Principal Investment Objective and
Strategies
Investment
Objective
. The Fund’s investment objective is
to replicate as closely as possible, before fees and expenses, the price and yield
performance of the Stowe Coal Index
SM
(the “Coal Index”). For a further description of
the Coal Index, see “Stowe Coal
Index
SM
.”
Principal
Investment Policy
. The Fund will normally invest at
least 80% of its total assets in equity securities of U.S. and foreign companies
principally engaged in the coal industry. Companies principally engaged in the coal
industry include those engaged in the mining of coal and/or related activities, including
coal transportation, the manufacture of coal mining equipment and the production of clean
coal, and which derive more than 50% of their total revenues from such activities. Such
companies may include small- and medium capitalization companies. This 80% investment
policy is non-fundamental and requires 60 days’ prior written notice to shareholders
before it can be changed.
Indexing
Investment Approach
. The Fund is not managed
according to traditional methods of “active” investment management, which
involve the buying and selling of securities based upon economic, financial and market
analysis and investment judgment. Instead, the Fund, utilizing a
- 1 -
“passive” or indexing investment
approach, attempts to approximate the investment performance of the Coal Index by investing
in a portfolio of securities that generally replicate the Coal Index.
The
Adviser anticipates that, generally, the Fund will hold all of the securities which
comprise the Coal Index in proportion to their weightings in the Coal Index. However, under
various circumstances, it may not be possible or practicable to purchase all of those
securities in these weightings. In these circumstances, the Fund may purchase a sample of
securities in the Coal Index. There also may be instances in which the Adviser may choose
to overweight another security in the Coal Index, purchase securities not in the Coal Index
which the Adviser believes are appropriate to substitute for certain securities in the Coal
Index or utilize various combinations of other available investment techniques in seeking
to replicate as closely as possible, before fees and expenses, the price and yield
performance of the Coal Index. The Fund may sell securities that are represented in the
Coal Index in anticipation of their removal from the Coal Index or purchase securities not
represented in the Coal Index in anticipation of their addition to the Coal Index. The
Adviser expects that, over time, the correlation between the Fund’s performance and
that of the Coal Index before fees and expenses will be 95% or better. A figure of 100%
would indicate perfect correlation.
The
Fund will normally invest at least 95% of its total assets in securities that comprise the
Coal Index. A lesser percentage may be so invested to the extent that the Adviser needs
additional flexibility to comply with the requirements of the Internal Revenue Code of
1986, as amended (the “Internal Revenue Code”), and other regulatory
requirements.
Because
of the passive investment management approach of the Fund, the portfolio turnover rate is
expected to be under 30%, generally a lower turnover rate than for many other investment
companies. Sales as a result of Coal Index changes could result in the realization of short
or long-term capital gains in the Fund resulting in tax liability for shareholders subject
to U.S. federal income tax. See “Shareholder Information—Tax
Matters.”
Market
Capitalization
. The Coal Index is comprised of
companies with market capitalizations greater than $100 million that have a three month
trading volume of at least 10% of their float adjusted market capitalization. The total
market capitalization of the Coal Index as of _____, 2007 was in excess of $___
billion.
Borrowing
Money
. The Fund may borrow money from a bank up to a
limit of one-third of the market value of its assets, but only for temporary or emergency
purposes. To the extent that the Fund borrows money, it may be leveraged; at such times,
the Fund may appreciate or depreciate in value more rapidly than its benchmark Coal
Index.
Fundamental
and Non-Fundamental Policies
. The Fund’s
investment objective and each of the other investment policies are non-fundamental policies
that may be changed by the Board of Trustees without shareholder approval, except as noted
in the Statement of Additional Information under the heading “Investment Policies and
Restrictions—Investment Restrictions.” However, shareholders would be notified
prior to any material change in these policies.
Principal Risks of Investing in the
Fund
Risks
of Investing in the Coal Industry.
The profitability
of companies in the coal industry is related to worldwide energy prices, exploration, and
production spending. Such companies also are subject to risks of changes in exchange rates,
government regulation, world events, depletion of resources and economic conditions, as
well as market, economic and political risks of the countries where energy companies are
located or do business. Coal exploration and mining can be significantly affected
by
- 2 -
natural disasters. Coal companies may be
adversely affected by changes in exchange rates, interest rates, government regulation,
world events, and economic conditions. Coal companies may be at risk for environmental
damage claims.
Risk
of Investing in Foreign Securities
. Investments in
the securities of non-U.S. 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. 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 will be available. 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. In addition, the Fund may not receive shareholder communications or be
permitted to vote the depository receipts that it holds, as the issuers may be under no
legal obligation to distribute them.
Because
the Fund will invest in securities denominated in foreign currencies, changes in currency
exchange rates may negatively impact the Fund’s returns. The values of the currencies
of the countries in which the Fund may invest may be subject to a high degree of
fluctuation due to changes in interest rates, 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. Therefore, the Fund’s exposure to foreign currencies may result in
reduced returns to the Fund. The Fund does not expect to hedge its currency
risk.
Market
Risk
. The prices of the securities in the Fund are
subject to the risk associated with investing in the stock market, including sudden and
unpredictable drops in value. An investment in the Fund may lose money.
Index
Tracking Risk
. The Fund’s return may not match
the return of the Coal Index for a number of reasons. For example, the Fund incurs a number
of operating expenses not applicable to the Coal Index and incurs costs in buying and
selling securities; especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Coal Index. 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 meet redemptions and pay expenses. The Fund is expected to fair value the foreign
securities it holds (See “Shareholder Information—Determination of NAV”).
To the extent the Fund calculates its NAV based on fair value prices and the value of the
Coal Index is based on the securities’ closing price on local foreign markets
(
i.e.
, the
value of the Coal Index is not based on fair value prices), the Fund’s ability to
track the Coal Index may be adversely affected. The need to comply with the diversification
and other requirements of the Internal Revenue Code may also impact the Fund’s
ability to replicate the performance of the Coal Index.
Replication
Management Risk
. Unlike many investment companies,
the Fund is not actively “managed.” Therefore, unless a specific security is
removed from the Coal Index, the Fund generally would not sell a security because the
security’s issuer was in financial trouble. An investment in the Fund involves risks
similar to those of investing in any fund of equity securities traded on exchanges, such as
market fluctuations caused by such factors as economic and political developments, changes
in interest rates and perceived trends in security prices. You should anticipate that the
value of the Shares will decline, more or less, in correspondence with any decline in value
of the Coal Index.
Non-Diversified
. The Fund is a separate investment portfolio of the Trust, which is an open-end investment
company registered under the 1940 Act. The Fund is classified as a
“non-diversified” investment company under the 1940 Act. As a result, the Fund
is subject to the risk that it will be more
- 3 -
volatile than a diversified fund because the
Fund may invest its assets in a smaller number of issuers or may invest larger proportions
of the assets of the Fund in a single company within the industry that comprise the Coal
Index. As of ____, 2007, the Coal Index included __ securities. As a result, the gains and
losses on a single security may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than diversified funds.
