower revenues to the issuer of the municipal securities.
Water and Sewer Bond Risk. Water and sewer revenue bonds are often considered to have relatively secure credit as a result of their issuer’s importance, monopoly status and generally unimpeded ability to raise rates. Despite this, lack of water supply due to insufficient rain, run-off or snow pack is a concern that has led to past defaults. Further, public resistance to rate increases, costly environmental litigation, and federal environmental mandates are challenges faced by issuers of water and sewer bonds.
Specific Risks Applicable to the VanEck Russia ETF and VanEck Russia Small-Cap ETF
Risks Related to Russian Invasion of Ukraine. In late February 2022, Russian military forces invaded Ukraine, significantly amplifying already existing geopolitical tensions among Russia, Ukraine, Europe, NATO, and the West. Russia’s invasion, the responses of countries and political bodies to Russia’s actions, and the potential for wider conflict may increase financial market volatility and could have severe adverse effects on regional and global economic markets, including the markets for certain securities and commodities such as oil and natural gas. Following Russia’s actions, various countries, including the U.S., Canada, the United Kingdom, Germany, and France, as well as the European Union, issued broad-ranging economic sanctions against Russia. The sanctions consist of the prohibition of trading in certain Russian securities and engaging in certain private transactions, the prohibition of doing business with certain Russian corporate entities, large financial institutions, officials and oligarchs, and the freezing of Russian assets. The sanctions include a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications, commonly called “SWIFT,” the electronic network that connects banks globally, and imposed restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. A number of large corporations and U.S. states have also announced plans to divest interests or otherwise curtail business dealings with certain Russian businesses.
The imposition of these current sanctions (and potential further sanctions in response to continued Russian military activity) and other actions undertaken by countries and businesses may adversely impact various sectors of the Russian economy, including but not limited to, the financials, energy, metals and mining, engineering, and defense and defense-related materials sectors. Such actions also may result in a weakening of the ruble, a downgrade of Russia’s credit rating, and the decline of the value and liquidity of Russian securities, and could impair the ability of a Fund to buy, sell, receive, or deliver those securities. Moreover, the measures could adversely affect global financial and energy markets and thereby negatively affect the value of a Fund's investments beyond any direct exposure to Russian issuers or those of adjoining geographic regions. In response to sanctions, Russia has taken and may take additional counter measures or retaliatory actions, which may impair the value and liquidity of Russian securities and Fund investments. Such actions could, for example, include restricting gas exports to other countries, seizure of U.S. and European residents' assets, conducting cyberattacks on other governments, corporations or individuals, or undertaking or provoking other military conflict elsewhere in Europe, any of which could exacerbate negative consequences on global financial markets and the economy. The actions discussed above could have a negative effect on the performance of Funds that have exposure to Russia. The conflict between Russia and Ukraine is currently unpredictable and has the potential to result in broadened military actions. The duration of ongoing hostilities and corresponding sanctions and related events cannot be predicted and may result in a negative impact on performance and the value of Fund investments, particularly as it relates to Russia exposure.
The Funds are in the process of liquidating their assets and winding up their business pursuant to the Plan of Liquidation and Termination and will be unable to meet their investment objectives. Due to difficulties transacting in impacted securities, a Fund may experience challenges liquidating the applicable positions as part of the Fund’s liquidation. Additionally, due to current and potential future sanctions or potential market closure impacting the ability to trade Russian securities, a Fund may experience higher transaction costs. Furthermore, any exposure that a Fund may have to Russian counterparties or counterparties that are otherwise impacted by sanctions also could negatively impact the Fund’s portfolio.
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Tax Risks
As with any investment, you should consider how your investment in Shares of a Fund will be taxed. The tax information in the Prospectus and SAI is provided as general information. You should consult your own tax professional about the tax consequences of an investment in Shares of a Fund.
U.S. Federal Tax Treatment of Certain Futures Contracts and Option Contracts
Each Fund may be required for federal income tax purposes to mark-to-market and recognize as income for each taxable year its net unrealized gains and losses on certain regulated futures contracts and option contracts (“Section 1256 Contracts”) as of the end of the year as well as those actually realized during the year. Gain or loss from Section 1256 Contracts will be 60% long-term and 40% short-term capital gain or loss. Application of this rule may alter the timing and character of distributions to shareholders. Each Fund may be required to defer the recognition of losses on futures contracts or certain option contracts to the extent of any unrecognized gains on related positions held by the Fund.
In order for a Fund to continue to qualify for U.S. federal income tax treatment as a RIC, at least 90% of its gross income for a taxable year must be derived from qualifying income, i.e., dividends, interest, income derived from loans of securities, income derived from interests in qualified publicly traded partnerships (which generally are partnerships that are traded on an established securities market or readily tradable on a secondary market (or the substantial equivalent thereof), other than partnerships that derive 90% of their income from interest, dividends and other permitted RIC income), gains from the sale of securities or of foreign currencies or other income derived with respect to the Fund’s business of investing in securities. It is anticipated that any net gain realized from the closing out of futures contracts or certain option contracts will be considered gain from the sale of securities and therefore will be qualifying income for purposes of the 90% requirement.
Each Fund distributes to shareholders annually any net capital gains which have been recognized for U.S. federal income tax purposes (including unrealized gains at the end of the Fund’s fiscal year on certain futures transactions and certain option contracts). Such distributions are combined with distributions of capital gains realized on each Fund’s other investments and shareholders are advised on the nature of the distributions.
Concentration Considerations
To the extent that a Fund’s investments are concentrated in a particular sector or sectors or industry or group of industries, the Fund will be subject to the risk that economic, political or other conditions that have a negative effect on that sector or industry will negatively impact the Fund to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries. The securities of state and municipal governments and their political subdivisions are not considered to be issued by members of any industry.
Cyber Security
The Funds, their service providers, each Exchange and Authorized Participants (defined below) are susceptible to cyber security risks that include, among other things, theft, unauthorized monitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; denial of service attacks; unauthorized access to relevant systems, compromises to networks or devices that the Funds and their service providers use to service the Fund’s operations; or operational disruption or failures in the physical infrastructure or operating systems that support the Funds and their service providers. Cyber attacks against or security breakdowns of the Funds, their service providers, an Exchange or Authorized Participants may adversely impact the Funds and their shareholders, potentially resulting in, among other things, financial losses; the inability of Fund shareholders to transact business and the Fund to process transactions; inability to calculate the Fund’s NAV; violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs; and/or additional compliance costs. The Fund may incur additional costs for cyber security risk management and remediation purposes. In addition, cyber security risks may also impact issuers of securities in which a Fund invests, which may cause the Fund’s investment in such issuers to lose value. There can be no assurance that the Funds, their service providers, an Exchange or Authorized Participants will not suffer losses relating to cyber attacks or other information security breaches in the future.
Securities Lending
The Funds, may lend securities to approved borrowers, including affiliates of the Fund’s securities lending agent, State Street Bank and Trust Company (“State Street”). Securities lending allows a Fund to retain ownership of the securities loaned and, at the same time, earn additional income. The borrower provides cash or non-cash collateral equal to at least 102% (105% for foreign securities) of the value of the securities loaned. Collateral is maintained by State Street on behalf of the Fund. Cash received as collateral through loan transactions is generally invested in shares of a money market fund. Investing this cash subjects that investment, as well as the securities loaned, to market appreciation or depreciation. Non-cash collateral consists of securities issued or guaranteed by the United States government or one of its agencies and cannot be re-hypothecated by the
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Fund. The SEC provided guidance in connection with the derivatives rule discussed above regarding the use of securities lending collateral that may limit the Funds from engaging in certain uses of cash and non-cash collateral. The Fund maintains the ability to vote or consent on proxy proposals involving material events affecting securities loaned. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a Fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. These delays and costs could be greater for foreign securities. If a Fund is not able to recover the securities loaned, the collateral may be sold and a replacement investment may be purchased in the market. The value of the collateral could decrease below the value of the replacement investment by the time the replacement investment is purchased.
Inability to Pass Through Deduction from MLPs (VanEck Energy Income ETF only)
Individuals and certain other non-corporate entities are generally eligible for a 20% deduction with respect to certain taxable income from master limited partnerships (“MLPs”) through 2025. The VanEck Energy Income ETF does not have the regulatory authority to pass through MLP net income, if any, or the 20% deduction to Fund shareholders. As a result, in comparison, investors investing directly in MLPs would be eligible for the 20% deduction for MLP net income from these investments while investors investing in MLPs held indirectly through the Fund would not be eligible for the 20% deduction for their share of such taxable income.
Risks Relating to VanEck Digital India ETF and VanEck India Growth Leaders ETF
Tax Risks. The taxation of income and capital gains of the VanEck Digital India ETF and VanEck India Growth Leaders ETF is subject to the fiscal laws and practices of different jurisdictions. Any of those jurisdictions may change their fiscal laws and practices (or interpretation thereof) and enforcement policies, possibly with retroactive effect. The VanEck India Growth Leaders ETF’s investment in the Mauritius Subsidiary involves certain tax risks. Changes to the Double Taxation Avoidance Treaty (the “Treaty”) between Mauritius and India (or its interpretation) may adversely affect the ability of the Mauritius Subsidiary to realize efficiently income or capital gains. Consequently, it is possible that Mauritius Subsidiary may face unfavorable tax treatment, which may materially adversely affect the value of its investments or the feasibility of making investments in India.
The Mauritius Subsidiary is a wholly-owned subsidiary of the Trust in Mauritius. The following tax risks are relevant to the Mauritius Subsidiary and, where indicated, to VanEck Digital India ETF.
a.Indirect Transfer Risk: Indian capital gains tax can be imposed on income arising from the transfer of shares in a company registered outside India which derives, directly or indirectly, its value substantially from the assets located in India. For more information about this issue, please see “Taxation of Indirect Transfer of Indian Assets” in the “Taxes” section of this SAI. Being a Category I FPI, the Mauritius Subsidiary and VanEck Digital India ETF are currently exempt from the application of these rules. In case of loss of the Mauritius Subsidiary's and/or VanEck Digital India ETF's registration as a Category I FPI or changes in Indian rules, the Mauritius Subsidiary, VanEck India Growth Leaders ETF, VanEck Digital India ETF and their investors could be subject to the indirect transfer tax provisions in the future.
b.Exposure to Permanent Establishment (“PE”): While the Fund believes that the activities of the Mauritius Subsidiary or VanEck Digital India ETF should not create a PE of the Mauritius Subsidiary or VanEck Digital India ETF in India, the Indian tax authorities may claim that these activities have resulted in a PE of the Mauritius Subsidiary or VanEck Digital India ETF in India. Under such circumstances, the profits of the Mauritius Subsidiary or VanEck Digital India ETF to the extent attributable to the PE would be subject to taxation in India.
c.General Anti-Avoidance Rules (“GAAR”): GAAR, as contained in the Indian Income Tax Act, 1961 (“ITA 1961”), became effective April 1, 2017. GAAR empowers the tax authorities to investigate and declare an arrangement as an “impermissible avoidance arrangement” and, consequently, the authorities can disregard entities in a structure, reallocate income and expenditure between parties to the arrangement, alter the tax residence of such entities and the legal situs of assets involved, treat debt as equity and vice versa. An “impermissible avoidance arrangement” is an arrangement entered into with the main purpose of obtaining a tax benefit and satisfying one or more of the following: (a) non-arm’s length dealings; (b) misuse or abuse of the provisions of the domestic income tax provisions; (c) lack of commercial substance; or (d) arrangement similar to that employed for non-bona fide purposes.
If the Indian Tax authorities deem the Mauritius Subsidiary’s structure to be an “impermissible avoidance arrangement,” then the Mauritius Subsidiary may not be able to claim benefits under the Treaty. Inability of
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the Mauritius Subsidiary to claim the tax benefits under the Treaty could have an adverse impact on the tax liabilities of the Mauritius Subsidiary, and would likely have an adverse impact on the returns to the Fund.
d.Renegotiation of the India-Mauritius Double Taxation Avoidance Treaty: India and Mauritius signed a protocol (“2016 Protocol”) on May 10, 2016 amending the Treaty. The 2016 Protocol gives India a source-based right to tax capital gains which arise from alienation of shares of an Indian resident company acquired by a Mauritian tax resident (as opposed to the previous residence-based tax regime under the Treaty). However, the 2016 Protocol provides for grandfathering of investments and stipulates that the revised position shall only be applicable to investments made on or after April 1, 2017. There can be no assurance that the terms of the Treaty will not be further amended in the future or be subject to a different interpretation or that the Mauritius Subsidiary will continue to be deemed a tax resident by Mauritius, allowing it favorable tax treatment. Any further changes in the provisions of the Treaty or in its applicability to the Mauritius Subsidiary could result in the imposition of withholding and other taxes on the Mauritius Subsidiary by India, which would reduce the return to the Fund on its investments.
e.Exposure to Place of Effective Management (“POEM”) risk:
While the VanEck Digital India ETF and Mauritius Subsidiary believe that their activities or the activities of the Adviser described in the Prospectus or this SAI should not lead to a situation where the POEM of the VanEck Digital India ETF, Mauritius Subsidiary or the Adviser is considered to be in India, there may be a risk that the Indian tax authorities will claim that these activities have resulted in a POEM of the VanEck Digital India ETF, Mauritius Subsidiary and/or the Adviser in India. If for any reason the activities are held to be a POEM of the VanEck Digital India ETF, Mauritius Subsidiary and/or the Adviser in India, then the worldwide profits of the VanEck Digital India ETF or Mauritius Subsidiary would be subject to taxation in India.
f.Limitations on the Mauritius Subsidiary’s Ability to Make Distributions or Pay Redemption Proceeds to the Fund. Certain limitations under the Mauritius Companies Act 2001 may adversely affect the ability of the Mauritius Subsidiary and the VanEck India Growth Leaders ETF to make distributions or pay the redemption proceeds to the investors. If VanEck India Growth Leaders ETF’s ability to make distributions is adversely affected, VanEck India Growth Leaders ETF may be unable to satisfy distribution requirements applicable to RICs under the Internal Revenue Code, and be subject to income and/or excise tax at the Fund level. See “Taxes.”
g.Mauritius Subsidiary Risks. The Fund may cease utilizing the Mauritius Subsidiary in the future or the use of the Subsidiary as intended may not be possible. Ceasing to utilize the Mauritius Subsidiary could result in realized gains for the Fund, in capital gains tax liability and other tax liability in India and Mauritius and in other associated liabilities.
Special Risk Considerations of Investing in China (VanEck China Bond ETF and VanEck ChiNext ETF (together, the “China Funds”) only)
Investments in securities of Chinese issuers involve risks and special considerations not typically associated with investments in the U.S. securities markets, including the following:
Political and Economic Risk. The economy of China differs from the economies of most developed countries in many respects, including the level of government involvement, its state of development, its growth rate, control of foreign exchange, and allocation of resources. The economy of China’s growth has been uneven both geographically and among various sectors of the economy. Economic growth has also been accompanied by periods of high inflation. The PRC government has implemented various measures from time to time to control inflation and restrain the rate of economic growth.
For more than 30 years, the PRC government has carried out economic reforms to achieve decentralization and utilization of market forces to develop the economy of the PRC. These reforms have resulted in significant economic growth and social progress. There can, however, be no assurance that the PRC government will continue to pursue such economic policies or, if it does, that those policies will continue to be successful. Any such adjustment and modification of those economic policies may have an adverse impact on the securities market in the PRC as well as the underlying securities of a Fund’s Index. Further, the PRC government may from time to time adopt corrective measures to control the growth of the PRC economy which may also have an adverse impact on the capital growth and performance of a Fund.
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Political changes, social instability and adverse diplomatic developments in the PRC could result in the imposition of additional government restrictions including expropriation of assets, confiscatory taxes or nationalization of some or all of the property held by the issuers of a Fund’s investments or contained in a Fund’s Index.
Market volatility caused by potential regional or territorial conflicts, including military conflicts, either in response to internal social unrest or conflicts with other countries, popular unrest associated with demands for improved political, economic and social conditions, the impact of regional conflict on the economy and hostile relations with neighboring countries, or natural or other disasters, may have an adverse impact on the performance of the Fund.
The laws, regulations, government policies and political and economic climate in China may change with little or no advance notice. Any such change could adversely affect market conditions and the performance of the Chinese economy and, thus, the value of the A-shares in a Fund’s portfolio.
Since 1949, the PRC has been a socialist state controlled by the Communist party. China has only recently opened up to foreign investment and has only begun to permit private economic activity. There is no guarantee that the Chinese government will not revert from its current open-market economy to the economic policy of central planning that it implemented prior to 1978.
Under the economic reforms implemented by the Chinese government, the Chinese economy has experienced tremendous growth, developing into one of the largest economies in the world. There is no assurance, however, that such growth will be sustained in the future.
The Chinese government continues to be an active participant in many economic sectors through ownership positions and regulation. The allocation of resources in China is subject to a high level of government control. The Chinese government strictly regulates the payment of foreign currency denominated obligations and sets monetary policy. Through its policies, the government may provide preferential treatment to particular industries or companies. The policies set by the government could have a substantial adverse effect on the Chinese economy and a Fund’s investments.
The Chinese economy is export-driven and highly reliant on trade, and much of China’s growth in recent years has been the result of focused investments in economic sectors intended to produce goods and services for export purposes. The performance of the Chinese economy may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, currency revaluation, capital reinvestment, resource self-sufficiency and balance of payments position. Adverse changes to the economic conditions of its primary trading partners, such as the United States, Japan and South Korea, would adversely impact the Chinese economy and a Fund’s investments. International trade tensions involving China and its trading counterparties may arise from time to time which can result in trade tariffs, embargoes, sanctions, investment restrictions, trade limitations, trade wars and other negative consequences. Such actions and consequences may ultimately result in a significant reduction in international trade, an oversupply of certain manufactured goods, devaluations of existing inventories and potentially the failure of individual companies and/or large segments of China’s export industry with a potentially severe negative impact to a Fund. China’s growing trade surplus with the United States has increased the risk of trade disputes. For example, recent developments in relations between the United States and China have heightened concerns of increased tariffs and restrictions on trade between the two countries. An increase in tariffs or trade restrictions, or even the threat of such developments, could lead to a significant reduction in international trade, which could have a negative impact on China’s, or other countries', export industry and a negative impact on a Fund. In addition, as China’s economic and political strength has grown in recent years, it has shown a greater willingness to assert itself militarily in the region. Military or diplomatic moves to resolve any issues could adversely affect the economies in the region and, thus, a Fund’s investments.
Moreover, the current slowdown or any future recessions in other significant economies of the world, such as the United States, the European Union and certain Asian countries, may adversely affect economic growth in China. An economic downturn in China would adversely impact a Fund’s investments.
Inflation. Economic growth in China has also historically been accompanied by periods of high inflation. Rising inflation may, in the future, adversely affect the performance of the Chinese economy and a Fund’s investments.
Tax Changes. The Chinese system of taxation is not as well settled as that of the United States. China has implemented a number of tax reforms in recent years and may amend or revise its existing tax laws and/or procedures in the future, possibly with retroactive effect. Changes in applicable Chinese tax law, such as the cessation of tax exemptions in respect of investments in A-shares via Stock Connect, could reduce the after-tax profits of the Fund, directly or indirectly, including by reducing the after-tax profits of companies in China in which a Fund invests. Uncertainties in Chinese tax rules could result in unexpected tax liabilities for the Fund. Should legislation limit U.S. investors’ ability to invest in specific Chinese companies through A-shares or other share class listings that are part of the underlying holdings, these shares may be excluded from Fund holdings. In addition, changes in the Chinese tax system may have retroactive effects.
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Nationalization and Expropriation. After the formation of the Chinese socialist state in 1949, the Chinese government renounced various debt obligations and nationalized private assets without providing any form of compensation. There can be no assurance that the Chinese government will not take similar actions in the future. Accordingly, an investment in a Fund involves a risk of a total loss.
Hong Kong Policy. As part of Hong Kong’s transition from British to Chinese sovereignty in 1997, China agreed to allow Hong Kong to maintain a high degree of autonomy with regard to its political, legal and economic systems for a period of at least 50 years. China controls matters that relate to defense and foreign affairs. Under the agreement, China does not tax Hong Kong, does not limit the exchange of the Hong Kong dollar for foreign currencies and does not place restrictions on free trade in Hong Kong. However, there is no guarantee that China will continue to honor the agreement, and China may change its policies regarding Hong Kong at any time. As of July 2020, the Chinese Standing Committee of the National People's Congress enacted the Law of the People's Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region. As of the same month, Hong Kong is no longer afforded preferential economic treatment by the United States under US law, and there is uncertainty as to how the economy of Hong Kong will be affected. Any further changes in PRC’s policies could adversely affect market conditions and the performance of the Hong Kong economy and, thus, the value of securities in the Fund’s portfolio.
Any such change could adversely affect market conditions and the performance of the Chinese economy and, thus, the value of securities in the Fund’s portfolio. Furthermore, as demonstrated by Hong Kong protests in recent years over political, economic, and legal freedoms, and the Chinese government's response to them, there continues to exist political uncertainty within Hong Kong.
Chinese Securities Markets. The securities markets in China have a limited operating history and are not as developed as those in the United States. These markets tend to have had greater volatility than markets in the United States and some other countries. In addition, there is less regulation and monitoring of Chinese securities markets and the activities of investors, brokers and other participants than in the United States. Accordingly, issuers of securities in China are not subject to the same degree of regulation as are U.S. issuers with respect to such matters as insider trading rules, tender offer regulation, stockholder proxy requirements and the requirements mandating timely disclosure of information. During periods of significant market volatility, the Chinese government has, from time to time, intervened in its domestic securities markets to a greater degree than would be typical in more developed markets. Stock markets in China are in the process of change and further development. This may lead to trading volatility, unpredictable trading suspensions, difficulty in the settlement and recording of transactions and difficulty in interpreting and applying the relevant regulations. These risks may be more pronounced for the A-share market than for Chinese securities markets generally because the A-share market is subject to greater government restrictions and control, including trading suspensions, as described in greater detail above.
Available Disclosure About Chinese Companies. Disclosure and regulatory standards in emerging market countries, such as China, are in many respects less stringent than U.S. standards. There is substantially less publicly available information about Chinese issuers than there is about U.S. issuers. The Chinese government has taken positions that prevent the United States Public Company Accounting Oversight Board (“PCAOB”) from inspecting the audit work and practices of accounting firms in mainland China and Hong Kong for compliance with U.S. law and professional standards. Audits performed by PCAOB-registered accounting firms in mainland China and Hong Kong may be less reliable than those performed by firms subject to PCAOB inspection. Therefore, disclosure of certain material information may not be made, and less information may be available to a Fund and other investors than would be the case if a Fund’s investments were restricted to securities of U.S. issuers. Chinese issuers are subject to accounting, auditing and financial standards and requirements that differ, in some cases significantly, from those applicable to U.S. issuers. In particular, the assets and profits appearing on the financial statements of a Chinese issuer may not reflect its financial position or results of operations in the way they would be reflected had such financial statements been prepared in accordance with U.S. Generally Accepted Accounting Principles. As a result, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, that there will be substantially less access to recourse, in comparison to U.S. domestic companies. Furthermore, under amendments to the Sarbanes-Oxley Act enacted in December 2020, which requires that the PCAOB be permitted to inspect the accounting firm of a U.S.-listed Chinese issuer, Chinese companies with securities listed on U.S. exchanges may be delisted if the PCAOB is unable to inspect the accounting firm.
Chinese Corporate and Securities Law. The regulations on investments and repatriation of capital are relatively new. As a result, the application and interpretation of such investment regulations are relatively untested. In addition, PRC authorities have broad discretion in this regard. A Fund’s rights with respect to its investments in A-shares through Stock Connect will not be governed by U.S. law, and instead will be governed by Chinese law. China operates under a civil law system, in which court precedent is not binding. Because there is no binding precedent to interpret existing statutes, there is uncertainty regarding the implementation of existing law.
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Legal principles relating to corporate affairs and the validity of corporate procedures, directors’ fiduciary duties and liabilities and stockholders’ rights often differ from those that may apply in the United States and other countries. Chinese laws providing protection to investors, such as laws regarding the fiduciary duties of officers and directors, are undeveloped and will not provide investors, such as a Fund, with protection in all situations where protection would be provided by comparable law in the United States. China lacks a national set of laws that address all issues that may arise with regard to a foreign investor such as a Fund.
It may therefore be difficult for a Fund to enforce its rights as an investor under Chinese corporate and securities laws, and it may be difficult or impossible for a Fund to obtain a judgment in court. Moreover, as Chinese corporate and securities laws continue to develop, these developments may adversely affect foreign investors, such as a Fund.
Special Risk Considerations of Investing in Chinese-Issued A-shares (VanEck ChiNext ETF only)
The Fund’s investments in A-shares via Stock Connect are limited by the market-wide quotas imposed by Stock Connect. Currently, there are two stock exchanges in mainland China, the Shanghai and Shenzhen Stock Exchanges, and there is one stock exchange in Hong Kong. The Shanghai and Shenzhen Stock Exchanges are supervised by the China Securities Regulatory Commission and are highly automated with trading and settlement executed electronically. The Shanghai and Shenzhen Stock Exchanges are more volatile than the major securities markets in the United States. In comparison to the mainland Chinese securities markets, the securities markets in Hong Kong are relatively well developed and active.
The Shanghai and Shenzhen Stock Exchanges divide listed shares into two classes: A-shares and B-shares. Companies whose shares are traded on the Shanghai and Shenzhen Stock Exchanges that are incorporated in mainland China may issue both A-shares and B-shares. In China, the A-shares and B-shares of an issuer may only trade on one exchange. A-shares and B-shares may both be listed on either the Shanghai or Shenzhen Stock Exchanges. Both classes represent an ownership interest
comparable to a share of common stock and all shares are entitled to substantially the same rights and benefits associated with ownership. A-shares are traded on the Shanghai and Shenzhen Stock Exchanges in RMB.
Because restrictions continue to exist and capital therefore cannot flow freely into the A-share market, it is possible that in the event of a market disruption, the liquidity of the A-share market and trading prices of A-shares could be more severely affected than the liquidity and trading prices of markets where securities are freely tradable and capital therefore flows more freely. The Fund cannot predict the nature or duration of such a market disruption or the impact that it may have on the A-share market and the short-term and long-term prospects of its investments in the A-share market.
The Chinese government has in the past taken actions that benefited holders of A-shares. As A-shares become more available to foreign investors, such as the Fund, the Chinese government may be less likely to take action that would benefit holders of A-shares.
From time to time, certain of the companies in which the Fund expects to invest may operate in, or have dealings with, countries subject to sanctions or embargoes imposed by the U.S. Government and the United Nations and/or countries identified by the U.S. Government as state sponsors of terrorism. A company may suffer damage to its reputation if it is identified as a company which operates in, or has dealings with, countries subject to sanctions or embargoes imposed by the U.S. Government and the United Nations and/or countries identified by the U.S. Government as state sponsors of terrorism. As an investor in such companies, the Fund will be indirectly subject to those risks.
Investment and Repatriation Restrictions. Investments by the Fund in A-shares and other Chinese financial instruments regulated by the China Securities Regulatory Commission, including warrants and open- and closed-end investment companies, are subject to governmental pre-approval limitations on the quantity that the Fund may purchase or limits on the classes of securities in which the Fund may invest.
The Chinese government limits foreign investment in the securities of certain Chinese issuers entirely if foreign investment is banned in respect of the industry in which the relevant Chinese issuers are conducting their business. These restrictions or limitations may have adverse effects on the liquidity and performance of the Fund holdings as compared to the performance of its Index. This may increase the risk of tracking error and may adversely affect the Fund’s ability to pursue its investment objective.
Risk of Loss of Favorable U.S. Tax Treatment. The Fund intends to distribute annually all or substantially all of its investment company taxable income and net capital gain. However, if the Fund does not repatriate funds associated with direct investment in A-shares on a timely basis, it may be unable to satisfy the distribution requirements required to qualify for the favorable tax treatment otherwise generally afforded to RICs under the Internal Revenue Code. If the Fund fails to qualify for any taxable year as a RIC, the Fund would be treated as a corporation subject to U.S. federal income tax, thereby subjecting any income earned by the Fund to tax at the
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corporate level (currently at a 21% U.S. federal tax rate) and, when such income is distributed, to a further tax at the shareholder level to the extent of the Fund’s current or accumulated earnings and profits. In addition, the Fund would not be eligible for a deduction for dividends paid to shareholders. In addition, the Fund could be required to recognize unrealized gains, pay taxes and make distributions (any of which could be subject to interest charges) before re-qualifying for taxation as a RIC. See the Fund’s Prospectus entitled “Shareholder Information—Tax Information—Taxes on Distributions” for more information.
Tax on Retained Income and Gains. To the extent the Fund does not distribute to shareholders all of its investment company taxable income and net capital gain in a given year, it will be required to pay U.S. federal income and excise tax on the retained income and gains, thereby reducing the Fund’s return. The Fund may elect to treat its net capital gain as having been distributed to shareholders. In that case, shareholders of record on the last day of the Fund’s taxable year will be required to include their attributable share of the retained gain in income for the year as a long-term capital gain despite not actually receiving the dividend, and will be entitled to a tax credit or refund for the tax deemed paid on their behalf by the Fund as well as an increase in the basis of their shares to reflect the difference between their attributable share of the gain and the related credit or refund.
Foreign Exchange Control. The Chinese government heavily regulates the domestic exchange of foreign currencies within China. Chinese law requires that all domestic transactions must be settled in RMB, places significant restrictions on the remittance of foreign currency and strictly regulates currency exchange from RMB. These restrictions may adversely affect the Fund and its investments. There may not be sufficient amounts of RMB for the Fund to be fully invested. It should also be noted that the PRC government’s policies on exchange control and repatriation restrictions are subject to change, and any such change may adversely impact the Fund. There can be no assurance that the RMB exchange rate will not fluctuate widely against the US dollar or any other foreign currency in the future. Under exceptional circumstances, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB.
Custody Risks of Investing in A-shares. Custody arrangements for investments in China are subject to the rules and regulations of the China Securities Regulatory Commission and the People’s Bank of China, which may materially differ from custody arrangements in other jurisdictions. The Fund’s investments in China are subject to the risks of such arrangements, including the risk of a liquidation or bankruptcy by the PRC sub-custodian, which may result in losses to the Fund.
Foreign Currency Considerations. Emerging markets such as China can experience high rates of inflation, deflation and currency devaluation. The value of the RMB may be subject to a high degree of fluctuation due to, among other things, changes in interest rates, the effects of monetary policies issued by the PRC, the United States, foreign governments, central banks or supranational entities, the imposition of currency controls or other national or global political or economic developments. The Fund invests a significant portion of its assets in investments denominated in RMB and the income received by the Fund will principally be in RMB. The Fund’s exposure to the RMB and changes in value of the RMB versus the U.S. dollar may result in reduced returns for the Fund. Moreover, the Fund may incur costs in connection with conversions between U.S. dollars and RMB. The RMB is currently not a freely convertible currency. The value of the RMB is based on a managed floating exchange rate based on market supply and demand with reference to a basket of foreign currencies. The daily trading price of the RMB is allowed to float within a narrow band around the central parity published by the People’s Bank of China. The Chinese government’s imposition of restrictions on the repatriation of RMB out of mainland China may limit the depth of the offshore RMB market and reduce the liquidity of the Fund’s investments. These restrictions as well as any accelerated appreciation or depreciation of RMB may adversely affect the Fund and its investments. The Fund may be required to liquidate certain positions in order to make distributions if the Fund has insufficient cash in U.S. dollars to meet distribution requirements under the Internal Revenue Code due to currency convertibility. The liquidation of investments, if required, may also have an adverse impact on the Fund’s performance.
Furthermore, the Fund may incur costs in connection with conversions between U.S. dollars and RMB. Foreign exchange dealers realize a profit based on the difference between the prices at which they are buying and selling various currencies. Thus, a dealer normally will offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire immediately to resell that currency to the dealer. The Fund will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward, futures or options contracts to purchase or sell foreign currencies.
RMB can be further categorized into onshore RMB (CNY), which can be traded only in the PRC, and offshore RMB (CNH), which can be traded outside the PRC. CNY and CNH are traded at different exchange rates and
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their exchange rates may not move in the same direction. The Fund may also be adversely affected by the exchange rates between CNY and CNH. In addition, there may not be sufficient amounts of RMB for the Fund to be fully invested. Moreover, the trading and settlement of RMB-denominated securities are recent developments in Hong Kong and there is no assurance that problems will not be encountered with the systems or that other logistical problems will not arise.
Currently, there is no market in China in which the Fund may engage in hedging transactions to minimize RMB foreign exchange risk, and there can be no guarantee that instruments suitable for hedging currency will be available to the Fund in China at any time in the future. In the event that in the future it becomes possible to hedge RMB currency risk in China, the Fund may seek to protect the value of some portion or all of its portfolio holdings against currency risks by engaging in hedging transactions. In that case, such Fund may enter into forward currency exchange contracts and currency futures contracts and options on such futures contracts, as well as purchase put or call options on currencies, in China. Currency hedging would involve special risks, including possible default by the other party to the transaction, illiquidity and, to the extent the Adviser’s view as to certain market movements is incorrect, the risk that the use of hedging could result in losses greater than if they had not been used. The use of currency transactions could result in the Fund’s incurring losses as a result of the imposition of exchange controls, exchange rate regulation, suspension of settlements or the
inability to deliver or receive a specified currency.
China-Related Index Tracking Risk. To the extent the Fund is unable to invest in A-shares or enter into swaps or other derivatives linked to the performance of its Index or securities comprising its Index, it may enter into swaps or other derivatives linked to the performance of other funds that seek to track the performance of its Index. These funds may trade at a premium or discount to net asset value, which may result in additional tracking error for the Fund. Moreover, the ability of the Fund to track its Index may be affected by foreign exchange fluctuations as between the U.S. dollar and the RMB. Additionally, the terms of the swaps require the payment of the U.S. dollar equivalent of the RMB distributions and dividends, meaning that the Fund is exposed to foreign exchange risk and fluctuations in value between the U.S. dollar and the RMB. The Fund will be required to remit RMB to settle the purchase of A-shares and repatriate RMB to U.S. dollars to settle redemption orders. In the event such remittance is delayed or disrupted, the Fund will not be able to fully replicate the Index by investing in the relevant A-shares, which may lead to increased tracking error, and may need to rely on borrowings to meet redemptions, which may lead to increased expenses. Because the Index is priced in Chinese RMB and the Fund is priced in U.S. dollars, the ability of the Fund to track the Index is in part subject to foreign exchange fluctuations as between the U.S. dollar and the RMB. The Fund may underperform the Index when the value of the U.S. dollar increases relative to the value of the RMB.
PRC Custodian Risks
Custody arrangements for investments in China are subject to the rules and regulations of the China Securities Regulatory Commission and the People’s Bank of China, which may materially differ from custody arrangements in other jurisdictions. The Fund’s investments in China are subject to the risks of such arrangements, including the risk of a liquidation or bankruptcy by the PRC sub-custodian, which may result in losses to the Fund.
Stock Connect Program Risks (VanEck ChiNext ETF, VanEck Green Metals ETF and VanEck Rare Earth and Strategic Metals ETF only)
VanEck ChiNext ETF, VanEck Green Metals ETF and VanEck Rare Earth and Strategic Metals ETF may invest in A-shares listed and traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange through the Shanghai-Hong Kong Stock Connect Program and the Shenzhen-Hong Kong Stock Connect Program (together, “Stock Connect”), or on such other stock exchanges in China which participate in Stock Connect from time to time or in the future. Trading through Stock Connect is subject to a number of restrictions that may affect a Fund’s investments and returns. For example, purchases of A-shares through Stock Connect are subject to a daily quota which does not belong to the Fund and can only be utilised on a first-come-first-serve basis. Once the daily quota is exceeded, buy orders may be rejected. The Fund's ability to invest in A-shares may therefore be limited. In addition, investments made through Stock Connect are subject to trading, clearance and settlement procedures that are relatively untested in the PRC, which could pose risks to a Fund. Furthermore, securities purchased via Stock Connect will be held via a book entry omnibus account in the name of Hong Kong Securities Clearing Company Limited (“HKSCC”), Hong Kong’s clearing entity, at the China Securities Depository and Clearing Corporation Limited (“CSDCC”). A Fund’s ownership interest in Stock Connect securities will not be reflected directly in book entry with CSDCC and will instead only be reflected on the books of its Hong Kong sub-custodian. A Fund may therefore depend on HKSCC’s ability or willingness as record-holder of Stock Connect securities to enforce the Fund’s shareholder rights.
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PRC law did not historically recognize the concept of beneficial ownership; while PRC regulations and the Hong Kong Stock Exchange have issued clarifications and guidance supporting the concept of beneficial ownership via Stock Connect, the interpretation of beneficial ownership in the PRC by regulators and courts may continue to evolve. Moreover, Stock Connect A-shares generally may not be sold, purchased or otherwise transferred other than through Stock Connect in accordance with applicable rules.
A primary feature of Stock Connect is the application of the home market’s laws and rules applicable to investors in A-shares. Therefore, a Fund’s investments in Stock Connect A-shares are generally subject to PRC securities regulations and listing rules, among other restrictions. The Stock Exchange of Hong Kong, Shenzhen Stock Exchange (“SZSE”) and Shanghai Stock Exchange (“SSE”) reserve the right to suspend trading if necessary for ensuring an orderly and fair market and managing risks prudently, which could adversely affect a Fund’s ability to access the mainland China market. A stock may be recalled from the scope of eligible SSE securities or SZSE securities for trading via the Stock Connects for various reasons, and in such event, the stock can only be sold but is restricted from being bought. Stock Connect is only available on days when markets in both the PRC and Hong Kong are open, which may limit the Fund’s ability to trade when it would be otherwise attractive to do so.
Uncertainties in permanent PRC tax rules governing the taxation of income and gains from investments in Stock Connect A-shares could result in unexpected tax liabilities for the Fund. Please refer to the section titled “PRC taxation” below.
A Fund may, through Stock Connect, access securities listed on the ChiNext Market and STAR Board of the SZSE. Listed companies on the ChiNext Market and STAR Board are usually of an emerging nature with smaller operating scale. Listed companies on the ChiNext Market and STAR Board are subject to wider price fluctuation limits and due to higher entry thresholds for investors, may have limited liquidity, compared to other boards. They are subject to higher fluctuation in stock prices and liquidity and have higher risks and turnover ratios than companies listed on the main board of the SZSE. Securities listed on the ChiNext Market may be overvalued and such exceptionally high valuation may not be sustainable. Stock prices may be more susceptible to manipulation due to fewer circulating shares. It may be more common and faster for companies listed on the ChiNext Market to delist. This may have an adverse impact on a Fund if the companies that they invest in are delisted. Also, the rules and regulations regarding companies listed on the ChiNext Market and STAR Board are less stringent in terms of profitability and share capital than those on the main board. Investments in the ChiNext Market and STAR Board may result in significant losses for a Fund and its investors. STAR Board is a newly established board and may have a limited number of listed companies during the initial stage. Investments in STAR board may be concentrated in a small number of stocks and subject the Fund to higher concentration risk.
Stock Connect only operates on days when both the PRC and Hong Kong markets are open for trading and when banks in both markets are open on the corresponding settlement days. So it is possible that there are occasions when it is a normal trading day for the PRC market but the Fund cannot carry out any China A-shares trading via Stock Connect. The Fund may be subject to a risk of price fluctuations in China A-shares during the time when any of Stock Connect is not trading as a result.
PRC regulations require that before an investor sells any share, there should be sufficient shares in the account; otherwise the SSE or SZSE will reject the sell order concerned. SEHK will carry out pre-trade checking on China A-shares sell orders of its participants (i.e. the stock brokers) to ensure there is no over-selling. If the Fund intends to sell certain China A-shares it holds, it must transfer those China A-shares to the respective accounts of its broker(s) before the market opens on the day of selling (“trading day”). If it fails to meet this deadline, it will not be able to sell those shares on the trading day. Because of this requirement, the Fund may not be able to dispose of its holdings of China A-shares in a timely manner.
The Stock Connect program is a relatively new program and may be subject to further interpretation and guidance. There can be no assurance as to the program’s continued existence or whether future developments regarding the program may restrict or adversely affect a Fund’s investments or returns. In addition, the application and interpretation of the laws and regulations of Hong Kong and the PRC, and the rules, policies or guidelines published or applied by relevant regulators and exchanges in respect of the Stock Connect program are uncertain, and they may have a detrimental effect on a Fund’s investments and returns. Moreover, the rules and regulations may have potential retrospective effect. There can be no assurance that the Stock Connects will not be abolished. Investments in mainland China markets through the Stock Connects may adversely affect the Fund as a result of such changes.
Bond Connect Risks (VanEck China Bond ETF only)
The “Mutual Bond Market Access between mainland China and Hong Kong” (“Bond Connect”) program is an initiative established to facilitate investors from mainland China and Hong Kong to trade in each other’s bond markets through connection between the mainland China and Hong Kong financial institutions.
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Under the prevailing PRC regulations, eligible foreign investors will be allowed to invest in the bonds available on the China Interbank Bond Market (“CIBM”) through the northbound trading of Bond Connect (“Northbound Trading Link”). There will be no investment quota for the Northbound Trading Link.
Under the Northbound Trading Link, eligible foreign investors are required to appoint the China Foreign Exchange Trade System & National Interbank Funding Centre (“CFETS”) or other institutions recognized by the PBOC as registration agents to apply for registration with the PBOC.
Eligible foreign investors may submit trade requests for bonds circulated in the CIBM through the Northbound Trading Link provided by offshore electronic bond trading platforms, which will in turn transmit their requests for quotation to CFETS. CFETS will send the requests for quotation to a number of approved onshore dealers (including market makers and others engaged in the market-making business) in mainland China. The approved onshore dealers will respond to the requests for quotation via CFETS, and CFETS will send their responses to those eligible foreign investors through the same offshore electronic bond trading platforms. Once the eligible foreign investor accepts the quotation, the trade is concluded on CFETS.
On the other hand, the settlement and custody of bond securities traded in the CIBM under Bond Connect will be done through the settlement and custody link between an offshore custody agent and onshore custodian and clearing institutions in mainland China. In August 2018, Bond Connect enhanced its settlement system to fully implement real-time delivery-versus-payment settlement of trades, which has resulted in increased adoption of Bond Connect by investors. However, there is a risk that Chinese regulators may alter all or part of the structure and terms of, as well as a China Fund’s access to, Bond Connect in the future or eliminate it altogether, which may limit or prevent the Fund from investing directly in or selling its bond securities. Pursuant to the prevailing regulations in mainland China, all bonds traded by eligible foreign investors will be registered in the name of the Central Moneymarkets Unit of the Hong Kong Monetary Authority (“CMU”), which will hold such bonds as a nominee owner.
Bond Connect is relatively new. Laws, rules, regulations, policies, notices, circulars or guidelines relating to Bond Connect as published or applied by any of the Bond Connect Authorities (as defined below) are untested and are subject to change from time to time. There can be no assurance that Bond Connect will not be restricted, suspended or abolished. If such event occurs, the Fund’s ability to invest in the CIBM through Bond Connect will be adversely affected, and if the Fund is unable to adequately access the CIBM through other means, the Fund’s ability to achieve its investment objective will be adversely affected.
Under the prevailing regulations, eligible foreign investors who wish to participate in Bond Connect may do so through an offshore custody agent, registration agent or other third parties (as the case may be), who would be responsible for making the relevant filings and account opening with the relevant authorities. The Fund is therefore subject to the risk of default or errors on the part of such agents.
Trading through Bond Connect is performed through newly developed trading platforms and operational systems. There is no assurance that such systems will function properly (in particular, under extreme market conditions) or will continue to be adapted to changes and developments in the market. In the event that the relevant systems fails to function properly, trading through Bond Connect may be disrupted. The Fund’s ability to trade through Bond Connect (and hence to pursue its investment strategy) may therefore be adversely affected. In addition, where the Fund invests in the CIBM through Bond Connect, it may be subject to risks of delays inherent in the order placing and/or settlement.
The CMU (i.e. the HKMA) is the “nominee holder” of the bonds acquired by the Fund through Bond Connect. Whilst the Bond Connect Authorities have expressly stated that investors will enjoy the rights and interests of the bonds acquired through Bond Connect in accordance with applicable laws, the exercise and the enforcement of beneficial ownership rights over such bonds in the courts in China is yet to be tested. In addition, in the event that the nominee holder becomes insolvent, such bonds may form part of the pool of assets of the nominee holder available for distribution to its creditors and the Fund, as a beneficial owner, may have no rights whatsoever in respect thereof.
Chinese Variable Interest Entities Risks
Chinese operating companies sometimes rely on variable interest entity (“VIE”) structures to raise capital from non-Chinese investors. In a VIE structure, a China-based operating company establishes an entity (typically offshore) that enters into service and other contracts (such as powers of attorney, equity pledge agreements and other services or business cooperation agreements) with the Chinese company designed to provide economic exposure to the company. The offshore entity then issues exchange-traded shares that are sold to the public, including non-Chinese investors (such as a Fund). Shares of the offshore entity are not equity ownership interests in the Chinese operating company and therefore the ability of the offshore entity to control the activities of the Chinese company are limited and the Chinese company may engage in activities that negatively impact investment value. The VIE structure is designed to provide the offshore entity (and in turn, investors in
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the entity) with economic exposure to the Chinese company that replicates equity ownership, without actual equity ownership. The VIE contractual arrangements permit the VIE structure to consolidate its financial statements with those of the underlying Chinese company. VIE structures are used due to Chinese government prohibitions on foreign ownership of companies in certain industries and it is not clear that the contracts are enforceable or that the structures will otherwise work as intended.
Intervention by the Chinese government with respect to VIE structures could adversely affect the Chinese operating company’s performance, the enforceability of the offshore entity’s contractual arrangements with the Chinese company and the value of the offshore entity’s shares. Further, if the Chinese government determines that the agreements establishing the VIE structure do not comply with Chinese law and regulations, including those related to prohibitions on foreign ownership, the Chinese government could subject the Chinese company to penalties, revocation of business and operating licenses or forfeiture of ownership interests. The offshore entity’s control over the Chinese company may also be jeopardized if certain legal formalities are not observed in connection with the agreements, if the agreements are breached or if the agreements are otherwise determined not to be enforceable. If any of the foregoing were to occur, the market value of a Fund’s associated portfolio holdings would likely fall, causing substantial investment losses for the Fund.
In addition, Chinese companies listed on U.S. exchanges, including ADRs and companies that rely on VIE structures, may be delisted if they do not meet U.S. accounting standards and auditor oversight requirements. Delisting could significantly decrease the liquidity and value of the securities of these companies, decrease the ability of a Fund to invest in such securities and increase the cost of the Fund if it is required to seek alternative markets in which to invest in such securities. Investments involving a VIE may also pose additional risks because the interests of the equity owners of the operating company may conflict with the interests of the investors of the offshore company, and the fiduciary duties of the officers and the directors of the operating company may differ from, or conflict with, the fiduciary duties of the officers and directors of the offshore company.
Specific Risks Applicable to VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF
Under normal circumstances, VanEck Real Assets ETF, through a wholly-owned subsidiary of the Fund, invests in Exchange-Traded Products that invest in commodities and Commodities Instruments. Under normal circumstances, each of VanEck CMCI Commodity Strategy ETF and VanEck Commodity Strategy ETF invests in certain Commodities Instruments through a wholly-owned subsidiary. The Funds’ wholly-owned subsidiaries are collectively referred to as the “Cayman Subsidiaries.”
Cayman Subsidiaries. Each Fund’s investment in its Cayman Subsidiary will generally not exceed 25% of the value of the Fund’s total assets at each quarter-end of the Fund's fiscal year. Each Cayman Subsidiary may invest in Commodities Instruments, as described under “Commodities Instruments” below. Because each Fund may invest a substantial portion of its assets in its Cayman Subsidiary, which may hold certain of the investments described in the Fund’s Prospectus and this SAI, each Fund may be considered to be investing indirectly in those investments through its Cayman Subsidiary. Therefore, except as otherwise noted, for purposes of this disclosure, references to a Fund’s investments strategies and risks include those of its Cayman Subsidiary.
The Cayman Subsidiaries are not registered under the 1940 Act and are not directly subject to its investor protections, except as noted in each Fund’s Prospectus or this SAI. However, each Cayman Subsidiary is wholly-owned and controlled by its Fund and is advised by VEARA. The Trust’s Board of Trustees has oversight responsibility for the investment activities of the Funds, including its investment in the Cayman Subsidiaries, and each Fund’s role as the sole shareholder of its Cayman Subsidiary. The Cayman Subsidiaries will also enter into separate contracts for the provision of custody, transfer agency, and accounting agent services with the same service providers or with affiliates of the same service providers that provide those services to its Fund.
Changes in the laws of the United States (where the Funds are organized) and/or the Cayman Islands (where the Cayman Subsidiaries are incorporated) could prevent a Fund and/or its Cayman Subsidiary from operating as described in its Prospectus and this SAI and could negatively affect the Fund and its shareholders. For example, the Cayman Islands currently does not impose certain taxes on the Cayman Subsidiaries, including income and capital gains tax, among others. If Cayman Islands laws were changed to require the Cayman Subsidiaries to pay Cayman Islands taxes, the investment returns of the Funds would likely decrease.
The financial statements of each Cayman Subsidiary will be consolidated with its Fund’s financial statements in the Fund’s filings on Form N-CSR with the SEC.
Commodities Instruments. Each Fund gains exposure to Commodities Instruments primarily through its Cayman Subsidiary. Additional information on the Cayman Subsidiaries is set forth under “Cayman Subsidiaries” above. Additional information regarding specific Commodities Instruments is set forth below. The Funds, either directly or through the Cayman
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Subsidiaries, may also gain exposure to Commodities Instruments through investment in certain investment companies, including ETFs, and in ETNs.
Each Fund may invest up to 25% of its total assets in its Cayman Subsidiary, portions of which will be committed as “initial” and “variation” margin to secure the Cayman Subsidiary’s positions in Commodities Instruments. These assets are placed in accounts maintained by the Fund’s Cayman Subsidiary at the Cayman Subsidiary’s clearing broker or FCM, and are held in cash or invested in U.S. Treasury bills and other direct or guaranteed debt obligations of the U.S. government maturing within less than one year at the time of investment.
In the event that the securities are not listed on a national securities exchange, the principal trading market for some may be in the OTC market. The existence of a liquid trading market for certain securities may depend on whether dealers will make a market in such securities. There can be no assurance that a market will be made or maintained or that any such market will be or remain liquid. The price at which securities may be sold and the value of the Funds’ Shares will be adversely affected if trading markets for the Funds’ portfolio securities are limited or absent or if bid/ask spreads are wide.
Each Fund may also invest in securities issued by other investment companies, equity securities, fixed income securities and money market instruments, including repurchase agreements. For temporary defensive purposes, each Fund may invest without limit in money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments.
Each of VanEck Commodity Strategy ETF and VanEck Real Assets ETF is an actively managed ETF that does not seek to replicate the performance of a specified index.
Regulatory developments affecting the exchange-traded and OTC derivatives markets may impair a Fund’s ability to manage or hedge its investment portfolio through the use of derivatives. The Dodd-Frank Act and the rules promulgated thereunder may limit the ability of a Fund to enter into one or more exchange-traded or OTC derivatives transactions.
Changes in the laws or regulations of the United States or the Cayman Islands, including any changes to applicable tax laws and regulations, could impair the ability of a Fund to achieve its investment objective and could increase the operating expenses of the Fund or its Cayman Subsidiary. CFTC regulations require an investment adviser of a registered investment company to register with the CFTC as a CPO if the investment company either markets itself as a vehicle for trading commodity interests or conducts more than a de minimis amount of speculative trading in commodity interests. Based on each Fund’s and its Cayman Subsidiary’s current investment strategies, each Fund and its Cayman Subsidiary are each a “commodity pool” and VEARA, which is currently registered with the CFTC as a CPO and commodity trading adviser under the CEA, is considered a CPO with respect to each Fund and its Cayman Subsidiary. Accordingly, each Fund and VEARA are subject to dual regulation by the CFTC and the SEC. Pursuant to certain CFTC regulations, each Fund and VEARA have elected to meet the requirements of certain CFTC regulations by complying with specific SEC rules and regulations relating to disclosure and reporting requirements. The CFTC could deem a Fund or VEARA in violation of an applicable CFTC regulation if the Fund or VEARA failed to comply with a related SEC regulatory requirement. In addition, the Funds and VEARA will remain subject to certain CFTC-mandated disclosure, reporting and recordkeeping regulations with respect to the Funds and the Cayman Subsidiaries. Compliance with the CFTC regulations could increase a Fund’s expenses, adversely affecting the Fund’s total return.
In addition, the CFTC or the SEC could at any time alter the regulatory requirements governing the use of commodity index-linked notes, commodity futures, options on commodity futures or swap transactions by investment companies, which could result in the inability of a Fund to achieve its investment objective through its current strategies. Amendments to position limits rules the CFTC has adopted that establish certain new and amended position limits for 25 specified physical commodity futures and related options contracts traded on exchanges, other futures contracts and related options directly or indirectly linked to such 25 specified contracts, and any OTC transactions that are economically equivalent to the 25 specified contracts have become effective. VEARA will need to consider whether the exposure created under these contracts (if applicable) might exceed the new and amended limits, and the limits may constrain the ability of the Fund to use such contracts. The amendments also modify the bona fide hedging exemption for which certain swap dealers were previously eligible, which could limit the amount of speculative OTC transaction capacity each such swap dealer would have available for a Fund.
Each Fund and its Cayman Subsidiary may utilize futures contracts. The use of futures is subject to applicable regulations of the SEC, the several exchanges upon which they are traded, the CFTC and various state regulatory authorities.
Futures Contracts. Each Fund may purchase and sell futures contracts. Each Fund (directly or through its Cayman Subsidiary) may invest in commodity futures contracts. Commodity futures contracts are generally based upon commodities within the six principal commodity groups: energy, industrial metals, agriculture, precious metals, foods and fibers, and livestock. The price of a commodity futures contract will reflect the storage costs of purchasing the commodity. These storage costs include the time value of money invested in the commodity plus the actual costs of storing the commodity less any
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benefits from ownership of the commodity that are not obtained by the holder of a futures contract (this is sometimes referred to as the “convenience yield”). To the extent that these storage costs change for an underlying commodity while the Fund is in a long position on that commodity, the value of the futures contract may change proportionately.
Commodity futures contracts are traded on futures exchanges. These futures exchanges offer a central marketplace in which to transact futures contracts, a clearing corporation to process trades, a standardization of expiration dates and contract sizes, and the availability of a secondary market. Futures markets also specify the terms and conditions of delivery as well as the maximum permissible price movement during a trading session. Additionally, the commodity futures exchanges may have position limit rules that limit the amount of futures contracts that any one party may hold in a particular commodity at any point in time. These position limit rules are designed to prevent any one participant from controlling a significant portion of the market. In the commodity futures markets, the exchange clearing corporation takes the other side in all transactions, either buying or selling directly to the market participants. The clearinghouse acts as the counterparty to all exchange-traded futures contracts, that is, a Fund’s or its Cayman Subsidiary’s obligation is to the clearinghouse, and the Fund or its Cayman Subsidiary will look to the clearinghouse to satisfy the Fund’s or its Cayman Subsidiary’s rights under a commodity futures contract.
Transaction costs are incurred when a futures contract is bought or sold and margin deposits must be maintained. A futures contract may be satisfied by delivery or purchase, as the case may be, of the instrument or by payment of the change in the cash value of the index. More commonly, futures contracts are closed out prior to delivery by entering into an offsetting transaction in a matching futures contract. Although the value of an index might be a function of the value of certain specified securities, no physical delivery of those securities is made. If the offsetting purchase price is less than the original sale price, a gain will be realized; if it is more, a loss will be realized. Conversely, if the offsetting sale price is more than the original purchase price, a gain will be realized; if it is less, a loss will be realized. The transaction costs must also be included in these calculations. There can be no assurance, however, that a Fund or its Cayman Subsidiary will be able to enter into an offsetting transaction with respect to a particular futures contract at a particular time. If a Fund or its Cayman Subsidiary is not able to enter into an offsetting transaction, the Fund or its Cayman Subsidiary will continue to be required to maintain the margin deposits on the futures contract.
Margin is the amount of funds that must be deposited by a Fund or its Cayman Subsidiary with its custodian or FCM in a segregated account in the name of the FCM in order to initiate futures trading and to maintain the Fund’s or its Cayman Subsidiary’s open positions in futures contracts. A margin deposit is intended to ensure a Fund’s or its Cayman Subsidiary’s performance of the futures contract. The margin required for a particular futures contract is set by the exchange on which the futures contract is traded and may be significantly modified from time to time by the exchange during the term of the futures contract. Futures contracts are customarily purchased and sold on margins that may vary.
If the price of an open futures contract changes (by increase in the case of a sale or by decrease in the case of a purchase) so that the loss on the futures contract reaches a point at which the margin on deposit does not satisfy margin requirements, the broker will require an increase in the margin. However, if the value of a position increases because of favorable price changes in the futures contract so that the margin deposit exceeds the required margin, the broker will pay the excess to a Fund or its Cayman Subsidiary. In computing daily net asset value, a Fund or its Cayman Subsidiary will mark to market the current value of its open futures contracts. A Fund and its Cayman Subsidiary expect to earn interest income on their margin deposits.
Because of the low margin deposits required, futures trading involves an extremely high degree of leverage. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of the futures contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, if the futures contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the amount initially invested in the futures contract. However, a Fund or its Cayman Subsidiary would presumably have sustained comparable losses if, instead of investing in the futures contract, it had invested in the underlying financial instrument and sold it after the decline.
Most U.S. futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of futures contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses. Despite the daily price limits on various futures exchanges, the price volatility of commodity futures contracts has been historically greater than that for traditional securities such as stocks and bonds. To the extent that a Fund or
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its Cayman Subsidiary invests in commodity futures contracts, the assets of the Fund and the Cayman Subsidiary, and therefore the prices of Fund shares, may be subject to greater volatility.
There can be no assurance that a liquid market will exist at a time when a Fund or its Cayman Subsidiary seeks to close out a futures contract. A Fund or its Cayman Subsidiary would continue to be required to meet margin requirements until the position is closed, possibly resulting in a decline in the Fund’s net asset value. There can be no assurance that an active secondary market will develop or continue to exist.
Regulatory Aspects of Investments in Futures. VEARA has registered as a CPO with the CFTC. VEARA’s investment decisions may need to be modified, and commodity contract positions held by a Fund and/or its Cayman Subsidiary may have to be liquidated at disadvantageous times or prices, to avoid exceeding position limits established by the CFTC, potentially subjecting the Fund to substantial losses. The regulation of commodity transactions in the United States is subject to ongoing modification by government, self-regulatory and judicial action. The effect of any future regulatory change on a Fund is impossible to predict, but could be substantial and adverse to the Fund.
Derivatives Rule. The Fund is required to comply with the derivatives rule when it engages in transactions involving futures and other derivatives involving future Fund payment or delivery obligations. VEARA cannot predict the effects of these requirements on the Fund. VEARA intends to monitor developments and seek to manage the Fund in a manner consistent with achieving the Fund’s investment objective. See “SEC Regulatory Matters” above.
Federal Income Tax Treatment of Investments in the Cayman Subsidiaries. Each Fund must derive at least 90% of its gross income from certain qualifying sources of income in order to qualify as a RIC under the Internal Revenue Code. The IRS issued a revenue ruling in December 2005 which concluded that income and gains from certain commodity-linked derivatives are not qualifying income under subchapter M of the Internal Revenue Code. As a result, a Fund’s ability to invest directly in commodity-linked futures contracts or swaps or in certain exchange-traded trusts that hold commodities as part of its investment strategy is limited by the requirement that it receive no more than ten percent (10%) of its gross income from such investments. The IRS has issued private letter rulings to other taxpayers in which the IRS specifically concluded that income derived from a fund’s investment in a controlled foreign corporation (“CFC”) also will constitute qualifying income to the fund, even if the CFC itself owns commodity-linked futures contracts or swaps. A private letter ruling cannot be used or cited as precedent and is binding on the IRS only for the taxpayer that receives it. The Funds have not obtained a ruling from the IRS with respect to their investments or their structure. The IRS has currently suspended the issuance of private letter rulings relating to the tax treatment of income generated by investments in a subsidiary. The IRS has issued regulations that generally treat a fund’s income inclusion with respect to an investment in a non-U.S. company generating investment income as qualifying income if there is a current-year distribution out of the earnings and profits of the non-U.S. company that are attributable to such income inclusion, or if the income inclusion is derived with respect to the fund’s business of investing in stocks and securities. Each Fund intends to treat its income from its Cayman Subsidiary as qualifying income without any such ruling from the IRS. There can be no assurance that the IRS will not change its position with respect to some or all of these issues or if the IRS did so, that a court would not sustain the IRS’s position. Furthermore, the tax treatment of each Fund’s investments in its Cayman Subsidiary may be adversely affected by future legislation, court decisions, future IRS guidance or Treasury regulations. If the IRS were to change its position or otherwise determine that income derived from a Fund’s investment in its Cayman Subsidiary does not constitute qualifying income and if such positions were upheld, or if future legislation, court decisions, future IRS guidance or Treasury regulations were to adversely affect the tax treatment of such investments, the Fund might cease to qualify as a RIC and would be required to reduce its exposure to such investments which could result in difficulty in implementing its investment strategy. If a Fund did not qualify as a RIC for any taxable year, the Fund’s taxable income would be subject to tax at the Fund level at regular corporate tax rates (without reduction for distributions to shareholders) and to a further tax at the shareholder level when such income is distributed. In such event, in order to re-qualify for taxation as a RIC, the Fund may be required to recognize unrealized gains, pay substantial taxes and interest and make certain distributions.
Cayman Subsidiaries. Investments in the Cayman Subsidiaries are expected to provide the Funds with exposure to the commodity markets within the limitations of subchapter M of the Internal Revenue Code and recent IRS revenue rulings and regulations, as discussed above under “Federal Income Tax Treatment of Investments in the Cayman Subsidiaries” and below under “Taxes.” Each Cayman Subsidiary is a company organized under the laws of the Cayman Islands and is overseen by its own board of directors. Each Fund is the sole shareholder of its Cayman Subsidiary, and it is not currently expected that shares of the Cayman Subsidiaries will be sold or offered to other investors. It is expected that the Cayman Subsidiaries will primarily invest in Commodities Instruments. To the extent that a Fund invests in its Cayman Subsidiary, the Fund may be subject to the risks associated with such Commodities Instruments.
While the Cayman Subsidiaries may be considered similar to investment companies, they are not registered under the 1940 Act and, unless otherwise noted in each Fund’s Prospectus and this SAI, are not subject to all of the investor protections of the 1940 Act and other U.S. regulations. Changes in the laws of the United States and/or the Cayman Islands could result in
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the inability of a Fund and/or its Cayman Subsidiary to operate as described in the Fund’s Prospectus and this SAI and could eliminate or severely limit the Fund’s ability to invest in its Cayman Subsidiary which may adversely affect the Fund and its shareholders.
EXCHANGE LISTING AND TRADING
A discussion of exchange listing and trading matters associated with an investment in each Fund is contained in each Fund’s Prospectus under the headings “Summary Information—Principal Risks of Investing in the Fund” with respect to the applicable Fund, “Additional Information About the Funds’ Investment Strategies and Risks—Risks of Investing in the Funds,” “Shareholder Information—Determination of NAV” and “Shareholder Information—Buying and Selling Exchange-Traded Shares.” The discussion below supplements, and should be read in conjunction with, such sections of each Fund’s Prospectus.
The Shares of each Fund are listed on NYSE Arca, NASDAQ or Cboe and trade in the secondary market at prices that may differ to some degree from their NAV. An Exchange may but is not required to remove the Shares of the Funds from listing if: (1) following the initial twelve-month period beginning upon the commencement of trading of the Funds, there are fewer than 50 beneficial holders of the Shares, (2) the Exchange becomes aware that the Funds are no longer eligible to operate in reliance on Rule 6c-11 under the 1940 Act, (3) the Funds no longer comply with certain listing exchange rules, or (4) such other event shall occur or condition exists that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. In addition, the Exchange will remove the Shares from listing and trading upon termination of the Trust. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of Shares of the Funds will continue to be met.
As in the case of other securities traded on an Exchange, brokers’ commissions on secondary market transactions in Shares of each of the Funds will be based on negotiated commission rates at customary levels.
In order to provide investors with a basis to gauge whether the market price of the Shares on the Exchange is approximately consistent with the current value of the assets of a Fund on a per Share basis, an “intra-day indicative value” (“IIV” and also known as the Indicative Optimized Portfolio Value) for a Fund may be disseminated through the facilities of the Consolidated Tape Association’s Network B. IIVs are disseminated during regular Exchange trading hours. The Funds are not involved in or responsible for the calculation or dissemination of the IIVs and make no warranty as to the accuracy of the IIVs.
The IIV has a securities component and a cash component reflecting cash and other assets that may be held by the Funds. The securities values included in the IIV are the values of the Deposit Securities (as defined below under the heading “Creation and Redemption of Creation Units—Fund Deposit”) for the Funds. While the IIV reflects the approximate current value of the Deposit Securities required to be deposited in connection with the purchase of a Creation Unit, it does not necessarily reflect the precise composition of the current portfolio of securities held by the Funds at a particular point in time because the current portfolio of each Fund may include securities that are not a part of the current Deposit Securities. Therefore, while each Fund’s IIV may be disseminated during the Exchange trading hours, it should not be viewed as a real-time update of the Fund’s NAV, which is calculated only once a day.
The cash component included in the IIV could consist of estimated accrued interest, dividends and other income, less expenses. If applicable, the IIV also reflects changes in currency exchange rates between the U.S. dollar and the applicable currency.
BOARD OF TRUSTEES OF THE TRUST
Trustees and Officers of the Trust
The Board of the Trust consists of six Trustees, five of whom are not “interested persons” (as defined in the 1940 Act) of the Trust (the “Independent Trustees”). Mr. Peter J. Sidebottom, an Independent Trustee, serves as Chairperson of the Board. The Board is responsible for overseeing the management and operations of the Trust, including general supervision of the duties performed by the Advisers and other service providers to the Trust. The Advisers are responsible for the day-to-day administration and business affairs of the Trust.
The Board believes that each Trustee’s experience, qualifications, attributes or skills on an individual basis and in combination with those of the other Trustees lead to the conclusion that the Board possesses the requisite skills and attributes to carry out its oversight responsibilities with respect to the Trust. The Board believes that the Trustees’ ability to review, critically evaluate, question and discuss information provided to them, to interact effectively with the Advisers, other service providers, counsel and independent auditors, and to exercise effective business judgment in the performance of their duties, support this conclusion. The Board also has considered the following experience, qualifications, attributes and/or skills, among others, of its members in reaching its conclusion: such person’s character and integrity; length of service as a board
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member of the Trust; such person’s willingness to serve and willingness and ability to commit the time necessary to perform the duties of a Trustee; and, as to each Trustee other than Mr. van Eck, his status as not being an “interested person” (as defined in the 1940 Act) of the Trust. In addition, the following specific experience, qualifications, attributes and/or skills apply as to each Trustee: Mr. Chow, significant business and financial experience, particularly in the investment management industry, experience with trading and markets through his involvement with the Pacific Stock Exchange, and service as a chief executive officer, board member, partner or executive officer of various businesses and non-profit organizations; Ms. Hesslein, business and financial experience, particularly in the investment management industry, and service as a president, board member and/or executive officer of various businesses; Mr. Short, business and financial experience, particularly in the investment management industry, and service as a president, board member or executive officer of various businesses; Mr. Sidebottom, business and financial experience, particularly in the investment management industry, and service as partner and/or executive officer of various businesses; Mr. Stamberger, extensive business and financial experience as founder, president and CEO of SmartBrief, Inc., and previous service as the Senior Vice President of B2B, Future Plc, a global media company; and Mr. van Eck, business and financial experience, particularly in the investment management industry, and service as a president, executive officer and/or board member of various businesses, including VEAC, Van Eck Securities Corporation (“VESC”), and VEARA. References to the experience, qualifications, attributes and skills of Trustees are pursuant to requirements of the SEC, do not constitute holding out of the Board or any Trustee as having any special expertise or experience, and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.
The Trustees of the Trust, their addresses, positions with the Trust, year of birth, term of office and length of time served, principal occupations during the past five years, the number of portfolios in the Fund Complex overseen by each Trustee and other directorships, if any, held by the Trustees, are set forth below.
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Independent Trustees
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 | ||||||||||||
| David H. Chow, 1957*† | Trustee Chairperson | Since 2006 2008 to 2022 | Founder and CEO, DanCourt Management LLC (financial/strategy consulting firm and Registered Investment Adviser), March 1999 to present. | 69 | Trustee, MainStay Fund Complex4, January 2016 to present and currently Chairman of the Investment Committee. Trustee, Berea College of Kentucky, May 2009 to June 2024, Chairman of the Investment Committee. Member of the Governing Council of the Independent Directors Council, October 2012 to September 2020. | ||||||||||||
| 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). | 69 | Formerly, Trustee, First Eagle Senior Loan Fund, March 2017 to December 2021; and Trustee, Eagle Growth and Income Opportunities Fund, March 2017 to December 2020. | ||||||||||||
| R. Alastair Short, 1953*† | Trustee | Since 2006 | President, Apex Capital Corporation (personal investment vehicle). | 79 | Chairman and Independent Director, EULAV Asset Management; Lead Independent Director, Total Fund Solution; Independent Director, Contingency Capital, LLC; Trustee, Kenyon Review; Trustee, Children's Village. Formerly, Independent Director, Tremont offshore funds. | ||||||||||||
| Peter J. Sidebottom, 1962*† | Chairperson Trustee | Since 2022 Since 2012 | Global Lead Partner, Financial Services Strategy, Accenture, January 2021 to present; Lead Partner, North America Banking and Capital Markets Strategy, Accenture, May 2017 to December 2021. | 69 | Formerly, 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 | Senior Vice President, B2B, Future Plc (a global media company), July 2020 to August 2022; President, CEO and co-founder, SmartBrief, Inc., 1999 to 2020. | 79 | Director, Food and Friends, Inc., 2013 to present; Board Member, The Arc Foundation of the US, 2022 to present; Chairman, Lifetime Care Services, LLC, 2023 to present. | ||||||||||||
1The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017.
2Each Trustee serves until resignation, death, retirement or removal. Officers are elected yearly by the Trustees.
3The Fund Complex consists of the VanEck Funds, VanEck VIP Trust and the Trust.
4The MainStay Fund Complex consists of MainStay Funds, MainStay Funds Trust, MainStay VP Funds Trust and MainStay MacKay Defined Term Municipal Opportunities Fund.
* Member of the Audit Committee.
† Member of the Nominating and Corporate Governance Committee.
Interested Trustee
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 | ||||||||||||
Jan F. van Eck, 19634 | Trustee, Chief Executive Officer and President | Trustee (Since 2006); Chief Executive Officer and President (Since 2009) | Director, President and Chief Executive Officer of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | 79 | Director, National Committee on US-China Relations. | ||||||||||||
____________________
1The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017.
2Each Trustee serves until resignation, death, retirement or removal. Officers are elected yearly by the Trustees.
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3The Fund Complex consists of the VanEck Funds, VanEck VIP Trust and the Trust.
4“Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC.
Officer Information
The Officers of the Trust, their addresses, positions with the Trust, year of birth and principal occupations during the past five years are set forth below.
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 | ||||||||
| Lawrence G. Altadonna, 1966 | Vice President and Treasurer | Since 2024 | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Fund Assistant Treasurer and Vice President of Credit Suisse Asset Management, LLC (June 2022- January 2024). | ||||||||
| Matthew A. Babinsky, 1983 | Vice President and Assistant Secretary | Vice President (Since 2023); Assistant Secretary (Since 2016) | 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. | ||||||||
| 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, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (Since 2012) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. Formerly, Treasurer of other investment companies advised by VEAC and VEARA. | ||||||||
| Susan Curry, 1966 | Assistant Vice President | Since 2022 | Assistant Vice President of VEAC, VEARA and VESC; Formerly, Managing Director, Legg Mason, Inc. | ||||||||
| Eduardo Escario, 1975 | Vice President | Since 2012 | Regional Director, Business Development/Sales for Southern Europe and South America of VEAC. | ||||||||
| 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 | Director, Business Development of VanEck Australia Pty Ltd. Formerly, 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. | ||||||||
| Matthew McKinnon, 1970 | Assistant Vice President | Since 2018 | Head of Asia - Business Development of VanEck Australia Pty Ltd. Formerly, Director, Intermediaries and Institutions of VanEck Australia Pty Ltd. | ||||||||
| Lisa A. Moss, 1965 | Assistant Vice President and Assistant Secretary | Since 2022 | Assistant Vice President of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly Senior Counsel, Perkins Coie LLP. | ||||||||
| Arian Neiron, 1979 | Vice President | Since 2018 | CEO & 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 and VEARA; 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; Co-head Sales EMEA. | ||||||||
43
| Jonathan R. Simon, 1974 | Senior Vice President, Secretary and Chief Legal Officer | Senior Vice President (Since 2016); Secretary and Chief Legal Officer (Since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. | ||||||||
| Andrew Tilzer, 1972 | Assistant Vice President | Since 2021 | Vice President of VEAC and VEARA; Vice President of Portfolio Administration of VEAC. Formerly, Assistant Vice President, Portfolio Operations of VEAC. | ||||||||
_____________________
1The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017.
2Officers are elected yearly by the Trustees.
The Board has an Audit Committee consisting of five Trustees who are Independent Trustees. Ms. Hesslein and Messrs. Chow, Short, Sidebottom and Stamberger currently serve as members of the Audit Committee and each of Ms. Hesslein and Messrs. Chow, Short, Sidebottom and Stamberger has been designated as an “audit committee financial expert” as defined under Item 407 of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Ms. Hesslein is the Chairperson of the Audit Committee. The Audit Committee has the responsibility, among other things, to: (i) oversee the accounting and financial reporting processes of the Trust and its internal control over financial reporting; (ii) oversee the quality and integrity of the Trust’s financial statements and the independent audit thereof; (iii) oversee or, as appropriate, assist the Board’s oversight of the Trust’s compliance with legal and regulatory requirements that relate to the Trust’s accounting and financial reporting, internal control over financial reporting and independent audit; (iv) approve prior to appointment the engagement of the Trust’s independent registered public accounting firm and, in connection therewith, to review and evaluate the qualifications, independence and performance of the Trust’s independent registered public accounting firm; and (v) act as a liaison between the Trust’s independent registered public accounting firm and the full Board.
The Board also has a Nominating and Corporate Governance Committee consisting of five Independent Trustees. Ms. Hesslein and Messrs. Chow, Short, Sidebottom and Stamberger currently serve as members of the Nominating and Corporate Governance Committee. Mr. Short is the Chairperson of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has the responsibility, among other things, to: (i) evaluate, as necessary, the composition of the Board, its committees and sub-committees and make such recommendations to the Board as deemed appropriate by the Committee; (ii) review and define Independent Trustee qualifications; (iii) review the qualifications of individuals serving as Trustees on the Board and its committees; (iv) evaluate, recommend and nominate qualified individuals for election or appointment as members of the Board and recommend the appointment of members and chairs of each Board committee and subcommittee; and (v) review and assess, from time to time, the performance of the committees and subcommittees of the Board and report the results to the Board.
Board of Trustees and Committee Meetings
The Board, as well as its Audit and Nominating and Corporate Governance Committees held meetings as set forth below:
| Fiscal Year | Number of Regular Meetings of the Board of Trustees | Number of Audit Committee Meetings | Number of Nominating and Corporate Governance Committee Meetings | ||||||||
October 1, 2023 - September 30, 2024 | 5 | 4 | 4 | ||||||||
January 1, 2024 - December 31, 2024 | 5 | 4 | 4 | ||||||||
May 1, 2023 - April 30, 2024 | 5 | 4 | 4 | ||||||||
The Board has determined that its leadership structure is appropriate given the business and nature of the Trust. In connection with its determination, the Board considered that the Chairperson of the Board is an Independent Trustee. The Chairperson of the Board can play an important role in setting the agenda of the Board and also serves as a key point person for dealings between management and the other Independent Trustees. The Independent Trustees believe that the Chairperson’s independence facilitates meaningful dialogue between the Advisers and the Independent Trustees. The Board also considered that the Chairperson of each Board committee is an Independent Trustee, which yields similar benefits with respect to the functions and activities of the various Board committees. The Independent Trustees also regularly meet outside the presence of management and are advised by independent legal counsel. The Board has determined that its committees help ensure that the Trust has effective and independent governance and oversight. The Board also believes that its leadership structure facilitates
44
the orderly and efficient flow of information to the Independent Trustees from management of the Trust, including the Advisers. The Board reviews its structure on an annual basis.
As an integral part of its responsibility for oversight of the Trust in the interests of shareholders, the Board, as a general matter, oversees risk management of the Trust’s investment programs and business affairs. The function of the Board with respect to risk management is one of oversight and not active involvement in, or coordination of, day-to-day risk management activities for the Trust. The Board recognizes that not all risks that may affect the Trust can be identified, that it may not be practical or cost-effective to eliminate or mitigate certain risks, that it may be necessary to bear certain risks (such as investment-related risks) to achieve the Trust’s goals, and that the processes, procedures and controls employed to address certain risks may be limited in their effectiveness. Moreover, reports received by the Trustees that may relate to risk management matters are typically summaries of the relevant information.
The Board exercises oversight of the risk management process. The Trust faces a number of risks, such as investment-related and compliance risks. The Advisers’ personnel seek to identify and address risks, i.e., events or circumstances that could have material adverse effects on the business, operations, shareholder services, investment performance or reputation of the Trust. Under the overall supervision of the Board or the applicable Committee of the Board, the Trust, the Advisers and the affiliates of the Advisers employ a variety of processes, procedures and controls to identify such possible events or circumstances, to lessen the probability of their occurrence and/or to mitigate the effects of such events or circumstances if they do occur. Different processes, procedures and controls are employed with respect to different types of risks. Various personnel, including the Trust’s Chief Compliance Officer, as well as various personnel of the Advisers and other service providers such as the Trust’s independent accountants, may report to the Audit Committee and/or to the Board with respect to various aspects of risk management, as well as events and circumstances that have arisen and responses thereto.
The officers and Trustees of the Trust, in the aggregate, owned less than 1% of the Shares of VanEck Alternative Asset Manager ETF as of June 4, 2025.
For each Fund with a fiscal year end of April 30, 2024, the officers and Trustees of the Trust, in the aggregate, owned less than 1% of the Shares of each Fund as of July 31, 2024.
For each Fund with a fiscal year end of September 30, 2024, except as follows, the officers and Trustees of the Trust, in the aggregate, owned less than 1% of the Shares of each Fund as of December 31, 2024. The officers and Trustees of the Trust, in the aggregate, owned 1.47% of Morningstar ESG Moat ETF, 4.40% Morningstar Wide Moat Growth ETF and 3.20% of Morningstar Wide Moat Value ETF.
For each Fund with a fiscal year end of December 31, 2024, except as follows, the officers and Trustees of the Trust, in the aggregate, owned less than 1% of the Shares of each Fund as of March 31, 2025. The officers and Trustees of the Trust, in the aggregate, owned 2.84% of VanEck Brazil Small-Cap Index ETF, 8.67% of VanEck Office and Commercial REIT ETF and 1.39% of VanEck Digital India ETF.
The general management of the Mauritius Subsidiary is the responsibility of its Board of Directors, a majority of which are also Trustees of the Trust.
For each Trustee, the dollar range of equity securities beneficially owned (including ownership through the Trust’s Deferred Compensation Plan) by the Trustee in the Trust and in all registered investment companies advised by the Advisers (“Family of Investment Companies”) that are overseen by the Trustee is shown below. With respect to the Funds with a fiscal year end of April 30, 2024, the dollar range of equity securities in such Funds is provided as of December 31, 2023. With respect to the Funds with a fiscal year end of September 30, 2024 and December 31, 2024, the dollar range of equity securities in such Funds is provided as of December 31, 2024.
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Funds with Fiscal Year Ended 9/30/2024 | ||||||||||||||||||||
Independent Trustees | Interested Trustee | |||||||||||||||||||
David H. Chow | Laurie A. Hesslein | R. Alastair Short | Peter J. Sidebottom | Richard D. Stamberger | Jan F. van Eck | |||||||||||||||
VanEck Alternative Asset Manager ETF* | None | None | None | None | None | None | ||||||||||||||
VanEck Biotech ETF | None | None | None | None | None | None | ||||||||||||||
| VanEck Commodity Strategy ETF | None | None | None | None | None | None | ||||||||||||||
| VanEck Digital Transformation ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Durable High Dividend ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Energy Income ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Environmental Services ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Fabless Semiconductor ETF | None | None | None | None | None | None | ||||||||||||||
| VanEck Gaming ETF | None | None | None | None | $10,001-$50,000 | $1-$10,000 | ||||||||||||||
| VanEck Green Infrastructure ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Long/Flat Trend ETF | None | None | None | None | None | $50,001-$100,000 | ||||||||||||||
| VanEck Morningstar ESG Moat ETF | None | None | None | None | None | $50,001-$100,000 | ||||||||||||||
VanEck Morningstar Global Wide Moat ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Morningstar International Moat ETF | None | None | None | None | Over $100,000 | Over $100,000 | ||||||||||||||
| VanEck Morningstar SMID Moat ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Morningstar Wide Moat ETF | Over $100,000 | $10,001-$50,000 | None | Over $100,000 | Over $100,000 | Over $100,000 | ||||||||||||||
VanEck Morningstar Wide Moat Growth ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
VanEck Morningstar Wide Moat Value ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
| VanEck Pharmaceutical ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Real Assets ETF | None | None | None | None | None | $50,001-$100,000 | ||||||||||||||
VanEck Retail ETF | None | None | None | None | None | None | ||||||||||||||
| VanEck Robotics ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
46
VanEck Semiconductor ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Social Sentiment ETF | None | None | None | None | None | $50,001-$100,000 | ||||||||||||||
| VanEck Video Gaming and eSports ETF | None | None | None | None | None | None | ||||||||||||||
Funds with Fiscal Year Ended 12/31/2024 | ||||||||||||||||||||
Independent Trustees | Interested Trustee | |||||||||||||||||||
David H. Chow | Laurie A. Hesslein | R. Alastair Short | Peter J. Sidebottom | Richard D. Stamberger | Jan F. van Eck | |||||||||||||||
VanEck AA-BB CLO ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Africa Index ETF | None | None | None | None | None | $1-$10,000 | ||||||||||||||
VanEck Agribusiness ETF | None | None | None | None | None | None | ||||||||||||||
VanEck BDC Income ETF | None | None | None | None | None | $50,001-$100,000 | ||||||||||||||
VanEck Brazil Small-Cap ETF | None | None | None | None | $10,001-$50,000 | Over $100,000 | ||||||||||||||
VanEck China Bond ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
| VanEck ChiNext ETF | None | None | None | None | None | $50,001-$100,000 | ||||||||||||||
| VanEck CLO ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck CMCI Commodity Strategy ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
| VanEck Digital India ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Gold Miners ETF | None | None | None | $10,001-$50,000 | None | None | ||||||||||||||
| VanEck Green Metals ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
VanEck India Growth Leaders Index ETF | None | None | None | $1-$10,000 | None | None | ||||||||||||||
VanEck Indonesia Index ETF | None | None | None | None | None | $1-$10,000 | ||||||||||||||
VanEck International High Yield Bond ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Israel ETF | None | None | None | None | None | None | ||||||||||||||
VanEck J.P. Morgan EM Local Currency Bond ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Junior Gold Miners ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Low Carbon Energy ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Mortgage REIT Income ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
VanEck Natural Resources ETF | None | None | None | None | $50,001-$100,000 | None | ||||||||||||||
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VanEck Office and Commercial REIT ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Oil Refiners ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
VanEck Oil Services ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Preferred Securities ex Financials ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Rare Earth and Strategic Metals ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Russia ETF | None | None | None | $1-$10,000 | None | None | ||||||||||||||
VanEck Russia Small-Cap ETF | None | None | None | None | None | $1-$10,000 | ||||||||||||||
VanEck Steel ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Uranium and Nuclear ETF | None | None | None | None | None | None | ||||||||||||||
VanEck Vietnam ETF | None | None | None | $1-$10,000 | None | None | ||||||||||||||
Funds with Fiscal Year Ended 4/30/2024 | ||||||||||||||||||||
Independent Trustees | Interested Trustee | |||||||||||||||||||
David H. Chow | Laurie A. Hesslein | R. Alastair Short | Peter J. Sidebottom | Richard D. Stamberger | Jan F. van Eck | |||||||||||||||
| VanEck CEF Muni Income ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Emerging Markets High Yield Bond ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
VanEck Fallen Angel High Yield Bond ETF | None | None | None | None | $50,001-$100,000 | $10,001-$50,000 | ||||||||||||||
VanEck Green Bond ETF | None | None | None | None | None | $1-$10,000 | ||||||||||||||
VanEck High Yield Muni ETF | None | None | None | None | Over $100,000 | None | ||||||||||||||
VanEck HIP Sustainable Muni ETF | None | None | None | None | None | None | ||||||||||||||
VanEck IG Floating Rate ETF | None | None | None | None | Over $100,000 | Over $100,000 | ||||||||||||||
VanEck Intermediate Muni ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
VanEck Moody's Analytics BBB Corporate Bond ETF | None | None | None | None | None | $1-$10,000 | ||||||||||||||
VanEck Moody's Analytics IG Corporate Bond ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
VanEck Long Muni ETF | None | None | None | None | None | $1-$10,000 | ||||||||||||||
VanEck Short High Yield Muni ETF | None | None | None | None | None | Over $100,000 | ||||||||||||||
48
VanEck Short Muni ETF | None | None | None | None | None | $10,001-$50,000 | ||||||||||||||
Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen By Trustee In Family of Investment Companies (as of December 31, 2024) | Over $100,000 | Over $100,000 | Over $100,000 | Over $100,000 | Over $100,000 | Over $100,000 | ||||||||||||||
*VanEck Alternative Asset Manager ETF has not commenced operations as of the date of this SAI.
As to each Independent Trustee and his immediate family members, no person owned beneficially or of record securities in an investment manager or principal underwriter of the Funds, or a person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with the investment manager or principal underwriter of the Funds.
Remuneration of Trustees
Each Independent Trustee receives an annual retainer of $150,000 and a per meeting fee of $30,000 for scheduled meetings of the Board. Additionally, the Chairperson of the Board receives an annual retainer of $62,000, the Chairperson of the Audit Committee receives an annual retainer of $26,000 Chairperson of the Governance Committee receives an annual retainer of $26,000. Independent Trustees are also reimbursed for travel and other out-of-pocket expenses incurred in attending such meetings. No pension or retirement benefits are accrued as part of Trustee compensation.
The table below shows the compensation paid to the Trustees for the fiscal years ended as set forth in the charts below. Annual Trustee fees may be reviewed periodically and changed by the Trust’s Board.(1)
| Fiscal Year Ended | Name of Trustee | Aggregate Compensation From the Trust | Deferred Compensation From the Trust | Pension or Retirement Benefits Accrued as Part of the Trust’s Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation From the Trust and the Fund Complex(2) Paid to Trustee | ||||||||||||||||||||||||||||||||
| September 30, 2024 | David H. Chow | $300,000 | $0 | N/A | N/A | $300,000 | ||||||||||||||||||||||||||||||||
| Laurie A. Hesslein | $326,000 | $0 | N/A | N/A | $326,000 | |||||||||||||||||||||||||||||||||
| R. Alastair Short | $356,000 | $0 | N/A | N/A | $486,000 | |||||||||||||||||||||||||||||||||
| Peter J. Sidebottom | $362,000 | $0 | N/A | N/A | $362,000 | |||||||||||||||||||||||||||||||||
| Richard D. Stamberger | $240,000 | $60,000 | N/A | N/A | $445,000 | |||||||||||||||||||||||||||||||||
Jan F. van Eck(3) | $0 | $0 | N/A | N/A | $0 | |||||||||||||||||||||||||||||||||
| Fiscal Year Ended | Name of Trustee | Aggregate Compensation From the Trust | Deferred Compensation From the Trust | Pension or Retirement Benefits Accrued as Part of the Trust’s Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation From the Trust and the Fund Complex(2) Paid to Trustee | ||||||||||||||||||||||||||||||||
| December 31, 2024 | David H. Chow | $300,000 | $0 | N/A | N/A | $300,000 | ||||||||||||||||||||||||||||||||
| Laurie A. Hesslein | $326,000 | $0 | N/A | N/A | $326,000 | |||||||||||||||||||||||||||||||||
| R. Alastair Short | $356,000 | $0 | N/A | N/A | $486,000 | |||||||||||||||||||||||||||||||||
| Peter J. Sidebottom | $362,000 | $0 | N/A | N/A | $362,000 | |||||||||||||||||||||||||||||||||
| Richard D. Stamberger | $240,000 | $60,000 | N/A | N/A | $445,000 | |||||||||||||||||||||||||||||||||
Jan F. van Eck(3) | $0 | $0 | N/A | N/A | $0 | |||||||||||||||||||||||||||||||||
49
| Fiscal Year Ended | Name of Trustee | Aggregate Compensation From the Trust | Deferred Compensation From the Trust | Pension or Retirement Benefits Accrued as Part of the Trust’s Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation From the Trust and the Fund Complex(2) Paid to Trustee | ||||||||||||||||||||||||||||||||
| April 30, 2024 | David H. Chow | $272,500 | $0 | N/A | N/A | $272,500 | ||||||||||||||||||||||||||||||||
| Laurie A. Hesslein | $298,500 | $0 | N/A | N/A | $298,500 | |||||||||||||||||||||||||||||||||
| R. Alastair Short | $298,500 | $0 | N/A | N/A | $428,500 | |||||||||||||||||||||||||||||||||
| Peter J. Sidebottom | $334,500 | $0 | N/A | N/A | $334,500 | |||||||||||||||||||||||||||||||||
| Richard D. Stamberger | $218,000 | $54,500 | N/A | N/A | $417,500 | |||||||||||||||||||||||||||||||||
Jan F. van Eck(3) | $0 | $0 | N/A | N/A | $0 | |||||||||||||||||||||||||||||||||
(1)For each Fund that pays the Adviser a unitary management fee, the Adviser pays such Fund’s allocable portion of Trustee compensation.