Investing
in Small- or Mid-Cap Companies
. The Fund may invest
in small- or mid-cap companies. If it does so, it may be subject to certain risks
associated with small- or mid-cap companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their corporate
existences. 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 larger companies.
Absence
of Prior Active Market
. The Fund is a newly
organized series of an investment company and thus has no operating history. While the
Fund’s Shares will be listed on the [ ], there can be no
assurance that active trading markets for the Shares will develop or be maintained. Van Eck
Securities Corporation, the distributor of the Shares (the “Distributor”), does
not maintain a secondary market in the Shares.
Trading
Issues
. Trading in Shares on the
[ ] may be halted due to market conditions or for reasons
that, in the view of the [ ], make trading in Shares
inadvisable. In addition, trading in Shares on the [ ] is
subject to trading halts caused by extraordinary market volatility pursuant to
[ ] “circuit breaker” rules. There can be no
assurance that the requirements of the [ ] necessary to
maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fluctuation
of NAV
. The NAV of the Shares will fluctuate with
changes in the market value of the Fund’s securities holdings. The market prices of
Shares will fluctuate in accordance with changes in NAV and supply and demand on the
[ ]. The Adviser cannot predict whether Shares will trade
below, at or above their NAV. 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 will be closely
related to, but not identical to, the same forces influencing the prices of the securities
of the Coal Index trading individually or in the aggregate at any point in time. However,
given that Shares can be created and redeemed daily in Creation Units (unlike shares of
closed-end funds, which frequently trade at appreciable discounts from, and sometimes at
premiums to, their NAV), the Adviser believes that large discounts or premiums to the NAV
of the Shares should not be sustained.
|
Shareholder
Expenses
|
|
|
|
(fees paid directly from your
investment, but see “Shareholder
|
|
|
|
Information—Creation and
Redemption of Creation Units” for a
|
|
|
|
discussion of Creation and
Redemption Transaction Fees)
|
|
None
|
|
Standard Creation/Redemption
Transaction Fee
|
|
$____
|
|
Maximum Creation/Redemption
Transaction Fee
(b)
|
|
$____
|
|
Annual Fund Operating
Expenses
|
|
|
|
(expenses that are deducted
from Fund assets)
|
|
|
|
Management Fee
|
|
____%
|
|
Other Operating
Expenses
(c)
|
|
____%
|
|
Total Gross Annual Fund
Operating Expenses
(d)
|
|
____%
|
|
Fee Waivers and Expenses
Assumption
(e)
|
|
____%
|
|
Total Net Annual Fund Operating
Expenses
(e)
|
|
____%
|
|
(a)
|
When buying or selling Shares through
a broker, you will incur customary brokerage commissions and charges.
|
|
|
|
(b)
|
If a Creation Unit is purchased or
redeemed outside the usual process through the National Securities Clearing
Corporation or for cash, a variable fee of up to four times the standard creation
or redemption transaction fee will be charged.
|
|
|
|
(c)
|
Other operating expenses are based on
estimated amounts for the current fiscal year and calculated as a percentage of
Fund net assets.
|
|
|
|
(d)
|
The Adviser has contractually agreed
to waive fees and/or pay Fund expenses to the extent necessary to prevent the
operating expenses of the Fund (excluding interest expense, offering costs and
other trading expenses, taxes and extraordinary expenses) from exceeding _____% of
average net assets per year at least until _____, 200__.
|
|
|
|
(e)
|
The offering costs excluded from the
_____% expense cap are: (a) legal fees pertaining to the Fund’s Shares
offered for sale; (b) SEC and state registration fees; and (c) initial fees paid to
be listed on an exchange.
|
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
Fund sells and redeems Shares in Creation Units principally on an in-kind basis for
portfolio securities of the Coal Index. Shares in less than Creation Units are not
redeemable. An investor purchasing a Creation Unit on an in-kind basis would pay the
following expenses on a $10,000 investment (payment with a deposit of securities included
in the Coal Index), assuming all Shares are redeemed at the end of the periods shown, a 5%
annual return and that the Fund’s operating expenses remain the same.
Investors should note that the presentation below of a
$10,000 investment is for illustration purposes only as Shares will be issued by the Fund
only in Creation Units. Further, the return of 5% and estimated expenses are for
illustration purposes only, and should not be considered indicators of expected Fund
expenses or performance, which may be greater or less than the estimates. Based on these
assumptions, your costs would be
:
|
Year
|
|
Expenses
|
|
1
|
|
$
|
__
|
|
3
|
|
$
|
____
|
- 5 -
Creation Transaction Fees and Redemption
Transaction Fees
The
Trust issues and redeems Shares at NAV only in blocks of 50,000 Shares or multiples
thereof. As a practical matter, only authorized participants may purchase or redeem these
Creation Units. A standard creation transaction fee of $____ is charged to each purchaser
of Creation Units. The fee is the same regardless of the number of Creation Units purchased
by an authorized participant on the same day. The value of a Creation Unit as of the first
creation was approximately $___________. An authorized participant who holds Creation Units
and wishes to redeem at NAV would also pay a standard redemption transaction fee of $____
on the date of such redemption(s), regardless of the number of Creation Units redeemed that
day. Authorized participants who hold Creation Units will also pay the annual Fund
operating expenses described in the table on the previous page. Assuming an investment in a
Creation Unit of $_______ and a 5% return each year, and assuming that the Fund’s
operating expenses remain the same, the total costs would be $______ if the Creation Unit
is redeemed after one year and $______ if the Creation Unit is redeemed after three years.
Investors should note that this presentation is for illustration purposes only and actual
costs may be higher. See “Shareholder Information—Creation and Redemption of
Creation Units.”
- 6 -
MARKET VECTORS—GAMING
ETF
Principal Investment Objective and
Strategies
Investment
Objective
. The Fund’s investment objective is
to replicate as closely as possible, before fees and expenses, the price and yield
performance of the S-Network Global Gaming
Index
SM
(the “Gaming Index”). For a further description of
the Gaming Index, see “The S-Network Global Gaming
Index
SM
.”
Principal
Investment Policy
. The Fund will normally invest at
least 80% of its total assets in equity securities of U.S. and foreign companies primarily
engaged in the global gaming industry. Companies primarily engaged in the global gaming
industry include those engaged in casino operations, race track operations, sports and
horse race betting technologies, and which derive at least 50% of their total revenues from
such activities (including resort facilities related to casino
operations).
Such companies may include small- and medium
capitalization companies. This 80% investment policy is non-fundamental and requires 60
days’ prior written notice to shareholders before it can be changed.