(2)The “Fund Complex” consists of VanEck Funds, VanEck VIP Trust and the Trust.
(3)“Interested person” under the 1940 Act.
PORTFOLIO HOLDINGS DISCLOSURE
Each Fund’s portfolio holdings are publicly disseminated each day the Fund is open for business through financial reporting and news services, including publicly accessible Internet web sites, such as www.vaneck.com. In addition, a basket composition file, which includes the security names and share quantities to deliver in exchange for Creation Units, together with estimates and actual cash components is publicly disseminated daily prior to the opening of the Exchange via the National Securities Clearing Corporation (the “NSCC”), a clearing agency that is registered with the SEC. The basket represents one Creation Unit of each Fund. The Trust, Advisers, Custodian (defined below) and Distributor (defined below) will not disseminate non-public information concerning the Trust.
QUARTERLY PORTFOLIO SCHEDULE
The Trust is required to disclose, after its first and third fiscal quarters, the complete schedule of the Funds’ portfolio holdings with the SEC on Form N-PORT. The Trust's Form N-PORT filings are available on the SEC’s website at http://www.sec.gov. You can write or email the SEC's Public Reference section and ask them to mail you information about the Funds. They will charge you a fee for this service. Each Fund’s complete schedule of portfolio holdings is also available through the Funds’ website, at www.vaneck.com or by calling 800.826.2333.
POTENTIAL CONFLICTS OF INTEREST
The Advisers (and their principals, affiliates or employees) may serve as investment adviser to other client accounts and conduct investment activities for their own accounts. Such “Other Clients” may have investment objectives or may implement investment strategies similar to those of the Funds, and may track the same index a Fund tracks. When an Adviser implements investment strategies for Other Clients that are similar or directly contrary to the positions taken by a Fund, the prices of the Fund’s securities may be negatively affected. For example, when purchase or sales orders for a Fund are aggregated with those of other funds and/or Other Clients and allocated among them, the price that the Fund pays or receives may be more in the case of a purchase or less in a sale than if the Advisers served as adviser to only the Fund. When Other Clients are selling a security that a Fund owns, the price of that security may decline as a result of the sales. The compensation that each Adviser receives from Other Clients may be higher than the compensation paid by a Fund to the Adviser. The Advisers have implemented procedures to monitor trading across the Funds and their Other Clients. Furthermore, an Adviser may recommend a Fund purchase securities of issuers to which it, or its affiliate, acts as adviser, manager, sponsor, distributor, marketing agent, or in another capacity and for which it receives advisory or other fees. While this practice may create conflicts of interest, the Adviser has adopted procedures to minimize such conflicts.
VanEck AA-BB CLO ETF and VanEck CLO ETF only
The portfolio manager at the Sub-Adviser manages other funds and mandates that purchase investment grade and below-investment grade CLO securities, which creates conflicts of interest with respect to portfolio management decisions and execution. The Sub-Adviser recognizes that it may be subject to a conflict of interest with respect to allocations of investment opportunities and transactions among its clients. To mitigate these conflicts, the Sub-Adviser’s policies and procedures seek to provide that investment decisions are made in accordance with the fiduciary duties owed to such accounts and without consideration of the Sub-Adviser’s economic, investment or other financial interests.
50
CODE OF ETHICS
The Fund, the Advisers, the Sub-Adviser (with respect to VanEck AA-BB CLO ETF and VanEck CLO ETF) and the Distributor have each adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act (“Rule 17j-1”). Such Codes of Ethics require, among other things, that “access persons” (as defined in Rule 17j-1) conduct personal securities transactions in a manner that avoids any actual or potential conflict of interest or any abuse of a position of trust and responsibility. The Codes of Ethics allow such access persons to invest in securities or instruments that may be purchased and held by a Fund, provided such investments are done consistently with the provisions of the Codes of Ethics.
PROXY VOTING POLICIES AND PROCEDURES
The Funds’ proxy voting record and information regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available upon request, by calling 800.826.2333, on or through each Fund's website at www.vaneck.com, and on the SEC’s website at http://www.sec.gov. Proxies for each Fund’s portfolio securities are voted in accordance with the Adviser’s proxy voting policies and procedures, which are set forth in Appendix A to this SAI.
The Trust is required to disclose annually each Fund’s complete proxy voting record on Form N-PX covering the period July 1 through June 30 and file it with the SEC no later than August 31. Form N-PX for the Funds is available by calling 800.826.2333 or by writing to 666 Third Avenue, 9th Floor, New York, New York 10017. The Funds’ Form N-PX is also available on the SEC’s website at www.sec.gov.
MANAGEMENT
The following information supplements and should be read in conjunction with the “Management of the Funds” section of each Prospectus.
Investment Advisers and Sub-Adviser
Van Eck Associates Corporation (All Funds except VanEck BDC Income ETF, VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, and VanEck Real Assets ETF).
VEAC acts as investment adviser to the Funds and, subject to the general supervision of the Board, is responsible for the day-to-day investment management of the Funds. VEAC is a private company with headquarters in New York and manages numerous pooled investment vehicles and separate accounts. VEAC has been wholly owned by members of the van Eck family since its founding in 1955 and its shares are held by VEAC’s Chief Executive Officer, Jan van Eck, and his family. Mr. van Eck’s positions with the Trust and each Adviser are discussed above.
VEAC serves as investment adviser to VanEck Gold Miners ETF pursuant to an investment management agreement between VanEck Gold Miners ETF and VEAC (the “Gold Miners Investment Management Agreement”) and also serves as investment adviser to each of the other Funds except VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF, pursuant to various investment management agreements between the Trust and VEAC (each a “Trust Investment Management Agreement” and, together with the Gold Miners Investment Management Agreement, the “VEAC Investment Management Agreement”). Under the VEAC Investment Management Agreement, VEAC, subject to the supervision of the Board and in conformity with the stated investment policies of each Fund, manages the investment of the Funds’ assets. VEAC is responsible for placing purchase and sale orders and providing continuous supervision of the investment portfolio of the Funds. All investment decisions relating to the VanEck India Growth Leaders ETF will be made outside of India.
VanEck AA-BB CLO ETF and VanEck CLO ETF. VEAC acts as investment adviser to VanEck AA-BB CLO ETF and VanEck CLO ETF and, subject to the general supervision of the Board, is responsible for overseeing the activities of the Sub-Adviser and for the day-to-day investment management of VanEck AA-BB CLO ETF’s and VanEck CLO ETF’s assets allocated to it. The Sub-Adviser acts as investment sub-adviser to VanEck AA-BB CLO ETF and VanEck CLO ETF and, subject to the oversight of VEAC, is responsible for the day-to-day investment management of VanEck AA-BB CLO ETF’s and VanEck CLO ETF’s assets allocated to it.
VEAC serves as investment adviser to VanEck AA-BB CLO ETF and VanEck CLO ETF pursuant to the VEAC investment management agreement between the Trust and the Adviser. Under the VEAC Investment Management Agreement, VEAC, subject to the supervision of the Board and in conformity with the stated investment policies of VanEck AA-BB CLO
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ETF and VanEck CLO ETF, manages and administers the Trust and oversees the Sub-Adviser with respect to the duties it has delegated to the Sub-Adviser regarding the investment and reinvestment of VanEck AA-BB CLO ETF’s and VanEck CLO ETF’s assets. The Sub-Adviser serves as investment sub-adviser to VanEck AA-BB CLO ETF and VanEck CLO ETF pursuant to investment sub-advisory agreement between the Adviser and the Sub-Adviser (the “Investment Sub-Advisory Agreement” ). The Sub-Adviser is responsible for placing purchase and sale orders and providing continuous supervision of VanEck AA-BB CLO ETF’s and VanEck CLO ETF’s assets allocated to it.
In rendering investment sub-advisory services to VanEck AA-BB CLO ETF and VanEck CLO ETF, the Sub-Adviser may use portfolio management, research and other services of an affiliate of the Sub-Adviser subject to supervision by the Sub-Adviser. Such affiliate may not be registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended. In such instances, the affiliate is considered a “participating affiliate” of the Sub-Adviser as that term is used in relief granted by the staff of the SEC allowing U.S. registered investment advisers to use portfolio management or research resources of advisory affiliates subject to the supervision of a registered adviser.
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Van Eck Absolute Return Advisers Corporation (VanEck BDC Income ETF*, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF only.)
VEARA acts as investment adviser to the VanEck BDC Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck Real Assets ETF and the Cayman Subsidiaries and, subject to the general supervision of the Board, is responsible for the day-to-day investment management of the VanEck BDC Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck Real Assets ETF and the Cayman Subsidiaries. VEARA is a private company with headquarters in New York and manages numerous pooled investment vehicles and separate accounts. VEARA is a wholly owned subsidiary of VEAC and is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended, and with the CFTC as a CPO and commodity trading advisor under the CEA. VEARA serves as investment adviser to the Funds pursuant to investment management agreements between the Trust and VEARA (each a “VEARA Investment Management Agreement” and together with the VEAC Investment Management Agreement, the “Investment Management Agreements”). Under each VEARA Investment Management Agreement, VEARA, subject to the supervision of the Board and in conformity with the stated investment policies of the VanEck BDC Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF, manages the investment of the VanEck BDC Income ETF’s, VanEck CMCI Commodity Strategy ETF’s, VanEck Commodity Strategy ETF's and VanEck Real Assets ETF’s assets. VEARA is responsible for placing purchase and sale orders and providing continuous supervision of the investment portfolio of the VanEck BDC Income ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF. Investments in underlying funds may involve duplication of advisory fees and certain other expenses. By investing in an underlying fund, the VanEck BDC Income ETF and VanEck Real Assets ETF becomes a shareholder of that underlying fund. As a result, the VanEck BDC Income ETF’s and VanEck Real Assets ETF’s shareholders will indirectly bear the VanEck BDC Income ETF’s and VanEck Real Assets ETF’s proportionate share of the fees and expenses paid by shareholders of the underlying fund, in addition to the fees and expenses the VanEck BDC Income ETF’s and VanEck Real Assets ETF’s shareholders directly bear in connection with the VanEck BDC Income ETF’s and VanEck Real Assets ETF’s own operations. To minimize the duplication of fees, VEARA has agreed to waive the management fee it charges to the VanEck Real Assets ETF by any amount it collects as a management fee from an underlying fund managed by the VEARA or VEAC, as a result of an investment of the VanEck Real Assets ETF’s assets in such underlying fund.
* On March 6, 2024, the Board considered and unanimously approved the assumption by VEARA of the investment management agreement between the Trust and VEAC with respect to the VanEck BDC Income ETF. Accordingly, effective on March 7, 2024, VEARA began acting as investment adviser to the VanEck BDC Income ETF.
All Funds
Indemnification. Pursuant to the Investment Management Agreements, the Trust has agreed to indemnify VEAC and VEARA for certain liabilities, including certain liabilities arising under the federal securities laws, unless such loss or liability results from willful misfeasance, bad faith or gross negligence in the performance of its duties or the reckless disregard of its obligations and duties. With respect to VanEck AA-BB CLO ETF and VanEck CLO ETF, pursuant to the Investment Sub-Advisory Agreement, the Adviser has agreed to indemnify the Sub-Adviser for certain liabilities, including certain liabilities arising under the federal securities laws, unless such loss or liability results from willful misfeasance, bad faith or gross negligence in the performance of its duties or the reckless disregard of its obligations and duties.
Compensation. As compensation for its services under each Investment Management Agreement, each Adviser is paid a monthly fee based on a percentage of each applicable Fund's average daily net assets at the annual rate set forth below.
From time to time, the applicable Adviser may waive all or a portion of its fees for certain Funds. Until at least each date set forth below, the applicable Adviser has agreed to waive fees and/or pay certain Fund expenses to the extent necessary to prevent the operating expenses of each Fund except for VanEck Real Assets ETF and VanEck India Growth Leaders ETF (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses) from exceeding the percentage set forth below of such Fund’s average daily net assets per year. Until at least the date set forth below, VEAC has agreed to waive fees and/or pay Fund and Mauritius Subsidiary expenses to the extent necessary to prevent the operating expenses of VanEck India Growth Leaders ETF (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses of the Fund and the Mauritius Subsidiary) from exceeding the percentage set forth below of its average daily net assets per year. Until at least the date set forth below, VEARA has agreed to waive fees and/or pay certain Fund expenses (inclusive of any Cayman Subsidiary expenses) to the extent necessary to prevent the operating expenses of VanEck Real Assets ETF (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses of the Funds) from exceeding the percentages set forth below of its average daily net assets per year.
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Under the VEAC Investment Management Agreement for the Municipal Funds and VanEck CEF Muni Income ETF, VEAC is responsible for all expenses of the Municipal Funds, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEAC Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. For its services to each applicable Municipal Fund and VanEck CEF Muni Income ETF, each applicable Fund has agreed to pay VEAC an annual unitary management fee equal to the percentage of each Fund’s average daily net assets as set forth below. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to a Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of a Fund to be listed on an exchange. Notwithstanding the foregoing, VEAC has agreed to pay all such offering costs until at least September 1, 2025.
Under the VEAC Investment Management Agreement for VanEck Emerging Markets High Yield Bond ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck Green Bond ETF, VanEck IG Floating Rate ETF, VanEck Moody's Analytics BBB Corporate Bond ETF and VanEck Moody's Analytics IG Corporate Bond ETF, VEAC is responsible for all expenses of each Fund, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEAC Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay such offering costs until at least September 1, 2025.
Under the VEAC Investment Management Agreement for VanEck Biotech ETF, VanEck Digital Transformation ETF, VanEck Durable High Dividend ETF, VanEck Energy Income ETF, VanEck Fabless Semiconductor ETF, VanEck Green Infrastructure ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF, VanEck Robotics ETF, VanEck Semiconductor ETF and VanEck Social Sentiment ETF, VEAC is responsible for all expenses of the VanEck Biotech ETF, VanEck Digital Transformation ETF, VanEck Durable High Dividend ETF, VanEck Energy Income ETF, VanEck Green Infrastructure ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF, VanEck Robotics ETF, VanEck Semiconductor ETF and VanEck Social Sentiment ETF, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEAC Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes (including accrued deferred tax liability) and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange. Notwithstanding the foregoing, VEAC has agreed to pay such offering costs until at least February 1, 2026.
Under the VEAC Investment Management Agreement for VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Digital India ETF, VanEck International High Yield Bond ETF, VanEck Green Metals ETF, VanEck Mortgage REIT Income ETF, VanEck Natural Resources ETF, VanEck Office and Commercial REIT ETF, VanEck Oil Services ETF and VanEck Preferred Securities ex Financials ETF, VEAC is responsible for all expenses of the Fund, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEAC Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay such offering costs until at least May 1, 2026.
Under the VEARA Investment Management Agreement for VanEck Commodity Strategy ETF, VEARA is responsible for all expenses of VanEck Commodity Strategy ETF (inclusive of any Cayman Subsidiary expense), including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEARA Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay and/or reimburse the Fund for such offering costs and trading expenses that are net account or similar fees charged by FCMs until at least February 1, 2026.
Under the VEARA Investment Management Agreement for VanEck CMCI Commodity Strategy ETF, VEARA has agreed to waive fees and reimburse VanEck CMCI Commodity Strategy ETF expenses (inclusive of any Cayman Subsidiary expenses), excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses, to the extent necessary to prevent the operating expenses of the Fund and its Cayman Subsidiary from exceeding the percentage set forth below of the Fund's average daily net assets per year until at least May 1, 2026.
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Under the VEAC Investment Management Agreement for VanEck Fallen Angel High Yield Bond ETF and VanEck Intermediate Muni ETF, VEAC is responsible for all expenses of VanEck Fallen Angel High Yield Bond ETF and VanEck Intermediate Muni ETF including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEAC Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to a Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of a Fund to be listed on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay such offering costs until at least September 1, 2025.
Under the VEARA Investment Management Agreement for VanEck BDC Income ETF, VEARA is responsible for all expenses of VanEck BDC Income ETF including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEARA Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange. Notwithstanding the foregoing, the Adviser has agreed to pay such offering costs until at least May 1, 2026.
Under the VEAC Investment Management Agreement for VanEck Alternative Asset Manager ETF, VEAC is responsible for all expenses of VanEck Alternative Asset Manager ETF, including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the VEAC Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes (including accrued deferred tax liability) and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange. Notwithstanding the foregoing, VEAC has agreed to pay such offering costs until at least February 1, 2027.
| Fund | Management Fee | Expense Cap | Fee Arrangement Duration Date | ||||||||
| CEF Muni Income ETF | 0.40% | N/A | September 1, 2025 | ||||||||
| Emerging Markets High Yield Bond ETF | 0.40% | N/A | September 1, 2025 | ||||||||
Fallen Angel High Yield Bond ETF 1 | 0.25% | N/A | September 1, 2025 | ||||||||
| Green Bond ETF | 0.20% | N/A | September 1, 2025 | ||||||||
| High Yield Muni ETF | 0.32% | N/A | September 1, 2025 | ||||||||
| HIP Sustainable Muni ETF | 0.24% | N/A | September 1, 2025 | ||||||||
| IG Floating Rate ETF | 0.14% | N/A | September 1, 2025 | ||||||||
Intermediate Muni ETF 2 | 0.18% | N/A | September 1, 2025 | ||||||||
| Long Muni ETF | 0.24% | N/A | September 1, 2025 | ||||||||
| Moody's Analytics BBB Corporate Bond ETF | 0.25% | N/A | September 1, 2025 | ||||||||
| Moody's Analytics IG Corporate Bond ETF | 0.20% | N/A | September 1, 2025 | ||||||||
| Short High Yield Muni ETF | 0.35% | N/A | September 1, 2025 | ||||||||
| Short Muni ETF | 0.07% | N/A | September 1, 2025 | ||||||||
Alternative Asset Manager ETF | 0.40% | N/A | February 1, 2027 | ||||||||
| Biotech ETF | 0.35% | N/A | February 1, 2026 | ||||||||
Commodity Strategy ETF 3 | 0.55% | N/A | February 1, 2026 | ||||||||
| Digital Transformation ETF | 0.50% | N/A | February 1, 2026 | ||||||||
| Durable High Dividend ETF | 0.29% | N/A | February 1, 2026 | ||||||||
| Energy Income ETF | 0.45% | N/A | February 1, 2026 | ||||||||
| Environmental Services ETF | 0.50% | 0.55% | February 1, 2026 | ||||||||
Fabless Semiconductor ETF | 0.35% | N/A | February 1, 2026 | ||||||||
| Gaming ETF | 0.50% | 0.65% | February 1, 2026 | ||||||||
| Green Infrastructure ETF | 0.45% | N/A | February 1, 2026 | ||||||||
| Long/Flat Trend ETF | 0.50% | 0.55% | February 1, 2026 | ||||||||
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| Fund | Management Fee | Expense Cap | Fee Arrangement Duration Date | ||||||||
| Morningstar ESG Moat ETF | 0.45% | 0.49% | February 1, 2026 | ||||||||
| Morningstar Global Wide Moat ETF | 0.45% | 0.52% | February 1, 2026 | ||||||||
| Morningstar International Moat ETF | 0.50% | 0.56% | February 1, 2026 | ||||||||
| Morningstar SMID Moat ETF | 0.45% | 0.49% | February 1, 2026 | ||||||||
| Morningstar Wide Moat ETF | 0.45% | 0.49% | February 1, 2026 | ||||||||
| Morningstar Wide Moat Growth ETF | 0.45% | 0.49% | February 1, 2026 | ||||||||
| Morningstar Wide Moat Value ETF | 0.45% | 0.49% | February 1, 2026 | ||||||||
| Pharmaceutical ETF | 0.35% | N/A | February 1, 2026 | ||||||||
Real Assets ETF 3 | 0.50% | 0.55% | February 1, 2026 | ||||||||
| Retail ETF | 0.35% | N/A | February 1, 2026 | ||||||||
| Robotics ETF | 0.47% | N/A | February 1, 2026 | ||||||||
| Semiconductor ETF | 0.35% | N/A | February 1, 2026 | ||||||||
| Social Sentiment ETF | 0.75% | N/A | February 1, 2026 | ||||||||
| Video Gaming and eSports ETF | 0.50% | 0.55% | February 1, 2026 | ||||||||
AA-BB CLO ETF | 0.45% | N/A | May 1, 2026 | ||||||||
| Africa Index ETF | 0.50% | 0.78% | May 1, 2026 | ||||||||
| Agribusiness ETF | 0.50% | 0.56% | May 1, 2026 | ||||||||
| BDC Income ETF | 0.40% | N/A | May 1, 2026 | ||||||||
| Brazil Small-Cap ETF | 0.50% | 0.59% | May 1, 2026 | ||||||||
| China Bond ETF | 0.40% | 0.50% | May 1, 2026 | ||||||||
| ChiNext ETF | 0.50% | 0.65% | May 1, 2026 | ||||||||
| CLO ETF | 0.40% | N/A | May 1, 2026 | ||||||||
| CMCI Commodity Strategy ETF | 0.65% | 0.65% | May 1, 2026 | ||||||||
| Digital India ETF | 0.70% | N/A | May 1, 2026 | ||||||||
| Gold Miners ETF | 0.50% | 0.53% | May 1, 2026 | ||||||||
| Green Metals ETF | 0.59% | N/A | May 1, 2026 | ||||||||
| India Growth Leaders ETF | 0.50% | 0.70% | May 1, 2026 | ||||||||
| Indonesia Index ETF | 0.50% | 0.57% | May 1, 2026 | ||||||||
| International High Yield Bond ETF | 0.40% | N/A | May 1, 2026 | ||||||||
| Israel ETF | 0.50% | 0.59% | May 1, 2026 | ||||||||
| J.P. Morgan EM Local Currency Bond ETF | 0.27% | 0.30% | May 1, 2026 | ||||||||
| Junior Gold Miners ETF | 0.50% | 0.56% | May 1, 2026 | ||||||||
| Low Carbon Energy ETF | 0.50% | 0.62% | May 1, 2026 | ||||||||
| Mortgage REIT Income ETF | 0.40% | N/A | May 1, 2026 | ||||||||
Natural Resources ETF 4 | 0.40% | N/A | May 1, 2026 | ||||||||
| Office and Commercial REIT ETF | 0.50% | N/A | May 1, 2026 | ||||||||
| Oil Refiners ETF | 0.50% | 0.59% | May 1, 2026 | ||||||||
| Oil Services ETF | 0.35% | N/A | May 1, 2026 | ||||||||
| Preferred Securities ex Financials ETF | 0.40% | N/A | May 1, 2026 | ||||||||
| Rare Earth and Strategic Metals ETF | 0.50% | 0.57% | May 1, 2026 | ||||||||
Russia ETF | 0.50% | 0.62% | December 31, 2027 | ||||||||
Russia Small-Cap ETF | 0.50% | 0.67% | December 31, 2027 | ||||||||
| Steel ETF | 0.50% | 0.55% | May 1, 2026 | ||||||||
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| Fund | Management Fee | Expense Cap | Fee Arrangement Duration Date | ||||||||
| Uranium and Nuclear ETF | 0.50% | 0.60% | May 1, 2026 | ||||||||
| Vietnam ETF | 0.50% | 0.76% | May 1, 2026 | ||||||||
1 Effective March 7, 2024, VanEck Fallen Angel High Yield Bond ETF's management fee was reduced from 0.35% to 0.25%.
2 Effective March 7, 2024, VanEck Intermediate Muni ETF's management fee was reduced from 0.24% to 0.18%.
3 For purposes of calculating the fees for the VanEck Commodity Strategy ETF and VanEck Real Assets ETF, the net assets of VanEck Commodity Strategy ETF and VanEck Real Assets ETF include the value of VanEck Commodity Strategy ETF’s and VanEck Real Assets ETF’s interest in the Cayman Subsidiary.
4 Effective March 15, 2024, VanEck Natural Resources ETF’s management fee was reduced from 0.49% to 0.40%.
The management fees paid by each Fund and the expenses waived or assumed by the applicable Adviser during the Funds’ last three fiscal years, or, if the Fund has not been in existence for a full fiscal year, since the commencement of operations of that Fund, are set forth in the chart below.
| Fund | Fiscal Year End | Management Fees Paid During the Fiscal Year | Expenses Waived or Assumed by the Adviser During the Fiscal Year | |||||||||||||||||||||||
| 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | |||||||||||||||||||||
| VanEck CEF Muni Income ETF | April 30th | $811,918 | $656,019 | $860,118 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Emerging Markets High Yield Bond ETF | April 30th | $4,778,794 | $2,133,780 | $1,502,499 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Fallen Angel High Yield Bond ETF* | April 30th | $17,079,449 | $10,586,530 | $9,336,776 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Green Bond ETF | April 30th | $195,123 | $157,689 | $164,439 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck High Yield Muni ETF | April 30th | $12,684,417 | $10,546,251 | $9,221,777 | $0 | $0 | $0 | |||||||||||||||||||
VanEck HIP Sustainable Muni ETF | April 30th | $20,951 | $40,877 | $43,719 | $0 | $0 | $0 | |||||||||||||||||||
VanEck IG Floating Rate ETF | April 30th | $1,082,404 | $1,564,521 | $1,751,440 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Intermediate Muni ETF** | April 30th | $4,495,019 | $4,272,569 | $4,275,649 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Long Muni ETF | April 30th | $576,431 | $587,826 | $1,013,976 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Moody's Analytics BBB Corporate Bond ETF | April 30th | $24,438 | $20,792 | $20,731 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Moody's Analytics IG Corporate Bond ETF | April 30th | $29,210 | $25,043 | $24,846 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Short High Yield Muni ETF | April 30th | $1,420,161 | $1,449,750 | $1,267,376 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Short Muni ETF | April 30th | $643,677 | $658,675 | $223,495 | $0 | $0 | $0 | |||||||||||||||||||
| 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | |||||||||||||||||||||
VanEck Alternative Asset Manager ETF (1) | September 30th | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
VanEck Biotech ETF† | September 30th | $1,707,698 | $1,720,048 | $1,572,343 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Commodity Strategy ETF(2) | September 30th | N/A | $119,666 | $137,002 | N/A | $0 | $0 | |||||||||||||||||||
VanEck Digital Transformation ETF | September 30th | $232,411 | $171,468 | $470,200 | $0 | $0 | $0 | |||||||||||||||||||
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| Fund | Fiscal Year End | Management Fees Paid During the Fiscal Year | Expenses Waived or Assumed by the Adviser During the Fiscal Year | |||||||||||||||||||||||
VanEck Durable High Dividend ETF† | September 30th | $184,775 | $265,758 | $172,281 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Energy Income ETF | September 30th | $131,411 | $141,251 | $201,186 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Environmental Services ETF | September 30th | $360,586 | $367,860 | $376,348 | $50,019 | $67,530 | $53,531 | |||||||||||||||||||
VanEck Fabless Semiconductor ETF(3) | September 30th | N/A | N/A | $1,171 | N/A | N/A | $0 | |||||||||||||||||||
| VanEck Gaming ETF | September 30th | $420,428 | $405,066 | $209,873 | $0 | $14,282 | $48,494 | |||||||||||||||||||
VanEck Green Infrastructure ETF(4) | September 30th | N/A | $6,275 | $7,988 | N/A | $0 | $0 | |||||||||||||||||||
| VanEck Long/Flat Trend ETF | September 30th | $217,594 | $146,854 | $129,738 | $55,641 | $69,451 | $59,557 | |||||||||||||||||||
VanEck Morningstar ESG Moat ETF | September 30th | $9,178 | $20,723 | $27,312 | $76,185 | $78,572 | $82,857 | |||||||||||||||||||
| VanEck Morningstar Global Wide Moat ETF | September 30th | $83,985 | $85,127 | $73,869 | $82,836 | $105,288 | $102,548 | |||||||||||||||||||
| VanEck Morningstar International Moat ETF | September 30th | $353,033 | $837,255 | $1,130,903 | $65,416 | $74,555 | $76,461 | |||||||||||||||||||
VanEck Morningstar SMID Moat ETF(5) | September 30th | N/A | $312,440 | $1,316,504 | N/A | $67,356 | $37,635 | |||||||||||||||||||
| VanEck Morningstar Wide Moat ETF | September 30th | $30,836,907 | $36,450,354 | $62,325,191 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Morningstar Wide Moat Growth ETF(6) | September 30th | N/A | N/A | $1,695 | N/A | N/A | $47,434 | |||||||||||||||||||
VanEck Morningstar Wide Moat Value ETF(6) | September 30th | N/A | N/A | $3,416 | N/A | N/A | $47,281 | |||||||||||||||||||
VanEck Pharmaceutical ETF† | September 30th | $1,489,021 | $1,598,103 | $1,860,347 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Real Assets ETF | September 30th | $428,583 | $594,907 | $433,407 | $98,801 | $226,801 | $175,449 | |||||||||||||||||||
VanEck Retail ETF† | September 30th | $691,330 | $533,025 | $672,112 | $0 | $0 | $0 | |||||||||||||||||||
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| Fund | Fiscal Year End | Management Fees Paid During the Fiscal Year | Expenses Waived or Assumed by the Adviser During the Fiscal Year | |||||||||||||||||||||||
VanEck Robotics ETF(7) | September 30th | N/A | $5,375 | $39,752 | N/A | $0 | $0 | |||||||||||||||||||
VanEck Semiconductor ETF† | September 30th | $25,764,670 | $27,780,972 | $59,286,734 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Social Sentiment ETF | September 30th | $828,108 | $441,044 | $448,998 | $452,219 | $47,782 | $0 | |||||||||||||||||||
| VanEck Video Gaming and eSports ETF | September 30th | $2,280,361 | $1,364,139 | $1,242,139 | $886 | $80,104 | $24,931 | |||||||||||||||||||
| 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | |||||||||||||||||||||
VanEck AA-BB CLO ETF(8) | December 31st | N/A | N/A | $58,156 | N/A | N/A | $0 | |||||||||||||||||||
| VanEck Africa Index ETF | December 31st | $265,905 | $226,942 | $225,366 | $0 | $69,506 | $2,879 | |||||||||||||||||||
| VanEck Agribusiness ETF | December 31st | $7,590,170 | $5,649,364 | $3,686,740 | $0 | $0 | $0 | |||||||||||||||||||
VanEck BDC Income ETF††† | December 31st | N/A | N/A | $3,204,490 | N/A | N/A | $0 | |||||||||||||||||||
| VanEck Brazil Small-Cap ETF | December 31st | $147,700 | $145,838 | $114,491 | $69,706 | $114,419 | $84,347 | |||||||||||||||||||
VanEck China Bond ETF††† | December 31st | N/A | N/A | $63,518 | N/A | N/A | $104,779 | |||||||||||||||||||
| VanEck ChiNext ETF | December 31st | $124,671 | $103,333 | $106,819 | $150,748 | $257,078 | $130,900 | |||||||||||||||||||
VanEck CLO ETF(9) | December 31st | $53,044 | $445,735 | $1,725,428 | $0 | $0 | $0 | |||||||||||||||||||
VanEck CMCI Commodity Strategy ETF(10) | December 31st | N/A | $5,907 | $16,250 | N/A | $51,512 | $93,558 | |||||||||||||||||||
VanEck Digital India ETF(11) | December 31st | $10,128 | $19,501 | $162,211 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Gold Miners ETF | December 31st | $60,561,304 | $62,507,929 | $67,983,659 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Green Metals ETF | December 31st | $134,921 | $149,115 | $142,382 | $0 | $0 | $0 | |||||||||||||||||||
VanEck India Growth Leaders ETF | December 31st | $281,518 | $297,274 | $718,989 | $0 | $131,971 | $0 | |||||||||||||||||||
| VanEck Indonesia Index ETF | December 31st | $281,236 | $154,887 | $170,642 | $56,101 | $126,398 | $90,973 | |||||||||||||||||||
VanEck International High Yield Bond ETF††† | December 31st | N/A | N/A | $69,979 | N/A | N/A | $0 | |||||||||||||||||||
| VanEck Israel ETF | December 31st | $339,749 | $284,753 | $354,591 | $29,747 | $106,015 | $81,238 | |||||||||||||||||||
VanEck J.P. Morgan EM Local Currency Bond ETF††† | December 31st | N/A | N/A | $5,043,525 | N/A | N/A | $202,084 | |||||||||||||||||||
| VanEck Junior Gold Miners ETF | December 31st | $19,460,452 | $19,836,611 | $24,359,121 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Low Carbon Energy ETF | December 31st | $1,175,675 | $938,357 | $690,106 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Mortgage REIT Income ETF††† | December 31st | N/A | N/A | $773,849 | N/A | N/A | $0 | |||||||||||||||||||
VanEck Natural Resources ETF***†† | December 31st | $668,971 | $667,955 | $526,053 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Office and Commercial REIT ETF(12) | December 31st | N/A | $1,293 | $6,344 | N/A | $0 | $0 | |||||||||||||||||||
| VanEck Oil Refiners ETF | December 31st | $173,888 | $172,536 | $174,543 | $61,342 | $81,096 | $78,777 | |||||||||||||||||||
VanEck Oil Services ETF†† | December 31st | $9,982,726 | $8,385,442 | $6,413,847 | $0 | $0 | $0 | |||||||||||||||||||
VanEck Preferred Securities ex Financials ETF††† | December 31st | N/A | N/A | $4,898,451 | N/A | N/A | $0 | |||||||||||||||||||
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| Fund | Fiscal Year End | Management Fees Paid During the Fiscal Year | Expenses Waived or Assumed by the Adviser During the Fiscal Year | |||||||||||||||||||||||
| VanEck Rare Earth and Strategic Metals ETF | December 31st | $4,261,430 | $2,821,557 | $1,502,321 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Russia ETF | December 31st | $1,089,445 | $0 | $55,610 | $0 | $0 | $0 | |||||||||||||||||||
| VanEck Russia Small-Cap ETF | December 31st | $20,102 | $0 | $50,556 | $37,039 | $83,536 | $76,897 | |||||||||||||||||||
| VanEck Steel ETF | December 31st | $547,396 | $609,918 | $504,912 | $21,645 | $13,818 | $46,417 | |||||||||||||||||||
| VanEck Uranium and Nuclear ETF | December 31st | $237,947 | $402,573 | $1,409,980 | $32,334 | $25,286 | $0 | |||||||||||||||||||
| VanEck Vietnam ETF | December 31st | $2,120,507 | $2,714,061 | $2,501,778 | $0 | $0 | $0 | |||||||||||||||||||
Prior to December 31, 2024, the fiscal year end for VanEck BDC Income ETF, VanEck China Bond ETF, VanEck International High Yield Bond ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck Mortgage REIT Income ETF and VanEck Preferred Securities ex Financials ETF was April 30th. The table below reflects the management fees paid and the expenses waived for the fiscal years ended April 30, 2022, April 30, 2023 and April 30, 2024.
| Fund | Fiscal Year End | Management Fees Paid During the Fiscal Year | Expenses Waived or Assumed by the Adviser During the Fiscal Year | ||||||||||||||||||||
| 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | ||||||||||||||||||
VanEck BDC Income ETF | April 30th | $2,070,800 | $2,197,290 | $3,097,821 | $0 | $0 | $0 | ||||||||||||||||
VanEck China Bond ETF | April 30th | $520,949 | $326,972 | $132,524 | $13,281 | $6,002 | $91,634 | ||||||||||||||||
VanEck International High Yield Bond ETF | April 30th | $407,619 | $242,537 | $167,682 | $0 | $0 | $0 | ||||||||||||||||
VanEck J.P. Morgan EM Local Currency Bond ETF | April 30th | $9,396,110 | $7,993,895 | $8,435,661 | $599,324 | $356,765 | $358,443 | ||||||||||||||||
VanEck Mortgage REIT Income ETF | April 30th | $1,213,758 | $726,235 | $895,665 | $0 | $0 | $0 | ||||||||||||||||
VanEck Preferred Securities ex Financials ETF | April 30th | $4,123,634 | $3,952,219 | $5,266,563 | $0 | $0 | $0 | ||||||||||||||||
† Effective October 1, 2021, each of VanEck Biotech ETF, VanEck Durable High Dividend ETF, VanEck Pharmaceutical ETF, VanEck Retail ETF and VanEck Semiconductor ETF adopted a unitary management fee.
†† Effective January 1, 2022, each of VanEck Natural Resources ETF and VanEck Oil Services ETF adopted a unitary management fee.
††† The fiscal year end for VanEck BDC Income ETF, VanEck China Bond ETF, VanEck International High Yield Bond ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck Mortgage REIT Income ETF and VanEck Preferred Securities ex Financials ETF changed from April 30th to December 31st. As such the table above reflects the management fees paid and expenses waived from May 1, 2024 to December 31, 2024.
* Effective March 7, 2024, VanEck Fallen Angel High Yield Bond ETF's management fee was reduced from 0.35% to 0.25%.
** Effective March 7, 2024, VanEck Intermediate Muni ETF's management fee was reduced from 0.24% to 0.18%.
*** Effective March 15, 2024, VanEck Natural Resources ETF’s management fee was reduced from 0.49% to 0.40%.
(1) VanEck Alternative Asset Manager ETF has not commenced operations as of the date of this SAI.
(2) VanEck Commodity Strategy ETF did not commence operations until December 20, 2022.
(3) VanEck Fabless Semiconductor ETF did not commence operations until August 27, 2024.
(4) VanEck Green Infrastructure ETF did not commence operations until October 18, 2022.
(5) VanEck Morningstar SMID Moat ETF did not commence operations until October 5, 2022.
(6) Each of VanEck Morningstar Wide Moat Growth ETF and VanEck Morningstar Wide Moat Value ETF did not commence operations until March 26, 2024.
(7) VanEck Robotics ETF did not commence operations until April 6, 2023.
(8) VanEck AA-BB CLO ETF did not commence operations until September 24, 2024.
(9) VanEck CLO ETF did not commence operations until June 22, 2022.
(10) VanEck CMCI Commodity Strategy ETF did not commence operations until August 22, 2023.
(11) VanEck Digital India ETF did not commence operations until February 16, 2022.
(12) VanEck Office and Commercial REIT ETF did not commence operations until September 20, 2023.
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With respect to VanEck AA-BB CLO ETF and VanEck CLO ETF, for the services provided and the expenses assumed by the Sub-Adviser pursuant to the Investment Sub-Advisory Agreement, VEAC (not VanEck AA-BB CLO ETF nor VanEck CLO ETF) will pay a monthly fee to the Sub-Adviser based on a percentage of the management fee paid to the Adviser after taking into account certain expenses paid by the Adviser.
The following table sets forth the aggregate investment sub-advisory fees paid by VEAC to PineBridge Investments, LLC and the percentage of the Fund’s average daily net assets represented by such fees, in each case during the Fund’s last three fiscal years, as applicable.
| Fees Paid During the Fiscal Year Ended December 31, | Percentage of the Fund's Average Daily Net Assets for Fiscal Year Ended December 31, | |||||||||||||||||||
| Fund | 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | ||||||||||||||
VanEck AA-BB CLO ETF* | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||
| VanEck CLO ETF | $0 | $99,695.27 | $738,218.79 | 0.00% | 0.09% | 0.17% | ||||||||||||||
*VanEck AA-BB CLO ETF did not commence operations until September 24, 2024.
Prior to January 12, 2024, China Asset Management (Hong Kong) Limited served as a sub-adviser to the China Funds. The following table sets forth the aggregate investment sub-advisory fees paid by VEAC to China Asset Management (Hong Kong) Limited and the percentage of the Fund’s average daily net assets represented by such fees, in each case during the Funds’ last three fiscal years, as applicable.
| Fees Paid During the Fiscal Year Ended December 31, | Percentage of the Fund's Average Daily Net Assets for Fiscal Year Ended December 31, | |||||||||||||||||||
| Fund | 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | ||||||||||||||
VanEck China Bond ETF* | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||
| VanEck ChiNext ETF | $0 | $0 | $0 | 0.00% | 0.00% | 0.00% | ||||||||||||||
*Prior to December 31, 2024 the fiscal year end for VanEck China Bond ETF was April 30th.
Term. Each Investment Management Agreement is subject to annual approval by (1) the Board or (2) a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of each Fund, provided that in either event such continuance also is approved by a majority of the Board who are not interested persons (as defined in the 1940 Act) of the Trust by a vote cast in person at a meeting called for the purpose of voting on such approval. Each Investment Management Agreement is terminable without penalty, on 60 days’ notice, by the Board or by a vote of the holders of a majority (as defined in the 1940 Act) of a Fund’s outstanding voting securities. Each Investment Management Agreement is also terminable upon 60 days’ notice by the applicable Adviser and will terminate automatically in the event of its assignment (as defined in the 1940 Act). The Investment Sub-Advisory Agreement terminates automatically upon assignment and is terminable at any time without penalty as to VanEck AA-BB CLO ETF and VanEck CLO ETF by the Board, or as to VanEck AA-BB CLO ETF or VanEck CLO ETF by vote of the holders of a majority of the Fund’s outstanding voting securities on 60 days’ written notice to the Sub-Adviser, by VEAC on sixty days’ written notice to the Sub-Adviser or by the Sub-Adviser on 120 days’ written notice to VEAC and the Trust.
Mauritius Subsidiary Investment Management Agreement. VEAC provides an investment program for the Mauritius Subsidiary and manages the investment of the Mauritius Subsidiary’s assets under the overall supervision of the Board of Directors of the Mauritius Subsidiary. Pursuant to a management agreement between VEAC and the Mauritius Subsidiary (the “Mauritius Subsidiary Investment Management Agreement”), VEAC does not receive any fees from the Mauritius Subsidiary.
The Mauritius Subsidiary Investment Management Agreement terminates automatically upon assignment and is terminable at any time without penalty as to the Mauritius Subsidiary by the Board of Directors of the Mauritius Subsidiary, the Trust’s Independent Trustees or by vote of the holders of a majority of the Mauritius Subsidiary’s outstanding voting securities on 60 days’ written notice to VEAC, or by VEAC on 60 days’ written notice to the Mauritius Subsidiary. Pursuant to the Mauritius Subsidiary Investment Management Agreement, VEAC will not be liable for any error of judgment or mistake of law or for any loss suffered by the Mauritius Subsidiary in connection with the performance of the Mauritius Subsidiary Investment Agreement, except a loss resulting from willful misfeasance, bad faith, fraud or gross negligence on the part of VEAC in the performance of its duties or from reckless disregard of its duties and obligations thereunder.
Cayman Subsidiary Investment Management Agreements. VEARA provides investment programs for the Cayman Subsidiaries and manages the investment of the Cayman Subsidiaries’ assets under the overall supervision of the Boards of Directors of the Cayman Subsidiaries. Pursuant to a management agreement between VEARA and the Cayman Subsidiary
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for VanEck Real Assets ETF, VEARA may receive certain fees for managing the Cayman Subsidiary’s assets and will waive or credit such amounts, if applicable, against the fees payable to VEARA by VanEck Real Assets ETF.
Each of the management agreements between VEARA and the Cayman Subsidiaries (the “Cayman Subsidiary Investment Management Agreements”) terminates automatically upon assignment and is terminable at any time without penalty as to the respective Cayman Subsidiary by the Board of Directors of such Cayman Subsidiary, the Trust’s Independent Trustees or by vote of the holders of a majority of such Cayman Subsidiary’s outstanding voting securities on 60 days’ written notice to VEARA, or by VEARA on 60 days’ written notice to such Cayman Subsidiary. Pursuant to the Cayman Subsidiary Investment Management Agreements, VEARA will not be liable for any error of judgment or mistake of law or for any loss suffered by a Cayman Subsidiary in connection with the performance of its Cayman Subsidiary Investment Management Agreement, except a loss resulting from willful misfeasance, bad faith, fraud or gross negligence on the part of VEARA in the performance of its duties or from reckless disregard of its duties and obligations thereunder.
The Administrators
VEAC and VEARA, as applicable, also serve as administrators (in such capacity, each, an “Administrator”) for the Trust pursuant to each respective Investment Management Agreement. Under each Investment Management Agreement, each Adviser is obligated on a continuous basis to provide such administrative services as the Board of the Trust reasonably deems necessary for the proper administration of the Trust and the Funds. Each Adviser will generally assist in all aspects of the Trust’s and the Funds’ operations; supply and maintain office facilities, statistical and research data, data processing services, clerical, accounting (only with respect to VanEck Gold Miners ETF), bookkeeping and record keeping services (including without limitation the maintenance of such books and records as are required under the 1940 Act and the rules thereunder, except as maintained by other agents), internal auditing, executive and administrative services, and stationery and office supplies; prepare reports to shareholders or investors; prepare and file tax returns; supply financial information and supporting data for reports to and filings with the SEC and various state Blue Sky authorities; supply supporting documentation for meetings of the Board; provide monitoring reports and assistance regarding compliance with the Declaration of Trust, by-laws, investment objectives and policies and with federal and state securities laws; arrange for appropriate insurance coverage; calculate NAVs, net income and realized capital gains or losses; and negotiate arrangements with, and supervise and coordinate the activities of, agents and others to supply services. VEAC owns 100% of the common stock of Van Eck Securities Corporation (the “Distributor”).
Mauritius Administrator
IQ EQ Fund Services (Mauritius) Ltd. (“IQ-EQ”), located at 33, Edith Cavell Street, Port-Louis, Mauritius, serves as the Mauritius Subsidiary’s Mauritius administrator. The Mauritius Subsidiary pays IQ-EQ a fee for its services and for preparing management accounts; acting as registrar in relation to the shares of the Mauritius Subsidiary; organizing board and shareholder meetings and keeping minutes and the statutory books and records of the Mauritius Subsidiary in order to comply with requirements of the Mauritian Companies Act 2001, the Financial Services Act 2007 and applicable law; preparing and filing certain regulatory filings; and providing taxation and regulatory advisory services. The Mauritius Subsidiary also reimburses IQ-EQ for all reasonable out-of-pocket expenses reasonably incurred by it in the performance of its duties.
Custodian and Transfer Agent
State Street, located at One Lincoln Street, Boston, MA 02111, serves as custodian (in such capacity, the “Custodian”) for the Funds, the Mauritius Subsidiary and the Cayman Subsidiaries pursuant to a custodian agreement. As Custodian, State Street holds the Funds’, the Mauritius Subsidiary’s and the Cayman Subsidiaries’ assets. As compensation for these custodial services, State Street receives, among other items, transaction fees, asset-based safe keeping fees and overdraft charges and may be reimbursed by a Fund for its out-of-pocket expenses. State Street serves as the Funds’ transfer agent (in such capacity, the “Transfer Agent”) pursuant to a transfer agency agreement. In addition, State Street provides various accounting services to each of the Funds, except VanEck Gold Miners ETF, pursuant to a fund accounting agreement. VEAC pays a portion of the fee that it receives from VanEck Gold Miners ETF to State Street for providing fund accounting services to VanEck Gold Miners ETF.
The Distributor
Van Eck Securities Corporation is the principal underwriter and distributor of Shares. Its principal address is 666 Third Avenue, New York, New York 10017 and investor information can be obtained by calling 800.826.2333. The Distributor has entered into an agreement with the Trust which will continue from its effective date unless terminated by
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either party upon 60 days’ prior written notice to the other party by the Trust and the Advisers, or by the Distributor, or until termination of the Trust or each Fund offering its Shares, and which is renewable annually thereafter (the “Distribution Agreement”), pursuant to which it distributes Shares. Shares will be continuously offered for sale by the Trust through the Distributor only in Creation Units, as described below under “Creation and Redemption of Creation Units—Procedures for Creation of Creation Units.” Shares in less than Creation Units are not distributed by the Distributor. The Distributor will deliver a prospectus to persons purchasing Shares in Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. The Distributor is a broker-dealer registered under the Exchange Act and a member of the Financial Industry Regulatory Authority (“FINRA”). The Distributor has no role in determining the investment policies of the Trust or which securities are to be purchased or sold by the Trust.
The Distributor may also enter into sales and investor services agreements with broker-dealers or other persons that are Participating Parties and DTC Participants (as defined below) to provide distribution assistance, including broker-dealer and shareholder support and educational and promotional services but must pay such broker-dealers or other persons, out of its own assets.
The Distribution Agreement provides that it may be terminated at any time, without the payment of any penalty: (i) by vote of a majority of the Independent Trustees or (ii) by vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Funds, on at least 60 days written notice to the Distributor. The Distribution Agreement is also terminable upon 60 days’ notice by the Distributor and will terminate automatically in the event of its assignment (as defined in the 1940 Act).
Affiliated Index Provider
The MVIS® Africa Index (the “Africa Index”), BlueStar Israel Global IndexTM (the “Israel Index”), MVIS® Brazil Small-Cap Index (the “Brazil Small-Cap Index”), MVIS® Digital India Index (the “Digital India Index”), MVIS® Global Digital Assets Equity Index (the “Digital Transformation Index”), MVIS® Global Agribusiness Index (the “Agribusiness Index”), MVIS® Global Clean-Tech Metals Index (the “Clean-Tech Metals Index”), MVIS® Global Gaming Index (the “Gaming Index”), MVIS® Global Junior Gold Miners Index (the “Junior Gold Miners Index”), MVIS® Global Low Energy Index (the “Low Carbon Energy Index”), MVIS® US Mortgage REITs Index (the “Mortgage REITs Index”), MVIS® Global Oil Refiners Index (the “Oil Refiners Index”), MVIS® Global Rare Earth/Strategic Metals Index (the “Rare Earth/Strategic Metals Index”), MVIS® Global Uranium & Nuclear Energy Index (the “Nuclear Energy Index”), MVIS® Global Video Gaming & eSports Index (the “eSports Index”), MVIS® Indonesia Index (the “Indonesia Index”), MVIS® Moody's Analytics® US BBB Corporate Bond Index (the “BBB Index”), MVIS® Moody's Analytics® US Investment Grade Corporate Bond Index (the “US IG Index”), MVIS® North America Energy Infrastructure Index (the “Energy Income Index”), MVIS® US Listed Pharmaceutical 25 Index (the “Pharmaceutical Index”), BlueStar® Robotics Index (the “Robotics Index”), MVIS® US Business Development Companies Index (the “BDC Index”), MVIS® US Investment Grade Floating Rate Index (the “Floating Rate Index”), MVIS® US Listed Biotech 25 Index (the “Biotech Index”), MVIS® US Listed Oil Services 25 Index (the “Oil Services Index”), MVIS® US Listed Retail 25 Index (the “Retail Index”), MVIS® US Listed Semiconductor 25 Index (the “Semiconductor Index”), MarketVector™ Alternative Asset Managers Index (the “Alternative Asset Managers Index”), MarketVectorTM Global Natural Resources Index (the “Natural Resources Index”), MarketVectorTM US Listed Office and Commercial REITs Index (the “Office and Commercial REITs Index”), MarketVector™ US Listed Fabless Semiconductor Index (the “Fabless Index”) and MarketVectorTM Vietnam Local Index (the “Vietnam Index”) (each a “MarketVector Index,” and collectively, the “MarketVector Indexes”) are published by MarketVector Indexes GmbH (“MarketVector”), which is an indirectly wholly-owned subsidiary of VEAC. In order to minimize any potential for conflicts caused by the fact that VEAC or its affiliates act as the index provider to a Fund that tracks a MarketVector Index, MarketVector has retained an unaffiliated third party (the “Calculation Agent”), to calculate the MarketVector Indexes. The Calculation Agent, using a rules-based methodology, will calculate, maintain and disseminate each of the MarketVector Indexes on a daily basis. MarketVector will monitor the results produced by the Calculation Agent to help ensure that the MarketVector Indexes are being calculated in accordance with the applicable rules-based methodology. In addition, VEAC and MarketVector have established policies and procedures designed to prevent non-public information about pending changes to a MarketVector Index from being used or disseminated in an improper manner.
Securities Lending
Pursuant to a securities lending agreement (the “Securities Lending Agreement”) between the Funds and State Street (in such capacity, the “Securities Lending Agent”), certain Funds may lend their securities through the Securities Lending Agent to certain qualified borrowers. The Securities Lending Agent administers the Funds’ securities lending program. These services include arranging the securities loans with approved borrowers and collecting fees and rebates due to the Funds from each borrower. The Securities Lending Agent maintains records of loans made and income derived therefrom and makes available such records that the Funds deem necessary to monitor the securities lending program.
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Each of the Funds listed below earned income and incurred the following costs and expenses, during its respective fiscal year, as a result of its securities lending activities.
| Fund | Fiscal Year | Gross Income (1) | Revenue Split(2) | Cash Collateral Management Fees(3) | Administrative Fees(4) | Indemnification Fees(5) | Rebates to Borrowers | Other Fees | Total Costs of the Securities Lending Activities | Net Income from the Securities Lending Activities | ||||||||||||||||||||||
| VanEck Biotech ETF | 9/30/2024 | $23,090 | $1,781 | $0 | $0 | $0 | $5,261 | $0 | $7,042 | $16,048 | ||||||||||||||||||||||
| VanEck Digital Transformation ETF | 9/30/2024 | $1,779,898 | $147,692 | $0 | $0 | $0 | $302,942 | $0 | $450,634 | $1,329,264 | ||||||||||||||||||||||
| VanEck Durable High Dividend ETF | 9/30/2024 | $76 | $7 | $0 | $0 | $0 | $0 | $0 | $7 | $69 | ||||||||||||||||||||||
| VanEck Environmental Services ETF | 9/30/2024 | $246,816 | $21,653 | $0 | $0 | $0 | $30,991 | $0 | $52,644 | $194,172 | ||||||||||||||||||||||
| VanEck Gaming ETF | 9/30/2024 | $7,645 | $722 | $0 | $0 | $0 | $397 | $0 | $1,119 | $6,526 | ||||||||||||||||||||||
| VanEck Green Infrastructure ETF | 9/30/2024 | $10,943 | $884 | $0 | $0 | $0 | $2,099 | $0 | $2,983 | $7,960 | ||||||||||||||||||||||
| VanEck Long/Flat Trend ETF | 9/30/2024 | $18,561 | $180 | $0 | $0 | $0 | $16,762 | $0 | $16,942 | $1,619 | ||||||||||||||||||||||
VanEck Morningstar ESG Moat ETF | 9/30/2024 | $2 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $2 | ||||||||||||||||||||||
| VanEck Morningstar Global Wide Moat ETF | 9/30/2024 | $3,172 | $99 | $0 | $0 | $0 | $2,180 | $0 | $2,279 | $893 | ||||||||||||||||||||||
| VanEck Morningstar International Moat ETF | 9/30/2024 | $142,964 | $6,049 | $0 | $0 | $0 | $82,706 | $0 | $88,755 | $54,209 | ||||||||||||||||||||||
| VanEck Morningstar SMID Moat ETF | 9/30/2024 | $598,760 | $59,000 | $0 | $0 | $0 | $4,834 | $0 | $63,834 | $534,926 | ||||||||||||||||||||||
| VanEck Morningstar Wide Moat ETF | 9/30/2024 | $40,556 | $3,955 | $0 | $0 | $0 | $1,000 | $0 | $4,955 | $35,601 | ||||||||||||||||||||||
| VanEck Pharmaceutical ETF | 9/30/2024 | $1,184,612 | $22,559 | $0 | $0 | $0 | $958,463 | $0 | $981,022 | $203,590 | ||||||||||||||||||||||
VanEck Real Assets ETF | 9/30/2024 | $431,921 | $8,068 | $0 | $0 | $0 | $351,234 | $0 | $359,302 | $72,619 | ||||||||||||||||||||||
| VanEck Retail ETF | 9/30/2024 | $2,703 | $268 | $0 | $0 | $0 | $16 | $0 | $284 | $2,419 | ||||||||||||||||||||||
| VanEck Robotics ETF | 9/30/2024 | $3,271 | $64 | $0 | $0 | $0 | $2,628 | $0 | $2,692 | $579 | ||||||||||||||||||||||
| VanEck Semiconductor ETF | 9/30/2024 | $987,712 | $8,339 | $0 | $0 | $0 | $904,316 | $0 | $912,655 | $75,057 | ||||||||||||||||||||||
| VanEck Social Sentiment ETF | 9/30/2024 | $484,070 | $45,110 | $0 | $0 | $0 | $32,860 | $0 | $77,970 | $406,100 | ||||||||||||||||||||||
64
| Fund | Fiscal Year | Gross Income (1) | Revenue Split(2) | Cash Collateral Management Fees(3) | Administrative Fees(4) | Indemnification Fees(5) | Rebates to Borrowers | Other Fees | Total Costs of the Securities Lending Activities | Net Income from the Securities Lending Activities | ||||||||||||||||||||||
| VanEck Video Gaming and eSports ETF | 9/30/2024 | $332,579 | $11,619 | $0 | $0 | $0 | $216,386 | $0 | $228,005 | $104,574 | ||||||||||||||||||||||
| VanEck Africa Index ETF | 12/31/2024 | $81,669 | $2,599 | $0 | $0 | $0 | $55,048 | $0 | $57,647 | $24,022 | ||||||||||||||||||||||
| VanEck Agribusiness ETF | 12/31/2024 | $679,550 | $27,981 | $0 | $0 | $0 | $400,132 | $0 | $428,113 | $251,437 | ||||||||||||||||||||||
| VanEck BDC Income ETF | 12/31/2024 | $6,904,119 | $544,102 | $0 | $0 | $0 | $1,466,237 | $0 | $2,010,339 | $4,893,780 | ||||||||||||||||||||||
| VanEck Brazil Small-Cap ETF | 12/31/2024 | $38,337 | $2,030 | $0 | $0 | $0 | $18,010 | $0 | $20,040 | $18,297 | ||||||||||||||||||||||
| VanEck CMCI Commodity Strategy ETF | 12/31/2024 | $1,002 | $35 | $0 | $0 | $0 | $651 | $0 | $686 | $316 | ||||||||||||||||||||||
| VanEck Gold Miners ETF | 12/31/2024 | $6,127,968 | $135,434 | $0 | $0 | $0 | $4,774,578 | $0 | $4,910,012 | $1,217,956 | ||||||||||||||||||||||
| VanEck Green Metals ETF | 12/31/2024 | $70,700 | $2,917 | $0 | $0 | $0 | $41,503 | $0 | $44,420 | $26,280 | ||||||||||||||||||||||
| VanEck Indonesia Index ETF | 12/31/2024 | $7,231 | $386 | $0 | $0 | $0 | $3,369 | $0 | $3,755 | $3,476 | ||||||||||||||||||||||
| VanEck International High Yield Bond ETF | 12/31/2024 | $29,194 | $718 | $0 | $0 | $0 | $22,013 | $0 | $22,731 | $6,463 | ||||||||||||||||||||||
| VanEck Israel ETF | 12/31/2024 | $177,529 | $12,200 | $0 | $0 | $0 | $55,384 | $0 | $67,584 | $109,945 | ||||||||||||||||||||||
| VanEck J.P. Morgan EM Local Currency Bond ETF | 12/31/2024 | $275,092 | $801 | $0 | $0 | $0 | $269,659 | $0 | $270,460 | $4,632 | ||||||||||||||||||||||
| VanEck Junior Gold Miners ETF | 12/31/2024 | $5,611,232 | $258,839 | $0 | $0 | $0 | $3,021,960 | $0 | $3,280,799 | $2,330,433 | ||||||||||||||||||||||
| VanEck Low Carbon Energy ETF | 12/31/2024 | $529,294 | $22,554 | $0 | $0 | $0 | $303,968 | $0 | $326,522 | $202,772 | ||||||||||||||||||||||
| VanEck Mortgage REIT Income ETF | 12/31/2024 | $572,672 | $35,901 | $0 | $0 | $0 | $213,503 | $0 | $249,404 | $323,268 | ||||||||||||||||||||||
| VanEck Natural Resources ETF | 12/31/2024 | $183,114 | $4,456 | $0 | $0 | $0 | $138,441 | $0 | $142,897 | $40,217 | ||||||||||||||||||||||
VanEck Office and Commercial REIT ETF | 12/31/2024 | $115 | $1 | $0 | $0 | $0 | $103 | $0 | $104 | $11 | ||||||||||||||||||||||
| VanEck Oil Refiners ETF | 12/31/2024 | $17,978 | $296 | $0 | $0 | $0 | $14,986 | $0 | $15282 | $2,696 | ||||||||||||||||||||||
65
| Fund | Fiscal Year | Gross Income (1) | Revenue Split(2) | Cash Collateral Management Fees(3) | Administrative Fees(4) | Indemnification Fees(5) | Rebates to Borrowers | Other Fees | Total Costs of the Securities Lending Activities | Net Income from the Securities Lending Activities | ||||||||||||||||||||||
| VanEck Oil Services ETF | 12/31/2024 | $286,737 | $23,609 | $0 | $0 | $0 | $50,532 | $0 | $74,141 | $212,596 | ||||||||||||||||||||||
| VanEck Preferred Securities ex Financials ETF | 12/31/2024 | $1,565,700 | $43,550 | $0 | $0 | $0 | $1,130,102 | $0 | $1,173,652 | $392,048 | ||||||||||||||||||||||
| VanEck Rare Earth and Strategic Metals ETF | 12/31/2024 | $3,502,035 | $306,323 | $0 | $0 | $0 | $438,021 | $0 | $744,344 | $2,757,691 | ||||||||||||||||||||||
| VanEck Russia ETF | 12/31/2024 | $92,050 | $1,867 | $0 | $0 | $0 | $73,370 | $0 | $75,237 | $16,813 | ||||||||||||||||||||||
| VanEck Steel ETF | 12/31/2024 | $129,785 | $2,530 | $0 | $0 | $0 | $104,460 | $0 | $106,990 | $22,795 | ||||||||||||||||||||||
| VanEck Uranium and Nuclear ETF | 12/31/2024 | $1,332,838 | $90,394 | $0 | $0 | $0 | $428,771 | $0 | $519,165 | $813,673 | ||||||||||||||||||||||
| VanEck Emerging Markets High Yield Bond ETF | 4/30/2024 | $1,015,622 | $23,423 | $0 | $0 | $0 | $781,374 | $0 | $804,797 | $210,825 | ||||||||||||||||||||||
| VanEck Fallen Angel High Yield Bond ETF | 4/30/2024 | $6,968,932 | $196,442 | $0 | $0 | $0 | $5,003,944 | $0 | $5,200,386 | $1,768,546 | ||||||||||||||||||||||
| VanEck Green Bond ETF | 4/30/2024 | $103,272 | $1,878 | $0 | $0 | $0 | $84,449 | $0 | $86,327 | $16,945 | ||||||||||||||||||||||
| VanEck IG Floating Rate ETF | 4/30/2024 | $135,847 | $9,280 | $0 | $0 | $0 | $43,016 | $0 | $52,296 | $83,551 | ||||||||||||||||||||||
| VanEck Moody's Analytics BBB Corporate Bond ETF | 4/30/2024 | $5,047 | $42 | $0 | $0 | $0 | $4,610 | $0 | $4,652 | $395 | ||||||||||||||||||||||
| VanEck Moody's Analytics IG Corporate Bond ETF | 4/30/2024 | $4,976 | $90 | $0 | $0 | $0 | $4,062 | $0 | $4,152 | $824 | ||||||||||||||||||||||
1Gross income includes income from the reinvestment of cash collateral and rebates paid by the borrower.
2Revenue split represents the share of revenue generated by the securities lending program and paid to the Securities Lending Agent.
3Cash collateral management fees include fees deducted from a pooled cash collateral reinvestment vehicle that are not included in the revenue split.
4These administrative fees are not included in the revenue split.
5These indemnification fees are not included in the revenue split.
Other Accounts Managed by the Portfolio Managers
Van Eck Associates Corporation and Van Eck Absolute Return Advisers Corporation
The following table lists the number and types of other accounts (excluding the Funds) advised by each Fund’s portfolio manager(s) and assets under management in those accounts as of the end of the last fiscal year of the Funds that they manage, except as otherwise indicated. If a portfolio manager is a primary portfolio manager for multiple Funds with different fiscal year ends, information is provided as of the most recent fiscal year end of the relevant Funds, except as otherwise indicated.
66
Portfolio Manager | Other Accounts Managed | Applicable Fiscal Year End | ||||||||||||
| Category of Account | Number of Accounts in Category | Total Assets in Accounts in Category | ||||||||||||
Peter H. Liao* | Registered Investment Companies | 48 | $83,655.14 million | 12/31/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 12/31/2024 | |||||||||||
| Other Accounts | 0 | $0 | 12/31/2024 | |||||||||||
Stephanie Wang | Registered Investment Companies | 0 | $0 | 4/30/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 4/30/2024 | |||||||||||
| Other Accounts | 0 | $0 | 4/30/2024 | |||||||||||
Francis G. Rodilosso | Registered Investment Companies | 6 | $5,705.34 million | 12/31/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 12/31/2024 | |||||||||||
| Other Accounts | 0 | $0 | 12/31/2024 | |||||||||||
| David Schassler | Registered Investment Companies | 0 | $0 | 9/30/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 9/30/2024 | |||||||||||
| Other Accounts | 0 | $0 | 9/30/2024 | |||||||||||
John Lau (Deputy Portfolio Manager) | Registered Investment Companies | 0 | $0 | 9/30/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 9/30/2024 | |||||||||||
| Other Accounts | 0 | $0 | 9/30/2024 | |||||||||||
| Roland Morris | Registered Investment Companies | 1 | $545.52 million | 12/31/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 12/31/2024 | |||||||||||
| Other Accounts | 0 | $0 | 12/31/2024 | |||||||||||
Griffin Driscoll* (Deputy Portfolio Manager) | Registered Investment Companies | 25 | $37,865.09 million | 12/31/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 12/31/2024 | |||||||||||
| Other Accounts | 0 | $0 | 12/31/2024 | |||||||||||
Ralph Lasta (Deputy Portfolio Manager) | Registered Investment Companies | 0 | $0 | 12/31/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 12/31/2024 | |||||||||||
| Other Accounts | 0 | $0 | 12/31/2024 | |||||||||||
Joseph Schafer (Deputy Portfolio Manager) | Registered Investment Companies | 0 | $0 | 9/30/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 9/30/2024 | |||||||||||
| Other Accounts | 0 | $0 | 9/30/2024 | |||||||||||
Chris Mailloux | Registered Investment Companies | 2 | $577.51 million | 12/31/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 12/31/2024 | |||||||||||
| Other Accounts | 0 | $0 | 12/31/2024 | |||||||||||
* Information for Messrs. Liao and Driscoll are provided as of April 30, 2025.
None of the portfolio managers manage accounts that are subject to performance-based advisory fees.
Although the Funds in the Trust that are managed by Ms. Wang and Messrs. Driscoll, Lasta, Lau, Liao, Mailloux, Rodilosso and Schassler may have different investment strategies, each Fund (except VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF and VanEck Real Assets ETF) has an investment objective of seeking to replicate as closely as possible, before fees and expenses, the price and yield performance of its respective underlying index. The Advisers do not believe that management of the various accounts presents a material conflict of interest for Ms. Wang and Messrs. Driscoll, Lasta, Lau, Liao, Mailloux, Rodilosso and Schassler or the Advisers.
PineBridge Investments LLC (relating to VanEck AA-BB CLO ETF and VanEck CLO ETF only).
The following table lists the number and types of other accounts advised by the portfolio manager at the Sub-Adviser and assets under management in those accounts as of the end of the last fiscal year of the funds she manages, except if otherwise indicated. If a portfolio manager is a primary portfolio manager for multiple funds with different fiscal year ends, information is provided as of the most recent fiscal year end of the relevant funds, except if otherwise indicated. The data provided does not reflect VanEck AA-BB CLO ETF, as the Fund has not commenced operations as of the date of this SAI.
67
| Portfolio Manager | Other Accounts Managed | Applicable Fiscal Year End | ||||||||||||
| Category of Account | Number of Accounts in Category | Total Assets in Accounts in Category | ||||||||||||
Laila Kollmorgen | Registered Investment Companies* | 2 | $308 million | 12/31/2024 | ||||||||||
Other Pooled Investment Vehicles** | 3 | $2,295 million | 12/31/2024 | |||||||||||
| Other Accounts | 12 | $3,658 million | 12/31/2024 | |||||||||||
* This category represents CLO sleeves of registered investment companies managed by the Sub-Adviser.
** This category represents pooled investment vehicle allocations into the Sub-Adviser’s CLO tranche strategies.
Performance-Based Accounts (The number of accounts and the total assets in the accounts managed by the portfolio manager with respect to which the advisory fee is based on the performance of the account.)
| Portfolio Manager | Other Accounts Managed | Applicable Fiscal Year End | ||||||||||||
| Category of Account | Number of Accounts in Category | Total Assets in Accounts in Category | ||||||||||||
Laila Kollmorgen | Registered Investment Companies* | 1 | $149 million | 12/31/2024 | ||||||||||
| Other Pooled Investment Vehicles | 0 | $0 | 12/31/2024 | |||||||||||
| Other Accounts | 0 | $0 | 12/31/2024 | |||||||||||
*This category represents CLO sleeves of registered investment companies managed by the Sub-Adviser.
The portfolio manager at the Sub-Adviser manages other funds and mandates that purchase investment grade and below-investment grade CLO securities, which creates conflicts of interest with respect to portfolio management decisions and execution. The Sub-Adviser recognizes that it may be subject to a conflict of interest with respect to allocations of investment opportunities and transactions among its clients. To mitigate these conflicts, the Sub-Adviser’s policies and procedures seek to provide that investment decisions are made in accordance with the fiduciary duties owed to such accounts and without consideration of the Sub-Adviser’s economic, investment or other financial interests.
Portfolio Manager Compensation
Van Eck Associates Corporation and Van Eck Absolute Return Advisers Corporation
The portfolio managers are paid a fixed base salary and a bonus. The bonus is based upon the quality of investment analysis and the management of the funds. The quality of management of the funds includes issues of replication, rebalancing, portfolio monitoring and efficient operation, among other factors. Portfolio managers who oversee accounts with significantly different fee structures are generally compensated by discretionary bonus rather than a set formula to help reduce potential conflicts of interest. At times, the Advisers and their affiliates manage accounts with incentive fees. The portfolio managers may serve as portfolio managers to other clients. Such “Other Clients” may have investment objectives or may implement investment strategies similar to those of the Funds, or, except for VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF or VanEck Real Assets ETF, may track the same index a Fund tracks. When the portfolio managers implement investment strategies for Other Clients that are similar or directly contrary to the positions taken by a Fund, the prices of the Fund’s securities may be negatively affected. The compensation that the Funds’ portfolio managers receive for managing other client accounts may be higher than the compensation the portfolio managers receive for managing the Funds. VEAC and VEARA have implemented procedures to monitor trading across funds and its Other Clients.
PineBridge Invetsments, LLC (relating to VanEck AA-BB CLO ETF and VanEck CLO ETF only).
Compensation for all the Sub-Adviser portfolio managers consists of both a salary and a bonus component. The salary component is a fixed base salary, and does not vary based on a portfolio manager’s performance. Generally, salary is based upon several factors, including experience and market levels of salary for such position. The bonus component is generally discretionally determined based both on a portfolio manager’s individual performance and the overall performance of the Sub-Adviser. In assessing individual performance of portfolio managers, both qualitative performance measures and also quantitative performance measures assessing the management of a portfolio manager’s funds are considered. A portfolio manager may be offered a long-term incentive/performance unit plan (“LTI”) to share in the long-term growth of the company. The LTI plan allows for the granting of incentive units representing equity interests in the company with the main objective of
68
attracting and retaining talent, incentivizing employee long-term performance and ensuring employee alignment of interests with the firm’s long-term vision and goals.
Portfolio Manager Share Ownership
The following table lists the dollar range of any Fund Shares beneficially owned by the primary portfolio manager(s) as of the end of each applicable Fund’s last fiscal year, except if otherwise indicated.
69
| Portfolio Manager | Fund | Fiscal Year End | Dollar Range Beneficially Owned | ||||||||
Peter H. Liao | VanEck Alternative Asset Manager ETF | September 30, 2025 | None* | ||||||||
| VanEck Biotech ETF | September 30, 2024 | None | |||||||||
| VanEck Digital Transformation ETF | September 30, 2024 | None | |||||||||
| VanEck Durable High Dividend ETF | September 30, 2024 | None | |||||||||
| VanEck Energy Income ETF | September 30, 2024 | None | |||||||||
| VanEck Environmental Services ETF | September 30, 2024 | $10,001 to $50,000 | |||||||||
VanEck Fabless Semiconductor ETF | September 30, 2024 | $1 to $10,000 | |||||||||
| VanEck Gaming ETF | September 30, 2024 | None | |||||||||
| VanEck Green Infrastructure ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar ESG Moat ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar Global Wide Moat ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar International Moat ETF | September 30, 2024 | $50,001 to $100,000 | |||||||||
| VanEck Morningstar SMID Moat ETF | September 30, 2024 | $10,001 to $50,000 | |||||||||
| VanEck Morningstar Wide Moat ETF | September 30, 2024 | $10,001 to $50,000 | |||||||||
| VanEck Morningstar Wide Moat Growth ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar Wide Moat Value ETF | September 30, 2024 | None | |||||||||
| VanEck Pharmaceutical ETF | September 30, 2024 | None | |||||||||
| VanEck Retail ETF | September 30, 2024 | None | |||||||||
| VanEck Robotics ETF | September 30, 2024 | None | |||||||||
| VanEck Semiconductor ETF | September 30, 2024 | $10,001 to $50,000 | |||||||||
| VanEck Social Sentiment ETF | September 30, 2024 | None | |||||||||
| VanEck Video Gaming and eSports ETF | September 30, 2024 | None | |||||||||
| VanEck Africa ETF | December 31, 2024 | None | |||||||||
| VanEck Agribusiness ETF | December 31, 2024 | None | |||||||||
| VanEck BDC Income ETF | December 31, 2024 | None | |||||||||
| VanEck Brazil Small-Cap ETF | December 31, 2024 | None | |||||||||
| VanEck ChiNext ETF | December 31, 2024 | None | |||||||||
| VanEck Digital India ETF | December 31, 2024 | None | |||||||||
| VanEck Gold Miners ETF | December 31, 2024 | $100,001 to $500,000 | |||||||||
| VanEck Green Metals ETF | December 31, 2024 | None | |||||||||
VanEck India Growth Leaders ETF | December 31, 2024 | None | |||||||||
| VanEck Indonesia Index ETF | December 31, 2024 | None | |||||||||
| VanEck Israel ETF | December 31, 2024 | None | |||||||||
| VanEck Junior Gold Miners ETF | December 31, 2024 | None | |||||||||
| VanEck Low Carbon Energy ETF | December 31, 2024 | None | |||||||||
| VanEck Mortgage REIT Income ETF | December 31, 2024 | $1 to $10,000 | |||||||||
| VanEck Natural Resources ETF | December 31, 2024 | None | |||||||||
| VanEck Office and Commercial REIT ETF | December 31, 2024 | None | |||||||||
| VanEck Oil Refiners ETF | December 31, 2024 | None | |||||||||
| VanEck Oil Services ETF | December 31, 2024 | None | |||||||||
| VanEck Preferred Securities ex Financials ETF | December 31, 2024 | None | |||||||||
| VanEck Rare Earth and Strategic Metals ETF | December 31, 2024 | None | |||||||||
| VanEck Russia ETF | December 31, 2024 | None | |||||||||
| VanEck Russia Small-Cap ETF | December 31, 2024 | None | |||||||||
| VanEck Steel ETF | December 31, 2024 | None | |||||||||
| VanEck Uranium and Nuclear ETF | December 31, 2024 | None | |||||||||
| VanEck Vietnam ETF | December 31, 2024 | None | |||||||||
| VanEck CEF Muni Income ETF | April 30, 2024 | $1 to $10,000 | |||||||||
70
71
| Portfolio Manager | Fund | Fiscal Year End | Dollar Range Beneficially Owned | ||||||||
Griffin Driscoll (Deputy Portfolio Manager) | VanEck Alternative Asset Manager ETF | September 30, 2025 | None* | ||||||||
| VanEck Biotech ETF | September 30, 2024 | None | |||||||||
| VanEck Digital Transformation ETF | September 30, 2024 | None | |||||||||
| VanEck Durable High Dividend ETF | September 30, 2024 | None | |||||||||
| VanEck Energy Income ETF | September 30, 2024 | None | |||||||||
| VanEck Environmental Services ETF | September 30, 2024 | None | |||||||||
| VanEck Fabless Semiconductor ETF | September 30, 2024 | None | |||||||||
| VanEck Gaming ETF | September 30, 2024 | None | |||||||||
| VanEck Green Infrastructure ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar ESG Moat ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar Global Wide Moat ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar International Moat ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar SMID Moat ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar Wide Moat ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar Wide Moat Growth ETF | September 30, 2024 | None | |||||||||
| VanEck Morningstar Wide Moat Value ETF | September 30, 2024 | None | |||||||||
| VanEck Pharmaceutical ETF | September 30, 2024 | None | |||||||||
| VanEck Retail ETF | September 30, 2024 | None | |||||||||
| VanEck Robotics ETF | September 30, 2024 | None | |||||||||
| VanEck Semiconductor ETF | September 30, 2024 | None | |||||||||
| VanEck Social Sentiment ETF | September 30, 2024 | None | |||||||||
| VanEck Video Gaming and eSports ETF | September 30, 2024 | None | |||||||||
| VanEck BDC Income ETF | December 31, 2024 | None | |||||||||
| VanEck Mortgage REIT Income ETF | December 31, 2024 | None | |||||||||
| VanEck Preferred Securities ex Financials ETF | December 31, 2024 | None | |||||||||
| VanEck CEF Muni Income ETF | April 30, 2024 | None | |||||||||
Ralph Lasta (Deputy Portfolio Manager) | VanEck Africa ETF | December 31, 2024 | None | ||||||||
| VanEck Agribusiness ETF | December 31, 2024 | None | |||||||||
| VanEck Brazil Small-Cap ETF | December 31, 2024 | None | |||||||||
| VanEck ChiNext ETF | December 31, 2024 | None | |||||||||
| VanEck Digital India ETF | December 31, 2024 | None | |||||||||
| VanEck Gold Miners ETF | December 31, 2024 | None | |||||||||
| VanEck Green Metals ETF | December 31, 2024 | None | |||||||||
VanEck India Growth Leaders ETF | December 31, 2024 | None | |||||||||
| VanEck Indonesia Index ETF | December 31, 2024 | None | |||||||||
| VanEck Israel ETF | December 31, 2024 | None | |||||||||
| VanEck Junior Gold Miners ETF | December 31, 2024 | None | |||||||||
| VanEck Low Carbon Energy ETF | December 31, 2024 | None | |||||||||
| VanEck Natural Resources ETF | December 31, 2024 | None | |||||||||
| VanEck Office and Commercial REIT ETF | December 31, 2024 | None | |||||||||
| VanEck Oil Refiners ETF | December 31, 2024 | None | |||||||||
| VanEck Oil Services ETF | December 31, 2024 | None | |||||||||
| VanEck Rare Earth and Strategic Metals ETF | December 31, 2024 | None | |||||||||
| VanEck Steel ETF | December 31, 2024 | None | |||||||||
| VanEck Uranium and Nuclear ETF | December 31, 2024 | None | |||||||||
| VanEck Vietnam ETF | December 31, 2024 | None | |||||||||
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| Portfolio Manager | Fund | Fiscal Year End | Dollar Range Beneficially Owned | ||||||||
Joseph Schafer (Deputy Portfolio Manager) | VanEck Long/Flat Trend ETF | September 30, 2024 | None | ||||||||
* Information for Messrs. Liao and Driscoll are provided as of April 30, 2025.
Ms. Kollmorgen owns $50,001 to $100,000 in Shares of VanEck CLO ETF, as of December 31, 2024.
Ms. Kollmorgen did not own any Shares of VanEck AA-BB CLO ETF, as of December 31, 2024.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio securities, the Advisers and the Sub-Adviser (with respect to VanEck AA-BB CLO ETF and VanEck CLO ETF) look for prompt execution of the order at a favorable price. Generally, the Advisers and the Sub-Adviser work with recognized dealers in these securities, except when a better price and execution of the order can be obtained elsewhere. The Funds will not deal with affiliates in principal transactions unless permitted by exemptive order or applicable rule or regulation. The Advisers and the Sub-Adviser (as applicable) owe a duty to each of their clients to seek best execution on trades effected. Since the investment objective of certain Funds is investment performance that corresponds to that of an Index, the Advisers and the Sub-Adviser (as applicable) do not intend to select brokers and dealers for the purpose of receiving research services in addition to a favorable price and prompt execution either from that broker or an unaffiliated third party.
Each Adviser assumes general supervision over placing orders on behalf of the Trust for the purchase or sale of portfolio securities. If purchases or sales of portfolio securities of the Trust and one or more other investment companies or clients supervised by an Adviser are considered at or about the same time, transactions in such securities are allocated among the several investment companies and clients in a manner deemed equitable to all by the Adviser. In some cases, this procedure could have a detrimental effect on the price or volume of the security so far as the Trust is concerned. However, in other cases, it is possible that the ability to participate in volume transactions and to negotiate lower brokerage commissions will be beneficial to the Trust. The primary consideration is best execution.
The Sub-Adviser oversees placing orders on behalf of the assets of the VanEck AA-BB CLO ETF and VanEck CLO ETF, allocated to them for the purchase or sale of portfolio securities. If purchases or sales of portfolio securities of the assets of VanEck AA-BB CLO ETF and VanEck CLO ETF, as applicable, allocated to them and one or more other investment companies or clients supervised by the Sub-Adviser are considered at or about the same time, transactions in such securities will be made among the several investment companies and clients in a manner deemed appropriate by the Sub-Adviser consistent with their duty to seek best execution.
Portfolio turnover may vary from year to year, as well as within a year. High turnover rates are likely to result in comparatively greater brokerage expenses, additional taxable income at a Fund level and additional taxable distributions. The overall reasonableness of brokerage commissions is evaluated by the Advisers based upon their knowledge of available information as to the general level of commissions paid by other institutional investors for comparable services.
Each of VanEck Moody's Analytics BBB Corporate Bond ETF and VanEck Moody's Analytics IG Corporate Bond
ETF experienced an increase in portfolio turnover for the fiscal year ended April 30, 2023 due to an increase in the number of
portfolio transactions.
VanEck Natural Resources ETF experienced an increase in portfolio turnover for the fiscal year ending December 31, 2024 in connection with the changes to the Fund’s investment objective, principal investment strategies and benchmark which came into effect on March 15, 2024.
Due to changes in the VanEck China Bond ETF’s principal investment strategies, following May 31, 2024 the Fund experienced a higher level of portfolio turnover in the current fiscal year than in previous fiscal years.
Because VanEck Alternative Asset Manager ETF has not commenced operations as of the date of this SAI, there have been no payments by the Fund for brokerage commissions.
The aggregate brokerage commissions paid by each Fund during its last three fiscal years as applicable, are set forth in the charts below.
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| Brokerage Commissions Paid During the Fiscal Year Ended December 31, | ||||||||||||||||||||||||||
| Fund | 2022 | 2023 | 2024 | |||||||||||||||||||||||
VanEck AA-BB CLO ETF(i) | N/A | N/A | $0 | |||||||||||||||||||||||
| VanEck Africa Index ETF | $63,166 | $62,181 | $71,352 | |||||||||||||||||||||||
VanEck Agribusiness ETF | $520,102 | $200,649 | $144,240 | |||||||||||||||||||||||
VanEck BDC Income ETF* | N/A | N/A | $351,596 | |||||||||||||||||||||||
| VanEck Brazil Small-Cap ETF | $20,251 | $15,474 | $11,970 | |||||||||||||||||||||||
VanEck China Bond ETF* | N/A | N/A | $0 | |||||||||||||||||||||||
VanEck ChiNext ETF | $10,513 | $44,172 | $52,017 | |||||||||||||||||||||||
VanEck CLO ETF (ii) | $0 | $0 | $0 | |||||||||||||||||||||||
VanEck CMCI Commodity Strategy ETF(iii) | N/A | $0 | $0 | |||||||||||||||||||||||
VanEck Digital India ETF(iv) | $1,950 | $6,005 | $21,797 | |||||||||||||||||||||||
| VanEck Gold Miners ETF | $2,862,493 | $1,407,794 | $2,628,342 | |||||||||||||||||||||||
VanEck Green Metals ETF | $26,769 | $9,252 | $7,629 | |||||||||||||||||||||||
VanEck India Growth Leaders ETF | $98,967 | $55,955 | $129,853 | |||||||||||||||||||||||
| VanEck Indonesia Index ETF | $27,322 | $12,452 | $14,708 | |||||||||||||||||||||||
VanEck International High Yield Bond ETF* | N/A | N/A | $0 | |||||||||||||||||||||||
| VanEck Israel ETF | $11,697 | $10,502 | $9,819 | |||||||||||||||||||||||
VanEck J.P. Morgan EM Local Currency Bond ETF* | N/A | N/A | $32,719 | |||||||||||||||||||||||
| VanEck Junior Gold Miners ETF | $1,541,885 | $1,172,844 | $1,947,789 | |||||||||||||||||||||||
| VanEck Low Carbon Energy ETF | $53,465 | $44,686 | $47,019 | |||||||||||||||||||||||
VanEck Mortgage REIT Income ETF* | N/A | N/A | $73,051 | |||||||||||||||||||||||
VanEck Natural Resources ETF | $48,511 | $37,130 | $53,267 | |||||||||||||||||||||||
VanEck Office and Commercial REIT ETF(v) | N/A | $57 | $428 | |||||||||||||||||||||||
VanEck Oil Refiners ETF | $25,013 | $11,261 | $13,672 | |||||||||||||||||||||||
VanEck Oil Services ETF | $558,173 | $463,728 | $427,380 | |||||||||||||||||||||||
VanEck Preferred Securities ex Financials ETF* | N/A | N/A | $398,132 | |||||||||||||||||||||||
| VanEck Rare Earth and Strategic Metals ETF | $732,091 | $281,055 | $146,178 | |||||||||||||||||||||||
VanEck Russia ETF | $24,346 | $332,191 | $424,223 | |||||||||||||||||||||||
| VanEck Russia Small-Cap ETF | $7,287 | $0 | $0 | |||||||||||||||||||||||
| VanEck Steel ETF | $27,675 | $24,451 | $21,853 | |||||||||||||||||||||||
VanEck Uranium and Nuclear ETF | $21,377 | $41,089 | $167,710 | |||||||||||||||||||||||
VanEck Vietnam ETF | $503,786 | $617,675 | $224,675 | |||||||||||||||||||||||
| Brokerage Commissions Paid During the Fiscal Year Ended April 30, | ||||||||||||||||||||
| Fund | 2022 | 2023 | 2024 | |||||||||||||||||
VanEck BDC Income ETF† | $181,035 | $121,260 | $126,318 | |||||||||||||||||
VanEck China Bond ETF† | $19,323 | $12,830 | $660 | |||||||||||||||||
VanEck International High Yield Bond ETF† | $ – | $5 | $ – | |||||||||||||||||
VanEck J.P. Morgan EM Local Currency Bond ETF† | $ – | $ – | $32,719 | |||||||||||||||||
VanEck Mortgage REIT Income ETF† | $50,532 | $50,260 | $50,488 | |||||||||||||||||
VanEck Preferred Securities ex Financials ETF† | $362,499 | $194,462 | $223,273 | |||||||||||||||||
*The fiscal year end for VanEck BDC Income ETF, VanEck China Bond ETF, VanEck International High Yield Bond ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck Mortgage REIT Income ETF and VanEck Preferred Securities ex Financials ETF changed from April 30th to December 31st. As such the table above reflects the brokerage commissions paid from May 1, 2024 to December 31, 2024.
† Prior to December 31, 2024, the fiscal year end for VanEck BDC Income ETF, VanEck China Bond ETF, VanEck International High Yield Bond ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck Mortgage REIT Income ETF and VanEck Preferred Securities ex Financials ETF was April 30th. The table above reflects the brokerage commissions paid for the fiscal years ended April 30, 2022, April 30, 2023 and April 30, 2024.
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| Brokerage Commissions Paid During the Fiscal Year Ended April 30, | ||||||||||||||||||||
| Fund | 2022 | 2023 | 2024 | |||||||||||||||||
VanEck CEF Muni Income ETF | $37,648 | $34,175 | $43,017 | |||||||||||||||||
| VanEck Emerging Markets High Yield Bond ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Fallen Angel High Yield Bond ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Green Bond ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck High Yield Muni ETF | $ – | $ – | $ – | |||||||||||||||||
VanEck HIP Sustainable Muni ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck IG Floating Rate ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Intermediate Muni ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Long Muni ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Moody's Analytics BBB Corporate Bond ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Moody's Analytics IG Corporate Bond ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Short High Yield Muni ETF | $ – | $ – | $ – | |||||||||||||||||
| VanEck Short Muni ETF | $ – | $ – | $ – | |||||||||||||||||
| Brokerage Commissions Paid During the Fiscal Year Ended September 30, | ||||||||||||||||||||
| Fund | 2022 | 2023 | 2024 | |||||||||||||||||
VanEck Alternative Asset Manager ETF(vi) | N/A | N/A | N/A | |||||||||||||||||
| VanEck Biotech ETF | $100,096 | $64,762 | $81,882 | |||||||||||||||||
VanEck Commodity Strategy ETF(vii) | N/A | $5,018 | $5,638 | |||||||||||||||||
VanEck Digital Transformation ETF | $33,958 | $21,663 | $86,068 | |||||||||||||||||
VanEck Durable High Dividend ETF | $13,222 | $22,838 | $16,654 | |||||||||||||||||
VanEck Energy Income ETF | $8,977 | $8,183 | $16,481 | |||||||||||||||||
VanEck Environmental Services ETF | $17,734 | $19,632 | $15,570 | |||||||||||||||||
VanEck Fabless Semiconductor ETF (viii) | N/A | N/A | $159 | |||||||||||||||||
| VanEck Gaming ETF | $19,713 | $17,810 | $10,196 | |||||||||||||||||
VanEck Green Infrastructure ETF(ix) | N/A | $142 | $262 | |||||||||||||||||
VanEck Long/Flat Trend ETF | $20,418 | $18,532 | $4,777 | |||||||||||||||||
VanEck Morningstar ESG Moat ETF | $460 | $771 | $891 | |||||||||||||||||
| VanEck Morningstar Global Wide Moat ETF | $8,827 | $8,792 | $8,067 | |||||||||||||||||
VanEck Morningstar International Moat ETF | $67,224 | $114,874 | $126,679 | |||||||||||||||||
VanEck Morningstar SMID Moat ETF(x) | N/A | $25,372 | $96,148 | |||||||||||||||||
VanEck Morningstar Wide Moat ETF | $1,519,531 | $1,773,064 | $4,264,476 | |||||||||||||||||
VanEck Morningstar Wide Moat Growth ETF(xi) | N/A | N/A | $84 | |||||||||||||||||
VanEck Morningstar Wide Moat Value ETF(xi) | N/A | N/A | $408 | |||||||||||||||||
| VanEck Pharmaceutical ETF | $79,347 | $88,581 | $90,011 | |||||||||||||||||
VanEck Real Assets ETF | $13,828 | $67,605 | $15,415 | |||||||||||||||||
| VanEck Retail ETF | $24,721 | $21,768 | $20,938 | |||||||||||||||||
VanEck Robotics ETF(xii) | N/A | $235 | $1,643 | |||||||||||||||||
| VanEck Semiconductor ETF | $1,099,681 | $1,141,976 | $2,882,348 | |||||||||||||||||
VanEck Social Sentiment ETF | $117,725 | $55,808 | $58,244 | |||||||||||||||||
| VanEck Video Gaming and eSports ETF | $241,223 | $122,296 | $118,778 | |||||||||||||||||
(i) VanEck AA-BB CLO ETF did not commence operations until September 24, 2024.
(ii) VanEck CLO ETF did not commence operations until June 22, 2022.
(iii) VanEck CMCI Commodity Strategy ETF did not commence operations until August 22, 2023.
(iv) VanEck Digital India ETF did not commence operations until February 16, 2022.
(v) VanEck Office and Commercial REIT ETF did not commence operations until September 20, 2023.
(vi) VanEck Alternative Asset Manager ETF has not commenced operations as of the date of this SAI.
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(vii) VanEck Commodity Strategy ETF did not commence operations until December 20, 2022.
(viii) VanEck Fabless Semiconductor ETF did not commence operations until August 27, 2024.
(ix) VanEck Green Infrastructure ETF did not commence operations until October 18, 2022.
(x) VanEck Morningstar SMID Moat ETF did not commence operations until October 4, 2022.
(xi) VanEck Morningstar Wide Moat Growth ETF and VanEck Morningstar Wide Moat Value ETF did not commence operations until March 26, 2024.
(xii) VanEck Robotics ETF did not commence operations until April 5, 2023.
For the fiscal year ended September 30, 2023, the following Funds experienced materially increased aggregate brokerage commissions due to an increase in the number of portfolio transactions: VanEck Durable High Dividend ETF, VanEck Morningstar International Moat ETF, VanEck Morningstar Wide Moat ETF, and VanEck Real Assets ETF.
For the fiscal year ended September 30, 2024, the following Funds experienced materially increased aggregate brokerage commissions due to an increase in the number of portfolio transactions: VanEck Digital Transformation ETF, VanEck Energy Income ETF, VanEck Morningstar International Moat ETF, VanEck Morningstar SMID Moat ETF, VanEck Morningstar Wide Moat ETF, and VanEck Semiconductor ETF.
For the fiscal year ended September 30, 2024, the following funds experienced materially decreased aggregate brokerage commissions due to a decrease in the number of portfolio transactions: VanEck Long/Flat Trend ETF, VanEck Real Assets ETF, and VanEck Video Gaming and eSports ETF.
For the fiscal year ended December 31, 2023, the following Funds experienced materially increased aggregate brokerage commissions due to an increase in the number of portfolio transactions: VanEck ChiNext ETF, VanEck Russia ETF and VanEck Vietnam ETF.
For the fiscal year ended December 31, 2024, the following Funds experienced materially increased aggregate brokerage commissions due to an increase in the number of portfolio transactions: VanEck BDC Income ETF, VanEck ChiNext ETF, VanEck Mortgage REIT Income ETF, VanEck Natural Resources ETF, VanEck Russia ETF and VanEck Uranium and Nuclear ETF.
For the fiscal year ended December 31, 2024, the following Funds experienced materially decreased aggregate brokerage commissions due to a decrease in the number of portfolio transactions: VanEck Agribusiness ETF, VanEck Rare Earth and Strategic Metals ETF and VanEck Vietnam ETF.
BOOK ENTRY ONLY SYSTEM
The following information supplements and should be read in conjunction with the section in each Fund’s Prospectus entitled “Shareholder Information—Buying and Selling Exchange-Traded Shares.”
The Depository Trust Company (“DTC”) acts as securities depositary for the Shares. Shares of the Funds are represented by securities registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC. Certificates will not be issued for Shares.
DTC, a limited-purpose trust company, was created to hold securities of its participants (the “DTC Participants”) and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the New York Stock Exchange (“NYSE”) and FINRA. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the “Indirect Participants”).
Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as “Beneficial Owners”) is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC Participant a written confirmation relating to their purchase of Shares.
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Conveyance of all notices, statements and other communications to Beneficial Owners is effected as follows. Pursuant to the depositary agreement between the Trust and DTC, DTC is required to make available to the Trust upon request and for a fee to be charged to the Trust a listing of the Shares holdings of each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements.
Share distributions shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares. DTC or its nominee, upon receipt of any such distributions, shall credit immediately DTC Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in Shares as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of Shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a “street name,” and will be the responsibility of such DTC Participants.
The Trust has no responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such Shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.
DTC may determine to discontinue providing its service with respect to the Shares at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a replacement is unavailable, to issue and deliver printed certificates representing ownership of Shares, unless the Trust makes other arrangements with respect thereto satisfactory to the Exchange.
CREATION AND REDEMPTION OF CREATION UNITS
General
The Funds issue and sell Shares only in Creation Units on a continuous basis through the Distributor, without an initial sales load, at their NAV next determined after receipt, on any Business Day (as defined herein), of an order in proper form. An Authorized Participant that is not a “qualified institutional buyer,” as such term is defined under Rule 144A of the Securities Act, will not be able to receive, as part of a redemption, restricted securities eligible for resale under Rule 144A.
A “Business Day” with respect to the Funds is any day on which the NYSE is open for business. As of the date of this SAI, the NYSE observes the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day (Washington’s Birthday), Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The times described below may change due to certain events such as the early closing of trading on the NYSE.
Fund Deposit
The consideration for a purchase of Creation Units of certain Funds generally consists of the in-kind deposit of a designated portfolio of securities (the “Deposit Securities”) and an amount of cash computed as described below (the “Cash Component”). The Cash Component together with the Deposit Securities, as applicable, are referred to as the “Fund Deposit,” which represents the minimum initial and subsequent investment amount for Shares. Due to various legal and operational constraints in certain countries in which certain Funds invest, Creation Units of these Funds as set forth in the table under the heading “Creation and Redemption Features” are issued partially or principally for cash.
The Cash Component represents the difference between the NAV of a Creation Unit and the market value of the Deposit Securities plus applicable transaction fees (as described below).
Each Administrator, through the NSCC, makes available on each Business Day, prior to the opening of business on the NYSE (currently 9:30 a.m., Eastern time), a list of the names and the required amounts of each Deposit Security that each Fund would accept as Fund Deposit that day. Such Fund Deposit is applicable, subject to any adjustments as described below, until such time as the next-announced Fund Deposit composition is made available.
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Each Fund reserves the right to permit or require the substitution of an amount of cash—referred to as “cash in lieu” to replace any Deposit Security. This may occur, for example, if a Deposit Security is not available in sufficient quantity for delivery, not eligible for transfer through the systems of DTC, the Federal Reserve System or the clearing process through the Continuous Net Settlement System of the NSCC, not permitted to be re-registered in the name of the Trust as a result of an in-kind purchase order pursuant to local law or market convention, restricted under the securities laws or not eligible for trading by an Authorized Participant or the investor for which it is acting. In such cases where the Trust makes Market Purchases (as defined below) because a Deposit Security may not be permitted to be re-registered in the name of the Trust as a result of an in-kind creation order pursuant to local law or market convention, or for other reasons, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value at which the securities were purchased by the Trust and the cash in lieu amount (which amount, at the Advisers’ discretion, may be capped), applicable registration fees and taxes. Brokerage commissions incurred in connection with the Trust’s acquisition of Deposit Securities may be at the expense of each Fund and, to the extent such commissions are at the expense of a Fund, will affect the value of all Shares of the Fund, but the Advisers may adjust the transaction fee to protect ongoing shareholders.
Each Administrator, through the NSCC, also makes available on each Business Day the estimated Cash Component effective through and including the previous Business Day, per outstanding Shares of the Fund.
Procedures for Creation of Creation Units
To be eligible to place orders with the Distributor to create Creation Units of the Funds, an entity or person must be an “Authorized Participant” which is a member or participant of a clearing agency registered with the SEC, which has a written agreement with a Fund that allows the Authorized Participant to place orders for the purchase and redemption of Creation Units (as it may be amended from time to time in accordance with its terms) (“Participant Agreement”).
All orders to create Creation Units, whether through the Clearing Process or outside the Clearing Process, must be received by the Distributor no later than the closing time of the regular trading session on the NYSE (“Closing Time”) (ordinarily 4:00 p.m., Eastern time) on the date such order is placed in order for creation of Creation Units to be effected based on the NAV of a Fund as determined on such date. The Business Day on which a creation order (or order to redeem as discussed below) is placed is herein referred to as the “Transmittal Date.” Orders must be transmitted by telephone or other transmission method acceptable to the Distributor, as generally described below (see “—Placement of Creation Orders Using Clearing Process”). Severe economic or market disruptions or changes, or telephone or other communication failure, may impede the ability to reach the Distributor or an Authorized Participant.
In connection with all orders to create Creation Units for certain Funds that invest in markets that require prefunding (including, for example, the China Funds), the Authorized Participant will be required to post collateral with the Trust consisting of cash in an amount up to 115% of the net asset value of the Funds’ shares included in the order. The cash collateral will be used to cover creation transaction fees and as collateral for securities which were not available for purchase. The Trust will return any unused portion of the collateral to the Authorized Participant.
Creation Units may be created in advance of the receipt by the Trust of all or a portion of the Fund Deposit. In such cases, the Authorized Participant will remain liable for the full deposit of the missing portion(s) of the Fund Deposit and will be required to post collateral with the Trust consisting of cash at least equal to a percentage of the marked-to-market value of such missing portion(s). The Trust may use such collateral to buy the missing portion(s) of the Fund Deposit at any time and will subject such Authorized Participant to liability for any shortfall between the cost to the Trust of purchasing such securities and the value of such collateral. The Trust will have no liability for any such shortfall. The Trust will return any unused portion of the collateral to the Authorized Participant once the entire Fund Deposit has been properly received by the Distributor and deposited into the Trust.
Orders to create Creation Units of a Fund shall be placed with an Authorized Participant, as applicable, in the form required by such Authorized Participant. Investors should be aware that their particular broker may not have executed a Participant Agreement, and that, therefore, orders to create Creation Units of the Funds may have to be placed by the investor’s broker through an Authorized Participant who has executed a Participant Agreement. At any given time there may be only a limited number of broker-dealers that have executed a Participant Agreement. Those placing orders to create Creation Units of a Fund through the Clearing Process should afford sufficient time to permit proper submission of the order to the Distributor prior to the Closing Time on the Transmittal Date.
Orders for creation that are effected outside the Clearing Process are likely to require transmittal by the Authorized Participant earlier on the Transmittal Date than orders effected using the Clearing Process. Those persons placing orders outside the Clearing Process should ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire system by contacting the operations department of the broker or depository institution effectuating such transfer of Deposit Securities and Cash Component.
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Orders to create Creation Units of certain Funds may be placed through the Clearing Process utilizing procedures applicable to funds holding domestic securities (“Domestic Funds”) (see “—Placement of Creation Orders Using Clearing Process”) or outside the Clearing Process utilizing the procedures applicable to either Domestic Funds or funds holding foreign securities (“Foreign Funds”) (see “—Placement of Creation Orders Outside Clearing Process—Domestic Funds” and “—Placement of Creation Orders Outside Clearing Process—Foreign Funds”). In the event that a Fund includes both domestic and foreign securities, the time for submitting orders is as stated in the “Placement of Creation Orders Outside Clearing Process—Foreign Funds” and “Placement of Redemption Orders Outside Clearing Process—Foreign Funds” sections below shall operate.
Placement of Creation Orders Using Clearing Process
Fund Deposits created through the Clearing Process, if available, must be delivered through an Authorized Participant that has executed a Participant Agreement.
The Participant Agreement authorizes the Distributor to transmit to NSCC on behalf of the Authorized Participant such trade instructions as are necessary to effect the Authorized Participant’s creation order. Pursuant to such trade instructions from the Distributor to NSCC, the Authorized Participant agrees to transfer the requisite Deposit Securities (or contracts to purchase such Deposit Securities that are expected to be delivered in a “regular way” manner) and the Cash Component to the Trust by the prescribed settlement date. An order to create Creation Units of a Fund through the Clearing Process is deemed received by the Distributor on the Transmittal Date if (i) such order is received by the Distributor not later than the Closing Time on such Transmittal Date and (ii) all other procedures set forth in the Participant Agreement are properly followed. The delivery of Creation Units so created will occur by the prescribed settlement date.
Placement of Creation Orders Outside Clearing Process—Domestic Funds
Fund Deposits created outside the Clearing Process must be delivered through an Authorized Participant that has executed a Participant Agreement. An Authorized Participant who wishes to place an order creating Creation Units of the Funds to be effected outside the Clearing Process must state in such order that the Authorized Participant is not using the Clearing Process and that the creation of Creation Units will instead be effected through a transfer of securities and cash. The Fund Deposit transfer must be ordered by the Authorized Participant in a manner so as to ensure the timely delivery of the requisite amounts of Deposit Securities through DTC to the account of the Trust.
All questions as to the amounts of Deposit Securities to be delivered, and the validity, form and eligibility (including time of receipt) for the deposit of any tendered securities, will be determined by the Trust, whose determination shall be final and binding. The cash equal to the Cash Component must be transferred directly to the Distributor through the Federal Reserve wire system in a timely manner. An order to create Creation Units of a Fund outside the Clearing Process is deemed received by the Distributor on the Transmittal Date if (i) such order is received by the Distributor not later than the Closing Time on such Transmittal Date; and (ii) all other procedures set forth in the Participant Agreement are properly followed. However, if the Distributor does not receive both the requisite Deposit Securities and the Cash Component in a timely fashion, such order may be cancelled. Upon written notice to the Distributor, such cancelled order may be resubmitted the following Business Day using the Fund Deposit as newly constituted to reflect the current NAV of the applicable Fund. The delivery of Creation Units so created will occur by the prescribed settlement date.
Additional transaction fees may be imposed with respect to transactions effected outside the Clearing Process (through an Authorized Participant) and in circumstances in which any cash can be used in lieu of Deposit Securities to create Creation Units. (See “Creation Transaction Fee” section below.)
Placement of Creation Orders Outside Clearing Process—Foreign Funds
The Distributor will inform the Transfer Agent, the Advisers and the Custodian upon receipt of a Creation Order. The Custodian will then provide such information to the appropriate sub-custodian. The Custodian will cause the sub-custodian of such Fund to maintain an account into which the Deposit Securities (or the cash value of all or part of such securities or “cash in lieu” amount) will be delivered. Deposit Securities must be delivered to an account maintained at the applicable local custodian. The Trust must also receive, on or before the contractual settlement date, immediately available or same day funds estimated by the Custodian to be sufficient to pay the Cash Component next determined after receipt in proper form of the purchase order, together with the creation transaction fee described below.
Once the Transfer Agent has accepted a creation order, the Transfer Agent will confirm the issuance of a Creation Unit of a Fund against receipt of payment, at such NAV as will have been calculated after receipt in proper form of such order. The Transfer Agent will then transmit a confirmation of acceptance of such order.
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Creation Units will not be issued until the transfer of good title to the Trust of the Deposit Securities and the payment of the Cash Component have been completed. When the sub-custodian has confirmed to the Custodian that the required Deposit Securities (or the cash value thereof) have been delivered to the account of the relevant sub-custodian, the Distributor and the applicable Adviser will be notified of such delivery and the Transfer Agent will issue and cause the delivery of the Creation Units.
Acceptance of Creation Orders
The Trust reserves the right to reject a creation order transmitted to it by the Distributor, including but not limited to the following: (a) the order is not in proper form; (b) the creator or creators, upon obtaining the Shares, would own 80% or more of the currently outstanding Shares of a Fund; (c) the Deposit Securities delivered are not as specified by the Administrators, as described above; (d) the acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; or (e) in the event that circumstances outside the control of the Trust, the Distributor and the Advisers make it for all practical purposes impossible to process creation orders. Examples of such circumstances include, without limitation, acts of God or public service or utility problems such as earthquakes, fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; wars; civil or military disturbances, including acts of civil or military authority or governmental actions; terrorism; sabotage; epidemics; riots; labor disputes; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Trust, the Advisers, the Distributor, DTC, the NSCC or any other participant in the creation process, and similar extraordinary events. The Transfer Agent will notify an Authorized Participant if an order is rejected. The Trust, the Custodian, any sub-custodian, the Distributor and the Transfer Agent are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits to Authorized Participants nor shall any of them incur any liability to Authorized Participants for the failure to give any such notification.
All questions as to the amounts of the Deposit Securities and the validity, form, eligibility and acceptance for deposit of any securities to be delivered shall be determined by the Trust, and the Trust’s determination shall be final and binding.
Creation Transaction Fee
A standard (fixed) creation transaction fee for each Fund payable to the Custodian, in the amount set forth in the table found under the “General Description of the Trust - Creation and Redemption Features” section of this SAI, is imposed on each creation transaction regardless of the number of Creation Units purchased in the transaction. However, the Custodian may increase the standard (fixed) creation transaction fee for administration and settlement of non-standard orders requiring additional administrative processing by the Custodian.
In addition, a variable charge for cash creations or for creations outside the Clearing Process may be imposed. In the case of cash creations or where the Trust permits or requires a creator to substitute cash in lieu of depositing a portion of Deposit Securities, the creator may be assessed an additional variable charge to compensate the Funds for the costs associated with purchasing the applicable securities. (See “Fund Deposit” section above.) As a result, in order to seek to replicate the in-kind creation order process, the Trust expects to purchase, in the secondary market or otherwise gain exposure to, the portfolio securities that could have been delivered as a result of an in-kind creation order pursuant to local law or market convention, or for other reasons (“Market Purchases”). In such cases where the Trust makes Market Purchases, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value at which the securities and/or financial instruments were purchased by the Trust and the cash in lieu amount (which amount, at the Adviser’s discretion, may be capped), the costs associated with certain derivative transactions, applicable registration fees, brokerage commissions and certain taxes. An Adviser may adjust the transaction fee to the extent the composition of the creation securities changes or cash in lieu is added to the Cash Component to protect ongoing shareholders. Creators of Creation Units are responsible for the costs of transferring the securities constituting the Deposit Securities to the account of the Trust. Each Fund may adjust or waive all or a portion of its creation transaction fee (including both the fixed and variable components) from time to time.
Redemption of Creation Units
Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Distributor, only on a Business Day and only through an Authorized Participant who has executed a Participant Agreement. The Trust will not redeem Shares in amounts less than Creation Units. Beneficial Owners also may sell Shares in the secondary market, but must accumulate enough Shares to constitute a Creation Unit in order to have such Shares redeemed by the Trust. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of Shares to constitute a redeemable Creation Unit. See, with respect to each
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Fund, the section entitled “Summary Information—Principal Risks of Investing in the Fund” and “Additional Information About the Funds’ Investment Strategies and Risks—Risks of Investing in the Funds” in the Prospectus.
The Fund Securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) are made available by each Administrator, through NSCC, prior to the opening of business on the NYSE (currently 9:30 a.m., Eastern Time) on each day that the NYSE is open for business. An Authorized Participant submitting a redemption request is deemed to make certain representations to the Trust. The Trust reserves the right to verify these representations at its discretion, and will typically require verification with respect to a redemption request from the Fund in connection with higher levels of redemption activity and/or short interest in the Fund. If the Authorized Participant, upon receipt of a verification request, does not provide sufficient verification of its representations as determined by the Trust, the redemption request will not be considered to have been received in proper form, and may be rejected by the Trust.
With respect to Funds that are redeemed in kind (as denoted in the “General Description of the Trust—Creation and Redemption Features” section of this SAI), the redemption proceeds for a Creation Unit generally consist of Fund Securities as announced by the relevant Administrator on the Business Day of the request for redemption, plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities, less the redemption transaction fee and variable fees described below. Should the Fund Securities have a value greater than the NAV of the Shares being redeemed, a compensating cash payment to the Trust equal to the differential plus the applicable redemption transaction fee will be required to be arranged for by or on behalf of the redeeming shareholder. Due to various legal and operational constraints in certain countries in which certain Funds invest, Creation Units of these Funds as set forth in the table under the heading “Creation and Redemption Features” are issued partially or principally for cash. Each Fund reserves the right to honor a redemption request by delivering a basket of securities or cash that differs from the Fund Securities. For the avoidance of doubt, such basket would not include any digital assets.
Redemption Transaction Fee
The standard (fixed) redemption transaction fee for each Fund payable to the Custodian, in the amount set forth in the chart found under the “General Description of the Trust - Creation and Redemption Features” section of this SAI, is imposed on each redemption transaction regardless of the number of Creation Units redeemed in the transaction. However, the Custodian may increase the standard (fixed) redemption transaction fee for administration and settlement of non-standard orders requiring additional administrative processing by the Custodian.
In addition, a variable charge for cash redemptions or redemptions outside the Clearing Process may be imposed. In the case of cash redemptions or partial cash redemptions (when cash redemptions are permitted or required for a Fund), an additional variable charge may also be imposed to compensate each applicable Fund for the costs associated with selling the applicable securities. As a result, in order to seek to replicate the in-kind redemption order process, the Trust expects to sell, in the secondary market, the portfolio securities or settle any financial instruments that may not be permitted to be re-registered in the name of the Authorized Participant as a result of an in-kind redemption order pursuant to local law or market convention, or for other reasons (“Market Sales”). In such cases where the Trust makes Market Sales, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value at which the securities and/or financial instruments were sold or settled by the Trust and the cash in lieu amount (which amount, at the Adviser’s discretion, may be capped), the costs associated with certain derivatives transactions, applicable registration fees, brokerage commissions and certain taxes (“Transaction Costs”). An Adviser may adjust the transaction fee to the extent the composition of the redemption securities changes or cash in lieu is added to the Cash Component to protect ongoing shareholders. In no event will the variable fees charged by a Fund in connection with a redemption exceed 2% of the value of each Creation Unit. Investors who use the services of a broker or other such intermediary may be charged a fee for such services. To the extent a Fund cannot recoup the amount of Transaction Costs incurred in connection with a redemption from the redeeming shareholder because of the 2% cap or otherwise, those Transaction Costs will be borne by the Fund’s remaining shareholders and negatively affect the Fund’s performance. Each Fund may adjust or waive all or a portion of its redemption transaction fee (including both the fixed and variable components) from time to time.
Portfolio Trading by Authorized Participants
When creation or redemption transactions consist of cash, the transactions may require a Fund to contemporaneously transact with broker-dealers for purchases or sales of portfolio securities, as applicable. Depending on the timing of the transactions and certain other factors, such transactions may be placed with the purchasing or redeeming Authorized Participant in its capacity as a broker-dealer or with its affiliated broker-dealer and conditioned upon an agreement with the Authorized Participant or its affiliated broker-dealer to transact at guaranteed prices in order to reduce transaction costs incurred as a consequence of settling creations or redemptions in cash rather than in-kind.
Specifically, following a Fund’s receipt of a creation or redemption order, to the extent such purchases or redemptions consist of a cash portion, the Fund may enter an order with the Authorized Participant or its affiliated broker-dealer to purchase or sell the portfolio securities, as applicable. Such Authorized Participant or its affiliated broker-dealer will
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be required to guarantee that the Fund will achieve execution of its order at a price at least as favorable to the Fund as the Fund’s valuation of the portfolio securities used for purposes of calculating the NAV applied to the creation or redemption transaction giving rise to the order. Whether the execution of the order is at a price at least as favorable to the Fund will depend on the results achieved by the executing firm and will vary depending on market activity, timing and a variety of other factors.
If the broker-dealer executing the order achieves executions in market transactions at a price more favorable than the Funds’ valuation of the Deposit Securities, then the Authorized Participant generally may retain the benefit of the favorable executions, and the Funds will return to the Authorized Participant the execution performance deposit. If, however, the broker-dealer executing the order is unable to achieve executions in market transactions at a price at least equal to the Fund’s valuation of the securities, the Funds retain the portion of the execution performance deposit equal to the full amount of the execution shortfall (including any taxes, brokerage commissions or other costs) and may require the Authorized Participant to deposit any additional amount required to cover the full amount of the actual execution performance guarantee.
Placement of Redemption Orders Using Clearing Process
Orders to redeem Creation Units of a Fund through the Clearing Process, if available, must be delivered through an Authorized Participant that has executed a Participant Agreement. An order to redeem Creation Units of a Fund using the Clearing Process is deemed received on the Transmittal Date if (i) such order is received by the Transfer Agent not later than 4:00 p.m., Eastern time on such Transmittal Date; and (ii) all other procedures set forth in the Participant Agreement are properly followed; such order will be effected based on the NAV of the applicable Fund as next determined. An order to redeem Creation Units of a Fund using the Clearing Process made in proper form but received by the Fund after 4:00 p.m., Eastern time, will be deemed received on the next Business Day immediately following the Transmittal Date. The requisite Fund Securities (or contracts to purchase such Fund Securities which are expected to be delivered in a “regular way” manner) and the applicable cash payment will be transferred by the prescribed settlement date.
Placement of Redemption Orders Outside Clearing Process—Domestic Funds
Orders to redeem Creation Units of a Fund outside the Clearing Process must be delivered through an Authorized Participant that has executed a Participant Agreement. An Authorized Participant who wishes to place an order for redemption of Creation Units of a Fund to be effected outside the Clearing Process must state in such order that the Authorized Participant is not using the Clearing Process and that redemption of Creation Units of the Fund will instead be effected through transfer of Creation Units of the Fund directly through DTC. An order to redeem Creation Units of a Fund outside the Clearing Process is deemed received by the Transfer Agent on the Transmittal Date if (i) such order is received by the Transfer Agent not later than 4:00 p.m. Eastern time on such Transmittal Date; (ii) such order is preceded or accompanied by the requisite number of Shares of Creation Units specified in such order, which delivery must be made through DTC to the Transfer Agent, on such Transmittal Date; and (iii) all other procedures set forth in the Participant Agreement are properly followed.
After the Transfer Agent has deemed an order for redemption outside the Clearing Process received, the Transfer Agent will initiate procedures to transfer the requisite Fund Securities (or contracts to purchase such Fund Securities) and the cash redemption payment to the redeeming Beneficial Owner by the prescribed settlement date. An additional variable redemption transaction fee may also be imposed.
Placement of Redemption Orders Outside Clearing Process—Foreign Funds
Arrangements satisfactory to the Trust must be in place for the Authorized Participant to transfer the Creation Units through DTC on or before the settlement date. Redemptions of Shares for Fund Securities will be subject to compliance with applicable U.S. federal and state securities laws and a Fund reserves the right to redeem Creation Units for cash to the extent that the Funds could not lawfully deliver specific Fund Securities upon redemptions or could not do so without first registering the Deposit Securities under such laws.
In connection with taking delivery of Shares for Fund Securities upon redemption of Creation Units, a redeeming shareholder or entity acting on behalf of a redeeming shareholder must maintain appropriate custody arrangements with a qualified broker-dealer, bank or other custody providers in each jurisdiction in which any of the Fund Securities are customarily traded, to which account such Fund Securities will be delivered. If neither the redeeming shareholder nor the entity acting on behalf of a redeeming shareholder has appropriate arrangements to take delivery of the Fund Securities in the applicable foreign jurisdiction and it is not possible to make other such arrangements, or if it is not possible to effect deliveries of the Fund Securities in such jurisdictions, the Trust may, in its discretion, exercise its option to redeem such Shares in cash, and the redeeming shareholder will be required to receive its redemption proceeds in cash.
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Due to the schedule of holidays in certain countries or for other reasons, however, the delivery of redemption proceeds may take longer than the normal settlement periods. In such cases, the local market settlement procedures will not commence until the end of the local holiday periods. Each of VanEck India Growth Leaders ETF and VanEck China Bond ETF generally intends to settle redemption transactions on the third (3rd) Business Day following the date on which such request for redemption is deemed received date (“T+3”).
The Funds may effect deliveries of Creation Units and redemption proceeds on a basis other than as described above in order to accommodate local holiday schedules, to account for different treatment among foreign and U.S. markets of dividend record dates and ex-dividend dates or under certain other circumstances. If in-kind creations are permitted or required by the Fund, the ability of the Trust to effect in-kind creations and redemptions as described above, of receipt of an order in good form is subject to, among other things, the condition that, within the time period from the date of the order to the date of delivery of the securities, there are no days that are holidays in the applicable foreign market.
For every occurrence of one or more intervening holidays in the applicable non-U.S. market that are not holidays observed in the U.S. equity market, the redemption settlement cycle may be extended by the number of such intervening holidays. In addition to holidays, other unforeseeable closings in a non-U.S. market due to emergencies may also prevent the Foreign Funds from delivering securities within the normal settlement period.
The securities delivery cycles currently practicable for transferring portfolio securities to redeeming investors, coupled with non-U.S. market holiday schedules, will require a delivery process longer than seven calendar days, in certain circumstances. In such cases, the local market settlement procedures will not commence until the end of the local holiday periods. The timing of settlement may also be affected by the proclamation of new holidays, the treatment by market participants of certain days as “informal holidays” (e.g., days on which no or limited securities transactions occur, as a result of substantially shortened trading hours), the elimination of existing holidays or changes in local securities delivery practices.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction with the section in each Fund’s Prospectus entitled “Shareholder Information—Determination of NAV.”
The NAV per Share for each Fund is computed by dividing the value of the net assets of the Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding. Expenses and fees, including the management fee, are accrued daily and taken into account for purposes of determining NAV. The NAV of each Fund is determined each business day as of the close of trading (ordinarily 4:00 p.m., Eastern time) on the New York Stock Exchange.
The values of each Fund’s portfolio securities are based on the securities’ closing prices on the markets on which the securities trade, when available. Due to the time differences between the United States and certain countries in which certain Funds invest, securities on these exchanges may not trade at times when Shares of the Fund will trade. In the absence of a last reported sales price, or if no sales were reported, and for other assets for which market quotes are not readily available, values may be based on quotes obtained from a quotation reporting system, established market makers or by an outside independent pricing service. Debt instruments with remaining maturities of more than 60 days are valued at the evaluated mean price provided by an outside independent pricing service. If an outside independent pricing service is unable to provide a valuation, the instrument is valued at the mean of the highest bid and the lowest asked quotes obtained from one or more brokers or dealers selected by the Advisers. Prices obtained by an outside independent pricing service may use information provided by market makers or estimates of market values obtained from yield data related to investments or securities with similar characteristics and may use a computerized grid matrix of securities and its evaluations in determining what it believes is the fair value of the portfolio securities. Short-term debt instruments having a maturity of 60 days or less are valued at amortized cost. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources. If a market quotation for a security or other asset is not readily available or the Advisers believe it does not otherwise accurately reflect the market value of the security or asset at the time a Fund calculates its NAV, the security or asset will be fair valued by each Adviser in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees. Each Fund may also use fair value pricing in a variety of circumstances, including but not limited to, situations when the value of a security in the Fund’s portfolio has been materially affected by events occurring after the close of the market on which the security is principally traded (such as a corporate action or other news that may materially affect the price of a security) or trading in a security has been suspended or halted. In addition, each Fund that holds foreign equity securities currently expects that it will fair value certain of the foreign equity securities held by the Fund each day the Fund calculates its NAV, except those securities principally traded on exchanges that close at the same time the Fund calculates its NAV.
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Accordingly, a Fund’s NAV may reflect certain portfolio securities’ fair values rather than their market prices at the time the exchanges on which they principally trade close. Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security or other asset is materially different than the value that could be realized upon the sale of such security or asset. In addition, for certain Funds, fair value pricing could result in a difference between the prices used to calculate a Fund’s NAV and the prices used by such Fund’s Index. This may adversely affect certain Fund’s ability to track its Index. With respect to securities that are principally traded on foreign exchanges, the value of a Fund’s portfolio securities may change on days when you will not be able to purchase or sell your Shares.
DIVIDENDS AND DISTRIBUTIONS
The following information supplements and should be read in conjunction with the section in each Fund’s Prospectus entitled “Shareholder Information—Distributions.”
General Policies
Each Fund
Dividends from net investment income, if any, are declared and paid monthly for VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Preferred Securities ex Financials ETF and each Fixed Income Fund, quarterly for each of VanEck BDC Income ETF, VanEck Durable High Dividend ETF, VanEck Energy Income ETF, VanEck Mortgage REIT Income ETF, VanEck Office and Commercial REIT ETF and VanEck Pharmaceutical ETF, and at least annually by each other Fund. Distributions of net realized capital gains, if any, generally are declared and paid once a year, but the Trust may make distributions on a more frequent basis for each Fund to improve its index tracking (for each Fund except VanEck AA-BB CLO ETF, VanEck CLO ETF, VanEck Commodity Strategy ETF, VanEck HIP Sustainable Muni ETF or VanEck Real Assets ETF) or to comply with the distribution requirements of the Internal Revenue Code, in all events in a manner consistent with the provisions of the 1940 Act. It is currently expected that virtually all net income (interest less expenses) will be distributed annually for VanEck Morningstar Global Wide Moat ETF and VanEck Video Gaming and eSports ETF, monthly for VanEck Preferred Securities ex Financials ETF and each Fixed Income Fund and quarterly for VanEck BDC Income ETF, VanEck Durable High Dividend ETF, VanEck Energy Income ETF, VanEck Mortgage REIT Income ETF and VanEck Office and Commercial REIT ETF, while capital gains distributions will generally occur annually in December. In addition, in situations where the Fund acquired investment securities after the beginning of the dividend period, the Fund may elect to distribute at least annually amounts representing the full dividend yield on the underlying portfolio securities of the Funds, net of expenses of the Funds, as if each Fund owned such underlying portfolio securities for the entire dividend period. If the Fund so elects, some portion of each distribution may result in a return of capital, which, for tax purposes, is treated as a return of your investment in Shares.
All Funds
Dividends and other distributions on Shares are distributed, as described below, on a pro rata basis to Beneficial Owners of such Shares. Dividend payments are made through DTC Participants and Indirect Participants to Beneficial Owners then of record with proceeds received from the Trust. With respect to all Funds, the Trust makes additional distributions to the minimum extent necessary (i) to distribute the entire annual taxable income and, with respect to the Equity Income Funds and Fixed Income Funds, net tax-exempt interest income, of the Trust, plus any net capital gains and (ii) to avoid imposition of the excise tax imposed by Section 4982 of the Internal Revenue Code. Management of the Trust reserves the right to declare special dividends if, in its reasonable discretion, such action is necessary or advisable to preserve the status of each Fund as a RIC or to avoid imposition of income or excise taxes on undistributed income.
DIVIDEND REINVESTMENT SERVICE
No reinvestment service is provided by the Trust. Broker-dealers may make available the DTC book-entry Dividend Reinvestment Service for use by Beneficial Owners of the Funds through DTC Participants for reinvestment of their dividend distributions. If this service is used, dividend distributions of both income and realized gains will be automatically reinvested in additional whole Shares of the Funds. Beneficial Owners should contact their broker to determine the availability and costs of the service and the details of participation therein. Brokers may require Beneficial Owners to adhere to specific procedures and timetables. Distributions reinvested in additional Shares of the Funds will nevertheless be taxable to Beneficial Owners acquiring such additional Shares to the same extent as if such distributions had been received in cash.
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CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of the date of this SAI, no entity beneficially or of record owned any voting securities of VanEck Alternative Asset Manager ETF.
Although the Trust does not have information concerning the beneficial ownership of shares held in the names of DTC Participants, the name and percentage ownership of each DTC Participant that owned of record 5% or more of the outstanding Shares of a Fund, as of the dates indicated, were as follows:
| Date | Fund | Fiscal Year End | Name and Address of Owner of Record | Percentage of Class of Fund Owned | ||||||||||
| December 31, 2024 | VanEck Biotech ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 17.45% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 13.45% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 8.18% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 8.02% | |||||||||||||
| Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 5.54% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 5.28% | |||||||||||||
| December 31, 2024 | VanEck Commodity Strategy ETF | September 30 | State Street Bank & Trust/ State Street TOTAL ETF P.O. BOX 1631 Boston, MA 02105-1631 | 71.38% | ||||||||||
BOFA Securities, Inc. One Bryant Park New York, NY 10036 | 15.48% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 10.42% | |||||||||||||
| December 31, 2024 | VanEck Digital Transformation ETF | September 30 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 18.22% | ||||||||||
| JP Morgan Chase Bank, National Associate 14201 Dallas PKWY Floor 12 Dallas, TX 75254 | 17.89% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 14.06% | |||||||||||||
| LPL Financial Corp. 9785 Towne Center Drive San Diego, CA 92121-1968 | 9.19% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 5.41% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 5.05% | |||||||||||||
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December 31, 2024 | VanEck Durable High Dividend ETF | September 30 | Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 20.58% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 19.70% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 13.09% | |||||||||||||
| LPL Financial Corp. 9785 Towne Center Drive San Diego, CA 92121-1968 | 12.87% | |||||||||||||
| State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 10.72% | |||||||||||||
| Raymond James & Associates Inc. 880 Carilion Parkway Saint Petersburg, FL 33716 | 5.94% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 5.28% | |||||||||||||
| December 31, 2024 | VanEck Energy Income ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 31.92% | ||||||||||
| State Street Bank & Trust/ State Street TOTAL ETF P.O. BOX 1631 Boston, MA, 02105-1631 | 16.76% | |||||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 12.00% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 7.66% | |||||||||||||
| LPL Financial Corp. 9785 Towne Center Drive San Diego, CA 92121-1968 | 7.34% | |||||||||||||
| December 31, 2024 | VanEck Environmental Services ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 21.32% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 13.30% | |||||||||||||
| American Enterprise Investment Service 901 3rd Ave South Minneapolis, MN 55474 | 10.67% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 9.87% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 6.40% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 5.26% | |||||||||||||
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| December 31, 2024 | VanEck Fabless Semiconductor ETF | September 30 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 32.31% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 30.18% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 7.55% | |||||||||||||
| Wells Fargo Clearing Services, LLC 2801 Market Street H0006-09B St. Louis, Missouri 63103 | 5.77% | |||||||||||||
| December 31, 2024 | VanEck Gaming ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 20.88% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 16.70% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 13.04% | |||||||||||||
December 31, 2024 | VanEck Green Infrastructure ETF | September 30 | Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 61.30% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 14.27% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA 94104 | 7.86% | |||||||||||||
| Vanguard Marketing Corp. 100 Vanguard Blvd Malvern, PA 19355 | 6.66% | |||||||||||||
| December 31, 2024 | VanEck Long/Flat Trend ETF | September 30 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 27.70% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 20.05% | |||||||||||||
| LPL Financial Corp. 9785 Towne Center Drive San Diego, CA 92121-1968 | 16.41% | |||||||||||||
| Raymond James & Associates Inc. 880 Carillon Parkway Saint Petersburg, FL 33716 | 16.25% | |||||||||||||
| December 31, 2024 | VanEck Morningstar ESG Moat ETF | September 30 | RBC Capital Markets Corporation 1 Liberty Street New York, NY 10006 | 33.03% | ||||||||||
| State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 22.22% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 20.36% | |||||||||||||
| Pershing LLC One Pershing Plaza Jersey City, NJ 07399 | 7.18% | |||||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 5.70% | |||||||||||||
87
| December 31, 2024 | VanEck Morningstar Global Wide Moat ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 52.24% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 10.49% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 8.10% | |||||||||||||
| J.P. Morgan Clearing Corp. 3 Chase Metrotech Center, Proxy Dept./NY1-H034 Brooklyn, NY 11245-0001 | 7.89% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 7.23% | |||||||||||||
| November 30, 2024 | VanEck Morningstar International Moat ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 20.75% | ||||||||||
Robert W. Baird & Co., Inc. 777 East Wisconsin Avenue Milwaukee, WI 53202 | 19.07% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 15.16% | |||||||||||||
| Raymond James & Associates Inc. 880 Carillon Parkway Saint Petersburg, FL 33716 | 8.71% | |||||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 6.52% | |||||||||||||
The Northern Trust Company/United Nation 801 S Canal Street Chicago, IL 60607 | 6.43% | |||||||||||||
| December 31, 2024 | VanEck Morningstar SMID Moat ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 29.92% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 25.23% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego, CA 92121-1968 | 11.03% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 7.90% | |||||||||||||
| Raymond James & Associates Inc. 880 Carillon Parkway Saint Petersburg, FL 33716 | 5.72% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 5.02% | |||||||||||||
88
| December 31, 2024 | VanEck Morningstar Wide Moat ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 23.04% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 16.36% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 7.63% | |||||||||||||
| Edward D. Jones & Co. 12555 Manchester Road St. Louis, MO 63131 | 6.93% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 6.72% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego, CA 92121-1968 | 6.64% | |||||||||||||
| Raymond James & Associates Inc. 880 Carillon Parkway Saint Petersburg, FL 33716 | 5.83% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 5.36% | |||||||||||||
| December 31, 2024 | VanEck Morningstar Wide Moat Growth ETF | September 30 | Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 50.98% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 18.80% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 16.80% | |||||||||||||
| December 31, 2024 | VanEck Morningstar Wide Moat Value ETF | September 30 | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 83.33% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 5.06% | |||||||||||||
| December 31, 2024 | VanEck Pharmaceutical ETF | Charles Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA 94104 | 18.86% | |||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 17.80% | |||||||||||||
| The Bank of New York Mellon One Wall Street, 5th Floor New York, NY 10286-0001 | 10.83% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 6.78% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II, Jersey City, NJ 07311 | 5.16% | |||||||||||||
89
| December 31, 2024 | VanEck Real Assets ETF | September 30 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 37.33% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 24.20% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 18.07% | |||||||||||||
| Raymond James & Associates Inc. 880 Carilion Parkway Saint Petersburg, FL 33716 | 8.50% | |||||||||||||
| December 31, 2024 | VanEck Retail ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 27.31% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 17.58% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego, CA 92121-1968 | 12.39% | |||||||||||||
| Pershing LLC One Pershing Plaza Jersey City, NJ 07399 | 8.26% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 7.73% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II, Jersey City, NJ 07311 | 6.30% | |||||||||||||
| December 31, 2024 | VanEck Robotics ETF | September 30 | J.P. Morgan Clearing Corp. 3 Chase Metrotech Center, Proxy Dept./NY1-H034 Brooklyn, NY 11245-0001 | 22.91% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 19.94% | |||||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 15.92% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 7.95% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II, Jersey City, NJ 07311 | 5.64% | |||||||||||||
| December 31, 2024 | VanEck Semiconductor ETF | September 30 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 16.07% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 16.01% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 14.25% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 5.90% | |||||||||||||
90
| December 31, 2024 | VanEck Social Sentiment ETF | September 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 29.35% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 19.30% | |||||||||||||
| Robinhood Securities LLC 85 Willow Road Menlo Park, CA 94025 | 10.82% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 10.66% | |||||||||||||
| December 31, 2024 | VanEck Video Gaming and eSports ETF | September 30 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.97% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 11.77% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 11.15% | |||||||||||||
| Euroclear Bank SA Boulevard du Rio Alvert II Brussels,Bruxelles-Capitale, 1210 | 10.13% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 6.41% | |||||||||||||
| March 31, 2025 | VanEck AA-BB CLO ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 38.67% | ||||||||||
| The Northern Trust Company/United Nation 801 S Canal Street Chicago, IL 60607 | 24.77% | |||||||||||||
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 10.50% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 5.59% | |||||||||||||
Folionfn Investments, Inc. 8180 Greenboro Drive, 8th Floor McLean, VA 22102 | 5.12% | |||||||||||||
91
| March 31, 2025 | VanEck Africa Index ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 17.79% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 17.08% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 10.39% | |||||||||||||
| J.P. Morgan Chase Bank, National Associate 14201 Dallas Parkway, Floor 12 Dallas, TX 75254 | 7.28% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 6.83% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 6.53% | |||||||||||||
| March 31, 2025 | VanEck Agribusiness ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 15.76% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.32% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 7.90% | |||||||||||||
| State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 6.92% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 5.79% | |||||||||||||
| March 31, 2025 | VanEck BDC Income ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 22.83% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 16.71% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 10.43% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 5.99% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 5.63% | |||||||||||||
92
| March 31, 2025 | VanEck Brazil Small-Cap ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 21.09% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 14.20% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 11.30% | |||||||||||||
| Vanguard Marketing Corp. 100 Vanguard Blvd Malvern, PA 19355 | 8.87% | |||||||||||||
BOFA Securities, Inc. One Bryant Park New York, NY 10036 | 8.08% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 6.39% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 5.06% | |||||||||||||
| March 31, 2025 | VanEck China Bond ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 23.55% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 15.56% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 13.28% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 7.76% | |||||||||||||
| Vanguard Marketing Corp. 100 Vanguard Blvd Malvern, PA 19355 | 5.64% | |||||||||||||
| Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 5.31% | |||||||||||||
| March 31, 2025 | VanEck ChiNext ETF | December 31 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 17.76% | ||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 13.91% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 11.69% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 9.90% | |||||||||||||
| Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 6.71% | |||||||||||||
93
| March 31, 2025 | VanEck CLO ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 41.11% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 24.54% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 8.64% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 5.53% | |||||||||||||
| The Northern Trust Company/United Nation 801 S Canal Street Chicago, IL 60607 | 5.07% | |||||||||||||
| March 31, 2025 | VanEck CMCI Commodity Strategy ETF | December 31 | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 60.00% | ||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 15.73% | |||||||||||||
| J.P. Morgan Clearing Corp. 3 Chase Metrotech Center, Proxy Dept./NY1-H034 Brooklyn, NY 11245-0001 | 9.03% | |||||||||||||
| March 31, 2025 | VanEck Digital India ETF | December 31 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 21.79% | ||||||||||
| Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 21.19% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 15.27% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 9.12% | |||||||||||||
| BOFA Securities Inc. One Bryant Park New York, NY 10036 | 6.51% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 5.04% | |||||||||||||
| March 31, 2025 | VanEck Gold Miners ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 16.32% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.65% | |||||||||||||
| J.P. Morgan Chase Bank, National Associate 14201 Dallas Parkway, Floor 12 Dallas, TX 75254 | 9.02% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 7.85% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 6.55% | |||||||||||||
94
| March 31, 2025 | VanEck Green Metals ETF | December 31 | Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 47.86% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 15.05% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 12.34% | |||||||||||||
| March 31, 2025 | VanEck India Growth Leaders ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 19.44% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 15.55% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 9.56% | |||||||||||||
| Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 6.59% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 6.37% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 5.50% | |||||||||||||
| March 31, 2025 | VanEck Indonesia Index ETF | December 31 | J.P. Morgan Chase Bank, National Associate 14201 Dallas Parkway, Floor 12 Dallas, TX 75254 | 14.42% | ||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 13.64% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 12.25% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.87% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 10.56% | |||||||||||||
| Brown Brothers Harriman & Co. 50 Milk Street Boston, MA 02109 | 5.58% | |||||||||||||
Stifel Nicolaus & Co., Inc, 501 N Broadway Street St. Louis, MO 63102 | 5.58% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 5.10% | |||||||||||||
95
| March 31, 2025 | VanEck International High Yield Bond ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 31.84% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 10.77% | |||||||||||||
| J.P. Morgan Chase Bank, National Associate 14201 Dallas Parkway, Floor 12 Dallas, TX 75254 | 5.37% | |||||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 5.12% | |||||||||||||
| March 31, 2025 | VanEck Israel ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 30.99% | ||||||||||
| RBC Dominion Securities Inc./CDS 200 Bay Street Toronto, ON M5J 2J5 Canada | 15.05% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 10.34% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 8.44% | |||||||||||||
| The Huntington National Bank 7 Easton Oval Columbus, OH 43219 | 6.02% | |||||||||||||
| March 31, 2025 | VanEck J.P. Morgan EM Local Currency Bond ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 21.14% | ||||||||||
| UBS Financial Services Inc. 1000 Harbor Boulevard, Weehawken, NJ 07086-6790 | 10.14% | |||||||||||||
| SEI Private Trust Company Co. 1 Freedom Valley Drive Oaks, PA 19456 | 7.97% | |||||||||||||
| Brown Brothers Harriman & Co. 50 Milk Street Boston, MA 02109 | 7.74% | |||||||||||||
| The Bank of New York Mellon One Wall Street, 5th Floor New York, NY 10286-0001 | 7.43% | |||||||||||||
| J.P. Morgan Chase Bank, National Associate 14201 Dallas Parkway, Floor 12 Dallas, TX 75254 | 5.37% | |||||||||||||
| March 31, 2025 | VanEck Junior Gold Miners ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 13.91% | ||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 10.29% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 9.01% | |||||||||||||
| The Bank of New York Mellon One Wall Street, 5th Floor New York, NY 10286-0001 | 6.24% | |||||||||||||
| Morgan Stanley & Co. LLC 1585 Broadway New York, NY 10036 | 5.49% | |||||||||||||
96
| March 31, 2025 | VanEck Low Carbon Energy ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 15.64% | ||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.53% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II, Jersey City, NJ 07311 | 9.67% | |||||||||||||
| Edward D. Jones & Co., 12555 Manchester Road, St. Louis, MO 63131 | 6.31% | |||||||||||||
| State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 6.27% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 5.63% | |||||||||||||
| March 31, 2025 | VanEck Mortgage REIT Income ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 26.71% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 20.30% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 6.33% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II, Jersey City, NJ 07311 | 6.13% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 5.23% | |||||||||||||
| March 31, 2025 | VanEck Natural Resources ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 21.80% | ||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 20.77% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 12.51% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 10.99% | |||||||||||||
| American Enterprise Investment Service 901 3rd Ave South Minneapolis, MN 55474 | 7.77% | |||||||||||||
| March 31, 2025 | VanEck Office and Commercial REIT ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 57.85% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 20.05% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12, Tampa, FL 33610 | 5.09% | |||||||||||||
97
| March 31, 2025 | VanEck Oil Refiners ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 27.49% | ||||||||||
| Pershing, LLC One Pershing Plaza Jersey City, NJ 07399 | 15.70% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 12.22% | |||||||||||||
| LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 10.50% | |||||||||||||
| March 31, 2025 | VanEck Oil Services ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 14.52% | ||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12, Tampa, FL 33610 | 12.50% | |||||||||||||
BOFA Securities, Inc. One Bryant Park New York, NY 10036 | 9.25% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 8.62% | |||||||||||||
| J.P. Morgan Chase Bank, National Associate 14201 Dallas Parkway, Floor 12 Dallas, TX 75254 | 7.58% | |||||||||||||
| Merrill Lynch, Pierce, Fenner & Smith Inc 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 6.03% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 5.16% | |||||||||||||
| March 31, 2025 | VanEck Preferred Securities ex Financials ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 42.36% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 14.28% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 6.99% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 5.49% | |||||||||||||
| March 31, 2025 | VanEck Rare Earth and Strategic Metals ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 15.94% | ||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 15.01% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.63% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II Jersey City, NJ 07311 | 11.60% | |||||||||||||
98
| March 31, 2025 | VanEck Russia ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 16.04% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 12.12% | |||||||||||||
| State Street Bank and Trust Company 225 Franklin Street, Boston, MA 02110 | 10.65% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 8.55% | |||||||||||||
| Brown Brothers Harriman & Co. 50 Milk Street Boston, MA 02109 | 5.76% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 5.41% | |||||||||||||
| Goldman, Sachs & Co. 30 Hudson Street, Jersey City, NJ 07302 | 5.33% | |||||||||||||
| March 31, 2025 | VanEck Russia Small-Cap ETF | December 31 | Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 22.06% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 20.38% | |||||||||||||
| Vanguard Marketing Corp. 100 Vanguard Blvd Malvern, PA 19355 | 12.74% | |||||||||||||
| National Financial Services LLC 200 Liberty Street New York, NY 10281 | 9.66% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12, Tampa, FL 33610 | 7.38% | |||||||||||||
| Morgan Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II, Jersey City, NJ 07311 | 5.01% | |||||||||||||
| March 31, 2025 | VanEck Steel ETF | December 31 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 20.37% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 15.05% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 12.59% | |||||||||||||
Raymond James & Associates, Inc. 880 Carilion Parkway St. Petersburg, FL 33716 | 10.19% | |||||||||||||
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| March 31, 2025 | VanEck Uranium and Nuclear ETF | December 31 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 16.42% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 15.82% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 10.15% | |||||||||||||
LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 8.81% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 8.29% | |||||||||||||
| Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 7.33% | |||||||||||||
| March 31, 2025 | VanEck Vietnam ETF | December 31 | Citibank 3801 Citibank Center B/3RD Floor/Zone 12 Tampa, FL 33610 | 19.35% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 14.09% | |||||||||||||
| Interactive Brokers Retail Equity CL 8 Greenwich Office Park Greenwich, CT 06831 | 9.47% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 7.27% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 5.68% | |||||||||||||
| July 31, 2024 | VanEck CEF Muni Income ETF | April 30 | UBS Financial Services, Inc. 1000 Harbor Boulevard Weehawken, NJ 07086-6790 | 23.15% | ||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 20.90% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 13.13% | |||||||||||||
Fifth Third Bank, NA 5050 Kingssley Dr. PO Box 740789 Cincinnati, OH 45274-0789 | 9.71% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. World Financial Center North Tower New York, NY 10080 | 7.47% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 6.36% | |||||||||||||
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| July 31, 2024 | VanEck Emerging Markets High Yield Bond ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 30.67% | ||||||||||
Euroclear Bank SA Boulevard du Rio Alvert II Brussels Bruxelles-Capitale, 1210 | 11.76% | |||||||||||||
| Wells Fargo Clearing Services, LLC 2801 Market Street H0006-09B St. Louis, Missouri 63103 | 9.12% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 7.81% | |||||||||||||
| July 31, 2024 | VanEck Fallen Angel High Yield Bond ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 25.98% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 10.29% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. World Financial Center North Tower New York, NY 10080 | 9.18% | |||||||||||||
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 7.09% | |||||||||||||
| U.S. Bank N.A. 461 5th Avenue, 19th Floor New York, NY 10017 | 5.39% | |||||||||||||
LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 5.17% | |||||||||||||
| July 31, 2024 | VanEck Green Bond ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 36.53% | ||||||||||
| National Financial Services, LLC 200 Liberty Street New York, NY 10281 | 20.82% | |||||||||||||
LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 14.72% | |||||||||||||
| July 31, 2024 | VanEck High Yield Muni ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 18.76% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 17.17% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. World Financial Center North Tower New York, NY 10080 | 15.58% | |||||||||||||
| SEI Private Trust Company Co. 1 Freedom Valley Drive Oaks, PA 19456 | 9.38% | |||||||||||||
Pershing LLC One Pershing Plaza Jersey City, NJ 07399 | 5.65% | |||||||||||||
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| July 31, 2024 | VanEck HIP Sustainable Muni ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 34.42% | ||||||||||
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 20.00% | |||||||||||||
J.P. Morgan Clearing Corp. 3 Chase Metrotech Center Proxy Dept./NY1-H034 Brooklyn NY 11245-0001 | 16.36% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 15.58% | |||||||||||||
Stonex Financial, Inc. 155 East 44th Street, Suite 900 New York City, New York, 10017 | 8.83% | |||||||||||||
| July 31, 2024 | VanEck Intermediate Muni ETF | April 30 | Merrill Lynch, Pierce, Fenner & Smith, Inc. World Financial Center North Tower New York, NY 10080 | 42.77% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.72% | |||||||||||||
| Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 10.13% | |||||||||||||
| Pershing LLC One Pershing Plaza Jersey City, NJ 07399 | 8.96% | |||||||||||||
| July 31, 2024 | VanEck IG Floating Rate ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 34.88% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 12.70% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 7.33% | |||||||||||||
LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 5.54% | |||||||||||||
The Bank of New York Mellon One Wall Street, 5th Floor New York, NY 10286-0001 | 5.35% | |||||||||||||
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| July 31, 2024 | VanEck Long Muni ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 25.68% | ||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. World Financial Center North Tower New York, NY 10080 | 14.57% | |||||||||||||
Raymond James & Associates, Inc. 880 Carilion Parkway St. Petersburg, FL 33716 | 11.46% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 11.23% | |||||||||||||
BNY Mellon Wealth Management 200 Park Ave New York, NY 10116 | 10.67% | |||||||||||||
| Morgan Stanley Smith Barney LLC Harborside Financial Center Plaza II Jersey City, NJ 07311 | 5.60% | |||||||||||||
| July 31, 2024 | VanEck Moody's Analytics BBB Corporate Bond ETF | April 30 | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 81.75% | ||||||||||
Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 9.88% | |||||||||||||
| July 31, 2024 | VanEck Moody's Analytics IG Corporate Bond ETF | April 30 | National Financial Services LLC 200 Liberty Street New York, NY 10281 | 83.52% | ||||||||||
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 | 13.51% | |||||||||||||
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| July 31, 2024 | VanEck Short High Yield Muni ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 22.60% | ||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 15.28% | |||||||||||||
Morgan Stanley Smith Barney LLC 1 Harborside Financial Center Plaza II Jersey City, NJ 07311 | 8.84% | |||||||||||||
Wells Fargo Clearing Services, LLC 2801 Market Street, H0006-09B St Louis, MO Missouri 63103 | 7.68% | |||||||||||||
Pershing LLC One Pershing Plaza Jersey City, NJ 07399 | 6.86% | |||||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. World Financial Center North Tower New York, NY 10080 | 5.53% | |||||||||||||
| July 31, 2024 | VanEck Short Muni ETF | April 30 | Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 | 24.44% | ||||||||||
Merrill Lynch, Pierce, Fenner & Smith, Inc. 101 Hudson Street, 9th Floor Jersey City, NJ 07302-3997 | 19.62% | |||||||||||||
National Financial Services LLC 200 Liberty Street New York, NY 10281 | 12.43% | |||||||||||||
Wells Fargo Clearing Services, LLC 2801 Market Street, H0006-09B St Louis, MO 63103 | 6.72% | |||||||||||||
Pershing LLC One Pershing Plaza Jersey City, NJ 07399 | 6.16% | |||||||||||||
LPL Financial Corp. 9785 Towne CTR Drive San Diego CA 92121-1968 | 5.79% | |||||||||||||
| American Enterprise Investment Service 901 3rd Ave South Minneapolis, MN 55474 | 5.25% | |||||||||||||
TAXES
The following information also supplements and should be read in conjunction with the section in each Fund’s Prospectus entitled “Shareholder Information—Tax Information” and the section in this Statement of Additional Information entitled “Special Considerations and Risks.” The following summary of certain relevant tax provisions is subject to change, and does not constitute legal or tax advice.
The following general discussion of certain U.S. federal income tax consequences is based on provisions of the Internal Revenue Code and the regulations issued thereunder as in effect on the date of this SAI. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein.
Shareholders are urged to consult their own tax advisers regarding the application of the provisions of tax law described in this SAI in light of the particular tax situations of the shareholders and regarding specific questions as to foreign, federal, state, or local taxes.
For purposes of this summary, the term “U.S. Shareholder” means a beneficial owner of Shares that, for U.S. federal income tax purposes, is one of the following:
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•an individual who is a citizen or resident of the United States;
•a corporation or other entity taxable as a corporation created in or organized under the laws of the United States, any state thereof or the District of Columbia;
•an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
•a trust (i) if a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust or (ii) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
A “Non-U.S. Shareholder” is a beneficial owner of Shares that is neither a U.S. Shareholder nor a partnership for U.S. federal income tax purposes. If a partnership (including any other entity treated as a partnership for U.S. federal income tax purposes) holds Shares, the U.S. federal income tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. Partners of partnerships that hold Shares should consult their tax advisors.
Tax Status of the Funds
Each Fund has elected (or intends to elect) to be treated and to qualify annually as a RIC under subchapter M of the Internal Revenue Code. As a RIC, each Fund will not be subject to U.S. federal income tax on the portion of its taxable investment income and capital gains that it distributes to its shareholders. To qualify for treatment as a RIC, a company must annually distribute at least 90% of its net investment company taxable income (which includes dividends, interest, net short-term capital gains and net ordinary income from certain MLPs) and at least 90% of its tax-exempt interest income, for each tax year, if any, to its shareholders and meet several other requirements relating to the nature of its income and the diversification of its assets, among others. If a Fund fails to qualify for any taxable year as a RIC, all of its taxable income will be subject to tax at regular corporate income tax rates without any deduction for distributions to shareholders, and such distributions generally will be taxable to shareholders as ordinary dividends to the extent of the Fund’s current and accumulated earnings and profits.
To the extent VanEck ChiNext ETF invests directly in the A-share market, or VanEck China Bond ETF invests directly in RMB Bonds, the Funds may not be able to repatriate funds associated with such direct investment on a timely basis and may be unable to meet the distribution requirements required to qualify for the favorable tax treatment otherwise generally afforded to RICs under the Internal Revenue Code.
Each of VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Long/Flat Trend ETF (to the extent the Fund is holding shares of one or more exchange-traded funds rather than investing directly in the shares of the companies comprising the S&P 500 Index) and VanEck Real Assets ETF is treated as a separate corporation for U.S. federal income tax purposes from the Underlying Funds. Each of VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Long/Flat Trend ETF (to the extent the Fund is holding shares of one or more exchange-traded funds rather than investing directly in the shares of the companies comprising the S&P 500 Index) and VanEck Real Assets ETF, therefore, is considered to be a separate entity in determining its treatment under the rules for RICs described herein and in the Prospectus. Distributions of short-term capital gains by an Underlying Fund will be recognized as ordinary income by the Fund and would not be offset by the Fund's capital loss carryforwards, if any. Capital loss carryforwards of an Underlying Fund, if any, would not offset net capital gains of the Fund. Losses in an Underlying Fund do not generally offset gains or distributions of another Underlying Fund. Redemptions of shares in an Underlying Fund could also result in a gain and/or income and also cause additional distributable gains to shareholders. The Fund’s use of the fund-of-funds structure could therefore affect the amount, timing and character of distributions to shareholders. Losses from redemptions of shares in an Underlying Fund may be deferred as wash sales, perhaps, indefinitely.
Each Fund will be subject to a 4% excise tax on certain undistributed income if it does not distribute to its shareholders in each calendar year an amount at least equal to the sum of 98% of its ordinary income (taking into account certain deferrals and elections) for the calendar year, 98.2% of its capital gain net income for the twelve months ended October 31 of such year, and 100% of any undistributed amounts on which the Fund paid no corporate-level U.S. federal income tax from the prior years. Although each Fund generally intends to declare and distribute dividends and distributions in the amounts and at the times necessary to avoid the application of this 4% excise tax, the Fund may elect to retain a portion of its income and gains, and in such a case, the Fund may be subject to excise tax.
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Tax Consequences of Commodity-Linked Investments (VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF only)
The IRS issued a revenue ruling in December 2005 which concluded that income and gains from certain commodity-linked derivatives are not qualifying income under subchapter M of the Internal Revenue Code. As a result, the ability for each Fund to invest directly in commodity-linked futures contracts or swaps and in certain exchange-traded trusts that hold commodities as part of its investment strategy is limited by the requirement that it receive no more than ten percent (10%) of its gross income from such investments.
The IRS has issued private letter rulings to other taxpayers in which the IRS specifically concluded that income derived from a fund’s investment in a CFC also will constitute qualifying income to the fund, even if the CFC itself owns commodity-linked futures contracts or swaps. A private letter ruling cannot be used or cited as precedent and is binding on the IRS only for the taxpayer that receives it. Each Fund has not obtained a ruling from the IRS with respect to its investments or its structure. The IRS has currently suspended the issuance of private letter rulings relating to the tax treatment of income generated by investments in a subsidiary. The IRS has issued regulations that generally treat a fund’s income inclusion with respect to an investment in a non-U.S. company generating investment income as qualifying income if there is a current-year distribution out of the earnings and profits of the non-U.S. company that are attributable to such income inclusion, or if the fund’s income inclusion is derived with respect to the fund’s business of investing in stocks or securities. Each Fund intends to treat its income from its Cayman Subsidiary as qualifying income without any such ruling from the IRS. There can be no assurance that the IRS will not change its position with respect to some or all of these issues or if the IRS did so, that a court would not sustain the IRS’s position. Furthermore, the tax treatment of a Fund’s investments in its Cayman Subsidiary may be adversely affected by future legislation, court decisions, future IRS guidance or Treasury regulations. If the IRS were to change its position or otherwise determine that income derived from a Fund’s investment in its Cayman Subsidiary does not constitute qualifying income and if such positions were upheld, or if future legislation, court decisions, future IRS guidance or Treasury regulations were to adversely affect the tax treatment of such investments, the Fund might cease to qualify as a RIC and would be required to reduce its exposure to such investments which could result in difficulty in implementing its investment strategy. If a Fund does not qualify as a RIC for any taxable year, the Fund’s taxable income would be subject to tax at the Fund level at regular corporate tax rates (without reduction for distributions to shareholders) and to a further tax at the shareholder level when such income is distributed. In such event, in order to re-qualify for taxation as a RIC, a Fund may be required to recognize unrealized gains, pay substantial taxes and interest and make certain distributions.
A foreign corporation, such as a Fund’s Cayman Subsidiary, generally is not subject to U.S. federal income taxation on its business income unless it is engaged in, or deemed to be engaged in, a U.S. trade or business. It is expected that each subsidiary will conduct its activities so as to satisfy the requirements of a safe harbor set forth in the Internal Revenue Code, under which each subsidiary may engage in certain commodity-related investments without being treated as engaged in a U.S. trade or business. However, if a subsidiary’s activities were determined not to be of the type described in the safe harbor, its activities may be subject to U.S. federal income taxation.
A foreign corporation, such as a Fund’s Cayman Subsidiary, that does not conduct a U.S. trade or business is nonetheless subject to a U.S. withholding tax at a flat 30% rate (or lower treaty rate, if applicable) on certain U.S. source gross income. No tax treaty is in force between the United States and the Cayman Islands that would reduce the 30% rate of withholding tax. However, it is not expected that the Cayman Subsidiary of either Fund will derive income subject to U.S. withholding taxes.
Each Cayman Subsidiary will be treated as a CFC for U.S. federal income tax purposes. As a result, a Fund must include in gross income for such purposes all of its Cayman Subsidiary’s “subpart F” income when its Cayman Subsidiary recognizes that income, whether or not its Cayman Subsidiary distributes such income to the Fund. It is expected that all of each Fund’s Cayman Subsidiary’s income will be subpart F income. A Fund’s tax basis in its Cayman Subsidiary will be increased as a result of the Fund’s recognition of its Cayman Subsidiary’s subpart F income. Each Fund will not be taxed on distributions received from its Cayman Subsidiary to the extent of its Cayman Subsidiary’s previously-undistributed subpart F income although its tax basis in its Cayman Subsidiary will be decreased by such amount. All subpart F income will be taxed as ordinary income, regardless of the nature of the transactions that generate it. Subpart F income does not qualify for treatment as qualified dividend income. If a Fund’s Cayman Subsidiary recognizes a net loss, the net loss will not be available to offset income recognized by the Fund and such loss cannot be carried forward to offset taxable income of the Fund or its Cayman Subsidiary in future periods.
With respect to VanEck Real Assets ETF only, the Fund may also gain commodity exposure through investment in ETFs that are treated as “qualified publicly traded partnerships” or grantor trusts for U.S. federal income tax purposes. The Fund may also invest in certain MLPs that are treated as “qualified publicly traded partnerships.” Investments by the Fund in “qualified publicly traded partnerships” and grantor trusts that engage in commodity trading must be monitored and limited so
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as to enable the Fund to satisfy certain asset diversification and qualifying income tests for qualification as a RIC. Failure to satisfy either test would jeopardize the Fund’s status as a RIC. Loss of such status could materially adversely affect the Fund.
Tax Status of Underlying Funds (VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Real Assets ETF and VanEck Long/Flat Trend ETF only)
Certain ETFs and other investment companies in which VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Real Assets ETF and VanEck Long/Flat Trend ETF may invest seek to qualify as RICs for tax purposes (“Underlying RICs”). To qualify and remain eligible for the special tax treatment accorded to RICs, such funds must meet certain source-of-income, asset diversification and annual distribution requirements. If a fund in which VanEck BDC Income ETF, VanEck CEF Muni Income ETF, VanEck Real Assets ETF or VanEck Long/Flat Trend ETF, invests fails to qualify as a RIC, such fund would be liable for federal, and possibly state, corporate taxes on its taxable income and gains. Such failure by a fund would subject the Fund to certain asset diversification limitations with respect to investment in such fund, and could substantially reduce the net assets of the Fund and the amount of income available for distribution to the Fund, which would in turn decrease the total return of the Fund in respect of such investment. Distributions of short-term capital gains by an Underlying RIC will be recognized as ordinary income by the Fund and would not be offset by the Fund's capital loss carryforwards, if any. Capital loss carryforwards of an Underlying RIC, if any, would not offset net capital gains of the Fund. The Fund will not be able to offset gains distributed by one Underlying RIC in which it invests against losses in another Underlying RIC in which the Fund invests. Redemptions of shares in an Underlying RIC, including those resulting from changes in the allocation among Underlying RICs, could also cause additional distributable gains to shareholders of the Fund. A portion of any such gains may be short-term capital gains that would be distributable as ordinary income to shareholders of the Fund. Further, a portion of losses on redemptions of shares in the Underlying RICs may be deferred indefinitely under the wash sale rules. As a result of these factors, the use of the fund of funds structure by the Fund could therefore affect the amount, timing and character of distributions to shareholders.
Tax Consequences of Investment in MLPs (VanEck Energy Income ETF only)
The VanEck Energy Income ETF invests in MLPs, which generally are treated as partnerships for federal income tax purposes. MLPs are publicly traded partnerships under the Internal Revenue Code. The Fund, as a RIC, must limit its total investment in certain types of MLPs to less than 25% of total assets, on a quarterly basis. The Internal Revenue Code generally requires publicly traded partnerships to be treated as corporations for U.S. federal income tax purposes. If, however, a publicly traded partnership satisfies certain requirements, it will be treated as a partnership for U.S. federal income tax purposes. Specifically, if a publicly traded partnership receives 90% or more 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 certain mineral or natural resources activities, income and gain from the transportation or storage of certain fuels, gain from the sale or disposition of a capital asset held for the production of such income, and, in certain circumstances, income and gain from commodities or futures, forwards and options with respect to commodities, then the publicly traded partnership will be treated as a partnership for federal income tax purposes. Mineral or natural resources activities include exploration, development, production, mining, processing, refining, marketing and transportation (including pipelines), of oil and gas, minerals, geothermal energy, fertilizers, timber or industrial source carbon dioxide.
Any distribution by an MLP treated as a partnership to the VanEck Energy Income ETF in excess of the Fund’s allocable share of such MLP’s net taxable income will decrease the Fund’s tax basis in its MLP investment and will therefore increase the amount of gain (or decrease the amount of loss) that will be recognized on the sale of an equity security in the MLP by the Fund. A portion of any gain or loss recognized by the Fund on a disposition of an MLP equity security (or by an MLP on a disposition of an underlying asset) may be separately computed and treated as ordinary income or loss under the Internal Revenue Code to the extent attributable to assets of the MLP that give rise to depreciation recapture, intangible drilling and development cost recapture, or other “unrealized receivables” or “inventory items” under the Internal Revenue Code. Any such gain may exceed net taxable gain realized on the disposition and will be recognized even if there is a net taxable loss on the disposition. The Fund’s net capital losses may only be used to offset capital gains and therefore cannot be used to offset gains that are treated as ordinary income. Thus, the Fund could recognize both gain that is treated as ordinary income and a capital loss on a disposition of an MLP equity security (or on an MLP’s disposition of an underlying asset) and would not be able to use the capital loss to offset that gain. The Fund will recognize gain or loss on the sale, exchange or other taxable disposition of its portfolio assets, including equity securities of MLPs, equal to the difference between the amount realized by the Fund on the sale, exchange or other taxable disposition and the Fund’s adjusted tax basis in such assets. The amount realized by the Fund in any case generally will be the amount paid by the purchaser of the asset plus, in the case of MLP equity securities, the Fund’s allocable share, if any, of the MLP’s debt that will be allocated to the purchaser as a result of the sale, exchange or other taxable disposition. The Fund’s tax basis in its equity securities in an MLP treated as a partnership is generally equal to the amount the Fund paid for the equity securities, (x) increased by the Fund’s allocable share of the MLP’s net taxable income and certain MLP debt, if any, and (y) decreased by the Fund’s allocable share of the MLP’s net losses and any distributions received by the
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Fund from the MLP. Each MLP will be treated as a separate passive activity so that losses of one MLP may not be netted against profits from elsewhere in the portfolio. Any such losses will be suspended until the MLP is sold.
Any capital losses that the VanEck Energy Income ETF recognizes on a disposition of an equity security of an MLP can only be used to offset capital gains that the Fund recognizes. Any capital losses that the Fund is unable to use may be carried forward to reduce the Fund’s capital gains in later years.
Tax Considerations with respect to Investments and Dividends
As a result of U.S. federal income tax requirements, the Trust, on behalf of the Funds, has the right to reject an order for a creation of Shares if the creator (or group of creators) would, upon obtaining the Shares so ordered, own 80% or more of the outstanding Shares of a Fund and if, pursuant to Section 351 of the Internal Revenue Code, the Funds would have a basis in the Deposit Securities different from the market value of such securities on the date of deposit. The Trust also has the right to require information necessary to determine beneficial share ownership for purposes of the 80% determination. See “Creation and Redemption of Creation Units—Acceptance of Creation Orders.”
Dividends, interest and gains received by a Fund from a non-U.S. investment may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. If more than 50% of a Fund’s total assets at the end of its taxable year consist of foreign stock or securities or if at least 50% of the value of a Fund’s total assets at the close of each quarter of its taxable year is represented by interests in RICs, the Fund may elect to “pass through” to its investors certain foreign income taxes paid by the Fund, with the result that each investor will (i) include in gross income, as an additional dividend, even though not actually received, the investor’s pro rata share of the Fund’s foreign income taxes, and (ii) either deduct (in calculating U.S. taxable income) or credit (in calculating U.S. federal income), subject to certain holding period and other limitations, the investor’s pro rata share of the Fund’s foreign income taxes. Even if VanEck ChiNext ETF is qualified to make that election and does so, however, this treatment will not apply with respect to amounts the Fund reserves in anticipation of the imposition of withholding taxes not currently in effect (if any). If these amounts are used to pay any tax liability of VanEck ChiNext ETF in a later year, they will be treated as paid by the stockholders in such later year, even if they are imposed with respect to income of an earlier year.
With respect to VanEck Africa Index ETF, VanEck Brazil Small-Cap ETF, VanEck ChiNext ETF, VanEck Digital India ETF, VanEck Gaming ETF, VanEck Gold Miners ETF, VanEck Green Metals ETF, VanEck India Growth Leaders ETF, VanEck Indonesia Index ETF, VanEck Israel ETF, VanEck Junior Gold Miners ETF, VanEck Low Carbon Energy ETF, Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF, VanEck Natural Resources ETF, VanEck Oil Refiners ETF, VanEck Rare Earth and Strategic Metals ETF, VanEck Robotics ETF, VanEck Uranium and Nuclear ETF, VanEck Video Gaming and eSports ETF and VanEck Vietnam ETF, it is expected that more than 50% of each Fund’s assets will consist of foreign securities that are foreign-listed companies and/or foreign-domiciled companies, but that expectation is subject to change depending on where the Fund invests. It is expected that more than 50% of each of VanEck China Bond ETF’s, VanEck Emerging Markets High Yield Bond ETF’s, VanEck Green Bond ETF, VanEck International High Yield Bond ETF’s and VanEck J.P. Morgan EM Local Currency Bond ETF’s assets will consist of foreign securities that are sovereign debt, foreign-listed companies and/or foreign-domiciled companies. Additionally, it is expected that more than 50% of VanEck Real Assets ETF's assets will be represented by interests in RICs.
Under Section 988 of the Internal Revenue Code, special rules are provided for certain transactions in a foreign currency other than the taxpayer’s functional currency (i.e., unless certain special rules apply, currencies other than the U.S. dollar). In general, foreign currency gains or losses from forward contracts, from futures contracts that are not “regulated futures contracts,” and from unlisted options will be treated as ordinary income or loss under Section 988 of the Internal Revenue Code. Also, certain foreign exchange gains or losses derived with respect to foreign fixed income securities are also subject to Section 988 treatment. In general, therefore, Section 988 gains or losses will increase or decrease the amount of each Fund’s investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of each Fund’s net capital gain.
With respect to VanEck Real Assets ETF, if a portion of the Fund’s investment income may be received in foreign currencies, the Fund will be required to compute its income in U.S. dollars for distribution to shareholders. When the Fund has distributed income, subsequent foreign currency losses may result in the Fund having distributed more income in a particular fiscal period than was available from investment income, which could result in a return of capital to shareholders.
Special tax rules may change the normal treatment of gains and losses recognized by a Fund if the Fund makes certain investments such as investments in structured notes, swaps, options, futures transactions, and non-U.S. corporations classified as passive foreign investment companies (“PFICs”). Those special tax rules can, among other things, affect the treatment of capital gain or loss as long-term or short-term and may result in ordinary income or loss rather than capital gain or loss and may accelerate when a Fund has to take these items into account for U.S. federal income tax purposes. A Fund’s
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transactions in derivatives are subject to special provisions of the Internal Revenue Code that, among other things, (1) could affect the character, amount and timing of distributions to shareholders of each Fund, (2) could require the Fund to “mark to market” certain types of the positions in its portfolio (that is, treat them as if they were closed out) and (3) may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the 90% distribution requirement and the excise tax avoidance requirements described above.
VanEck ChiNext ETF’s investments may invest in swaps and other derivative instruments that may generally be less tax-efficient than a direct investment in A-shares. Furthermore, VanEck ChiNext ETF may be required to periodically adjust its positions in these swaps or derivatives to comply with certain regulatory requirements which may further cause these investments to be less efficient than a direct investment in A-shares. The application of these special rules would therefore also affect the timing and character of distributions made by a Fund. See “U.S. Federal Tax Treatment of Certain Futures Contracts and Option Contracts” for certain federal income tax rules regarding futures contracts.
VanEck China Bond ETF’s investments may invest in swaps and other derivative instruments that may generally be less tax-efficient than a direct investment in RMB Bonds. Furthermore, VanEck China Bond ETF may be required to periodically adjust its positions in these swaps or derivatives to comply with certain regulatory requirements which may further cause these investments to be less efficient than a direct investment in RMB Bonds.
VanEck BDC ETF’s investments may invest in swaps and other derivative instruments that may generally be less tax-efficient than a direct investment in BDCs. Furthermore, VanEck BDC ETF may be required to periodically adjust its positions in these swaps or derivatives to comply with certain regulatory requirements which may further cause these investments to be less efficient than a direct investment in BDCs.
There may be uncertainty as to the appropriate treatment of certain of a Fund’s investments for U.S. federal income tax purposes. In particular, a Fund may invest a portion of its net assets in below investment grade instruments. Investments in these types of instruments may present special tax issues for such Fund. U.S. federal income tax rules are not entirely clear about issues such as when a Fund may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. These and other issues will be addressed by a Fund, to the extent necessary, in order to seek to ensure that it distributes sufficient income to ensure that it does not become subject to U.S. federal income or excise tax.
Certain Funds may make investments, both directly and/or through swaps or other derivative positions, in PFICs. Investments in PFICs are subject to special tax rules which may result in adverse tax consequences to a Fund and its shareholders. To the extent a Fund invests in PFICs, it generally intends to elect to “mark to market” these investments at the end of each taxable year. By making this election, the Fund will recognize as ordinary income any increase in the value of such shares as of the close of the taxable year over their adjusted basis and as ordinary loss any decrease in such investment (but only to the extent of prior income from such investment under the mark to market rules). Gains realized with respect to a disposition of a PFIC that a Fund has elected to mark to market will be ordinary income. Alternatively, a Fund that invests in PFICs may elect to treat PFICs as “qualified electing funds” (or “QEFs”) under the Internal Revenue Code if sufficient documentation and information is available. By making this election, the Fund will be required to include in income each year its proportionate share of the ordinary earnings and net capital gain of a QEF, even if such income is not distributed by the QEF. By making the mark to market or QEF election, a Fund may recognize income in excess of the distributions that it receives from its investments. Accordingly, a Fund may need to borrow money or dispose of some of its investments in order to meet its distribution requirements. If a Fund does not make the mark to market or QEF election with respect to an investment in a PFIC, the Fund could become subject to U.S. federal income tax with respect to certain distributions from, and gain on the dispositions of, the PFIC which cannot be avoided by distributing such amounts to the Fund’s shareholders.
Certain Funds or some of the REITs in which a Fund may invest may be permitted to hold residual interests in real estate mortgage investment conduits (“REMICs”). Under Treasury regulations not yet issued, but that may apply retroactively, a portion of a Fund’s income from a REIT that is attributable to the REIT’s residual interest in a REMIC (referred to in the Internal Revenue Code as an “excess inclusion”) will be subject to federal income tax in all events. These regulations are expected to provide that excess inclusion income of a RIC, such as a Fund, will be allocated to shareholders of the RIC in proportion to the dividends received by shareholders, with the same consequences as if shareholders held the related REMIC residual interest directly.
Under current law, certain Funds serve to block unrelated business taxable income (“UBTI”) from being realized by their tax-exempt shareholders. Notwithstanding the foregoing, a tax-exempt shareholder could realize UBTI by virtue of its investment in a Fund if Shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Section 514(b) of the Internal Revenue Code. Certain types of income received by a Fund from REITs, REMICs, taxable mortgage pools or other investments may cause the Fund to report some or all of its distributions as “excess inclusion income.”
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In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) will constitute UBTI to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on unrelated business income, thereby potentially requiring such an entity that is allocated excess inclusion income, and that otherwise might not be required to file a tax return, to file a tax return and pay tax on such income, and (iii) in the case of a Non-U.S. Shareholder, will not qualify for any reduction in U.S. federal withholding tax.
If at any time during any taxable year a “disqualified organization” (as defined in the Internal Revenue Code) is a record holder of a share in a RIC, then the RIC will be subject to a tax equal to that portion of its excess inclusion income for the taxable year that is allocable to the disqualified organization, multiplied by the highest federal income tax rate imposed on corporations. It is not expected that a substantial portion of a Fund’s assets will be residual interests in REMICs. Additionally, the Funds do not intend to invest in REITs in which a substantial portion of the assets will consist of residual interests in REMICs.
Each Fund may make investments in which it recognizes income or gain prior to receiving cash with respect to such investment. For example, under certain tax rules, a Fund may be required to accrue a portion of any discount at which certain securities are purchased as income each year even though the Fund receives no payments in cash on the security during the year. To the extent that a Fund makes such investments, it generally would be required to pay out such income or gain as a distribution in each year to avoid taxation at the Fund level.
Each Fund will report to shareholders annually the amounts of dividends received from ordinary income and the amount of distributions received from capital gains and the portion of dividends, if any, which may qualify for the dividends received deduction. Certain ordinary dividends paid to non-corporate shareholders may constitute qualified dividend income eligible for taxation at a lower tax rate applicable to long-term capital gains provided holding period and other requirements are met at both the shareholder and Fund levels. In the event that Funds receive such a dividend and report the distribution of such dividend as a qualified dividend, the dividend may be taxed at maximum capital gains rates of 15% or 20%, provided holding period and other requirements are met at both the shareholder and each Fund level.
If the aggregate amount of qualified dividend income received by a Fund during any taxable year is less than 95% of the Fund’s gross income (as specifically defined for that purpose), qualified dividend treatment applies only if and to the extent reported by the Fund as qualified dividend income. A Fund may report such dividends as qualified dividend income only to the extent the Fund itself has qualified dividend income for the taxable year with respect to which such dividends are made. Qualified dividend income is generally dividend income from taxable domestic corporations and certain foreign corporations (e.g., foreign corporations incorporated in a possession of the United States or in certain countries with comprehensive tax treaties with the United States, or whose stock is readily tradable on an established securities market in the United States), provided the Fund has held the stock in such corporations for more than 60 days during the 121-day period beginning on the date which is 60 days before the date on which such stock becomes ex-dividend with respect to such dividend (or more than 90 days during the 181-day period beginning 90 days before the ex-dividend date for the stock in the case of certain preferred stock dividends) (the “holding period requirement”). In order to be eligible for the 20% maximum rate on dividends from the Fund attributable to qualified dividends, shareholders must separately satisfy the holding period requirement with respect to their Fund shares.
VanEck AA-BB CLO ETF, VanEck CEF Muni Income ETF, VanEck CLO ETF, VanEck China Bond ETF, VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF, VanEck Emerging Markets High Yield Bond ETF, VanEck Fallen Angel High Yield Bond ETF, VanEck Green Bond ETF, VanEck High Yield Muni ETF, VanEck HIP Sustainable Muni ETF, VanEck Intermediate Muni ETF, VanEck International High Yield Bond ETF, VanEck IG Floating Rate ETF, VanEck J.P. Morgan EM Local Currency Bond ETF, VanEck Long Muni ETF, VanEck Moody's Analytics BBB Corporate Bond ETF, VanEck Moody's Analytics IG Corporate Bond ETF, VanEck Russia ETF, VanEck Russia Small-Cap ETF, VanEck Short High Yield Muni ETF and VanEck Short Muni ETF do not expect that any of their distributions will be qualified dividends eligible for lower tax rates or for the corporate dividends received deduction. In the event that VanEck BDC Income ETF, VanEck Energy Income ETF, VanEck Mortgage REIT Income ETF and VanEck Preferred Securities ex Financials ETF receive such a dividend and report the distribution of such dividend as a qualified dividend, the dividend may be taxed at maximum capital gains rates of 15% or 20%, provided holding period and other requirements are met at both the shareholder and the Fund level. It is not expected that any significant portion of the VanEck BDC Income ETF’s, VanEck Brazil Small-Cap ETF’s or VanEck Mortgage REIT Income ETF’s distributions will be eligible for qualified dividend treatment.
Section 199A of the Internal Revenue Code allows a deduction through 2025 of up to 20% on taxable ordinary dividends from REITs and certain other types of business income for non-corporate taxpayers. Treasury regulations enable a RIC to flow-through to its shareholders such taxable ordinary dividends from REITs if received by the RIC. VanEck
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Mortgage REIT Income ETF and VanEck Preferred Securities ex Financials ETF expect that some portion of their distributions may be taxable ordinary dividends from REITs. Treasury regulations currently do not provide a mechanism for a RIC to flow-through to its shareholders qualified business income from MLPs that would allow the shareholders such 20% deduction.
Certain distributions reported by a Fund as Section 163(j) interest dividends may be treated as interest income by shareholders for purposes of the tax rules applicable to interest expense limitations under Internal Revenue Code Section 163(j). Such treatment by the shareholder is generally subject to holding period requirements and other potential limitations, although the holding period requirements are generally not applicable to dividends declared by money market funds and certain other funds that declare dividends daily and pay such dividends on a monthly or more frequent basis. The amount that a Fund is eligible to report as a Section 163(j) dividend for a tax year is generally limited to the excess of the Fund’s business interest income over the sum of the Fund’s (i) business interest expense and (ii) other deductions properly allocable to the Fund’s business interest income.