Indexing
Investment Approach
. The Fund is not managed
according to traditional methods of “active” investment management, which
involve the buying and selling of securities based upon economic, financial and market
analysis and investment judgment. Instead, the Fund, utilizing a “passive” or
indexing investment approach, attempts to approximate the investment performance of the
Gaming Index by investing in a portfolio of securities that generally replicate the Gaming
Index.
The
Adviser anticipates that, generally, the Fund will hold all of the securities which
comprise the Gaming Index in proportion to their weightings in the Gaming Index. However,
under various circumstances, it may not be possible or practicable to purchase all of those
securities in these weightings. In these circumstances, the Fund may purchase a sample of
securities in the Gaming Index. There also may be instances in which the Adviser may choose
to overweight another security in the Gaming Index, purchase securities not in the Gaming
Index which the Adviser believes are appropriate to substitute for certain securities in
the Gaming Index or utilize various combinations of other available investment techniques
in seeking to replicate as closely as possible, before fees and expenses, the price and
yield performance of the Gaming Index. The Fund may sell securities that are represented in
the Gaming Index in anticipation of their removal from the Gaming Index or purchase
securities not represented in the Gaming Index in anticipation of their addition to the
Gaming Index. The Adviser expects that, over time, the correlation between the Fund’s
performance and that of the Gaming Index before fees and expenses will be 95% or better. A
figure of 100% would indicate perfect correlation.
The
Fund will normally invest at least 95% of its total assets in securities that comprise the
Gaming Index. A lesser percentage may be so invested to the extent that the Adviser needs
additional flexibility to comply with the requirements of the Internal Revenue Code of
1986, as amended (the “Internal Revenue Code”), and other regulatory
requirements.
Because
of the passive investment management approach of the Fund, the portfolio turnover rate is
expected to be under 30%, generally a lower turnover rate than for many other investment
companies. Sales as a result of Gaming Index changes could result in the realization of
short or long-term capital gains in the Fund resulting in tax liability for shareholders
subject to U.S. federal income tax. See “Shareholder Information—Tax
Matters.”
Market
Capitalization
. The Gaming Index is comprised of
companies with market capitalizations greater than $200 million. Stocks whose market
capitalization falls below $100 million as of any rebalancing date shall be deleted from
the Gaming Index. Stocks must have a three-month trading
- 7 -
volume equal to or greater than 10% of their
float adjusted market capitalization to be included in the Gaming Index. The total market
capitalization of the Gaming Index as of ______ ___, 2007 was in excess of $____
billion.
Borrowing
Money
. The Fund may borrow money from a bank up to a
limit of one-third of the market value of its assets, but only for temporary or emergency
purposes. To the extent that the Fund borrows money, it may be leveraged; at such times,
the Fund may appreciate or depreciate in value more rapidly than its benchmark, the Gaming
Index.
Fundamental
and Non-Fundamental Policies
. The Fund’s
investment objective and each of the other investment policies are non-fundamental policies
that may be changed by the Board of Trustees without shareholder approval, except as noted
in the Statement of Additional Information under the heading “Investment Policies and
Restrictions—Investment Restrictions.” However, shareholders would be notified
prior to any material change in these policies.
Principal Risks of Investing in the
Fund
Risks
of Investing in the Gaming Industry.
Companies
in the global gaming industry are highly regulated, and state and Federal legislative
changes (as well as the laws of other countries) can significantly impact the profitability
of companies in the industry. Companies in the same industry often face similar obstacles,
issues and regulatory burdens. As a result, the securities of global gaming companies owned
by the Fund may react similarly to, and move in unison with, one another. The global gaming
industry may also be negatively affected by changes in economic conditions as well as
changes in consumer tastes.
Risk
of Investing in Foreign Securities
. Investments in
the securities of non-U.S. 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. 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 will be available. 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. In addition, the Fund may not receive shareholder communications or be
permitted to vote the depository receipts that it holds, as the issuers may be under no
legal obligation to distribute them.
Because
the Fund will invest in securities denominated in foreign currencies, changes in currency
exchange rates may negatively impact the Fund’s returns. The values of the currencies
of the countries in which the Fund may invest may be subject to a high degree of
fluctuation due to changes in interest rates, 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. Therefore, the Fund’s exposure to foreign currencies may result in
reduced returns to the Fund. The Fund does not expect to hedge its currency
risk.
Market
Risk
. The prices of the securities in the Fund are
subject to the risk associated with investing in the stock market, including sudden and
unpredictable drops in value. An investment in the Fund may lose money.
Index
Tracking Risk
. The Fund’s return may not match
the return of the Gaming Index for a number of reasons. For example, the Fund incurs a
number of operating expenses not applicable to the
- 8 -
Gaming Index and incurs costs in buying and
selling securities; especially when rebalancing the Fund’s securities holdings to
reflect changes in the composition of the Gaming Index. 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 meet redemptions and pay expenses. The Fund is expected to fair value the foreign
securities it holds (See “Shareholder Information—Determination of NAV”).
To the extent the Fund calculates its NAV based on fair value prices and the value of the
Gaming Index is based on the securities’ closing price on local foreign markets
(
i.e.
, the
value of the Gaming Index is not based on fair value prices), the Fund’s ability to
track the Gaming Index may be adversely affected. The need to comply with the
diversification and other requirements of the Internal Revenue Code may also impact the
Fund’s ability to replicate the performance of the Gaming Index.
Replication
Management Risk
. Unlike many investment companies,
the Fund is not actively “managed.” Therefore, unless a specific security is
removed from the Gaming Index, the Fund generally would not sell a security because the
security’s issuer was in financial trouble. An investment in the Fund involves risks
similar to those of investing in any fund of equity securities traded on exchanges, such as
market fluctuations caused by such factors as economic and political developments, changes
in interest rates and perceived trends in security prices. You should anticipate that the
value of the Shares will decline, more or less, in correspondence with any decline in value
of the Gaming Index.
Non-Diversified
. The Fund is a separate investment portfolio of the Trust, which is an open-end investment
company registered under the 1940 Act. The Fund is classified as a
“non-diversified” investment company under the 1940 Act. As a result, the Fund
is subject to the risk that it will be more volatile than a diversified fund because the
Fund may invest its assets in a smaller number of issuers or may invest larger proportions
of the assets of the Fund in a single company within the industry that comprise the Gaming
Index. As of ______ ___, 2007, the Gaming Index included ___ securities. As a result, the
gains and losses on a single security may have a greater impact on the Fund’s NAV and
may make the Fund more volatile than diversified funds.
Investing
in Small- or Mid-Cap Companies
. The Fund may invest
in small- or mid-cap companies. If it does so, it may be subject to certain risks
associated with small- or mid-cap companies. These companies are often subject to less
analyst coverage and may be in early and less predictable periods of their corporate
existences. 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 larger companies.