Distributions in excess of a Fund’s current and accumulated earnings and profits are treated as a tax-free return of your investment to the extent of your basis in the Shares and generally as capital gain thereafter. A return of capital, which for tax purposes is treated as a return of your investment, reduces your basis in Shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition of Shares. A distribution will reduce a Fund’s NAV per Share and may be taxable to you as ordinary income or capital gain even though, from an economic standpoint, the distribution may constitute a return of capital. Except when your investment is in an IRA, 401(k) plan or other tax-advantaged investment plan, or you are a tax-exempt investor, if you buy Shares of the Fund before a taxable distribution is paid, you will be subject to tax on the entire amount of the distribution you receive even though the distribution may actually be a return of a portion of your investment. This is known as “buying a dividend.” Distributions may be taxable to you even if they are paid from income or gain earned by the Fund before your investment (and thus were included in the price you paid for your Shares). Please consult your own tax advisor.
Distributions from capital gains generally are made after applying any available capital loss carryforwards. Capital loss carryforwards are reduced to the extent they offset current-year net realized capital gains, whether the Fund retains or distributes such gains. If a Fund incurs or has incurred capital losses in excess of capital gains (“net capital losses”), those losses will be carried forward to one or more subsequent taxable years; any such carryforward losses will retain their character as short-term or long-term. In the event that the Fund were to experience an ownership change as defined under the Internal Revenue Code, the capital loss carryforwards and other favorable tax attributes of the Fund, if any, may be subject to limitation.
In determining its net capital gain, including in connection with determining the amount available to support a capital gain dividend, its taxable income and its earnings and profits, a Fund generally may also elect to treat part or all of any post-October capital loss (defined as any net capital loss attributable to the portion, if any, of the taxable year after October 31 or, if there is no such loss, the net long-term capital loss or net short-term capital loss attributable to any such portion of the taxable year) or late-year ordinary loss (generally, the sum of its (i) net ordinary loss, if any, from the sale, exchange or other taxable disposition of property, attributable to the portion, if any, of the taxable year after October 31, and its (ii) other net ordinary loss, if any, attributable to the portion, if any, of the taxable year after December 31) as if incurred in the succeeding taxable year.
In general, a sale of Shares results in capital gain or loss, and for individual shareholders, is taxable at a federal rate dependent upon the length of time the Shares were held. A redemption of a shareholder’s Fund Shares is normally treated as a sale for tax purposes. Fund Shares held for a period of one year or less at the time of such sale or redemption will, for tax purposes, generally result in short-term capital gains or losses, and those held for more than one year will generally result in long-term capital gains or losses. The maximum tax rate on long-term capital gains available to a non-corporate shareholder generally is 15% or 20%, depending on whether the shareholder’s income exceeds certain threshold amounts (but the 25% capital gain tax rate will remain applicable to 25% rate gain distributions received by VanEck Mortgage REIT Income ETF).
If at the end of each quarter of the taxable year of a RIC, 50% or more of the assets, by value, of the RIC are either (i) state, municipal and other bonds that pay interest that is exempt from federal income tax, or (ii) interests in other RICs, the RIC may report a portion of its dividends as exempt-interest dividends. As VanEck CEF Muni Income ETF invests in underlying funds, in order to report exempt-interest dividends, at the end of each quarter of its taxable year, 50% of more of its assets would need to be represented by interests in other RICs. The Municipal Funds and VanEck CEF Muni Income ETF expect to be eligible to make such reports with respect to a substantial amount of the income each receives. The portion of the dividends that are reported as being exempt-interest dividends generally will be exempt from federal income tax and may be exempt from state and local taxation. Depending on a shareholder’s state of residence, exempt-interest dividends paid by the Funds from interest earned on municipal securities of that state, or its political subdivision, may be exempt in the hands of such shareholder from income tax in that state and its localities. However, income from municipal securities of states other than the shareholder’s state of residence generally will not qualify for this treatment.
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Interest on indebtedness incurred by a shareholder to purchase or carry shares of the Municipal Funds or VanEck CEF Muni Income ETF will not be deductible for U.S. federal income tax purposes. In addition, the IRS may require a shareholder in a Fund that receives exempt-interest dividends to treat as taxable income a portion of certain otherwise non-taxable social security and railroad retirement benefit payments. In addition, the receipt of dividends and distributions from the Funds may affect a foreign corporate shareholder’s federal “branch profits” tax liability and the federal “excess net passive income” tax liability of a shareholder of a subchapter S corporation. Shareholders should consult their own tax advisers as to whether they are (i) “substantial users” with respect to a facility or “related” to such users within the meaning of the Internal Revenue Code or (ii) subject to the federal “branch profits” tax, or the deferral “excess net passive income” tax.
Shares of the Municipal Funds and VanEck CEF Muni Income ETF generally would not be suitable for tax-exempt institutions or tax-deferred retirement plans (e.g., plans qualified under Section 401 of the Internal Revenue Code, and individual retirement accounts). Such retirement plans would not gain any benefit from the tax-exempt nature of a Municipal Fund’s, or VanEck CEF Muni Income ETF’s dividend because such dividend would be ultimately taxable to beneficiaries when distributed to them.
Any market discount recognized on a bond is taxable as ordinary income. A market discount bond is a bond acquired in the secondary market at a price below redemption value or adjusted issue price if issued with original issue discount. Absent an election by the Funds to include the market discount in income as it accrues, gain on the Funds’ disposition of such an obligation will be treated as ordinary income rather than capital gain to the extent of the accrued market discount.
The Tax Cuts and Jobs Act (the “Act”), enacted in 2017, contained certain provisions that may affect the Municipal Funds. Under prior law, the tax exemption for interest from state and local bonds generally applied to refunded bonds with certain limitations on advance refunding bonds. Advance refunding bonds are bonds that are issued more than 90 days before the redemption of the refunded bond. Under the Act, interest income from advance refunding bonds will now be considered to be taxable interest income for any advance refundings that occur after December 31, 2017. This provision may affect the supply of municipal bonds available for purchase in the market.
Certain Treasury regulations and government guidance indicate that the Act’s provisions that required that certain undistributed earnings of foreign corporations be recognized as income by U.S. owners with significant interests in foreign corporations with historical undistributed earnings may affect calculations in prior years of distributable investment income for VanEck Junior Gold Miners ETF which owned relevant percentages of certain foreign corporations in its portfolio during certain periods affected by the Act’s provisions potentially resulting in additional dividends by and excise tax and other tax penalties and charges on VanEck Junior Gold Miners ETF’s undistributed investment income.
Gain or loss on the sale or redemption of Fund Shares is measured by the difference between the amount of cash received (or the fair market value of any property received) and the adjusted tax basis of the Shares. Shareholders should keep records of investments made (including Shares acquired through reinvestment of dividends and distributions) so they can compute their tax basis in their Fund Shares. Reporting to the IRS and to taxpayers is required with respect to adjusted cost basis information for covered securities, which generally include shares of a RIC acquired after January 1, 2012. Shareholders should contact their financial intermediaries with respect to reporting of cost basis and available elections for their accounts.
A loss realized on a sale or exchange of Shares of a Fund may be disallowed if other Fund Shares or substantially identical shares are acquired (whether through the automatic reinvestment of dividends or otherwise) within a sixty-one (61) day period beginning thirty (30) days before and ending thirty (30) days after the date that the Shares are disposed of. In such a case, the basis of the Shares acquired will be adjusted to reflect the disallowed loss. Any loss upon the sale or exchange of Shares held for six (6) months or less will be treated as long-term capital loss to the extent of any capital gain dividends received by the shareholders.
Distribution of ordinary income and capital gains may also be subject to foreign, state and local taxes.
Certain Funds may invest a portion of their assets in certain “private activity bonds.” As a result, a portion of the exempt-interest dividends paid by such Funds will be an item of tax preference to non-corporate shareholders subject to the alternative minimum tax. However, the alternative minimum tax consequences discussed in this paragraph do not apply with respect to interest paid on bonds issued after December 31, 2008 and before January 1, 2011 (including refunding bonds issued during that period to refund bonds originally issued after December 31, 2003 and before January 1, 2009).
Distributions reinvested in additional Fund Shares through the means of a dividend reinvestment service (see “Dividend Reinvestment Service”) will nevertheless be taxable dividends to Beneficial Owners acquiring such additional Shares to the same extent as if such dividends had been received in cash.
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An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from a Fund and net gains from redemptions or other taxable dispositions of Fund Shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.
Some shareholders may be subject to a withholding tax on distributions of ordinary income, capital gains and any cash received on redemption of Creation Units (“backup withholding”). The backup withholding rate for individuals is currently 24%. Generally, shareholders subject to backup withholding will be those for whom no certified taxpayer identification number is on file with a Fund or who, to the Fund’s knowledge, have furnished an incorrect number. When establishing an account, an investor must certify under penalty of perjury that such number is correct and that such investor is not otherwise subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld will be allowed as a credit against shareholders’ U.S. federal income tax liabilities, and may entitle them to a refund, provided that the required information is timely furnished to the IRS.
Distributions of ordinary income paid to shareholders who are nonresident aliens or foreign entities will generally be subject to a 30% U.S. withholding tax unless a reduced rate of withholding or a withholding exemption is provided under applicable treaty law. Prospective investors are urged to consult their tax advisors regarding such withholding.
Non-U.S. Shareholders
If you are not a citizen or resident alien of the United States or if you are a non-U.S. entity, a Fund’s ordinary income dividends (which include distributions of net short-term capital gains) will generally be subject to a 30% U.S. withholding tax, unless a lower treaty rate applies or unless such income is effectively connected with a U.S. trade or business.
A Non-U.S. Shareholder who wishes to claim the benefits of an applicable income tax treaty for dividends will be required (a) to complete Form W-8BEN or Form W-8BEN-E (or other applicable form) and certify under penalty of perjury that such holder is not a United States person as defined under the Internal Revenue Code and is eligible for treaty benefits or (b) if Shares are held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable United States Treasury regulations. A Non-U.S. Shareholder eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.
If the amount of a distribution to a Non-U.S. Shareholder exceeds the Fund’s current and accumulated earnings and profits, such excess will be treated first as a tax-free return of capital to the extent of the Non-U.S. Shareholder’s tax basis in the Shares, and then as capital gain. Capital gain recognized by a Non-U.S. Shareholder as a consequence of a distribution by the Fund in excess of its current and accumulated earnings and profits will generally not be subject to United States federal income tax, except as described below.
Any capital gain realized by a Non-U.S. Shareholder upon a sale of shares of a Fund will generally not be subject to U.S. federal income or withholding tax unless (i) the gain is effectively connected with the shareholder’s trade or business in the United States, or in the case of a shareholder who is a nonresident alien individual, the shareholder is present in the United States for 183 days or more during the taxable year and certain other conditions are met or (ii) a Fund is or has been a U.S. real property holding corporation, as defined below, at any time within the five-year period preceding the date of disposition of the Fund’s Shares or, if shorter, within the period during which the Non-U.S. Shareholder has held the Shares. Generally, a corporation is a U.S. real property holding corporation if the fair market value of its U.S. real property interests, as defined in the Internal Revenue Code and applicable regulations issued thereunder, equals or exceeds 50% of the aggregate fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. A Fund may be, or may prior to a Non-U.S. Shareholder’s disposition of Shares become, a U.S. real property holding corporation. If a Fund is or becomes a U.S. real property holding corporation, so long as the Fund’s Shares are regularly traded on an established securities market, a Non-U.S. Shareholder who holds or held (at any time during the shorter of the five-year period preceding the date of disposition or the holder’s holding period) more than 5% (directly or indirectly as determined under applicable attribution rules of the Internal Revenue Code) of the Fund’s Shares will be subject to U.S. federal income tax on the disposition of Shares. Any Non-U.S. Shareholder who is described in one of the foregoing cases is urged to consult his, her or its own tax advisor regarding the U.S. federal income tax consequences of the redemption, sale, exchange or other disposition of Shares of a Fund.
Properly reported dividends received by a nonresident alien or foreign entity are generally exempt from U.S. federal withholding tax when they (i) are paid in respect of the Fund’s “qualified net interest income” (generally, the Fund’s U.S. source interest income, reduced by expenses that are allocable to such income), or (ii) are paid in connection with the Fund’s “qualified short-term capital gains” (generally, the excess of the Fund’s net short-term capital gain over the Fund’s long-term capital loss for such taxable year). However, depending on the circumstances, the Fund may report all, some or none of the
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Fund’s potentially eligible dividends as such qualified net interest income or as qualified short-term capital gains, and a portion of the Fund’s distributions (e.g., interest from non-U.S. sources, subpart F income with respect to VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF’s investment in the Cayman Subsidiaries and any foreign currency gains) would be ineligible for this potential exemption from withholding. With respect to VanEck CMCI Commodity Strategy ETF, VanEck Commodity Strategy ETF and VanEck Real Assets ETF, a financial intermediary may in fact withhold even if the Funds do so report.
As part of the Foreign Account Tax Compliance Act (“FATCA”), the Funds may be required to withhold 30% on certain types of U.S.-sourced income (e.g., dividends, interest, and other types of passive income), paid to (i) foreign financial institutions (“FFIs”), including non-U.S. investment funds, unless they agree to collect and disclose to the IRS information regarding their direct and indirect U.S. account holders and (ii) certain nonfinancial foreign entities (“NFFEs”), unless they certify certain information regarding their direct and indirect U.S. owners. To avoid possible withholding, FFIs will need to enter into agreements with the IRS which state that they will provide the IRS information, including the names, account numbers and balances, addresses and taxpayer identification numbers of U.S. account holders and comply with due diligence procedures with respect to the identification of direct and indirect U.S. accounts as well as agree to withhold tax on certain types of withholdable payments made to non-compliant FFIs or to applicable foreign account holders who fail to provide the required information to the IRS, or similar account information and required documentation to a local revenue authority, should an applicable intergovernmental agreement be implemented. NFFEs will need to provide certain information regarding each substantial U.S. owner or certifications of no substantial U.S. ownership, unless certain exceptions apply, or agree to provide certain information to the IRS.
The Funds may be subject to the FATCA withholding obligation, and also will be required to perform extensive due diligence reviews to classify foreign entity investors for FATCA purposes. Investors are required to agree to provide information necessary to allow the Funds to comply with the FATCA rules. If the Funds are required to withhold amounts from payments pursuant to FATCA, investors will receive distributions that are reduced by such withholding amounts.
Non-U.S. Shareholders are advised to consult their tax advisors with respect to the particular tax consequences to them of an investment in a Fund, including the possible applicability of the U.S. estate tax.
The foregoing discussion is a summary only and is not intended as a substitute for careful tax planning. Purchasers of Shares of the Trust should consult their own tax advisers as to the tax consequences of investing in such Shares, including under state, local and other tax laws. Finally, the foregoing discussion is based on applicable provisions of the Internal Revenue Code, regulations, judicial authority and administrative interpretations in effect on the date hereof. Changes in applicable authority could materially affect the conclusions discussed above and could adversely affect the Funds, and such changes often occur.
Reportable Transactions
Under promulgated Treasury regulations, if a shareholder recognizes a loss on a disposition of a Fund’s Shares of $2 million or more in any one taxable year (or $4 million in any combination of taxable years) for an individual shareholder or $10 million or more in any taxable year (or $20 million in any combination of taxable years) for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct owners of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC that engaged in a reportable transaction are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs. In addition, significant penalties may be imposed for the failure to comply with the reporting requirements. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.
Mauritius and India Tax Matters
(VanEck Digial India ETF and VanEck India Growth Leaders ETF only)
Please note that the tax implications in this section are based on the current provisions of the tax laws, and the regulations thereunder, and the judicial and administrative interpretations thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions. Any such changes could have adverse tax consequences for the VanEck Digital India ETF and VanEck India Growth Leaders ETF and its wholly-owned subsidiary located in the Republic of Mauritius (the “Mauritius Subsidiary”), as the case may be, and thus reduce the return to Fund shareholders.
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Each Fund and the Mauritius Subsidiary may be subject to Indian income tax on income earned from or with respect to Indian securities, and securities transaction tax in respect of dealings in Indian securities purchased or sold on the Indian stock exchanges. If Indian General Anti-Avoidance Rules are held to be applicable to any transaction pertaining to the either Fund or the Mauritius Subsidiary, it could have an adverse impact on their taxation in India.
Indian capital gains tax can be imposed on income arising from the transfer of shares in a company established outside India which derives, directly or indirectly, its value substantially from the assets located in India. Being a Category I FPI, the VanEck Digital India ETF and Mauritius Subsidiary are currently exempt from the application of these rules. In case of loss of the VanEck Digital India ETF's and Mauritius Subsidiary's registration as Category I FPIs or changes in Indian rules, the Mauritius Subsidiary, VanEck Digital India ETF, VanEck India Growth Leaders ETF and the investors could be subject to the indirect transfer tax provisions in the future.
An investor in VanEck Digital India ETF and VanEck India Growth Leaders ETF will not be subject to taxation in India unless such investor is a resident of India or, if a non-resident, has an Indian source income or income received (whether accrued or otherwise) in India or triggers the indirect transfer provisions (discussed above).
(VanEck India Growth Leaders ETF only)
Mauritius. The Mauritius Subsidiary is regulated by the Financial Services Commission in Mauritius (“FSC”), which has issued a Global Business License to the Mauritius Subsidiary to conduct the business of “investment holding”. The Mauritius Subsidiary has applied for a tax residence certificate (“TRC”) from the Mauritius Revenue Authority (the “MRA”) through the FSC to benefit from the network of tax treaties in Mauritius. The TRC is issued by the MRA subject to the Mauritius Subsidiary meeting certain tests and conditions and is renewable on an annual basis.
The Mauritius Subsidiary generally will be taxable in Mauritius on income derived from its investments in the portfolio companies at the rate of 15%. Effective January 1, 2019, a partial exemption regime has been introduced in Mauritius, under which a corporation holding a Global Business License will be granted an exemption of 80% on certain specified income, subject to meeting certain additional substance requirements.
The Mauritius Subsidiary intends to comply with the substance and other requirements prescribed under applicable Mauritius law, however it is possible that the Mauritius Subsidiary may not continue to satisfy these requirements of Mauritius in the future, which may have adverse Mauritius tax consequences.
Mauritius and United States have entered into a Model 1 Inter-Governmental Agreement to improve international tax compliance and to implement FATCA. On June 23, 2015, Mauritius also signed the Convention on Mutual Administrative Assistance in Tax Matters to enable the implementation of the common reporting standard (“CRS”). As a result of FATCA, CRS or any other legislation under which disclosure may be necessary or desirable which may apply to the Mauritius Subsidiary, investors may be required to provide the Board of Directors of the Mauritius Subsidiary (the “Mauritius Subsidiary Board”) with all information and documents as the Mauritius Subsidiary Board may require. The Mauritius Subsidiary may disclose such information regarding the investors as may be required by the Government of Mauritius pursuant to FATCA, CRS or applicable laws or regulations in connection therewith (including, without limitation, the disclosure of certain non-public personal information regarding the investors to the extent required).
India-Mauritius Tax Treaty. The taxation of the Mauritius Subsidiary in India is governed by the provisions of the ITA 1961, read with India-Mauritius tax treaty.
In order to claim the beneficial provisions of the India-Mauritius tax treaty, the Mauritius Subsidiary must be a tax resident of Mauritius and should obtain a TRC pertaining to the relevant period from the FSC. The Mauritius Subsidiary has to provide to the Indian tax authorities such other documents and information, as are or may be prescribed.
Following the changes to the India-Mauritius tax treaty in 2016, capital gains of the Mauritius Subsidiary from sale of shares of an Indian company are taxable in India with the exception of gains on sale of shares of an Indian company acquired by a Mauritius tax resident before April 1, 2017 (“Grandfathered Investments”) which continue to be exempt from Indian capital gains tax irrespective of the date on which such shares are sold. If the Mauritius Subsidiary qualifies as a Mauritius resident entity under Mauritius income tax laws, has a valid TRC and is eligible for benefits under the India-Mauritius tax treaty, the Mauritius Subsidiary will not be subject to Indian tax on capital gains derived from Grandfathered Investments.
In the event that the benefits of the Treaty are not available to the Subsidiary, or the Subsidiary is held to have a permanent establishment in India, its income from India will be taxed in accordance with Indian tax rules.
PRC Taxation
(VanEck ChiNext ETF, VanEck Green Metals ETF and VanEck Rare Earth and Strategic Metals ETF only)
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The Funds’ investments in A-shares will be subject to a number of PRC tax rules and the application of many of those rules is at present uncertain. PRC taxes that may apply to the Funds’ investments include withholding taxes on dividends earned by a Fund, withholding taxes on capital gains, value-added tax (previously, business tax) and stamp tax.
Non-PRC tax resident enterprises (without permanent establishment in the PRC), such as the Funds, are generally subject to a withholding income tax of 10% on any PRC-sourced income (including dividends, distributions and capital gains) they derive from their investment in PRC securities unless exempt or reduced under PRC law or a relevant tax treaty. The application of such treaties to a foreign investor is uncertain and would depend on the approval of PRC tax authorities.
With respect to Stock Connect, foreign investors (including the Funds) investing through Stock Connect would be temporarily exempt from the corporate income tax and value-added tax on the gains on disposal of such A-shares until further notice. Dividends would be subject to corporate income tax on a withholding basis at 10%, unless reduced under a double tax treaty with PRC upon application to and obtaining approval from the competent tax authority.
The current PRC tax laws and regulations and interpretations thereof may be revised or amended in the future. Any revision or amendment in tax laws and regulations may adversely affect the Fund.
Each Fund, prior to December 22, 2014, reserved 10% of its realized and unrealized gains from its A-share investments to apply towards withholding tax liability with respect to realized and unrealized gains from the Fund’s investments in A-shares of “land-rich” enterprises, which are companies that have greater than 50% of their assets in land or real properties in the PRC. Each Fund could be subject to tax liability for any tax payments for which reserves have not been made or that were not previously withheld. The impact of any such tax liability on the Funds’ return could be substantial.
The Funds may also potentially be subject to PRC value-added tax at the rate of 6% on capital gains derived from trading of A-shares.
(VanEck China Bond ETF and VanEck J.P. Morgan EM Local Currency Bond ETF only)
There are still some uncertainties in the PRC tax rules governing taxation of income and gains from investments in the PRC due to the lack of formal guidance from the PRC’s tax authorities that could result in unexpected tax liabilities for VanEck China Bond ETF and VanEck J.P. Morgan EM Local Currency Bond ETF. Non-PRC tax resident enterprises (without permanent establishment in the PRC), such as the Funds, are generally subject to a withholding income tax of 10% on any PRC-sourced income (including dividends, distributions and capital gains). On November 7, 2018, the PRC Ministry of Finance (MOF) and PRC State Administration of Taxation (SAT) jointly issued Caishui [2018] 108 (Circular 108) which provided a temporary three-year tax exemption from withholding income tax and value added tax with respect to bond interest derived by foreign institutional investors (FIIs) derived in the domestic bond market (via CIBM and Hong Kong Bond Connect) from November 7, 2018 to November 6, 2021. On November 26, 2021, the tax exemption period provided in Circular 108 was extended by Caishui [2021] No. 34 (“Circular 34”) to December 31, 2025.
Under the PRC Corporate Income Tax regime, PRC also imposes withholding tax at a rate of 10% (subject to treaty relief) on PRC-sourced capital gains derived by nonresident enterprises, provided that the nonresident enterprises (i) do not have places of business, establishments or permanent establishments in the PRC; and (ii) are not PRC tax resident enterprises. VanEck China Bond ETF and VanEck J.P. Morgan EM Local Currency Bond ETF currently consider capital gains derived from bonds issued by PRC entities to be non PRC-sourced income, and thus nonresident enterprises should not be subject to withholding tax on such gains. Gains derived by nonresidents from the trading of bonds issued by PRC entities should be exempt from value-added tax.
PRC rules for taxation of nonresidents trading bonds via Bond Connect are evolving, and the PRC tax regulations to be issued by the PRC State Administration of Taxation and/or PRC MOF to clarify the subject matter may apply retrospectively, even if such rules are adverse to the nonresident investors. If the PRC tax authorities were to issue differing formal guidance or tax rules regarding the taxation of interest and capital gains derived by nonresident investors from PRC bonds, and/or begin collecting withholding tax on gains from such investments, VanEck China Bond ETF and VanEck J.P. Morgan EM Local Currency Bond ETF could be subject to additional tax liabilities. The impact of any such tax liability, as well as the potential late payment interest and penalties associated with the underpaid PRC taxes, on a Fund’s return could be substantial.
Other Issues
(VanEck Energy Income ETF only)
The Fund may be subject to tax or taxes in certain states where MLPs do business. Furthermore, in those states which have income tax laws, the tax treatment of the Fund and its Fund shareholders with respect to distributions by the Fund may differ from federal tax treatment.
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CAPITAL STOCK AND SHAREHOLDER REPORTS
The Trust currently is comprised of 69 investment portfolios which are currently being offered. The Trust issues Shares of beneficial interest with no par value. The Board may designate additional funds of the Trust.
Each Share issued by the Trust has a pro rata interest in the assets of the corresponding Fund. Shares have no pre-emptive, exchange, subscription or conversion rights and are freely transferable. Each Share is entitled to participate equally in dividends and distributions declared by the Board with respect to the relevant Fund, and in the net distributable assets of such Fund on liquidation. A Fund may liquidate and terminate at any time and for any reason, including as a result of the termination of the license agreement between the Fund’s Adviser and the Fund’s Index Provider, without shareholder approval.
Each Share has one vote with respect to matters upon which a shareholder vote is required consistent with the requirements of the 1940 Act and the rules promulgated thereunder and each fractional Share has a proportional fractional vote. Shares of all funds vote together as a single class except that if the matter being voted on affects only a particular fund it will be voted on only by that fund, and if a matter affects a particular fund differently from other funds, that fund will vote separately on such matter. Under Delaware law, the Trust is not required to hold an annual meeting of shareholders unless required to do so under the 1940 Act. The policy of the Trust is not to hold an annual meeting of shareholders unless required to do so under the 1940 Act. All Shares of the Trust have noncumulative voting rights for the election of Trustees. Under Delaware law, Trustees of the Trust may be removed by vote of the shareholders.
Under Delaware law, the shareholders of a Fund are not generally subject to liability for the debts or obligations of the Trust. Similarly, Delaware law provides that a Fund will not be liable for the debts or obligations of any other series of the Trust. However, no similar statutory or other authority limiting statutory trust shareholder liability may exist in other states. As a result, to the extent that a Delaware statutory trust or a shareholder is subject to the jurisdiction of courts of such other states, the courts may not apply Delaware law and may thereby subject the Delaware statutory trust’s shareholders to liability for the debts or obligations of the Trust. The Trust’s Amended and Restated Declaration of Trust (the “Declaration of Trust”) provides for indemnification by the relevant Fund for all loss suffered by a shareholder as a result of an obligation of the Fund. The Declaration of Trust also provides that a Fund shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the Fund and satisfy any judgment thereon.
The Trust will issue through DTC Participants to its shareholders semi-annual reports, annual reports and such other information as may be required by applicable laws, rules and regulations. Beneficial Owners also receive annually notification as to the Trust’s distributions.
Shareholder inquiries may be made by writing to the Trust, c/o Van Eck Associates Corporation, 666 Third Avenue, 9th Floor, New York, New York 10017.
COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Dechert LLP, 1095 Avenue of the Americas, New York, New York 10036, is counsel to the Trust and has passed upon the validity of each Fund’s Shares.
Another independent public accounting firm was the Trust's independent registered public accounting firm for the fiscal years ended September 30, 2021, December 31, 2021 and April 30, 2022. PricewaterhouseCoopers LLP, has been appointed as the Trust's independent registered public accounting firm for the fiscal years subsequent to April 30, 2022 and audits the Funds' financial statements and perform other related audit services.
FINANCIAL STATEMENTS
Pursuant to an agreement and plan of reorganization between the Trust, on behalf of the VanEck Energy Income ETF, and Exchange Traded Concepts Trust, on behalf of Yorkville High Income MLP ETF (the “Predecessor Fund”), on February 22, 2016 the VanEck Energy Income ETF acquired all of the assets and liabilities of the Predecessor Fund in exchange for shares of beneficial interest of the VanEck Energy Income ETF (the “Reorganization”). As a result of the Reorganization, the VanEck Energy Income ETF adopted the financial and performance history of the Predecessor Fund.
The audited financial statements, including the financial highlights, the report of PricewaterhouseCoopers LLP, each Fund’s independent registered public accountant, appearing in the Trust’s most recent Annual Report to shareholders or filing on Form N-CSR for each Fund’s corresponding fiscal year end and filed electronically with the SEC, are incorporated by reference in and made part of this SAI. No other portions of any of the Trust’s Annual Reports, Semi-Annual Reports or filing on Form N-CSR are incorporated by reference or made part of this SAI. You may request a copy of the Trust’s Annual Reports and Semi-Annual Reports for the Funds at no charge by calling 800.826.2333 during normal business hours.
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For each Fund with a fiscal year end of December 31, 2024, the Trust's most recent Annual Reports to shareholders and filing on Form N-CSR are accessible HERE.
For each Fund with a fiscal year end of April 30, 2024, the Trust's most recent Annual Reports to shareholders are accessible HERE.
For each Fund with a fiscal year end of September 30, 2024, the Trust's most recent Annual Reports to shareholders and filing on Form N-CSR are accessible HERE.
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LICENSE AGREEMENTS AND DISCLAIMERS1
1 Unless otherwise defined in the relevant disclosure, defined terms shall have the meaning as set forth in each Fund’s prospectus.
Source ICE Data, is used with permission. “ICE” is a registered trademark of ICE Data or its affiliates. “NYSE”, “NYSE Arca Gold Miners Index” and “NYSE Arca” are registered trademarks of NYSE Group, Inc., and are used by ICE Data with permission and under a license. “BofA”® is a registered trademark of Bank of America Corporation licensed by Bank of America Corporation and its affiliates ("BofA") and may not be used without BofA's prior written approval.
These trademarks have been licensed, along with the NYSE Arca Environmental Services Index, the NYSE Arca Gold Miners Index and the NYSE Arca Steel Index, the Fallen Angel Index, the Emerging Markets High Yield Index, the Preferred Securities Index, the High Yield Index, the Intermediate Index, the Long Index, the Short High Yield Index, the Short Index and the International High Yield Index (the “ICE Indices”) for use by the Adviser in connection with the relevant funds (the “VE Products”). Neither the Adviser, the Trust nor the VE Products, as applicable, are sponsored, endorsed, sold or promoted by ICE Data, its affiliates or its and their third party suppliers (“ICE Data and its Suppliers”). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in securities generally, in the VE Products particularly, the Trust or the ability of the ICE Indices to track general market performance. Past performance of an Index is not an indicator of or a guarantee of future results.
ICE Data’s only relationship to the Adviser is the licensing of certain trademarks and trade names and the ICE Indices or components thereof. The ICE Indices are determined, composed and calculated by ICE Data without regard to the Adviser or the VE Products or their holders. ICE Data has no obligation to take the needs of the Adviser or the holders of the VE Products into consideration in determining, composing or calculating the ICE Indices. ICE Data is not responsible for and has not participated in the determination of the timing of, prices of, or quantities of the VE Products to be issued or in the determination or calculation of the equation by which the VE Products are to be priced, sold, purchased, or redeemed. Except for certain custom index calculation services, all information provided by ICE Data is general in nature and not tailored to the needs of the Adviser or any other person, entity or group of persons. ICE Data has no obligation or liability in connection with the administration, marketing, or trading of the VE Products. ICE Data is not an investment advisor. Inclusion of a security within an Index is not a recommendation by ICE Data to buy, sell, or hold such security, nor is it considered to be investment advice.
ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE ICE INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE ICE INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK.
In addition, and although ICE Data shall obtain information for inclusion in or for use in the calculation of each of the Indices from sources which it considers reliable, ICE Data and its Suppliers do not guarantee the accuracy and/or the completeness of the component data of each of the Indices obtained from independent sources. Without limiting any of the foregoing, in no event shall ICE Data and its Suppliers have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of an Index’s possibility of such damages.
Morningstar Disclaimer
The Adviser has entered into a licensing agreement with Morningstar, Inc. (“Morningstar”) pursuant to which the Adviser has the right to use the Morningstar® Global Markets ex-US Wide Moat Focus Index℠, the Morningstar® Global Wide Moat Focus Index℠, the Morningstar® Wide Moat Focus Index℠, the Morningstar® US Broad Growth Wide Moat Focus Index℠, the Morningstar® US Broad Value Wide Moat Focus Index℠, the Morningstar® US Dividend Valuation Index℠, the Morningstar® US Small-Mid Cap Moat Focus Index℠ and the Morningstar® US Sustainability Moat Focus Index℠ (collectively the “Morningstar Indices”) as the underlying indices for the VanEck Durable High Dividend ETF, VanEck Morningstar ESG Moat ETF, VanEck Morningstar Global Wide Moat ETF, VanEck Morningstar International Moat ETF, VanEck Morningstar SMID Moat ETF, VanEck Morningstar Wide Moat ETF, VanEck Morningstar Wide Moat Growth ETF and VanEck Morningstar Wide Moat Value ETF (each a “VanEck Index ETF,” and collectively, the “VanEck Index ETFs”).
The VanEck Index ETFs are not sponsored, endorsed, sold or promoted by Morningstar. Morningstar makes no representation or warranty, express or implied, to the shareholders of the VanEck Index ETFs or any member of the public regarding the advisability of investing in securities generally or in the VanEck Index ETFs in particular or the ability of the Morningstar Indices to track general stock market performance. Morningstar’s only relationship to the Adviser is the licensing
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of certain service marks and service names of Morningstar and of the Morningstar Indices, which are determined, composed and calculated by Morningstar without regard to the Adviser or the VanEck Index ETFs. Morningstar has no obligation to take the needs of the Adviser or the shareholders of the VanEck Index ETFs into consideration in determining, composing or calculating the Morningstar Indices. Morningstar is not responsible for and has not participated in the determination of the prices and amount of the VanEck Index ETFs or the timing of the issuance or sale of the VanEck Index ETFs or in the determination or calculation of the equation by which the VanEck Index ETFs are converted into cash. Morningstar has no obligation or liability in connection with the administration, marketing or trading of the VanEck Index ETFs.
MORNINGSTAR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE MORNINGSTAR INDICES OR ANY DATA INCLUDED THEREIN AND MORNINGSTAR SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. MORNINGSTAR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, SHAREHOLDERS OF THE VANECK INDEX ETFS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE MORNINGSTAR INDICES OR ANY DATA INCLUDED THEREIN. MORNINGSTAR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE MORNINGSTAR INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MORNINGSTAR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
VanEck CEF Muni Income ETF is not sponsored, endorsed, sold or promoted by VettaFi. VettaFi makes no representation or warranty, express or implied, to the owners of VanEck CEF Muni Income ETF, or any member of the public regarding the advisability of investing in securities generally or in VanEck CEF Muni Income ETF particularly or the ability of the S-Network Municipal Bond Closed-End Fund Index (the “CEFMX Index”) to track the performance of the federally tax-exempt annual yield sector of the closed-end fund market. VettaFi’s only relationship to the Adviser is the licensing of certain service marks and trade names of S-Network and of the CEFMX Index that is determined, composed and calculated by VettaFi without regard to the Adviser or VanEck CEF Muni Income ETF. VettaFi has no obligation to take the needs of the Adviser or the owners of VanEck CEF Muni Income ETF, into consideration in determining, composing or calculating the CEFMX Index. VettaFi is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of VanEck CEF Muni Income ETF to be issued or in the determination or calculation of the equation by which VanEck CEF Muni Income ETF is to be converted into cash. VettaFi has no obligation or liability in connection with the administration, marketing or trading of VanEck CEF Muni Income ETF.
VETTAFI DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE CEFMX INDEX OR ANY DATA INCLUDED THEREIN AND THE INDEX PROVIDER SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. VETTAFI MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF VANECK CEF MUNI INCOME ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE CEFMX INDEX OR ANY DATA INCLUDED THEREIN. S-NETWORK MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE CEFMX INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CEFMX INDEX PROVIDER HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
The Adviser has entered into a licensing agreement with MarketVector Indexes GmbH (“MarketVector”) to use each of the Africa Index, Agribusiness Index, Alternative Asset Managers Index, BBB Index, BDC Index, Biotech Index, Brazil Small-Cap Index, Clean-Tech Metals Index, Digital India Index, Digital Transformation Index, Energy Income Index, eSports Index, Fabless Index, Floating Rate Index, Gaming Index, Indonesia Index, Israel Index, Junior Gold Miners Index, Low Carbon Energy Index, Mortgage REITs Index, Natural Resources Index, Nuclear Energy Index, Office and Commercial REITs Index, Oil Refiners Index, Oil Services Index, Pharmaceutical Index, Rare Earth/Strategic Metals Index, Retail Index, Robotics Index, Semiconductor Index, US IG Index, and Vietnam Index, (the “MarketVector Indexes”). Each of the funds that seeks to track a MarketVector Index (each an “Index ETF,” and collectively, the “Index ETFs”) is entitled to use its Index pursuant to a sub-licensing arrangement with the Adviser.
Shares of the Index ETFs are not sponsored, endorsed, sold or promoted by MarketVector. MarketVector makes no representation or warranty, express or implied, to the owners of the Shares of the Index ETFs or any member of the public regarding the advisability of investing in securities generally or in the Shares of the Index ETFs particularly or the ability of the MarketVector Indexes to track the performance of its respective securities markets. Each of the MarketVector Indexes is
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determined and composed by MarketVector without regard to the Adviser or the Shares of the Index ETFs. MarketVector has no obligation to take the needs of the Adviser or the owners of the Shares of the Index ETFs into consideration in determining or composing the respective Index. MarketVector is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Shares of the Index ETFs to be issued or in the determination or calculation of the equation by which the Shares of the Index ETFs are to be converted into cash. MarketVector has no obligation or liability in connection with the administration, marketing or trading of the Shares of the Index ETFs.
MARKETVECTOR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN AND MARKETVECTOR SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. MARKETVECTOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. MARKETVECTOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MARKETVECTOR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Shares of the Index ETFs are not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the MarketVector Indexes and/or its trade mark or its price at any time or in any other respect. The MarketVector Indexes are calculated and maintained by Solactive AG. Solactive AG uses its best efforts to ensure that the MarketVector Indexes are calculated correctly. Irrespective of its obligations towards MarketVector Indexes, Solactive AG has no obligation to point out errors in the MarketVector Indexes to third parties including but not limited to investors and/or financial intermediaries of the Index ETFs. Neither publication of the MarketVector Indexes by Solactive AG nor the licensing of the MarketVector Indexes or its trade mark for the purpose of use in connection with the Index ETFs constitutes a recommendation by Solactive AG to invest capital in the Index ETFs nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in the Index ETFs. Solactive AG is not responsible for fulfilling the legal requirements concerning the accuracy and completeness of the prospectus of the Index ETFs.
The Adviser has entered into a licensing agreement with Moody’s Analytics, Inc. to use certain Moody’s Analytics credit risk models, data and trademarks. Moody’s Analytics is a registered trademark of Moody’s Analytics, Inc. and/or its affiliates and is used under license.
Moody's Analytics IG Corporate Bond ETF and VanEck Moody's Analytics BBB Corporate Bond ETF are not sponsored, promoted, sold or supported in any manner by Moody’s Analytics nor does Moody’s Analytics offer any express or implicit guarantee or assurance either with regard to the results of using the US IG Index or BBB Index, as applicable, and/or the Moody’s Analytics trademark or data at any time or in any other respect. Certain quantitative financial data used in calculating and publishing the US IG Index or BBB Index is licensed to the Adviser by Moody’s Analytics. Moody’s Analytics has no obligation to point out errors in the data to third parties including but not limited to investors and/or financial intermediaries of the Fund. The licensing of data or the Moody’s Analytics trademark for the purpose of use in connection with the US IG Index or BBB Index, as applicable, and Fund does not constitutes a recommendation by Moody’s Analytics to invest capital in the Fund nor does it in any way represent an assurance or opinion of Moody’s Analytics with regard to any investment in this financial instrument. Moody’s Analytics bears no liability with respect to the Fund or any security. The VanEck Moody’s Analytics IG Corporate Bond ETF and the VanEck Moody's Analytics BBB Corporate Bond ETF, which are based on the US IG Index and the BBB Index, respectively, are not issued, sponsored, endorsed, sold or marketed by ICE Data, and ICE Data makes no representation regarding the advisability of investing in such
product.
The VanEck IG Floating Rate ETF, which is based on the Floating Rate Index, the Moody's Analytics IG Corporate Bond ETF which is based on the US IG Index, and the VanEck Moody's Analytics BBB Corporate Bond ETF, which is based on the BBB Index, are not issued, sponsored, endorsed, sold or marketed by ICE Data, and ICE Data makes no representation regarding the advisability of investing in such products.
ICE Data’s only relationship to the Licensee is the licensing of certain trademarks and trade names and the IG Floating Rate Index, the US IG Index and the BBB Index (collectively, the “ICE Calculated Indices”) or components thereof. The ICE Calculated Indices are determined, composed and calculated by ICE Data without regard to the Adviser or the Products or its holders. ICE Data has no obligation to take the needs of the Adviser or the holders of the Products into consideration in
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determining, composing or calculating the ICE Calculated Indices. ICE Data is not responsible for and has not participated in the determination of the timing of, prices of, or quantities of the Products to be issued or in the determination or calculation of the equation by which the Products are to be priced, sold, purchased, or redeemed. Except for certain custom index calculation services, all information provided by ICE Data is general in nature and not tailored to the needs of the Adviser or any other person, entity or group of persons. ICE Data has no obligation or liability in connection with the administration, marketing, or trading of the Products. ICE Data is not an investment advisor. Inclusion of a security within an index is not a recommendation by ICE Data to buy, sell, or hold such security, nor is it considered to be investment advice.
ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE ICE CALCULATED INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE ICE CALCULATED INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK.
VanEck India Growth Leaders ETF (the “MarketGrader Index ETF,”) is not sponsored, endorsed, sold or promoted by MarketGrader.com Corp. (“MarketGrader”). MarketGrader's only relationship to the Adviser is the licensing of the MarketGrader India All-Cap Growth Leaders Index, the (“MarketGrader Index”) which is determined, composed and calculated by MarketGrader and Solactive AG, as Index Calculation Agent, without regard to the Adviser. MarketGrader has no obligation to take the needs of the Adviser or the owners of the MarketGrader Index ETF into consideration in determining, composing or calculating the MarketGrader Index.
MARKETGRADER SHALL NOT BE A PARTY TO THE TRANSACTION CONTEMPLATED HEREBY, AND IS NOT PROVIDING ANY ADVICE, RECOMMENDATION, REPRESENTATION OR WARRANTY REGARDING THE ADVISABILITY OF THIS TRANSACTION OR THE MARKETGRADER INDEX ETF OR THE ABILITY OF THE MARKETGRADER INDEX TO TRACK INVESTMENT PERFORMANCE. MARKETGRADER HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, REGARDING THIS TRANSACTION AND ANY USE OF THE MARKETGRADER INDEX, INCLUDING BUT NOT LIMITED TO ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE, AND NON-INFRINGEMENT AND ALL WARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING AND USAGE OF TRADE OR THEIR EQUIVALENTS UNDER THE LAWS OF ANY JURISDICTION. UNDER NO CIRCUMSTANCES AND UNDER NO THEORY OF LAW, TORT, CONTRACT, STRICT LIABILITY OR OTHERWISE, SHALL MARKETGRADER OR ANY OF ITS AFFILIATES BE LIABLE TO ANY PERSON FOR ANY DAMAGES, REGARDLESS OF WHETHER THEY ARE DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY CHARACTER, INCLUDING DAMAGES FOR TRADING LOSSES OR LOST PROFITS, OR FOR ANY CLAIM OR DEMAND BY ANY THIRD PARTY, EVEN IF MARKETGRADER KNEW OR HAD REASON TO KNOW OF THE POSSIBILITY OF SUCH DAMAGES, CLAIM OR DEMAND.
The MarketGrader Index is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the MarketGrader Index ETF and/or the Index Price at any time or in any other respect. The MarketGrader Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the MarketGrader Index is calculated correctly. Irrespective of its obligations towards MarketGrader, Solactive AG has no obligation to point out errors in the MarketGrader Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the MarketGrader Index by Solactive AG nor the licensing of the MarketGrader Index or for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this financial instrument.
The VanEck India Growth Leaders ETF invests substantially all of its assets in the Mauritius Subsidiary, MV SCIF Mauritius, a private company limited by shares incorporated in Mauritius. The Mauritius Subsidiary is regulated by the Mauritius Financial Services Commission which has issued a GBL1 License to the Mauritius Subsidiary to conduct the business of “investment holding.” Neither investors in the Mauritius Subsidiary nor investors in the Fund are protected by any statutory compensation arrangements in Mauritius in the event of the Mauritius Subsidiary’s or the Fund’s failure.
The Mauritius Financial Services Commission does not vouch for the financial soundness of the Mauritius Subsidiary or the Fund or for the correctness of any statements made or opinions expressed with regard to it in any offering document or other similar document of the Mauritius Subsidiary or the Fund.
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The information contained herein regarding the ChiNext Index was provided by Shenzhen Securities Information Co., Ltd (“Shenzhen Securities”).
Shares of the VanEck ChiNext ETF are not sponsored, endorsed, sold or promoted by the Shenzhen Securities. Shenzhen Securities makes no representation or warranty, express or implied, to the owners of the Shares of VanEck ChiNext ETF or any member of the public regarding the advisability of investing in securities generally or in the Shares of VanEck ChiNext ETF particularly or the ability of the ChiNext Index to track the performance of the securities markets. The ChiNext Index is determined and composed by Shenzhen Securities without regard to the Adviser or the Shares of VanEck ChiNext ETF. Shenzhen Securities has no obligation to take the needs of the Adviser or the owners of the Shares of VanEck ChiNext ETF into consideration in determining or composing the ChiNext Index. Shenzhen Securities is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Shares of VanEck ChiNext ETF to be issued or in the determination or calculation of the equation by which the Shares of VanEck ChiNext ETF are to be converted into cash. Shenzhen Securities has no obligation or liability in connection with the administration, marketing or trading of the Shares of VanEck ChiNext ETF.
SHENZHEN SECURITIES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE CHINEXT INDEX OR ANY DATA INCLUDED THEREIN AND SHENZHEN SECURITIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. SHENZHEN SECURITIES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF THE SHARES OF VANECK CHINEXT ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE CHINEXT INDEX OR ANY DATA INCLUDED THEREIN. SHENZHEN SECURITIES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE CHINEXT INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL SHENZHEN SECURITIES HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
J.P. Morgan is the marketing name for JPMorgan Chase & Co., and its subsidiaries and affiliates worldwide. J.P. Morgan Securities Inc. is a member of NYSE and SIPC. JPMorgan Chase Bank, National Association is a member of FDIC. J.P. Morgan Futures Inc. is a member of the NFA. J.P. Morgan Securities Ltd. and J.P. Morgan plc are authorized by the FSA and members of the LSE. J.P. Morgan Europe Limited is authorized by the FSA. J.P. Morgan Equities Limited is a member of the Johannesburg Securities Exchange and is regulated by the FSB. J.P. Morgan Securities (Asia Pacific) Limited is registered as an investment adviser with the Securities & Futures Commission in Hong Kong and its CE number is AAJ321. J.P. Morgan Securities Singapore Private Limited is a member of Singapore Exchange Securities Trading Limited and is regulated by the Monetary Authority of Singapore ("MAS"). J.P. Morgan Securities Asia Private Limited is regulated by the MAS and the Financial Services Agency in Japan. J.P. Morgan Australia Limited (ABN 52 002 888 011) is a licensed securities dealer.
The Shares of VanEck J.P. Morgan EM Local Currency Bond ETF are not sponsored, endorsed, sold or promoted by J.P. Morgan. J.P. Morgan makes no representation or warranty, express or implied, to the owners of the Shares of VanEck J.P. Morgan EM Local Currency Bond ETF or any member of the public regarding the advisability of investing in securities generally, or in the Shares of VanEck J.P. Morgan EM Local Currency Bond ETF particularly or the Emerging Markets Global Core Index to track general bond market performance. J.P. Morgan's only relationship to the Adviser is the licensing of the Emerging Markets Global Core Index which is determined, composed and calculated by J.P. Morgan without regard to the Adviser or the Shares of VanEck J.P. Morgan EM Local Currency Bond ETF. J.P. Morgan has no obligation to take the needs of the Adviser or the owners of the Shares of VanEck J.P. Morgan EM Local Currency Bond ETF into consideration in determining, composing or calculating the Emerging Markets Global Core Index. J.P. Morgan is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Shares of VanEck J.P. Morgan EM Local Currency Bond ETF to be issued or in the determination or calculation of the equation by which the Shares of VanEck J.P. Morgan EM Local Currency Bond ETF are to be converted into cash. J.P. Morgan has no obligation or liability in connection with the administration, marketing or trading of the Shares of VanEck J.P. Morgan EM Local Currency Bond ETF.
THE EMERGING MARKETS GLOBAL CORE INDEX AND/OR SHARES OF THE VANECK J.P. MORGAN EM LOCAL CURRENCY BOND ETF, IS PROVIDED "AS IS" WITH ANY AND ALL FAULTS. J.P. MORGAN DOES NOT GUARANTEE THE AVAILABILITY, SEQUENCE, TIMELINESS, QUALITY, ACCURACY AND/OR THE COMPLETENESS OF THE EMERGING MARKETS GLOBAL CORE INDEX AND/OR SHARES OF THE VANECK J.P. MORGAN EM LOCAL CURRENCY BOND ETF AND/OR ANY DATA INCLUDED THEREIN, OR OTHERWISE OBTAINED BY THE ADVISER, OWNERS OF THE VANECK J.P. MORGAN EM LOCAL CURRENCY BOND ETF OR BY ANY OTHER PERSON OR ENTITY, FROM ANY USE OF THE EMERGING MARKETS GLOBAL CORE INDEX AND/OR THE SHARES OF THE VANECK J.P. MORGAN EM LOCAL CURRENCY BOND ETF. J.P. MORGAN MAKES
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NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE EMERGING MARKETS GLOBAL CORE INDEX OR ANY DATA INCLUDED THEREIN, OR OTHERWISE OBTAINED BY THE ADVISER, OWNERS OF SHARES OF THE VANECK J.P. MORGAN EM LOCAL CURRENCY BOND ETF OR BY ANY OTHER PERSON OR ENTITY, FROM ANY USE OF THE EMERGING MARKETS GLOBAL CORE INDEX AND/OR SHARES OF THE VANECK J.P. MORGAN EM LOCAL CURRENCY BOND ETF. THERE ARE NO REPRESENTATIONS OR WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE OF THIS DOCUMENT, IF ANY. ALL WARRANTIES AND REPRESENTATIONS OF ANY KIND WITH REGARD TO THE EMERGING MARKETS GLOBAL CORE INDEX AND/OR SHARES OF THE VANECK J.P. MORGAN LOCAL CURRENCY BOND ETF, ARE DISCLAIMED INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, QUALITY, ACCURACY, FITNESS FOR A PARTICULAR PURPOSE AND/OR AGAINST INFRINGEMENT AND/OR WARRANTIES AS TO ANY RESULTS TO BE OBTAINED BY AND/OR FROM THE USE OF THE EMERGING MARKETS GLOBAL CORE INDEX.
The indexes may not be copied, used, or distributed without J.P. Morgan's prior written approval. J.P. Morgan and the J.P. Morgan index names are service mark(s) of J.P. Morgan or its affiliates and have been licensed for use for certain purposes by VanEck. No purchaser, seller or holder of this security, product or fund, or any other person or entity, should use or refer to any J.P. Morgan trade name, trademark or service mark to sponsor, endorse, market or promote this Financial Product or any other financial product without first contacting J.P. Morgan to determine whether J.P. Morgan's permission is required. Under no circumstances may any person or entity claim any affiliation with J.P. Morgan without the prior written permission of J.P. Morgan. Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. Copyright 2025, J.P. Morgan Chase & Co. All rights reserved.
The VanEck China Bond ETF has been developed solely by the Adviser. The VanEck China Bond ETF is not in any way connected to or sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies.
All rights in the FTSE Chinese Broad Bond 0-10 Years Diversified Select Index vest in the relevant LSE Group company which owns the FTSE Chinese Broad Bond 0-10 Years Diversified Select Index. “FTSE®” is a trademark of the relevant LSE Group company and is used by any other LSE Group company under license.
The FTSE Chinese Broad Bond 0-10 Years Diversified Select Index is calculated by or on behalf of FTSE Fixed Income, LLC or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on, or any error in, the FTSE Chinese Broad Bond 0-10 Years Diversified Select Index or (b) investment in or operation of the VanEck China Bond ETF. The LSE Group makes no claim, prediction, warranty or representation either as to the results to be obtained from the VanEck China Bond ETF.
The information contained herein regarding the Green Bond Index was provided by S&P Dow Jones Indices LLC. The information contained herein regarding the securities markets and DTC was obtained from publicly available sources.
The Adviser has entered into a licensing agreement with S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) to use the Green Bond Index. VanEck Green Bond ETF is entitled to use the Green Bond Index pursuant to a sub-licensing arrangement with the Adviser.
The Green Bond Index is a product of SPDJI and has been licensed for use by the Adviser. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); These trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by the Adviser. It is not possible to invest directly in an index. VanEck Green Bond ETF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the VanEck Green Bond ETF or any member of the public regarding the advisability of investing in securities generally or in VanEck Green Bond ETF particularly or the ability of the Green Bond Index to track general market performance. Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices’ only relationship to the Adviser with respect to the Green Bond Index is the licensing of the Green Bond Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The Green Bond Index is determined, composed and calculated by S&P Dow Jones Indices without regard to the Adviser or the VanEck Green Bond ETF. S&P Dow Jones Indices has no obligation to take the needs of the Adviser or the owners of VanEck Green Bond ETF into consideration in determining, composing or calculating the Green Bond Index. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of the VanEck Green Bond ETF. There is no assurance that investment products based on
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the Green Bond Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment adviser, commodity trading advisory, commodity pool operator, broker dealer, fiduciary, “promoter” (as defined in the Investment Company Act of 1940), “expert” as enumerated within 15 U.S.C. § 77k(a) or tax advisor. Inclusion of a security, commodity, crypto currency or other asset within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, commodity, crypto currency or other asset, nor is it considered to be investment advice or commodity trading advice.
NEITHER S&P DOW JONES INDICES NOR THIRD PARTY LICENSOR GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE GREEN BOND INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY THE ADVISER, OWNERS OF THE VANECK GREEN BOND ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE GREEN BOND INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. S&P DOW JONES INDICES HAS NOT REVIEWED, PREPARED AND/OR CERTIFIED ANY PORTION OF, NOR DOES S&P DOW JONES INDICES HAVE ANY CONTROL OVER, THE VANECK GREEN BOND ETF REGISTRATION STATEMENT, PROSPECTUS OR OTHER OFFERING MATERIALS. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND THE ADVISER, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
The information contained herein regarding the NDR CMG Index was provided by Ned Davis Research, Inc. (“NDR”).“NDR CMG Index,” “Ned Davis Research,” “Ned Davis,” and “NDR” are trademarks of NDR, and “CMG” and “CMG Capital Management Group” are trademarks of CMG Capital Management Group, Inc. (“CMG”). These trademarks have been licensed for use for certain purposes by Van Eck Associates Corporation. VanEck Long/Flat Trend ETF is based on the NDR CMG Index and is not issued, sponsored, endorsed, sold, promoted or advised by Ned Davis Research, Inc., CMG Capital Management Group, or their affiliates. Ned Davis Research, Inc. and CMG Capital Management Group make no representation or warranty, expressed or implied, regarding whether VanEck Long/Flat Trend ETF is suitable for investors generally or the advisability of trading in such product. Ned Davis Research, Inc. and CMG Capital Management Group do not guarantee that the NDR CMG Index referenced by the VanEck Long/Flat Trend ETF has been accurately calculated or that the NDR CMG Index appropriately represents a particular investment strategy. The NDR CMG Index is heavily dependent on quantitative models and data from one or more third parties, and there is no guarantee that these models will perform as expected. While the NDR CMG Index is designed to reduce risk from adverse market conditions, there is a risk that actual performance could be worse than a buy-and-hold strategy. Ned Davis Research, Inc., CMG Capital Management Group, and their affiliates shall not have any liability for any error in the NDR CMG Index calculation or for any infirmity in the VanEck Long/Flat Trend ETF.
NEITHER NDR NOR CMG GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE NDR CMG INDEX OR ANY DATA INCLUDED THEREIN AND NEITHER NDR NOR CMG SHALL HAVE ANY LIABILITY WHATSOEVER FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. NDR AND CMG MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE VANECK LONG/FLAT TREND ETF OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NDR CMG INDEX OR ANY DATA INCLUDED THEREIN. NDR AND CMG MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NDR CMG INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL NDR OR CMG HAVE ANY LIABILITY, JOINTLY OR SEVERALLY, FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
The NDR CMG Index is the property of Ned Davis Research, Inc.(“NDR”), which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the NDR CMG Index. The NDR CMG Index is not sponsored by S&P Dow Jones Indices LLC or its affiliates or its third party licensors, including Standard & Poor’s Financial Services LLC and Dow Jones Trademark Holdings LLC (collectively, “S&P Dow Jones Indices”). S&P Dow Jones
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Indices will not be liable for any errors or omissions in calculating the Index. “Calculated by S&P Dow Jones Indices” and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Ned Davis Research, Inc. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC, and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC.
The VanEck Long/Flat Trend ETF based on the NDR CMG Index is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices. S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the VanEck Long/Flat Trend ETF or any member of the public regarding the advisability of investing in securities generally or in the NDR CMG Index or the VanEck Long/Flat Trend ETF particularly or the ability of the NDR CMG Index or the VanEck Long/Flat Trend ETF to track general market performance. S&P Dow Jones Indices’ only relationship to Ned Davis Research, Inc. with respect to the NDR CMG Index is the licensing of the S&P 500 Index, certain trademarks, service marks and trade names of S&P Dow Jones Indices, and the provision of the calculation services on behalf of Ned Davis Research, Inc. related to the NDR CMG Index without regard to Ned Davis Research, Inc. or the VanEck Long/Flat Trend ETF. S&P Dow Jones Indices is not responsible for and has not participated in the creation of the VanEck Long/Flat Trend ETF, the determination of the prices and amount of the VanEck Long/Flat Trend ETF or the timing of the issuance or sale of the VanEck Long/Flat Trend ETF or in the determination or calculation of the equation by which the VanEck Long/Flat Trend ETF may be converted into cash or other redemption mechanics. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of the VanEck Long/Flat Trend ETF. There is no assurance that investment products based on the NDR CMG Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion or exclusion of a security within the NDR CMG Index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it investment advice. S&P Dow Jones Indices does not act nor shall be deemed to be acting as a fiduciary in providing the S&P 500 Index.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE GREEN BOND INDEX OR THE NDR CMG INDEX, OR ANY DATA RELATED THERETO, OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY NDR, OWNERS OF THE VANECK GREEN BOND ETF OR VANECK LONG/FLAT TREND ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME, OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. S&P DJI HAS NOT PREPARED, REVIEWED AND/OR CERTIFIED ANY PORTION OF, NOR DOES S&P HAVE ANY CONTROL OVER, THE VANECK GREEN BOND ETF REGISTRATION STATEMENT, PROSPECTUS OR OTHER OFFERING MATERIALS. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND NDR OR VEAC, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
The Adviser has entered into a licensing agreement with BUZZ Holdings ULC (“BUZZ Holdings”) to use the Sentiment Leaders Index. VanEck Social Sentiment ETF is entitled to use the Sentiment Leaders Index pursuant to a sub-licensing arrangement with the Adviser.
The Sentiment Leaders Index is a product of BUZZ Holdings, and has been licensed to the Adviser for use in connection with VanEck Social Sentiment ETF.
VanEck Social Sentiment ETF is not sponsored, endorsed, sold or promoted by BUZZ Holdings, or its shareholders, or the licensor of the Sentiment Leaders Index and/or its affiliates and third party licensors. BUZZ Holdings makes no representation or warranty, express or implied, to the owners of VanEck Social Sentiment ETF or any member of the public regarding the advisability of investing in securities generally or in VanEck Social Sentiment ETF particularly, or the ability of the Sentiment Leaders Index to track general market performance. BUZZ Holdings’ only relationship to the Adviser with respect to the Sentiment Leaders Index is the licensing of the Sentiment Leaders Index and certain trademarks of BUZZ Holdings. The BUZZ indices are determined and composed by BUZZ Holdings without regard to the Adviser or VanEck Social
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Sentiment ETF. BUZZ Holdings has no obligation to take the needs of the Adviser or the owners of VanEck Social Sentiment ETF into consideration in determining and composing the Sentiment Leaders Index.
BUZZ Holdings is not responsible for and have not participated in the determination of the prices of VanEck Social Sentiment ETF or the timing of the issuance or sale of securities of VanEck Social Sentiment ETF or in the determination or calculation of the equation by which VanEck Social Sentiment ETF securities may be converted into cash, surrendered, or redeemed, as the case may be. BUZZ Holdings have no obligation or liability in connection with the administration, marketing or trading of VanEck Social Sentiment ETF. There is no assurance that investment products based on the Sentiment Leaders Index will accurately track index performance or provide positive investment returns. BUZZ Holdings is not an investment advisor and the inclusion of a security in the Sentiment Leaders Index is not a recommendation by BUZZ Holdings to buy, sell, or hold such security, nor should it be considered investment advice.
BUZZ Holdings is not responsible for fulfilling the legal requirements concerning the accuracy and completeness of the VanEck Social Sentiment ETF’s Prospectus.
BUZZ HOLDINGS DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE SENTIMENT LEADERS INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION WITH RESPECT THERETO, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS). BUZZ HOLDINGS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. BUZZ HOLDINGS MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY VAN ECK ASSOCIATES CORPORATION, OWNERS OF VANECK SOCIAL SENTIMENT ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE SENTIMENT LEADERS INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL BUZZ HOLDINGS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN BUZZ HOLDINGS AND VAN ECK ASSOCIATES CORPORATION, OTHER THAN THE LICENSORS OF BUZZ HOLDINGS.
VanEck Social Sentiment ETF is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Sentiment Leaders Index and/or its trade mark or its price at any time or in any other respect. The Sentiment Leaders Index is calculated and maintained by Solactive AG. Solactive AG uses its best efforts to ensure that the Sentiment Leaders Index is calculated correctly. Irrespective of its obligations towards BUZZ Holdings, Solactive AG has no obligation to point out errors in the Sentiment Leaders Index to third parties including but not limited to investors and/or financial intermediaries of VanEck Social Sentiment ETF. Neither the publication of the Sentiment Leaders Index by Solactive AG nor the licensing of the Sentiment Leaders Index or its trade marks for the purpose of use in connection with VanEck Social Sentiment ETF constitutes a recommendation by Solactive AG to invest capital in VanEck Social Sentiment ETF nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in VanEck Social Sentiment ETF. Solactive AG is not responsible for fulfilling the legal requirements concerning the accuracy and completeness of VanEck Social Sentiment ETF’s Prospectus.
“HIP Investor Inc.,” “HIP Investor,” “HIP,” “HIP Ratings,” “HIP SDG Ratings,” “HIP Climate Threat Resilience Ratings,” “Be More HIP,” and “HIP = Human Impact + Profit” are service marks of HIP Investor Inc. (“HIP”). These marks have been licensed for use for certain purposes by Van Eck Associates Corporation. VanEck HIP Sustainable Muni ETF may make determinations based on HIP Investor’s data, metrics, pillars, and ratings of ESG, SDGs, climate, and opportunity zones; and the ETF is not issued, sponsored, endorsed, promoted or advised by HIP Investor Inc. or their affiliates. HIP Investor Inc. makes no representation or warranty, expressed or implied, regarding whether VanEck HIP Sustainable Muni ETF is suitable for investors generally or the advisability of trading in such product.
HIP INVESTOR INC. DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE RATINGS, PILLARS, METRICS, OR ANY DATA INCLUDED IN THE ETF, AND HIP INVESTOR INC. SHALL NOT HAVE ANY LIABILITY WHATSOEVER FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. HIP INVESTOR INC. MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE VANECK HIP SUSTAINABLE MUNI ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE HIP INVESTOR RATINGS OR ANY DATA INCLUDED THEREIN. HIP INVESTOR INC.
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MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE RATINGS OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL HIP INVESTOR INC. HAVE ANY LIABILITY, JOINTLY OR SEVERALLY, FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
The Adviser has entered into a licensing agreement with Indxx to use the Green Infrastructure Index. VanEck Green Infrastructure ETF is entitled to use the Green Infrastructure Index pursuant to a sub-licensing arrangement with the Adviser.
Shares of the VanEck Green Infrastructure ETF are not sponsored, endorsed, sold or promoted by Indxx. Indxx makes no representation or warranty, express or implied, to the owners of Shares of the VanEck Green Infrastructure ETF or any member of the public regarding the advisability of investing in securities generally or in the Shares of the VanEck Green Infrastructure ETF particularly or the ability of the Green Infrastructure Index to track the performance of its respective securities market. The Green Infrastructure Index is determined and composed by Indxx without regard to the Adviser or the Shares of the VanEck Green Infrastructure ETF. Indxx has no obligation to take the needs of the Adviser or the owners of Shares of the VanEck Green Infrastructure ETF into consideration in determining and composing the Green Infrastructure Index.
Indxx is not responsible for and has not participated in the determination of the timing of prices at, or quantities of the Shares of the VanEck Green Infrastructure ETF to be issued or in the determination or calculation of the equation by which the Shares of the VanEck Green Infrastructure ETF are to be converted into cash. Indxx has no obligation or liability in connection with the administration, marketing or trading of the Shares of the VanEck Green Infrastructure ETF.
“Indxx” is a service mark of Indxx and has been licensed for use for certain purposes by the Adviser.
INDXX MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY ANY PERSON OR ENTITY FROM THE USE OF THE GREEN INFRASTRUCTURE INDEX, TRADING BASED ON THE GREEN INFRASTRUCTURE INDEX, OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE PRODUCTS, OR FOR ANY OTHER USE. INDXX EXPRESSLY DISCLAIMS ALL WARRANTIES AND CONDITIONS, EXPRESS, STATUTORY, OR IMPLIED INCLUDING WARRANTIES AND CONDITIONS OF MERCHANTABILITY, TITLE, OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE GREEN INFRASTRUCTURE INDEX OR ANY DATA INCLUDED THEREIN.
INDXX DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY DATA SUPPLIED BY IT OR ANY DATA INCLUDED THEREIN. INDXX MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUNDS, ITS SHAREHOLDERS OR AFFILIATES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DATA SUPPLIED BY INDXX OR ANY DATA INCLUDED THEREIN. INDXX MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE DATA SUPPLIED BY INDXX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL INDXX HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
VEAC has also entered into a licensing agreement with UBS to use the UBS Constant Maturity Commodity Total Return Index. The VanEck CMCI Commodity Strategy ETF is entitled to use the UBS Constant Maturity Commodity Total Return Index pursuant to a sub-licensing arrangement with VEAC.
UBS owns or exclusively licenses all proprietary rights with respect to the UBS Constant Maturity Commodity Total Return Index. Any third-party product based on or related to the VanEck CMCI Commodity Strategy ETF (“Product”) may only be issued upon the prior joint written approval of UBS and upon the execution of a license agreement between UBS and the party intending to launch a Product (a “Licensee”). In no way does UBS sponsor or endorse, nor is it otherwise involved in the issuance and offering of a Product nor does it make any representation or warranty, express or implied, to the holders of the Product or any member of the public regarding the advisability of investing in the Product or commodities generally or in futures particularly, or as to results to be obtained from the use of the VanEck CMCI Commodity Strategy ETF or from the Product. Further, UBS does not provide investment advice to any Licensee specific to the Product, other than providing the VanEck CMCI Commodity Strategy ETF as agreed in the license agreement with the Licensee, and which will be done without consideration of the particular needs of the Product or the Licensee. UBS specifically disclaims any liability to any party for any
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inaccuracy in the data on which the VanEck CMCI Commodity Strategy ETF is based, for any mistakes, errors, omissions or interruptions in the calculation and/or dissemination of the VanEck CMCI Commodity Strategy ETF, or for the manner in which such is applied in connection with the issuance and offering of a Product. In no event shall UBS have any liability to any party for any lost profits or indirect, punitive, special or consequential damages or losses.
THIS IS NOT AN OFFER OR SOLICITATION BY UBS OF AN OFFER TO BUY OR SELL ANY SECURITY OR INVESTMENT. PAST PERFORMANCE OF THE UBS CONSTANT MATURITY COMMODITY TOTAL RETURN INDEX IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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APPENDIX A
VANECK PROXY VOTING POLICIES
VanEck (the “Adviser”) has adopted the following policies and procedures which are reasonably designed to ensure that proxies are voted in a manner that is consistent with the best interests of its clients in accordance with its fiduciary duties and Rule 206(4)-6 under the Investment Advisers Act of 1940. When an adviser has been granted proxy voting authority by a client, the adviser owes its clients the duties of care and loyalty in performing this service on their behalf. The duty of care requires the adviser to monitor corporate actions and vote client proxies. The duty of loyalty requires the adviser to cast the proxy votes in a manner that is consistent with the best interests of the client.
Rule 206(4)-6 also requires the Adviser to disclose information about the proxy voting procedures to its clients and to inform clients how to obtain information about how their proxies were voted. Additionally, Rule 204-2 under the Advisers Act requires the Adviser to maintain certain proxy voting records.
An adviser that exercises voting authority without complying with Rule 206(4)-6 will be deemed to have engaged in a “fraudulent, deceptive, or manipulative” act, practice or course of business within the meaning of Section 206(4) of the Advisers Act.
The Adviser intends to vote all proxies in accordance with applicable rules and regulations, and in the best interests of clients without influence by real or apparent conflicts of interest. To assist in its responsibility for voting proxies and the overall voting process, the Adviser has engaged an independent third party proxy voting specialist, Glass Lewis & Co., LLC. The services provided by Glass Lewis include in-depth research, global issuer analysis, and voting recommendations as well as vote execution, reporting and recordkeeping.
Resolving Material Conflicts of Interest
When a material conflict of interest exists, proxies will be voted in the following manner:
1.Strict adherence to the Glass Lewis guidelines, or
2.The potential conflict will be disclosed to the client:
a. with a request that the client vote the proxy,
b. with a recommendation that the client engage another party to determine how the proxy should be voted or
c. if the foregoing are not acceptable to the client, disclosure of how VanEck intends to vote and a written consent to that vote by the client.
Any deviations from the foregoing voting mechanisms must be approved by the Chief Compliance Officer with a written explanation of the reason for the deviation.
A material conflict of interest means the existence of a business relationship between a portfolio company or an affiliate and the Adviser, any affiliate or subsidiary, or an “affiliated person” of a VanEck mutual fund. Examples of when a material conflict of interest exists include a situation where the adviser provides significant investment advisory, brokerage or other services to a company whose management is soliciting proxies; an officer of the Adviser serves on the board of a charitable organization that receives charitable contributions from the portfolio company and the charitable organization is a client of the Adviser; a portfolio company that is a significant selling agent of the Adviser’s products and services solicits proxies; a broker-dealer or insurance company that controls 5% or more of the Adviser’s assets solicits proxies; the Adviser serves as an investment adviser to the pension or other investment account of the portfolio company; the Adviser and the portfolio company have a lending relationship. In each of these situations voting against management may cause the Adviser a loss of revenue or other benefit.
Client Inquiries
All inquiries by clients as to how the Adviser has voted proxies must immediately be forwarded to Portfolio Administration.
Disclosure to Clients
1.Notification of Availability of Information
a. Client Brochure - The Client Brochure or Part II of Form ADV will inform clients that they can obtain information from the Adviser on how their proxies were voted. The Client Brochure or Part II of Form ADV will be mailed to each client annually. The Legal Department will be responsible for coordinating the mailing with Sales/Marketing Departments.
2.Availability of Proxy Voting Information
a. At the client’s request or if the information is not available on the Adviser’s website, a hard copy of the account’s proxy votes will be mailed to each client.
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Recordkeeping Requirements
1.VanEck will retain the following documentation and information for each matter relating to a portfolio security with respect to which a client was entitled to vote:
a. proxy statements received;
b. identifying number for the portfolio security;
c. shareholder meeting date;
d. brief identification of the matter voted on;
e. whether the vote was cast on the matter;
f. how the vote was cast (e.g., for or against proposal, or abstain; for or withhold regarding election of directors);
g. records of written client requests for information on how the Adviser voted proxies on behalf of the client;
h. a copy of written responses from the Adviser to any written or oral client request for information on how the Adviser voted proxies on behalf of the client; and any documents prepared by the Adviser that were material to the decision on how to vote or that memorialized the basis for the decision, if such documents were prepared.
2.Copies of proxy statements filed on EDGAR, and proxy statements and records of proxy votes maintained with a third party (i.e., proxy voting service) need not be maintained. The third party must agree in writing to provide a copy of the documents promptly upon request.
3.If applicable, any document memorializing that the costs of voting a proxy exceed the benefit to the client or any other decision to refrain from voting, and that such abstention was in the client’s best interest.
4.Proxy voting records will be maintained in an easily accessible place for five years, the first two at the office of the Adviser. Proxy statements on file with EDGAR or maintained by a third party and proxy votes maintained by a third party are not subject to these particular retention requirements.
Voting Foreign Proxies
At times the Adviser may determine that, in the best interests of its clients, a particular proxy should not be voted. This may occur, for example, when the cost of voting a foreign proxy (translation, transportation, etc.) would exceed the benefit of voting the proxy or voting the foreign proxy may cause an unacceptable limitation on the sale of the security. Any such instances will be documented by the Portfolio Manager and reviewed by the Chief Compliance Officer.
Securities Lending
Certain portfolios managed by the Adviser participate in securities lending programs to generate additional revenue. Proxy voting rights generally pass to the borrower when a security is on loan. The Adviser will use its best efforts to recall a security on loan and vote such securities if the Portfolio Manager determines that the proxy involves a material event.
Proxy Voting Policy
The Adviser has reviewed the Glass Lewis Proxy Guidelines (“Guidelines”) and has determined that the Guidelines are consistent with the Adviser’s proxy voting responsibilities and its fiduciary duty with respect to its clients. The Adviser will review any material amendments to the Guidelines.
While it is the Adviser’s policy to generally follow the Guidelines, the Adviser retains the right, on any specific proxy, to vote differently from the Guidelines, if the Adviser believes it is in the best interests of its clients. Any such exceptions will be documented by the Adviser and reviewed by the Chief Compliance Officer.
The portfolio manager or analyst covering the security is responsible for making proxy voting decisions. Portfolio Administration, in conjunction with the portfolio manager and the custodian, is responsible for monitoring corporate actions and ensuring that corporate actions are timely voted.