Absence
of Prior Active Market
. The Fund is a newly
organized series of an investment company and thus has no operating history. While the
Fund’s Shares will be listed on the ______, there can be no assurance that active
trading markets for the Shares will develop or be maintained. Van Eck Securities
Corporation, the distributor of the Shares (the “Distributor”), does not
maintain a secondary market in the Shares.
Trading
Issues
. Trading in Shares on the _______ may be
halted due to market conditions or for reasons that, in the view of the ______, make
trading in Shares inadvisable. In addition, trading in Shares on the ______ is subject to
trading halts caused by extraordinary market volatility pursuant to ______ “circuit
breaker” rules. There can be no assurance that the requirements of the ______
necessary to maintain the listing of the Fund will continue to be met or will remain
unchanged.
Fluctuation
of NAV
. The NAV of the Shares will fluctuate with
changes in the market value of the Fund’s securities holdings. The market prices of
Shares will fluctuate in accordance with changes in
- 9 -
NAV and supply and demand on the ______. The
Adviser cannot predict whether Shares will trade below, at or above their NAV. 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 will be closely related to, but not identical to,
the same forces influencing the prices of the securities of the Gaming Index trading
individually or in the aggregate at any point in time. However, given that Shares can be
created and redeemed daily in Creation Units (unlike shares of closed-end funds, which
frequently trade at appreciable discounts from, and sometimes at premiums to, their NAV),
the Adviser believes that large discounts or premiums to the NAV of the Shares should not
be sustained.
Performance
The
Fund has not yet commenced operations and therefore does not have a performance
history.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy and hold Shares of the
Fund.
(a)(b)
|
Shareholder
Expenses
|
|
|
|
(fees paid directly from your
investment, but see “Shareholder
|
|
|
|
Information—Creation and
Redemption of Creation Units” for a
|
|
|
|
discussion of Creation and
Redemption Transaction Fees)
|
|
None
|
|
Standard Creation/Redemption
Transaction Fee
|
|
$____
|
|
Maximum Creation/Redemption
Transaction Fee
(b)
|
|
$____
|
|
Annual Fund Operating
Expenses
|
|
|
|
(expenses that are deducted
from Fund assets)
|
|
|
|
Management Fee
|
|
__%
|
|
Other Operating
Expenses
(c)
|
|
____%
|
|
Total Gross Annual Fund
Operating Expenses
(d)
|
|
____%
|
|
Fee Waivers and Expenses
Assumption
(e)
|
|
____%
|
|
Total Net Annual Fund Operating
Expenses
(e)
|
|
____%
|
|
(a)
|
When buying or selling Shares through
a broker, you will incur customary brokerage commissions and charges.
|
|
|
|
(b)
|
If a Creation Unit is purchased or
redeemed outside the usual process through the National Securities Clearing
Corporation or for cash, a variable fee of up to four times the standard creation
or redemption transaction fee will be charged.
|
|
|
|
(c)
|
Other operating expenses are based on
estimated amounts for the current fiscal year and calculated as a percentage of
Fund net assets.
|
|
|
|
(d)
|
The Adviser has contractually agreed
to waive fees and/or pay Fund expenses to the extent necessary to prevent the
operating expenses of the Fund (excluding interest expense, offering costs and
other trading expenses, taxes and extraordinary expenses) from exceeding ___% of
average net assets per year at least until ____, 200_.
|
|
|
|
(e)
|
The offering costs excluded from the
____% expense cap are: (a) legal fees pertaining to the Fund’s Shares offered
for sale; (b) SEC and state registration fees; and (c) initial fees paid to be
listed on an exchange.
|
|
|
- 10 -
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
Fund sells and redeems Shares in Creation Units principally on an in-kind basis for
portfolio securities of the Gaming Index. Shares in less than Creation Units are not
redeemable. An investor purchasing a Creation Unit on an in-kind basis would pay the
following expenses on a $10,000 investment (payment with a deposit of securities included
in the Gaming Index), assuming all Shares are redeemed at the end of the periods shown, a
5% annual return and that the Fund’s operating expenses remain the same.
Investors should note that the presentation below of a
$10,000 investment is for illustration purposes only as Shares will be issued by the Fund
only in Creation Units. Further, the return of 5% and estimated expenses are for
illustration purposes only, and should not be considered indicators of expected Fund
expenses or performance, which may be greater or less than the estimates. Based on these
assumptions, your costs would be
:
|
Year
|
|
Expenses
|
|
1
|
|
$
__________
|
|
3
|
|
$
__________
|
Creation Transaction Fees and Redemption
Transaction Fees
The
Trust issues and redeems Shares at NAV only in blocks of 50,000 Shares or multiples
thereof. As a practical matter, only authorized participants may purchase or redeem these
Creation Units. A standard creation transaction fee of $____ is charged to each purchaser
of Creation Units. The fee is the same regardless of the number of Creation Units purchased
by an authorized participant on the same day. The value of a Creation Unit as of the first
creation was approximately $____. An authorized participant who holds Creation Units and
wishes to redeem at NAV would also pay a standard redemption transaction fee of $____ on
the date of such redemption(s), regardless of the number of Creation Units redeemed that
day. Authorized participants who hold Creation Units will also pay the annual Fund
operating expenses described in the table on the previous page. Assuming an investment in a
Creation Unit of $____ and a 5% return each year, and assuming that the Fund’s
operating expenses remain the same, the total costs would be $______ if the Creation Unit
is redeemed after one year and $______ if the Creation Unit is redeemed after three years.
Investors should note that this presentation is for illustration purposes only and actual
costs may be higher. See “Shareholder Information—Creation and Redemption of
Creation Units.”
- 11 -
THE STOWE COAL
INDEX
SM
The
Stowe Coal Index
SM
(the “Coal Index”) is a rules based index intended
to give investors a means of tracking the overall performance of a global universe of
listed companies engaged in the coal industry. The Coal Index is a modified capitalization
weighted, float adjusted index comprising publicly traded companies engaged in the mining
of coal and/or related activities, including coal transportation, the manufacture of coal
mining equipment and the production of clean coal. The Coal Index strives to be inclusive
of all companies worldwide that are principally engaged (derive greater than 50% of
revenues from applicable sources) in the coal industry. The Coal Index was determined to
yield a benchmark value of approximately 1000 at its inception date, which was the close of
trading on December 31, 2001. Constituent stocks must have a market capitalization of
greater than $100 million on a rebalancing date to be added to the index. Stocks whose
market capitalization falls below $50 million as of any rebalancing date shall be deleted
from the index. Stocks must have a three-month trading volume equal to or greater than 10%
of their float adjusted market capitalization to be included in the index. Only shares that
trade on a recognized domestic or international stock exchange may qualify (e.g., National
Stock Market stocks must be “reported securities” under 11Aa3-1 of the
Securities Exchange Act of 1934, as amended. Similar criteria and standards apply to stocks
with foreign listings.)