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United	States GLASS LEWIS 2025	Benchmark	Policy	Guidelines www.glasslewis.com
Table	of	Contents About	Glass	Lewis	 6 Guidelines	 Introduction	 7 Summary	of	Changes	for	2025	 7 Clarifying	Amendments	 8 A	Board	of	Directors	that	Serves	Shareholder	Interest	 9 Election	of	Directors	 9 Independence	 9 Committee	Independence	 12 Independent	Chair	 12 Performance	 14 Board	Responsiveness	 15 Board	Responsiveness	to	Shareholder	Proposals	 16 The	Role	of	a	Committee	Chair	 16 Audit	Committees	and	Performance	 17 Standards	for	Assessing	the	Audit	Committee	 17 Material	Weaknesses	 20 Compensation	Committee 	 Performance	 21 Nominating	and	Governance	Committee	Performance	 23 Board-Level	Risk	Management	Oversight	 26 Board	Oversight	of	Environmental	and	Social	Issues	 27 Board	Oversight	of	Technology	 28 Board	Accountability	for	Environmental	and	Social	Performance	 30 Director	Commitments	 31 Other	Considerations	 32 Controlled	Companies	 33 Significant	Shareholders	 34 Governance	Following	an	IPO,	Spin-Off,	or	Direct	Listing	 34 Governance	Following	a	Business	Combination	with	a	Special	Purpose	Acquisition	Company	 36 Dual-Listed	o r 	Foreign-Incorporated	Companies	 36 OTC-listed	Companies	 37 2024	Benchmark	Policy	Guidelines	—	United	States 2
Mutual	Fund	Boards	 37 Declassified	Boards	 38 Board	Composition	and	Refreshment	 39 Board	Diversity	 40 Board	Gender 	Diversity	 40 Board	Underrepresented	Community	Diversity	 41 State	Laws	on	Diversity	 41 Disclosure	of	Director	Diversity	and	Skills	 42 Stock	Exchange	Diversity	Disclosure	Requirements 43 Proxy	Access	 42 Majority	Vote	for	Election	of	Directors	 43 The	Plurality	Vote	Standard	 43 Advantages	of	a	Majority	Vote	Standard	 43 Conflicting	and	Excluded	Proposals	 44 Transparency	and	Integrity	in	Financial	Reporting	 45 Auditor	Ratification	 46 Voting	Recommendations	on	Auditor	Ratification	 47 Pension	Accounting	Issues	 48 The	Link	Between	Compensation	and	Performance	 49 Advisory	Vote	on	Executive	Compensation	 ( S a y - o n - Pay)	 49 Say-on-Pay	Voting	Recommendations	 50 Company	Responsiveness	 52 Pay	for	Performance	 52 Short-Term	Incentives	 53 Long-Term	 Incentives	 55 Grants	of	Front-Loaded	Awards	 56 Linking	Executive	Pay	to	Environmental	and	Social	Criteria	 57 One-Time	Awards	 58 Contractual	Payments	and	Arrangements	 58 Sign-on	Awards	and	Severance	Benefits	 58 Change	in	Control	 59 Excise	Tax	Gross-ups	 59 2024	Benchmark	Policy	Guidelines	—	United	States 3
Amended	 Emp loymen t 	Agreements	 60 Recoupment	Provisions	(Clawbacks)	 60 Hedging	of	Stock	 60 Pledging	of	Stock	 61 Executive	Ownership	Guidelines	 61 Compensation	Consultant	 Independence	 62 CEO	Pay	Ratio	 62 Frequency	of	Say-on-Pay	 62 Vote	on	Golden	Parachute	Arrangements	 63 Equity-Based	 C omp e n s a t i o n 	 Proposals	 63 Option	Exchanges	and	Repricing	 65 Option	Backdating,	Spring-Loading	and	Bullet-Dodging	 65 Director	Compensat ion 	 Plans	 67 Employee	Stock	Purchase	Plans	 67 Executive	 Compensation	 Tax	 Deductibility	 —	 Amendment	 to	 IRC	 162(M)	 67 Governance	Structure	and	the	Shareholder	Franchise	 69 Anti-Takeover	Measures	 69 Poison	Pills	(Shareholder	Rights	Plans)	 69 NOL	Poison	Pills	 69 Fair	Price	Provisions	 71 Control	Share	Statutes	 71 Quorum	Requirements	 72 Director	and	Officer	Indemnification	 72 Officer	Exculpation	 72 Reincorporation	 73 Exclusive	Forum	and	Fee-Shifting	Bylaw	Provisions	 74 Authorized	Shares	 75 Advance	Notice	Requirements	 76 Virtual	Shareholder	Meetings	 76 Voting	Structure	 77 Multi-Class	Share	Structures	 77 2024	Benchmark	Policy	Guidelines	—	United	States 4
Cumulative	Voting	 78 Supermajority	Vote	Requirements	 79 Transaction	of	Other	Business	 79 Anti-Greenmail	Proposals	 79 Mutual	Funds:	Investment	Policies	and	Advisory	Agreements	 79 Real	Estate	Investment	Trusts	 80 Preferred	Stock	Issuances	at	REITs	 80 Business	Deve lopment 	Companies	 80 Authorization	to	Sell	Shares	at	a	Price	Below	Net	Asset	Value	 81 Auditor	Ratification	and	Below-NAV	Issuances	 81 Special	Purpose	Acquisition	Companies	 82 Extension	of	Business	Combination	Deadline	 82 SPAC	Board	Independence	 82 Director	Commitments	of	SPAC	Executives	 82 Shareholder	Proposals	 83 Overall	Approach	to	Environmental,	Social	&	Governance	Issues	 84 Connect	with	Glass	Lewis	 86 2024	Benchmark	Policy	Guidelines	—	United	States 5
About	Glass	Lewis Glass	Lewis	is	the	world’s	choice	for	governance	solutions.	We	enable	institutional	investors	and	publicly listed	companies	to	make	informed	decisions	based	on	research	and	data.	We	cover	30,000+	meetings	each	 year,	across	approximately	100	global	markets.	Our	team	has	been	providing	in-depth	analysis	of	companies	 since	2003,	relying	solely	on	publicly	available	information	to	inform	its	policies,	research,	and	voting	 recommendations. Our	customers	include	the	majority	of	the	world’s	largest	pension	plans,	mutual	funds,	and	asset managers,	collectively	managing	over	$40	trillion	in	assets.	We	have	teams	located	across	the	United	States,	 Europe,	and	Asia-Pacific	giving	us	global	reach	with	a	local	perspective	on	the	important	governance	issues. Investors	around	the	world	depend	on	Glass	Lewis’	Viewpoint	platform	to	manage	their	proxy	voting,	policy	 implementation,	recordkeeping,	and	reporting.	Our	industry	leading	Proxy	Paper	product	provides	 comprehensive	environmental,	social,	and	governance	research	and	voting	recommendations	weeks	ahead	of	 voting	deadlines.	Public	companies	can	also	use	our	innovative	Report	Feedback	Statement	to	deliver	their	 opinion	on	our	proxy	research	directly	to	the	voting	decision	makers	at	every	investor	client	in	time	for	voting	 decisions	to	be	made	or	changed. The	research	team	engages	extensively	with	public	companies,	investors,	regulators,	and	other	industry	 stakeholders	to	gain	relevant	context	into	the	realities	surrounding	companies,	sectors,	and	the	market	in	 general.	This	enables	us	to	provide	the	most	comprehensive	and	pragmatic	insights	to	our	customers. 2024	Benchmark	Policy	Guidelines	—	United	States 6 Join	the	Conversation Glass	Lewis	is	committed	to	ongoing	engagement	with	all	market	participants. info@glasslewis.com | www.glasslewis.com
Guidelines	Introduction Summary	of	Changes	for	2025 Glass	Lewis	evaluates	these	guidelines	on	an	ongoing	basis	and	formally	updates	them	on	an	annual	basis.	This	 year	we’ve	made	noteworthy	revisions	in	the	following	areas,	which	are	summarized	below	but	discussed	in	 greater	detail	in	the	relevant	section	of	this	document: Update:	17	December	2024.	We	have	removed	our	discussion	on	page	42	of	stock	exchange	diversity	disclosure	 requirements. Board	Oversight	of	AI We	have	included	a	new	discussion	on	our	approach	to	artificial	intelligence	(AI)-related	risk	oversight.	In	recent	 years,	companies	have	rapidly	begun	to	develop	and	adopt	uses	for	artificial	intelligence	(AI)	technologies	 throughout	various	aspects	of	their	operations.	Deployed	and	overseen	effectively,	AI	technologies	have	the	 potential	to	make	companies’	operations	and	systems	more	efficient	and	productive.	However,	as	the	use	of	 these	technologies	has	grown,	so	have	the	potential	risks	associated	with	companies’	development	and	use	of	 AI.	Given	these	potential	risks,	the	benchmark	policy	takes	the	view	that	boards	should	be	cognizant	of,	and	take	 steps	to	mitigate	exposure	to,	any	material	risks	that	could	arise	from	their	use	or	development	of	AI. In	the	absence	of	material	incidents	related	to	a	company’s	use	or	management	of	AI-related	issues,	our	 benchmark	policy	will	generally	not	make	voting	recommendations	on	the	basis	of	a	company’s	oversight	of,	or	 disclosure	concerning,	AI-related	issues.	However,	in	instances	where	there	is	evidence	that	insufficient	 oversight	and/or	management	of	AI	technologies	has	resulted	in	material	harm	to	shareholders,	Glass	Lewis	will	 review	a	company’s	overall	governance	practices	and	identify	which	directors	or	board-level	committees	have	 been	charged	with	oversight	of	AI-related	risks.	We	will	also	closely	evaluate	the	board’s	response	to,	and	 management	of,	this	issue	as	well	as	any	associated	disclosures	and	the	benchmark	policy	may	recommend against	appropriate	directors	should	we	find	the	board’s	oversight,	response	or	disclosure	concerning	AI-related	 issues	to	be	insufficient. Change-In-Control	 Provisions We	have	updated	our	discussion	of	change-in-control	provisions	in	the	section	“The	Link	Between	Compensation	 and	Performance”	to	define	our	benchmark	policy	view	that	companies	that	allow	for	committee	discretion	over	 the	treatment	of	unvested	awards	should	commit	to	providing	clear	rationale	for	how	such	awards	are	treated	 in	the	event	a	change	in	control	occurs. 2024	Benchmark	Policy	Guidelines	—	United	States 7
Clarifying	 Amendments The	following	clarifications	of	our	existing	policies	are	included	this	year: Board	Responsiveness	 to	Shareholder	Proposals We	have	revised	our	discussion	of	board	responsiveness	to	shareholder	proposal	to	reflect	that	when	 shareholder	proposals	receive	significant	shareholder	support	(generally	more	than	30%	but	less	than	majority	 of	votes	cast),	the	benchmark	policy	generally	takes	the	view	that	boards	should	engage	with	shareholders	on	 the	issue	and	provide	disclosure	addressing	shareholder	concerns	and	outreach	initiatives. Reincorporation We	have	revised	our	discussion	on	reincorporations	to	reflect	that	we	review	all	proposals	to	reincorporate	to	a	 different	state	or	country	on	a	case-by-case	basis.	Our	review	includes	the	changes	in	corporate	governance	 provisions,	especially	those	relating	to	shareholder	rights,	material	differences	in	corporate	statutes	and	legal	 precedents,	and	relevant	financial	benefits,	among	other	factors,	resulting	from	the	change	in	domicile. Approach	to	Executive	Pay	Program We	have	provided	some	clarifying	statements	to	the	discussion	of	in	the	section	titled	“The	Link	Between	 Compensation	and	Performance”	to	emphasize	Glass	Lewis’	holistic	approach	to	analyzing	executive	 compensation	programs.	There	are	few	program	features	that,	on	their	own,	lead	to	an	unfavorable	 recommendation	from	Glass	Lewis	for	a	say-on-pay	proposal.	Our	analysis	reviews	pay	programs	on	a	case-by-	 case	basis.	We	do	not	utilize	a	pre-determined	scorecard	approach	when	considering	individual	features	such	as	 the	allocation	of	the	long-term	incentive	between	performance-based	awards	and	time-based	awards. Unfavorable	factors	in	a	pay	program	are	reviewed	in	the	context	of	rationale,	overall	structure,	overall disclosure	quality,	the	program’s	ability	to	align	executive	pay	with	performance	and	the	shareholder	experience	 and	the	trajectory	of	the	pay	program	resulting	from	changes	introduced	by	the	compensation	committee. 2024	Benchmark	Policy	Guidelines	—	United	States 8
A	Board	of	Directors	that	Serves	Shareholder	 Interest Election	of	Directors The	purpose	of	Glass	Lewis’	proxy	research	and	advice	is	to	facilitate	shareholder	voting	in	favor	of	governance	 structures	that	will	drive	performance,	create	shareholder	value	and	maintain	a	proper	tone	at	the	top.	Glass	 Lewis	looks	for	talented	boards	with	a	record	of	protecting	shareholders	and	delivering	value	over	the	medium-	 and	long-term.	We	believe	that	a	board	can	best	protect	and	enhance	the	interests	of	shareholders	if	it	is	 sufficiently	independent,	has	a	record	of	positive	performance,	and	consists	of	individuals	with	diverse	 backgrounds	and	a	breadth	and	depth	of	relevant	experience. Independence The	independence	of	directors,	or	lack	thereof,	is	ultimately	demonstrated	through	the	decisions	they	make.	In	 assessing	the	independence	of	directors,	we	will	take	into	consideration,	when	appropriate,	whether	a	director	 has	a	track	record	indicative	of	making	objective	decisions.	Likewise,	when	assessing	the	independence	of directors	we	will	also	examine	when	a	director’s	track	record	on	multiple	boards	indicates	a	lack	of	objective	 decision-making.	Ultimately,	we	believe	the	determination	of	whether	a	director	is	independent	or	not	must	 take	into	consideration	both	compliance	with	the	applicable	independence	listing	requirements	as	well	as	 judgments	made	by	the	director. We	look	at	each	director	nominee	to	examine	the	director’s	relationships	with	the	company,	the	company’s	 executives,	and	other	directors.	We	do	this	to	evaluate	whether	personal,	familial,	or	financial	relationships	(not	 including	director	compensation)	may	impact	the	director’s	decisions.	We	believe	that	such	relationships	make	it	 difficult	for	a	director	to	put	shareholders’	interests	above	the	director’s	or	the	related	party’s	interests.	We	also	 believe	that	a	director	who	owns	more	than	20%	of	a	company	can	exert	disproportionate	influence	on	the board,	and	therefore	believe	such	a	director’s	independence	may	be	hampered,	in	particular	when	serving	on the	audit	committee. Thus,	we	put	directors	into	three	categories	based	on	an	examination	of	the	type	of	relationship	they	have	with	 the	company: Independent	Director	—	An	independent	director	has	no	material	financial,	familial	or	other	current	 relationships	with	the	company,	its	executives,	or	other	board	members,	except	for	board	service	and	 standard	fees	paid	for	that	service.	Relationships	that	existed	within	three	to	five	years1	before	the 1	 NASDAQ	originally	proposed	a	five-year	look-back	period	but	both	it	and	the	NYSE	ultimately	settled	on	a	three-year	look-	 back	prior	to	finalizing	their	rules.	A	five-year	standard	for	former	employment	relationships	is	more	appropriate,	in	our	 view,	because	we	believe	that	the	unwinding	of	conflicting	relationships	between	former	management	and	board	members	 is	more	likely	to	be	complete	and	final	after	five	years.	However,	Glass	Lewis	does	not	apply	the	five-year	look-back	period	 to	directors	who	have	previously	served	as	executives	of	the	company	on	an	interim	basis	for	less	than	one	year. 2024	Benchmark	Policy	Guidelines	—	United	States 9
inquiry	are	usually	considered	“current”	for	purposes	of	this	test.	For	material	financial	relationships	 with	the	company,	we	apply	a	three-year	look	back,	and	for	former	employment	relationships	with	the	 company,	we	apply	a	five-year	look	back. Affiliated	Director	—	An	affiliated	director	has,	(or	within	the	past	three	years,	had)	a	material	financial,	 familial	or	other	relationship	with	the	company	or	its	executives,	but	is	not	an	employee	of	the	 company.2	This	includes	directors	whose	employers	have	a	material	financial	relationship	with	the	 company.3	In	addition,	we	view	a	director	who	either	owns	or	controls	20%	or	more	of	the	company’s	 voting	stock,	or	is	an	employee	or	affiliate	of	an	entity	that	controls	such	amount,	as	an	affiliate.4 We	view	20%	shareholders	as	affiliates	because	they	typically	have	access	to	and	involvement	with	the	 management	of	a	company	that	is	fundamentally	different	from	that	of	ordinary	shareholders.	More	 importantly,	20%	holders	may	have	interests	that	diverge	from	those	of	ordinary	holders,	for	reasons	such	as	 the	liquidity	(or	lack	thereof)	of	their	holdings,	personal	tax	issues,	etc. Glass	Lewis	applies	a	three-year	look	back	period	to	all	directors	who	have	an	affiliation	with	the	company	other	 than	former	employment,	for	which	we	apply	a	five-year	look	back. Definition	of	“Material”:	A	material	relationship	is	one	in	which	the	dollar	value	exceeds: • $50,000	(or	where	no	amount	is	disclosed)	for	directors	who	are	paid	for	a	service	they	have	agreed	 to	perform	for	the	company,	outside	of	their	service	as	a	director,	including	professional	or	other	 services.	This	threshold	also	applies	to	directors	who	are	the	majority	or	principal	owner	of	a	firm	that	 receives	such	payments;	or • $120,000	(or	where	no	amount	is	disclosed)	for	those	directors	employed	by	a	professional	services	firm	 such	as	a	law	firm,	investment	bank,	or	consulting	firm	and	the	company	pays	the	firm,	not	the	 individual,	for	services.5	This	dollar	limit	would	also	apply	to	charitable	contributions	to	schools	where	a 2	 If	a	company	does	not	consider	a	non-employee	director	to	be	independent,	Glass	Lewis	will	classify	that	director	as	an	 affiliate. 3	We	allow	a	five-year	grace	period	for	former	executives	of	the	company	or	merged	companies	who	have	consulting	 agreements	with	the	surviving	company.	(We	do	not	automatically	recommend	voting	against	directors	in	such	cases	for	 the	first	five	years.)	If	the	consulting	agreement	persists	after this	five-year	grace	period,	we	apply	the	materiality	thresholds	outlined	in	the	definition	of	“material.” 4	 This	includes	a	director	who	serves	on	a	board	as	a	representative	(as	part	of	his	or	her	basic	responsibilities)	of	an	 investment	firm	with	greater	than	20%	ownership.	However,	while	we	will	generally	consider	him/her	to	be	affiliated,	we	 will	not	recommend	voting	against	unless	(i)	the	investment	firm	has	disproportionate	board	representation	or	(ii)	the	 director	serves	on	the	audit	committee. 5	 We	may	deem	such	a	transaction	to	be	immaterial	where	the	amount	represents	less	than	1%	of	the	firm’s	annual	 revenues	and	the	board	provides	a	compelling	rationale	as	to	why	the	director’s	independence	is	not	affected	by	the	 relationship. 2024	Benchmark	Policy	Guidelines	—	United	States 10
board	member	is	a	professor;	or	charities	where	a	director	serves	on	the	board	or	is	an	executive;6	and any	aircraft	and	real	estate	dealings	between	the	company	and	the	director’s	firm;	or • 1%	of	either	company’s	consolidated	gross	revenue	for	other	business	relationships	(e.g.,	where	the	 director	is	an	executive	officer	of	a	company	that	provides	services	or	products	to	or	receives	services	or	 products	from	the	company).7 Definition	of	“Familial”	—	Familial	relationships	include	a	person’s	spouse,	parents,	children,	siblings,	 grandparents,	uncles,	aunts,	cousins,	nieces,	nephews,	in-laws,	and	anyone	(other	than	domestic	employees)	 who	shares	such	person’s	home.	A	director	is	an	affiliate	if:	i)	he	or	she	has	a	family	member	who	is	employed	by	 the	company	and	receives	more	than	$120,0008	in	annual	compensation;	or,	ii)	he	or	she	has	a	family	member	 who	is	employed	by	the	company	and	the	company	does	not	disclose	this	individual’s	compensation. Definition	of	“Company”	—	A	company	includes	any	parent	or	subsidiary	in	a	group	with	the	company	or	any	 entity	that	merged	with,	was	acquired	by,	or	acquired	the	company. Inside	Director	—	An	inside	director	simultaneously	serves	as	a	director	and	as	an	employee	of	the	 company.	This	category	may	include	a	board	chair	who	acts	as	an	employee	of	the	company	or	is	paid	as	 an	employee	of	the	company.	In	our	view,	an	inside	director	who	derives	a	greater	amount	of	income	as	 a	result	of	affiliated	transactions	with	the	company	rather	than	through	compensation	paid	by	the	 company	(i.e.,	salary,	bonus,	etc.	as	a	company	employee)	faces	a	conflict	between	making	decisions	 that	are	in	the	best	interests	of	the	company	versus	those	in	the	director’s	own	best	interests. Therefore,	we	will	recommend	voting	against	such	a	director. Additionally,	we	believe	a	director	who	is	currently	serving	in	an	interim	management	position	should	be	 considered	an	insider,	while	a	director	who	previously	served	in	an	interim	management	position	for	less	than	 one	year	and	is	no	longer	serving	in	such	capacity	is	considered	independent.	Moreover,	a	director	who	 previously	served	in	an	interim	management	position	for	over	one	year	and	is	no	longer	serving	in	such	capacity	 is	considered	an	affiliate	for	five	years	following	the	date	of	the	director’s	resignation	or	departure	from	the	 interim	management	position. Voting	Recommendations	on	the	Basis	of	Board	Independence Glass	Lewis	believes	a	board	will	be	most	effective	in	protecting	shareholders’	interests	if	it	is	at	least	two-thirds	 independent.	We	note	that	each	of	the	Business	Roundtable,	the	Conference	Board,	and	the	Council	of	 Institutional	Investors	advocates	that	two-thirds	of	the	board	be	independent.	Where	more	than	one-third	of 6	We	will	generally	take	into	consideration	the	size	and	nature	of	such	charitable	entities	in	relation	to	the	company’s	size	and	 industry	along	with	any	other	relevant	factors	such	as	the	director’s	role	at	the	charity.	However,	unlike	for	other	types	of	 related	party	transactions,	Glass	Lewis	generally	does	not	apply	a	look-back	period	to	affiliated	relationships	involving	 charitable	contributions;	if	the	relationship	between	the	director	and	the	school	or	charity	ceases,	or	if	the	company	 discontinues	its	donations	to	the	entity,	we	will	consider	the	director	to	be	independent. 7	 This	includes	cases	where	a	director	is	employed	by,	or	closely	affiliated	with,	a	private	equity	firm	that	profits	from	an	 acquisition	made	by	the	company.	Unless	disclosure	suggests	otherwise,	we	presume	the	director	is	affiliated. 8	Pursuant	to	SEC	rule	Item	404	of	Regulation	S-K	under	the	Securities	Exchange	Act,	compensation	exceeding	$120,000	is	 the	minimum	threshold	deemed	material	for	disclosure	of	transactions	involving	family	members	of	directors. 2024	Benchmark	Policy	Guidelines	—	United	States 11
the	members	are	affiliated	or	inside	directors,	we	typically8	recommend	voting	against	some	of	the	inside	and/or	 affiliated	directors	in	order	to	satisfy	the	two-thirds	threshold. In	the	case	of	a	less	than	two-thirds	independent	board,	Glass	Lewis	strongly	supports	the	existence	of	a	 presiding	or	lead	director	with	authority	to	set	the	meeting	agendas	and	to	lead	sessions	outside	the	insider	 chair’s	presence. In	addition,	we	scrutinize	avowedly	“independent”	chairs	and	lead	directors.	We	believe	that	they	should	be unquestionably	independent,	or	the	company	should	not	tout	them	as	such. Committee	Independence We	believe	that	only	independent	directors	should	serve	on	a	company’s	audit,	compensation,	nominating,	and	 governance	committees.9	We	typically	recommend	that	shareholders	vote	against	any	affiliated	or	inside	 director	seeking	appointment	to	an	audit,	compensation,	nominating,	or	governance	committee,	or	who	has	 served	in	that	capacity	in	the	past	year. Pursuant	to	Section	952	of	the	Dodd-Frank	Act,	as	of	January	11,	2013,	the	U.S.	Securities	and	Exchange	 Commission	(SEC)	approved	new	listing	requirements	for	both	the	NYSE	and	NASDAQ	which	require	that	boards	 apply	enhanced	standards	of	independence	when	making	an	affirmative	determination	of	the	independence	of	 compensation	committee	members.	Specifically,	when	making	this	determination,	in	addition	to	the	factors	 considered	when	assessing	general	director	independence,	the	board’s	considerations	must	include:	(i)	the	 source	of	compensation	of	the	director,	including	any	consulting,	advisory	or	other	compensatory	fee	paid	by the	listed	company	to	the	director	(the	“Fees	Factor”);	and	(ii)	whether	the	director	is	affiliated	with	the	listing company,	its	subsidiaries,	or	affiliates	of	its	subsidiaries	(the	“Affiliation	Factor”). Glass	Lewis	believes	it	is	important	for	boards	to	consider	these	enhanced	independence	factors	when	assessing	 compensation	committee	members.	However,	as	discussed	above	in	the	section	titled	Independence,	we	apply	 our	own	standards	when	assessing	the	independence	of	directors,	and	these	standards	also	take	into	account	 consulting	and	advisory	fees	paid	to	the	director,	as	well	as	the	director’s	affiliations	with	the	company	and	its	 subsidiaries	and	affiliates.	We	may	recommend	voting	against	compensation	committee	members	who	are	not	 independent	based	on	our	standards. Independent	 Chair Glass	Lewis	believes	that	separating	the	roles	of	CEO	(or,	more	rarely,	another	executive	position)	and	chair	 creates	a	better	governance	structure	than	a	combined	CEO/chair	position.	An	executive	manages	the	business 8	With	a	staggered	board,	if	the	affiliates	or	insiders	that	we	believe	should	not	be	on	the	board	are	not	up	for	election,	we	will	 express	our	concern	regarding	those	directors,	but	we	will	not	recommend	voting	against	the	other	affiliates	or	insiders	who	are	 up	for	election	just	to	achieve	two-thirds	independence.	However,	we	will	consider	recommending	voting	against	the	directors	 subject	to	our	concern	at	their	next	election	if	the	issue	giving	rise	to	the	concern	is	not	resolved. 9	We	will	recommend	voting	against	an	audit	committee	member	who	owns	20%	or	more	of	the	company’s	stock,	and	we	 believe	that	there	should	be	a	maximum	of	one	director	(or	no	directors	if	the	committee	is	composed	of	less	than	three	 directors)	who	owns	20%	or	more	of	the	company’s	stock	on	the	compensation,	nominating,	and	governance	committees. 2024	Benchmark	Policy	Guidelines	—	United	States 12
according	to	a	course	the	board	charts.	Executives	should	report	to	the	board	regarding	their	performance	in	 achieving	goals	set	by	the	board.	This	is	needlessly	complicated	when	a	CEO	chairs	the	board,	since	a	CEO/chair	 presumably	will	have	a	significant	influence	over	the	board. While	many	companies	have	an	independent	lead	or	presiding	director	who	performs	many	of	the	same	 functions	of	an	independent	chair	(e.g.,	setting	the	board	meeting	agenda),	we	do	not	believe	this	alternate	 form	of	independent	board	leadership	provides	as	robust	protection	for	shareholders	as	an	independent	chair. It	can	become	difficult	for	a	board	to	fulfill	its	role	of	overseer	and	policy	setter	when	a	CEO/chair	controls	the	 agenda	and	the	boardroom	discussion.	Such	control	can	allow	a	CEO	to	have	an	entrenched	position,	leading	to	 longer-than-optimal	terms,	fewer	checks	on	management,	less	scrutiny	of	the	business	operation,	and	 limitations	on	independent,	shareholder-focused	goal-setting	by	the	board. A	CEO	should	set	the	strategic	course	for	the	company,	with	the	board’s	approval,	and	the	board	should	enable	 the	CEO	to	carry	out	the	CEO’s	vision	for	accomplishing	the	board’s	objectives.	Failure	to	achieve	the	board’s	 objectives	should	lead	the	board	to	replace	that	CEO	with	someone	in	whom	the	board	has	confidence. Likewise,	an	independent	chair	can	better	oversee	executives	and	set	a	pro-shareholder	agenda	without	the	 management	conflicts	that	a	CEO	and	other	executive	insiders	often	face.	Such	oversight	and	concern	for	 shareholders	allows	for	a	more	proactive	and	effective	board	of	directors	that	is	better	able	to	look	out	for	the	 interests	of	shareholders. Further,	it	is	the	board’s	responsibility	to	select	a	chief	executive	who	can	best	serve	a	company	and	its	 shareholders	and	to	replace	this	person	when	his	or	her	duties	have	not	been	appropriately	fulfilled.	Such	a	 replacement	becomes	more	difficult	and	happens	less	frequently	when	the	chief	executive	is	also	in	the	position	 of	overseeing	the	board. Glass	Lewis	believes	that	the	installation	of	an	independent	chair	is	almost	always	a	positive	step	from	a	 corporate	governance	perspective	and	promotes	the	best	interests	of	shareholders.	Further,	the	presence	of	an	 independent	chair	fosters	the	creation	of	a	thoughtful	and	dynamic	board,	not	dominated	by	the	views	of	senior	 management.	Encouragingly,	many	companies	appear	to	be	moving	in	this	direction	—	one	study	indicates	that	 only	10	percent	of	incoming	CEOs	in	2014	were	awarded	the	chair	title,	versus	48	percent	in	2002.10	Another	 study	finds	that	53	percent	of	S&P	500	boards	now	separate	the	CEO	and	chair	roles,	up	from	37	percent	in	 2009,	although	the	same	study	found	that	only	34	percent	of	S&P	500	boards	have	truly	independent	chairs.11 We	do	not	recommend	that	shareholders	vote	against	CEOs	who	chair	the	board.	However,	we	typically	 recommend	that	our	clients	support	separating	the	roles	of	chair	and	CEO	whenever	that	question	is	posed	in	a	 proxy	(typically	in	the	form	of	a	shareholder	proposal),	as	we	believe	that	it	is	in	the	long-term	best	interests	of	 the	company	and	its	shareholders. Further,	where	the	company	has	neither	an	independent	chair	nor	independent	lead	director,	we	will	 recommend	voting	against	the	chair	of	the	governance	committee. 10	 Ken	Favaro,	Per-Ola	Karlsson	and	Gary	L.	Nelson.	“The	$112	Billion	CEO	Succession	Problem.”	(Strategy+Business,	Issue	79,	 Summer	2015). 11	 Spencer	Stuart	Board	Index,	2019,	p.	6. 2024	Benchmark	Policy	Guidelines	—	United	States 13
Performance The	most	crucial	test	of	a	board’s	commitment	to	the	company	and	its	shareholders	lies	in	the	actions	of	the	 board	and	its	members.	We	look	at	the	performance	of	these	individuals	as	directors	and	executives	of	the	 company	and	of	other	companies	where	they	have	served. We	find	that	a	director’s	past	conduct	is	often	indicative	of	future	conduct	and	performance.	We	often	find	 directors	with	a	history	of	overpaying	executives	or	of	serving	on	boards	where	avoidable	disasters	have	 occurred	serving	on	the	boards	of	companies	with	similar	problems.	Glass	Lewis	has	a	proprietary	database	of	 directors	serving	at	over	8,000	of	the	most	widely	held	U.S.	companies.	We	use	this	database	to	track	the	 performance	of	directors	across	companies. Voting	Recommendations	on	the	Basis	of	Performance We	typically	recommend	that	shareholders	vote	against	directors	who	have	served	on	boards	or	as	executives	of	 companies	with	records	of	poor	performance,	inadequate	risk	oversight,	excessive	compensation,	audit-	or	 accounting-related	issues,	and/or	other	indicators	of	mismanagement	or	actions	against	the	interests	of	 shareholders.	We	will	reevaluate	such	directors	based	on,	among	other	factors,	the	length	of	time	passed	since	 the	incident	giving	rise	to	the	concern,	shareholder	support	for	the	director,	the	severity	of	the	issue,	the director’s	role	(e.g.,	committee	membership),	director	tenure	at	the	subject	company,	whether	ethical	lapses accompanied	the	oversight	lapse,	and	evidence	of	strong	oversight	at	other	companies. Likewise,	we	examine	the	backgrounds	of	those	who	serve	on	key	board	committees	to	ensure	that	they	have	 the	required	skills	and	diverse	backgrounds	to	make	informed	judgments	about	the	subject	matter	for	which	the	 committee	is	responsible. We	believe	shareholders	should	avoid	electing	directors	who	have	a	record	of	not	fulfilling	their	responsibilities	 to	shareholders	at	any	company	where	they	have	held	a	board	or	executive	position.	We	typically	recommend	 voting	against: • A	director	who	fails	to	attend	a	minimum	of	75%	of	board	and	applicable	committee	meetings,	 calculated	in	the	aggregate.12 • A	director	who	belatedly	filed	a	significant	form(s)	4	or	5,	or	who	has	a	pattern	of	late	filings	if	the	late filing	was	the	director’s	fault	(we	look	at	these	late	filing	situations	on	a	case-by-case	basis). • A	director	who	is	also	the	CEO	of	a	company	where	a	serious	and	material	restatement	has	occurred	 after	the	CEO	had	previously	certified	the	pre-restatement	financial	statements. • A	director	who	has	received	two	against	recommendations	from	Glass	Lewis	for	identical	reasons	within	 the	prior	year	at	different	companies	(the	same	situation	must	also	apply	at	the	company	being	 analyzed). Furthermore,	with	consideration	given	to	the	company’s	overall	corporate	governance,	pay-for-performance	 alignment	and	board	responsiveness	to	shareholders,	we	may	recommend	voting	against	directors	who	served 12	 However,	where	a	director	has	served	for	less	than	one	full	year,	we	will	typically	not	recommend	voting	against	for	failure	to	 attend	75%	of	meetings.	Rather,	we	will	note	the	poor	attendance	with	a	recommendation	to	track	this	issue	going	forward.	We	 will	also	refrain	from	recommending	to	vote	against	directors	when	the	proxy	discloses	that	the	director	missed	the	meetings	 due	to	serious	illness	or	other	extenuating	circumstances. 2024	Benchmark	Policy	Guidelines	—	United	States 14
throughout	a	period	in	which	the	company	performed	significantly	worse	than	peers	and	the	directors	have	not	 taken	reasonable	steps	to	address	the	poor	performance. Board	Responsiveness Glass	Lewis	believes	that	boards	should	be	responsive	to	shareholders	when	a	significant	percentage	of	 shareholders	vote	contrary	to	the	recommendation	of	management,	depending	on	the	issue. When	20%	of	more	of	shareholders	vote	contrary	to	management	(which	occurs	when	more	than	20%	of	votes	 on	the	proposal	are	cast	as	AGAINST	and/or	ABSTAIN),	we	believe	that	boards	should	engage	with	shareholders	 on	the	issue	and	demonstrate	some	initial	level	of	responsiveness.	These	include	instances	when	20%	or	more	of	 shareholders: (i) withhold	votes	from	(or	vote	against)	a	director	nominee;	or (ii) vote	against	a	management-sponsored	proposal. In	our	view,	a	20%	threshold	is	significant	enough	to	warrant	a	close	examination	of	the	underlying	issues	and	an	 evaluation	of	whether	the	board	responded	appropriately	following	the	vote,	particularly	in	the	case	of	a	 compensation	or	director	election	proposal.	While	the	20%	threshold	alone	will	not	automatically	generate	a	 negative	vote	recommendation	from	Glass	Lewis	on	a	future	proposal	(e.g.,	to	recommend	against	a	director	 nominee,	against	a	say-on-pay	proposal,	etc.),	it	may	be	a	contributing	factor	to	our	recommendation	to	vote against	management’s	recommendation	in	the	event	we	determine	that	the	board	did	not	respond appropriately. When	a	majority	of	shareholders	vote	contrary	to	management,	we	believe	that	boards	should	engage	with	 shareholders	on	the	issue	and	provide	a	more	robust	response	to	fully	address	shareholder	concerns.	These	 include	instances	when	a	majority	or	more	of	shareholders: (i) withhold	votes	from	(or	vote	against)	a	director	nominee; (ii) vote	against	a	management-sponsored	proposal; At	controlled	companies	and	companies	that	have	multi-class	share	structures	with	unequal	voting	rights,	we	 will	carefully	examine	the	level	of	approval	or	disapproval	attributed	to	unaffiliated	shareholders	when	 determining	whether	board	responsiveness	is	warranted.	In	the	case	of	companies	that	have	multi-class	share	 structures	with	unequal	voting	rights,	we	will	generally	examine	the	level	of	approval	or	disapproval	attributed	 to	unaffiliated	shareholders	on	a	“one	share,	one	vote”	basis.	At	controlled	and	multi-class	companies,	when	at	 least	20%	or	more	of	unaffiliated	shareholders	vote	contrary	to	management,	we	believe	that	boards	should	 engage	with	shareholders	and	demonstrate	some	initial	level	of	responsiveness,	and	when	a	majority	or	more	of	 unaffiliated	shareholders	vote	contrary	to	management,	we	believe	that	boards	should	engage	with	 shareholders	and	provide	a	more	robust	response	to	address	shareholder	concerns. As	a	general	framework,	our	evaluation	of	board	responsiveness	involves	a	review	of	publicly	available	 disclosures	(e.g.,	the	proxy	statement,	annual	report,	8-Ks,	company	website,	etc.)	released	following	the	date	of	 the	company’s	last	annual	meeting	up	through	the	publication	date	of	our	most	current	Proxy	Paper.	Depending	 on	the	specific	issue,	our	focus	typically	includes,	but	is	not	limited	to,	the	following: 2024	Benchmark	Policy	Guidelines	—	United	States 15
• At	the	board	level,	any	changes	in	directorships,	committee	memberships,	disclosure	of	related	party	 transactions,	meeting	attendance,	or	other	responsibilities; • Any	revisions	made	to	the	company’s	articles	of	incorporation,	bylaws	or	other	governance	documents; • Any	press	or	news	releases	indicating	changes	in,	or	the	adoption	of,	new	company	policies,	business	 practices	or	special	reports;	and • Any	modifications	made	to	the	design	and	structure	of	the	company’s	compensation	program,	as	well	as	 an	assessment	of	the	company’s	engagement	with	shareholders	on	compensation	issues	as	discussed	in	 the	Compensation	Discussion	&	Analysis	(CD&A),	particularly	following	a	material	vote	against	a	 company’s	say-on-pay. • Proxy	statement	disclosure	discussing	the	board’s	efforts	to	engage	with	shareholders	and	the	actions taken	to	address	shareholder	concerns. Our	Proxy	Paper	analysis	will	include	a	case-by-case	assessment	of	the	specific	elements	of	board	 responsiveness	that	we	examined	along	with	an	explanation	of	how	that	assessment	impacts	our	current	voting	 recommendations. Board	Responsiveness	 to	Shareholder	Proposals Majority-Supported	Shareholder	Proposals We	expect	clear	action	from	the	board	when	shareholder	proposals	receive	support	from	a	majority	of	votes	 cast	(excluding	abstentions	and	broker	non-votes).	In	our	view,	this	may	include	fully	implementing	the	request	 of	the	shareholder	proposal	and/or	engaging	with	shareholders	on	the	issue	and	providing	sufficient	disclosures	 to	address	shareholder	concerns. Significantly	 Supported	Shareholder	Proposals When	shareholder	proposals	receive	significant	support	(generally	more	than	30%	but	less	than	majority	of	 votes	cast),	we	believe	an	initial	level	of	board	responsiveness	is	warranted.	In	instances	where	a	shareholder	 proposal	has	received	at	least	30%	shareholder	support,	we	generally	believe	boards	should	engage	with	 shareholders	on	the	issue	and	provide	disclosure	addressing	shareholder	concerns	and	outreach	initiatives. Further,	as	discussed	above,	at	controlled	companies	and	companies	that	have	multi-class	share	structures	with	 unequal	voting	rights,	we	will	carefully	examine	the	level	of	approval	or	disapproval	attributed	to	unaffiliated	 shareholders	when	determining	whether	board	responsiveness	is	warranted. The	Role	of	a	Committee	Chair Glass	Lewis	believes	that	a	designated	committee	chair	maintains	primary	responsibility	for	the	actions	of	his	or	 her	respective	committee.	As	such,	many	of	our	committee-specific	voting	recommendations	are	against	the	 applicable	committee	chair	rather	than	the	entire	committee	(depending	on	the	seriousness	of	the	issue).	In	 cases	where	the	committee	chair	is	not	up	for	election	due	to	a	staggered	board,	and	where	we	have	identified	 multiple	concerns,	we	will	generally	recommend	voting	against	other	members	of	the	committee	who	are	up	for	 election,	on	a	case-by-case	basis. 2024	Benchmark	Policy	Guidelines	—	United	States 16
In	cases	where	we	would	ordinarily	recommend	voting	against	a	committee	chair	but	the	chair	is	not	specified,	 we	apply	the	following	general	rules,	which	apply	throughout	our	guidelines: • If	there	is	no	committee	chair,	we	recommend	voting	against	the	longest-serving	committee	member	or,	 if	the	longest-serving	committee	member	cannot	be	determined,	the	longest-serving	board	member serving	on	the	committee	(i.e.,	in	either	case,	the	“senior	director”);	and • If	there	is	no	committee	chair,	but	multiple	senior	directors	serving	on	the	committee,	we	recommend	 voting	against	both	(or	all)	such	senior	directors. In	our	view,	companies	should	provide	clear	disclosure	of	which	director	is	charged	with	overseeing	each	 committee.	In	cases	where	that	simple	framework	is	ignored	and	a	reasonable	analysis	cannot	determine	which	 committee	member	is	the	designated	leader,	we	believe	shareholder	action	against	the	longest	serving	 committee	member(s)	is	warranted.	Again,	this	only	applies	if	we	would	ordinarily	recommend	voting	against	 the	committee	chair	but	there	is	either	no	such	position	or	no	designated	director	in	such	role. Audit	Committees	and	Performance Audit	committees	play	an	integral	role	in	overseeing	the	financial	reporting	process	because	stable	capital	 markets	depend	on	reliable,	transparent,	and	objective	financial	information	to	support	an	efficient	and	 effective	capital	market	process.	Audit	committees	play	a	vital	role	in	providing	this	disclosure	to	shareholders. When	assessing	an	audit	committee’s	performance,	we	are	aware	that	an	audit	committee	does	not	prepare	 financial	statements,	is	not	responsible	for	making	the	key	judgments	and	assumptions	that	affect	the	financial	 statements,	and	does	not	audit	the	numbers	or	the	disclosures	provided	to	investors.	Rather,	an	audit	 committee	member	monitors	and	oversees	the	process	and	procedures	that	management	and	auditors	 perform.	The	1999	Report	and	Recommendations	of	the	Blue	Ribbon	Committee	on	Improving	the	Effectiveness	 of	Corporate	Audit	Committees	stated	it	best: A	proper	and	well-functioning	system	exists,	therefore,	when	the	three	main	groups	responsible	for	 financial	reporting	—	the	full	board	including	the	audit	committee,	financial	management	including	the	 internal	auditors,	and	the	outside	auditors	—	form	a	‘three	legged	stool’	that	supports	responsible	 financial	disclosure	and	active	participatory	oversight.	However,	in	the	view	of	the	Committee,	the	audit	 committee	must	be	‘first	among	equals’	in	this	process,	since	the	audit	committee	is	an	extension	of	the	 full	board	and	hence	the	ultimate	monitor	of	the	process. Standards	for	Assessing	the	Audit	Committee For	an	audit	committee	to	function	effectively	on	investors’	behalf,	it	must	include	members	with	sufficient	 knowledge	to	diligently	carry	out	their	responsibilities.	In	its	audit	and	accounting	recommendations,	the	 Conference	Board	Commission	on	Public	Trust	and	Private	Enterprise	said	“members	of	the	audit	committee	 must	be	independent	and	have	both	knowledge	and	experience	in	auditing	financial	matters.”13 13	 Commission	on	Public	Trust	and	Private	Enterprise.	The	Conference	Board.	2003. 2024	Benchmark	Policy	Guidelines	—	United	States 17
We	are	skeptical	of	audit	committees	where	there	are	members	that	lack	expertise	as	a	Certified	Public	 Accountant	(CPA),	Chief	Financial	Officer	(CFO)	or	corporate	controller,	or	similar	experience.	While	we	will	not	 necessarily	recommend	voting	against	members	of	an	audit	committee	when	such	expertise	is	lacking,	we	are	 more	likely	to	recommend	voting	against	committee	members	when	a	problem	such	as	a	restatement	occurs	 and	such	expertise	is	lacking. Glass	Lewis	generally	assesses	audit	committees	against	the	decisions	they	make	with	respect	to	their	oversight	 and	monitoring	role.	The	quality	and	integrity	of	the	financial	statements	and	earnings	reports,	the	 completeness	of	disclosures	necessary	for	investors	to	make	informed	decisions,	and	the	effectiveness	of	the	 internal	controls	should	provide	reasonable	assurance	that	the	financial	statements	are	materially	free	from	 errors.	The	independence	of	the	external	auditors	and	the	results	of	their	work	all	provide	useful	information	by	 which	to	assess	the	audit	committee. When	assessing	the	decisions	and	actions	of	the	audit	committee,	we	typically	defer	to	its	judgment	and	 generally	recommend	voting	in	favor	of	its	members.	However,	we	will	consider	recommending	that	 shareholders	vote	against	the	following: • All	members	of	the	audit	committee	when	options	were	backdated,	there	is	a	lack	of	adequate	controls	 in	place,	there	was	a	resulting	restatement,	and	disclosures	indicate	there	was	a	lack	of	documentation	 with	respect	to	the	option	grants. • The	audit	committee	chair,	if	the	audit	committee	does	not	have	a	financial	expert	or	the	committee’s	 financial	expert	does	not	have	a	demonstrable	financial	background	sufficient	to	understand	the	 financial	issues	unique	to	public	companies. • The	audit	committee	chair,	if	the	audit	committee	did	not	meet	at	least	four	times	during	the	year. • The	audit	committee	chair,	if	the	committee	has	less	than	three	members. • Any	audit	committee	member	who	sits	on	more	than	three	public	company	audit	committees,	unless	 the	audit	committee	member	is	a	retired	CPA,	CFO,	controller	or	has	similar	experience,	in	which	case	 the	limit	shall	be	four	committees,	taking	time	and	availability	into	consideration	including	a	review	of	 the	audit	committee	member’s	attendance	at	all	board	and	committee	meetings.14 • All	members	of	an	audit	committee	who	are	up	for	election	and	who	served	on	the	committee	at	the	 time	of	the	audit,	if	audit	and	audit-related	fees	total	one-third	or	less	of	the	total	fees	billed	by	the	 auditor. • The	audit	committee	chair	when	tax	and/or	other	fees	are	greater	than	audit	and	audit-related	fees	paid	 to	the	auditor	for	more	than	one	year	in	a	row	(in	which	case	we	also	recommend	against	ratification	of	 the	auditor). • The	audit	committee	chair	when	fees	paid	to	the	auditor	are	not	disclosed. • All	members	of	an	audit	committee	where	non-audit	fees	include	fees	for	tax	services	(including,	but	not	 limited	to,	such	things	as	tax	avoidance	or	shelter	schemes)	for	senior	executives	of	the	company.	Such	 services	are	prohibited	by	the	Public	Company	Accounting	Oversight	Board	(PCAOB). 14	 Glass	Lewis	may	exempt	certain	audit	committee	members	from	the	above	threshold	if,	upon	further	analysis	of	relevant	 factors	such	as	the	director’s	experience,	the	size,	industry-mix	and	location	of	the	companies	involved	and	the	director’s	 attendance	at	all	the	companies,	we	can	reasonably	determine	that	the	audit	committee	member	is	likely	not	hindered	by	 multiple	audit	committee	commitments. 2024	Benchmark	Policy	Guidelines	—	United	States 18
• All	members	of	an	audit	committee	that	reappointed	an	auditor	that	we	no	longer	consider	to	be	 independent	for	reasons	unrelated	to	fee	proportions. • All	members	of	an	audit	committee	when	audit	fees	are	excessively	low,	especially	when	compared	with	 other	companies	in	the	same	industry. • The	audit	committee	chair	if	the	committee	failed	to	put	auditor	ratification	on	the	ballot	for	 shareholder	approval.	However,	if	the	non-audit	fees	or	tax	fees	exceed	audit	plus	audit-related	fees	in	 either	the	current	or	the	prior	year,	then	Glass	Lewis	will	recommend	voting	against	the	entire	audit	 committee. • All	members	of	an	audit	committee	where	the	auditor	has	resigned	and	reported	that	a	section	10A15 letter	has	been	issued. • All	members	of	an	audit	committee	at	a	time	when	material	accounting	fraud	occurred	at	the	 company.16 • All	members	of	an	audit	committee	at	a	time	when	annual	and/or	multiple	quarterly	financial	 statements	had	to	be	restated,	and	any	of	the	following	factors	apply:17 o The	restatement	involves	fraud	or	manipulation	by	insiders; o The	restatement	is	accompanied	by	an	SEC	inquiry	or	investigation; o The	restatement	involves	revenue	recognition; o The	restatement	results	in	a	greater	than	5%	adjustment	to	costs	of	goods	sold,	operating	 expense,	or	operating	cash	flows;	or o The	restatement	results	in	a	greater	than	5%	adjustment	to	net	income,	10%	adjustment	to	 assets	or	shareholders	equity,	or	cash	flows	from	financing	or	investing	activities. • All	members	of	an	audit	committee	if	the	company	repeatedly	fails	to	file	its	financial	reports	in	a	timely	 fashion.	For	example,	the	company	has	filed	two	or	more	quarterly	or	annual	financial	statements	late	 within	the	last	five	quarters. • All	members	of	an	audit	committee	when	it	has	been	disclosed	that	a	law	enforcement	agency	 has	charged	the	company	and/or	its	employees	with	a	violation	of	the	Foreign	Corrupt	Practices	 Act	(FCPA). • All	members	of	an	audit	committee	when	the	company	has	aggressive	accounting	policies	and/or	poor	 disclosure	or	lack	of	sufficient	transparency	in	its	financial	statements. 15	 Auditors	are	required	to	report	all	potential	illegal	acts	to	management	and	the	audit	committee	unless	they	are	clearly	 inconsequential	in	nature.	If	the	audit	committee	or	the	board	fails	to	take	appropriate	action	on	an	act	that	has	been	 determined	to	be	a	violation	of	the	law,	the	independent	auditor	is	required	to	send	a	section	10A	letter	to	the	SEC.	Such	letters	 are	rare	and	therefore	we	believe	should	be	taken	seriously. 16	 Research	indicates	that	revenue	fraud	now	accounts	for	over	60%	of	SEC	fraud	cases,	and	that	companies	that	engage	in	 fraud	experience	significant	negative	abnormal	stock	price	declines—facing	bankruptcy,	delisting,	and	material	asset	sales	 at	much	higher	rates	than	do	non-fraud	firms	(Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission. “Fraudulent	Financial	Reporting:	1998-2007.”	May	2010). 17	The	SEC	issued	guidance	in	March	2021	related	to	classification	of	warrants	as	liabilities	at	special	purpose	acquisition	 companies	(SPACs).	We	will	generally	refrain	from	recommending	against	audit	committee	members	when	the	restatement	 in	question	is	solely	as	a	result	of	the	aforementioned	SEC	guidance. 2024	Benchmark	Policy	Guidelines	—	United	States 19
• All	members	of	the	audit	committee	when	there	is	a	disagreement	with	the	auditor	and	the	auditor	 resigns	or	is	dismissed	(e.g.,	the	company	receives	an	adverse	opinion	on	its	financial	statements	from	 the	auditor). • All	members	of	the	audit	committee	if	the	contract	with	the	auditor	specifically	limits	the	auditor’s liability	to	the	company	for	damages.18 • All	members	of	the	audit	committee	who	served	since	the	date	of	the	company’s	last	annual	meeting	if,	 since	the	last	annual	meeting,	the	company	has	reported	a	material	weakness	that	has	not	yet	been	 corrected	and	the	company	has	not	disclosed	a	remediation	plan;	or	when	a	material	weakness	has	 been	ongoing	for	more	than	one	year	and	the	company	has	not	disclosed	an	updated	remediation	plan	 that	clearly	outlines	the	company’s	progress	toward	remediating	the	material	weakness. Material	Weaknesses Effective	internal	controls	over	financial	reporting	should	ensure	the	integrity	of	companies’	accounting	and financial	reporting. The	SEC	guidance	regarding	Management's	Report	on	Internal	Control	Over	Financial	Reporting	requires	that	 reports	on	internal	control	should	include:	(i)	a	statement	of	management's	responsibility	for	establishing	and	 maintaining	adequate	internal	control	over	financial	reporting	for	the	company;	(ii)	management's	assessment	 of	the	effectiveness	of	the	company's	internal	control	over	financial	reporting	as	of	the	end	of	the	company's	 most	recent	fiscal	year;	(iii)	a	statement	identifying	the	framework	used	by	management	to	evaluate	the	 effectiveness	of	the	company's	internal	control	over	financial	reporting;	and	(iv)	a	statement	that	the	registered	 public	accounting	firm	that	audited	the	company's	financial	statements	included	in	the	annual	report	has	issued	 an	attestation	report	on	management's	assessment	of	the	company's	internal	control	over	financial	reporting. A	material	weakness	occurs	when	a	company	identifies	a	deficiency,	or	a	combination	of	deficiencies,	in	internal	 controls	over	financial	reporting,	such	that	there	is	a	reasonable	possibility	that	a	material	misstatement	of	the	 company's	annual	or	interim	financial	statements	will	not	be	prevented	or	detected	on	a	timely	basis.	Failure	to	 maintain	effective	internal	controls	can	create	doubts	regarding	the	reliability	of	financial	reporting	and	the	 preparation	of	financial	statements	in	accordance	with	U.S.	GAAP	and	may	lead	to	companies	publishing	 financial	statements	that	are	not	free	of	errors	or	misstatements. We	believe	it	is	the	responsibility	of	audit	committees	to	ensure	that	material	weaknesses	are	remediated	in	a	 timely	manner	and	that	companies	disclose	remediation	plans	that	include	detailed	steps	to	resolve	a	given	 material	weakness.	In	cases	where	a	material	weakness	has	been	ongoing	for	more	than	one	fiscal	year,	we	 expect	the	company	to	disclose	an	updated	remediation	plan	at	least	annually	thereafter.	Updates	to	existing	 remediation	plans	should	state	the	progress	the	company	has	made	toward	remediating	the	material	weakness	 and	the	remaining	actions	the	company	plans	to	take	until	the	material	weakness	is	fully	remediated.	As	such,	 we	are	critical	of	audit	committees	when	companies	disclose	remediation	plans	that	remain	unchanged	from	a	 prior	period. 18	 The	Council	of	Institutional	Investors.	“Corporate	Governance	Policies,”	p.	4,	April	5,	2006;	and	“Letter	from	Council	of	 Institutional	Investors	to	the	AICPA,”	November	8,	2006. 2024	Benchmark	Policy	Guidelines	—	United	States 20
When	a	material	weakness	is	reported	and	the	company	has	not	disclosed	a	remediation	plan,	or	when	a	 material	weakness	has	been	ongoing	for	more	than	one	year	and	the	company	has	not	disclosed	an	updated	 remediation	plan	that	clearly	outlines	the	company’s	progress	toward	remediating	the	material	weakness,	we	 will	consider	recommending	that	shareholders	vote	against	all	members	of	a	company’s	audit	committee	who	 served	on	the	committee	during	the	time	when	the	material	weakness	was	identified. We	also	take	a	dim	view	of	audit	committee	reports	that	are	boilerplate,	and	which	provide	little	or	no	 information	or	transparency	to	investors.	When	a	problem	such	as	a	material	weakness,	restatement	or	late	 filings	occurs,	in	forming	our	judgment	with	respect	to	the	audit	committee	we	take	into	consideration	the	 transparency	of	the	audit	committee	report. Compensation	Committee	Performance Compensation	committees	have	a	critical	role	in	determining	the	compensation	of	executives.	This	includes	 deciding	the	basis	on	which	compensation	is	determined,	as	well	as	the	amounts	and	types	of	compensation	 to	be	paid.	This	process	begins	with	the	hiring	and	initial	establishment	of	employment	agreements,	including	 the	terms	for	such	items	as	pay,	pensions	and	severance	arrangements.	It	is	important	in	establishing	 compensation	arrangements	that	compensation	be	consistent	with,	and	based	on	the	long-term	economic performance	of,	the	business’s	long-term	shareholders	returns. Compensation	committees	are	also	responsible	for	the	oversight	of	the	transparency	of	compensation.	This	 oversight	includes	disclosure	of	compensation	arrangements,	the	matrix	used	in	assessing	pay	for	performance,	 and	the	use	of	compensation	consultants.	In	order	to	ensure	the	independence	of	the	board’s	compensation	 consultant,	we	believe	the	compensation	committee	should	only	engage	a	compensation	consultant	that	is	not	 also	providing	any	services	to	the	company	or	management	apart	from	their	contract	with	the	compensation	 committee.	It	is	important	to	investors	that	they	have	clear	and	complete	disclosure	of	all	the	significant	terms	 of	compensation	arrangements	in	order	to	make	informed	decisions	with	respect	to	the	oversight	and	decisions	 of	the	compensation	committee. Finally,	compensation	committees	are	responsible	for	oversight	of	internal	controls	over	the	executive	 compensation	process.	This	includes	controls	over	gathering	information	used	to	determine	compensation,	 establishment	of	equity	award	plans,	and	granting	of	equity	awards.	For	example,	the	use	of	a	compensation	 consultant	who	maintains	a	business	relationship	with	company	management	may	cause	the	committee	to make	decisions	based	on	information	that	is	compromised	by	the	consultant’s	conflict	of	interests.	Lax	controls	 can	also	contribute	to	improper	awards	of	compensation	such	as	through	granting	of	backdated	or	spring-	 loaded	options,	or	granting	of	bonuses	when	triggers	for	bonus	payments	have	not	been	met. Central	to	understanding	the	actions	of	compensation	committee	is	a	careful	review	of	the	CD&A	report	 included	in	each	company’s	proxy.	We	review	the	CD&A	in	our	evaluation	of	the	overall	compensation	practices	 of	a	company,	as	overseen	by	the	compensation	committee.	The	CD&A	is	also	integral	to	the	evaluation	of	 compensation	proposals	at	companies,	such	as	advisory	votes	on	executive	compensation,	which	allow	 shareholders	to	vote	on	the	compensation	paid	to	a	company’s	top	executives. When	assessing	the	performance	of	compensation	committees,	we	will	consider	recommending	that	 shareholders	vote	against	the	following: 2024	Benchmark	Policy	Guidelines	—	United	States 21
• All	members	of	a	compensation	committee	during	whose	tenure	the	committee	failed	to	address	 shareholder	concerns	following	majority	shareholder	rejection	of	the	say-on-pay	proposal	in	the	 previous	year.	Where	the	proposal	was	approved	but	there	was	a	significant	shareholder	vote	(i.e.,	 greater	than	20%	of	votes	cast)	against	the	say-on-pay	proposal	in	the	prior	year,	if	the	board	did	not	 respond	sufficiently	to	the	vote	including	actively	engaging	shareholders	on	this	issue,	we	will	also	 consider	recommending	voting	against	the	chair	of	the	compensation	committee	or	all	members	of	the	 compensation	committee,	depending	on	the	severity	and	history	of	the	compensation	problems	and	the	 level	of	shareholder	opposition. • All	members	of	the	compensation	committee	who	are	up	for	election	and	served	when	the	company	 failed	to	align	pay	with	performance	if	shareholders	are	not	provided	with	an	advisory	vote	on	executive	 compensation	at	the	annual	meeting.19 • Any	member	of	the	compensation	committee	who	has	served	on	the	compensation	committee	of	at	 least	two	other	public	companies	that	have	consistently	failed	to	align	pay	with	performance	and	whose	 oversight	of	compensation	at	the	company	in	question	is	suspect. • All	members	of	the	compensation	committee	(during	the	relevant	time	period)	if	the	company	entered	 into	excessive	employment	agreements	and/or	severance	agreements. • All	members	of	the	compensation	committee	when	performance	goals	were	changed	(i.e.,	lowered)	 when	employees	failed	or	were	unlikely	to	meet	original	goals,	or	performance-based	compensation	 was	paid	despite	goals	not	being	attained. • All	members	of	the	compensation	committee	if	excessive	employee	perquisites	and	benefits	 were	allowed. • The	compensation	committee	chair	if	the	compensation	committee	did	not	meet	during	the	year. • All	members	of	the	compensation	committee	when	the	company	repriced	options	or	completed	a	“self	 tender	offer”	without	shareholder	approval	within	the	past	two	years. • All	members	of	the	compensation	committee	when	vesting	of	in-the-money	options	is	accelerated. • All	members	of	the	compensation	committee	when	option	exercise	prices	were	backdated.	Glass	Lewis	 will	recommend	voting	against	an	executive	director	who	played	a	role	in	and	participated	in option	backdating. • All	members	of	the	compensation	committee	when	option	exercise	prices	were	spring-loaded	or	 otherwise	timed	around	the	release	of	material	information. • All	members	of	the	compensation	committee	when	a	new	employment	contract	is	given	to	an	executive	 that	does	not	include	a	clawback	provision	and	the	company	had	a	material	restatement,	especially	if	 the	restatement	was	due	to	fraud. • The	chair	of	the	compensation	committee	where	the	CD&A	provides	insufficient	or	unclear	information	 about	performance	metrics	and	goals,	where	the	CD&A	indicates	that	pay	is	not	tied	to	performance,	or	 where	the	compensation	committee	or	management	has	excessive	discretion	to	alter	performance	 terms	or	increase	amounts	of	awards	in	contravention	of	previously	defined	targets. 19	 If	a	company	provides	shareholders	with	a	say-on-pay	proposal,	we	will	initially	only	recommend	voting	against	the	 company's	say-on-pay	proposal	and	will	not	recommend	voting	against	the	members	of	the	compensation	committee	unless	 there	is	a	pattern	of	failing	to	align	pay	and	performance	and/or	the	company	exhibits	egregious	compensation	practices.	For	 cases	in	which	the	disconnect	between	pay	and	performance	is	marginal	and	the	company	has	outperformed	its	peers,	we	will	 consider	not	recommending	against	compensation	committee	members. 2024	Benchmark	Policy	Guidelines	—	United	States 22
• All	members	of	the	compensation	committee	during	whose	tenure	the	committee	failed	to	implement	a	 shareholder	proposal	regarding	a	compensation-related	issue,	where	the	proposal	received	the	 affirmative	vote	of	a	majority	of	the	voting	shares	at	a	shareholder	meeting,	and	when	a	reasonable	 analysis	suggests	that	the	compensation	committee	(rather	than	the	governance	committee)	should	 have	taken	steps	to	implement	the	request.20 • All	members	of	the	compensation	committee	when	the	board	has	materially	decreased	proxy	statement	 disclosure	regarding	executive	compensation	policies	and	procedures	in	a	manner	which	substantially	 impacts	shareholders’	ability	to	make	an	informed	assessment	of	the	company’s	executive	pay	practices. • All	members	of	the	compensation	committee	when	new	excise	tax	gross-up	provisions	are	adopted	in	 employment	agreements	with	executives,	particularly	in	cases	where	the	company	previously	 committed	not	to	provide	any	such	entitlements	in	the	future. • All	members	of	the	compensation	committee	when	the	board	adopts	a	frequency	for	future	advisory	 votes	on	executive	compensation	that	differs	from	the	frequency	approved	by	shareholders. • The	chair	of	the	compensation	committee	when”	mega-grants”	have	been	granted	and	the	awards	 present	concerns	such	as	excessive	quantum,	lack	of	sufficient	performance	conditions,	and/or	are	 excessively	dilutive,	among	others. Nominating	and	Governance	Committee	Performance The	nominating	and	governance	committee	is	responsible	for	the	governance	by	the	board	of	the	company	and	 its	executives.	In	performing	this	role,	the	committee	is	responsible	and	accountable	for	selection	of	objective	 and	competent	board	members.	It	is	also	responsible	for	providing	leadership	on	governance	policies	adopted	 by	the	company,	such	as	decisions	to	implement	shareholder	proposals	that	have	received	a	majority	vote.	At	 most	companies,	a	single	committee	is	charged	with	these	oversight	functions;	at	others,	the	governance	and	 nominating	responsibilities	are	apportioned	among	two	separate	committees. Consistent	with	Glass	Lewis’	philosophy	that	boards	should	have	diverse	backgrounds	and	members	with	a	 breadth	and	depth	of	relevant	experience,	we	believe	that	nominating	and	governance	committees	should	 consider	diversity	when	making	director	nominations	within	the	context	of	each	specific	company	and	its	 industry.	In	our	view,	shareholders	are	best	served	when	boards	make	an	effort	to	ensure	a	constituency	that	is	 not	only	reasonably	diverse	on	the	basis	of	age,	race,	gender	and	ethnicity,	but	also	on	the	basis	of	geographic	 knowledge,	industry	experience,	board	tenure	and	culture. Regarding	the	committee	responsible	for	governance,	we	will	consider	recommending	that	shareholders	vote	 against	the	following: • All	members	of	the	governance	committee21	during	whose	tenure	a	shareholder	proposal	relating	to	 important	shareholder	rights	received	support	from	a	majority	of	the	votes	cast	(excluding	abstentions 20	 In	all	other	instances	(i.e.,	a	non-compensation-related	shareholder	proposal	should	have	been	implemented)	we	recommend	 that	shareholders	vote	against	the	members	of	the	governance	committee. 21	 If	the	board	does	not	have	a	committee	responsible	for	governance	oversight	and	the	board	did	not	implement	a	 shareholder	proposal	that	received	the	requisite	support,	we	will	recommend	voting	against	the	entire	board.	If	the 2024	Benchmark	Policy	Guidelines	—	United	States 23
and	broker	non-votes)	and	the	board	has	not	begun	to	implement	or	enact	the	proposal’s	subject	 matter.22	Examples	of	such	shareholder	proposals	include	those	seeking	a	declassified	board	structure,	a	 majority	vote	standard	for	director	elections,	or	a	right	to	call	a	special	meeting.	In	determining	whether	 a	board	has	sufficiently	implemented	such	a	proposal,	we	will	examine	the	quality	of	the	right	enacted	 or	proffered	by	the	board	for	any	conditions	that	may	unreasonably	interfere	with	the	shareholders’	 ability	to	exercise	the	right	(e.g.,	overly	restrictive	procedural	requirements	for	calling	a	special	 meeting). • All	members	of	the	governance	committee	when	a	shareholder	resolution	is	excluded	from	the	meeting	 agenda	but	the	SEC	has	declined	to	state	a	view	on	whether	such	resolution	should	be	excluded,	or	 when	the	SEC	has	verbally	permitted	a	company	to	exclude	a	shareholder	proposal	but	there	is	no	 written	record	provided	by	the	SEC	about	such	determination	and	the	company	has	not	provided	any	 disclosure	concerning	this	no-action	relief. • The	governance	committee	chair	when	the	chair	is	not	independent	and	an	independent	lead	or	 presiding	director	has	not	been	appointed.23 • The	governance	committee	chair	at	companies	with	a	multi-class	share	structure	and	unequal	voting	 rights	when	the	company	does	not	provide	for	a	reasonable	sunset	of	the	multi-class	share	structure	 (generally	seven	years	or	less). • In	the	absence	of	a	nominating	committee,	the	governance	committee	chair	when	there	are	fewer	than	 five,	or	the	whole	governance	committee	when	there	are	more	than	20	members	on	the	board. • The	governance	committee	chair	when	the	committee	fails	to	meet	at	all	during	the	year. • The	governance	committee	chair,	when	for	two	consecutive	years	the	company	provides	what	we	 consider	to	be	“inadequate”	related	party	transaction	disclosure	(i.e.,	the	nature	of	such	transactions	 and/or	the	monetary	amounts	involved	are	unclear	or	excessively	vague,	thereby	preventing	a	share-	 holder	from	being	able	to	reasonably	interpret	the	independence	status	of	multiple	directors	above	and	 beyond	what	the	company	maintains	is	compliant	with	SEC	or	applicable	stock	exchange	listing	 requirements). • The	governance	committee	chair,	when	during	the	past	year	the	board	adopted	a	forum	selection	clause	 (i.e.,	an	exclusive	forum	provision)24	designating	either	a	state's	courts	for	intra-corporate	disputes, shareholder	proposal	at	issue	requested	that	the	board	adopt	a	declassified	structure,	we	will	recommend	voting	against	all	 director	nominees	up	for	election. 22	Where	a	compensation-related	shareholder	proposal	should	have	been	implemented,	and	when	a	reasonable	analysis	 suggests	that	the	members	of	the	compensation	committee	(rather	than	the	governance	committee)	bear	the	responsibility	 for	failing	to	implement	the	request,	we	recommend	that	shareholders	only	vote	against	members	of	the	compensation	 committee. 23	We	believe	that	one	independent	individual	should	be	appointed	to	serve	as	the	lead	or	presiding	director.	When	such	a	 position	is	rotated	among	directors	from	meeting	to	meeting,	we	will	recommend	voting	against	the	governance	committee	 chair	as	we	believe	the	lack	of	fixed	lead	or	presiding	director	means	that,	effectively,	the	board	does	not	have	an	 independent	board	leader. 24	 A	forum	selection	clause	is	a	bylaw	provision	stipulating	that	a	certain	state	or	federal	jurisdiction	is	the	exclusive	forum	 for	specified	legal	matters.	Such	a	clause	effectively	limits	a	shareholder's	legal	remedy	regarding	appropriate	choice	of	 venue	and	related	relief. 2024	Benchmark	Policy	Guidelines	—	United	States 24
and/or	federal	courts	for	matters	arising	under	the	Securities	Act	of	1933	without	shareholder	 approval,25	or	if	the	board	is	currently	seeking	shareholder	approval	of	a	forum	selection	clause	pursuant	 to	a	bundled	bylaw	amendment	rather	than	as	a	separate	proposal. • All	members	of	the	governance	committee	during	whose	tenure	the	board	adopted,	without	 shareholder	approval,	provisions	in	its	charter	or	bylaws	that,	through	rules	on	director	compensation,	 may	inhibit	the	ability	of	shareholders	to	nominate	directors. • The	governance	committee	chair	when	the	board	takes	actions	to	limit	shareholders’	ability	to	vote	on	 matters	material	to	shareholder	rights	(e.g.,	through	the	practice	of	excluding	a	shareholder	proposal	by	 means	of	ratifying	a	management	proposal	that	is	materially	different	from	the	shareholder	proposal). • The	governance	committee	chair	when	directors’	records	for	board	and	committee	meeting	attendance	 are	not	disclosed,	or	when	it	is	indicated	that	a	director	attended	less	than	75%	of	board	and	committee	 meetings	but	disclosure	is	sufficiently	vague	that	it	is	not	possible	to	determine	which	specific	director’s	 attendance	was	lacking. • The	governance	committee	chair	when	a	detailed	record	of	proxy	voting	results	from	the	prior	annual	 meeting	has	not	been	disclosed. • The	governance	committee	chair	when	a	company	does	not	clearly	disclose	the	identity	of	a	shareholder	 proponent	(or	lead	proponent	when	there	are	multiple	filers)	in	their	proxy	statement.	For	a	detailed	 explanation	of	this	policy,	please	refer	to	our	comprehensive	Proxy	Paper	Guidelines	for	Shareholder	 Proposals	&	ESG-Related	Issues,	available	at	www.glasslewis.com/voting-policies-current/. In	addition,	we	may	recommend	that	shareholders	vote	against	the	chair	of	the	governance	committee,	or	the	 entire	committee,	where	the	board	has	amended	the	company’s	governing	documents	to	reduce	or	remove	 important	shareholder	rights,	or	to	otherwise	impede	the	ability	of	shareholders	to	exercise	such	right,	and	has	 done	so	without	seeking	shareholder	approval.	Examples	of	board	actions	that	may	cause	such	a	 recommendation	include:	the	elimination	of	the	ability	of	shareholders	to	call	a	special	meeting	or	to	act	by	 written	consent;	an	increase	to	the	ownership	threshold	required	for	shareholders	to	call	a	special	meeting;	an increase	to	vote	requirements	for	charter	or	bylaw	amendments;	the	adoption	of	provisions	that	limit	the	ability	 of	shareholders	to	pursue	full	legal	recourse	—	such	as	bylaws	that	require	arbitration	of	shareholder	claims or	that	require	shareholder	plaintiffs	to	pay	the	company’s	legal	expenses	in	the	absence	of	a	court	victory	 (i.e.,	“fee-shifting”	or	“loser	pays”	bylaws);	the	adoption	of	a	classified	board	structure;	and	the	elimination	of	 the	ability	of	shareholders	to	remove	a	director	without	cause. Regarding	the	nominating	committee,	we	will	consider	recommending	that	shareholders	vote	against	the	 following: • All	members	of	the	nominating	committee,	when	the	committee	nominated	or	renominated an	individual	who	had	a	significant	conflict	of	interest	or	whose	past	actions	demonstrated	a	lack	of	 integrity	or	inability	to	represent	shareholder	interests. • The	nominating	committee	chair,	if	the	nominating	committee	did	not	meet	during	the	year. 25	 Glass	Lewis	will	evaluate	the	circumstances	surrounding	the	adoption	of	any	forum	selection	clause	as	well	as	the	general	 provisions	contained	therein.	Where	it	can	be	reasonably	determined	that	a	forum	selection	clause	is	narrowly	crafted	to	suit	 the	particular	circumstances	facing	the	company	and/or	a	reasonable	sunset	provision	is	included,	we	may	make	an	exception	 to	this	policy. 2024	Benchmark	Policy	Guidelines	—	United	States 25
• In	the	absence	of	a	governance	committee,	the	nominating	committee	chair	when	the	chair	is	not	 independent,	and	an	independent	lead	or	presiding	director	has	not	been	appointed. • The	nominating	committee	chair,	when	there	are	fewer	than	five,	or	the	whole	nominating	committee	 when	there	are	more	than	20	members	on	the	board. • The	nominating	committee	chair,	when	a	director	received	a	greater	than	50%	against	vote	the	prior	 year	and	not	only	was	the	director	not	removed,	but	the	issues	that	raised	shareholder	concern	were	 not	corrected.26 • The	chair	of	the	nominating	committee	of	a	board	that	is	not	at	least	30	percent	gender	diverse,27	or	all	 members	of	the	nominating	committee	of	a	board	with	no	gender	diverse	directors,	at	companies	 within	the	Russell	3000	index.	For	companies	outside	of	the	Russell	3000	index,	we	will	recommend	 voting	against	the	chair	of	the	nominating	committee	if	there	are	no	gender	diverse	directors. • The	chair	of	the	nominating	committee	of	a	board	with	fewer	than	one	director	from	an	 underrepresented	community	on	the	board,	at	companies	within	the	Russell	1000	index. • The	nominating	committee	chair	when,	alongside	other	governance	or	board	performance	concerns,	the	 average	tenure	of	non-executive	directors	is	10	years	or	more	and	no	new	independent	directors	have	 joined	the	board	in	the	past	five	years.	We	will	not	be	making	voting	recommendations	solely	on	this	 basis;	rather,	insufficient	board	refreshment	may	be	a	contributing	factor	in	our	recommendations	when	 additional	board-related	concerns	have	been	identified. In	addition,	we	may	consider	recommending	shareholders	vote	against	the	chair	of	the	nominating	committee	 where	the	board’s	failure	to	ensure	the	board	has	directors	with	relevant	experience,	either	through	periodic	 director	assessment	or	board	refreshment,	has	contributed	to	a	company’s	poor	performance.	Where	these	 issues	warrant	an	against	vote	in	the	absence	of	both	a	governance	and	a	nominating	committee,	we	will	 recommend	voting	against	the	board	chair,	unless	the	chair	also	serves	as	the	CEO,	in	which	case	we	will	 recommend	voting	against	the	longest-serving	director. Board-Level	Risk	Management	Oversight Glass	Lewis	evaluates	the	risk	management	function	of	a	public	company	board	on	a	strictly	case-by-case	basis.	 Sound	risk	management,	while	necessary	at	all	companies,	is	particularly	important	at	financial	firms	which	 inherently	maintain	significant	exposure	to	financial	risk.	We	believe	such	financial	firms	should	have	a	chief	risk	 officer	reporting	directly	to	the	board	and	a	dedicated	risk	committee	or	a	committee	of	the	board	charged	with	 risk	oversight.	Moreover,	many	non-financial	firms	maintain	strategies	which	involve	a	high	level	of	exposure	to	 financial	risk.	Similarly,	since	many	non-financial	firms	have	complex	hedging	or	trading	strategies,	those	firms	 should	also	have	a	chief	risk	officer	and	a	risk	committee. 26	 Considering	that	shareholder	disapproval	clearly	relates	to	the	director	who	received	a	greater	than	50%	against	vote	rather	 than	the	nominating	chair,	we	review	the	severity	of	the	issue(s)	that	initially	raised	shareholder	concern	as	well	as	company	 responsiveness	to	such	matters,	and	will	only	recommend	voting	against	the	nominating	chair	if	a	reasonable	analysis	suggests	 that	it	would	be	most	appropriate.	In	rare	cases,	we	will	consider	recommending	against	the	nominating	chair	when	a	director	 receives	a	substantial	(i.e.,	20%	or	more)	vote	against	based	on	the	same	analysis. 27	Women	and	directors	that	identify	with	a	gender	other	than	male	or	female. 2024	Benchmark	Policy	Guidelines	—	United	States 26
Our	views	on	risk	oversight	are	consistent	with	those	expressed	by	various	regulatory	bodies.	In	its	December	 2009	Final	Rule	release	on	Proxy	Disclosure	Enhancements,	the	SEC	noted	that	risk	oversight	is	a	key	 competence	of	the	board	and	that	additional	disclosures	would	improve	investor	and	shareholder understanding	of	the	role	of	the	board	in	the	organization’s	risk	management	practices.	The	final	rules,	which	 became	effective	on	February	28,	2010,	now	explicitly	require	companies	and	mutual	funds	to	describe	(while	 allowing	for	some	degree	of	flexibility)	the	board’s	role	in	the	oversight	of	risk. When	analyzing	the	risk	management	practices	of	public	companies,	we	take	note	of	any	significant	losses	or	 writedowns	on	financial	assets	and/or	structured	transactions.	In	cases	where	a	company	has	disclosed	a	sizable	 loss	or	writedown,	and	where	we	find	that	the	company’s	board-level	risk	committee’s	poor	oversight	 contributed	to	the	loss,	we	will	recommend	that	shareholders	vote	against	such	committee	members	on	that	 basis.	In	addition,	in	cases	where	a	company	maintains	a	significant	level	of	financial	risk	exposure	but	fails	to	 disclose	any	explicit	form	of	board-level	risk	oversight	(committee	or	otherwise),28	we	will	consider	 recommending	to	vote	against	the	board	chair	on	that	basis.	However,	we	generally	would	not	recommend	 voting	against	a	combined	chair/CEO,	except	in	egregious	cases. Board	Oversight	of	Environmental	and	Social	Issues Glass	Lewis	recognizes	the	importance	of	ensuring	the	sustainability	of	companies’	operations.	We	believe	that	 insufficient	oversight	of	material	environmental	and	social	issues	can	present	direct	legal,	financial,	regulatory	 and	reputational	risks	that	could	serve	to	harm	shareholder	interests.	Therefore,	we	believe	that	these	issues	 should	be	carefully	monitored	and	managed	by	companies,	and	that	all	companies	should	have	an	appropriate	 oversight	structure	in	place	to	ensure	that	they	are	mitigating	attendant	risks	and	capitalizing	on	related	 opportunities	to	the	best	extent	possible. To	that	end,	Glass	Lewis	believes	that	companies	should	ensure	that	boards	maintain	clear	oversight	of	material	 risks	to	their	operations,	including	those	that	are	environmental	and	social	in	nature.	These	risks	could	include,	 but	are	not	limited	to,	matters	related	to	climate	change,	human	capital	management,	diversity,	stakeholder	 relations,	and	health,	safety	&	environment.	Given	the	importance	of	the	board’s	role	in	overseeing	 environmental	and	social	risks,	we	believe	this	responsibility	should	be	formally	designated	and	codified	in	the	 appropriate	committee	charters	or	other	governing	documents. While	we	believe	that	it	is	important	that	these	issues	are	overseen	at	the	board	level	and	that	shareholders	are	 afforded	meaningful	disclosure	of	these	oversight	responsibilities,	we	believe	that	companies	should	determine	 the	best	structure	for	this	oversight.	In	our	view,	this	oversight	can	be	effectively	conducted	by	specific	directors,	 the	entire	board,	a	separate	committee,	or	combined	with	the	responsibilities	of	a	key	committee. For	companies	in	the	Russell	3000	index	and	in	instances	where	we	identify	material	oversight	concerns,	Glass	 Lewis	will	review	a	company’s	overall	governance	practices	and	identify	which	directors	or	board-level	 committees	have	been	charged	with	oversight	of	environmental	and/or	social	issues.	Furthermore,	given	the importance	of	the	board’s	role	in	overseeing	environmental	and	social	risks,	Glass	Lewis	will	generally 28	 A	committee	responsible	for	risk	management	could	be	a	dedicated	risk	committee,	the	audit	committee,	or	the	finance	 committee,	depending	on	a	given	company’s	board	structure	and	method	of	disclosure.	At	some	companies,	the	entire	board	is	 charged	with	risk	management. 2024	Benchmark	Policy	Guidelines	—	United	States 27
recommend	voting	against	the	governance	committee	chair	of	a	company	in	the	Russell	1000	index	that	fails	to provide	explicit	disclosure	concerning	the	board’s	role	in	overseeing	these	issues. When	evaluating	the	board’s	role	in	overseeing	environmental	and/or	social	issues,	we	will	examine	a	 company’s	committee	charters	and	governing	documents	to	determine	if	the	company	has	codified	and	 maintained	a	meaningful	level	of	oversight	of	and	accountability	for	a	company’s	material	environmental	and	 social	impacts. Board	Oversight	of	Technology Cyber	Risk	Oversight Companies	and	consumers	are	exposed	to	a	growing	risk	of	cyber-attacks.	These	attacks	can	result	in	customer	 or	employee	data	breaches,	harm	to	a	company’s	reputation,	significant	fines	or	penalties,	and	interruption	to	a	 company’s	operations.	Further,	in	some	instances,	cyber	breaches	can	result	in	national	security	concerns,	such	 as	those	impacting	companies	operating	as	utilities,	defense	contractors,	and	energy	companies. In	response	to	these	issues,	regulators	have	increasingly	been	focused	on	ensuring	companies	are	providing	 appropriate	and	timely	disclosures	and	protections	to	stakeholders	that	could	have	been	adversely	impacted	by	 a	breach	in	a	company’s	cyber	infrastructure. On	July	26,	2023,	the	SEC	approved	final	rules	requiring	public	companies	to	report	cybersecurity	incidents	 deemed	material	within	four	days	of	identifying	them,	detailing	their	nature,	scope,	timing,	and	material	impact	 under	Item	1.05	on	Form	8-K. Furthermore,	in	annual	reports,	companies	must	disclose	their	processes	for	assessing,	identifying,	and	 managing	material	cybersecurity	risks,	along	with	their	material	effects;	and	describe	whether	any	risks	from	 prior	incidents	have	materially	affected	its	business	strategy,	results	of	operations,	or	financial	condition	(or	are	 reasonably	likely	to),	pursuant	to	Regulation	S-K	Item	106.	Item	106	will	also	require	registrants	to	describe	the	 board	of	directors’	oversight	of	risks	from	cybersecurity	threats	and	management’s	role	and	expertise	in	 assessing	and	managing	material	risks	from	cybersecurity	threats.	Similar	rules	were	also	adopted	for	foreign	 private	issuers.	The	final	rules	became	effective	on	September	5,	2023. Given	the	regulatory	focus	on,	and	the	potential	adverse	outcomes	from,	cyber-related	issues,	it	is	our	view	that	 cyber	risk	is	material	for	all	companies.	We	therefore	believe	that	it	is	critical	that	companies	evaluate	and	 mitigate	these	risks	to	the	greatest	extent	possible.	With	that	view,	we	encourage	all	issuers	to	provide	clear	 disclosure	concerning	the	role	of	the	board	in	overseeing	issues	related	to	cybersecurity,	including	how	 companies	are	ensuring	directors	are	fully	versed	on	this	rapidly	evolving	and	dynamic	issue.	We	believe	such	 disclosure	can	help	shareholders	understand	the	seriousness	with	which	companies	take	this	issue. In	the	absence	of	material	cyber	incidents,	we	will	generally	not	make	voting	recommendations	on	the	basis	of	a	 company’s	oversight	or	disclosure	concerning	cyber-related	issues.	However,	in	instances	where	cyber-attacks	 have	caused	significant	harm	to	shareholders	we	will	closely	evaluate	the	board’s	oversight	of	cybersecurity	as	 well	as	the	company’s	response	and	disclosures. Moreover,	in	instances	where	a	company	has	been	materially	impacted	by	a	cyber-attack,	we	believe	 shareholders	can	reasonably	expect	periodic	updates	communicating	the	company’s	ongoing	progress	towards 2024	Benchmark	Policy	Guidelines	—	United	States 28
resolving	and	remediating	the	impact	of	the	cyber-attack.	We	generally	believe	shareholders	are	best	served	 when	such	updates	include	(but	are	not	necessarily	limited	to)	details	such	as	when	the	company	has	fully	 restored	its	information	systems,	when	the	company	has	returned	to	normal	operations,	what	resources	the	 company	is	providing	for	affected	stakeholders,	and	any	other	potentially	relevant	information,	until	the	 company	considers	the	impact	of	the	cyber-attack	to	be	fully	remediated.	These	disclosures	should	focus	on	the	 company’s	response	to	address	the	impacts	to	affected	stakeholders	and	should	not	reveal	specific	and/or technical	details	that	could	impede	the	company’s	response	or	remediation	of	the	incident	or	that	could	assist threat	actors. In	such	instances,	we	may	recommend	against	appropriate	directors	should	we	find	the	board’s	oversight,	 response	or	disclosure	concerning	cybersecurity-related	issues	to	be	insufficient,	or	are	not	provided	to	 shareholders. Board	Oversight	of	Artificial	Intelligence In	recent	years,	companies	have	rapidly	begun	to	develop	and	adopt	uses	for	artificial	intelligence	(AI)	 technologies	throughout	various	aspects	of	their	operations.	Deployed	and	overseen	effectively,	AI	technologies	 have	the	potential	to	make	companies’	operations	and	systems	more	efficient	and	productive.	However,	as	the	 use	of	these	technologies	has	grown,	so	have	the	potential	risks	associated	with	companies’	development	and	 use	of	AI.	Given	these	potential	risks,	we	believe	that	boards	should	be	cognizant	of,	and	take	steps	to	mitigate	 exposure	to,	any	material	risks	that	could	arise	from	their	use	or	development	of	AI. Companies	that	use	or	develop	AI	technologies	should	consider	adopting	strong	internal	frameworks	that	 include	ethical	considerations	and	ensure	they	have	provided	a	sufficient	level	of	oversight	of	AI.	 As	such,	 boards	may	seek	to	ensure	effective	oversight	and	address	skills	gaps	by	engaging	in	continued	board	education	 and/or	appointing	directors	with	AI	expertise.	With	that	view,	we	believe	that	all	companies	that	develop	or	 employ	the	use	of	AI	in	their	operations	should	provide	clear	disclosure	concerning	the	role	of	the	board	in	 overseeing	issues	related	to	AI,	including	how	companies	are	ensuring	directors	are	fully	versed	on	this	rapidly	 evolving	and	dynamic	issue.	We	believe	such	disclosure	can	help	shareholders	understand	the	seriousness	with	 which	companies	take	this	issue. While	we	believe	that	it	is	important	that	these	issues	are	overseen	at	the	board	level	and	that	shareholders	are	 afforded	meaningful	disclosure	of	these	oversight	responsibilities,	we	believe	that	companies	should	determine	 the	best	structure	for	this	oversight.	In	our	view,	this	oversight	can	be	effectively	conducted	by	specific	directors,	 the	entire	board,	a	separate	committee,	or	combined	with	the	responsibilities	of	a	key	committee. In	the	absence	of	material	incidents	related	to	a	company’s	use	or	management	of	AI-related	issues,	we	will generally	not	make	voting	recommendations	on	the	basis	of	a	company’s	oversight	of,	or	disclosure	concerning,	 AI-related	issues.	However,	in	instances	where	there	is	evidence	that	insufficient	oversight	and/or	management	 of	AI	technologies	has	resulted	in	material	harm	to	shareholders,	Glass	Lewis	will	review	a	company’s	overall	 governance	practices	and	identify	which	directors	or	board-level	committees	have	been	charged	with	oversight	 of	AI-related	risks.	We	will	also	closely	evaluate	the	board’s	response	to,	and	management	of,	this	issue	as	well	 as	any	associated	disclosures	and	may	recommend	against	appropriate	directors	should	we	find	the	board’s	 oversight,	response	or	disclosure	concerning	AI-related	issues	to	be	insufficient. 2024	Benchmark	Policy	Guidelines	—	United	States 29
Board	Accountability	for	Environmental	and	Social	Performance Glass	Lewis	carefully	monitors	companies’	performance	with	respect	to	environmental	and	social	issues,	 including	those	related	to	climate	and	human	capital	management.	In	situations	where	we	believe	that	a	 company	has	not	properly	managed	or	mitigated	material	environmental	or	social	risks	to	the	detriment	of	 shareholder	value,	or	when	such	mismanagement	has	threatened	shareholder	value,	Glass	Lewis	may	 recommend	that	shareholders	vote	against	the	members	of	the	board	who	are	responsible	for	oversight	of	 environmental	and	social	risks.	In	the	absence	of	explicit	board	oversight	of	environmental	and	social	issues,	 Glass	Lewis	may	recommend	that	shareholders	vote	against	members	of	the	audit	committee.	In	making	these	 determinations,	Glass	Lewis	will	carefully	review	the	situation,	its	effect	on	shareholder	value,	as	well	as	any	 corrective	action	or	other	response	made	by	the	company. For	more	information	on	how	Glass	Lewis	evaluates	environmental	and	social	issues,	please	see	Glass	Lewis’	 Overall	Approach	to	ESG	as	well	as	our	comprehensive	Proxy	Paper	Guidelines	for	Shareholder	Proposals	&	ESG-	 Related	Issues,	available	at	www.glasslewis.com/voting-policies-current/. Board	Accountability	for	Climate-related	Issues Given	the	exceptionally	broad	impacts	of	a	changing	climate	on	companies,	the	economy,	and	society	in	general,	 we	view	climate	risk	as	a	material	risk	for	all	companies.	We	therefore	believe	that	boards	should	be	considering	 and	evaluating	their	operational	resilience	under	lower-carbon	scenarios.	While	all	companies	maintain	 exposure	to	climate-related	risks,	we	believe	that	additional	consideration	should	be	given	to,	and	that	 disclosure	should	be	provided	by	those	companies	whose	GHG	emissions	represent	a	financially	material	risk. We	believe	that	companies	with	this	increased	risk	exposure	should	provide	clear	and	comprehensive	disclosure	 regarding	these	risks,	including	how	they	are	being	mitigated	and	overseen.	We	believe	such	information	is crucial	to	allow	investors	to	understand	the	company’s	management	of	this	issue,	as	well	as	the	impact	of	a	 lower	carbon	future	on	the	company’s	operations. In	line	with	this	view,	Glass	Lewis	will	carefully	examine	the	climate-related	disclosures	provided	by	companies	 in	the	S&P	500	index	with	material	exposure	to	climate	risk	stemming	from	their	own	operations29,	 as	well	as	 companies	where	we	believe	emissions	or	climate	impacts,	or	stakeholder	scrutiny	thereof,	represent	an	 outsized,	financially	material	risk,	in	order	to	assess	whether	they	have	produced	disclosures	in	line	with	the	 recommendations	of	the	Task	Force	on	Climate-related	Financial	Disclosures	(TCFD)	or	IFRS	S2	Climate-related	 Disclosures.	We	will	also	assess	whether	these	companies	have	disclosed	explicit	and	clearly	defined	board-level	 oversight	responsibilities	for	climate-related	issues.	In	instances	where	we	find	either	(or	both)	of	these	 disclosures	to	be	absent	or	significantly	lacking,	we	may	recommend	voting	against	the	chair	of	the	committee	 (or	board)	charged	with	oversight	of	climate-related	issues,	or	if	no	committee	has	been	charged	with	such	 oversight,	the	chair	of	the	governance	committee.	Further,	we	may	extend	our	recommendation	on	this	basis	to	 additional	members	of	the	responsible	committee	in	cases	where	the	committee	chair	is	not	standing	for 29	This	policy	will	generally	apply	to	companies	in	the	following	SASB-defined	industries:	agricultural	products,	air	freight	&	 logistics,	airlines,	chemicals,	construction	materials,	containers	&	packaging,	cruise	lines,	electric	utilities	&	power	generators,	 food	retailers	&	distributors,	health	care	distributors,	iron	&	steel	producers,	marine	transportation,	meat,	poultry	&	dairy,	 metals	&	mining,	non-alcoholic	beverages,	oil	&	gas,	pulp	&	paper	products,	rail	transportation,	road	transportation,	 semiconductors,	waste	management. 2024	Benchmark	Policy	Guidelines	—	United	States 30
election	due	to	a	classified	board,	or	based	on	other	factors,	including	the	company’s	size,	industry	and	its	 overall	governance	profile. Director	Commitments We	believe	that	directors	should	have	the	necessary	time	to	fulfill	their	duties	to	shareholders.	In	our	view,	an	 overcommitted	director	can	pose	a	material	risk	to	a	company’s	shareholders,	particularly	during	periods	of	 crisis.	In	addition,	recent	research	indicates	that	the	time	commitment	associated	with	being	a	director	has	been	 on	a	significant	upward	trend	in	the	past	decade.30	As	a	result,	we	generally	recommend	that	shareholders	vote	 against	a	director	who	serves	as	an	executive	officer	(other	than	executive	chair)	of	any	public	company31	while	 serving	on	more	than	one	external	public	company	board,	a	director	who	serves	as	an	executive	chair	of	any	 public	company	while	serving	on	more	than	two	external	public	company	boards,	and	any	other	director	who	 serves	on	more	than	five	public	company	boards. Because	we	believe	that	executives	will	primarily	devote	their	attention	to	executive	duties,	we	generally	will	 not	recommend	that	shareholders	vote	against	overcommitted	directors	at	the	companies	where	they	serve	as	 an	executive. When	determining	whether	a	director’s	service	on	an	excessive	number	of	boards	may	limit	the	ability	of	the	 director	to	devote	sufficient	time	to	board	duties,	we	may	consider	relevant	factors	such	as	the	size	and	location	 of	the	other	companies	where	the	director	serves	on	the	board,	the	director’s	board	roles	at	the	companies	in	 question,	whether	the	director	serves	on	the	board	of	any	large	privately-held	companies,	the	director’s	tenure	 on	the	boards	in	question,	and	the	director’s	attendance	record	at	all	companies.	In	the	case	of	directors	who	 serve	in	executive	roles	other	than	CEO	(e.g.,	executive	chair),	we	will	evaluate	the	specific	duties	and	 responsibilities	of	that	role	in	determining	whether	an	exception	is	warranted. We	may	also	refrain	from	recommending	against	certain	directors	if	the	company	provides	sufficient	rationale	 for	their	continued	board	service.	The	rationale	should	allow	shareholders	to	evaluate	the	scope	of	the directors’	other	commitments,	as	well	as	their	contributions	to	the	board	including	specialized	knowledge	of	the	 company’s	industry,	strategy	or	key	markets,	the	diversity	of	skills,	perspective	and	background	they	provide,	 and	other	relevant	factors.	We	will	also	generally	refrain	from	recommending	to	vote	against	a	director	who	 serves	on	an	excessive	number	of	boards	within	a	consolidated	group	of	companies	in	related	industries,	or	a	 director	that	represents	a	firm	whose	sole	purpose	is	to	manage	a	portfolio	of	investments	which	include	the	 company. 30	 For	example,	the	2015-2016	NACD	Public	Company	Governance	Survey	states	that,	on	average,	directors	spent	a	total	of 248.2	hours	annual	on	board-related	matters	during	the	past	year,	which	it	describes	as	a	“historically	high	level”	that	is	 significantly	above	the	average	hours	recorded	in	2006.	Additionally,	the	2020	Spencer	Stuart	Board	Index	indicates	that,	 while	39%	of	S&P	500	CEOs	serve	on	one	additional	public	board,	just	2%	of	S&P	500	CEOs	serve	on	two	additional	public	 boards	and	only	one	CEO	serves	on	three. 31	When	the	executive	officer	in	question	serves	only	as	an	executive	at	a	special	purpose	acquisition	company	(SPAC)	we	 will	generally	apply	the	higher	threshold	of	five	public	company	directorships. 2024	Benchmark	Policy	Guidelines	—	United	States 31
Other	Considerations In	addition	to	the	three	key	characteristics	—	independence,	performance,	experience	—	that	we	use	to	 evaluate	board	members,	we	consider	conflict-of-interest	issues	as	well	as	the	size	of	the	board	of	directors	 when	making	voting	recommendations. Conflicts	of	Interest We	believe	board	members	should	be	wholly	free	of	identifiable	and	substantial	conflicts	of	interest,	regardless	 of	the	overall	level	of	independent	directors	on	the	board.	Accordingly,	we	recommend	that	shareholders	vote	 against	the	following	types	of	directors: • A	CFO	who	is	on	the	board:	In	our	view,	the	CFO	holds	a	unique	position	relative	to	financial	reporting	 and	disclosure	to	shareholders.	Due	to	the	critical	importance	of	financial	disclosure	and	reporting,	we	 believe	the	CFO	should	report	to	the	board	and	not	be	a	member	of	it. • A	director	who	provides	—	or	a	director	who	has	an	immediate	family	member	who	provides	—	material	 consulting	or	other	material	professional	services	to	the	company.	These	services	may	include	legal,	 consulting,32	or	financial	services.	We	question	the	need	for	the	company	to	have	consulting	 relationships	with	its	directors.	We	view	such	relationships	as	creating	conflicts	for	directors,	since	they	 may	be	forced	to	weigh	their	own	interests	against	shareholder	interests	when	making	board	decisions. In	addition,	a	company’s	decisions	regarding	where	to	turn	for	the	best	professional services	may	be	compromised	when	doing	business	with	the	professional	services	firm	of	one	of	the company’s	directors. • A	director,	or	a	director	who	has	an	immediate	family	member,	engaging	in	airplane,	real	estate,	or	 similar	deals,	including	perquisite-type	grants	from	the	company,	amounting	to	more	than	$50,000.	 Directors	who	receive	these	sorts	of	payments	from	the	company	will	have	to	make	unnecessarily	 complicated	decisions	that	may	pit	their	interests	against	shareholder	interests. • Interlocking	directorships:	CEOs	or	other	top	executives	who	serve	on	each	other’s	boards	create	an	 interlock	that	poses	conflicts	that	should	be	avoided	to	ensure	the	promotion	of	shareholder	interests	 above	all	else.33 • All	board	members	who	served	at	a	time	when	a	poison	pill	with	a	term	of	longer	than	one	year	was	 adopted	without	shareholder	approval	within	the	prior	twelve	months.34	In	the	event	a	board	is	 classified	and	shareholders	are	therefore	unable	to	vote	against	all	directors,	we	will	recommend	voting	 against	the	remaining	directors	the	next	year	they	are	up	for	a	shareholder	vote.	If	a	poison	pill	with	a 32	We	will	generally	refrain	from	recommending	against	a	director	who	provides	consulting	services	for	the	company	if	the	 director	is	excluded	from	membership	on	the	board’s	key	committees	and	we	have	not	identified	significant	governance	 concerns	with	the	board. 33	We	do	not	apply	a	look-back	period	for	this	situation.	The	interlock	policy	applies	to	both	public	and	private	companies.	 On	a	case-by-case	basis,	we	evaluate	other	types	of	interlocking	relationships,	such	as	interlocks	with	close	family	members	 of	executives	or	within	group	companies.	Further,	we	will	also	evaluate	multiple	board	interlocks	among	non-insiders	(i.e.,	 multiple	directors	serving	on	the	same	boards	at	other	companies),	for	evidence	of	a	pattern	of	poor	oversight. 34	 Refer	to	the	“Governance	Structure	and	the	Shareholder	Franchise”	section	for	further	discussion	of	our	policies	 regarding	anti-takeover	measures,	including	poison	pills. 2024	Benchmark	Policy	Guidelines	—	United	States 32
term	of	one	year	or	less	was	adopted	without	shareholder	approval,	and	without	adequate	justification,	 we	will	consider	recommending	that	shareholders	vote	against	all	members	of	the	governance	 committee.	If	the	board	has,	without	seeking	shareholder	approval,	and	without	adequate	justification,	 extended	the	term	of	a	poison	pill	by	one	year	or	less	in	two	consecutive	years,	we	will	consider	 recommending	that	shareholders	vote	against	the	entire	board. Size	of	the	Board	of	Directors While	we	do	not	believe	there	is	a	universally	applicable	optimal	board	size,	we	do	believe	boards	should	have	 at	least	five	directors	to	ensure	sufficient	diversity	in	decision-making	and	to	enable	the	formation	of	key	board	 committees	with	independent	directors.	Conversely,	we	believe	that	boards	with	more	than	20	members	will	 typically	suffer	under	the	weight	of	“too	many	cooks	in	the	kitchen”	and	have	difficulty	reaching	consensus	and	 making	timely	decisions.	Sometimes	the	presence	of	too	many	voices	can	make	it	difficult	to	draw	on	the	 wisdom	and	experience	in	the	room	by	virtue	of	the	need	to	limit	the	discussion	so	that	each	voice	may	be	 heard. To	that	end,	we	typically	recommend	voting	against	the	chair	of	the	nominating	committee	(or	the	governance	 committee,	in	the	absence	of	a	nominating	committee)	at	a	board	with	fewer	than	five	directors	or	more	than	 20	directors. Controlled	Companies We	believe	controlled	companies	warrant	certain	exceptions	to	our	independence	standards.	The	board’s	 function	is	to	protect	shareholder	interests;	however,	when	an	individual,	entity	(or	group	of	shareholders	party	 to	a	formal	agreement)	owns	more	than	50%	of	the	voting	shares,	the	interests	of	the	majority	of	shareholders	 are	the	interests	of	that	entity	or	individual.	Consequently,	Glass	Lewis	does	not	apply	our	usual	two-thirds	 board	independence	rule	and	therefore	we	will	not	recommend	voting	against	boards	whose	composition	 reflects	the	makeup	of	the	shareholder	population. Independence	Exceptions The	independence	exceptions	that	we	make	for	controlled	companies	are	as	follows: • We	do	not	require	that	controlled	companies	have	boards	that	are	at	least	two-thirds	independent.	So	 long	as	the	insiders	and/or	affiliates	are	connected	with	the	controlling	entity,	we	accept	the	presence	 of	non-independent	board	members. • The	compensation	committee	and	nominating	and	governance	committees	do	not	need	to	consist	solely	 of	independent	directors. o We	believe	that	standing	nominating	and	corporate	governance	committees	at	controlled	 companies	are	unnecessary.	Although	having	a	committee	charged	with	the	duties	of	searching	 for,	selecting,	and	nominating	independent	directors	can	be	beneficial,	the	unique	composition	 of	a	controlled	company’s	shareholder	base	makes	such	committees	weak	and	irrelevant. o Likewise,	we	believe	that	independent	compensation	committees	at	controlled	companies	are	 unnecessary.	Although	independent	directors	are	the	best	choice	for	approving	and	monitoring	 senior	executives’	pay,	controlled	companies	serve	a	unique	shareholder	population	whose	 voting	power	ensures	the	protection	of	its	interests.	As	such,	we	believe	that	having	affiliated directors	on	a	controlled	company’s	compensation	committee	is	acceptable.	However,	given 2024	Benchmark	Policy	Guidelines	—	United	States 33
that	a	controlled	company	has	certain	obligations	to	minority	shareholders	we	feel	that	an	 insider	should	not	serve	on	the	compensation	committee.	Therefore,	Glass	Lewis	will	 recommend	voting	against	any	insider	(the	CEO	or	otherwise)	serving	on	the	compensation	 committee. • Controlled	companies	do	not	need	an	independent	chair	or	an	independent	lead	or	presiding	director.	 Although	an	independent	director	in	a	position	of	authority	on	the	board	—	such	as	chair	or	presiding	 director	—	can	best	carry	out	the	board’s	duties,	controlled	companies	serve	a	unique	shareholder	 population	whose	voting	power	ensures	the	protection	of	its	interests. Size	of	the	Board	of	Directors We	have	no	board	size	requirements	for	controlled	companies. Audit	Committee	Independence Despite	a	controlled	company’s	status,	unlike	for	the	other	key	committees,	we	nevertheless	believe	that	audit	 committees	should	consist	solely	of	independent	directors.	Regardless	of	a	company’s	controlled	status,	the	 interests	of	all	shareholders	must	be	protected	by	ensuring	the	integrity	and	accuracy	of	the	company’s	financial	 statements.	Allowing	affiliated	directors	to	oversee	the	preparation	of	financial	reports	could	create	an	 insurmountable	conflict	of	interest. Board	Responsiveness	at	Multi-Class	Companies At	controlled	companies	and	companies	that	have	multi-class	share	structures	with	unequal	voting	rights,	we	 will	carefully	examine	the	level	of	approval	or	disapproval	attributed	to	unaffiliated	shareholders	when	 determining	whether	board	responsiveness	is	warranted.	In	the	case	of	companies	that	have	multi-class	share	 structures	with	unequal	voting	rights,	we	will	generally	examine	the	level	of	approval	or	disapproval	attributed	 to	unaffiliated	shareholders	on	a	“one	share,	one	vote”	basis.	At	controlled	and	multi-class	companies,	when	at	 least	20%	or	more	of	unaffiliated	shareholders	vote	contrary	to	management,	we	believe	that	boards	should	 engage	with	shareholders	and	demonstrate	some	initial	level	of	responsiveness,	and	when	a	majority	or	more	of	 unaffiliated	shareholders	vote	contrary	to	management	we	believe	that	boards	should	engage	with	shareholders	 and	provide	a	more	robust	response	to	fully	address	shareholder	concerns. Significant	Shareholders Where	an	individual	or	entity	holds	between	20-50%	of	a	company’s	voting	power,	we	believe	it	is	reasonable	to	 allow	proportional	representation	on	the	board	and	committees	(excluding	the	audit	committee)	based	on	the	 individual	or	entity’s	percentage	of	ownership. Governance	Following	an	IPO,	Spin-Off,	or	Direct	Listing We	believe	companies	that	have	recently	completed	an	initial	public	offering	(IPO),	spin-off,	or	direct	listing	 should	be	allowed	adequate	time	to	fully	comply	with	marketplace	listing	requirements	and	meet	basic	 corporate	governance	standards.	Generally	speaking,	we	refrain	from	making	recommendations	on	the	basis	of	 governance	standards	(e.g.,	board	independence,	committee	membership	and	structure,	meeting	attendance,	 etc.)	during	the	one-year	period	following	an	IPO. 2024	Benchmark	Policy	Guidelines	—	United	States 34
However,	some	cases	warrant	shareholder	action	against	the	board	of	a	company	that	have	completed	an	IPO,	 spin-off,	or	direct	listing	within	the	past	year.	When	evaluating	companies	that	have	recently	gone	public,	Glass	 Lewis	will	review	the	terms	of	the	applicable	governing	documents	in	order	to	determine	whether	shareholder	 rights	are	being	severely	restricted	indefinitely.	We	believe	boards	that	approve	highly	restrictive	governing	 documents	have	demonstrated	that	they	may	subvert	shareholder	interests	following	the	IPO.	In	conducting	this	 evaluation,	Glass	Lewis	will	consider: • The	adoption	of	anti-takeover	provisions	such	as	a	poison	pill	or	classified	board • Supermajority	vote	requirements	to	amend	governing	documents • The	presence	of	exclusive	forum	or	fee-shifting	provisions • Whether	shareholders	can	call	special	meetings	or	act	by	written	consent • The	voting	standard	provided	for	the	election	of	directors • The	ability	of	shareholders	to	remove	directors	without	cause • The	presence	of	evergreen	provisions	in	the	company’s	equity	compensation	arrangements • The	presence	of	a	multi-class	share	structure	which	does	not	afford	common	shareholders	voting	power	 that	is	aligned	with	their	economic	interest In	cases	where	Glass	Lewis	determines	that	the	board	has	approved	overly	restrictive	governing	documents,	we	 will	generally	recommend	voting	against	members	of	the	governance	committee.	If	there	is	no	governance	 committee,	or	if	a	portion	of	such	committee	members	are	not	standing	for	election	due	to	a	classified	board	 structure,	we	will	expand	our	recommendations	to	additional	director	nominees,	based	on	who	is	standing	for	 election. In	cases	where,	preceding	an	IPO,	the	board	adopts	a	multi-class	share	structure	where	voting	rights	are	not	 aligned	with	economic	interest,	or	an	anti-takeover	provision,	such	as	a	poison	pill	or	classified	board,	we	will	 generally	recommend	voting	against	all	members	of	the	board	who	served	at	the	time	of	the	IPO	if	the	board:	(i)	 did	not	also	commit	to	submitting	these	provisions	to	a	shareholder	vote	at	the	company’s	first	shareholder	 meeting	following	the	IPO;	or	(ii)	did	not	provide	for	a	reasonable	sunset	of	these	provisions	(generally	three	to	 five	years	in	the	case	of	a	classified	board	or	poison	pill;	or	seven	years	or	less	in	the	case	of	a	multi-class	share	 structure).	In	the	case	of	a	multi-class	share	structure,	if	these	provisions	are	put	to	a	shareholder	vote,	we	will	 examine	the	level	of	approval	or	disapproval	attributed	to	unaffiliated	shareholders	when	determining	the	vote	 outcome. In	our	view,	adopting	an	anti-takeover	device	unfairly	penalizes	future	shareholders	who	(except	for	electing	to	 buy	or	sell	the	stock)	are	unable	to	weigh	in	on	a	matter	that	could	potentially	negatively	impact	their	ownership	 interest.	This	notion	is	strengthened	when	a	board	adopts	a	classified	board	with	an	infinite	duration	or	a	poison	 pill	with	a	five-	to	ten-year	term	immediately	prior	to	going	public,	thereby	insulating	management	for	a	 substantial	amount	of	time. In	addition,	shareholders	should	also	be	wary	of	companies	that	adopt	supermajority	voting	requirements	 before	their	IPO.	Absent	explicit	provisions	in	the	articles	or	bylaws	stipulating	that	certain	policies	will	be	 phased	out	over	a	certain	period	of	time,	long-term	shareholders	could	find	themselves	in	the	predicament	of	 having	to	attain	a	supermajority	vote	to	approve	future	proposals	seeking	to	eliminate	such	policies. 2024	Benchmark	Policy	Guidelines	—	United	States 35
Governance	Following	a	Business	Combination	with	a	Special	Purpose	Acquisition	Company The	business	combination	of	a	private	company	with	a	publicly	traded	special	purpose	acquisition	company	 (SPAC)	facilitates	the	private	entity	becoming	a	publicly	traded	corporation.	Thus,	the	business	combination represents	the	private	company’s	de-facto	IPO.	We	believe	that	some	cases	warrant	shareholder	action	against	 the	board	of	a	company	that	have	completed	a	business	combination	with	a	SPAC	within	the	past	year. At	meetings	where	shareholders	vote	on	the	business	combination	of	a	SPAC	with	a	private	company,	 shareholders	are	generally	voting	on	a	new	corporate	charter	for	the	post-combination	company	as	a	condition	 to	approval	of	the	business	combination.	In	many	cases,	shareholders	are	faced	with	the	dilemma	of	having	to	 approve	corporate	charters	that	severely	restrict	shareholder	rights	to	facilitate	the	business	combination. Therefore,	when	shareholders	are	required	to	approve	binding	charters	as	a	condition	to	approval	of	a	business	 combination	with	a	SPAC,	we	believe	shareholders	should	also	be	provided	with	advisory	votes	on	material	 charter	amendments	as	a	means	to	voice	their	opinions	on	such	restrictive	governance	provisions. When	evaluating	companies	that	have	recently	gone	public	via	business	combination	with	a	SPAC,	Glass	Lewis	 will	review	the	terms	of	the	applicable	governing	documents	to	determine	whether	shareholder	rights	are	being	 severely	restricted	indefinitely	and	whether	these	restrictive	provisions	were	put	forth	for	a	shareholder	vote	on	 an	advisory	basis	at	the	prior	meeting	where	shareholders	voted	on	the	business	combination. In	cases	where,	prior	to	the	combined	company	becoming	publicly	traded,	the	board	adopts	a	multi-class	share	 structure	where	voting	rights	are	not	aligned	with	economic	interest,	or	an	anti-takeover	provision,	such	as	a	 poison	pill	or	classified	board,	we	will	generally	recommend	voting	against	all	members	of	the	board	who	served	 at	the	time	of	the	combined	company	becoming	publicly	traded	if	the	board:	(i)	did	not	also	submit	these	 provisions	to	a	shareholder	vote	on	an	advisory	basis	at	the	prior	meeting	where	shareholders	voted	on	the	 business	combination;	(ii)	did	not	also	commit	to	submitting	these	provisions	to	a	shareholder	vote	at	the	 company’s	first	shareholder	meeting	following	the	company	becoming	publicly	traded;	or	(iii)	did	not	provide	for	 a	reasonable	sunset	of	these	provisions	(generally	three	to	five	years	in	the	case	of	a	classified	board	or	poison	 pill;	or	seven	years	or	less	in	the	case	of	a	multi-class	share	structure). Consistent	with	our	view	on	IPOs,	adopting	an	anti-takeover	device	unfairly	penalizes	future	shareholders	who	 (except	for	electing	to	buy	or	sell	the	stock)	are	unable	to	weigh	in	on	a	matter	that	could	potentially	negatively	 impact	their	ownership	interest. Dual-Listed	or	 Foreign-Incorporated	Companies For	companies	that	trade	on	multiple	exchanges	or	are	incorporated	in	foreign	jurisdictions	but	trade	only	in	the	 U.S.,	we	will	apply	the	governance	standard	most	relevant	in	each	situation.	We	will	consider	a	number	of	 factors	in	determining	which	Glass	Lewis	country-specific	policy	to	apply,	including	but	not	limited	to:	(i)	the	 corporate	governance	structure	and	features	of	the	company	including	whether	the	board	structure	is	unique	to	 a	particular	market;	(ii)	the	nature	of	the	proposals;	(iii)	the	location	of	the	company’s	primary	listing,	if	one	can	 be	determined;	(iv)	the	regulatory/governance	regime	that	the	board	is	reporting	against;	and	(v)	the	availability	 and	completeness	of	the	company’s	SEC	filings. 2024	Benchmark	Policy	Guidelines	—	United	States 36
OTC-listed	Companies Companies	trading	on	the	OTC	Bulletin	Board	are	not	considered	“listed	companies”	under	SEC	rules	and	 therefore	not	subject	to	the	same	governance	standards	as	listed	companies.	However,	we	believe	that	more	 stringent	corporate	governance	standards	should	be	applied	to	these	companies	given	that	their	shares	are	still	 publicly	traded. When	reviewing	OTC	companies,	Glass	Lewis	will	review	the	available	disclosure	relating	to	the	shareholder	 meeting	to	determine	whether	shareholders	are	able	to	evaluate	several	key	pieces	of	information,	including:	(i)	 the	composition	of	the	board’s	key	committees,	if	any;	(ii)	the	level	of	share	ownership	of	company	insiders	or	 directors;	(iii)	the	board	meeting	attendance	record	of	directors;	(iv)	executive	and	non-employee	director	 compensation;	(v)	related-party	transactions	conducted	during	the	past	year;	and	(vi)	the	board’s	leadership	 structure	and	determinations	regarding	director	independence. We	are	particularly	concerned	when	company	disclosure	lacks	any	information	regarding	the	board’s	key	 committees.	We	believe	that	committees	of	the	board	are	an	essential	tool	for	clarifying	how	the	responsibilities	 of	the	board	are	being	delegated,	and	specifically	for	indicating	which	directors	are	accountable	for	ensuring:	(i)	 the	independence	and	quality	of	directors,	and	the	transparency	and	integrity	of	the	nominating	process;	(ii)	 compensation	programs	that	are	fair	and	appropriate;	(iii)	proper	oversight	of	the	company’s	accounting,	 financial	reporting,	and	internal	and	external	audits;	and	(iv)	general	adherence	to	principles	of	good	corporate	 governance. In	cases	where	shareholders	are	unable	to	identify	which	board	members	are	responsible	for	ensuring	oversight	 of	the	above-mentioned	responsibilities,	we	may	consider	recommending	against	certain	members	of	the	board. Ordinarily,	we	believe	it	is	the	responsibility	of	the	corporate	governance	committee	to	provide	thorough disclosure	of	the	board’s	governance	practices.	In	the	absence	of	such	a	committee,	we	believe	it	is	appropriate	 to	hold	the	board’s	chair	or,	if	such	individual	is	an	executive	of	the	company,	the	longest-serving	non-executive	 board	member	accountable. Mutual	Fund	Boards Mutual	funds,	or	investment	companies,	are	structured	differently	from	regular	public	companies	(i.e.,	operating	 companies).	Typically,	members	of	a	fund’s	advisor	are	on	the	board	and	management	takes	on	a	different	role	 from	that	of	regular	public	companies.	Thus,	we	focus	on	a	short	list	of	requirements,	although	many	of	our	 guidelines	remain	the	same. The	following	mutual	fund	policies	are	similar	to	the	policies	for	regular	public	companies: • Size	of	the	board	of	directors	—	The	board	should	be	made	up	of	between	five	and	twenty	directors. • The	CFO	on	the	board	—	Neither	the	CFO	of	the	fund	nor	the	CFO	of	the	fund’s	registered	investment advisor	should	serve	on	the	board. • Independence	of	the	audit	committee	—	The	audit	committee	should	consist	solely	of	independent	 directors. • Audit	committee	financial	expert	—	At	least	one	member	of	the	audit	committee	should	be	designated	 as	the	audit	committee	financial	expert. 2024	Benchmark	Policy	Guidelines	—	United	States 37
The	following	differences	from	regular	public	companies	apply	at	mutual	funds: • Independence	of	the	board	—	We	believe	that	three-fourths	of	an	investment	company’s	board	should	 be	made	up	of	independent	directors.	This	is	consistent	with	a	proposed	SEC	rule	on	investment	 company	boards.	The	Investment	Company	Act	requires	40%	of	the	board	to	be	independent,	but	in	 2001,	the	SEC	amended	the	Exemptive	Rules	to	require	that	a	majority	of	a	mutual	fund	board	be	 independent.	In	2005,	the	SEC	proposed	increasing	the	independence	threshold	to	75%.	In	2006,	a	 federal	appeals	court	ordered	that	this	rule	amendment	be	put	back	out	for	public	comment,	putting	it	 back	into	“proposed	rule”	status.	Since	mutual	fund	boards	play	a	vital	role	in	overseeing	the	 relationship	between	the	fund	and	its	investment	manager,	there	is	greater	need	for	independent	 oversight	than	there	is	for	an	operating	company	board. • When	the	auditor	is	not	up	for	ratification	—	We	do	not	recommend	voting	against	the	audit	 committee	if	the	auditor	is	not	up	for	ratification.	Due	to	the	different	legal	structure	of	an	investment	 company	compared	to	an	operating	company,	the	auditor	for	the	investment	company	(i.e.,	mutual	 fund) does	not	conduct	the	same	level	of	financial	review	for	each	investment	company	as	for	an	 operating	company. • Non-independent	chair	—	The	SEC	has	proposed	that	the	chair	of	the	fund	board	be	independent.	We	 agree	that	the	roles	of	a	mutual	fund’s	chair	and	CEO	should	be	separate.	Although	we	believe	this	 would	be	best	at	all	companies,	we	recommend	voting	against	the	chair	of	an	investment	company’s	 nominating	committee	as	well	as	the	board	chair	if	the	chair	and	CEO	of	a	mutual	fund	are	the	same	 person	and	the	fund	does	not	have	an	independent	lead	or	presiding	director.	Seven	former	SEC	 commissioners	support	the	appointment	of	an	independent	chair	and	we	agree	with	them	that	“an	 independent	board	chair	would	be	better	able	to	create	conditions	favoring	the	long-term	interests	of	 fund	shareholders	than	would	a	chair	who	is	an	executive	of	the	advisor.”	(See	the	comment	letter	sent	 to	the	SEC	in	support	of	the	proposed	rule	at	http://www.sec.gov/news/studies/indchair.pdf.) • Multiple	funds	overseen	by	the	same	director	—	Unlike	service	on	a	public	company	board,	mutual	 fund	boards	require	much	less	of	a	time	commitment.	Mutual	fund	directors	typically	serve	on	dozens	of	 other	mutual	fund	boards,	often	within	the	same	fund	complex.	The	Investment	Company	Institute’s	 (ICI)	Overview	of	Fund	Governance	Practices,	1994-2012,	indicates	that	the	average	number	of	funds	 served	by	an	independent	director	in	2012	was	53.	Absent	evidence	that	a	specific	director	is	hindered	 from	being	an	effective	board	member	at	a	fund	due	to	service	on	other	funds’	boards,	we	refrain	from	 maintaining	a	cap	on	the	number	of	outside	mutual	fund	boards	that	we	believe	a	director	can	serve	on. Declassified	 Boards Glass	Lewis	favors	the	repeal	of	staggered	boards	and	the	annual	election	of	directors.	We	believe	staggered	 boards	are	less	accountable	to	shareholders	than	boards	that	are	elected	annually.	Furthermore,	we	feel	the	 annual	election	of	directors	encourages	board	members	to	focus	on	shareholder	interests. Empirical	studies	have	shown:	(i)	staggered	boards	are	associated	with	a	reduction	in	a	firm’s	valuation;	and	(ii)	 in	the	context	of	hostile	takeovers,	staggered	boards	operate	as	a	takeover	defense,	which	entrenches	 management,	discourages	potential	acquirers,	and	delivers	a	lower	return	to	target	shareholders. 2024	Benchmark	Policy	Guidelines	—	United	States 38
In	our	view,	there	is	no	evidence	to	demonstrate	that	staggered	boards	improve	shareholder	returns	in	a	 takeover	context.	Some	research	has	indicated	that	shareholders	are	worse	off	when	a	staggered	board	blocks	a	 transaction;	further,	when	a	staggered	board	negotiates	a	friendly	transaction,	no	statistically	significant	 difference	in	premium	occurs.35	Additional	research	found	that	charter-based	staggered	boards	“reduce	the market	value	of	a	firm	by	4%	to	6%	of	its	market	capitalization”	and	that	“staggered	boards	bring	about	and	not	 merely	reflect	this	reduction	in	market	value.”36	A	subsequent	study	reaffirmed	that	classified	boards	reduce	 shareholder	value,	finding	“that	the	ongoing	process	of	dismantling	staggered	boards,	encouraged	by institutional	investors,	could	well	contribute	to	increasing	shareholder	wealth.”37 Shareholders	have	increasingly	come	to	agree	with	this	view.	In	2019,	90%	of	S&P	500	companies	had	 declassified	boards,	up	from	68%	in	2009.38	Management	proposals	to	declassify	boards	are	approved	with	near	 unanimity	and	shareholder	proposals	on	the	topic	also	receive	strong	shareholder	support;	in	2014,	shareholder	 proposals	requesting	that	companies	declassify	their	boards	received	average	support	of	84%	(excluding	 abstentions	and	broker	non-votes),	whereas	in	1987,	only	16.4%	of	votes	cast	favored	board	declassification.39	 Further,	a	growing	number	of	companies,	nearly	half	of	all	those	targeted	by	shareholder	proposals	requesting	 that	all	directors	stand	for	election	annually,	either	recommended	shareholders	support	the	proposal	or	made	 no	recommendation,	a	departure	from	the	more	traditional	management	recommendation	to	vote	against	 shareholder	proposals. Given	our	belief	that	declassified	boards	promote	director	accountability,	the	empirical	evidence	suggesting	 staggered	boards	reduce	a	company’s	value	and	the	established	shareholder	opposition	to	such	a	structure,	 Glass	Lewis	supports	the	declassification	of	boards	and	the	annual	election	of	directors. Board	Composition	and	Refreshment Glass	Lewis	strongly	supports	routine	director	evaluation,	including	independent	external	reviews,	and	periodic	 board	refreshment	to	foster	the	sharing	of	diverse	perspectives	in	the	boardroom	and	the	generation	of	new	 ideas	and	business	strategies.	Further,	we	believe	the	board	should	evaluate	the	need	for	changes	to	board	 composition	based	on	an	analysis	of	skills	and	experience	necessary	for	the	company,	as	well	as	the	results	of	 the	director	evaluations,	as	opposed	to	relying	solely	on	age	or	tenure	limits.	When	necessary,	shareholders	can	 address	concerns	regarding	proper	board	composition	through	director	elections. 35	 Lucian	Bebchuk,	John	Coates	IV,	Guhan	Subramanian,	“The	Powerful	Antitakeover	Force	of	Staggered	Boards:	Further	 Findings	and	a	Reply	to	Symposium	Participants,”	55	Stanford	Law	Review	885-917	(2002). 36	 Lucian	Bebchuk,	Alma	Cohen,	“The	Costs	of	Entrenched	Boards”	(2004). 37	 Lucian	Bebchuk,	Alma	Cohen	and	Charles	C.Y.	Wang,	“Staggered	Boards	and	the	Wealth	of	Shareholders:	 Evidence	from	 a	Natural	Experiment,” SSRN:	http://ssrn.com/abstract=1706806	(2010),	p.	26. 38	 Spencer	Stuart	Board	Index,	2019,	p.	15. 39	 Lucian	Bebchuk,	John	Coates	IV	and	Guhan	Subramanian,	“The	Powerful	Antitakeover	Force	of	Staggered	Boards:	Theory,	 Evidence,	and	Policy”. 2024	Benchmark	Policy	Guidelines	—	United	States 39
In	our	view,	a	director’s	experience	can	be	a	valuable	asset	to	shareholders	because	of	the	complex,	critical	 issues	that	boards	face.	This	said,	we	recognize	that	in	rare	circumstances,	a	lack	of	refreshment	can	contribute	 to	a	lack	of	board	responsiveness	to	poor	company	performance. We	will	note	as	a	potential	concern	instances	where	the	average	tenure	of	non-executive	directors	is	10	years	or	 more	and	no	new	directors	have	joined	the	board	in	the	past	five	years.	While	we	will	be	highlighting	this	as	a	 potential	area	of	concern,	we	will	not	be	making	voting	recommendations	strictly	on	this	basis,	unless	we	have	 identified	other	governance	or	board	performance	concerns. On	occasion,	age	or	term	limits	can	be	used	as	a	means	to	remove	a	director	for	boards	that	are	unwilling	to	 police	their	membership	and	enforce	turnover.	Some	shareholders	support	term	limits	as	a	way	to	force	change	 in	such	circumstances. While	we	understand	that	age	limits	can	aid	board	succession	planning,	the	long-term	impact	of	age	limits	 restricts	experienced	and	potentially	valuable	board	members	from	service	through	an	arbitrary	means.	We	 believe	that	shareholders	are	better	off	monitoring	the	board’s	overall	composition,	including	the	diversity	of	its	 members,	the	alignment	of	the	board’s	areas	of	expertise	with	a	company’s	strategy,	the	board’s	approach	to	 corporate	governance,	and	its	stewardship	of	company	performance,	rather	than	imposing	inflexible	rules	that	 don’t	necessarily	correlate	with	returns	or	benefits	for	shareholders. However,	if	a	board	adopts	term/age	limits,	it	should	follow	through	and	not	waive	such	limits.	In	cases	where	 the	board	waives	its	term/age	limits	for	two	or	more	consecutive	years,	Glass	Lewis	will	generally	recommend	 that	shareholders	vote	against	the	nominating	and/or	governance	committee	chair,	unless	a	compelling	 rationale	is	provided	for	why	the	board	is	proposing	to	waive	this	rule,	such	as	consummation	of	a	corporate	 transaction. Board	Diversity Glass	Lewis	recognizes	the	importance	of	ensuring	that	the	board	is	composed	of	directors	who	have	a	diversity	 of	skills,	thought	and	experience,	as	such	diversity	benefits	companies	by	providing	a	broad	range	of	 perspectives	and	insights.	Glass	Lewis	closely	reviews	the	composition	of	the	board	for	representation	of	diverse	 director	candidates. Board	Gender	Diversity We	consider	the	nominating	and	governance	committee	to	be	responsible	for	ensuring	sufficient	board	 diversity,	or	for	publicly	communicating	its	rationale	or	a	plan	for	increasing	diversity.	As	such,	we	will	generally	 recommend	voting	against	the	chair	of	the	nominating	committee	of	a	board	that	is	not	at	least	30	percent	 gender	diverse,	or	all	members	of	the	nominating	committee	of	a	board	with	no	gender	diverse	directors,	at	 companies	within	the	Russell	3000	index.	For	companies	outside	the	Russell	3000	index,	our	policy	requires	a	 minimum	of	one	gender	diverse	director. When	making	these	voting	recommendations,	we	will	carefully	review	a	company’s	disclosure	of	its	diversity	 considerations	and	may	refrain	from	recommending	that	shareholders	vote	against	directors	when	boards	have	 provided	sufficient	rationale	for	the	lack	of	diversity	or	a	plan	to	address	the	lack	of	diversity,	including	a 2024	Benchmark	Policy	Guidelines	—	United	States 40
timeline	of	when	the	board	intends	to	appoint	additional	gender	diverse	directors	(generally	by	the	next	annual	 meeting	or	as	soon	as	reasonably	practicable). We	may	extend	our	gender	diversity	recommendations	to	additional	members	of	the	nominating	committee	in	 cases	where	the	committee	chair	is	not	standing	for	election	due	to	a	classified	board,	or	based	on	other	factors,	 including	the	company’s	size	and	industry,	applicable	laws	in	its	state	of	headquarters,	and	its	overall	 governance	profile. Board	Underrepresented	Community	Diversity We	will	generally	recommend	against	the	chair	of	the	nominating	committee	of	a	board	with	fewer	than	one	 director	from	an	underrepresented	community	on	the	board	at	companies	within	the	Russell	1000	index. We	define	“underrepresented	community	director”	as	an	individual	who	self-identifies	as	Black,	African	 American,	North	African,	Middle	Eastern,	Hispanic,	Latino,	Asian,	Pacific	Islander,	Native	American,	Native	 Hawaiian,	or	Alaskan	Native,	or	who	self-identifies	as	a	member	of	the	LGBTQIA+	community.	For	the	purposes	 of	this	evaluation,	we	will	rely	solely	on	self-identified	demographic	information	as	disclosed	in	company	proxy	 statements. When	making	these	voting	recommendations,	we	will	carefully	review	a	company’s	disclosure	of	its	diversity	 considerations	and	may	refrain	from	recommending	that	shareholders	vote	against	directors	when	boards	have	 provided	a	sufficient	rationale	or	plan	to	address	the	lack	of	diversity	on	the	board,	including	a	timeline	to	 appoint	additional	directors	from	an	underrepresented	community	(generally	by	the	next	annual	meeting	or	as	 soon	as	reasonably	practicable). We	may	extend	our	underrepresented	community	diversity	recommendations	to	additional	members	of	the	 nominating	committee	in	cases	where	the	committee	chair	is	not	standing	for	election	due	to	a	classified	board,	 or	based	on	other	factors,	including	the	company’s	size	and	industry,	applicable	laws	in	its	state	of	headquarters,	 and	its	overall	governance	profile. State	Laws	on	Diversity Several	states	have	begun	to	encourage	board	diversity	through	legislation.	Some	state	laws	imposed	 mandatory	board	composition	requirements,	while	other	states	have	enacted	or	are	considering	legislation	that	 encourages	companies	to	diversify	their	boards	but	does	not	mandate	board	composition	requirements. Furthermore,	several	states	have	enacted	or	are	considering	enacting	certain	disclosure	or	reporting	 requirements	in	filings	made	with	each	respective	state	annually. Glass	Lewis	will	recommend	in	accordance	with	mandatory	board	composition	requirements	set	forth	in	 applicable	state	laws	when	they	come	into	effect.	We	will	generally	refrain	from	recommending	against	 directors	when	applicable	state	laws	do	not	mandate	board	composition	requirements,	are	non-binding,	or	 solely	impose	disclosure	or	reporting	requirements. We	note	that	during	2022,	California’s	Senate	Bill	826	and	Assembly	Bill	979	regarding	board	gender	and “underrepresented	community”	diversity,	respectively,	were	both	deemed	to	violate	the	equal	protection	clause	 of	the	California	state	constitution.	These	laws	are	currently	in	the	appeals	process. 2024	Benchmark	Policy	Guidelines	—	United	States 41
Accordingly,	where	we	previously	recommended	in	accordance	with	mandatory	board	composition	 requirements	set	forth	in	California’s	SB	826	and	AB	979,	we	will	refrain	from	providing	recommendations	 pursuant	to	these	state	board	composition	requirements	until	further	notice	while	we	continue	to	monitor	the	 appeals	process.	However,	we	will	continue	to	monitor	compliance	with	these	requirements. Disclosure	of	Director	Diversity	and	Skills Because	company	disclosure	is	critical	when	measuring	the	mix	of	diverse	attributes	and	skills	of	directors,	Glass	 Lewis	assesses	the	quality	of	such	disclosure	in	companies’	proxy	statements.	Accordingly,	we	reflect	how	a	 company’s	proxy	statement	presents:	(i)	the	board’s	current	percentage	of	racial/ethnic	diversity;	(ii)	whether	 the	board’s	definition	of	diversity	explicitly	includes	gender	and/or	race/ethnicity;	(iii)	whether	the	board	has	 adopted	a	policy	requiring	women	and	minorities	to	be	included	in	the	initial	pool	of	candidates	when	selecting	 new	director	nominees	(aka	“Rooney	Rule”);	and	(iv)	board	skills	disclosure.	Such	ratings	will	help	inform	our	 assessment	of	a	company’s	overall	governance	and	may	be	a	contributing	factor	in	our	recommendations	when	 additional	board-related	concerns	have	been	identified. At	companies	in	the	Russell	1000	index	that	have	not	provided	any	disclosure	in	any	of	the	above	categories,	we	 will	generally	recommend	voting	against	the	chair	of	the	nominating	and/or	governance	committee.	Further,	 when	companies	in	the	Russell	1000	index	have	not	provided	any	disclosure	of	individual	or	aggregate	racial/ ethnic	minority	board	demographic	information,	we	will	generally	recommend	voting	against	the	chair	of	the	 nominating	and/or	governance	committee. Proxy	Access In	lieu	of	running	their	own	contested	election,	proxy	access	would	not	only	allow	certain	shareholders	to	 nominate	directors	to	company	boards	but	the	shareholder	nominees	would	be	included	on	the	company’s	 ballot,	significantly	enhancing	the	ability	of	shareholders	to	play	a	meaningful	role	in	selecting	their	 representatives.	Glass	Lewis	generally	supports	affording	shareholders	the	right	to	nominate	director	candidates	 to	management’s	proxy	as	a	means	to	ensure	that	significant,	long-term	shareholders	have	an	ability	to	 nominate	candidates	to	the	board. Companies	generally	seek	shareholder	approval	to	amend	company	bylaws	to	adopt	proxy	access	in	response	to	 shareholder	engagement	or	pressure,	usually	in	the	form	of	a	shareholder	proposal	requesting	proxy	access,	 although	some	companies	may	adopt	some	elements	of	proxy	access	without	prompting.	Glass	Lewis	considers	 several	factors	when	evaluating	whether	to	support	proposals	for	companies	to	adopt	proxy	access	including	the	 specified	minimum	ownership	and	holding	requirement	for	shareholders	to	nominate	one	or	more	directors,	as	 well	as	company	size,	performance	and	responsiveness	to	shareholders. For	a	discussion	of	recent	regulatory	events	in	this	area,	along	with	a	detailed	overview	of	the	Glass	Lewis	 approach	to	shareholder	proposals	regarding	Proxy	Access,	refer	to	Glass	Lewis’	Proxy	Paper	Guidelines	for	 Shareholder	Proposals	&	ESG-Related	Issues,	available	at	www.glasslewis.com. 2024	Benchmark	Policy	Guidelines	—	United	States 42
Majority	Vote	for	Election	of	Directors Majority	voting	for	the	election	of	directors	is	fast	becoming	the	de	facto	standard	in	corporate	board	elections.	 In	our	view,	the	majority	voting	proposals	are	an	effort	to	make	the	case	for	shareholder	impact	on	director	 elections	on	a	company-specific	basis. While	this	proposal	would	not	give	shareholders	the	opportunity	to	nominate	directors	or	lead	to	elections	 where	shareholders	have	a	choice	among	director	candidates,	if	implemented,	the	proposal	would	allow	 shareholders	to	have	a	voice	in	determining	whether	the	nominees	proposed	by	the	board	should	actually	serve	 as	the	overseer-representatives	of	shareholders	in	the	boardroom.	We	believe	this	would	be	a	favorable	 outcome	for	shareholders. The	number	of	shareholder	proposals	requesting	that	companies	adopt	a	majority	voting	standard	has	declined	 significantly	during	the	past	decade,	largely	as	a	result	of	widespread	adoption	of	majority	voting	or	director	 resignation	policies	at	U.S.	companies.	In	2019,	89%	of	the	S&P	500	Index	had	implemented	a	resignation	policy	 for	directors	failing	to	receive	majority	shareholder	support,	compared	to	65%	in	2009.40 The	Plurality	Vote	Standard Today,	most	U.S.	companies	still	elect	directors	by	a	plurality	vote	standard.	Under	that	standard,	if	one	 shareholder	holding	only	one	share	votes	in	favor	of	a	nominee	(including	that	director,	if	the	director	is	a	 shareholder),	that	nominee	“wins”	the	election	and	assumes	a	seat	on	the	board.	The	common	concern	among	 companies	with	a	plurality	voting	standard	is	the	possibility	that	one	or	more	directors	would	not	receive	a	 majority	of	votes,	resulting	in	“failed	elections.” Advantages	of	a	Majority	Vote	Standard If	a	majority	vote	standard	were	implemented,	a	nominee	would	have	to	receive	the	support	of	a	majority	of	the	 shares	voted	in	order	to	be	elected.	Thus,	shareholders	could	collectively	vote	to	reject	a	director	they	believe	 will	not	pursue	their	best	interests.	Given	that	so	few	directors	(less	than	100	a	year)	do	not	receive	majority	 support	from	shareholders,	we	think	that	a	majority	vote	standard	is	reasonable	since	it	will	neither	result	in	 many	failed	director	elections	nor	reduce	the	willingness	of	qualified,	shareholder-focused	directors	to	serve	in	 the	future.	Further,	most	directors	who	fail	to	receive	a	majority	shareholder	vote	in	favor	of	their	election	do	 not	step	down,	underscoring	the	need	for	true	majority	voting. We	believe	that	a	majority	vote	standard	will	likely	lead	to	more	attentive	directors.	Although	shareholders	only	 rarely	fail	to	support	directors,	the	occasional	majority	vote	against	a	director’s	election	will	likely	deter	the	 election	of	directors	with	a	record	of	ignoring	shareholder	interests.	Glass	Lewis	will	therefore	generally	support	 proposals	calling	for	the	election	of	directors	by	a	majority	vote,	excepting	contested	director	elections. In	response	to	the	high	level	of	support	majority	voting	has	garnered,	many	companies	have	voluntarily	taken	 steps	to	implement	majority	voting	or	modified	approaches	to	majority	voting.	These	steps	range	from	a 40	 Spencer	Stuart	Board	Index,	2019,	p.	15. 2024	Benchmark	Policy	Guidelines	—	United	States 43
modified	approach	requiring	directors	that	receive	a	majority	of	withheld	votes	to	resign	(i.e.,	a	resignation	 policy)	to	actually	requiring	a	majority	vote	of	outstanding	shares	to	elect	directors. We	feel	that	the	modified	approach	does	not	go	far	enough	because	requiring	a	director	to	resign	is	not	the	 same	as	requiring	a	majority	vote	to	elect	a	director	and	does	not	allow	shareholders	a	definitive	voice	in	the	 election	process.	Further,	under	the	modified	approach,	the	corporate	governance	committee	could	reject	a	 resignation	and,	even	if	it	accepts	the	resignation,	the	corporate	governance	committee	decides	on	the director’s	replacement.	And	since	the	modified	approach	is	usually	adopted	as	a	policy	by	the	board	or	a	board	 committee,	it	could	be	altered	by	the	same	board	or	committee	at	any	time. Conflicting	and	Excluded	Proposals SEC	Rule	14a-8(i)(9)	allows	companies	to	exclude	shareholder	proposals	“if	the	proposal	directly	conflicts	with	 one	of	the	company’s	own	proposals	to	be	submitted	to	shareholders	at	the	same	meeting.”	On	October	22,	 2015,	the	SEC	issued	Staff	Legal	Bulletin	No.	14H	(SLB	14H)	clarifying	its	rule	concerning	the	exclusion	of	certain	 shareholder	proposals	when	similar	items	are	also	on	the	ballot.	SLB	14H	increased	the	burden	on	companies	to	 prove	to	SEC	staff	that	a	conflict	exists;	therefore,	many	companies	still	chose	to	place	management	proposals	 alongside	similar	shareholder	proposals	in	many	cases. During	the	2018	proxy	season,	a	new	trend	in	the	SEC’s	interpretation	of	this	rule	emerged.	Upon	submission	of	 shareholder	proposals	requesting	that	companies	adopt	a	lower	special	meeting	threshold,	several	companies	 petitioned	the	SEC	for	no-action	relief	under	the	premise	that	the	shareholder	proposals	conflicted	with management’s	own	special	meeting	proposals,	even	though	the	management	proposals	set	a	higher	threshold	 than	those	requested	by	the	proponent.	No-action	relief	was	granted	to	these	companies;	however,	the	SEC	 stipulated	that	the	companies	must	state	in	the	rationale	for	the	management	proposals	that	a	vote	in	favor	of	 management’s	proposal	was	tantamount	to	a	vote	against	the	adoption	of	a	lower	special	meeting	threshold.	In	 certain	instances,	shareholder	proposals	to	lower	an	existing	special	meeting	right	threshold	were	excluded	on	 the	basis	that	they	conflicted	with	management	proposals	seeking	to	ratify	the	existing	special	meeting	rights.	 We	find	the	exclusion	of	these	shareholder	proposals	to	be	especially	problematic	as,	in	these	instances,	 shareholders	are	not	offered	any	enhanced	shareholder	right,	nor	would	the	approval	(or	rejection)	of	the ratification	proposal	initiate	any	type	of	meaningful	change	to	shareholders’	rights. In	instances	where	companies	have	excluded	shareholder	proposals,	such	as	those	instances	where	special meeting	shareholder	proposals	are	excluded	as	a	result	of	“conflicting”	management	proposals,	Glass	Lewis	will take	a	case-by-case	approach,	taking	into	account	the	following	issues: • The	threshold	proposed	by	the	shareholder	resolution; • The	threshold	proposed	or	established	by	management	and	the	attendant	rationale	for	the	threshold; • Whether	management’s	proposal	is	seeking	to	ratify	an	existing	special	meeting	right	or	adopt	a	bylaw that	would	establish	a	special	meeting	right;	and • The	company’s	overall	governance	profile,	including	its	overall	responsiveness	to	and	engagement	with shareholders. Glass	Lewis	generally	favors	a	10-15%	special	meeting	right.	Accordingly,	Glass	Lewis	will	generally	recommend	 voting	for	management	or	shareholder	proposals	that	fall	within	this	range.	When	faced	with	conflicting 2024	Benchmark	Policy	Guidelines	—	United	States 44
proposals,	Glass	Lewis	will	generally	recommend	in	favor	of	the	lower	special	meeting	right	and	will	recommend	 voting	against	the	proposal	with	the	higher	threshold.	However,	in	instances	where	there	are	conflicting	 management	and	shareholder	proposals	and	a	company	has	not	established	a	special	meeting	right,	Glass	Lewis	 may	recommend	that	shareholders	vote	in	favor	of	the	shareholder	proposal	and	that	they	abstain	from	a	 management-proposed	bylaw	amendment	seeking	to	establish	a	special	meeting	right.	We	believe	that	an	 abstention	is	appropriate	in	this	instance	in	order	to	ensure	that	shareholders	are	sending	a	clear	signal	 regarding	their	preference	for	the	appropriate	threshold	for	a	special	meeting	right,	while	not	directly	opposing	 the	establishment	of	such	a	right. In	cases	where	the	company	excludes	a	shareholder	proposal	seeking	a	reduced	special	meeting	right	by	means	 of	ratifying	a	management	proposal	that	is	materially	different	from	the	shareholder	proposal,	we	will	generally	 recommend	voting	against	the	chair	or	members	of	the	governance	committee. In	other	instances	of	conflicting	management	and	shareholder	proposals,	Glass	Lewis	will	consider	the	following: • The	nature	of	the	underlying	issue; • The	benefit	to	shareholders	of	implementing	the	proposal; • The	materiality	of	the	differences	between	the	terms	of	the	shareholder	proposal	and	management	 proposal; • The	context	of	a	company’s	shareholder	base,	corporate	structure	and	other	relevant	circumstances; and • A	company’s	overall	governance	profile	and,	specifically,	its	responsiveness	to	shareholders	as evidenced	by	a	company’s	response	to	previous	shareholder	proposals	and	its	adoption	of	progressive shareholder	rights	provisions. In	recent	years,	we	have	seen	the	dynamic	nature	of	the	considerations	given	by	the	SEC	when	determining	 whether	companies	may	exclude	certain	shareholder	proposals.	We	understand	that	not	all	shareholder	 proposals	serve	the	long-term	interests	of	shareholders,	and	value	and	respect	the	limitations	placed	on	 shareholder	proponents,	as	certain	shareholder	proposals	can	unduly	burden	companies.	However,	Glass	Lewis	 believes	that	shareholders	should	be	able	to	vote	on	issues	of	material	importance. We	view	the	shareholder	proposal	process	as	an	important	part	of	advancing	shareholder	rights	and	 encouraging	responsible	and	financially	sustainable	business	practices.	While	recognizing	that	certain	proposals	 cross	the	line	between	the	purview	of	shareholders	and	that	of	the	board,	we	generally	believe	that	companies	 should	not	limit	investors’	ability	to	vote	on	shareholder	proposals	that	advance	certain	rights	or	promote	 beneficial	disclosure.	Accordingly,	Glass	Lewis	will	make	note	of	instances	where	a	company	has	successfully	 petitioned	the	SEC	to	exclude	shareholder	proposals.	If	after	review	we	believe	that	the	exclusion	of	a	 shareholder	proposal	is	detrimental	to	shareholders,	we	may,	in	certain	very	limited	circumstances,	recommend	 against	members	of	the	governance	committee. 2024	Benchmark	Policy	Guidelines	—	United	States 45
Transparency	and	Integrity	in	Financial	 Reporting Auditor	Ratification The	auditor’s	role	as	gatekeeper	is	crucial	in	ensuring	the	integrity	and	transparency	of	the	financial	information	 necessary	for	protecting	shareholder	value.	Shareholders	rely	on	the	auditor	to	ask	tough	questions	and	to	do	a	 thorough	analysis	of	a	company’s	books	to	ensure	that	the	information	provided	to	shareholders	is	complete, accurate,	fair,	and	that	it	is	a	reasonable	representation	of	a	company’s	financial	position.	The	only	way	 shareholders	can	make	rational	investment	decisions	is	if	the	market	is	equipped	with	accurate	information	 about	a	company’s	fiscal	health.	As	stated	in	the	October	6,	2008	Final	Report	of	the	Advisory	Committee	on	the	 Auditing	Profession	to	the	U.S.	Department	of	the	Treasury: “The	auditor	is	expected	to	offer	critical	and	objective	judgment	on	the	financial	matters	under	 consideration,	and	actual	and	perceived	absence	of	conflicts	is	critical	to	that	expectation.	The	 Committee	believes	that	auditors,	investors,	public	companies,	and	other	market	participants	must	 understand	the	independence	requirements	and	their	objectives,	and	that	auditors	must	adopt	a	mindset	 of	skepticism	when	facing	situations	that	may	compromise	their	independence.” As	such,	shareholders	should	demand	an	objective,	competent	and	diligent	auditor	who	performs	at	or	above	 professional	standards	at	every	company	in	which	the	investors	hold	an	interest.	Like	directors,	auditors	should	 be	free	from	conflicts	of	interest	and	should	avoid	situations	requiring	a	choice	between	the	auditor’s	interests	 and	the	public’s	interests.	Almost	without	exception,	shareholders	should	be	able	to	annually	review	an auditor’s	performance	and	to	annually	ratify	a	board’s	auditor	selection.	Moreover,	in	October	2008,	the	 Advisory	Committee	on	the	Auditing	Profession	went	even	further,	and	recommended	that	“to	further	enhance	 audit	committee	oversight	and	auditor	accountability	...	disclosure	in	the	company	proxy	statement	regarding	 shareholder	ratification	[should]	include	the	name(s)	of	the	senior	auditing	partner(s)	staffed	on	the engagement.”41 On	August	16,	2011,	the	PCAOB	issued	a	Concept	Release	seeking	public	comment	on	ways	that	auditor	 independence,	objectivity	and	professional	skepticism	could	be	enhanced,	with	a	specific	emphasis	on	 mandatory	audit	firm	rotation.	The	PCAOB	convened	several	public	roundtable	meetings	during	2012	to	further	 discuss	such	matters.	Glass	Lewis	believes	auditor	rotation	can	ensure	both	the	independence	of	the	auditor	and	 the	integrity	of	the	audit;	we	will	typically	recommend	supporting	proposals	to	require	auditor	rotation	when	 the	proposal	uses	a	reasonable	period	of	time	(usually	not	less	than	5-7	years),	particularly	at	companies	with	a	 history	of	accounting	problems. On	June	1,	2017,	the	PCAOB	adopted	new	standards	to	enhance	auditor	reports	by	providing	additional	 important	information	to	investors.	For	companies	with	fiscal	year	end	dates	on	or	after	December	15,	2017,	 reports	were	required	to	include	the	year	in	which	the	auditor	began	serving	consecutively	as	the	company’s	 auditor.	For	large	accelerated	filers	with	fiscal	year	ends	of	June	30,	2019	or	later,	and	for	all	other	companies	 with	fiscal	year	ends	of	December	15,	2020	or	later,	communication	of	critical	audit	matters	(CAMs)	will	also	be	 required.	CAMs	are	matters	that	have	been	communicated	to	the	audit	committee,	are	related	to	accounts	or 41	 “Final	Report	of	the	Advisory	Committee	on	the	Auditing	Profession	to	the	U.S.	Department	of	the	Treasury.”	p.	VIII:20, October	6,	2008. 2024	Benchmark	Policy	Guidelines	—	United	States 46
disclosures	that	are	material	to	the	financial	statements,	and	involve	especially	challenging,	subjective,	or	 complex	auditor	judgment. Glass	Lewis	believes	the	additional	reporting	requirements	are	beneficial	for	investors.	The	additional	 disclosures	can	provide	investors	with	information	that	is	critical	to	making	an	informed	judgment	about	an	 auditor’s	independence	and	performance.	Furthermore,	we	believe	the	additional	requirements	are	an	 important	step	toward	enhancing	the	relevance	and	usefulness	of	auditor	reports,	which	too	often	are	seen	as	 boilerplate	compliance	documents	that	lack	the	relevant	details	to	provide	meaningful	insight	into	a	particular	 audit. Voting	Recommendations	on	Auditor	Ratification We	generally	support	management’s	choice	of	auditor	except	when	we	believe	the	auditor’s	independence	or	 audit	integrity	has	been	compromised.	Where	a	board	has	not	allowed	shareholders	to	review	and	ratify	an	 auditor,	we	typically	recommend	voting	against	the	audit	committee	chair.	When	there	have	been	material	 restatements	of	annual	financial	statements	or	material	weaknesses	in	internal	controls,	we	usually	recommend	 voting	against	the	entire	audit	committee. Reasons	why	we	may	not	recommend	ratification	of	an	auditor	include: • When	audit	fees	plus	audit-related	fees	total	less	than	the	tax	fees	and/or	other	non-audit	fees. • Recent	material	restatements	of	annual	financial	statements,	including	those	resulting	in	the	reporting	 of	material	weaknesses	in	internal	controls	and	including	late	filings	by	the	company	where	the	auditor	 bears	some	responsibility	for	the	restatement	or	late	filing.42 • When	the	auditor	performs	prohibited	services	such	as	tax-shelter	work,	tax	services	for	the	CEO	or	CFO,	 or	contingent-fee	work,	such	as	a	fee	based	on	a	percentage	of	economic	benefit	to	the	company. • When	audit	fees	are	excessively	low,	especially	when	compared	with	other	companies	in	the	same	 industry. • When	the	company	has	aggressive	accounting	policies. • When	the	company	has	poor	disclosure	or	lack	of	transparency	in	its	financial	statements. • Where	the	auditor	limited	its	liability	through	its	contract	with	the	company	or	the	audit	contract	 requires	the	corporation	to	use	alternative	dispute	resolution	procedures	without	adequate	 justification. • We	also	look	for	other	relationships	or	concerns	with	the	auditor	that	might	suggest	a	conflict	between the	auditor’s	interests	and	shareholder	interests. • In	determining	whether	shareholders	would	benefit	from	rotating	the	company’s	auditor,	where relevant	we	will	consider	factors	that	may	call	into	question	an	auditor’s	effectiveness,	including	auditor	 tenure,	a	pattern	of	inaccurate	audits,	and	any	ongoing	litigation	or	significant	controversies.	When	 Glass	Lewis	considers	ongoing	litigation	and	significant	controversies,	it	is	mindful	that	such	matters	may	 involve	unadjudicated	allegations.	Glass	Lewis	does	not	assume	the	truth	of	such	allegations	or	that	the 42	 An	auditor	does	not	audit	interim	financial	statements.	Thus,	we	generally	do	not	believe	that	an	auditor	should	be	opposed	 due	to	a	restatement	of	interim	financial	statements	unless	the	nature	of	the	misstatement	is	clear	from	a	reading	of	the	 incorrect	financial	statements. 2024	Benchmark	Policy	Guidelines	—	United	States 47
law	has	been	violated.	Instead,	Glass	Lewis	focuses	more	broadly	on	whether,	under	the	particular	facts	 and	circumstances	presented,	the	nature	and	number	of	such	lawsuits	or	other	significant	controversies	 reflects	on	the	risk	profile	of	the	company	or	suggests	that	appropriate	risk	mitigation	measures	may	be	 warranted.” Pension	Accounting	 Issues A	pension	accounting	question	occasionally	raised	in	proxy	proposals	is	what	effect,	if	any,	projected	returns	on	 employee	pension	assets	should	have	on	a	company’s	net	income.	This	issue	often	arises	in	the	executive-	 compensation	context	in	a	discussion	of	the	extent	to	which	pension	accounting	should	be	reflected	in	business	 performance	for	purposes	of	calculating	payments	to	executives. Glass	Lewis	believes	that	pension	credits	should	not	be	included	in	measuring	income	that	is	used	to	award	 performance-based	compensation.	Because	many	of	the	assumptions	used	in	accounting	for	retirement	plans are	subject	to	the	company’s	discretion,	management	would	have	an	obvious	conflict	of	interest	if	pay	were	tied	 to	pension	income.	In	our	view,	projected	income	from	pensions	does	not	truly	reflect	a	company’s	 performance. 2024	Benchmark	Policy	Guidelines	—	United	States 48
The	Link	Between	Compensation	and	 Performance Glass	Lewis	carefully	reviews	the	compensation	awarded	to	senior	executives,	as	we	believe	that	this	is	an important	area	in	which	the	board’s	priorities	are	revealed.	Glass	Lewis	strongly	believes	executive	 compensation	should	be	linked	directly	with	the	performance	of	the	business	the	executive	is	charged	with	 managing.	We	believe	the	most	effective	compensation	arrangements	provide	for	an	appropriate	mix	of	 performance-based	short-	and	long-term	incentives	in	addition	to	fixed	pay	elements	while	promoting	a	prudent	 and	sustainable	level	of	risk-taking. Glass	Lewis	believes	that	comprehensive,	timely	and	transparent	disclosure	of	executive	pay	is	critical	to	 allowing	shareholders	to	evaluate	the	extent	to	which	pay	is	aligned	with	company	performance.	When	 reviewing	proxy	materials,	Glass	Lewis	examines	whether	the	company	discloses	the	performance	metrics	used	 to	determine	executive	compensation.	We	recognize	performance	metrics	must	necessarily	vary	depending	on	 the	company	and	industry,	among	other	factors,	and	may	include	a	wide	variety	of	financial	measures	as	well	as	 industry-specific	performance	indicators.	However,	we	believe	companies	should	disclose	why	the	specific	 performance	metrics	were	selected	and	how	the	actions	they	are	designed	to	incentivize	will	lead	to	better	 corporate	performance. Moreover,	it	is	rarely	in	shareholders’	interests	to	disclose	competitive	data	about	individual	salaries	below	the	 senior	executive	level.	Such	disclosure	could	create	internal	personnel	discord	that	would	be	counterproductive	 for	the	company	and	its	shareholders.	 We	do	not	believe	shareholders	need	or	will	benefit	from	detailed	 reports	about	individual	management	employees	other	than	the	most	senior	executives. Advisory	Vote	on	Executive	Compensation	(Say- on-Pay) The	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	(the	“Dodd-Frank	Act”)	required	most	 companies	to	hold	an	advisory	vote	on	executive	compensation	at	the	first	shareholder	meeting	that	occurs	six	 months	after	enactment	of	the	bill	(January	21,	2011). This	practice	of	allowing	shareholders	a	non-binding	vote	on	a	company’s	compensation	report	is	standard	 practice	in	many	non-U.S.	countries,	and	has	been	a	requirement	for	most	companies	in	the	United	Kingdom	 since	2003	and	in	Australia	since	2005.	Although	say-on-pay	proposals	are	non-binding,	a	high	level	of “against”	or	“abstain”	votes	indicates	substantial	shareholder	concern	about	a	company’s	compensation	policies and	procedures. Given	the	complexity	of	most	companies’	compensation	programs,	Glass	Lewis	applies	a	highly	nuanced approach	when	analyzing	advisory	votes	on	executive	compensation.	We	review	each	company’s	compensation	 on	a	case-by-case	basis,	recognizing	that	each	company	must	be	examined	in	the	context	of	industry,	size,	 maturity,	performance,	financial	condition,	its	historic	pay	for	performance	practices,	and	any	other	relevant	 internal	or	external	factors. 2024	Benchmark	Policy	Guidelines	—	United	States 49
We	believe	that	each	company	should	design	and	apply	specific	compensation	policies	and	practices	that	are	 appropriate	to	the	circumstances	of	the	company	and,	in	particular,	will	attract	and	retain	competent	executives	 and	other	staff,	while	motivating	them	to	grow	the	company’s	long-term	shareholder	value. Where	we	find	those	specific	policies	and	practices	serve	to	reasonably	align	compensation	with	performance,	 and	such	practices	are	adequately	disclosed,	Glass	Lewis	will	recommend	supporting	the	company’s	approach.	 If,	however,	those	specific	policies	and	practices	fail	to	demonstrably	link	compensation	with	performance,	Glass	 Lewis	will	generally	recommend	voting	against	the	say-on-pay	proposal. Glass	Lewis	reviews	say-on-pay	proposals	on	both	a	qualitative	basis	and	a	quantitative	basis,	with	a	focus	on	 several	main	areas: • The	overall	design	and	structure	of	the	company’s	executive	compensation	programs	including	selection and	challenging	nature	of	performance	metrics; • The	implementation	and	effectiveness	of	the	company’s	executive	compensation	programs	including pay	mix	and	use	of	performance	metrics	in	determining	pay	levels; • The	quality	and	content	of	the	company’s	disclosure; • The	quantum	paid	to	executives;	and • The	link	between	compensation	and	performance	as	indicated	by	the	company’s	current	and	past	pay-	 for-performance	grades. We	also	review	any	significant	changes	or	modifications,	including	post	fiscal	year-end	changes	and	one-time	 awards,	particularly	where	the	changes	touch	upon	issues	that	are	material	to	Glass	Lewis	recommendations.	 Additionally,	while	we	recognize	their	rarity	in	the	U.S.	market,	beneficial	features	such	as	but	not	limited	to	 post-vesting	and/or	post-retirement	holding	requirements	may	be	viewed	positively	in	our	holistic	analysis. Say-on-Pay	Voting	Recommendations In	cases	where	we	find	deficiencies	in	a	company’s	compensation	program’s	design,	implementation	or	 management,	we	will	recommend	that	shareholders	vote	against	the	say-on-pay	proposal.	Generally,	such	 instances	include: • Evidence	of	a	pattern	of	poor	pay-for-performance	practices	(e.g.,	deficient	or	failing	pay-for-	 performance	grades	or	a	misalignment	between	incentive	payouts	and	the	shareholder	experience), • Unclear	or	questionable	disclosure	regarding	the	overall	compensation	structure	(e.g.,	limited	 information	regarding	benchmarking	processes,	limited	rationale	for	bonus	performance	metrics	and	 targets,	etc.), • Questionable	adjustments	to	certain	aspects	of	the	overall	compensation	structure	(e.g.,	limited	 rationale	for	significant	changes	to	performance	targets	or	metrics,	the	payout	of	guaranteed	bonuses	 or	sizable	retention	grants,	etc.),	and/or • Other	egregious	compensation	practices. Glass	Lewis	approaches	its	analysis	of	executive	compensation	programs	on	a	case-by-case	basis.	 Glass	Lewis	 reviews	all	factors	related	to	named	executive	officer	compensation,	including	quantitative	analyses,	structural	 features,	the	presence	of	effective	best	practice	policies,	disclosure	quality	and	trajectory-related	factors.	Except	 for	particularly	egregious	pay	decisions	and	practices,	no	one	factor	would	ordinarily	lead	to	an	unfavorable 2024	Benchmark	Policy	Guidelines	—	United	States 50
recommendation	without	a	review	of	the	company’s	rationale	and/or	the	influence	of	such	decisions	or practices	on	other	aspects	of	the	pay	program,	most	notably	the	company’s	ability	to	align	executive	pay	with performance	and	the	shareholder	experience. Although	not	an	exhaustive	list,	the	following	factors	are	viewed	negatively.	When	weighed	together,	they	may	 cause	Glass	Lewis	to	recommend	voting	against	a	say-on-pay	vote: • Inappropriate	or	outsized	self-selected	peer	groups	and/or	benchmarking	issues	such	as	compensation	 targets	set	well	above	the	median	without	adequate	justification; • Egregious	or	excessive	bonuses,	equity	awards,	perquisites	or	severance	payments,	including	golden	 handshakes	and	golden	parachutes; • Insufficient	response	to	low	shareholder	support; • Problematic	contractual	payments,	such	as	guaranteed	bonuses; • Adjustments	to	performance	results	that	lead	to	problematic	pay	outcomes; • Insufficiently	challenging	performance	targets	and/or	high	potential	payout	opportunities; • Performance	targets	lowered	without	justification; • Discretionary	bonuses	paid	when	short-	or	long-term	incentive	plan	targets	were	not	met; • High	executive	pay	relative	to	peers	that	is	not	justified	by	outstanding	company	performance;	and • The	terms	of	the	long-term	incentive	plans	are	inappropriate	(please	see	“Long-Term	Incentives”). The	aforementioned	issues	 influence	Glass	Lewis’	assessment	of	the	structure	of	a	company’s	compensation	 program.	We	evaluate	structure	on	a	“Good,	Fair,	Poor”	rating	scale	whereby	a	“Good”	rating	represents	a	 compensation	program	with	little	to	no	concerns	and	market-leading	practices,	a	“Fair”	rating	represents	a	 compensation	program	with	some	concerns	but	general	adherence	to	best	practices	and	a	“Poor”	rating	 represents	a	compensation	program	that	deviates	significantly	from	best	practice	or	contains	one	or	more	 egregious	compensation	practices. We	believe	that	it	is	important	for	companies	to	provide	investors	with	clear	and	complete	disclosure	of	all	the	 significant	terms	of	compensation	arrangements.	Similar	to	structure,	we	evaluate	disclosure	on	a	“Good,	Fair,	 Poor”	rating	scale.	A	“Good”	rating	represents	a	thorough	discussion	of	all	elements	of	compensation	with	 rationale.	A	“Fair”	rating	represents	an	adequate	discussion	of	all	or	most	elements	of	compensation	with	 rationale.	A	“Poor”	rating	represents	an	incomplete	or	absent	discussion	of	compensation.	In	instances	where	a	 company	has	simply	failed	to	provide	sufficient	disclosure	of	its	policies,	we	may	recommend	shareholders	vote	 against	this	proposal	solely	on	this	basis,	regardless	of	the	appropriateness	of	compensation	levels.	Glass	Lewis	 understands	that	regulatory	disclosure	rules	such	as	smaller	reporting	company	disclosure	standards	may	 condone	the	omission	of	key	executive	compensation	information.	However,	we	believe	that	companies	should	 provide	sufficient	information	in	the	proxy	statement	to	enable	shareholders	to	vote	in	an	informed	manner. In	general,	most	companies	will	fall	within	the	“Fair”	range	for	both	structure	and	disclosure,	and	Glass	Lewis	 largely	uses	the	“Good”	and	“Poor”	ratings	to	highlight	outliers. Where	we	identify	egregious	compensation	practices,	we	may	also	recommend	voting	against	the	compensation	 committee	based	on	the	practices	or	actions	of	its	members	during	the	year.	Such	practices	may	include	 approving	large	one-off	payments,	the	inappropriate,	unjustified	use	of	discretion,	or	sustained	poor	pay	for	 performance	practices.	(Refer	to	the	section	on	"Compensation	Committee	Performance"	for	more	 information.) 2024	Benchmark	Policy	Guidelines	—	United	States 51
Company	Responsiveness When	companies	receive	a	significant	level	of	shareholder	opposition	to	a	say-on-pay	proposal,	which	occurs	 when	more	than	20%	of	votes	on	the	proposal	are	cast	as	AGAINST	and/or	ABSTAIN,	we	believe	the	board	 should	demonstrate	a	commensurate	level	of	engagement	and	responsiveness	to	the	concerns	behind	the	 disapproval,	with	a	particular	focus	on	responding	to	shareholder	feedback.	When	assessing	the	level	of	 opposition	to	say-on-pay	proposals,	we	may	further	examine	the	level	of	opposition	among	disinterested	 shareholders	as	an	independent	group.	While	we	recognize	that	sweeping	changes	cannot	be	made	to	a	 compensation	program	without	due	consideration,	and	that	often	a	majority	of	shareholders	may	have	voted	in	 favor	of	the	proposal,	given	that	the	average	approval	rate	for	say-on-pay	proposals	is	about	90%,	we	believe	 the	compensation	committee	should	demonstrate	in	its	proxy	statement	a	level	of	response	to	a	significant	vote	 against.	In	general,	our	expectations	regarding	the	minimum	appropriate	levels	of	responsiveness	will	 correspond	with	the	level	of	shareholder	opposition,	as	expressed	both	through	the	magnitude	of	opposition	in	 a	single	year,	and	through	the	persistence	of	shareholder	disapproval	over	time. Responses	we	consider	appropriate	include	engaging	with	large	shareholders,	especially	dissenting	 shareholders,	to	identify	their	concerns,	and,	where	reasonable,	implementing	changes	and/or	making	 commitments	that	directly	address	those	concerns	within	the	company’s	compensation	program.	In	cases	where	 particularly	egregious	pay	decisions	caused	the	say	on	pay	proposal	to	fail,	Glass	Lewis	will	closely	consider	 whether	any	changes	were	made	directly	relating	to	the	pay	decision	that	may	address	structural	concerns	that	 shareholders	have.	In	the	absence	of	any	evidence	in	the	disclosure	that	the	board	is	actively	engaging	 shareholders	on	these	issues	and	responding	accordingly,	we	may	recommend	holding	compensation	 committee	members	accountable	for	failing	to	adequately	respond	to	shareholder	opposition.	Regarding	such	 recommendations,	careful	consideration	will	be	given	to	the	level	of	shareholder	protest	and	the	severity	and	 history	of	compensation	practices. Pay	for	Performance Glass	Lewis	believes	an	integral	part	of	a	well-structured	compensation	package	is	a	successful	link	between	pay	 and	performance.	Our	proprietary	pay-for-performance	model,	which	serves	as	our	primary	quantitative	 analysis,	was	developed	to	better	evaluate	the	link	between	pay	and	performance.	Generally,	compensation	and	 performance	are	measured	against	a	peer	group	of	appropriate	companies	that	may	overlap,	to	a	certain	extent,	 with	a	company’s	self-disclosed	peers.	This	quantitative	analysis	provides	a	consistent	framework	and	historical	 context	for	our	clients	to	determine	how	well	companies	link	executive	compensation	to	relative	performance.	 Companies	that	demonstrate	a	weaker	link	are	more	likely	to	receive	a	negative	recommendation;	however,	 other	qualitative	factors	such	as	overall	incentive	structure,	significant	forthcoming	changes	to	the	 compensation	program	or	reasonable	long-term	payout	levels	may	mitigate	our	concerns	to	a	certain	extent. While	we	assign	companies	a	letter	grade	of	A,	B,	C,	D	or	F	based	on	the	alignment	between	pay	and	 performance	under	our	primary	model,	the	grades	derived	from	the	Glass	Lewis	pay-for-performance	analysis	 do	not	follow	the	traditional	U.S.	school	letter	grade	system.	Rather,	the	grades	are	generally	interpreted	as	 follows: Grade	of	A:	The	company’s	percentile	rank	for	pay	is	significantly	less	than	its	percentile	rank	for	performance Grade	of	B:	The	company’s	percentile	rank	for	pay	is	moderately	less	than	its	percentile	rank	for	performance 2024	Benchmark	Policy	Guidelines	—	United	States 52
Grade	of	C:	The	company’s	percentile	rank	for	pay	is	approximately	aligned	with	its	percentile	rank	for performance Grade	of	D:	The	company’s	percentile	rank	for	pay	is	higher	than	its	percentile	rank	for	performance Grade	of	F:	The	company’s	percentile	rank	for	pay	is	significantly	higher	than	its	percentile	rank	for	performance Separately,	a	specific	comparison	between	the	company’s	executive	pay	and	its	peers’	executive	pay	levels	may	 be	discussed	in	the	analysis	for	additional	insight	into	the	grade.	Likewise,	a	specific	comparison	between	the	 company’s	performance	and	its	peers’	performance	is	reflected	in	the	analysis	for	further	context. We	use	this	analysis	to	inform	our	voting	decisions	on	say-on-pay	proposals.	If	a	company	receives	a	“D”	or	“F”	 from	our	proprietary	model,	we	are	more	likely	to	recommend	that	shareholders	vote	against	the	say-on-pay	 proposal.	However,	important	supplemental	quantitative	factors	like	analyses	of	realized	pay	levels	and	the	 “compensation	actually	paid”	data	mandated	by	the	SEC’s	2022	final	rule	regarding	pay	versus	performance	may	 be	considered,	and	other	qualitative	factors	such	as	an	effective	overall	incentive	structure,	the	relevance	of	 selected	performance	metrics,	significant	forthcoming	enhancements	or	reasonable	long-term	payout	levels	 may	give	us	cause	to	recommend	in	favor	of	a	proposal	even	when	we	have	identified	a	disconnect	between	pay	 and	performance. In	determining	the	peer	groups	used	in	our	pay-for-performance	letter	grades,	Glass	Lewis	utilizes	a	proprietary	 methodology	that	considers	both	market	and	industry	peers,	along	with	each	company’s	self-disclosed	peers	 and	peers	of	those	company-disclosed	peers.	Each	component	is	considered	on	a	weighted	basis	and	is	subject	 to	size-based	ranking	and	screening.	Since	the	peer	group	used	is	based	on	an	independent,	proprietary	 technique,	it	will	often	differ	from	the	one	used	by	the	company	which,	in	turn,	will	affect	the	resulting	analyses.	 While	Glass	Lewis	believes	that	the	independent,	rigorous	methodology	it	uses	provides	a	valuable	perspective	 on	the	company’s	compensation	program,	the	company’s	self-selected	peer	group	may	also	presented	in	the	 Proxy	Paper	for	comparative	purposes	and	for	supplemental	analyses. Short-Term	Incentives A	short-term	bonus	or	incentive	(STI)	should	be	demonstrably	tied	to	performance.	Whenever	possible,	we	 believe	a	mix	of	corporate	and	individual	performance	measures	is	appropriate.	We	would	normally	expect	 performance	measures	for	STI	plans	to	be	based	on	company-wide	or	divisional	financial	measures	as	well	as	 non-financial,	qualitative	or	non-formulaic	factors	such	as	those	related	to	safety,	environmental	issues,	and	 customer	satisfaction	when	they	are	material	to	the	company’s	overall	health.	While	we	recognize	that	 companies	operating	in	different	sectors	or	markets	may	seek	to	utilize	a	wide	range	of	metrics,	we	expect	such	 measures	to	be	appropriately	tied	to	a	company’s	business	drivers. Further,	the	threshold,	target	and	maximum	performance	goals	and	corresponding	payout	levels	that	can	be	 achieved	under	STI	plans	should	be	disclosed.	Shareholders	should	expect	stretching	performance	targets	for	 the	maximum	award	to	be	achieved.	Any	increase	in	the	potential	target	and	maximum	award	should	be	clearly	 justified	to	shareholders,	as	should	any	decrease	in	target	and	maximum	performance	levels	from	the	previous	 year. Glass	Lewis	recognizes	that	disclosure	of	some	measures	or	performance	targets	may	include	commercially	 confidential	information.	Therefore,	we	believe	it	may	be	reasonable	to	exclude	such	information	in	some	cases 2024	Benchmark	Policy	Guidelines	—	United	States 53
as	long	as	the	company	provides	sufficient	justification	for	non-disclosure.	However,	where	a	short-term	bonus	 has	been	paid,	companies	should	disclose	the	extent	to	which	performance	has	been	achieved	against	relevant	 targets,	including	disclosure	of	the	actual	target	achieved. Where	management	has	received	significant	short-term	incentive	payments	but	overall	performance	and/or	the	 shareholder	experience	over	the	measurement	year	prima	facie	appears	to	be	poor	or	negative,	we	believe	the	 company	should	provide	a	clear	explanation	of	why	these	significant	short-term	payments	were	made.	We	also	 believe	any	significant	changes	to	the	program	structure	should	be	accompanied	by	rationalizing	disclosure. Further,	where	a	company	has	applied	upward	discretion,	which	includes	lowering	goals	mid-year,	increasing	 calculated	payouts	or	retroactively	pro-rating	performance	periods,	we	expect	a	robust	discussion	of	why	the	 decision	was	necessary. Adjustments	to	GAAP	figures	may	be	considered	in	Glass	Lewis’	assessment	of	the	effectiveness	of	the	incentive	 at	tying	executive	pay	with	performance.	We	believe	that	where	companies	use	non-GAAP	or	bespoke	metrics,	 clear	reconciliations	between	these	figures	and	GAAP	figures	in	audited	financial	statements	should	be	provided.	 Moreover,	Glass	Lewis	believes	that	in	circumstances	where	significant	adjustments	were	applied	to	 performance	results,	thorough,	detailed	discussion	of	adjustments	akin	to	a	GAAP-to-non-GAAP	reconciliation	 and	their	impact	on	payouts	within	the	proxy	statement	is	warranted.	The	absence	of	such	enhanced	disclosure	 for	significant	adjustments	will	impact	Glass	Lewis'	assessment	of	the	quality	of	disclosure	and,	in	turn,	may	play	 a	role	in	the	overall	recommendation	for	the	advisory	vote	on	executive	compensation. Glass	Lewis	recognizes	the	importance	of	the	compensation	committee’s	prudent	and	responsible	exercise	of	 discretion	over	incentive	pay	outcomes	to	account	for	significant,	material	events	that	would	otherwise	be	 excluded	from	performance	results	of	selected	metrics	of	incentive	programs.	For	instance,	litigation	settlement	 charges	are	typically	removed	from	non-GAAP	results	before	the	determination	of	formulaic	incentive	payouts,	 or	health	and	safety	failures	may	not	be	reflected	in	performance	results	where	companies	do	not	expressly	 include	health	and	safety	metrics	in	incentive	plans.	Such	events	may	nevertheless	be	consequential	to	 corporate	performance	results,	impact	the	shareholder	experience,	and,	in	some	cases,	may	present	material	 risks.	Conversely,	certain	events	may	adversely	impact	formulaic	payout	results	despite	being	outside	 executives'	control.	We	believe	that	companies	should	provide	thorough	discussion	of	how	such	events	were	 considered	in	the	committee’s	decisions	to	exercise	discretion	over	incentive	payouts. We	do	not	generally	recommend	against	a	pay	program	due	to	the	use	of	a	non-formulaic	plan.	If	a	company	has	 chosen	to	rely	primarily	on	a	subjective	assessment	or	the	board’s	discretion	in	determining	short-term	bonuses,	 we	believe	that	the	proxy	statement	should	provide	a	meaningful	discussion	of	the	board’s	rationale	in	 determining	the	bonuses	paid	as	well	as	a	rationale	for	the	use	of	a	non-formulaic	mechanism.	Particularly	 where	the	aforementioned	disclosures	are	substantial	and	satisfactory,	such	a	structure	will	not	provoke	serious	 concern	in	our	analysis	on	its	own.	However,	in	conjunction	with	other	significant	issues	in	a	program’s	design	or	 operation,	such	as	a	disconnect	between	pay	and	performance,	the	absence	of	a	cap	on	payouts,	or	a	lack	of	 performance-based	long-term	awards,	the	use	of	a	non-formulaic	bonus	may	help	drive	a	negative	 recommendation. 2024	Benchmark	Policy	Guidelines	—	United	States 54
Long-Term	 Incentives Glass	Lewis	recognizes	the	value	of	equity-based	incentive	programs,	which	are	often	the	primary	long-term	 incentive	for	executives.	When	used	appropriately,	they	can	provide	a	vehicle	for	linking	an	executive’s	pay	to	 company	performance,	thereby	aligning	their	interests	with	those	of	shareholders.	In	addition,	equity-based	 compensation	can	be	an	effective	way	to	attract,	retain	and	motivate	key	employees. There	are	certain	elements	that	Glass	Lewis	believes	are	common	to	most	well-structured	long-term	incentive	 (LTI)	plans.	These	include: • No	re-testing	or	lowering	of	performance	conditions; • Performance	metrics	that	cannot	be	easily	manipulated	by	management; • Two	or	more	performance	metrics; • At	least	one	relative	performance	metric	that	compares	the	company’s	performance	to	a	relevant	peer group	or	index; • Performance	periods	of	at	least	three	years; • Stretching	metrics	that	incentivize	executives	to	strive	for	outstanding	performance	while	not	 encouraging	excessive	risk-taking; • Reasonable	individual	award	limits; • Equity	granting	practices	that	are	clearly	disclosed	and • Additional	post-vesting	holding	periods	to	encourage	long-term	executive	share	ownership. In	evaluating	long-term	incentive	grants,	Glass	Lewis	generally	believes	that	at	least	half	of	the	grant	should	 consist	of	performance-based	awards,	putting	a	material	portion	of	executive	compensation	at-risk	and	 demonstrably	linked	to	the	performance	of	the	company.	While	we	will	consistently	raise	concern	with	 programs	that	do	not	meet	this	criterion,	we	may	refrain	from	a	negative	recommendation	in	the	absence	of	 other	significant	issues	with	the	program’s	design	or	operation.	However,	in	cases	where	performance-based awards	are	significantly	rolled	back	or	eliminated	from	a	company’s	long-term	incentive	plan,	such	decisions	will	 generally	be	viewed	negatively	outside	of	exceptional	circumstances.	Given	the	reduction	in	rigor	and accountability	in	the	pay	program,	Glass	Lewis	will	assess	the	revision’s	impact	on	the	pay	program’s	ability	to	 align	executive	pay	with	performance	and	shareholder	experience;	programs	that	fail	our	assessment	may	 receive	an	unfavorable	recommendation.	They	may	also	lead	to	an	unfavorable	recommendation	from	Glass	 Lewis	if	the	change	is	not	offset	by	meaningful	revisions	such	as	to	pay	quantum	and	vesting	periods,	particularly	 in	the	absence	of	cogent	rationale. As	with	the	short-term	incentive,	Glass	Lewis	recognizes	the	importance	of	the	compensation	committee’s	 judicious	and	responsible	exercise	of	discretion	over	incentive	pay	outcomes	to	account	for	significant	events	 that	would	otherwise	be	excluded	from	performance	results	of	selected	metrics	of	incentive	programs.	We	 believe	that	companies	should	provide	thorough	discussion	of	how	such	events	were	considered	in	the	 committee’s	decisions	to	exercise	discretion	or	refrain	from	applying	discretion	over	incentive	pay	outcomes.	 Furthermore,	considerations	related	to	the	use	of	non-GAAP	metrics	under	the	STI	plan	similarly	apply	to	the	 long-term	incentive	program. Performance	measures	should	be	carefully	selected	and	should	relate	to	the	specific	business/industry	in	which the	company	operates	and,	especially,	to	the	key	value	drivers	of	the	company’s	business.	As	with	short-term 2024	Benchmark	Policy	Guidelines	—	United	States 55
incentive	plans,	the	basis	for	any	adjustments	to	metrics	or	results	should	be	clearly	explained,	as	should	the company’s	judgment	on	the	use	of	discretion	and	any	significant	changes	to	the	performance	program	structure. While	cognizant	of	the	inherent	complexity	of	certain	performance	metrics,	Glass	Lewis	generally	believes	that	 measuring	a	company’s	performance	with	multiple	metrics	serves	to	provide	a	more	complete	picture	of	the	 company’s	performance	than	a	single	metric.	Further,	reliance	on	just	one	metric	may	focus	too	much	 management	attention	on	a	single	target	and	is	therefore	more	susceptible	to	manipulation.	When	utilized	for	 relative	measurements,	external	benchmarks	such	as	a	sector	index	or	peer	group	should	be	disclosed	and	 transparent.	The	rationale	behind	the	selection	of	a	specific	index	or	peer	group	should	also	be	disclosed. Internal	performance	benchmarks	should	also	be	disclosed	and	transparent,	unless	a	cogent	case	for	 confidentiality	is	made	and	fully	explained.	Similarly,	actual	performance	and	vesting	levels	for	previous	grants	 earned	during	the	fiscal	year	should	be	disclosed. We	also	believe	shareholders	should	evaluate	the	relative	success	of	a	company’s	compensation	programs,	 particularly	with	regard	to	existing	equity-based	incentive	plans,	in	linking	pay	and	performance	when	evaluating	 potential	changes	to	LTI	plans	and	determining	the	impact	of	additional	stock	awards.	We	will	therefore	review	 the	company’s	pay-for-performance	analyses	(see	above	for	more	information)	and	specifically	the	proportion	 of	total	compensation	that	is	stock-based. Grants	of	Front-Loaded	Awards Many	U.S.	companies	have	chosen	to	provide	large	grants,	usually	in	the	form	of	equity	awards,	that	are	 intended	to	serve	as	compensation	for	multiple	years.	This	practice,	often	called	front-loading,	is	taken	up	either	 in	the	regular	course	of	business	or	as	a	response	to	specific	business	conditions	and	with	a	predetermined	 objective.	The	so-called	“mega-grant”,	an	outsized	award	to	one	individual	sometimes	valued	at	over	$100	 million	is	sometimes	but	not	always	provided	as	a	front-loaded	award.	We	believe	shareholders	should	generally	 be	wary	of	this	granting	approach,	and	we	accordingly	weigh	these	grants	with	particular	scrutiny. While	the	use	of	front-loaded	awards	is	intended	to	lock-in	executive	service	and	incentives,	the	same	rigidity	 also	raises	the	risk	of	effectively	tying	the	hands	of	the	compensation	committee.	As	compared	with	a	more	 responsive	annual	granting	schedule	program,	front-loaded	awards	may	preclude	improvements	or	changes	to	 reflect	evolving	business	strategies	or	to	respond	to	other	unforeseen	factors.	Additionally,	if	structured	poorly,	 early	vesting	of	such	awards	may	reduce	or	eliminate	the	retentive	power	at	great	cost	to	shareholders.	The	 considerable	emphasis	on	a	single	grant	can	place	intense	pressures	on	every	facet	of	its	design,	amplifying	any	 potential	perverse	incentives	and	creating	greater	room	for	unintended	consequences.	In	particular,	provisions	 around	changes	of	control	or	separations	of	service	must	ensure	that	executives	do	not	receive	excessive	 payouts	that	do	not	reflect	shareholder	experience	or	company	performance. We	consider	a	company’s	rationale	for	granting	awards	under	this	structure	and	also	expect	any	front-loaded	 awards	to	include	a	firm	commitment	not	to	grant	additional	awards	for	a	defined	period,	as	is	commonly	 associated	with	this	practice.	Even	when	such	a	commitment	is	provided,	unexpected	circumstances	may	lead	 the	board	to	make	additional	payments	or	awards	for	retention	purposes,	or	to	incentivize	management	 towards	more	realistic	goals	or	a	revised	strategy.	If	a	company	breaks	its	commitment	not	to	grant	further	 awards,	we	may	recommend	against	the	pay	program	unless	a	convincing	rationale	is	provided.	The	multiyear	 nature	of	these	awards	generally	lends	itself	to	significantly	higher	compensation	figures	in	the	year	of	grant 2024	Benchmark	Policy	Guidelines	—	United	States 56