The
Coal Index is calculated and maintained by Standard & Poor’s Custom Indices on
behalf of Stowe Global Indexes LLC. Index values are calculated daily, except Saturdays and
Sundays, and are distributed over the Consolidated Tape Association’s Network B
between the hours of approximately 9:30 a.m. and 4:15 p.m., under the symbol COAL. Index
values are disseminated every 15 seconds.
The
Coal Index is calculated using a capitalization weighting methodology, adjusted for float,
which is modified so as to ensure compliance with the diversification requirements of
Subchapter M of the Internal Revenue Code. The Coal Index is reconstituted quarterly, at
the close of business on the third Friday of each calendar quarter, and companies are added
and/or deleted based upon the Coal Index eligibility criteria. Companies with recent stock
exchange listings, i.e. recent IPOs, may be added to the index on any rebalancing date,
provided the companies meet all eligibility criteria and have been trading for more than 22
trading days. The share weights of the Coal Index components are adjusted on each
rebalancing date.
Rebalancing
data, including constituent weights and related information, is posted on the Coal
Index’s web site (www.stowecoalindex.com) prior to the start of trading on the first
business day following the third Friday of the calendar quarter. A press announcement
identifying additions and deletions to the Coal Index is issued on the Wednesday prior to a
rebalancing date. Share weights of the constituents remain constant between quarters except
in the event of certain types of corporate actions, including stock splits and reverse
stock splits. Share weights of the Coal Index are not adjusted between rebalancing dates
for shares issued or shares repurchased.
- 12 -
THE S-NETWORK GLOBAL GAMING
INDEX
SM
The
S-Network Global Gaming Index
SM
(the “Gaming Index”) is a rules based index
intended to give investors a means of tracking the overall performance of a global universe
of listed companies engaged in the global gaming industry. The Gaming Index is a modified
capitalization weighted, float adjusted index comprising publicly traded companies engaged
in casino operations, race track operations, sports and horse race betting operations,
online gaming operations and/or the provision of related equipment and technologies. The
Gaming Index strives to include all companies worldwide that are principally engaged
(derive greater than 50% of revenues from applicable sources) in the gaming industry,
including resort facilities related to casino operations.
Constituent
stocks for the Gaming Index must have a market capitalization of greater than $200 million
on a rebalancing date to be added to the index. Stocks whose market capitalization falls
below $100 million as of any rebalancing date shall be deleted from the Gaming Index.
Stocks must have a three-month trading volume equal to or greater than 10% of their float
adjusted market capitalization to be included in the Gaming Index. Only shares that trade
on a recognized domestic or international stock exchange may qualify.
The
Gaming Index is calculated and maintained by Standard & Poor’s Custom Indices on
behalf of Stowe Global Indexes LLC. Index values are calculated daily, except Saturdays and
Sundays, and are distributed over the Consolidated Tape Association’s Network B
between the hours of approximately 9:30 a.m. and 4:15 p.m., under the symbol BETS. Index
values are disseminated every 15 seconds.
The
Gaming Index is calculated using a capitalization weighting methodology, adjusted for
float, which is modified so as to ensure compliance with the diversification requirements
of Subchapter M of the Internal Revenue Code. The S Gaming Index is reconstituted
quarterly, at the close of business on the third Friday of each calendar quarter, and
companies are added and/or deleted based upon the Gaming Index eligibility criteria.
Companies with recent stock exchange listings,
i.e.
, recent IPOs,
may be added to the index on any rebalancing date, provided the companies meet all
eligibility criteria and have been trading for more than 22 trading days. The share weights
of the Gaming Index components are adjusted on each rebalancing date.
Rebalancing
data, including constituent weights and related information, is posted on the Gaming
Index’s web site
(
www.snetglobalindexes.com
) prior to the start of trading on the first business day following the third Friday of the
calendar quarter. A press announcement identifying additions and deletions to the Gaming
Index is issued on the Wednesday prior to a rebalancing date. Share weights of the
constituents remain constant between quarters except in the event of certain types of
corporate actions, including stock splits and reverse stock splits. Share weights of the
Gaming Index are not adjusted between rebalancing dates for shares issued or shares
repurchased.
- 13 -
PORTFOLIO HOLDINGS
A
description of each Fund’s policies and procedures with respect to the disclosure of
the Fund’s portfolio securities is available in the Funds’ SAI.
ADDITIONAL INVESTMENT
STRATEGIES
Each
Fund will normally invest at least 95% of its total assets in component securities that
comprise its benchmark index. Each Fund may invest its remaining assets in 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 in
swaps, options futures contracts and currency forwards. Swaps, options, futures contracts
and currency forwards (and convertible securities and structured notes) may be used by each
Fund in seeking performance that corresponds to its respective benchmark index, and in
managing cash flows. The Funds will not invest in money market instruments as part of a
temporary defensive strategy to protect against potential stock market declines.
The
Funds may lend their 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 Funds receive liquid collateral equal to at least 102%
of the value of the portfolio securities being loaned. This collateral is marked-to-market
on a daily basis. Although a Fund will receive collateral in connection with all loans of
its securities holdings, the Fund would be exposed to a risk of loss should a borrower
default on its obligation to return the borrowed securities
(
e.g.
, the
loaned securities may have appreciated beyond the value of the collateral held by the
Fund). In addition, the Fund will bear the risk of loss of any cash collateral that it
invests.
MANAGEMENT
Board
of Trustees
. The Board of Trustees of the Trust has
responsibility for the general oversight of the management of the Funds, including general
supervision of the Adviser and other service providers, but is not involved in the
day-to-day management of the Trust. A list of the Trustees and the Trust officers, and
their present positions and principal occupations, is provided in the Funds’
SAI.
Investment
Manager
. 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, will
be responsible for the day-to-day investment management of the Fund. As of June 30, 2007,
the Adviser managed approximately $5.8 billion in assets. The Adviser’s principal
business address is 99 Park Avenue, 8th Floor, New York, New York 10016.
A
discussion regarding the Board of Trustees’ approval of the Investment Management
Agreement will be available in the Trust’s annual report for the fiscal year ended
December 31, 2007.
For
the services provided to each Fund under the Investment Management Agreement, each Fund
will pay the Adviser monthly fees based on a percentage of each Fund’s average daily
net assets at the annual rate of 0.50% . From time to time, the Adviser may waive all or a
portion of its fee. Until at least May 1, 2008, the Adviser has contractually agreed to
waive fees and/or pay Fund expenses to the extent necessary to prevent the operating
expenses of each Fund (excluding interest expense, offering costs, taxes and extraordinary
expenses) from exceeding 0.65% of average daily net assets per year. The
- 14 -
offering costs excluded from the expense
caps are: (a) legal fees pertaining to the Funds’ Shares offered for sale; (b) SEC
and state registration fees; and (c) initial fees paid to be listed on an
exchange.
Each
Fund is responsible for all of its expenses, including the investment advisory fees, costs
of transfer agency, custody, legal, audit and other services, interest, taxes, any
distribution fees or expenses, offering fees or expenses and extraordinary
expenses.
Administrator,
Custodian and Transfer Agent
. Van Eck Associates
Corporation is the administrator for the Fund (the “Administrator”), and The
Bank of New York 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 provided pursuant to the
Investment Management Agreement.
Distributor
. Van Eck Securities Corporation is the distributor of each Fund’s Shares. The
Distributor will not distribute Shares in less than Creation Units, and it does not
maintain a secondary market in the Shares. As noted in the section entitled
“Shareholder Information—Buying and Selling Exchange-Traded Shares,” the
Shares are traded in the secondary market.
PORTFOLIO MANAGERS
The
portfolio managers who are currently responsible for the day-to-day management of each
Fund’s portfolio are Hao-Hung (Peter) Liao and Edward M. Kuczma, Jr. Mr. Liao has
been employed by the Adviser since the summer of 2004. Mr. Liao attended New York
University from 2000 to 2004 where he received a Bachelor of Arts majoring in mathematics
and economics. Prior to Mr. Liao’s current role of portfolio manager to the funds of
the Trust, Mr. Liao served as investment analyst for the Worldwide Absolute Return Fund
where his role included manager review, performance attribution, changes in manager
mandates and risk management. Mr. Liao continues to serve in this capacity. Mr. Kuczma has
been employed by the Adviser since January of 2004. Prior to Mr. Kuczma’s current
role of investment analyst, he worked from January 2004 to June 2004 in Portfolio
Administration for the Adviser. After serving as a fund administrator for international
portfolios, Mr. Kuczma became an analyst for emerging market companies. He also serves on a
committee that reviews managers and changing mandates for a multi-manager absolute return
strategy. Mr. Kuczma attended Georgetown University from 1999 to 2003. Mr. Liao and Mr.
Kuczma serve as portfolio managers of each of the nine portfolios of the Trust, including
the Funds. Neither Mr. Kuczma nor Mr. Liao manages any other accounts of any type for the
Adviser. See the Funds’ SAI for additional information about the portfolio
managers’ compensation, other accounts managed by the portfolio managers and their
respective ownership of Shares.
- 15 -
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 after the close of trading (ordinarily 4:00 p.m., Eastern time) of the
[ ]. 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.
The
value of each Fund’s portfolio securities is based on the securities’ closing
price on local markets when available. If a security’s market price is not readily
available or does not otherwise accurately reflect the fair value of the security, the
security will be valued by another method that the Adviser believes will better reflect
fair value in accordance with the Trust’s valuation policies and procedures approved
by the Board of Trustees. Each Fund may use fair value pricing in a variety of
circumstances, including but not limited to, situations when the value of a security in a
Fund’s portfolio has been materially affected by events occurring after the close of
the market on which the security is principally traded (such as a corporate action or other
news that may materially affect the price of a security) or trading in a security has been
suspended or halted. In addition, each Fund currently expects that it will fair value
foreign equity securities held by the Fund each day the Fund calculates its NAV.
Accordingly, a Fund’s NAV is expected to reflect certain portfolio securities’
fair values rather than their market prices. Fair value pricing involves subjective
judgments and it is possible that a fair value determination for a security is materially
different than the value that could be realized upon the sale of the security. In addition,
fair value pricing could result in a difference between the prices used to calculate a
Fund’s NAV and the prices used by the Fund’s respective benchmark index. This
may adversely affect a Fund’s ability to track its respective benchmark index. With
respect to securities that are primarily listed 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.
Buying and Selling Exchange-Traded
Shares
The
Shares of each of the Funds have been approved for listing on the
[ ], subject to notice of issuance. 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 between the bid and the offered price in the secondary market
on each leg of a round trip (purchase and sale) transaction. It is anticipated that the
Shares of the Funds will trade in the secondary market at prices that may differ to varying
degrees from the closing NAVs of the Shares. Given, however, that Shares can be created and
redeemed daily in Creation Units, the Adviser believes that large discounts and premiums to
NAV should not be sustained for very long.
The
Depository Trust Corporation (“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
- 16 -
Participants,”
i.e.
, brokers,
dealers, banks and trust companies that clear through or maintain a custodial relationship
with a DTC Participant, either directly or indirectly, through which such beneficial owner
holds its interests. The Trust understands that under existing industry practice, in the
event the Trust requests any action of holders of Shares, or a beneficial owner desires to
take any action that DTC, as the record owner of all outstanding Shares, is entitled to
take, DTC would authorize the DTC Participants to take such action and that the DTC
Participants would authorize the Indirect Participants and beneficial owners acting through
such DTC Participants to take such action and would otherwise act upon the instructions of
beneficial owners owning through them. As described above, the Trust recognizes DTC or its
nominee as the owner of all Shares for all purposes. For more information, see the section
entitled “Book Entry Only System” in the Funds’ SAI.
Market
Timing and Related Matters
. The Funds impose no
restrictions on the frequency of purchases and redemptions. In determining not to approve a
written, established policy limiting purchases and redemptions, the Board of Trustees
evaluated the nature of the Funds
(
i.e.
, a fund
whose shares are expected to trade intra-day). In particular, the Board of Trustees
considered that, unlike traditional mutual funds, the Funds generally issue and redeem
their Shares at the NAV per Share for a basket of securities intended to mirror each
Fund’s portfolio, plus a small amount of cash, and Shares may be purchased and sold
in the secondary market at prevailing market prices.
Given
this structure, the Board of Trustees determined that it is unlikely that (a) market timing
would be attempted by a Fund’s shareholders or (b) any attempts to market time the
Funds by shareholders would result in negative impact to the Fund or its shareholders.
However, creations and redemptions of Creation Units consisting of a significant amount of
cash, although expected to be rare, could create the potential for market timing with its
negative impact to the Funds and their shareholders.
Creation and Redemption of Creation
Units
The
Trust issues and redeems Shares at NAV only in a large specified number of Shares called a
“Creation Unit.” A Creation Unit consists of 50,000 Shares. The Funds generally
issue and redeem Creation Units only in-kind in exchange for a designated portfolio of
equity securities included in each respective benchmark index and a relatively small cash
payment. Except when aggregated in Creation Units, the Shares are not redeemable securities
of the Funds. See “Shareholder Information—Buying and Selling Exchange-Traded
Shares” and “—Procedures for Creation of Creation
Units.”