than	might	otherwise	be	expected.	In	our	qualitative	analysis	of	the	grants	of	front-loaded	awards	to	executives,	 Glass	Lewis	considers	the	quantum	of	the	award	on	an	annualized	basis	and	may	compare	this	result	to	the	prior	 practice	and	peer	data,	among	other	benchmarks.	Additionally,	for	awards	that	are	granted	in	the	form	of	 equity,	Glass	Lewis	may	consider	the	total	potential	dilutive	effect	of	such	award	on	shareholders. In	situations	where	the	front-loaded	award	was	meant	to	cover	a	certain	portion	of	the	regular	long-term	 incentive	grant	for	each	year	during	the	covered	period,	our	analysis	of	the	value	of	the	remaining	portion	of	the	 regular	long-term	incentives	granted	during	the	period	covered	by	the	award	will	account	for	the	annualized	 value	of	the	front-loaded	portion,	and	we	expect	no	supplemental	grant	be	awarded	during	the	vesting	period	of	 the	front-loaded	portion. Linking	Executive	Pay	to	Environmental	and	Social	Criteria Glass	Lewis	believes	that	explicit	environmental	and/or	social	(E&S)	criteria	in	executive	incentive	plans,	when	 used	appropriately,	can	serve	to	provide	both	executives	and	shareholders	a	clear	line	of	sight	into	a	company’s	 ESG	strategy,	ambitions,	and	targets.	 Although	we	are	strongly	supportive	of	companies’	incorporation	of	 material	E&S	risks	and	opportunities	in	their	long-term	strategic	planning,	we	believe	that	the	inclusion	of	E&S	 metrics	in	compensation	programs	should	be	predicated	on	each	company’s	unique	circumstances.	In	order	to	 establish	a	meaningful	link	between	pay	and	performance,	companies	must	consider	factors	including	their	 industry,	size,	risk	profile,	maturity,	performance,	financial	condition,	and	any	other	relevant	internal	or	external	 factors. When	a	company	is	introducing	E&S	criteria	into	executive	incentive	plans,	we	believe	it	is	important	that	 companies	provide	shareholders	with	sufficient	disclosure	to	allow	them	to	understand	how	these	criteria	align	 withtheir	strategies.	Additionally,	Glass	Lewis	recognizes	that	there	may	be	situations	where	certain	E&S	 performance	criteria	are	reasonably	viewed	as	prerequisites	for	executive	performance,	as	opposed	to	 behaviors	and	conditions	that	need	to	be	incentivized.	For	example,	we	believe	that	shareholders	should	 interrogate	the	use	of	metrics	that	award	executives	for	ethical	behavior	or	compliance	with	policies	and	 regulations.	 It	is	our	view	that	companies	should	provide	shareholders	with	disclosures	that	clearly	lay	out	the	 rationale	for	selecting	specific	E&S	metrics,	the	target-setting	process,	and	corresponding	payout	opportunities.	 Further,	particularly	in	the	case	of	qualitative	metrics,	we	believe	that	shareholders	should	be	provided	with	a	 clear	understanding	of	the	basis	on	which	the	criteria	will	be	assessed.	Where	quantitative	targets	have	been	 set,	we	believe	that	shareholders	are	best	served	when	these	are	disclosed	on	an	ex-ante	basis,	or	the	board	 should	outline	why	it	believes	it	is	unable	to	do	so. While	we	believe	that	companies	should	generally	set	long-term	targets	for	their	environmental	and	social	 ambitions,	we	are	mindful	that	not	all	compensation	schemes	lend	themselves	to	the	inclusion	of	E&S	metrics.	 We	also	are	of	the	view	that	companies	should	retain	flexibility	in	not	only	choosing	to	incorporate	E&S	metrics	 in	their	compensation	plans,	but	also	in	the	placement	of	these	metrics.	For	example,	some	companies	may	 resolve	that	including	E&S	criteria	in	the	annual	bonus	may	help	to	incentivize	the	achievement	of	short-term	 milestones	and	allow	for	more	maneuverability	in	strategic	adjustments	to	long-term	goals.	Other	companies	 may	determine	that	their	long-term	sustainability	targets	are	best	achieved	by	incentivizing	executives	through	 metrics	included	in	their	long-term	incentive	plans. 2024	Benchmark	Policy	Guidelines	—	United	States 57
One-Time	Awards Glass	Lewis	believes	shareholders	should	generally	be	wary	of	awards	granted	outside	of	the	standard	incentive	 schemes,	as	such	awards	have	the	potential	to	undermine	the	integrity	of	a	company’s	regular	incentive	plans	or	 the	link	between	pay	and	performance,	or	both.	We	generally	believe	that	if	the	existing	incentive	programs	fail	 to	provide	adequate	incentives	to	executives,	companies	should	redesign	their	compensation	programs	rather	 than	make	additional	grants. However,	Glass	Lewis	reviews	grants	of	supplemental	awards	on	a	case-by-case,	company-by-company	basis	to	 give	adequate	consideration	for	unique	circumstances.	 Companies	should	provide	a	thorough	description	of	the	 awards,	including	a	cogent	and	convincing	explanation	of	their	necessity	and	why	existing	awards	do	not	provide	 sufficient	motivation	and	a	discussion	of	how	the	quantum	of	the	award	and	its	structure	were	determined. Further,	such	awards	should	be	tied	to	future	service	and	performance	whenever	possible. Additionally,	we	believe	companies	making	supplemental	or	one-time	awards	should	also	describe	if	and	how	 the	regular	compensation	arrangements	will	be	affected	by	these	additional	grants.	In	reviewing	a	company’s	 use	of	supplemental	awards,	Glass	Lewis	will	evaluate	the	terms	and	size	of	the	grants	in	the	context	of	the	 company’s	overall	incentive	strategy	and	granting	practices,	as	well	as	the	current	operating	environment. Contractual	Payments	and	Arrangements Beyond	the	quantum	of	contractual	payments,	Glass	Lewis	will	also	consider	the	design	of	any	entitlements.	 Certain	executive	employment	terms	may	help	to	drive	a	negative	recommendation,	including,	but	not	limited	 to: • Excessively	broad	change	in	control	triggers; • Inappropriate	severance	entitlements; • Inadequately	explained	or	excessive	sign-on	arrangements; • Guaranteed	bonuses	(especially	as	a	multiyear	occurrence);	and • Failure	to	address	any	concerning	practices	in	amended	employment	agreements. In	general,	we	are	wary	of	terms	that	are	excessively	restrictive	in	favor	of	the	executive,	or	that	could potentially	incentivize	behaviors	that	are	not	in	a	company’s	best	interest. Sign-on	Awards	and	Severance	Benefits We	acknowledge	that	there	may	be	certain	costs	associated	with	transitions	at	the	executive	level.	In	evaluating	 the	size	of	severance	and	sign-on	arrangements,	we	may	consider	the	executive’s	regular	target	compensation	 level,	or	the	sums	paid	to	other	executives	(including	the	recipient’s	predecessor,	where	applicable)	in	 evaluating	the	appropriateness	of	such	an	arrangement. We	believe	sign-on	arrangements	should	be	clearly	disclosed	and	accompanied	by	a	meaningful	explanation	of	 the	payments	and	the	process	by	which	the	amounts	were	reached.	Further,	the	details	of	and	basis	for	any	 “make-whole”	payments	(paid	as	compensation	for	awards	forfeited	from	a	previous	employer)	should	be	 provided. 2024	Benchmark	Policy	Guidelines	—	United	States 58
With	respect	to	severance,	we	believe	companies	should	abide	by	predetermined	payouts	in	most	 circumstances.	While	in	limited	circumstances	some	deviations	may	not	be	inappropriate,	we	believe	 shareholders	should	be	provided	with	a	meaningful	explanation	of	any	additional	or	increased	benefits	agreed	 upon	outside	of	regular	arrangements.	However,	where	Glass	Lewis	determines	that	such	predetermined	 payouts	are	particularly	problematic	or	unfavorable	to	shareholders,	we	may	consider	the	execution	of	such	 payments	in	a	negative	recommendation	for	the	advisory	vote	on	executive	compensation. In	the	U.S.	market,	most	companies	maintain	severance	entitlements	based	on	a	multiple	of	salary	and,	in	many	 cases,	bonus.	In	almost	all	instances	we	see,	the	relevant	multiple	is	three	or	less,	even	in	the	case	of	a	change	in	 control.	We	believe	the	basis	and	total	value	of	severance	should	be	reasonable	and	should	not	exceed	the	 upper	limit	of	general	market	practice.	We	consider	the	inclusion	of	long-term	incentives	in	cash	severance	 calculations	to	be	inappropriate,	particularly	given	the	commonality	of	accelerated	vesting	and	the	proportional	 weight	of	long-term	incentives	as	a	component	of	total	pay.	Additional	considerations,	however,	will	be	 accounted	for	when	reviewing	atypically	structured	compensation	approaches. Change	in	Control Glass	Lewis	considers	double-trigger	change	in	control	arrangements,	which	require	both	a	change	in	control	 and	termination	or	constructive	termination,	to	be	best	practice.	Any	arrangement	that	is	not	explicitly	double-	 trigger	may	be	considered	a	single-trigger	or	modified	single-trigger	arrangement.	Companies	that	allow	for	 committee	discretion	over	the	treatment	of	unvested	awards	should	commit	to	providing	clear	rationale	for	the	 committee's	ultimate	decision	as	to	how	such	awards	should	be	treated	in	the	event	a	change	in	control	occurs. Further,	we	believe	that	excessively	broad	definitions	of	change	in	control	are	potentially	problematic	as	they	 may	lead	to	situations	where	executives	receive	additional	compensation	where	no	meaningful	change	in	status	 or	duties	has	occurred. Excise	Tax	Gross-ups Among	other	entitlements,	Glass	Lewis	is	strongly	opposed	to	excise	tax	gross-ups	related	to	IRC	§	4999	and	 their	expansion,	especially	where	no	consideration	is	given	to	the	safe	harbor	limit.	We	believe	that	under	no	 normal	circumstance	is	the	inclusion	of	excise	tax	gross-up	provisions	in	new	agreements	or	the	addition	of	such	 provisions	to	amended	agreements	acceptable.	In	consideration	of	the	fact	that	minor	increases	in	change-in-	 control	payments	can	lead	to	disproportionately	large	excise	taxes,	the	potential	negative	impact	of	tax	gross-	 ups	far	outweighs	any	retentive	benefit. Depending	on	the	circumstances,	the	addition	of	new	gross-ups	around	this	excise	tax	may	lead	to	negative recommendations	for	a	company’s	say-on-pay	proposal,	the	chair	of	the	compensation	committee,	or	the	entire	 committee,	particularly	in	cases	where	a	company	had	committed	not	to	provide	any	such	entitlements	in	the	 future.	For	situations	in	which	the	addition	of	new	excise	tax	gross	ups	will	be	provided	in	connection	with	a	 specific	change-in-control	transaction,	this	policy	may	be	applied	to	the	say-on-pay	proposal,	the	golden	 parachute	proposal	and	recommendations	related	to	the	compensation	committee	for	all	involved	corporate	 parties,	as	appropriate. 2024	Benchmark	Policy	Guidelines	—	United	States 59
Amended	 Employment	 Agreements Any	contractual	arrangements	providing	for	problematic	pay	practices	which	are	not	addressed	in	materially	 amended	employment	agreements	will	potentially	be	viewed	by	Glass	Lewis	as	a	missed	opportunity	on	the	part	 of	the	company	to	align	its	policies	with	current	best	practices.	Such	problematic	pay	practices	include,	but	are	 not	limited	to,	excessive	change	in	control	entitlements,	modified	single-trigger	change	in	control	entitlements,	 excise	tax	gross-ups,	and	multi-year	guaranteed	awards. Recoupment	Provisions	(Clawbacks) On	October	26,	2022,	the	SEC	adopted	Rule	10D-1	under	the	Securities	Exchange	Act	of	1934.	The	rule	mandates	 national	securities	exchanges	and	associations	to	promulgate	new	listing	standards	requiring	companies	to maintain	recoupment	policies	(“clawback	provisions”).	The	final	clawback	listing	standards	were	approved	by	 the	SEC,	effective	October	2,	2023	and	required	listed	companies	to	adopt	a	compliant	policy	by	December	1,	 2023.	Glass	Lewis	believes	that	clawback	provisions	play	an	important	role	in	mitigating	excessive	risk-taking	 that	may	be	encouraged	by	poorly	structured	variable	incentive	programs.	Current	listing	standards	require	 recoupment	of	erroneously	awarded	payouts	to	current	and	former	executive	officers	in	the	event	of	an	 accounting	restatement	or	correction	to	previous	financial	statements	that	is	material	to	the	current	period,	 regardless	of	fault	or	misconduct. Glass	Lewis	recognizes	that	excessive	risk-taking	that	can	materially	and	adversely	impact	shareholders	may	not	 necessarily	result	in	such	restatements.	We	believe	that	clawback	policies	should	allow	recovery	from	current	 and	former	executive	officers	in	the	event	of	a	restatement	of	financial	results	or	similar	revision	of	performance	 indicators	upon	which	the	awards	were	based.	Additionally,	recoupment	policies	should	provide	companies	with	 the	ability	to	claw	back	variable	incentive	payments	(whether	time-based	or	performance-based)	when	there	is	 evidence	of	problematic	decisions	or	actions,	such	as	material	misconduct,	a	material	reputational	failure,	 material	risk	management	failure,	or	a	material	operational	failure,	the	consequences	of	which	have	not	already	 been	reflected	in	incentive	payments	and	where	recovery	is	warranted. In	situations	where	the	company	ultimately	determines	not	to	follow	through	with	recovery,	Glass	Lewis	will	 assess	the	appropriateness	of	such	determination	for	each	case.	A	thorough,	detailed	discussion	of	the	 company's	decision	to	not	pursue	recoupment	and,	if	applicable,	how	the	company	has	otherwise	rectified	the	 disconnect	between	executive	pay	outcomes	and	negative	impacts	of	their	actions	on	the	company	and	the	 shareholder	experience	will	be	considered.	The	absence	of	such	enhanced	disclosure	may	impact	Glass	Lewis'	 assessment	of	the	quality	of	disclosure	and,	in	turn,	may	play	a	role	in	Glass	Lewis'	overall	recommendation	for	 the	advisory	vote	on	executive	compensation.	The	clawback	policy	should	provide	recoupment	authority	 regardless	of	whether	the	employment	of	the	executive	officer	was	terminated	with	or	without	cause. Hedging	of	Stock Glass	Lewis	believes	that	the	hedging	of	shares	by	executives	in	the	shares	of	the	companies	where	they	are	 employed	severs	the	alignment	of	interests	of	the	executive	with	shareholders.	We	believe	companies	should	 adopt	strict	policies	to	prohibit	executives	from	hedging	the	economic	risk	associated	with	their	share	ownership	 in	the	company. 2024	Benchmark	Policy	Guidelines	—	United	States 60
Pledging	of	 Stock Glass	Lewis	believes	that	shareholders	should	examine	the	facts	and	circumstances	of	each	company	rather	than	 apply	a	one-size-fits-all	policy	regarding	employee	stock	pledging.	Glass	Lewis	believes	that	shareholders	benefit	 when	employees,	particularly	senior	executives,	have	meaningful	financial	interest	in	the	success	of	the	 company	under	their	management,	and	therefore	we	recognize	the	benefits	of	measures	designed	to	encourage	 employees	to	both	buy	shares	out	of	their	own	pocket	and	to	retain	shares	they	have	been	granted;	blanket	 policies	prohibiting	stock	pledging	may	discourage	executives	and	employees	from	doing	either. However,	we	also	recognize	that	the	pledging	of	shares	can	present	a	risk	that,	depending	on	a	host	of	factors,	 an	executive	with	significant	pledged	shares	and	limited	other	assets	may	have	an	incentive	to	take	steps	to	 avoid	a	forced	sale	of	shares	in	the	face	of	a	rapid	stock	price	decline.	Therefore,	to	avoid	substantial	losses	from	 a	forced	sale	to	meet	the	terms	of	the	loan,	the	executive	may	have	an	incentive	to	boost	the	stock	price	in	the	 short	term	in	a	manner	that	is	unsustainable,	thus	hurting	shareholders	in	the	long-term.	We	also	recognize concerns	regarding	pledging	may	not	apply	to	less	senior	employees,	given	the	latter	group’s	significantly	more limited	influence	over	a	company’s	stock	price.	Therefore,	we	believe	that	the	issue	of	pledging	shares	should	be	 reviewed	in	that	context,	as	should	policies	that	distinguish	between	the	two	groups. Glass	Lewis	believes	that	the	benefits	of	stock	ownership	by	executives	and	employees	may	outweigh	the	risks	 of	stock	pledging,	depending	on	many	factors.	As	such,	Glass	Lewis	reviews	all	relevant	factors	in	evaluating	 proposed	policies,	limitations	and	prohibitions	on	pledging	stock,	including: • The	number	of	shares	pledged; • The	percentage	executives’	pledged	shares	are	of	outstanding	shares; • The	percentage	executives’	pledged	shares	are	of	each	executive’s	shares	and	total	assets; • Whether	the	pledged	shares	were	purchased	by	the	employee	or	granted	by	the	company; • Whether	there	are	different	policies	for	purchased	and	granted	shares; • Whether	the	granted	shares	were	time-based	or	performance-based; • The	overall	governance	profile	of	the	company; • The	volatility	of	the	company’s	stock	(in	order	to	determine	the	likelihood	of	a	sudden	stock	price	drop); • The	nature	and	cyclicality,	if	applicable,	of	the	company’s	industry; • The	participation	and	eligibility	of	executives	and	employees	in	pledging; • The	company’s	current	policies	regarding	pledging	and	any	waiver	from	these	policies	for	employees and	executives;	and • Disclosure	of	the	extent	of	any	pledging,	particularly	among	senior	executives. Executive	Ownership	Guidelines The	alignment	between	shareholder	interests	and	those	of	executives	helps	to	ensure	 that	executives	are	acting	 in	the	best	long-term	interests	of	disinterested	shareholders.	Companies	should	facilitate	this	relationship	 through	the	adoption	and	enforcement	of	meaningful	minimum	executive	share	ownership	requirements. Companies	should	clearly	disclose	their	executive	ownership	requirements	in	their	Compensation	Discussion	and	 Analysis	section	and	how	the	various	types	of	outstanding	equity	awards	are	counted	or	excluded	from	the	 ownership	level	calculation. 2024	Benchmark	Policy	Guidelines	—	United	States 61
In	determining	whether	executives	have	met	the	requirements	or	not,	the	inclusion	of	unearned	performance-	 based	full	value	awards	and/or	unexercised	stock	options	without	cogent	rationale	may	be	viewed	as	 problematic.	While	Glass	Lewis	views	the	inclusion	of	unearned	performance-based	equity	in	the	ownership	 determination	 renders	executive	share	ownership	policies	less	effective,	we	continue	to	believe	that	 performance-based	equity	compensation	plays	an	important	role	in	the	separate	issue	of	aligning	executive	pay	 with	performance. Compensation	Consultant	 Independence As	mandated	by	Section	952	of	the	Dodd-Frank	Act,	as	of	January	11,	2013,	the	SEC	approved	listing	 requirements	for	both	the	NYSE	and	NASDAQ	which	require	compensation	committees	to	consider	six	factors	 (https://www.sec.gov/rules/final/2012/33-9330.pdf,	p.31-32)	in	assessing	compensation	advisor	independence.	 According	to	the	SEC,	“no	one	factor	should	be	viewed	as	a	determinative	factor.”	Glass	Lewis	believes	this	six-	 factor	assessment	is	an	important	process	for	every	compensation	committee	to	undertake	but	believes	 companies	employing	a	consultant	for	board	compensation,	consulting	and	other	corporate	services	should	 provide	clear	disclosure	beyond	just	a	reference	to	examining	the	six	points,	in	order	to	allow	shareholders	to	 review	the	specific	aspects	of	the	various	consultant	relationships. We	believe	compensation	consultants	are	engaged	to	provide	objective,	disinterested,	expert	advice	to	the	 compensation	committee.	When	the	consultant	or	its	affiliates	receive	substantial	income	from	providing	other	 services	to	the	company,	we	believe	the	potential	for	a	conflict	of	interest	arises	and	the	independence	of	the	 consultant	may	be	jeopardized.	Therefore,	Glass	Lewis	will,	when	relevant,	note	the	potential	for	a	conflict	of	 interest	when	the	fees	paid	to	the	advisor	or	its	affiliates	for	other	services	exceed	those	paid	for	compensation	 consulting. CEO	Pay	Ratio As	mandated	by	Section	953(b)	of	the	Dodd-Frank	Wall	Street	Consumer	and	Protection	Act,	beginning	in	2018,	 issuers	will	be	required	to	disclose	the	median	annual	total	compensation	of	all	employees	except	the	CEO,	the	 total	annual	compensation	of	the	CEO	or	equivalent	position,	and	the	ratio	between	the	two	amounts.	Glass	 Lewis	will	display	the	pay	ratio	as	a	data	point	in	our	Proxy	Papers,	as	available.	While	we	recognize	that	the	pay	 ratio	has	the	potential	to	provide	additional	insight	when	assessing	a	company’s	pay	practices,	at	this	time	it	will	 not	be	a	determinative	factor	in	our	voting	recommendations.	On	the	other	hand,	we	believe	the	underlying	 data	may	help	shareholders	evaluate	the	rationale	for	certain	executive	pay	decisions	such	as	increases	in	fixed	 pay	levels. Frequency	of	Say-on-Pay The	Dodd-Frank	Act	also	requires	companies	to	allow	shareholders	a	non-binding	vote	on	the	frequency	of	say-	 on-pay	votes	(i.e.,	every	one,	two	or	three	years).	Additionally,	Dodd-Frank	requires	companies	to	hold	such	 votes	on	the	frequency	of	say-on-pay	votes	at	least	once	every	six	years. We	believe	companies	should	submit	say-on-pay	votes	to	shareholders	every	year.	We	believe	that	the	time	and	 financial	burdens	to	a	company	with	regard	to	an	annual	vote	are	relatively	small	and	incremental	and	are 2024	Benchmark	Policy	Guidelines	—	United	States 62
outweighed	by	the	benefits	to	shareholders	through	more	frequent	accountability.	Implementing	biannual	or	 triennial	votes	on	executive	compensation	limits	shareholders’	ability	to	hold	the	board	accountable	for	its	 compensation	practices	through	means	other	than	voting	against	the	compensation	committee.	Unless	a	 company	provides	a	compelling	rationale	or	unique	circumstances	for	say-on-pay	votes	less	frequent	than	 annually,	we	will	generally	recommend	that	shareholders	support	annual	votes	on	compensation. Vote	on	Golden	Parachute	Arrangements The	Dodd-Frank	Act	also	requires	companies	to	provide	shareholders	with	a	separate	non-binding	vote	on	 approval	of	golden	parachute	compensation	arrangements	in	connection	with	certain	change-in-control	 transactions.	However,	if	the	golden	parachute	arrangements	have	previously	been	subject	to	a	say-on-pay	vote	 which	shareholders	approved,	then	this	required	vote	is	waived. Glass	Lewis	believes	the	narrative	and	tabular	disclosure	of	golden	parachute	arrangements	benefits	all	 shareholders.	Glass	Lewis	analyzes	each	golden	parachute	arrangement	on	a	case-by-case	basis,	taking	into	 account,	among	other	items:	the	nature	of	the	change-in-control	transaction,	the	ultimate	value	of	the	 payments	particularly	compared	to	the	value	of	the	transaction,	any	excise	tax	gross-up	obligations,	the	tenure	 and	position	of	the	executives	in	question	before	and	after	the	transaction,	any	new	or	amended	employment	 agreements	entered	into	in	connection	with	the	transaction,	and	the	type	of	triggers	involved	(i.e.,	single	vs.	 double).	In	cases	where	new	problematic	features,	such	as	excise	tax	gross-up	obligations	or	new	and	excessive	 single-trigger	entitlements,	are	introduced	in	a	golden	parachute	proposal,	such	features	may	contribute	to	a	 negative	recommendation	not	only	for	the	golden	parachute	proposal	under	review,	but	for	the	next	say-on-pay	 proposal	of	any	involved	corporate	parties,	as	well	as	recommendations	against	their	compensation	committee	 as	appropriate. Equity-Based	 Compensation	 Proposals We	believe	that	equity	compensation	awards,	when	not	abused,	are	useful	for	retaining	employees	and	 providing	an	incentive	for	them	to	act	in	a	way	that	will	improve	company	performance.	Glass	Lewis	recognizes	 that	equity-based	compensation	plans	are	critical	components	of	a	company’s	overall	compensation	program,	 and	we	analyze	such	plans	accordingly	based	on	both	quantitative	and	qualitative	factors. Our	quantitative	analysis	assesses	the	plan’s	cost	and	the	company’s	pace	of	granting	utilizing	a	number	of	 different	analyses,	comparing	the	program	with	absolute	limits	we	believe	are	key	to	equity	value	creation	and	 with	a	carefully	chosen	peer	group.	In	general,	our	model	seeks	to	determine	whether	the	proposed	plan	is	 either	absolutely	excessive	or	is	more	than	one	standard	deviation	away	from	the	average	plan	for	the	peer	 group	on	a	range	of	criteria,	including	dilution	to	shareholders	and	the	projected	annual	cost	relative	to	the	 company’s	financial	performance.	Each	of	the	analyses	(and	their	constituent	parts)	is	weighted	and	the	plan	is	 scored	in	accordance	with	that	weight. We	compare	the	program’s	expected	annual	expense	with	the	business’s	operating	metrics	to	help	determine	 whether	the	plan	is	excessive	in	light	of	company	performance.	We	also	compare	the	plan’s	expected	annual	 cost	to	the	enterprise	value	of	the	firm	rather	than	to	market	capitalization	because	the	employees,	managers	 and	directors	of	the	firm	contribute	to	the	creation	of	enterprise	value	but	not	necessarily	market	capitalization 2024	Benchmark	Policy	Guidelines	—	United	States 63
(the	biggest	difference	is	seen	where	cash	represents	the	vast	majority	of	market	capitalization).	Finally,	we	do	 not	rely	exclusively	on	relative	comparisons	with	averages	because,	in	addition	to	creeping	averages	serving	to	 inflate	compensation,	we	believe	that	some	absolute	limits	are	warranted. We	then	consider	qualitative	aspects	of	the	plan	such	as	plan	administration,	the	method	and	terms	of	exercise,	 repricing	history,	express	or	implied	rights	to	reprice,	and	the	presence	of	evergreen	provisions.	We	also	closely	 review	the	choice	and	use	of,	and	difficulty	in	meeting,	the	awards’	performance	metrics	and	targets,	if	any.	We	 believe	significant	changes	to	the	terms	of	a	plan	should	be	explained	for	shareholders	and	clearly	indicated. Other	factors	such	as	a	company’s	size	and	operating	environment	may	also	be	relevant	in	assessing	the	severity	 of	concerns	or	the	benefits	of	certain	changes.	Finally,	we	may	consider	a	company’s	executive	compensation	 practices	in	certain	situations,	as	applicable. We	evaluate	equity	plans	based	on	certain	overarching	principles: • Companies	should	seek	more	shares	only	when	needed; • Requested	share	amounts	or	share	reserves	should	be	conservative	in	size	so	that	companies	must	seek	 shareholder	approval	every	three	to	four	years	(or	more	frequently); • If	a	plan	is	relatively	expensive,	it	should	not	grant	options	solely	to	senior	executives	and	board	 members; • Dilution	of	annual	net	share	count	or	voting	power,	along	with	the	“overhang”	of	incentive	plans,	should be	limited; • Annual	cost	of	the	plan	(especially	if	not	shown	on	the	income	statement)	should	be	reasonable	as	a	 percentage	of	financial	results	and	should	be	in	line	with	the	peer	group; • The	expected	annual	cost	of	the	plan	should	be	proportional	to	the	business’s	value; • The	intrinsic	value	that	option	grantees	received	in	the	past	should	be	reasonable	compared	with	the business’s	financial	results; • Plans	should	not	permit	repricing	of	stock	options	without	shareholder	approval; • Plans	should	not	contain	excessively	liberal	administrative	or	payment	terms; • Plans	should	not	count	shares	in	ways	that	understate	the	potential	dilution,	or	cost,	to	common shareholders.	This	refers	to	“inverse”	full-value	award	multipliers; • Selected	performance	metrics	should	be	challenging	and	appropriate,	and	should	be	subject	to	relative	 performance	measurements;	and • Stock	grants	should	be	subject	to	minimum	vesting	and/or	holding	periods	sufficient	to	ensure	 sustainable	performance	and	promote	retention. Meanwhile,	for	individual	equity	award	proposals	where	the	recipient	of	the	proposed	grant	is	also	a	large	 shareholder	of	the	company	whose	vote	can	materially	affect	the	passage	of	the	proposal,	we	believe	that	the	 company	should	strongly	consider	the	level	of	approval	from	disinterested	shareholders	before	proceeding	with	 the	proposed	grant.	Glass	Lewis	recognizes	potential	conflicts	of	interests	when	vote	outcomes	can	be	heavily	 influenced	by	the	recipient	of	the	grant.	A	required	abstention	vote	or	non-vote	from	the	recipient	for	an	equity	 award	proposal	in	these	situations	can	help	to	avoid	such	conflicts.	This	favorable	feature	will	be	weighed	 alongside	the	structure,	disclosure,	dilution,	provided	rationale,	and	other	provisions	related	to	the	individual	 award	to	assess	the	award’s	alignment	with	long-term	shareholder	interests. 2024	Benchmark	Policy	Guidelines	—	United	States 64
Option	Exchanges	and	Repricing Glass	Lewis	is	generally	opposed	to	the	repricing	of	employee	and	director	options	regardless	of	how	it	is	 accomplished.	Employees	should	have	some	downside	risk	in	their	equity-based	compensation	program	and	 repricing	eliminates	any	such	risk.	As	shareholders	have	substantial	risk	in	owning	stock,	we	believe	that	the	 equity	compensation	of	employees	and	directors	should	be	similarly	situated	to	align	their	interests	with	those	 of	shareholders.	We	believe	this	will	facilitate	appropriate	risk-	and	opportunity-taking	for	the	company	by	 employees. We	are	concerned	that	option	grantees	who	believe	they	will	be	“rescued”	from	underwater	options	will	be	 more	inclined	to	take	unjustifiable	risks.	Moreover,	a	predictable	pattern	of	repricing	or	exchanges	substantially	 alters	a	stock	option’s	value	because	options	that	will	practically	never	expire	deeply	out	of	the	money	are	 worth	far	more	than	options	that	carry	a	risk	of	expiration. In	short,	repricings	and	option	exchange	programs	change	the	bargain	between	shareholders	and	employees	 after	the	bargain	has	been	struck. There	is	one	circumstance	in	which	a	repricing	or	option	exchange	program	may	be	acceptable:	if macroeconomic	or	industry	trends,	rather	than	specific	company	issues,	cause	a	stock’s	value	to	decline	 dramatically	and	the	repricing	is	necessary	to	motivate	and	retain	employees.	In	viewing	the	company’s	stock	 decline	as	part	of	a	larger	trend,	we	would	expect	the	impact	to	approximately	reflect	the	market	or	industry	 price	decline	in	terms	of	timing	and	magnitude.	In	this	circumstance,	we	think	it	fair	to	conclude	that	option	 grantees	may	be	suffering	from	a	risk	that	was	not	foreseeable	when	the	original	“bargain”	was	struck.	In	such	a	 scenario,	we	may	opt	to	support	a	repricing	or	option	exchange	program	only	if	sufficient	conditions	are	met. We	look	for	the	following	features	in	a	repricing	or	exchange	proposal: • Officers	and	board	members	cannot	participate	in	the	program;	and • The	exchange	is	value-neutral	or	value-creative	to	shareholders	using	very	conservative	assumptions. In	our	evaluation	of	the	appropriateness	of	the	program	design,	we	also	consider	the	inclusion	of	the	following	 features: • The	vesting	requirements	on	exchanged	or	repriced	options	are	extended	beyond	one	year; • Shares	reserved	for	options	that	are	reacquired	in	an	option	exchange	will	permanently	retire	(i.e.,	will	 not	be	available	for	future	grants)	so	as	to	prevent	additional	shareholder	dilution	in	the	future;	and • Management	and	the	board	make	a	cogent	case	for	needing	to	motivate	and	retain	existing	employees,	 such	as	being	in	a	competitive	employment	market. Option	Backdating,	Spring-Loading	and	Bullet-Dodging Glass	Lewis	views	option	backdating,	and	the	related	practices	of	spring-loading	and	bullet-dodging,	as	egregious	 actions	that	warrant	holding	the	appropriate	management	and	board	members	responsible.	These	practices	are	 similar	to	repricing	options	and	eliminate	much	of	the	downside	risk	inherent	in	an	option	grant	that	is	designed	 to	induce	recipients	to	maximize	shareholder	return. Backdating	an	option	is	the	act	of	changing	an	option’s	grant	date	from	the	actual	grant	date	to	an	earlier	date when	the	market	price	of	the	underlying	stock	was	lower,	resulting	in	a	lower	exercise	price	for	the	option.	In 2024	Benchmark	Policy	Guidelines	—	United	States 65
past	studies,	Glass	Lewis	identified	over	270	companies	that	have	disclosed	internal	or	government	 investigations	into	their	past	stock-option	grants. Spring-loading	is	granting	stock	options	while	in	possession	of	material,	positive	information	that	has	not	been	 disclosed	publicly.	Bullet-dodging	is	delaying	the	grants	of	stock	options	until	after	the	release	of	material,	 negative	information.	This	can	allow	option	grants	to	be	made	at	a	lower	price	either	before	the	release	of	 positive	news	or	following	the	release	of	negative	news,	assuming	the	stock’s	price	will	move	up	or	down	in	 response	to	the	information.	This	raises	a	concern	similar	to	that	of	insider	trading,	or	the	trading	on	material	 non-public	information. The	exercise	price	for	an	option	is	determined	on	the	day	of	grant,	providing	the	recipient	with	the	same	market	 risk	as	an	investor	who	bought	shares	on	that	date.	However,	where	options	were	backdated,	the	executive	or	 the	board	(or	the	compensation	committee)	changed	the	grant	date	retroactively.	The	new	date	may	be	at	or	 near	the	lowest	price	for	the	year	or	period.	This	would	be	like	allowing	an	investor	to	look	back	and	select	the	 lowest	price	of	the	year	at	which	to	buy	shares. A	2006	study	of	option	grants	made	between	1996	and	2005	at	8,000	companies	found	that	option	backdating	 can	be	an	indication	of	poor	internal	controls.	The	study	found	that	option	backdating	was	more	likely	to	occur	 at	companies	without	a	majority	independent	board	and	with	a	long-serving	CEO;	both	factors,	the	study concluded,	were	associated	with	greater	CEO	influence	on	the	company’s	compensation	and	governance practices.43 Where	a	company	granted	backdated	options	to	an	executive	who	is	also	a	director,	Glass	Lewis	will	recommend	 voting	against	that	executive/director,	regardless	of	who	decided	to	make	the	award.	In	addition,	Glass	Lewis	 will	recommend	voting	against	those	directors	who	either	approved	or	allowed	the	backdating.	Glass	Lewis	feels	 that	executives	and	directors	who	either	benefited	from	backdated	options	or	authorized	the	practice	have	 failed	to	act	in	the	best	interests	of	shareholders. Given	the	severe	tax	and	legal	liabilities	to	the	company	from	backdating,	Glass	Lewis	will	consider	 recommending	voting	against	members	of	the	audit	committee	who	served	when	options	were	backdated,	a	 restatement	occurs,	material	weaknesses	in	internal	controls	exist	and	disclosures	indicate	there	was	a	lack	of	 documentation.	These	committee	members	failed	in	their	responsibility	to	ensure	the	integrity	of	the	company’s	 financial	reports. When	a	company	has	engaged	in	spring-loading	or	bullet-dodging,	Glass	Lewis	will	consider	recommending	 voting	against	the	compensation	committee	members	where	there	has	been	a	pattern	of	granting	options	at	or	 near	historic	lows.	Glass	Lewis	will	also	recommend	voting	against	executives	serving	on	the	board	who	 benefited	from	the	spring-loading	or	bullet-dodging. 43	 Lucian	Bebchuk,	Yaniv	Grinstein	and	Urs	Peyer.	“LUCKY	CEOs.”	November,	2006. 2024	Benchmark	Policy	Guidelines	—	United	States 66
Director	Compensation	 Plans Glass	Lewis	believes	that	non-employee	directors	should	receive	reasonable	and	appropriate	compensation	for	 the	time	and	effort	they	spend	serving	on	the	board	and	its	committees.	However,	a	balance	is	required.	Fees	 should	be	competitive	in	order	to	retain	and	attract	qualified	individuals,	but	excessive	fees	represent	a	financial	 cost	to	the	company	and	potentially	compromise	the	objectivity	and	independence	of	non-employee	directors.	 We	will	consider	recommending	support	for	compensation	plans	that	include	option	grants	or	other	equity-	 based	awards	that	help	to	align	the	interests	of	outside	directors	with	those	of	shareholders.	However,	to	 ensure	directors	are	not	incentivized	in	the	same	manner	as	executives	but	rather	serve	as	a	check	on	imprudent	 risk-taking	in	executive	compensation	plan	design,	equity	grants	to	directors	should	not	be	performance-based.	 Where	an	equity	plan	exclusively	or	primarily	covers	non-employee	directors	as	participants,	we	do	not	believe	 that	the	plan	should	provide	for	performance-based	awards	in	any	capacity. When	non-employee	director	equity	grants	are	covered	by	the	same	equity	plan	that	applies	to	a	company’s	 broader	employee	base,	we	will	use	our	proprietary	model	and	analyst	review	of	this	model	to	guide	our	voting	 recommendations.	If	such	a	plan	broadly	allows	for	performance-based	awards	to	directors	or	explicitly	provides	 for	such	grants,	we	may	recommend	against	the	overall	plan	on	this	basis,	particularly	if	the	company	has	 granted	performance-based	awards	to	directors	in	past. Employee	Stock	Purchase	Plans Glass	Lewis	believes	that	employee	stock	purchase	plans	(ESPPs)	can	provide	employees	with	a	sense	of	 ownership	in	their	company	and	help	strengthen	the	alignment	between	the	interests	of	employees	and	 shareholders.	We	evaluate	ESPPs	by	assessing	the	expected	discount,	purchase	period,	expected	purchase activity	(if	previous	activity	has	been	disclosed)	and	whether	the	plan	has	a	“lookback”	feature.	Except	for	the most	extreme	cases,	Glass	Lewis	will	generally	support	these	plans	given	the	regulatory	purchase	limit	of $25,000	per	employee	per	year,	which	we	believe	is	reasonable.	We	also	look	at	the	number	of	shares	 requested	to	see	if	a	ESPP	will	significantly	contribute	to	overall	shareholder	dilution	or	if	shareholders	will	not	 have	a	chance	to	approve	the	program	for	an	excessive	period	of	time.	As	such,	we	will	generally	recommend	 against	ESPPs	that	contain	“evergreen”	provisions	that	automatically	increase	the	number	of	shares	available	 under	the	ESPP	each	year. Executive	 Compensation	 Tax	 Deductibility	— Amendment	to	IRC	162(M) The	“Tax	Cut	and	Jobs	Act”	had	significant	implications	on	Section	162(m)	of	the	Internal	Revenue	Code,	a	 provision	that	allowed	companies	to	deduct	compensation	in	excess	of	$1	million	for	the	CEO	and	the	next	three	 most	highly	compensated	executive	officers,	excluding	the	CFO,	if	the	compensation	is	performance-based	and	 is	paid	under	shareholder-approved	plans.	Glass	Lewis	does	not	generally	view	amendments	to	equity	plans	and	 changes	to	compensation	programs	in	response	to	the	elimination	of	tax	deductions	under	162(m)	as	 problematic.	This	specifically	holds	true	if	such	modifications	contribute	to	the	maintenance	of	a	sound	 performance-based	compensation	program. 2024	Benchmark	Policy	Guidelines	—	United	States 67
As	grandfathered	contracts	may	continue	to	be	eligible	for	tax	deductions	under	the	transition	rule	for	Section	 162(m),	companies	may	therefore	submit	incentive	plans	for	shareholder	approval	to	take	of	advantage	of	the	 tax	deductibility	afforded	under	162(m)	for	certain	types	of	compensation. We	believe	the	best	practice	for	companies	is	to	provide	robust	disclosure	to	shareholders	so	that	they	can	 make	fully	informed	judgments	about	the	reasonableness	of	the	proposed	compensation	plan.	To	allow	for	 meaningful	shareholder	review,	we	prefer	that	disclosure	should	include	specific	performance	metrics,	a	 maximum	award	pool,	and	a	maximum	award	amount	per	employee.	We	also	believe	it	is	important	to	analyze	 the	estimated	grants	to	see	if	they	are	reasonable	and	in	line	with	the	company’s	peers. We	typically	recommend	voting	against	a	162(m)	proposal	where:	(i)	a	company	fails	to	provide	at	least	a	list	of	 performance	targets;	(ii)	a	company	fails	to	provide	one	of	either	a	total	maximum	or	an	individual	maximum;	or (iii)	the	proposed	plan	or	individual	maximum	award	limit	is	excessive	when	compared	with	the	plans	of	the company’s	peers. The	company’s	record	of	aligning	pay	with	performance	(as	evaluated	using	our	proprietary	pay-for-	 performance	model)	also	plays	a	role	in	our	recommendation.	Where	a	company	has	a	record	of	setting	 reasonable	pay	relative	to	business	performance,	we	generally	recommend	voting	in	favor	of	a	plan	even	if	the	 plan	caps	seem	large	relative	to	peers	because	we	recognize	the	value	in	special	pay	arrangements	for	continued	 exceptional	performance. As	with	all	other	issues	we	review,	our	goal	is	to	provide	consistent	but	contextual	advice	given	the	specifics	of	 the	company	and	ongoing	performance.	Overall,	we	recognize	that	it	is	generally	not	in	shareholders’	best	 interests	to	vote	against	such	a	plan	and	forgo	the	potential	tax	benefit	since	shareholder	rejection	of	such	plans	 will	not	curtail	the	awards;	it	will	only	prevent	the	tax	deduction	associated	with	them. 2024	Benchmark	Policy	Guidelines	—	United	States 68
Governance	Structure	and	the	Shareholder	 Franchise Anti-Takeover	Measures Poison	Pills	(Shareholder	Rights	Plans) Glass	Lewis	believes	that	poison	pill	plans	are	not	generally	in	shareholders’	best	interests.	They	can	reduce	 management	accountability	by	substantially	limiting	opportunities	for	corporate	takeovers.	Rights	plans	can	thus	 prevent	shareholders	from	receiving	a	buy-out	premium	for	their	stock.	Typically	we	recommend	that	 shareholders	vote	against	these	plans	to	protect	their	financial	interests	and	ensure	that	they	have	an	 opportunity	to	consider	any	offer	for	their	shares,	especially	those	at	a	premium. We	believe	boards	should	be	given	wide	latitude	in	directing	company	activities	and	in	charting	the	company’s	 course.	However,	on	an	issue	such	as	this,	where	the	link	between	the	shareholders’	financial	interests	and	their	 right	to	consider	and	accept	buyout	offers	is	substantial,	we	believe	that	shareholders	should	be	allowed	to	vote	 on	whether	they	support	such	a	plan’s	implementation.	This	issue	is	different	from	other	matters	that	are	 typically	left	to	board	discretion.	Its	potential	impact	on	and	relation	to	shareholders	is	direct	and	substantial.	It	 is	also	an	issue	in	which	management	interests	may	be	different	from	those	of	shareholders;	thus,	ensuring	that	 shareholders	have	a	voice	is	the	only	way	to	safeguard	their	interests. In	certain	circumstances,	we	will	support	a	poison	pill	that	is	limited	in	scope	to	accomplish	a	particular	 objective,	such	as	the	closing	of	an	important	merger,	or	a	pill	that	contains	what	we	believe	to	be	a	reasonable	 qualifying	offer	clause.	We	will	consider	supporting	a	poison	pill	plan	if	the	qualifying	offer	clause	includes	each	 of	the	following	attributes: • The	form	of	offer	is	not	required	to	be	an	all-cash	transaction; • The	offer	is	not	required	to	remain	open	for	more	than	90	business	days; • The	offeror	is	permitted	to	amend	the	offer,	reduce	the	offer,	or	otherwise	change	the	terms; • There	is	no	fairness	opinion	requirement;	and • There	is	a	low	to	no	premium	requirement. Where	these	requirements	are	met,	we	typically	feel	comfortable	that	shareholders	will	have	the	opportunity	to	 voice	their	opinion	on	any	legitimate	offer. NOL	Poison	Pills Similarly,	Glass	Lewis	may	consider	supporting	a	limited	poison	pill	in	the	event	that	a	company	seeks	 shareholder	approval	of	a	rights	plan	for	the	express	purpose	of	preserving	Net	Operating	Losses	(NOLs).	While	 companies	with	NOLs	can	generally	carry	these	losses	forward	to	offset	future	taxable	income,	Section	382 2024	Benchmark	Policy	Guidelines	—	United	States 69
of	the	Internal	Revenue	Code	limits	companies’	ability	to	use	NOLs	in	the	event	of	a	“change	of	ownership.”44	In	 this	case,	a	company	may	adopt	or	amend	a	poison	pill	(NOL	pill)	in	order	to	prevent	an	inadvertent	change	of	 ownership	by	multiple	investors	purchasing	small	chunks	of	stock	at	the	same	time,	and	thereby	preserve	the	 ability	to	carry	the	NOLs	forward.	Often	such	NOL	pills	have	trigger	thresholds	much	lower	than	the	common	 15%	or	20%	thresholds,	with	some	NOL	pill	triggers	as	low	as	5%. In	many	cases,	companies	will	propose	the	adoption	of	bylaw	amendments	specifically	restricting	certain	share	 transfers,	in	addition	to	proposing	the	adoption	of	a	NOL	pill.	In	general,	if	we	support	the	terms	of	a	particular	 NOL	pill,	we	will	generally	support	the	additional	protective	amendment	in	the	absence	of	significant	concerns	 with	the	specific	terms	of	that	proposal. As	with	traditional	poison	pills,	NOL	pills	may	deter	shareholders	and	potentially	serve	as	entrenchment	 mechanisms.	Certain	features	such	as	low	thresholds	combined	with	acting	in	concert	provisions,	among	other	 concerning	terms,	may	disempower	shareholders	and	insulate	the	board	and	management.	When	acting	in	 concert	provisions	are	present	within	the	terms	of	a	NOL	pill,	we	believe	this	may	raise	concerns	as	to	the	true	 objective	of	the	pill. Acting	in	concert	provisions	broaden	the	definition	of	beneficial	ownership	to	prohibit	parallel	conduct,	or	 multiple	shareholders	party	to	a	formal	or	informal	agreement	collaborating	to	influence	the	board	and	 management	of	a	company,	and	aggregate	the	ownership	of	such	shareholders	towards	the	triggering	 threshold.	In	our	view,	acting	in	concert	provisions	broadly	limit	the	voice	of	shareholders	and	may	diminish	 their	ability	to	engage	in	a	productive	dialogue	with	the	company	and	with	other	shareholders.	When	a	board	 adopts	defensive	measures	without	engaging	with	shareholders,	we	take	a	dim	view	of	the	board	and	the	 overall	governance	of	the	company. As	such,	Glass	Lewis	evaluates	NOL	pills	on	a	strictly	case-by-case	basis,	taking	into	consideration,	among	other	 factors:	(i)	the	value	of	the	NOLs	to	the	company;	(ii)	the	likelihood	of	a	change	of	ownership	based	on	the	size	 of	the	holdings	and	the	nature	of	the	larger	shareholders;	(iii)	the	trigger	threshold;	(iv)	the	duration	of	the	plan	 (i.e.,	whether	it	contains	a	reasonable	“sunset”	provision,	generally	one	year	or	less);	 (v)	the	inclusion	of	an	 acting	in	concert	provision;	(vi)	whether	the	pill	is	implemented	following	the	filing	of	a	Schedule	13D	by	a	 shareholder	or	there	is	evidence	of	hostile	activity	or	shareholder	activism;	and	(vii)	if	the	pill	is	subject	to	 periodic	board	review	and/or	shareholder	ratification. We	believe	that	shareholders	should	be	offered	the	opportunity	to	vote	on	any	adoption	or	renewal	of	a	NOL	 pill	regardless	of	any	potential	tax	benefit	that	it	offers	a	company.	As	such,	we	will	consider	recommending	 voting	against	those	members	of	the	board	who	served	at	the	time	when	an	NOL	pill	was	adopted	without	 shareholder	approval	within	the	prior	twelve	months	and	where	the	NOL	pill	is	not	subject	to	shareholder	 ratification. 44	 Section	382	of	the	Internal	Revenue	Code	refers	to	a	“change	of	ownership”	of	more	than	50	percentage	points	by	one	or	 more	5%	shareholders	within	a	three-year	period.	The	statute	is	intended	to	deter	the	“trafficking”	of	net	operating	losses. 2024	Benchmark	Policy	Guidelines	—	United	States 70
Fair	Price	Provisions Fair	price	provisions,	which	are	rare,	require	that	certain	minimum	price	and	procedural	requirements	be	 observed	by	any	party	that	acquires	more	than	a	specified	percentage	of	a	corporation’s	common	stock.	The	 provision	is	intended	to	protect	minority	shareholder	value	when	an	acquirer	seeks	to	accomplish	a	merger	or	 other	transaction	which	would	eliminate	or	change	the	interests	of	the	minority	shareholders.	The	provision	is	 generally	applied	against	the	acquirer	unless	the	takeover	is	approved	by	a	majority	of	“continuing	directors”	 and	holders	of	a	majority,	in	some	cases	a	supermajority	as	high	as	80%,	of	the	combined	voting	power	of	all	 stock	entitled	to	vote	to	alter,	amend,	or	repeal	the	above	provisions. The	effect	of	a	fair	price	provision	is	to	require	approval	of	any	merger	or	business	combination	with	an “interested	shareholder”	by	51%	of	the	voting	stock	of	the	company,	excluding	the	shares	held	by	the	interested	 shareholder.	An	interested	shareholder	is	generally	considered	to	be	a	holder	of	10%	or	more	of	the	company’s	 outstanding	stock,	but	the	trigger	can	vary. Generally,	provisions	are	put	in	place	for	the	ostensible	purpose	of	preventing	a	back-end	merger	where	the	 interested	shareholder	would	be	able	to	pay	a	lower	price	for	the	remaining	shares	of	the	company	than	he	or	 she	paid	to	gain	control.	The	effect	of	a	fair	price	provision	on	shareholders,	however,	is	to	limit	their	ability	to	 gain	a	premium	for	their	shares	through	a	partial	tender	offer	or	open	market	acquisition	which	typically	raise	 the	share	price,	often	significantly.	A	fair	price	provision	discourages	such	transactions	because	of	the	potential	 costs	of	seeking	shareholder	approval	and	because	of	the	restrictions	on	purchase	price	for	completing	a	merger	 or	other	transaction	at	a	later	time. Glass	Lewis	believes	that	fair	price	provisions,	while	sometimes	protecting	shareholders	from	abuse	in	a	 takeover	situation,	more	often	act	as	an	impediment	to	takeovers,	potentially	limiting	gains	to	shareholders	 from	a	variety	of	transactions	that	could	significantly	increase	share	price.	In	some	cases,	even	the	independent	 directors	of	the	board	cannot	make	exceptions	when	such	exceptions	may	be	in	the	best	interests	of	 shareholders.	Given	the	existence	of	state	law	protections	for	minority	shareholders	such	as	Section	203	of	the	 Delaware	Corporations	Code,	we	believe	it	is	in	the	best	interests	of	shareholders	to	remove	fair	price	 provisions. Control	Share	Statutes Certain	states,	including	Delaware,	have	adopted	control	share	acquisition	statutes	as	an	anti-takeover	defense	 for	certain	closed-end	investment	companies	and	business	development	companies.	Control	share	statutes	may	 prevent	changes	in	control	by	limiting	voting	rights	of	a	person	that	acquires	the	ownership	of	“control	shares.”	 Control	shares	are	shares	of	stock	equal	to	or	exceeding	specified	percentages	of	company	voting	power,	and	a	 control	share	statute	prevents	shares	in	excess	of	the	specified	percentage	from	being	voted,	unless:	(i)	the board	approves	them	to	be	voted;	or	(ii)	the	holder	of	the	“control	shares”	receives	approval	from	a	 supermajority	of	“non-interested”	shareholders. Depending	on	the	state	of	incorporation,	companies	may	automatically	rely	on	control	share	statutes	unless	the	 fund’s	board	of	trustees	eliminates	the	application	of	the	control	share	statute	to	any	or	all	fund	share	 acquisitions,	through	adoption	of	a	provision	in	the	fund's	governing	instrument	or	by	fund	board	action	alone.	 In	certain	other	states,	companies	must	adopt	control	share	statutes. 2024	Benchmark	Policy	Guidelines	—	United	States 71
In	our	view,	control	share	statues	disenfranchise	shareholders	by	reducing	their	voting	power	to	a	level	less	than	 their	economic	interest	and	effectively	function	as	an	anti-takeover	device.	We	believe	all	shareholders	should	 have	an	opportunity	to	vote	all	of	their	shares.	Moreover,	anti-takeover	measures	may	prevent	shareholders	 from	receiving	a	buy-out	premium	for	their	stock. As	such,	we	will	generally	recommend	voting	for	proposals	to	opt	out	of	control	share	acquisition	statutes,	 unless	doing	so	would	allow	the	completion	of	a	takeover	that	is	not	in	the	best	interests	of	shareholders;	and	 against	proposals	to	amend	the	charter	to	include	control	share	acquisition	provisions. Further,	in	cases	where	a	closed-end	fund	or	business	development	company	has	received	a	public	buyout	offer	 and	has	relied	on	a	control	share	statute	as	a	defense	mechanism	in	the	prior	year,	we	will	generally	recommend	 shareholders	vote	against	the	chair	of	the	nominating	and	governance	committee,	absent	a	compelling	rationale	 as	to	why	a	rejected	acquisition	was	not	in	the	best	interests	of	shareholders. Quorum	Requirements Glass	Lewis	believes	that	a	company’s	quorum	requirement	should	be	set	at	a	level	high	enough	to	ensure	that	a	 broad	range	of	shareholders	are	represented	in	person	or	by	proxy,	but	low	enough	that	the	company	can	 transact	necessary	business.	Companies	in	the	U.S.	are	generally	subject	to	quorum	requirements	under	the	 laws	of	their	specific	state	of	incorporation.	Additionally,	those	companies	listed	on	the	NASDAQ	Stock	Market	 are	required	to	specify	a	quorum	in	their	bylaws,	provided	however	that	such	quorum	may	not	be	less	than	one-	 third	of	outstanding	shares.	Prior	to	2013,	the	New	York	Stock	Exchange	required	a	quorum	of	50%	for	listed	 companies,	although	this	requirement	was	dropped	in	recognition	of	individual	state	requirements	and	 potential	confusion	for	issuers.	Delaware,	for	example,	required	companies	to	provide	for	a	quorum	of	no	less	 than	one-third	of	outstanding	shares;	otherwise	such	quorum	shall	default	to	a	majority. We	generally	believe	a	majority	of	outstanding	shares	entitled	to	vote	is	an	appropriate	quorum	for	the	 transaction	of	business	at	shareholder	meetings.	However,	should	a	company	seek	shareholder	approval	of	a	 lower	quorum	requirement	we	will	generally	support	a	reduced	quorum	of	at	least	one-third	of	shares	entitled	 to	vote,	either	in	person	or	by	proxy.	When	evaluating	such	proposals,	we	also	consider	the	specific	facts	and	 circumstances	of	the	company,	such	as	size	and	shareholder	base. Director	and	Officer	Indemnification While	Glass	Lewis	strongly	believes	that	directors	and	officers	should	be	held	to	the	highest	standard	when	 carrying	out	their	duties	to	shareholders,	some	protection	from	liability	is	reasonable	to	protect	them	against	 certain	suits	so	that	these	officers	feel	comfortable	taking	measured	risks	that	may	benefit	shareholders.	As	 such,	we	find	it	appropriate	for	a	company	to	provide	indemnification	and/or	enroll	in	liability	insurance	to	cover	 its	directors	and	officers	so	long	as	the	terms	of	such	agreements	are	reasonable. Officer	Exculpation In	August	2022,	the	Delaware	General	Assembly	amended	Section	102(b)(7)	of	the	Delaware	General Corporation	Law	(“DGCL”)	to	authorize	corporations	to	adopt	a	provision	in	their	certificate	of	incorporation	to 2024	Benchmark	Policy	Guidelines	—	United	States 72
eliminate	or	limit	monetary	liability	of	certain	corporate	officers	for	breach	of	fiduciary	duty	of	care.	Previously,	 the	DGCL	allowed	only	exculpation	of	corporate	directors	from	breach	of	fiduciary	duty	of	care	claims	if	the	 corporation’s	certificate	of	incorporation	includes	an	exculpation	provision. The	amendment	authorizes	corporations	to	provide	for	exculpation	of	the	following	officers:	(i)	the corporation’s	president,	chief	executive	officer,	chief	operating	officer,	chief	financial	officer,	chief	legal	officer,	 controller,	treasurer	or	chief	accounting	officer,	(ii)	“named	executive	officers”	identified	in	the	corporation’s	 SEC	filings,	and	(iii)	individuals	who	have	agreed	to	be	identified	as	officers	of	the	corporation. Corporate	exculpation	provisions	under	the	DGCL	only	apply	to	claims	for	breach	of	the	duty	of	care,	and	not	to	 breaches	of	the	duty	of	loyalty.	Exculpation	provisions	also	do	not	apply	to	acts	or	omissions	not	in	good	faith	or	 that	involve	intentional	misconduct,	knowing	violations	of	the	law,	or	transactions	involving	the	receipt	of	any	 improper	personal	benefits.	Furthermore,	officers	may	not	be	exculpated	from	claims	brought	against	them	by,	 or	in	the	right	of,	the	corporation	(i.e.,	derivative	actions). Under	Section	102(b)(7),	a	corporation	must	affirmatively	elect	to	include	an	exculpation	provision	in	its	 certificate	of	incorporation.	We	will	closely	evaluate	proposals	to	adopt	officer	exculpation	provisions	on	a	case-	 by-case	basis.	We	will	generally	recommend	voting	against	such	proposals	eliminating	monetary	liability	for	 breaches	of	the	duty	of	care	for	certain	corporate	officers,	unless	compelling	rationale	for	the	adoption	is	 provided	by	the	board,	and	the	provisions	are	reasonable. Reincorporation In	general,	Glass	Lewis	believes	that	the	board	is	in	the	best	position	to	determine	the	appropriate	jurisdiction	of	 incorporation	for	the	company.	We	review	all	proposals	to	reincorporate	to	a	different	state	or	country	on	a	 case-by-case	basis.	Our	review	includes	the	changes	in	corporate	governance	provisions,	especially	those	 relating	to	shareholder	rights,	material	differences	in	corporate	statutes	and	legal	precedents,	and	relevant	 financial	benefits,	among	other	factors,	resulting	from	the	change	in	domicile. Glass	Lewis	closely	examines	the	impact	on	shareholder	rights	arising	from	a	change	in	domicile	and	governing	 law,	including	the	following: • Will	shareholders	gain/retain	certain	rights	(i.e.	the	right	to	call	special	meetings,	the	right	to	act	by	 written	consent,	the	ability	to	remove	directors)? • Does	the	proposed	new	jurisdiction	allow	for	director	and	officer	exculpation	and/or	exclusive	forum	 provisions? • What	are	the	fiduciary	duties	(if	any)	of	directors,	officers,	and	majority	shareholders	under	the	new jurisdiction’s	statutes? • What	are	the	material	differences	in	corporate	statutes,	case	law,	and	judicial	systems? • Is	the	company	proposing	to	reincorporate	to	a	jurisdiction	considered	to	be	a	“tax	haven”? In	addition,	when	examining	a	proposal	to	reincorporate,	we	will	also	consider	the	overall	governance	of	the	 company,	including,	but	not	limited	to,	the	following: • Does	the	company	have	anti-takeover	protections	such	as	a	poison	pill	or	classified	board	in	place? 2024	Benchmark	Policy	Guidelines	—	United	States 73
• Does	the	company	have	a	significant	shareholder	or	is	the	company	otherwise	considered	controlled?45 • Has	the	board	been	previously	unresponsive	to	shareholders	(such	as	failing	to	implement	a	shareholder	 proposal	that	received	majority	shareholder	support)? • Does	the	company	have	an	independent	chair	and	is	the	board	sufficiently	independent? • Are	there	other	material	governance	issues	of	concern	at	the	company?	Has	the	company’s performance	matched	or	exceeded	its	peers	in	the	past	one	and	three	years? • How	has	the	company	ranked	in	Glass	Lewis’	pay-for-performance	analysis	during	the	last	three	years? Where	there	is	a	decline	in	shareholder	rights,	the	financial	benefits	are	de	minimis,	and	the	proposed	 jurisdiction	has	significantly	worse	shareholder	protections,	we	will	generally	recommend	voting	against	the	 transaction. In	addition,	costly,	shareholder-initiated	reincorporations	are	typically	not	the	best	route	to	achieve	the	 furtherance	of	shareholder	rights.	We	believe	shareholders	are	generally	better	served	by	proposing	specific	 shareholder	resolutions	addressing	pertinent	issues	which	may	be	implemented	at	a	lower	cost,	and	perhaps	 even	with	board	approval.	However,	when	shareholders	propose	a	shift	into	a	jurisdiction	with	enhanced	 shareholder	rights,	Glass	Lewis	examines	the	significant	ways	the	company	would	benefit	from	shifting	 jurisdictions	including	an	evaluation	of	the	criteria	listed	above.	We	note,	however,	that	we	will	only	support	 shareholder	proposals	to	change	a	company’s	place	of	incorporation	in	exceptional	circumstances. Exclusive	Forum	and	Fee-Shifting	Bylaw	Provisions Glass	Lewis	recognizes	that	companies	may	be	subject	to	frivolous	and	opportunistic	lawsuits,	particularly	in	 conjunction	with	a	merger	or	acquisition,	that	are	expensive	and	distracting.	In	response,	companies	have	 sought	ways	to	prevent	or	limit	the	risk	of	such	suits	by	adopting	bylaws	regarding	where	the	suits	must	be	 brought	or	shifting	the	burden	of	the	legal	expenses	to	the	plaintiff,	if	unsuccessful	at	trial. Glass	Lewis	believes	that	charter	or	bylaw	provisions	limiting	a	shareholder’s	choice	of	legal	venue	are	not	in	the	 best	interests	of	shareholders.	Such	clauses	may	effectively	discourage	the	use	of	shareholder	claims	by	 increasing	their	associated	costs	and	making	them	more	difficult	to	pursue.	As	such,	shareholders	should	be	 wary	about	approving	any	limitation	on	their	legal	recourse	including	limiting	themselves	to	a	single	jurisdiction	 (e.g.,	Delaware	or	federal	courts	for	matters	arising	under	the	Securities	Act	of	1933)	without	compelling	 evidence	that	it	will	benefit	shareholders. For	this	reason,	we	recommend	that	shareholders	vote	against	any	bylaw	or	charter	amendment	seeking	to	 adopt	an	exclusive	forum	provision	unless	the	company:	(i)	provides	a	compelling	argument	on	why	the	 provision	would	directly	benefit	shareholders;	(ii)	provides	evidence	of	abuse	of	legal	process	in	other,	non-	 favored	jurisdictions;	(iii)	narrowly	tailors	such	provision	to	the	risks	involved;	and	(iv)	maintains	a	strong	record	 of	good	corporate	governance	practices. 45	 In	cases	where	a	controlled	company	is	seeking	to	change	its	domicile,	we	will	closely	evaluate	how	the	independent	 members	of	the	board	came	to	its	recommendation,	if	the	controlling	shareholder	had	any	ability	to	influence	the	board,	and	if	 the	proposal	is	also	put	to	a	vote	of	disinterested	shareholders. 2024	Benchmark	Policy	Guidelines	—	United	States 74
Moreover,	in	the	event	a	board	seeks	shareholder	approval	of	a	forum	selection	clause	pursuant	to	a	bundled	 bylaw	amendment	rather	than	as	a	separate	proposal,	we	will	weigh	the	importance	of	the	other	bundled	 provisions	when	determining	the	vote	recommendation	on	the	proposal.	We	will	nonetheless	recommend	 voting	against	the	chair	of	the	governance	committee	for	bundling	disparate	proposals	into	a	single	proposal	 (refer	to	our	discussion	of	nominating	and	governance	committee	performance	in	Section	I	of	the	guidelines). Similarly,	some	companies	have	adopted	bylaws	requiring	plaintiffs	who	sue	the	company	and	fail	to	receive	a	 judgment	in	their	favor	pay	the	legal	expenses	of	the	company.	These	bylaws,	also	known	as	“fee-shifting”	or	 “loser	pays”	bylaws,	will	likely	have	a	chilling	effect	on	even	meritorious	shareholder	lawsuits	as	shareholders	 would	face	an	strong	financial	disincentive	not	to	sue	a	company.	Glass	Lewis	therefore	strongly	opposes	the	 adoption	of	such	fee-shifting	bylaws	and,	if	adopted	without	shareholder	approval,	will	recommend	voting	 against	the	governance	committee.	While	we	note	that	in	June	of	2015	the	State	of	Delaware	banned	the	 adoption	of	fee-shifting	bylaws,	such	provisions	could	still	be	adopted	by	companies	incorporated	in	other	 states. Authorized	Shares Glass	Lewis	believes	that	adequate	capital	stock	is	important	to	a	company’s	operation.	When	analyzing	a	 request	for	additional	shares,	we	typically	review	four	common	reasons	why	a	company	might	need	additional	 capital	stock: 1. Stock	Split	—	We	typically	consider	three	metrics	when	evaluating	whether	we	think	a	stock	split	is	likely	 or	necessary:	The	historical	stock	pre-split	price,	if	any;	the	current	price	relative	to	the	company’s	most	 common	trading	price	over	the	past	52	weeks;	and	some	absolute	limits	on	stock	price	that,	in	our	view,	 either	always	make	a	stock	split	appropriate	if	desired	by	management	or	would	almost	never	be	a	 reasonable	price	at	which	to	split	a	stock. 2. Shareholder	Defenses	—	Additional	authorized	shares	could	be	used	to	bolster	takeover	defenses	such	 as	a	poison	pill.	Proxy	filings	often	discuss	the	usefulness	of	additional	shares	in	defending	against	or	 discouraging	a	hostile	takeover	as	a	reason	for	a	requested	increase.	Glass	Lewis	is	typically	against	such	 defenses	and	will	oppose	actions	intended	to	bolster	such	defenses. 3. Financing	for	Acquisitions	—	We	look	at	whether	the	company	has	a	history	of	using	stock	for	 acquisitions	and	attempt	to	determine	what	levels	of	stock	have	typically	been	required	to	accomplish	 such	transactions.	Likewise,	we	look	to	see	whether	this	is	discussed	as	a	reason	for	additional	shares	in	 the	proxy. 4. Financing	for	Operations	—	We	review	the	company’s	cash	position	and	its	ability	to	secure	financing	 through	borrowing	or	other	means.	We	look	at	the	company’s	history	of	capitalization	and	whether	the	 company	has	had	to	use	stock	in	the	recent	past	as	a	means	of	raising	capital. Issuing	additional	shares	generally	dilutes	existing	holders	in	most	circumstances.	Further,	the	availability	of	 additional	shares,	where	the	board	has	discretion	to	implement	a	poison	pill,	can	often	serve	as	a	deterrent	to	 interested	suitors.	Accordingly,	where	we	find	that	the	company	has	not	detailed	a	plan	for	use	of	the	proposed	 shares,	or	where	the	number	of	shares	far	exceeds	those	needed	to	accomplish	a	detailed	plan,	we	typically	 recommend	against	the	authorization	of	additional	shares.	Similar	concerns	may	also	lead	us	to	recommend 2024	Benchmark	Policy	Guidelines	—	United	States 75
against	a	proposal	to	conduct	a	reverse	stock	split	if	the	board	does	not	state	that	it	will	reduce	the	number	of	 authorized	common	shares	in	a	ratio	proportionate	to	the	split. With	regard	to	authorizations	and/or	increases	in	preferred	shares,	Glass	Lewis	is	generally	against	such	 authorizations,	which	allow	the	board	to	determine	the	preferences,	limitations	and	rights	of	the	preferred	 shares	(known	as	“blank-check	preferred	stock”).	We	believe	that	granting	such	broad	discretion	should	be	of	 concern	to	common	shareholders,	since	blank-check	preferred	stock	could	be	used	as	an	anti-takeover	device	or	 in	some	other	fashion	that	adversely	affects	the	voting	power	or	financial	interests	of	common	shareholders. Therefore,	we	will	generally	recommend	voting	against	such	requests,	unless	the	company	discloses	a	 commitment	to	not	use	such	shares	as	an	anti-takeover	defense	or	in	a	shareholder	rights	plan,	or	discloses	a	 commitment	to	submit	any	shareholder	rights	plan	to	a	shareholder	vote	prior	to	its	adoption. While	we	think	that	having	adequate	shares	to	allow	management	to	make	quick	decisions	and	effectively	 operate	the	business	is	critical,	we	prefer	that,	for	significant	transactions,	management	come	to	shareholders	 to	justify	their	use	of	additional	shares	rather	than	providing	a	blank	check	in	the	form	of	a	large	pool	of	 unallocated	shares	available	for	any	purpose. Advance	Notice	Requirements We	typically	recommend	that	shareholders	vote	against	proposals	that	would	require	advance	notice	of	 shareholder	proposals	or	of	director	nominees. These	proposals	typically	attempt	to	require	a	certain	amount	of	notice	before	shareholders	are	allowed	to	 place	proposals	on	the	ballot.	Notice	requirements	typically	range	between	three	to	six	months	prior	to	the	 annual	meeting.	Advance	notice	requirements	typically	make	it	impossible	for	a	shareholder	who	misses	the	 deadline	to	present	a	shareholder	proposal	or	a	director	nominee	that	might	be	in	the	best	interests	of	the	 company	and	its	shareholders. We	believe	shareholders	should	be	able	to	review	and	vote	on	all	proposals	and	director	nominees.	 Shareholders	can	always	vote	against	proposals	that	appear	with	little	prior	notice.	Shareholders,	as	owners	of	a	 business,	are	capable	of	identifying	issues	on	which	they	have	sufficient	information	and	ignoring	issues	on	 which	they	have	insufficient	information.	Setting	arbitrary	notice	restrictions	limits	the	opportunity	for	 shareholders	to	raise	issues	that	may	come	up	after	the	window	closes. Virtual	Shareholder	Meetings A	growing	contingent	of	companies	have	elected	to	hold	shareholder	meetings	by	virtual	means	only.	Glass	 Lewis	believes	that	virtual	meeting	technology	can	be	a	useful	complement	to	a	traditional,	in-person	 shareholder	meeting	by	expanding	participation	of	shareholders	who	are	unable	to	attend	a	shareholder	 meeting	in	person	(i.e.,	a	“hybrid	meeting”).	However,	we	also	believe	that	virtual-only	meetings	have	the	 potential	to	curb	the	ability	of	a	company’s	shareholders	to	meaningfully	communicate	with	the	company’s	 management. Prominent	shareholder	rights	advocates,	including	the	Council	of	Institutional	Investors,	have	expressed	 concerns	that	such	virtual-only	meetings	do	not	approximate	an	in-person	experience	and	may	serve	to	reduce 2024	Benchmark	Policy	Guidelines	—	United	States 76
the	board’s	accountability	to	shareholders.	When	analyzing	the	governance	profile	of	companies	that	choose	to	 hold	virtual-only	meetings,	we	look	for	robust	disclosure	in	a	company’s	proxy	statement	which	assures	 shareholders	that	they	will	be	afforded	the	same	rights	and	opportunities	to	participate	as	they	would	at	an	in-	 person	meeting. Examples	of	effective	disclosure	include:	(i)	addressing	the	ability	of	shareholders	to	ask	questions	during	the	 meeting,	including	time	guidelines	for	shareholder	questions,	rules	around	what	types	of	questions	are	allowed,	 and	rules	for	how	questions	and	comments	will	be	recognized	and	disclosed	to	meeting	participants;	(ii) procedures,	if	any,	for	posting	appropriate	questions	received	during	the	meeting	and	the	company’s	answers,	 on	the	investor	page	of	their	website	as	soon	as	is	practical	after	the	meeting;	(iii)	addressing	technical	and	 logistical	issues	related	to	accessing	the	virtual	meeting	platform;	and	(iv)	procedures	for	accessing	technical	 support	to	assist	in	the	event	of	any	difficulties	accessing	the	virtual	meeting. We	will	generally	recommend	voting	against	members	of	the	governance	committee	where	the	board	is	 planning	to	hold	a	virtual-only	shareholder	meeting	and	the	company	does	not	provide	such	disclosure. Voting	Structure Multi-Class	Share	Structures Glass	Lewis	believes	multi-class	voting	structures	are	typically	not	in	the	best	interests	of	common	shareholders.	 Allowing	one	vote	per	share	generally	operates	as	a	safeguard	for	common	shareholders	by	ensuring	that	those	 who	hold	a	significant	minority	of	shares	are	able	to	weigh	in	on	issues	set	forth	by	the	board. Furthermore,	we	believe	that	the	economic	stake	of	each	shareholder	should	match	their	voting	power	and	that	 no	small	group	of	shareholders,	family	or	otherwise,	should	have	voting	rights	different	from	those	of	other	 shareholders.	On	matters	of	governance	and	shareholder	rights,	we	believe	shareholders	should	have	the	power	 to	speak	and	the	opportunity	to	effect	change.	That	power	should	not	be	concentrated	in	the	hands	of	a	few	for	 reasons	other	than	economic	stake. We	generally	consider	a	multi-class	share	structure	to	reflect	negatively	on	a	company’s	overall	corporate	 governance.	Because	we	believe	that	companies	should	have	share	capital	structures	that	protect	the	interests	 of	non-controlling	shareholders	as	well	as	any	controlling	entity,	we	typically	recommend	that	shareholders	vote	 in	favor	of	recapitalization	proposals	to	eliminate	dual-class	share	structures.	Similarly,	we	will	generally	 recommend	against	proposals	to	adopt	a	new	class	of	common	stock.	We	will	generally	recommend	voting	 against	the	chair	of	the	governance	committee	at	companies	with	a	multi-class	share	structure	and	unequal	 voting	rights	when	the	company	does	not	provide	for	a	reasonable	sunset	of	the	multi-class	share	structure	 (generally	seven	years	or	less). In	the	case	of	a	board	that	adopts	a	multi-class	share	structure	in	connection	with	an	IPO,	spin-off,	or	direct	 listing	within	the	past	year,	we	will	generally	recommend	voting	against	all	members	of	the	board	who	served	at	 the	time	of	the	IPO	if	the	board:	(i)	did	not	also	commit	to	submitting	the	multi-class	structure	to	a	shareholder	 vote	at	the	company’s	first	shareholder	meeting	following	the	IPO;	or	(ii)	did	not	provide	for	a	reasonable	sunset	 of	the	multi-class	structure	(generally	seven	years	or	less).	If	the	multi-class	share	structure	is	put	to	a 2024	Benchmark	Policy	Guidelines	—	United	States 77
shareholder	vote,	we	will	examine	the	level	of	approval	or	disapproval	attributed	to	unaffiliated	shareholders	 when	determining	the	vote	outcome. At	companies	that	have	multi-class	share	structures	with	unequal	voting	rights,	we	will	carefully	examine	the	 level	of	approval	or	disapproval	attributed	to	unaffiliated	shareholders	when	determining	whether	board	 responsiveness	is	warranted.	In	the	case	of	companies	that	have	multi-class	share	structures	with	unequal	 voting	rights,	we	will	generally	examine	the	level	of	approval	or	disapproval	attributed	to	unaffiliated	 shareholders	on	a	“one	share,	one	vote”	basis.	At	controlled	and	multi-class	companies,	when	at	least	20%	or	 more	of	unaffiliated	shareholders	vote	contrary	to	management,	we	believe	that	boards	should	engage	with	 shareholders	and	demonstrate	some	initial	level	of	responsiveness,	and	when	a	majority	or	more	of	unaffiliated	 shareholders	vote	contrary	to	management	we	believe	that	boards	should	engage	with	shareholders	and	 provide	a	more	robust	response	to	fully	address	shareholder	concerns. Cumulative	Voting Cumulative	voting	increases	the	ability	of	minority	shareholders	to	elect	a	director	by	allowing	shareholders	to	 cast	as	many	shares	of	the	stock	they	own	multiplied	by	the	number	of	directors	to	be	elected.	As	companies	 generally	have	multiple	nominees	up	for	election,	cumulative	voting	allows	shareholders	to	cast	all	of	their	votes	 for	a	single	nominee,	or	a	smaller	number	of	nominees	than	up	for	election,	thereby	raising	the	likelihood	of	 electing	one	or	more	of	their	preferred	nominees	to	the	board.	It	can	be	important	when	a	board	is	controlled by	insiders	or	affiliates	and	where	the	company’s	ownership	structure	includes	one	or	more	shareholders	who control	a	majority-voting	block	of	company	stock. Glass	Lewis	believes	that	cumulative	voting	generally	acts	as	a	safeguard	for	shareholders	by	ensuring	that	those	 who	hold	a	significant	minority	of	shares	can	elect	a	candidate	of	their	choosing	to	the	board.	This	allows	the	 creation	of	boards	that	are	responsive	to	the	interests	of	all	shareholders	rather	than	just	a	small	group	of large	holders. We	review	cumulative	voting	proposals	on	a	case-by-case	basis,	factoring	in	the	independence	of	the	board	and	 the	status	of	the	company’s	governance	structure.	But	we	typically	find	these	proposals	on	ballots	at	companies	 where	independence	is	lacking	and	where	the	appropriate	checks	and	balances	favoring	shareholders	are	not	in	 place.	In	those	instances	we	typically	recommend	in	favor	of	cumulative	voting. Where	a	company	has	adopted	a	true	majority	vote	standard	(i.e.,	where	a	director	must	receive	a	majority	of	 votes	cast	to	be	elected,	as	opposed	to	a	modified	policy	indicated	by	a	resignation	policy	only),	Glass	Lewis	will	 recommend	voting	against	cumulative	voting	proposals	due	to	the	incompatibility	of	the	two	election	methods.	 For	companies	that	have	not	adopted	a	true	majority	voting	standard	but	have	adopted	some	form	of	majority	 voting,	Glass	Lewis	will	also	generally	recommend	voting	against	cumulative	voting	proposals	if	the	company	has	 not	adopted	anti-takeover	protections	and	has	been	responsive	to	shareholders. Where	a	company	has	not	adopted	a	majority	voting	standard	and	is	facing	both	a	shareholder	proposal	to	 adopt	majority	voting	and	a	shareholder	proposal	to	adopt	cumulative	voting,	Glass	Lewis	will	support	only	the	 majority	voting	proposal.	When	a	company	has	both	majority	voting	and	cumulative	voting	in	place,	there	is	a	 higher	likelihood	of	one	or	more	directors	not	being	elected	as	a	result	of	not	receiving	a	majority	vote.	This	is	 because	shareholders	exercising	the	right	to	cumulate	their	votes	could	unintentionally	cause	the	failed	election	 of	one	or	more	directors	for	whom	shareholders	do	not	cumulate	votes. 2024	Benchmark	Policy	Guidelines	—	United	States 78
Supermajority	Vote	Requirements Glass	Lewis	believes	that	supermajority	vote	requirements	impede	shareholder	action	on	ballot	items	critical	to	 shareholder	interests.	An	example	is	in	the	takeover	context,	where	supermajority	vote	requirements	can	 strongly	limit	the	voice	of	shareholders	in	making	decisions	on	such	crucial	matters	as	selling	the	business.	This	 in	turn	degrades	share	value	and	can	limit	the	possibility	of	buyout	premiums	to	shareholders.	Moreover, we	believe	that	a	supermajority	vote	requirement	can	enable	a	small	group	of	shareholders	to	overrule	the	will	 of	the	majority	shareholders.	We	believe	that	a	simple	majority	is	appropriate	to	approve	all	matters	presented	 to	shareholders. Transaction	of	Other	Business We	typically	recommend	that	shareholders	not	give	their	proxy	to	management	to	vote	on	any	other	business	 items	that	may	properly	come	before	an	annual	or	special	meeting.	In	our	opinion,	granting	unfettered	 discretion	is	unwise. Anti-Greenmail	Proposals Glass	Lewis	will	support	proposals	to	adopt	a	provision	preventing	the	payment	of	greenmail,	which	would	serve	 to	prevent	companies	from	buying	back	company	stock	at	significant	premiums	from	a	certain	shareholder. Since	a	large	or	majority	shareholder	could	attempt	to	compel	a	board	into	purchasing	its	shares	at	a	large	 premium,	the	anti-greenmail	provision	would	generally	require	that	a	majority	of	shareholders	other	than	the	 majority	shareholder	approve	the	buyback. Mutual	Funds:	Investment	Policies	and	Advisory	Agreements Glass	Lewis	believes	that	decisions	about	a	fund’s	structure	and/or	a	fund’s	relationship	with	its	investment	 advisor	or	sub-advisors	are	generally	best	left	to	management	and	the	members	of	the	board,	absent	a	showing	 of	egregious	or	illegal	conduct	that	might	threaten	shareholder	value.	As	such,	we	focus	our	analyses	of	such	 proposals	on	the	following	main	areas: • The	terms	of	any	amended	advisory	or	sub-advisory	agreement; • Any	changes	in	the	fee	structure	paid	to	the	investment	advisor;	and • Any	material	changes	to	the	fund’s	investment	objective	or	strategy. We	generally	support	amendments	to	a	fund’s	investment	advisory	agreement	absent	a	material	change	that	is	 not	in	the	best	interests	of	shareholders.	A	significant	increase	in	the	fees	paid	to	an	investment	advisor	would	 be	reason	for	us	to	consider	recommending	voting	against	a	proposed	amendment	to	an	investment	advisory	 agreement	or	fund	reorganization.	However,	in	certain	cases,	we	are	more	inclined	to	support	an	increase	in	 advisory	fees	if	such	increases	result	from	being	performance-based	rather	than	asset-based.	Furthermore,	we 2024	Benchmark	Policy	Guidelines	—	United	States 79
generally	support	sub-advisory	agreements	between	a	fund’s	advisor	and	sub-advisor,	primarily	because	the	 fees	received	by	the	sub-advisor	are	paid	by	the	advisor,	and	not	by	the	fund. In	matters	pertaining	to	a	fund’s	investment	objective	or	strategy,	we	believe	shareholders	are	best	served	 when	a	fund’s	objective	or	strategy	closely	resembles	the	investment	discipline	shareholders	understood	and	 selected	when	they	initially	bought	into	the	fund.	As	such,	we	generally	recommend	voting	against	amendments	 to	a	fund’s	investment	objective	or	strategy	when	the	proposed	changes	would	leave	shareholders	with	stakes	 in	a	fund	that	is	noticeably	different	than	when	originally	purchased,	and	which	could	therefore	potentially negatively	impact	some	investors’	diversification	strategies. Real	Estate	Investment	Trusts The	complex	organizational,	operational,	tax	and	compliance	requirements	of	Real	Estate	Investment	Trusts	 (REITs)	provide	for	a	unique	shareholder	evaluation.	In	simple	terms,	a	REIT	must	have	a	minimum	of	100	 shareholders	(the	100	Shareholder	Test)	and	no	more	than	50%	of	the	value	of	its	shares	can	be	held	by	five	or	 fewer	individuals	(the	“5/50	Test”).	At	least	75%	of	a	REITs’	assets	must	be	in	real	estate,	it	must	derive	75%	of	 its	gross	income	from	rents	or	mortgage	interest,	and	it	must	pay	out	90%	of	its	taxable	earnings	as	dividends.	In	 addition,	as	a	publicly	traded	security	listed	on	a	stock	exchange,	a	REIT	must	comply	with	the	same	general	 listing	requirements	as	a	publicly	traded	equity. In	order	to	comply	with	such	requirements,	REITs	typically	include	percentage	ownership	limitations	in	their	 organizational	documents,	usually	in	the	range	of	5%	to	10%	of	the	REITs	outstanding	shares.	Given	the	 complexities	of	REITs	as	an	asset	class,	Glass	Lewis	applies	a	highly	nuanced	approach	in	our	evaluation	of	REIT	 proposals,	especially	regarding	changes	in	authorized	share	capital,	including	preferred	stock. Preferred	Stock	Issuances	at	REITs Glass	Lewis	is	generally	against	the	authorization	of	"blank-check	preferred	stock."	However,	given	the	 requirement	that	a	REIT	must	distribute	90%	of	its	net	income	annually,	it	is	inhibited	from	retaining	capital	to	 make	investments	in	its	business.	As	such,	we	recognize	that	equity	financing	likely	plays	a	key	role	in	a	REIT’s	 growth	and	creation	of	shareholder	value.	Moreover,	shareholder	concern	regarding	the	use	of	preferred	stock	 as	an	anti-takeover	mechanism	may	be	allayed	by	the	fact	that	most	REITs	maintain	ownership	limitations	in	 their	certificates	of	incorporation.	For	these	reasons,	along	with	the	fact	that	REITs	typically	do	not	engage	in	 private	placements	of	preferred	stock	(which	result	in	the	rights	of	common	shareholders	being	adversely	 impacted),	we	may	support	requests	to	authorize	shares	of	blank-check	preferred	stock	at	REITs. Business	Development	Companies Business	Development	Companies	(BDCs)	were	created	by	the	U.S.	Congress	in	1980;	they	are	regulated	under	 the	Investment	Company	Act	of	1940	and	are	taxed	as	regulated	investment	companies	(RICs)	under	the	Internal	 Revenue	Code.	BDCs	typically	operate	as	publicly	traded	private	equity	firms	that	invest	in	early	stage	to	mature	 private	companies	as	well	as	small	public	companies.	BDCs	realize	operating	income	when	their	investments	are	 sold	off,	and	therefore	maintain	complex	organizational,	operational,	tax	and	compliance	requirements	that	are 2024	Benchmark	Policy	Guidelines	—	United	States 80
similar	to	those	of	REITs—the	most	evident	of	which	is	that	BDCs	must	distribute	at	least	90%	of	their	taxable	 earnings	as	dividends. Authorization	to	Sell	Shares	at	a	Price	Below	Net	Asset	Value Considering	that	BDCs	are	required	to	distribute	nearly	all	their	earnings	to	shareholders,	they	sometimes	need	 to	offer	additional	shares	of	common	stock	in	the	public	markets	to	finance	operations	and	acquisitions. However,	shareholder	approval	is	required	in	order	for	a	BDC	to	sell	shares	of	common	stock	at	a	price	below	 Net	Asset	Value	(NAV).	Glass	Lewis	evaluates	these	proposals	using	a	case-by-case	approach,	but	will	 recommend	supporting	such	requests	if	the	following	conditions	are	met: • The	authorization	to	allow	share	issuances	below	NAV	has	an	expiration	date	of	one	year	or	less	from	 the	date	that	shareholders	approve	the	underlying	proposal	(i.e.,	the	meeting	date); • The	proposed	discount	below	NAV	is	minimal	(ideally	no	greater	than	20%); • The	board	specifies	that	the	issuance	will	have	a	minimal	or	modest	dilutive	effect	(ideally	no	greater than	25%	of	the	company’s	then-outstanding	common	stock	prior	to	the	issuance);	and • A	majority	of	the	company’s	independent	directors	who	do	not	have	a	financial	interest	in	the	issuance approve	the	sale. In	short,	we	believe	BDCs	should	demonstrate	a	responsible	approach	to	issuing	shares	below	NAV,	by	 proactively	addressing	shareholder	concerns	regarding	the	potential	dilution	of	the	requested	share	issuance,	 and	explaining	if	and	how	the	company’s	past	below-NAV	share	issuances	have	benefitted	the	company. Auditor	Ratification	and	Below-NAV	Issuances When	a	BDC	submits	a	below-NAV	issuance	for	shareholder	approval,	we	will	refrain	from	recommending	 against	the	audit	committee	chair	for	not	including	auditor	ratification	on	the	same	ballot.	Because	of	the	 unique	way	these	proposals	interact,	votes	may	be	tabulated	in	a	manner	that	is	not	in	shareholders’	interests. In	cases	where	these	proposals	appear	on	the	same	ballot,	auditor	ratification	is	generally	the	only	“routine	 proposal,”	the	presence	of	which	triggers	a	scenario	where	broker	non-votes	may	be	counted	toward	 shareholder	quorum,	with	unintended	consequences. Under	the	1940	Act,	below-NAV	issuance	proposals	require	relatively	high	shareholder	approval.	Specifically,	 these	proposals	must	be	approved	by	the	lesser	of:	(i)	67%	of	votes	cast	if	a	majority	of	shares	are	represented	 at	the	meeting;	or	(ii)	a	majority	of	outstanding	shares.	Meanwhile,	any	broker	non-votes	counted	toward	 quorum	will	automatically	be	registered	as	“against”	votes	for	purposes	of	this	proposal.	The	unintended	result	 can	be	a	case	where	the	issuance	proposal	is	not	approved,	despite	sufficient	voting	shares	being	cast	in	favor. Because	broker	non-votes	result	from	a	lack	of	voting	instruction	by	the	shareholder,	we	do	not	believe	 shareholders’	ability	to	weigh	in	on	the	selection	of	auditor	outweighs	the	consequences	of	failing	to	approve	an	 issuance	proposal	due	to	such	technicality. 2024	Benchmark	Policy	Guidelines	—	United	States 81
Special	 Purpose	Acquisition	Companies Special	Purpose	Acquisition	Companies	(SPACs),	also	known	as	“blank	check	companies,”	are	publicly	traded	 entities	with	no	commercial	operations	and	are	formed	specifically	to	pool	funds	in	order	to	complete	a	merger	 or	acquisition	within	a	set	time	frame.	In	general,	the	acquisition	target	of	a	SPAC	is	either	not	yet	identified	or	 otherwise	not	explicitly	disclosed	to	the	public	even	when	the	founders	of	the	SPAC	may	have	at	least	one	target	 in	mind.	Consequently,	IPO	investors	often	do	not	know	what	company	they	will	ultimately	be	investing	in. SPACs	are	therefore	very	different	from	typical	operating	companies.	Shareholders	do	not	have	the	same	 expectations	associated	with	an	ordinary	publicly	traded	company	and	executive	officers	of	a	SPAC	typically	do	 not	continue	in	employment	roles	with	an	acquired	company. Extension	of	Business	Combination	Deadline Governing	documents	of	SPACs	typically	provide	for	the	return	of	IPO	proceeds	to	common	shareholders	if	no	 qualifying	business	combination	is	consummated	before	a	certain	date.	Because	the	time	frames	for	the	 consummation	of	such	transactions	are	relatively	short,	SPACs	will	sometimes	hold	special	shareholder	meetings	 at	which	shareholders	are	asked	to	extend	the	business	combination	deadline.	In	such	cases,	an	acquisition	 target	will	typically	have	been	identified,	but	additional	time	is	required	to	allow	management	of	the	SPAC	to	 finalize	the	terms	of	the	deal. Glass	Lewis	believes	management	and	the	board	are	generally	in	the	best	position	to	determine	when	the	 extension	of	a	business	combination	deadline	is	needed.	We	therefore	generally	defer	to	the	recommendation	 of	management	and	support	reasonable	extension	requests. SPAC	Board	Independence The	board	of	directors	of	a	SPAC’s	acquisition	target	is	in	many	cases	already	established	prior	to	the	business	 combination.	In	some	cases,	however,	the	board’s	composition	may	change	in	connection	with	the	business	 combination,	including	the	potential	addition	of	individuals	who	served	in	management	roles	with	the	SPAC.	The	 role	of	a	SPAC	executive	is	unlike	that	of	a	typical	operating	company	executive.	Because	the	SPAC’s	only	 business	is	identifying	and	executing	an	acquisition	deal,	the	interests	of	a	former	SPAC	executive	are	also	 different.	Glass	Lewis	does	not	automatically	consider	a	former	SPAC	executive	to	be	affiliated	with	the	acquired	 operating	entity	when	their	only	position	on	the	board	of	the	combined	entity	is	that	of	an	otherwise	 independent	director.	Absent	any	evidence	of	an	employment	relationship	or	continuing	material	financial	 interest	in	the	combined	entity,	we	will	therefore	consider	such	directors	to	be	independent. Director	Commitments	of	SPAC	Executives We	believe	the	primary	role	of	executive	officers	at	SPACs	is	identifying	acquisition	targets	for	the	SPAC	and	 consummating	a	business	combination.	Given	the	nature	of	these	executive	roles	and	the	limited	business operations	of	SPACs,	when	a	directors’	only	executive	role	is	at	a	SPAC,	we	will	generally	apply	our	higher	limit	 for	company	directorships.	As	a	result,	we	generally	recommend	that	shareholders	vote	against	a	director	who	 serves	in	an	executive	role	only	at	a	SPAC	while	serving	on	more	than	five	public	company	boards. 2024	Benchmark	Policy	Guidelines	—	United	States 82