Fund
Deposits
. The consideration for creation of Creation
Units of the Funds generally consists of the in-kind deposit of a designated portfolio of
equity securities (the “Deposit Securities”) constituting a replication of each
Fund’s respective benchmark index and an amount of cash computed as described below
(the “Cash Component”) and together with the Deposit Securities, the
“Fund Deposit.” The list of the names and numbers of shares of the Deposit
Securities is made available by the Administrator through the facilities of the National
Securities Clearing Corporation (the “NSCC”) immediately prior to the opening
of business each day of the [ ]. The Cash Component represents
the difference between the NAV of a Creation Unit and the market value of the Deposit
Securities and may include a “Dividend Equivalent Payment” as described in the
Funds’ SAI.
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 either must be (1) a “Participating Party,”
i.e.
, a broker-dealer
or other participant in the Clearing Process through the Continuous Net Settlement System
of the NSCC; or (2) a DTC Participant; and, in either case, must have executed an agreement
with the Trust and with the Distributor with respect to creations and redemptions of
Creation Units outside the Clearing Process (“Participant Agreement”). All
Creation Units of the Funds, however created, will be entered on the records of the
Depository in the name of Cede & Co. for the account of a DTC Participant.
- 17 -
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 the Funds 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 date on which a creation (or redemption
order, as discussed below) is placed (the “Transmittal Date”).
Orders
for creation that are effected outside the Clearing Process are likely to require
transmittal by the DTC 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. Investors should refer
to “Creation and Redemption of Creation Units” in the Funds’ SAI for
details regarding the logistics of placement of orders using and outside the Clearing
Process.
Acceptance
of Creation Order
. The Trust reserves the absolute
right to reject a creation order transmitted to it by the Distributor if, for any reason:
(a) the order is not in proper form; (b) the creator or creators, upon obtaining the Shares
ordered, would own 80% or more of the currently outstanding Shares of a Fund; (c) the
Deposit Securities delivered are not as specified by the Administrator, as described above;
(d) acceptance of the Deposit Securities would have certain adverse tax consequences to a
Fund; (e) the acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful;
(f) the acceptance of the Fund Deposit would otherwise, in the discretion of the Trust or
the Adviser, have an adverse effect on the Trust or the rights of beneficial owners; or (g)
in the event that circumstances outside the control of the Trust, the Distributor and the
Adviser make it for all practical purposes impossible to process creation orders. Examples
of such circumstances include acts of God or public service or utility problems such as
fires, floods, extreme weather conditions and power outages resulting in telephone,
telecopy and computer failures; market conditions or activities causing trading halts;
systems failures involving computer or other information systems affecting the Trust, the
Adviser, the Distributor, DTC, the NSCC or any other participant in the creation process,
and similar extraordinary events. The Trust shall notify a prospective creator of its
rejection of the order of such person. The Trust and the Distributor are under no duty,
however, to give notification of any defects or irregularities in the delivery of Fund
Deposits nor shall either of them incur any liability for the failure to give any such
notification. The Trust shall notify a prospective creator of its rejection of the order of
such person.
All
questions as to the number of Shares of each security in 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 fixed creation transaction fee of
$____, which is paid to the Fund (the “Creation Transaction Fee”), is
applicable to each transaction regardless of the number of Creation Units purchased in the
transaction. An additional charge of up to four times the Creation Transaction Fee may be
imposed with respect to transactions effected outside of the Clearing Process (through a
DTC Participant) or to the extent that cash is used in lieu of securities to purchase
Creation Units. See “Creation and Redemption of Creation Units” in the SAI. The
price for each Creation Unit will equal the daily NAV per Share times the number of Shares
in a Creation Unit plus the fees described above and, if applicable, any transfer taxes.
Shares of the Funds may be issued in advance of receipt of all Deposit Securities subject
to various conditions, including a requirement to maintain on deposit with the Funds cash
at least equal to 115% of the market value of the missing Deposit Securities. See
“Creation and Redemption of Creation Units” in the Funds’ SAI.
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 day on
- 18 -
which the [ ]
is open for trading and only through a Participating Party or DTC 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.
The
Administrator, through NSCC, makes available immediately prior to the opening of business
on the [ ] (currently 9:30 a.m. Eastern time) on each day that
the [ ] is open for business, the securities held by a Fund
(“Fund Securities”) that will be applicable (subject to possible amendment or
correction) to redemption requests received in proper form (as defined below) on that day.
Fund Securities received on redemption may not be identical to Deposit Securities which are
applicable to purchasers of Creation Units. Unless cash redemptions are available or
specified for the Funds, the redemption proceeds for a Creation Unit generally consist of
Fund Securities, 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 described
below.
The
redemption transaction fee of $____ is deducted from such redemption proceeds. Should the
Fund Securities have a value greater than the NAV of Shares being redeemed, a compensating
cash payment to the Trust equal to the differential, plus the applicable redemption fee
and, if applicable, any transfer taxes will be required to be arranged for by or on behalf
of the redeeming shareholder. The basic redemption transaction fees are the same no matter
how many Creation Units are being redeemed pursuant to any one redemption request. The
Funds may adjust these fees from time to time based upon actual experience. An additional
charge up to four times the redemption transaction fee may be charged with respect to
redemptions outside of the Clearing Process. An additional variable charge for cash
redemptions or partial cash redemptions (when cash redemptions are available) may also be
imposed. Investors who use the services of a broker or other such intermediary may be
charged a fee for such services. Investors should refer to “Creation and Redemption
of Creation Units” in the Funds’ SAI for details regarding the logistics of
redemption orders using and outside the Clearing Process.
Redemptions
of Shares for Fund Securities will be subject to compliance with applicable U.S. federal
and state securities laws, and the Funds (whether or not they otherwise permit cash
redemptions) reserve the right to redeem Creation Units for cash to the extent that the
Funds could not lawfully deliver specific Deposit Securities upon redemptions or could not
do so without first registering the Fund Securities under such laws. Deliveries of Fund
Securities to redeeming investors generally will be made within three business days. Due to
the schedule of holidays in certain countries, however, the delivery of in-kind redemption
proceeds may take longer than three business days after the day on which the redemption
request is received in proper form. In such cases, the local market settlement procedures
will not commence until the end of the local holiday periods. See the SAI for a list of the
local holidays in the foreign countries relevant to the Funds.
The
right of redemption may be suspended or the date of payment postponed (1) for any period
during which the [ ] is closed (other than customary weekend
and holiday closings); (2) for any period during which trading on the
[ ] is suspended or restricted; (3) for any period during
which an emergency exists as a result of which disposal of the Shares of the Funds or
determination of their NAV is not reasonably practicable; or (4) in such other circumstance
as is permitted by the SEC.
Investors
interested in creating and/or redeeming Creation Units should refer to the more detailed
information “Creation and Redemption of Creation Units” in the Funds’
SAI.