Shareholder	Proposals Glass	Lewis	believes	that	shareholders	should	seek	to	promote	governance	structures	that	protect	shareholders,	 support	effective	ESG	oversight	and	reporting,	and	encourage	director	accountability.	Accordingly,	Glass	Lewis	 places	a	significant	emphasis	on	promoting	transparency,	robust	governance	structures	and	companies’	 responsiveness	to	and	engagement	with	shareholders.	We	also	believe	that	companies	should	be	transparent	on	 how	they	are	mitigating	material	ESG	risks,	including	those	related	to	climate	change,	human	capital	 management,	and	stakeholder	relations. To	that	end,	we	evaluate	all	shareholder	proposals	on	a	case-by-case	basis	with	a	view	to	protecting	long-term	 shareholder	value.	While	we	are	generally	supportive	of	those	that	promote	board	accountability,	shareholder	 rights,	and	transparency,	we	consider	all	proposals	in	the	context	of	a	company’s	unique	operations	and	risk	 profile. For	a	detailed	review	of	our	policies	concerning	compensation,	environmental,	social,	and	governance	 shareholder	proposals,	please	refer	to	our	comprehensive	Proxy	Paper	Guidelines	for	Shareholder	Proposals	&	 ESG-Related	Issues,	available	at	www.glasslewis.com/voting-policies-current/. 2024	Benchmark	Policy	Guidelines	—	United	States 83
Overall	Approach	to	Environmental,	Social	&	 Governance	Issues Glass	Lewis	evaluates	all	environmental	and	social	issues	through	the	lens	of	long-term	shareholder	value.	We	 believe	that	companies	should	be	considering	material	environmental	and	social	factors	in	all	aspects	of	their	 operations	and	that	companies	should	provide	shareholders	with	disclosures	that	allow	them	to	understand	 how	these	factors	are	being	considered	and	how	attendant	risks	are	being	mitigated.	We	also	are	of	the	view	 that	governance	is	a	critical	factor	in	how	companies	manage	environmental	and	social	risks	and	opportunities	 and	that	a	well-governed	company	will	be	generally	managing	these	issues	better	than	one	without	a	 governance	structure	that	promotes	board	independence	and	accountability. We	believe	part	of	the	board’s	role	is	to	ensure	that	management	conducts	a	complete	risk	analysis	of	company	 operations,	including	those	that	have	material	environmental	and	social	implications.	We	believe	that	directors	 should	monitor	management’s	performance	in	both	capitalizing	on	environmental	and	social	opportunities	and	 mitigating	environmental	and	social	risks	related	to	operations	in	order	to	best	serve	the	interests	of	 shareholders.	Companies	face	significant	financial,	legal	and	reputational	risks	resulting	from	poor	 environmental	and	social	practices,	or	negligent	oversight	thereof.	Therefore,	in	cases	where	the	board	or	 management	has	neglected	to	take	action	on	a	pressing	issue	that	could	negatively	impact	shareholder	value,	 we	believe	that	shareholders	should	take	necessary	action	in	order	to	effect	changes	that	will	safeguard	their	 financial	interests. Given	the	importance	of	the	role	of	the	board	in	executing	a	sustainable	business	strategy	that	allows	for	the	 realization	of	environmental	and	social	opportunities	and	the	mitigation	of	related	risks,	relating	to	 environmental	risks	and	opportunities,	we	believe	shareholders	should	seek	to	promote	governance	structures	 that	protect	shareholders	and	promote	director	accountability.	When	management	and	the	board	have	 displayed	disregard	for	environmental	or	social	risks,	have	engaged	in	egregious	or	illegal	conduct,	or	have	failed	 to	adequately	respond	to	current	or	imminent	environmental	and	social	risks	that	threaten	shareholder	value,	 we	believe	shareholders	should	consider	holding	directors	accountable.	In	such	instances,	we	will	generally	 recommend	against	responsible	members	of	the	board	that	are	specifically	charged	with	oversight	of	the	issue	 in	question. When	evaluating	environmental	and	social	factors	that	may	be	relevant	to	a	given	company,	Glass	Lewis	does	so	 in	the	context	of	the	financial	materiality	of	the	issue	to	the	company’s	operations.	We	believe	that	all	 companies	face	risks	associated	with	environmental	and	social	issues.	However,	we	recognize	that	these	risks	 manifest	themselves	differently	at	each	company	as	a	result	of	a	company’s	operations,	workforce,	structure,	 and	geography,	among	other	factors.	Accordingly,	we	place	a	significant	emphasis	on	the	financial	implications	 of	a	company’s	actions	with	regard	to	impacts	on	its	stakeholders	and	the	environment. When	evaluating	environmental	and	social	issues,	Glass	Lewis	examines	companies’: Direct	environmental	and	social	risk	—	Companies	should	evaluate	financial	exposure	to	direct	environmental	 risks	associated	with	their	operations.	Examples	of	direct	environmental	risks	include	those	associated	with	oil	 or	gas	spills,	contamination,	hazardous	leakages,	explosions,	or	reduced	water	or	air	quality,	among	others. Social	risks	may	include	non-inclusive	employment	policies,	inadequate	human	rights	policies,	or	issues	that 2024	Benchmark	Policy	Guidelines	—	United	States 84
adversely	affect	the	company’s	stakeholders.	Further,	we	believe	that	firms	should	consider	their	exposure	to	 risks	emanating	from	a	broad	range	of	issues,	over	which	they	may	have	no	or	only	limited	control,	such	as	 insurance	companies	being	affected	by	increased	storm	severity	and	frequency	resulting	from	climate	change Risk	due	to	legislation	and	regulation	—	Companies	should	evaluate	their	exposure	to	changes	or	potential	 changes	in	regulation	that	affect	current	and	planned	operations.	Regulation	should	be	carefully	monitored	in	all	 jurisdictions	in	which	the	company	operates.	We	look	closely	at	relevant	and	proposed	legislation	and	evaluate	 whether	the	company	has	responded	proactively. Legal	and	reputational	risk	—	Failure	to	take	action	on	important	environmental	or	social	issues	may	carry	the	 risk	of	inciting	negative	publicity	and	potentially	costly	litigation.	While	the	effect	of	high-profile	campaigns	on	 shareholder	value	may	not	be	directly	measurable,	we	believe	it	is	prudent	for	companies	to	carefully	evaluate	 the	potential	impacts	of	the	public	perception	of	their	impacts	on	stakeholders	and	the	environment.	When	 considering	investigations	and	lawsuits,	Glass	Lewis	is	mindful	that	such	matters	may	involve	unadjudicated	 allegations	or	other	charges	that	have	not	been	resolved.	Glass	Lewis	does	not	assume	the	truth	of	such	 allegations	or	charges	or	that	the	law	has	been	violated.	Instead,	Glass	Lewis	focuses	more	broadly	on	whether,	 under	the	particular	facts	and	circumstances	presented,	the	nature	and	number	of	such	concerns,	lawsuits	or	 investigations	reflects	on	the	risk	profile	of	the	company	or	suggests	that	appropriate	risk	mitigation	measures	 may	be	warranted. Governance	risk	—	Inadequate	oversight	of	environmental	and	social	issues	carries	significant	risks	to	 companies.	When	leadership	is	ineffective	or	fails	to	thoroughly	consider	potential	risks,	such	risks	are	likely	 unmitigated	and	could	thus	present	substantial	risks	to	the	company,	ultimately	leading	to	loss	of	shareholder	 value. Glass	Lewis	believes	that	one	of	the	most	crucial	factors	in	analyzing	the	risks	presented	to	companies	in	the	 form	of	environmental	and	social	issues	is	the	level	and	quality	of	oversight	over	such	issues.	When	 management	and	the	board	have	displayed	disregard	for	environmental	risks,	have	engaged	in	egregious	or	 illegal	conduct,	or	have	failed	to	adequately	respond	to	current	or	imminent	environmental	risks	that	threaten	 shareholder	value,	we	believe	shareholders	should	consider	holding	directors	accountable.	When	companies	 have	not	provided	for	explicit,	board-level	oversight	of	environmental	and	social	matters	and/or	when	a	 substantial	environmental	or	social	risk	has	been	ignored	or	inadequately	addressed,	we	may	recommend	voting	 against	members	of	the	board.	In	addition,	or	alternatively,	depending	on	the	proposals	presented,	we	may	also	 consider	recommending	voting	in	favor	of	relevant	shareholder	proposals	or	against	other	relevant	 management-proposed	items,	such	as	the	ratification	of	auditor,	a	company’s	accounts	and	reports,	or	 ratification	of	management	and	board	acts. 2024	Benchmark	Policy	Guidelines	—	United	States 85
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DISCLAIMER ©	2024	Glass,	Lewis	&	Co.,	and/or	its	affiliates.	All	Rights	Reserved. This	document	is	intended	to	provide	an	overview	of	Glass	Lewis’	proxy	voting	guidelines.	It	is	not	intended	to be	exhaustive	and	does	not	address	all	potential	voting	issues.	Glass	Lewis’	proxy	voting	guidelines,	as	they	apply	 to	certain	issues	or	types	of	proposals,	are	further	explained	in	supplemental	guidelines	and	reports	that	are	 made	available	on	Glass	Lewis’	website	–	http://www.glasslewis.com.	These	guidelines	have	not	been	set	or	 approved	by	the	U.S.	Securities	and	Exchange	Commission	or	any	other	regulatory	body.	Additionally,	none	of	 the	information	contained	herein	is	or	should	be	relied	upon	as	investment	advice.	The	content	of	this document	has	been	developed	based	on	Glass	Lewis’	experience	with	proxy	voting	and	corporate	governance	 issues,	engagement	with	clients	and	issuers,	and	review	of	relevant	studies	and	surveys,	and	has	not	been	 tailored	to	any	specific	person	or	entity. Glass	Lewis’	proxy	voting	guidelines	are	grounded	in	corporate	governance	best	practices,	which	often	exceed	 minimum	legal	requirements.	Accordingly,	unless	specifically	noted	otherwise,	a	failure	to	meet	these	guidelines	 should	not	be	understood	to	mean	that	the	company	or	individual	involved	has	failed	to	meet	applicable	legal	 requirements. No	representations	or	warranties	express	or	implied,	are	made	as	to	the	accuracy	or	completeness	of	any	 information	included	herein.	In	addition,	Glass	Lewis	shall	not	be	liable	for	any	losses	or	damages	arising	from	or	 in	connection	with	the	information	contained	herein	or	the	use,	reliance	on,	or	inability	to	use	any	such	 information.	Glass	Lewis	expects	its	subscribers	possess	sufficient	experience	and	knowledge	to	make	their	own	 decisions	entirely	independent	of	any	information	contained	in	this	document	and	subscribers	are	ultimately	 and	solely	responsible	for	making	their	own	decisions,	including,	but	not	limited	to,	ensuring	that	such	decisions	 comply	with	all	agreements,	codes,	duties,	laws,	ordinances,	regulations,	and	other	obligations	applicable	to	 such	subscriber. All	information	contained	in	this	report	is	protected	by	law,	including,	but	not	limited	to,	copyright	law,	and	 none	of	such	information	may	be	copied	or	otherwise	reproduced,	repackaged,	further	transmitted,	transferred,	 disseminated,	redistributed	or	resold,	or	stored	for	subsequent	use	for	any	such	purpose,	in	whole	or	in	part,	in	 any	form	or	manner,	or	by	any	means	whatsoever,	by	any	person	without	Glass	Lewis’	prior	written	consent. 2024	Benchmark	Policy	Guidelines	—	United	States 87
International GLASS LEWIS 								2025	Benchmark	Policy	Guidelines 												An	Overview	of	Glass	Lewis’	Approach	to	Proxy	Advice 									 				 				www.glasslewis.com
Table	of	Contents Introduction	 8 Summary	of	Changes	for	2025	 8 Board	Oversight	of	Artificial	Intelligence	 8 Appointment	of	Auditor	for	Sustainability	Reporting	 8 Board	Responsiveness	to	Shareholder	Proposals	 8 Clarifying	Amendments	 9 Committee	Performance	 10 Overall	Approach	to	Executive	Compensation	 10 Election	of	Directors	 10 Election	of	Directors	 12 Board	and	Committee	Composition	and	Performance	 12 Board	Composition	 12 Committee	Composition	 13 Board	Diversity	 14 Board	Tenure	and	Refreshment	 14 Separation	of	the	Roles	of	Chair	and	CEO	 14 Board	Responsiveness	 15 Election	Procedures	 15 Slate	Elections	 15 Classified	Boards	 16 Board	Oversight	of	Material	Issues	 16 Review	of	Risk	Management	Controls	 16 Board	Oversight	of	Environmental	and	Social	Issues	 17 Board	Accountability	for	Climate-Related	Issues	 18 Board	Oversight	of	Technology	 18 2024	International	Benchmark	Policy	Guidelines 2
Financial	Reporting	 21 Accounts	and	Reports	 21 Income	Allocation	(Distribution	of	Dividends)	 21 Appointment	of	Auditors	and	Authority	to	Set	Fees	 21 Compensation	 22 Compensation	Report/Compensation	Policy	 22 Long-Term	Incentive	Plans	 23 Performance-Based	Equity	Compensation	 23 Director	Compensation	 24 Retirement	Benefits	for	Directors	 24 Governance	Structure	 24 Amendments	to	the	Articles	of	Association	 25 Virtual	Meetings	 25 Anti-Takeover	Measures	 26 Multi-Class	Share	Structures	 26 Poison	Pills	(Shareholder	Rights	Plans)	 26 Supermajority	Vote	Requirements	 26 Increase	in	Authorized	Shares	 27 Issuance	of	Shares	 27 Repurchase	of	Shares	 27 Shareholder	Proposals	 28 Overall	Approach	to		Environmental,	Social	&	Governance	 29 Connect	with	Glass	Lewis	 31 2024	International	Benchmark	Policy	Guidelines 3
About	Glass	Lewis	 Glass	Lewis	is	the	world’s	choice	for	governance	solutions.	We	enable	institutional	investors	and publicly	 listed companies to	make	informed	decisions	based	on	research	and	data.	We	cover	30,000+ meetings	each	year,	 across	approximately	100	global	markets.	Our	team	has	been	providing	in-depth	analysis	of	companies	since	 2003,	relying	solely	on	publicly	available	information	to	inform	its	policies,	research,	and	voting	 recommendations. Our	customers	include the	majority	of the	world’s	largest	pension	plans,	mutual	funds,	and	asset	 managers,	collectively	managing	over $40	trillion	in	assets.	We	have	teams	located	across	the	United	States,	 Europe,	and	Asia-Pacific	giving	us	global	reach	with	a	local	perspective	on	the	important	governance	issues. Investors	around	the	world	depend	on	Glass	Lewis’	Viewpoint	platform	to	manage	their	proxy	voting,	policy	 implementation,	recordkeeping,	and	reporting.	Our	industry	leading	Proxy	Paper	product	provides	 comprehensive	environmental,	social,	and	governance	research	and	voting	recommendations	weeks	ahead	of	 voting	deadlines.	Public	companies	can	also	use	our	innovative	Report	Feedback	Statement	to	deliver	their	 opinion	on	our	proxy	research	directly	to	the	voting	decision	makers	at	every	investor	client	in	time	for	voting	 decisions	to	be	made	or	changed. The	research	team	engages	extensively	with	public	companies,	investors,	regulators,	and	other	industry	 stakeholders	to	gain	relevant	context	into	the	realities	surrounding	companies,	sectors,	and	the	market	in	 general.	This	enables	us	to	provide	the	most	comprehensive	and	pragmatic	insights	to	our	customers.	 Join	the	Conversation Glass	Lewis	is	committed	to	ongoing	engagement	with	all	market	participants. info@glasslewis.com					|						www.glasslewis.com 2024	International	Benchmark	Policy	Guidelines 4
Introduction These	guidelines	provide	a	general	overview	of	Glass	Lewis’	Benchmark	Policy	approach	to	proxy	advice	globally.	 Glass	Lewis	publishes	separate,	detailed	guidelines	for	all	major	global	markets,	which	are	publicly	available	on	 the	Glass	Lewis	website.	Glass	Lewis'	regional	Benchmark	Policy	guidelines	are	largely	based	on	the	regulations,	 listing	rules,	codes	of	best	practice	and	other	relevant	standards	set	in	each	country.	While	these	guidelines	 provide	a	high-level	overview	of	our	general	policy	approach,	implementation	varies	in	accordance	with	relevant	 requirements	or	best	practices	in	each	market.	For	detailed	information	on	the	implementation	of	the	policy	 approach	described	below,	refer	to	the	Glass	Lewis	Benchmark	Policy	guidelines	for	the	relevant	country.		 Summary	of	Changes	for	2025 Board	Oversight	of	Artificial	Intelligence In	a	new	section	of	these	guidelines,	we	have	outlined	our	belief	that	boards	should	be	cognizant	of,	and	take	 steps	to	mitigate	exposure	to,	any	material	risks	that	could	arise	from	their	use	or	development	of	AI.	Companies	 that	use	or	develop	AI	technologies	should	adopt	strong	internal	frameworks	that	include	ethical	considerations	 and	ensure	effective	oversight	of	AI.	Clear	disclosure	on	how	boards	are	overseeing	AI	and	expanding	their	 collective	expertise	and	understanding	in	this	area	is	likely	to	be	of	value	to	shareholders. In	instances	where	there	is	evidence	that	insufficient	oversight	and/or	management	of	AI	technologies	has	 resulted	in	material	harm	to	shareholders,	we	may	recommend	that	shareholders	vote	against	the	re-election	of	 accountable	directors,	or	other	matters	up	for	a	shareholder	vote,	as	appropriate,	should	we	find	the	board’s	 oversight,	response	or	disclosure	concerning	AI-related	issues	to	be	insufficient. Please	refer	to	the	“Board	Oversight	of	Artificial	Intelligence”	section	of	these	guidelines	for	further	information. Appointment	of	Auditor	for	Sustainability	Reporting We	have	introduced	wording	to	outline	that	when	a	company	provides	a	shareholder	vote	on	the	appointment	 of	an	auditor	for	sustainability	reporting,	the	Benchmark	Policy	will	generally	recommend	that	shareholders	 support	the	company’s	proposed	choice,	subject	to	our	general	policies	on	the	company	providing	sufficient	 information	on	the	identity	of	and	fees	paid	to	the	auditor,	as	well	as	to	the	independence	and	performance	of	 the	auditor. Please	refer	to	the	“Appointment	of	Auditors	and	Authority	to	Set	Fees”	section	of	these	guidelines	for	further	 information. Board	Responsiveness	to	Shareholder	Proposals We	have	expanded	our	commentary	on	board	responsiveness	to	outline	that	when	shareholder	proposals	 receive	significant	shareholder	support	(generally	more	than	30%	of	votes	cast),	the	Benchmark	Policy	generally	 takes	the	view	that	boards	should	engage	with	shareholders	on	the	issue	and	provide	disclosure	addressing	 shareholder	concerns	and	outreach	initiatives. Please	refer	to	the	“Board	Responsiveness”	section	of	these	guidelines	for	further	information. 2024	International	Benchmark	Policy	Guidelines 5
Clarifying	Amendments The	following	clarifications	of	our	existing	policies	are	included	this	year: Director	Accountability We	have	clarified	that	the	Benchmark	Policy	may	recommend	a	vote	against	the	chair,	or	all	members,	or	key	 board	committees	when	there	are	material	performance	concerns	with	the	committee	in	question.	Further,	we	 have	clarified	that	the	Benchmark	Policy	may	recommend	a	vote	against	a	director	in	a	board	leadership	position	 (e.g.	board	chair	or	vice	chair,	lead	independent	director,	committee	chair)	when	we	conclude	that	this	director	 holds	primary	accountability	on	the	board	for	a	certain	issue. Please	refer	to	the	“Board	Composition”	and	“Committee	Composition”	sections	of	these	guidelines	for	further	 information. Overall	Approach	to	Executive	Compensation We	have	expanded	the	discussion	of	Glass	Lewis’	overall	nuanced	approach	to	reviewing	executive	 compensation	proposals.	In	particular,	we	have	highlighted	that	we	conduct	a	holistic	review	of	all	relevant	 factors	and	take	a	case-by-case	approach	to	our	analysis	of	pay	programs,	with	a	negative	recommendation	 being	based	on	an	individual	factor	only	in	particularly	egregious	cases. Please	refer	to	the	“Compensation	Report/Compensation	Policy”	section	of	these	guidelines	for	further	 information. Election	of	Directors We	have	restructured	this	section	of	the	guidelines	to	group	policy	areas	under	the	headings	“Board	and	 Committee	Composition	and	Performance”,	“Election	Procedures”,	and	“Board	Oversight	of	Material	Issues”. 2024	International	Benchmark	Policy	Guidelines 6
Election	of	Directors Board	and	Committee	Composition	and	Performance Boards	are	put	in	place	to	represent	shareholders	and	protect	their	interests.	Glass	Lewis	seeks	boards	with	a	 proven	record	of	protecting	shareholders	and	delivering	value	over	the	medium-	and	long-term.	In	our	view,	 boards	working	to	protect	and	enhance	the	best	interests	of	shareholders	should	include	some	independent	 directors	(the	percentage	will	vary	by	local	market	practice	and	regulations),	boast	a	record	of	positive	 performance,	have	directors	with	diverse	backgrounds,	and	appoint	directors	with	a	breadth	and	depth	of	 experience.		 Board	Composition	 We	look	at	each	individual	on	the	board	and	examine	their	relationships	with	the	company,	the	company’s	 executives,	and	with	other	board	members.	The	purpose	of	this	inquiry	is	to	determine	whether	pre-existing	 personal,	familial,	or	financial	relationships	are	likely	to	impact	the	decisions	of	that	board	member.		 Where	the	company	does	not	disclose	the	names	or	backgrounds	of	director	nominees	with	sufficient	time	in	 advance	of	the	shareholder	meeting	to	evaluate	their	independence,	performance	or	skills	the	Benchmark	Policy	 will	generally	recommend	voting	against	or	abstaining	from	voting	on	the	election.		 We	recommend	voting	in	favor	of	governance	structures	that	will	drive	positive	performance	and	enhance	 shareholder	value.	The	most	crucial	test	of	a	board’s	commitment	to	the	company	and	to	its	shareholders	is	the	 performance	of	the	board	and	its	members.	The	performance	of	directors	in	their	capacity	as	board	members	 and	as	executives	of	the	company,	when	applicable,	and	in	their	roles	at	other	companies	where	they	serve	is	 critical	to	this	evaluation.	We	generally	believe	that	a	board	will	be	most	effective	in	protecting	shareholders'	 interests	when	a	majority	of	shareholder	representatives	on	the	board	are	independent,	although	we	set	higher	 and	lower	thresholds	in	some	markets	on	the	basis	of	local	best	practice	recommendations	and	prevailing	 market	practice.	We	typically	accept	the	presence	of	representatives	of	a	company's	major	shareholder(s)	on	the	 board	in	line	with	their	stake	in	a	company's	issued	share	capital	or	voting	rights,	so	long	as	there	is	a	sufficient	 number	of	independent	directors	to	represent	free-float	shareholders	and	allow	for	the	formation	of	sufficiently	 independent	board	committees. We	believe	a	director	can	be	considered	independent	if	they	have	no	material	financial,	familial,	or	other	current	 relationships	with	the	company,	its	executives	or	other	board	members	except	for	service	on	the	board	and	 standard	fees	paid	for	that	service.	Relationships	that	have	existed	within	the	three	to	five	years,	dependent	on	 the	nature	of	the	relationship,	prior	to	the	inquiry	are	usually	considered	to	be	“current”	for	purposes	of	this	 test.		 We	consider	a	director	to	be	affiliated	if	they	have	a	material	financial,	familial	or	other	relationship	with	the	 company	or	its	executives,	but	are	not	an	employee	of	the	company.	This	includes	directors	whose	employers	 have	a	material	financial	relationship	with	the	company.	This	also	includes	a	director	who	owns	or	controls,	 directly	or	indirectly,	10%	or	more	of	the	company’s	voting	stock	(except	where	local	regulations	or	best	practice	 set	a	different	threshold).		 2024	International	Benchmark	Policy	Guidelines 7
We	define	an	inside	director	as	one	who	simultaneously	serves	as	a	director	and	as	an	employee	of	the	 company.	This	category	may	include	a	board	chair	who	acts	as	an	employee	of	the	company	or	is	paid	as	an	 employee	of	the	company.		 Although	we	typically	recommend	that	shareholders	support	the	election	of	independent	directors,	we	will	 recommend	voting	against	directors	for	the	following	reasons:		 • A	director	who	attends	less	than	75%	of	the	board	and	applicable	committee	meetings.		 • A	director	who	is	also	the	CEO	of	a	company	where	a	serious	restatement	has	occurred	after	the	CEO	 certified	the	pre-restatement	financial	statements.		 • An	affiliated	director	where	the	board	is	not	sufficiently	independent	in	accordance	with	market	best	 practice	standards.	 • There	are	substantial	concerns	regarding	the	performance	and/or	skills	and	experience	of	a	director. • The	director	can	be	considered	to	hold	primary	accountability	for	an	issue	due	to	their	leadership	 position	on	the	board1. We	also	feel	that	the	following	conflicts	of	interest	may	hinder	a	director’s	performance	and	will	therefore	 recommend	voting	against	a:		 • Director	who	sits	on	an	excessive	number	of	boards.		 • Director	who,	or	a	director	whose	immediate	family	member,	currently	provides	material	professional	 services	to	the	company.		 • Director	who,	or	a	director	whose	immediate	family	member,	engages	in	airplane,	real	estate	or	other	 similar	deals,	including	perquisite	type	grants	from	the	company.		 • Director	with	an	interlocking	directorship. Committee	Composition	 We	believe	that	independent	directors	should	serve	on	a	company’s	audit,	compensation,	nominating	and	 governance	committees.	We	will	support	boards	with	such	a	structure	and	encourage	change	where	this	is	not	 the	case.	We	generally	recommend	that	shareholders	oppose	the	presence	of	executive	directors	on	the	audit	 and	compensation	committee	given	the	risks	for	conflicts	of	interest.	We	generally	believe	that	the	majority	of	 shareholder	representatives	on	key	board	committees	should	be	independent,	although	we	set	higher	and	lower	 thresholds	in	some	markets	on	the	basis	of	local	best	practice	recommendations	and	prevailing	market	practice.	 The	Benchmark	Policy	may	recommend	that	shareholders	vote	against	the	chair,	or	all	members,	of	key	 committees	when	there	are	material	performance	concerns2. 1In	some	cases,	the	Benchmark	Policy	will	consider	directors	in	leadership	positions	on	the	board	to	hold	primary	 accountability	for	an	issue	and	recommend	against	their	re-election	to	the	board.	Depending	on	this	issue,	this	could	apply	 to	the	chair	or	vice	chair	of	the	board,	the	lead	independent	director	(if	applicable),	or	the	chair	of	key	board	committees.	 2For	instance,	the	Benchmark	Policy	will	generally	recommend	a	vote	against	the	audit	committee	chair	for	ongoing	 excessive	non-audit	fees	or	when	a	company	fails	to	disclose	audit	fees,	and	may	recommend	a	vote	against	all	members	of	 the	compensation	committee	for	ongoing	egregious	compensation	policies	and	practices.	Please	refer	to	local	market	 guidelines	for	further	information	on	how	committee	members	are	held	accountable	for	poor	committee	performance	in	 each	market. 2024	International	Benchmark	Policy	Guidelines 8
Board	Diversity	 Glass	Lewis	values	the	importance	of	board	diversity,	believing	there	are	a	number	of	benefits	from	having	 individuals	with	a	variety	of	backgrounds	serving	on	boards.	We	consider	the	diversity	of	gender,	backgrounds,	 skills	and	experience	of	directors	when	evaluating	board	diversity.	If	a	board	has	failed	to	address	material	 concerns	regarding	the	mix	of	skills	and	experience	of	the	non-executive	directors	or	when	it	fails	to	meet	legal	 requirements	or	the	best	practice	standard	prevalent	in	the	market	for	gender	quotas	and	has	not	disclosed	any	 cogent	explanation	or	plan	regarding	its	approach	to	board	diversity,	we	will	consider	recommending	voting	 against	the	chair	of	the	nominating	committee.	We	expect	boards	of	main	market	companies	listed	in	most	 major	global	markets	(e.g.	Australia,	Canada,	Europe,	Japan,	United	Kingdom	and	United	States),	to	comprise	at	 least	one	gender	diverse	director	(women,	or	directors	that	identify	with	a	gender	other	than	male	or	female).	 For	European	and	North	American	companies	listed	on	a	blue-chip	or	mid-cap	index	(e.g.	Russell	3000,	TSX,	FTSE	 350,	etc.),	we	expect	at	least	30%	of	the	board	to	be	composed	of	gender	diverse	directors.	We	apply	a	higher	 standard	where	best	practice	recommendations	or	listing	regulations	set	a	higher	target.	 We	also	monitor	company	disclosure	on	diversity	of	ethnicity	and	other	underrepresented	communities	at	board	 level.	We	expect	large	companies	in	markets	with	legal	requirements	or	best	practice	recommendations	in	this	 area	(e.g.	United	States;	United	Kingdom)	to	provide	clear	disclosure	on	the	board's	performance	or	transition	 plans. Board	Tenure	and	Refreshment	 Glass	Lewis	strongly	supports	routine	director	evaluation,	including	independent	external	reviews,	and	periodic	 board	refreshment	to	foster	the	sharing	of	diverse	perspectives	in	the	boardroom	and	the	generation	of	new	 ideas	and	business	strategies.	In	our	view,	a	director’s	experience	can	be	a	valuable	asset	to	shareholders	 because	of	the	complex,	critical	issues	that	boards	face.	This	said,	we	recognize	a	lack	of	refreshment	can	 contribute	to	a	lack	of	board	responsiveness	to	poor	company	performance.	We	may	consider	recommending	 voting	against	directors	with	a	lengthy	tenure	(e.g.	over	12	years)	when	we	identify	significant	performance	or	 governance	concerns	indicating	that	a	fresh	perspective	would	be	beneficial	and	we	find	no	evidence	of	board	 refreshment.	 Where	a	board	has	established	an	age	or	term	limit,	we	believe	these	should	generally	be	applied	equally	for	all	 members	of	the	board.	If	a	board	waives	its	age/term	limits,	the	Benchmark	Policy	will	consider	recommending	 shareholders	vote	against	the	chair	of	the	nominating	committee	or	equivalent,	unless	compelling	rationale	is	 provided	for	why	the	board	is	proposing	to	waive	this	rule	through	an	election/re-election.	 Separation	of	the	Roles	of	Chair	and	CEO	 Glass	Lewis	believes	that	separating	the	roles	of	corporate	officers	and	the	chair	of	the	board	is	a	better	 governance	structure	than	a	combined	executive/chair	position.	The	role	of	executives	is	to	manage	the	 business	on	the	basis	of	the	course	charted	by	the	board.	Executives	should	be	in	the	position	of	reporting	and	 answering	to	the	board	for	their	performance	in	achieving	the	goals	set	out	by	such	board.	This	becomes	much	 more	complicated	when	management	actually	sits	on,	or	chairs,	the	board.		 We	view	an	independent	chair	as	better	able	to	oversee	the	executives	of	the	company	and	set	a	pro- shareholder	agenda	without	the	management	conflicts	that	a	CEO	and	other	executive	insiders	often	face.	This,	 2024	International	Benchmark	Policy	Guidelines 9
in	turn,	leads	to	a	more	proactive	and	effective	board	of	directors	that	is	looking	out	for	the	interests	of	 shareholders	above	all	else.		 In	the	absence	of	an	independent	chair,	we	support	the	appointment	of	a	presiding	or	lead	director	with	 authority	to	set	the	agenda	for	the	meetings	and	to	lead	sessions	outside	the	presence	of	the	insider	chair.	 We	may	recommend	voting	against	the	chair	of	the	nominating	committee	when	the	chair	and	CEO	roles	are	 combined	and	the	board	has	not	appointed	an	independent	presiding	or	lead	director.	 Board	Responsiveness	 Glass	Lewis	believes	that	any	time	20%	or	more	of	shareholders	vote	contrary	to	the	recommendation	of	 management,	the	board	should,	depending	on	the	issue,	demonstrate	some	level	of	responsiveness	to	address	 the	concerns	of	shareholders,	particularly	in	the	case	of	a	compensation	or	director	election	proposal.	While	the	 20%	threshold	alone	will	not	automatically	generate	a	negative	vote	recommendation	from	Glass	Lewis	on	a	 future	proposal	(e.g.,	to	recommend	against	a	director	nominee,	against	a	remuneration	proposal,	etc.),	it	will	 be	a	contributing	factor	to	recommend	a	vote	against	management's	recommendation	in	the	event	we	 determine	that	the	board	did	not	respond	appropriately.	Additionally,	when	shareholder	proposals	receive	 significant	support	(generally	more	than	30%	of	votes	cast),	we	believe	that	boards	should	engage	with	 shareholders	on	the	issue	and	provide	disclosure	addressing	shareholder	concerns	and	outreach	initiatives. In	the	case	of	companies	with	a	controlling	shareholder	and/or	with	a	multi-class	share	structure,	we	will	 carefully	examine	the	level	of	disapproval	attributable	to	minority	shareholders.	As	a	general	framework,	our	 evaluation	of	board	responsiveness	involves	a	review	of	the	publicly	available	disclosures	released	following	the	 date	of	the	company's	last	annual	meeting	up	through	the	publication	date	of	our	most	current	Proxy	Paper.	 Election	Procedures Slate	Elections	 In	some	countries,	companies	elect	their	board	members	as	a	slate,	whereby	shareholders	are	unable	to	vote	on	 the	election	of	each	individual	director,	but	rather	are	limited	to	voting	for	or	against	the	board	as	a	whole.	In	 countries	where	slate	elections	are	common	market	practice,	we	will	not	recommend	that	shareholders	oppose	 an	election	on	the	basis	of	this	election	method	alone.	 We	will	generally	recommend	that	shareholders	support	a	director	slate,	unless	we	have	identified	 independence	or	performance	concerns.	When	the	proposed	slate	raises	concerns	regarding	board	or	 committee	independence,	we	will	generally	recommend	that	shareholders	vote	against	the	slate.	In	egregious	 cases	where	we	have	identified	concerns	regarding	the	performance	and/or	experience	of	the	board,	its	 committees,	and/or	individual	directors,	we	will	similarly	recommend	that	shareholders	vote	against	the	director	 slate. Classified	Boards	 The	Benchmark	Policy	favors	the	repeal	of	staggered	boards	in	favor	of	the	annual	election	of	directors.	We	 believe	that	staggered	boards	are	less	accountable	to	shareholders	than	annually	elected	boards.	Furthermore,	 we	feel	that	the	annual	election	of	directors	encourages	board	members	to	focus	on	protecting	the	interests	of	 shareholders.		 2024	International	Benchmark	Policy	Guidelines 10
Board	Oversight	of	Material	Issues Board	Oversight	of	Risk	Management	Controls	 We	believe	companies,	particularly	financial	firms,	should	have	a	dedicated	risk	committee,	or	a	committee	of	 the	board	charged	with	risk	oversight,	as	well	as	a	chief	risk	officer	who	reports	directly	to	that	committee,	not	 to	the	CEO	or	another	executive.	In	cases	where	a	company	has	disclosed	a	sizable	loss	or	write-down,	and	 where	a	reasonable	analysis	indicates	that	the	company’s	board-level	risk	committee	should	be	held	 accountable	for	poor	oversight,	we	would	recommend	that	shareholders	vote	against	such	committee	members	 on	that	basis.	In	addition,	in	cases	where	a	company	maintains	a	significant	level	of	financial	risk	exposure	but	 fails	to	disclose	any	explicit	form	of	board-level	risk	oversight	(committee	or	otherwise),	we	will	consider	 recommending	to	vote	against	the	board	chair	on	that	basis.		 Board	Oversight	of	Environmental	and	Social	Issues Glass	Lewis	recognizes	the	importance	of	ensuring	the	sustainability	of	companies’	operations.	We	believe	that	 insufficient	oversight	of	material	environmental	and	social	issues	can	present	direct	legal,	financial,	regulatory	 and	reputational	risks	that	could	serve	to	harm	shareholder	interests.	Therefore,	we	believe	that	these	issues	 should	be	carefully	monitored	and	managed	by	companies,	and	that	companies	should	have	an	appropriate	 oversight	structure	in	place	to	ensure	that	they	are	mitigating	attendant	risks	and	capitalizing	on	related	 opportunities	to	the	best	extent	possible.		The	Benchmark	Policy	will	generally	recommend	that	shareholders	 vote	against	the	chair	of	the	governance	committee	(or	equivalent)	of	companies	listed	on	a	major	blue-chip	 index	in	key	global	markets	that	do	not	provide	clear	disclosure	concerning	the	board-level	oversight	afforded	to	 material	environmental	and/or	social	issues.	In	general,	we	believe	that	shareholders	are	best	served	when	this	 responsibility	is	formally	designated	and	codified	in	the	appropriate	committee	charters	or	other	governing	 documents. Board	Accountability	for	Climate-Related	Issues Given	the	exceptionally	broad	impacts	of	a	changing	climate	on	companies,	the	economy,	and	society	in	general,	 we	view	climate	risk	as	a	material	risk	for	all	companies.	We	therefore	believe	that	boards	should	be	considering	 and	evaluating	their	operational	resilience	under	lower-carbon	scenarios.	While	all	companies	maintain	 exposure	to	climate-related	risks,	we	believe	that	additional	consideration	should	be	given	to,	and	that	 disclosure	should	be	provided	by,	those	companies	whose	GHG	emissions	represent	a	financially	material	risk. We	believe	that	companies	with	this	increased	risk	exposure	should	provide	clear	and	comprehensive	disclosure	 regarding	these	risks,	including	how	they	are	being	mitigated	and	overseen.	We	believe	such	information	is	 crucial	to	allow	investors	to	understand	the	company’s	management	of	this	issue,	as	well	as	the	impact	of	a	 lower	carbon	future	on	the	company’s	operations. In	line	with	this	view,	Glass	Lewis	will	carefully	examine	the	climate-related	disclosures	provided	by	large-cap	 companies	in	developed	capital	markets3	with	material	exposure	to	climate	risk	stemming	from	their	own	 3E.g.,	S&P	500,	FTSE	100,	Nikkei	225,	etc. 2024	International	Benchmark	Policy	Guidelines 11
operations4	as	well	as	companies	where	we	believe	emissions	or	climate	impacts,	or	stakeholder	scrutiny	 thereof,	represent	an	outsized,	financially	material	risk	in	order	to	assess	whether	they	have	produced	disclosure	 that	is	aligned	with	the	recommendations	of	the	Task	Force	on	Climate-related	Disclosures	(TCFD)	or	IFRS	S2	 Climate-related	Disclosures.	We	will	also	assess	whether	these	companies	have	disclosed	explicit	and	clearly	 defined	board-level	oversight	responsibilities	for	climate-related	issues. In	instances	where	we	find	either	(or	both)	of	these	disclosures	to	be	absent	or	significantly	lacking,	we	may	 recommend	voting	against	the	chair	of	the	committee	(or	board)	charged	with	oversight	of	climate-related	 issues,	or	if	no	committee	has	been	charged	with	such	oversight,	the	chair	of	the	governance	committee. Further,	we	may	extend	our	recommendation	on	this	basis	to	additional	members	of	the	responsible	committee	 in	cases	where	the	committee	chair	is	not	standing	for	election	due	to	a	classified	board,	or	based	on	other	 factors,	including	the	company’s	size	and	industry	and	its	overall	governance	profile.	In	instances	where	 appropriate	directors	are	not	standing	for	election,	we	may	instead	recommend	shareholders	vote	against	other	 matters	that	are	up	for	a	vote,	such	as	the	ratification	of	board	acts,	or	the	accounts	and	reports	proposal. Board	Oversight	of	Technology Cyber	Risk	Oversight Companies	and	consumers	are	exposed	to	a	growing	risk	of	cyber-attacks.	These	attacks	can	result	in	customer	 or	employee	data	breaches,	harm	to	a	company’s	reputation,	significant	fines	or	penalties,	and	interruption	to	a	 company’s	operations.	Further,	in	some	instances,	cyber	breaches	can	result	in	national	security	concerns,	such	 as	those	impacting	companies	operating	as	utilities,	defense	contractors,	and	energy	companies. In	response	to	these	issues,	regulators	have	increasingly	been	focused	on	ensuring	companies	are	providing	 appropriate	and	timely	disclosures	and	protections	to	stakeholders	that	could	have	been	adversely	impacted	by	 a	breach	in	a	company’s	cyber	infrastructure. Given	the	regulatory	focus	on,	and	the	potential	adverse	outcomes	from,	cyber-related	issues,	it	is	our	view	that	 cyber	risk	is	material	for	all	companies.	We	therefore	believe	that	it	is	critical	that	companies	evaluate	and	 mitigate	these	risks	to	the	greatest	extent	possible.	With	that	view,	we	encourage	all	issuers	to	provide	clear	 disclosure	concerning	the	role	of	the	board	in	overseeing	issues	related	to	cybersecurity,	including	how	 companies	are	ensuring	directors	are	fully	versed	on	this	rapidly	evolving	and	dynamic	issue.	We	believe	such	 disclosure	can	help	shareholders	understand	the	seriousness	with	which	companies	take	this	issue. In	the	absence	of	material	cyber	incidents,	we	will	generally	not	make	voting	recommendations	on	the	basis	of	a	 company’s	oversight	or	disclosure	concerning	cyber-related	issues.	However,	in	instances	where	cyber-attacks	 have	caused	significant	harm	to	shareholders,	we	will	closely	evaluate	the	board’s	oversight	of	cybersecurity	as	 well	as	the	company’s	response	and	disclosures. Moreover,	in	instances	where	a	company	has	been	materially	impacted	by	a	cyber-attack,	we	believe	 shareholders	can	reasonably	expect	periodic	updates	communicating	the	company’s	ongoing	progress	towards	 4This	policy	will	generally	apply	to	companies	in	the	following	SASB-defined	industries:	agricultural	products,	air	freight	&	 logistics,	airlines,	chemicals,	construction	materials,	containers	&	packaging,	cruise	lines,	electric	utilities	&	power	 generators,	food	retailers	&	distributors,	health	care	distributors,	iron	&	steel	producers,	marine	transportation,	meat,	 poultry	&	dairy,	metals	&	mining,	non-alcoholic	beverages,	oil	&	gas,	pulp	&	paper	products,	rail	transportation,	road	 transportation,	semiconductors,	waste	management. 2024	International	Benchmark	Policy	Guidelines 12
resolving	and	remediating	the	impact	of	the	cyber-attack.	We	generally	believe	that	shareholders	are	best	 served	when	such	updates	include	(but	are	not	necessarily	limited	to)	details	such	as	when	the	company	has	 fully	restored	its	information	systems,	when	the	company	has	returned	to	normal	operations,	what	resources	 the	company	is	providing	for	affected	stakeholders,	and	any	other	potentially	relevant	information,	until	the	 company	considers	the	impact	of	the	cyber-attack	to	be	fully	remediated.	These	disclosures	should	focus	on	the	 company’s	response	to	address	the	impacts	to	affected	stakeholders	and	should	not	reveal	specific	and/or	 technical	details	that	could	impede	the	company’s	response	or	remediation	of	the	incident	or	that	could	assist	 threat	actors. In	such	instances,	we	may	recommend	against	appropriate	directors	should	we	find	the	board’s	oversight,	 response	or	disclosure	concerning	cybersecurity-related	issues	to	be	insufficient,	or	not	provided	to	 shareholders. Board	Oversight	of	Artificial	Intelligence In	recent	years,	companies	have	rapidly	begun	to	develop	and	adopt	uses	for	artificial	intelligence	(AI)	 technologies	throughout	various	aspects	of	their	operations.	Deployed	and	overseen	effectively,	AI	technologies	 have	the	potential	to	make	companies’	operations	and	systems	more	efficient	and	productive.	However,	as	the	 use	of	these	technologies	has	grown,	so	have	the	potential	risks	associated	with	companies’	development	and	 use	of	AI.	Given	these	potential	risks,	we	believe	that	boards	should	be	cognizant	of,	and	take	steps	to	mitigate	 exposure	to,	any	material	risks	that	could	arise	from	their	use	or	development	of	AI.	 Companies	that	use	or	develop	AI	technologies	should	consider	adopting	strong	internal	frameworks	that	 include	ethical	considerations	and	ensure	they	have	provided	a	sufficient	level	of	oversight	of	AI.	As	such,	boards	 may	seek	to	ensure	effective	oversight	and	address	skills	gaps	by	engaging	in	continued	board	education	and/or	 appointing	directors	with	AI	expertise.	With	that	view,	we	believe	that	all	companies	that	develop	or	employ	the	 use	of	AI	in	their	operations	should	provide	clear	disclosure	concerning	the	role	of	the	board	in	overseeing	issues	 related	to	AI,	including	how	companies	are	ensuring	directors	are	fully	versed	on	this	rapidly	evolving	and	 dynamic	issue.	We	believe	such	disclosure	can	help	shareholders	understand	the	seriousness	with	which	 companies	take	this	issue.	 While	we	believe	that	it	is	important	that	these	issues	are	overseen	at	the	board	level	and	that	shareholders	are	 afforded	meaningful	disclosure	of	these	oversight	responsibilities,	we	believe	that	companies	should	determine	 the	best	structure	for	this	oversight.	In	our	view,	this	oversight	can	be	effectively	conducted	by	specific	directors,	 the	entire	board,	a	separate	committee,	or	combined	with	the	responsibilities	of	a	key	committee.	 In	the	absence	of	material	incidents	related	to	a	company’s	use	or	management	of	AI-related	issues,	we	will	 generally	not	make	voting	recommendations	on	the	basis	of	a	company’s	oversight	of,	or	disclosure	concerning,	 AI-related	issues.	However,	in	instances	where	there	is	evidence	that	insufficient	oversight	and/or	management	 of	AI	technologies	has	resulted	in	material	harm	to	shareholders,	Glass	Lewis	will	review	a	company’s	overall	 governance	practices	and	identify	which	directors	or	board-level	committees	have	been	charged	with	oversight	 of	AI-related	risks.	We	will	also	closely	evaluate	the	board’s	response	to,	and	management	of,	this	issue	as	well	 as	any	associated	disclosures	and	may	recommend	voting	against	the	re-election	of	accountable	directors,	or	 other	matters	up	for	a	shareholder	vote,	as	appropriate,	should	we	find	the	board’s	oversight,	response	or	 disclosure	concerning	AI-related	issues	to	be	insufficient. 2024	International	Benchmark	Policy	Guidelines 13
Financial	Reporting Accounts	and	Reports	 Many	countries	require	companies	to	submit	the	annual	financial	statements,	director	reports,	and	independent	 auditors’	reports	to	shareholders	at	a	general	meeting.	The	Benchmark	Policy	will	usually	recommend	voting	in	 favor	of	these	proposals	except	when	there	are	concerns	about	the	integrity	of	the	statements/reports.	 However,	should	the	audited	financial	statements,	auditor’s	report	and/or	annual	report	not	be	published	at	the	 writing	of	our	report,	the	Benchmark	Policy	will	recommend	that	shareholders	abstain	from	voting	on	this	 proposal.		 Income	Allocation	(Distribution	of	Dividends)	 In	many	countries,	companies	must	submit	the	allocation	of	income	for	shareholder	approval.	The	Benchmark	 Policy	will	generally	recommend	voting	for	such	a	proposal.	However,	we	will	give	particular	scrutiny	to	cases	 where	the	company’s	dividend	payout	ratio	is	exceptionally	low	or	excessively	high	relative	to	its	peers,	or	the	 proposed	distribution	represents	a	substantial	departure	from	a	company's	disclosed	dividend	policy,	and	the	 company	has	not	provided	a	satisfactory	explanation.		 Appointment	of	Auditors	and	Authority	to	Set	Fees	 We	believe	that	role	of	the	auditor	is	crucial	in	protecting	shareholder	value.	Like	directors,	auditors	should	be	 free	from	conflicts	of	interest	and	should	assiduously	avoid	situations	that	require	them	to	make	choices	 between	their	own	interests	and	the	interests	of	the	shareholders.	The	Benchmark	Policy	generally	supports	 management’s	recommendation	regarding	the	selection	of	an	auditor	and	supports	granting	the	board	the	 authority	to	fix	auditor	fees	except	in	cases	where	we	conclude	that	the	independence	of	an	incumbent	auditor	 or	the	integrity	of	the	audit	has	been	compromised.	However,	the	Benchmark	Policy	generally	recommends	 voting	against	ratification	of	the	auditor	and/or	authorizing	the	board	to	set	auditor	fees	for	the	following	 reasons:		 • When	audit	fees	added	to	audit-related	fees	total	less	than	one-half	of	total	fees.		 • When	there	have	been	any	recent	restatements	or	late	filings	by	the	company	where	the	auditor	bears	 some	responsibility	for	the	restatement	or	late	filing	(e.g.,	a	restatement	due	to	a	reporting	error).		 • When	the	company	has	aggressive	accounting	policies.		 • When	the	company	has	poor	disclosure	or	lack	of	transparency	in	financial	statements.		 • When	there	are	other	relationships	or	issues	of	concern	with	the	auditor	that	might	suggest	a	conflict	 between	the	interest	of	the	auditor	and	the	interests	of	shareholders.		 • When	the	company	is	changing	auditors	as	a	result	of	a	disagreement	between	the	company	and	the	 auditor	on	a	matter	of	accounting	principles	or	practices,	financial	statement	disclosure	or	auditing	 scope	or	procedures.	 • Where	the	auditor’s	tenure	is	lengthy	(e.g.	over	10	years)	and	when	we	identify	any	ongoing	litigation	or	 significant	controversies	which	call	into	question	an	auditor's	effectiveness. 2024	International	Benchmark	Policy	Guidelines 14
When	a	company	is	seeking	to	appoint	an	auditor	for	sustainability	reporting,	the	Benchmark	Policy	will	 generally	recommend	that	shareholders	support	a	company’s	choice,	subject	to	the	company	providing	 sufficient	information	on	the	identity	of	and	fees	paid	to	the	auditor,	as	well	as	to	the	independence	and	 performance	of	the	auditor,	as	outlined	above.		 Compensation	 Compensation	Report/Compensation	Policy	 We	closely	review	companies’	remuneration	practices	and	disclosure	as	outlined	in	company	filings	to	evaluate	 management-submitted	compensation	report	and	policy	vote	proposals.	In	evaluating	these	proposals,	which	 can	be	binding	or	non-binding	depending	on	the	country,	we	examine	how	well	the	company	has	disclosed	 information	pertinent	to	its	compensation	programs,	the	extent	to	which	overall	compensation	is	tied	to	 performance,	the	performance	metrics	selected	by	the	company,	and	the	levels	of	remuneration	in	comparison	 to	company	performance	and	that	of	its	peers. Given	the	complexity	of	most	companies’	remuneration	programs,	Glass	Lewis	applies	a	highly	nuanced	 approach	when	analyzing	executive	compensation;	we	review	all	factors,	including	structural	features,	the	 presence	of	effective	best	practices,	disclosure	quality,	and	trajectory-related	factors.	Further,	we	review	 executive	compensation	on	both	a	qualitative	and	quantitative	basis,	recognizing	that	each	company	must	be	 examined	in	the	context	of	its	industry,	size,	financial	condition,	its	historic	pay-for-performance	practices,	 ownership	structure,	and	any	other	relevant	internal	or	external	factors.	We	also	review	any	significant	changes	 or	modifications,	and	associated	rationale,	made	to	a	company’s	compensation	structure	or	award	levels,	 including	base	salaries,	on	a	case-by-case	basis. Except	for	particularly	egregious	pay	decisions	and	practices,	no	one	factor	would	ordinarily	lead	to	an	 unfavorable	recommendation	under	the	Benchmark	Policy	without	a	review	of	the	company’s	rationale	and/or	 the	influence	of	such	decisions	or	practices	on	other	aspects	of	the	pay	program,	most	notably	the	company’s	 ability	to	align	executive	pay	with	performance	and	the	shareholder	experience.		 Nevertheless,	while	not	an	exhaustive	list,	the	Benchmark	Policy	considers	the	following	to	be	problematic	pay	 practices	which	may	lead,	or	strongly	contribute,	to	a	recommendation	to	vote	against	a	company’s	 compensation	report	or	policy: • Gross	disconnect	between	pay	and	performance;		 • Gross	disconnect	between	remuneration	outcomes	and	the	experience	of	shareholders	and	other	key	 stakeholders	(in	particular	company	employees)	in	the	year	under	review; • Performance	goals	and	metrics	are	inappropriate	or	insufficiently	challenging;		 • Lack	of	disclosure	regarding	performance	metrics	and	goals	as	well	as	the	extent	to	which	the	 performance	metrics,	targets	and	goals	are	implemented	to	enhance	company	performance	and	 encourage	prudent	risk-taking;		 • Excessive	weighting	of	short-term	(e.g.,	generally	less	than	three	year)	performance	measurement	in	 incentive	plans;	 • Excessive	discretion	afforded	to	or	exercised	by	management	or	the	compensation	committee	to	 deviate	from	defined	performance	metrics	and	goals	in	making	awards;		 2024	International	Benchmark	Policy	Guidelines 15
• Ex	gratia	or	other	non-contractual	payments	have	been	made	and	the	reasons	for	making	the	payments	 have	not	been	fully	explained	or	the	explanation	is	unconvincing;		 • Guaranteed	bonuses	are	established;		 • Egregious	or	excessive	bonuses,	equity	awards	or	severance	payments;		 • Excessive	increases	(e.g.	over	10%)	in	fixed	payments	such	as	salary	or	pension	entitlements	that	are	not	 adequately	justified;	and • The	proposed	changes	to	the	existing	policy	represent,	on	aggregate,	a	worsening	of	the	overall	 structure. In	addition,	we	look	for	the	presence	of	other	structural	safeguards,	such	as	executive	shareholding	 requirements,	and	clawback	and	malus	policies	for	incentive	plans.	The	absence	of	such	safeguards	may	 contribute	to	a	negative	recommendation.	In	particularly	egregious	cases	where	we	conclude	that	the	 compensation	committee	has	substantially	failed	to	fulfill	its	duty	to	shareholders,	we	may	also	recommend	that	 shareholders	vote	against	the	chair,	senior	members,	or	all	members	of	the	committee,	depending	on	the	 seriousness	and	persistence	of	the	issues	identified. Long-Term	Incentive	Plans	 Glass	Lewis	recognizes	the	value	of	equity-based	incentive	programs.	When	used	appropriately,	they	can	provide	 a	vehicle	for	linking	an	employee’s	pay	to	a	company’s	performance,	thereby	aligning	their	interests	with	those	 of	shareholders.	Tying	a	portion	of	an	employee’s	compensation	to	the	performance	of	the	company	provides	an	 incentive	to	maximize	share	value.	In	addition,	equity-based	compensation	is	an	effective	way	to	attract,	retain	 and	motivate	key	employees.	In	order	to	allow	for	meaningful	shareholder	review,		incentive	programs	should	 generally	include:	(i)	specific	and	appropriate	performance	goals;	(ii)	a	maximum	award	pool;	and	(iii)	a	 maximum	award	amount	per	employee.	In	addition,	the	payments	made	should	be	reasonable	relative	to	the	 performance	of	the	business	and	total	compensation	to	those	covered	by	the	plan	should	be	in	line	with	 compensation	paid	by	the	company’s	peers.		 Performance-Based	Equity	Compensation	 Glass	Lewis	believes	in	performance-based	equity	compensation	plans	for	senior	executives.	We	feel	that	 executives	should	be	compensated	with	equity	when	their	performance	and	that	of	the	company	warrants	such	 rewards.	While	we	do	not	believe	that	equity-based	compensation	plans	for	all	employees	need	to	be	based	on	 overall	company	performance,	the	Benchmark	Policy	does	support	such	limitations	for	grants	to	senior	 executives	(although	even	some	equity-based	compensation	of	senior	executives	without	performance	criteria	is	 acceptable,	such	as	in	the	case	of	moderate	incentive	grants	made	in	an	initial	offer	of	employment).	Boards	 often	argue	that	such	a	proposal	would	hinder	them	in	attracting	talent.	We	believe	that	boards	can	develop	a	 consistent,	reliable	approach,	as	boards	of	many	companies	have,	that	would	still	attract	executives	who	believe	 in	their	ability	to	guide	the	company	to	achieve	its	targets.		 The	Benchmark	Policy	generally	recommends	that	shareholders	vote	in	favor	of	performance-based	option	 requirements.	There	should	be	no	retesting	of	performance	conditions	for	all	share-	and	option-	based	incentive	 schemes.	The	Benchmark	Policy	will	generally	recommend	that	shareholders	vote	against	performance-based	 equity	compensation	plans	that	allow	for	re-testing.	 2024	International	Benchmark	Policy	Guidelines 16
We	pay	particular	attention	to	awards	to	major	shareholders	that	serve	as	senior	executives,	mindful	of	the	 natural	alignment	between	shareholders'	and	the	executive's	interests	and	the	potential	for	such	grants	to	 further	consolidate	the	executive's	ownership	level.	We	generally	believe	that	the	inclusion	of	challenging	 targets	attached	to	a	diverse	set	of	performance	metrics	can	serve	to	mitigate	concerns	with	such	awards.	 Where	a	company	is	proposing	an	individual	equity	award	where	the	recipient	of	the	proposed	grant	is	also	a	 large	shareholder,	we	believe	that	the	company	should	strongly	consider	the	level	of	approval	from	 disinterested	shareholders	before	proceeding	with	the	proposed	grant.	Glass	Lewis	recognizes	potential	conflicts	 of	interest	when	vote	outcomes	can	be	heavily	influenced	by	the	recipient	of	the	grant.	A	required	abstention	 vote	or	non-vote	from	the	recipient	for	an	equity	award	proposal	in	these	situations	can	help	to	avoid	such	 conflicts. Director	Compensation	 Glass	Lewis	believes	that	non-employee	directors	should	receive	appropriate	types	and	levels	of	compensation	 for	the	time	and	effort	they	spend	serving	on	the	board	and	its	committees.	Director	fees	should	be	reasonable	 in	order	to	retain	and	attract	qualified	individuals.	The	Benchmark	Policy	supports	compensation	plans	that	 include	non-performance-based	equity	awards.	Glass	Lewis	compares	the	costs	of	these	plans	to	the	plans	of	 peer	companies	with	similar	market	capitalizations	in	the	same	country	to	help	inform	its	judgment	on	this	issue.		 Retirement	Benefits	for	Directors	 The	Benchmark	Policy	will	typically	recommend	voting	against	proposals	to	grant	retirement	benefits	to	non- executive	directors.	Such	extended	payments	can	impair	the	objectivity	and	independence	of	these	board	 members.	Directors	should	receive	adequate	compensation	for	their	board	service	through	initial	and	annual	 fees.		 Governance	Structure			 Amendments	to	the	Articles	of	Association	 We	will	evaluate	proposed	amendments	to	a	company’s	articles	of	association	on	a	case-by-case	basis.	We	are	 opposed	to	the	practice	of	bundling	several	amendments	under	a	single	proposal	because	it	prevents	 shareholders	from	evaluating	each	amendment	on	its	own	merits.	In	such	cases,	we	will	analyze	each	change	 individually	and	will	recommend	voting	for	the	proposal	only	when	we	believe	that	the	amendments	on	balance	 are	in	the	best	interests	of	shareholders.		 Virtual	Meetings	 Glass	Lewis	unequivocally	supports	companies	facilitating	the	virtual	participation	of	shareholders	in	general	 meetings.	We	believe	that	virtual	meeting	technology	can	be	a	useful	complement	to	a	traditional,	in-person	 shareholder	meeting	by	expanding	participation	of	shareholders	who	are	unable	to	attend	a	shareholder	 meeting	in	person	(i.e.	a	"hybrid	meeting").	However,	we	also	believe	that	virtual-only	shareholder	meetings	can	 curb	the	ability	of	a	company's	shareholders	to	participate	in	the	meeting	and	meaningfully	communicate	with	 company	management	and	directors.		 2024	International	Benchmark	Policy	Guidelines 17
Where	companies	are	convening	a	meeting	at	which	in-person	attendance	of	shareholders	is	limited,	we	expect	 companies	to	set	and	disclose	clear	procedures	at	the	time	of	convocation	regarding:		 i) When,	where,	and	how	shareholders	will	have	an	opportunity	to	ask	questions	related	to	the	 subjects	normally	discussed	at	the	annual	meeting,	including	a	timeline	for	submitting	questions,	 types	of	appropriate	questions,	and	rules	for	how	questions	and	comments	will	be	recognized	and	 disclosed	to	shareholders;		 ii) In	particular	where	there	are	restrictions	on	the	ability	of	shareholders	to	question	the	board	during	 the	meeting	-	the	manner	in	which	appropriate	questions	received	during	the	meeting	will	be	 addressed	by	the	board;	this	should	include	a	commitment	that	questions	which	meet	the	board’s	 guidelines	are	answered	in	a	format	that	is	accessible	by	all	shareholders,	such	as	on	the	company’s	 AGM	or	investor	relations	website;	 iii) The	procedure	and	requirements	to	participate	in	the	meeting	and	access	the	meeting	platform;	and		 iv) Technical	support	that	is	available	to	shareholders	prior	to	and	during	the	meeting.	In	egregious	 cases	where	inadequate	disclosure	of	the	aforementioned	has	been	provided	to	shareholders	at	the	 time	of	convocation,	we	will	generally	recommend	that	shareholders	hold	the	board	or	relevant	 directors	accountable.		 Depending	on	a	company’s	governance	structure,	country	of	incorporation,	and	the	agenda	of	the	meeting,	this	 may	lead	to	recommendations	that	shareholders	vote	against	members	of	the	governance	committee	(or	 equivalent;	if	up	for	re-election);	the	chair	of	the	board	(if	up	for	re-election);	and/or	other	agenda	items	 concerning	board	composition	and	performance	as	applicable	(e.g.	ratification	of	board	acts).	We	will	always	 take	into	account	local	laws,	best	practices,	and	disclosure	standards	when	assessing	a	company’s	performance	 on	this	issue.	 Anti-Takeover	Measures		 Multi-Class	Share	Structures	 Glass	Lewis	believes	multi-class	voting	structures	are	typically	not	in	the	best	interests	of	common	shareholders.	 We	believe	the	economic	stake	of	each	shareholder	should	match	their	voting	power	and	that	no	small	group	of	 shareholders,	family	or	otherwise,	should	have	voting	rights	different	from	those	of	other	shareholders.	 We	generally	consider	a	multi-class	share	structure	to	reflect	negatively	on	a	company's	overall	corporate	 governance.	Because	we	believe	that	allowing	one	vote	per	share	best	protects	the	interests	of	shareholders,	we	 typically	recommend	that	shareholders	vote	in	favor	of	recapitalization	proposals	to	eliminate	multi-class	share	 structures.	Similarly,	we	will	generally	recommend	voting	against	proposals	to	adopt	a	new	class	of	common	 stock.	 The	Benchmark	Policy	will	generally	recommend	that	shareholders	vote	against	(a)	certain	director(s)	and/or	 other	relevant	agenda	items	at	a	North	American	or	European	company	that	adopts	a	multi-class	share	structure	 with	unequal	voting	rights	in	connection	with	an	IPO,	spin-off,	or	direct	listing	within	the	past	year	if	the	board:	 (i)	did	not	also	commit	to	submitting	the	multi-class	structure	to	a	shareholder	vote	at	the	company’s	first	 shareholder	meeting	following	the	IPO;	or	(ii)	did	not	provide	for	a	reasonable	sunset	of	the	multi-class	structure	 (generally	seven	years	or	less).	The	approach	of	the	Benchmark	Policy	toward	companies	with	existing	multi- class	share	structures	with	unequal	voting	varies	between	regions	and	is	dependent	on,	inter	alia,	local	market	 2024	International	Benchmark	Policy	Guidelines 18
practice	and	legislation,	as	well	as	our	assessment	on	whether	evidence	exists	that	the	share	structure	is	 contributing	to	poor	governance	or	the	suppression	of	minority	shareholder	concerns. Poison	Pills	(Shareholder	Rights	Plans)	 Glass	Lewis	believes	that	poison	pill	plans	generally	are	not	in	the	best	interests	of	shareholders.	Specifically,	 they	can	reduce	management	accountability	by	substantially	limiting	opportunities	for	corporate	takeovers.	 Rights	plans	can	thus	prevent	shareholders	from	receiving	a	buy-out	premium	for	their	stock.	We	believe	that	 boards	should	be	given	wide	latitude	in	directing	the	activities	of	the	company	and	charting	the	company’s	 course.	However,	on	an	issue	such	as	this	where	the	link	between	the	financial	interests	of	shareholders	and	 their	right	to	consider	and	accept	buyout	offers	is	so	substantial,	we	believe	that	shareholders	should	be	allowed	 to	vote	on	whether	or	not	they	support	such	a	plan’s	implementation.	In	certain	limited	circumstances,	we	will	 support	a	limited	poison	pill	to	accomplish	a	particular	objective,	such	as	the	closing	of	an	important	merger,	or	 a	pill	that	contains	what	we	believe	to	be	a	reasonable	‘qualifying	offer’	clause.		 Supermajority	Vote	Requirements	 Glass	Lewis	favors	a	simple	majority	voting	structure	except	where	a	supermajority	voting	requirement	is	 explicitly	intended	to	protect	the	rights	of	minority	shareholders	in	a	controlled	company.	In	the	case	of	 noncontrolled	companies,	supermajority	vote	requirements	act	as	impediments	to	shareholder	action	on	ballot	 items	that	are	critical	to	their	interests.	One	key	example	is	in	the	takeover	context	where	supermajority	vote	 requirements	can	strongly	limit	shareholders’	input	in	making	decisions	on	such	crucial	matters	as	selling	the	 business.		 Increase	in	Authorized	Shares	 Glass	Lewis	believes	that	having	adequate	capital	stock	available	for	issuance	is	important	to	the	operation	of	a	 company.	We	will	generally	support	proposals	when	a	company	could	reasonably	use	the	requested	shares	for	 financing,	stock	splits	and	stock	dividends.	While	we	believe	that	having	adequate	shares	to	allow	management	 to	make	quick	decisions	and	effectively	operate	the	business	is	critical,	we	prefer	that,	for	significant	 transactions,	management	come	to	shareholders	to	justify	their	use	of	additional	shares	rather	than	providing	a	 blank	check	in	the	form	of	large	pools	of	unallocated	shares	available	for	any	purpose.		 In	general,	the	Benchmark	Policy	will	support	proposals	to	increase	authorized	shares	up	to	100%	of	the	number	 of	shares	currently	authorized	unless,	after	the	increase	the	company	would	be	left	with	less	than	30%	of	its	 authorized	shares	outstanding.	In	markets	where	such	authorities	typically	also	authorize	the	board	to	issue	new	 shares	without	separate	shareholder	approval,	we	apply	the	policy	described	below	on	the	issuance	of	shares.		 Issuance	of	Shares	 Issuing	additional	shares	can	dilute	existing	holders	in	some	circumstances.	Further,	the	availability	of	additional	 shares,	where	the	board	has	discretion	to	implement	a	poison	pill,	can	often	serve	as	a	deterrent	to	interested	 suitors.	Accordingly,	where	we	find	that	the	company	has	not	disclosed	a	detailed	plan	for	use	of	the	proposed	 shares,	or	where	the	number	of	shares	requested	are	excessive,	the	Benchmark	Policy	typically	recommends	 against	the	issuance.	In	the	case	of	a	private	placement,	we	will	also	consider	whether	the	company	is	offering	a	 discount	to	its	share	price.		 2024	International	Benchmark	Policy	Guidelines 19
In	general,	the	Benchmark	Policy	will	support	proposals	to	authorize	the	board	to	issue	shares	(with	preemptive	 rights)	when	the	requested	increase	is	equal	to	or	less	than	the	current	issued	share	capital.	This	authority	 should	generally	not	exceed	five	years.	In	accordance	with	differing	market	best	practice,	in	some	countries,	if	a	 proposal	seeks	to	issue	shares	exceeding	33%	of	issued	share	capital,	the	company	should	explain	the	specific	 rationale,	which	we	analyze	on	a	case-by-case	basis.	 We	will	also	generally	support	proposals	to	suspend	preemptive	rights	for	a	maximum	of	5-20%	of	the	issued	 ordinary	share	capital	of	the	company,	depending	on	best	practice	in	the	country	in	which	the	company	is	 located.	This	authority	should	not	exceed	five	years,	or	less	for	some	countries.		 Repurchase	of	Shares	 The	Benchmark	Policy	will	recommend	voting	in	favor	of	a	proposal	to	repurchase	shares	when	the	plan	includes	 the	following	provisions:	(i)	a	maximum	number	of	shares	which	may	be	purchased	(typically	not	more	than	 10-20%	of	the	issued	share	capital);	and	(ii)	a	maximum	price	which	may	be	paid	for	each	share	(as	a	percentage	 of	the	market	price).	The	Benchmark	Policy	may	support	a	larger	proposed	repurchase	program	where	the	terms	 of	the	program	stipulate	that	repurchased	shares	must	be	cancelled. Shareholder	Proposals Glass	Lewis	believes	that	shareholders	should	seek	to	promote	governance	structures	that	protect	shareholders,	 support	effective	ESG	oversight	and	reporting,	and	encourage	director	accountability.	Accordingly,	Glass	Lewis	 places	a	significant	emphasis	on	promoting	transparency,	robust	governance	structures	and	companies’	 responsiveness	to	and	engagement	with	shareholders.	We	also	believe	that	companies	should	be	transparent	on	 how	they	are	mitigating	material	ESG	risks,	including	those	related	to	climate	change,	human	capital	 management,	and	stakeholder	relations.	 To	that	end,	we	evaluate	all	shareholder	proposals	on	a	case-by-case	basis	with	a	view	to	promoting	long-term	 shareholder	value.	While	we	are	generally	supportive	of	those	that	promote	board	accountability,	shareholder	 rights,	and	transparency,	we	consider	all	proposals	in	the	context	of	a	company’s	unique	operations	and	risk	 profile.	 For	a	detailed	review	of	our	Benchmark	Policy	concerning	compensation,	environmental,	social,	and	governance	 shareholder	proposals,	please	refer	to	our	comprehensive	Proxy	Paper	Guidelines	for	Shareholder	Proposals	&	 ESG-Related	Issues,	available	at	www.glasslewis.com/voting-policies-current/. 2024	International	Benchmark	Policy	Guidelines 20
Overall	Approach	to	 Environmental,	Social	&	Governance	 Glass	Lewis	evaluates	all	environmental	and	social	issues	through	the	lens	of	long-term	shareholder	value.	We	 believe	that	companies	should	be	considering	material	environmental	and	social	factors	in	all	aspects	of	their	 operations	and	that	companies	should	provide	shareholders	with	disclosures	that	allow	them	to	understand	how	 these	factors	are	being	considered	and	how	attendant	risks	are	being	mitigated.	We	also	are	of	the	view	that	 governance	is	a	critical	factor	in	how	companies	manage	environmental	and	social	risks	and	opportunities	and	 that	a	well-governed	company	will	be	generally	managing	these	issues	better	than	one	without	a	governance	 structure	that	promotes	board	independence	and	accountability.	 We	believe	part	of	the	board’s	role	is	to	ensure	that	management	conducts	a	complete	risk	analysis	of	company	 operations,	including	those	that	have	material	environmental	and	social	implications.	We	believe	that	directors	 should	monitor	management’s	performance	in	both	capitalizing	on	environmental	and	social	opportunities	and	 mitigating	environmental	and	social	risks	related	to	operations	in	order	to	best	serve	the	interests	of	 shareholders.	Companies	face	significant	financial,	legal	and	reputational	risks	resulting	from	poor	 environmental	and	social	practices,	or	negligent	oversight	thereof.	Therefore,	in	cases	where	the	board	or	 management	has	neglected	to	take	action	on	a	pressing	issue	that	could	negatively	impact	shareholder	value,	 we	believe	that	shareholders	should	take	necessary	action	in	order	to	effect	changes	that	will	safeguard	their	 financial	interests.	 Given	the	importance	of	the	role	of	the	board	in	executing	a	sustainable	business	strategy	that	allows	for	the	 realization	of	environmental	and	social	opportunities	and	the	mitigation	of	related	risks,	relating	to	 environmental	risks	and	opportunities,	we	believe	shareholders	should	seek	to	promote	governance	structures	 that	protect	shareholders	and	promote	director	accountability.	When	management	and	the	board	have	 displayed	disregard	for	environmental	or	social	risks,	have	engaged	in	egregious	or	illegal	conduct,	or	have	failed	 to	adequately	respond	to	current	or	imminent	environmental	and	social	risks	that	threaten	shareholder	value,	 we	believe	shareholders	should	consider	holding	directors	accountable.	In	such	instances,	we	will	generally	 recommend	against	responsible	members	of	the	board	that	are	specifically	charged	with	oversight	of	the	issue	in	 question.	 When	evaluating	environmental	and	social	factors	that	may	be	relevant	to	a	given	company,	Glass	Lewis	does	so	 in	the	context	of	the	financial	materiality	of	the	issue	to	the	company’s	operations.	We	believe	that	all	 companies	face	risks	associated	with	environmental	and	social	issues.	However,	we	recognize	that	these	risks	 manifest	themselves	differently	at	each	company	as	a	result	of	a	company’s	operations,	workforce,	structure,	 and	geography,	among	other	factors.	Accordingly,	we	place	a	significant	emphasis	on	the	financial	implications	 of	a	company’s	actions	with	regard	to	impacts	on	its	stakeholders	and	the	environment. When	evaluating	environmental	and	social	issues,	Glass	Lewis	examines	companies’: Direct	environmental	and	social	risk	—	Companies	should	evaluate	financial	exposure	to	direct	environmental	 risks	associated	with	their	operations.	Examples	of	direct	environmental	risks	include	those	associated	with	oil	or	 gas	spills,	contamination,	hazardous	leakages,	explosions,	or	reduced	water	or	air	quality,	among	others.	Social	 risks	may	include	non-inclusive	employment	policies,	inadequate	human	rights	policies,	or	issues	that	adversely	 affect	the	company’s	stakeholders.	Further,	we	believe	that	firms	should	consider	their	exposure	to	risks	 2024	International	Benchmark	Policy	Guidelines 21
emanating	from	a	broad	range	of	issues,	over	which	they	may	have	no	or	only	limited	control,	such	as	insurance	 companies	being	affected	by	increased	storm	severity	and	frequency	resulting	from	climate	change. Risk	due	to	legislation	and	regulation	—	Companies	should	evaluate	their	exposure	to	changes	or	potential	 changes	in	regulation	that	affect	current	and	planned	operations.	Regulation	should	be	carefully	monitored	in	all	 jurisdictions	in	which	the	company	operates.	We	look	closely	at	relevant	and	proposed	legislation	and	evaluate	 whether	the	company	has	responded	proactively. Legal	and	reputational	risk	—	Failure	to	take	action	on	important	environmental	or	social	issues	may	carry	the	 risk	of	inciting	negative	publicity	and	potentially	costly	litigation.	While	the	effect	of	high-profile	campaigns	on	 shareholder	value	may	not	be	directly	measurable,	we	believe	it	is	prudent	for	companies	to	carefully	evaluate	 the	potential	impacts	of	the	public	perception	of	their	impacts	on	stakeholders	and	the	environment.	When	 considering	investigations	and	lawsuits,	Glass	Lewis	is	mindful	that	such	matters	may	involve	unadjudicated	 allegations	or	other	charges	that	have	not	been	resolved.	Glass	Lewis	does	not	assume	the	truth	of	such	 allegations	or	charges	or	that	the	law	has	been	violated.	Instead,	Glass	Lewis	focuses	more	broadly	on	whether,	 under	the	particular	facts	and	circumstances	presented,	the	nature	and	number	of	such	concerns,	lawsuits	or	 investigations	reflects	on	the	risk	profile	of	the	company	or	suggests	that	appropriate	risk	mitigation	measures	 may	be	warranted. Governance	risk	—	Inadequate	oversight	of	environmental	and	social	issues	carries	significant	risks	to	 companies.	When	leadership	is	ineffective	or	fails	to	thoroughly	consider	potential	risks,	such	risks	are	likely	 unmitigated	and	could	thus	present	substantial	risks	to	the	company,	ultimately	leading	to	loss	of	shareholder	 value.	 Glass	Lewis	believes	that	one	of	the	most	crucial	factors	in	analyzing	the	risks	presented	to	companies	in	the	 form	of	environmental	and	social	issues	is	the	level	and	quality	of	oversight	over	such	issues.	When	management	 and	the	board	have	displayed	disregard	for	environmental	risks,	have	engaged	in	egregious	or	illegal	conduct,	or	 have	failed	to	adequately	respond	to	current	or	imminent	environmental	risks	that	threaten	shareholder	value,	 we	believe	shareholders	should	consider	holding	directors	accountable.	When	companies	have	not	provided	for	 explicit,	board-level	oversight	of	environmental	and	social	matters	and/or	when	a	substantial	environmental	or	 social	risk	has	been	ignored	or	inadequately	addressed,	we	may	recommend	voting	against	members	of	the	 board.	In	addition,	or	alternatively,	depending	on	the	proposals	presented,	we	may	also	consider	recommending	 voting	in	favor	of	relevant	shareholder	proposals	or	against	other	relevant	management-proposed	items,	such	as	 the	ratification	of	auditor,	a	company’s	accounts	and	reports,	or	ratification	of	management	and	board	acts. 2024	International	Benchmark	Policy	Guidelines 22
Connect	with	Glass	Lewis Corporate	Website			 |		www.glasslewis.com Email		 |		info@glasslewis.com Social	 |	 		@glasslewis				 		 			Glass,	Lewis	&	Co. Global	Locations North	 America Asia	 Pacific United	States Headquarters 100	Pine	Street,	Suite	1925 San	Francisco,	CA	94111 +1	415	678	4110 New	York,	NY	 +1	646	606	2345 2323	Grand	Boulevard Suite	1125 Kansas	City,	MO	64108 +1	816	945	4525 Australia CGI	Glass	Lewis Suite	5.03,	Level	5 255	George	Street Sydney	NSW	2000 +61	2	9299	9266 Japan Shinjuku	Mitsui	Building 11th	floor 2-1-1,	Nishi-Shinjuku,	Shinjuku-ku, Tokyo	163-0411,	Japan Europe Ireland 15	Henry	Street Limerick	V94	V9T4 +353	61	534	343 United	Kingdom 80	Coleman	Street Suite	4.02 London	EC2R	5BJ +44	20	7653	8800 France Proxinvest 6	Rue	d’Uzès 75002	Paris +33	()1	45	51	50	43 Germany IVOX	Glass	Lewis Kaiserallee	23a 76133	Karlsruhe +49	721	35	49622 2024	International	Benchmark	Policy	Guidelines 23
DISCLAIMER ©	2025	Glass,	Lewis	&	Co.,	and/or	its	affiliates.	All	Rights	Reserved. This	document	is	intended	to	provide	an	overview	of	Glass	Lewis’	proxy	voting	guidelines.	It	is	not	intended	to	be	 exhaustive	and	does	not	address	all	potential	voting	issues.	Glass	Lewis’	proxy	voting	guidelines,	as	they	apply	to	 certain	issues	or	types	of	proposals,	are	further	explained	in	supplemental	guidelines	and	reports	that	are	made	 available	on	Glass	Lewis’	website	–	http://www.glasslewis.com.	These	guidelines	have	not	been	set	or	approved	 by	the	U.S.	Securities	and	Exchange	Commission	or	any	other	regulatory	body.	Additionally,	none	of	the	 information	contained	herein	is	or	should	be	relied	upon	as	investment	advice.	The	content	of	this	document	 has	been	developed	based	on	Glass	Lewis’	experience	with	proxy	voting	and	corporate	governance	issues,	 engagement	with	clients	and	issuers,	and	review	of	relevant	studies	and	surveys,	and	has	not	been	tailored	to	 any	specific	person	or	entity.	 Glass	Lewis’	proxy	voting	guidelines	are	grounded	in	corporate	governance	best	practices,	which	often	exceed	 minimum	legal	requirements.	Accordingly,	unless	specifically	noted	otherwise,	a	failure	to	meet	these	guidelines	 should	not	be	understood	to	mean	that	the	company	or	individual	involved	has	failed	to	meet	applicable	legal	 requirements. No	representations	or	warranties	express	or	implied,	are	made	as	to	the	accuracy	or	completeness	of	any	 information	included	herein.	In	addition,	Glass	Lewis	shall	not	be	liable	for	any	losses	or	damages	arising	from	or	 in	connection	with	the	information	contained	herein	or	the	use,	reliance	on,	or	inability	to	use	any	such	 information.	Glass	Lewis	expects	its	subscribers	possess	sufficient	experience	and	knowledge	to	make	their	own	 decisions	entirely	independent	of	any	information	contained	in	this	document	and	subscribers	are	ultimately	 and	solely	responsible	for	making	their	own	decisions,	including,	but	not	limited	to,	ensuring	that	such	decisions	 comply	with	all	agreements,	codes,	duties,	laws,	ordinances,	regulations,	and	other	obligations	applicable	to	 such	subscriber.	 All	information	contained	in	this	report	is	protected	by	law,	including,	but	not	limited	to,	copyright	law,	and	 none	of	such	information	may	be	copied	or	otherwise	reproduced,	repackaged,	further	transmitted,	transferred,	 disseminated,	redistributed	or	resold,	or	stored	for	subsequent	use	for	any	such	purpose,	in	whole	or	in	part,	in	 any	form	or	manner,	or	by	any	means	whatsoever,	by	any	person	without	Glass	Lewis’	prior	written	consent.	The	 foregoing	includes,	but	is	not	limited	to,	using	these	guidelines,	in	any	manner	and	in	whole	or	in	part,	in	 connection	with	any	training,	self-improving,	or	machine	learning	software,	algorithms,	hardware,	or	other	 artificial	intelligence	tools	or	aids	of	any	kind,	including,	without	limitation,	large	language	models	or	other	 generative	artificial	intelligence	platforms	or	services,	whether	proprietary	to	you	or	a	third	party,	or	generally	 available	(collectively,	“AI”)	as	well	as	any	services,	products,	data,	writings,	works	of	authorship,	graphics,	 pictures,	recordings,	any	electronic	or	other	information,	text	or	numerals,	audio	or	visual	content,	or	materials	 of	any	nature	or	description	generated	or	derived	by	or	using,	in	whole	or	in	part,	AI. 2024	International	Benchmark	Policy	Guidelines 24
PART C: OTHER INFORMATION
| Item 28. | Exhibits: | ||||
| (a) | |||||
| (b) | |||||
| (c) | Not applicable. | ||||
| (d)(1) | |||||
| (d)(2) | |||||
| (d)(3) | |||||
| (d)(4) | Not applicable. | ||||
| (d)(5) | |||||
| (d)(6) | Not applicable. | ||||
| (d)(7) | Not applicable. | ||||
| (d)(8) | |||||
| (d)(9) | |||||
| (d)(10) | |||||
| (e)(1) | |||||
| (e)(2) | |||||
| (f) | Not applicable. | ||||
| (g) | |||||
| (h)(1) | |||||
| (h)(2) | |||||
| (h)(3) | |||||
| (h)(4) | |||||
| (i)(1) | |||||
| (i)(2) | |||||
| (i)(3) | |||||
| (i)(4) | |||||
| (i)(5) | |||||
| (i)(6) | |||||
| (i)(7) | |||||
| (i)(8) | |||||
| (i)(9) | |||||
| (i)(10) | |||||
| (i)(11) | |||||
| (i)(12) | |||||
| (i)(13) | |||||
| (i)(14) | |||||
| (i)(15) | |||||
| (i)(16) | |||||
| (i)(17) | |||||
| (i)(18) | |||||
| (i)(19) | |||||
| (i)(20) | |||||
| (i)(21) | |||||
| (i)(22) | |||||
| (i)(23) | |||||
| (i)(24) | |||||
| (i)(25) | |||||
| (i)(26) | |||||
| (i)(27) | |||||
| (i)(28) | |||||
| (i)(29) | |||||
| (i)(30) | |||||
| (i)(31) | |||||
| (i)(32) | |||||
| (i)(33) | |||||
| (i)(34) | |||||
| (i)(35) | |||||
| (i)(36) | |||||
| (i)(37) | |||||
| (i)(38) | |||||
| (i)(39) | |||||
| (i)(40) | |||||
| (i)(41) | |||||
| (i)(42) | |||||
| (i)(43) | |||||
| (i)(44) | |||||
| (i)(45) | |||||
| (i)(46) | |||||
| (i)(47) | |||||
| (i)(48) | |||||
| (i)(49) | |||||
| (i)(50) | |||||
| (i)(51) | |||||
| (i)(52) | |||||
| (i)(53) | |||||
| (i)(54) | |||||
| (i)(55) | |||||
| (i)(56) | |||||
| (i)(57) | |||||
| (i)(58) | |||||
| (i)(59) | |||||
| (i)(60) | |||||
| (i)(61) | |||||
| (i)(62) | |||||
| (i)(63) | |||||
| (i)(64) | |||||
| (i)(65) | |||||
| (i)(66) | |||||
| (i)(67) | |||||
| (i)(68) | |||||
| (i)(69) | |||||
| (i)(70) | |||||
| (i)(71) | |||||
| (i)(72) | |||||
| (i)(73) | |||||
| (i)(74) | |||||
| (i)(75) | |||||
| (i)(76) | |||||
| (i)(77) | |||||
| (i)(78) | |||||
| (i)(79) | |||||
(i)(80) | |||||
(i)(81) | |||||
| (i)(82) | Opinion and Consent of Dechert LLP (with respect to VanEck Technology TruSector ETF), to be filed by amendment. | ||||
| (i)(83) | Opinion and Consent of Dechert LLP (with respect to VanEck Communications Services TruSector ETF), to be filed by amendment. | ||||
| (i)(84) | Opinion and Consent of Dechert LLP (with respect to VanEck Consumer Discretionary TruSector ETF), to be filed by amendment. | ||||
| (i)(85) | |||||
| (i)(86) | Not applicable. | ||||
| (j) | Not applicable. | ||||
| (k) | Not applicable. | ||||
| (l) | Not applicable. | ||||
| (m) | Not applicable. | ||||
| (n) | Not applicable. | ||||
| (o) | Not applicable. | ||||
| (p)(1) | |||||
| (p)(2) | |||||
| (p)(3) | |||||
| (q)(1) | |||||
| (q)(2) | |||||
Item 29. Persons Controlled by or Under Common Control with Registrant
None.
Item 30. Indemnification
Pursuant to Section 10.2 of the Amended and Restated Declaration of Trust, every person who is, or has been, a Trustee or officer of the Trust (including persons who serve at the Trust’s request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise) (collectively, the “Covered Persons”) shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit, mediation, arbitration or proceeding, whether civil or criminal, in which he or she becomes involved as a party or otherwise by virtue of his being or having been a Trustee or officer and against amounts paid or incurred by him in the settlement thereof. No indemnification shall be provided to a Covered Person who shall have been adjudicated by a court or body before which the proceeding was brought to be liable to the Trust or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office or not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or in the event of a settlement, unless there has been a determination that such Trustee or officer did not engage in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office (i) by the court or other body approving the settlement; (ii) by at least a majority of those Trustees who are neither interested parties of the Trust nor are parties to the matter based upon a review of readily-available facts (as opposed to a full trial-type inquiry); or (iii) by written opinion of independent legal counsel based upon a review of readily available facts (as opposed to a full trial-type inquiry). For purposes of the determination or opinion referred to in (ii) and (iii) above, the majority of those Trustees who neither are interested persons of the Trust nor are parties to the matter or independent legal counsel, as the case may be, shall be entitled to rely on a rebuttable presumption that the Covered Person has not engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person’s office.
The Trust has agreed to indemnify and hold harmless the Trustees against any and all expenses actually and reasonably incurred by the Trustee in any proceeding arising out of or in connection with the Trustee’s service to the Trust, to the fullest extent permitted by the Amended and Restated Agreement and Declaration of Trust of the Fund and Title 12, Part V, Chapter 38 of the Delaware Code, and applicable law.
Item 31. Business and Other Connections of Investment Manager
See “Management” in the Statement of Additional Information. Information as to the directors and officers of the Adviser is included in its Form ADV filed with the SEC and is incorporated herein by reference thereto.
Item 32. Principal Underwriters
(a) Van Eck Securities Corporation is the Trust’s principal underwriter. Van Eck Securities Corporation also acts as a principal underwriter, depositor, or investment manager for the following other investment companies: each series of VanEck Funds and VanEck VIP Trust.
(b) The following is a list of the officers, directors and partners of Van Eck Securities Corporation:
Name and Principal Business Address | Positions and Offices with Underwriter | Positions and Offices with Trust | ||||||
| Jan F. van Eck 666 Third Avenue New York, NY 10017 | Director, President and Chief Executive Officer | President, Chief Executive Officer and Trustee | ||||||
Name and Principal Business Address | Positions and Offices with Underwriter | Positions and Offices with Trust | ||||||
| Jonathan R. Simon 666 Third Avenue New York, NY 10017 | Director, Senior Vice President, General Counsel and Secretary | Senior Vice President, Chief Legal Officer and Secretary | ||||||
| Laura I. Martinez 666 Third Avenue New York, NY 10017 | Vice President, Associate General Counsel and Assistant Secretary | Vice President and Assistant Secretary | ||||||
| Matthew A. Babinsky 666 Third Avenue New York, NY 10017 | Vice President, Associate General Counsel and Assistant Secretary | Vice President and Assistant Secretary | ||||||
| Lisa A. Moss 666 Third Avenue New York, NY 10017 | Assistant Vice President | Assistant Vice President and Assistant Secretary | ||||||
| Susan Curry 666 Third Avenue New York, NY 10017 | Assistant Vice President | Assistant Vice President | ||||||
| Brendan Gundersen 666 Third Avenue New York, NY 10017 | Managing Director, Head of Institutional Sales | N/A | ||||||
| Richard Potocki 666 Third Avenue New York, NY 10017 | Managing Director, Head of US Distribution | N/A | ||||||
| F. Michael Gozzillo 666 Third Avenue New York, NY 10017 | Chief Compliance Officer | Chief Compliance Officer | ||||||
| Laura Hamilton 666 Third Avenue New York, NY 10017 | Assistant Vice President | Vice President | ||||||
| Lee Rappaport 666 Third Avenue New York, NY 10017 | Director, Vice President, Chief Financial Officer, Treasurer and Operations Principal (FINOP) | N/A | ||||||
| Matthew Bartlett 666 Third Avenue New York, NY 10017 | Manager, Internal Sales Desk | N/A | ||||||
| Kristen Capuano 666 Third Avenue New York, NY 10017 | Managing Director, Head of Marketing and Product Strategy | N/A | ||||||
| Joseph Giordano 666 Third Avenue New York, NY 10017 | Controller | N/A | ||||||
Item 33. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules thereunder will be maintained as follows: journals, ledgers, securities records and other original records will be maintained principally at the offices of the Registrant’s Custodian and Transfer Agent, State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111 and the Registrant’s prior Custodian and Transfer Agent, The Bank of New York Mellon, 101 Barclay Street, New York, New York 10286. All other records so required to be maintained will be maintained at the offices of Van Eck Associates Corporation/Van Eck Absolute Return Advisers Corporation/Van Eck Securities Corporation, 666 Third Avenue, Floor 9, New York, New York 10017.
Item 34. Management Services
Not applicable.
Item 35. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Juan in the Commonwealth of Puerto Rico on the 3rd day of June, 2025.
| VANECK ETF TRUST | |||||||||||
| By: | /s/ Laura I. Martinez | ||||||||||
| Name: Laura I. Martinez | |||||||||||
| Title: Vice President and Assistant Secretary | |||||||||||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following person in the capacities and on the date indicated.
/s/ David H. Chow* | Trustee | June 3, 2025 | ||||||||||||
| David H. Chow | ||||||||||||||
/s/ Laurie A. Hesslein* | Trustee | June 3, 2025 | ||||||||||||
| Laurie A. Hesslein | ||||||||||||||
/s/ R. Alastair Short* | Trustee | June 3, 2025 | ||||||||||||
| R. Alastair Short | ||||||||||||||
/s/ Peter J. Sidebottom* | Trustee | June 3, 2025 | ||||||||||||
| Peter J. Sidebottom | ||||||||||||||
/s/ Richard D. Stamberger* | Trustee | June 3, 2025 | ||||||||||||
| Richard D. Stamberger | ||||||||||||||
/s/ Jan F. van Eck* | President, Chief Executive Officer and Trustee | June 3, 2025 | ||||||||||||
| Jan F. van Eck | ||||||||||||||
/s/ John J. Crimmins* | Vice President, Chief Financial Officer and Principal Accounting Officer | June 3, 2025 | ||||||||||||
| John J. Crimmins | ||||||||||||||
| *By: | /s/ Laura I. Martinez | |||||||
| Laura I. Martinez | ||||||||
Attorney-in-Fact | ||||||||
| June 3, 2025 | ||||||||
EXHIBIT INDEX
(i)(85) Opinion and Consent of Dechert LLP.