- 19 -
Distributions
Net
Investment Income and Capital Gains
. As a Fund
shareholder, 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
Funds typically earn 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 Funds realize capital gains or losses whenever they sell
securities. Net capital gains are distributed to shareholders as “capital gain
distributions.”
Net
investment income and net capital gains are typically distributed to shareholders at least
annually. Dividends may be declared and paid more frequently to improve index tracking or
to comply with the distribution requirements of the Internal Revenue Code. In addition, the
Funds may determine to distribute at least annually amounts representing the full dividend
yield net of expenses on the underlying investment securities, as if the Funds owned the
underlying investment securities for the entire dividend period, in which case some portion
of each distribution may result in a return of capital. You will be notified regarding the
portion of the distribution which represents a return of capital.
Distributions
in cash may be reinvested automatically in additional Shares of your Fund only if the
broker through which you purchased Shares makes such option available.
Tax Matters
As
with any investment, you should consider how your Fund investment will be taxed. The tax
information in this Prospectus is provided as general information. You should consult your
own tax professional about the tax consequences of an investment in the Funds. Unless your
investment in the Fund is through a tax-exempt entity or taxed-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
. The Funds expect to distribute net
investment income at least annually, and any net realized long-term or short-term capital
gains annually. The Fund may also pay a special distribution at the end of the calendar
year 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. Dividends paid out of a Fund’s income and net short-term
gains, if any, are taxable as ordinary income. The Funds may receive dividends, the
distribution of which the Funds may designate as a qualified dividend. In the event that a
Fund receives such dividend and designates the distribution of such dividend as a qualified
dividend, the qualified dividend may be taxed at the maximum capital gains rate.
Distributions of net long-term capital gains, if any, in excess of net short-term capital
losses are taxable as long-term capital gains, regardless of how long you have held the
Shares.
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 as
capital gain thereafter. 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.
If
you are not a citizen or resident alien of the United States, each 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 carried on
through a permanent establishment in the United States. The
- 20 -
Funds may, under certain circumstances,
designate all or a portion of a dividend as an “interest-related dividend” that
if received by a nonresident alien or foreign entity generally would be exempt from the 30%
U.S. withholding tax, provided that certain other requirements are met. The Funds may also,
under certain circumstances, designate all or a portion of a dividend as a
“short-term capital gain dividend” which if received by a nonresident alien or
foreign entity generally would be exempt from the 30% U.S. withholding tax, unless the
foreign person is a nonresident alien individual present in the United States for a period
or periods aggregating 183 days or more during the foreign person’s taxable year.
However, the Funds do not expect to pay significant amounts of “interest-related
dividends” or “short-term capital gains dividends.” Distributions
attributable to gains from “U.S. real property interests,” including gains from
the disposition of certain U.S. real property holding corporations, will generally be
subject to federal withholding tax and may give rise to an obligation on the part of the
foreign shareholder to file a U.S. tax return. Also, such gain may be subject to a 30%
branch profits tax in the hands of a foreign shareholder that is a corporation. A U.S. real
property holding corporation means any corporation whose fair market value of its U.S. real
property interests equals or exceeds 50% of the sum of the fair market value of its overall
real property interests and any other of its assets which are used or held for use in a
trade or business.
Dividends
and interest from non-U.S. investments received by the Funds 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.
By
law, the Funds must withhold a percentage of your distributions and proceeds if you have
not provided a taxpayer identification number or social security number. The backup
withholding rate for individuals is currently 28%. This is not an additional tax and may be
refunded, or credited against your tax liability, provided certain required information is
furnished to the Internal Revenue Service.
Taxes
on the Sale of [ ]-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.
Taxes
on Creations and Redemptions of Creation Units
. A
person who exchanges equity 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 exchanger’s aggregate basis in the
securities surrendered, taking into consideration the cash component paid. A person who
exchanges Creation Units for equity securities will generally recognize a gain or loss
equal to the difference between the exchangor’s basis in the Creation Units and the
aggregate market value of the securities received. The Internal Revenue Service, however,
may assert that a loss realized upon an exchange of 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
should consult their own tax adviser with respect to whether wash sale rules apply and when
a loss might be deductible.
Under
current U.S. federal income tax laws, any capital gain or loss realized upon a redemption
of Creation Units 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 the Shares
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.
- 21 -
The
foregoing discussion summarizes some of the consequences under current U.S. federal income
tax law of an investment in the Funds. 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.
- 22 -
LICENSE AGREEMENT
The
Adviser has entered into a licensing agreement with Stowe to use the Coal Index and the
Gaming Index. Each Fund is entitled to use its respective benchmark index pursuant to a
sub-licensing arrangement with the Adviser.
THE
FUNDS ARE NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STOWE GLOBAL INDEXES, LLC
(“LICENSOR”). LICENSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
TO THE OWNERS OF THE FUNDS OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF
INVESTING IN SECURITIES GENERALLY OR IN THE FUNDS PARTICULARLY OR THE ABILITY OF THE COAL
INDEX TO TRACK THE PERFORMANCE OF THE PHYSICAL COMMODITIES MARKET. LICENSOR’S ONLY
RELATIONSHIP TO THE LICENSEE IS THE LICENSING OF CERTAIN SERVICE MARKS AND TRADE NAMES OF
LICENSOR AND OF THE COAL INDEX AND THE GAMING INDEX THAT IS DETERMINED, COMPOSED AND
CALCULATED BY LICENSOR WITHOUT REGARD TO THE LICENSEE OR THE FUND. LICENSOR HAS NO
OBLIGATION TO TAKE THE NEEDS OF THE LICENSEE OR THE OWNERS OF THE FUND INTO CONSIDERATION
IN DETERMINING, COMPOSING OR CALCULATING THE COAL INDEX OR THE GAMING INDEX. LICENSOR IS
NOT RESPONSIBLE FOR AND HAS NOT PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES
AT, OR QUANTITIES OF THE FUNDS TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE
EQUATION BY WHICH THE FUNDS ARE TO BE CONVERTED INTO CASH. LICENSOR HAS NO OBLIGATION OR
LIABILITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE
FUNDS.
LICENSOR
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE COAL INDEX OR THE GAMING
INDEX OR ANY DATA INCLUDED THEREIN AND LICENSOR SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. LICENSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE COAL INDEX, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE COAL INDEX OR ANY DATA INCLUDED THEREIN. LICENSOR 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 COAL INDEX OR THE GAMING INDEX OR ANY
DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL LICENSOR
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
THE
FUNDS ARE NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR’S, A
DIVISION OF THE MCGRAW-HILL COMPANIES, INC. (“S&P”) OR ITS THIRD PARTY
LICENSORS. NEITHER S&P NOR ITS THIRD PARTY LICENSORS MAKE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE FUND OR ANY MEMBER OF THE PUBLIC
REGARDING THE ADVISABILITY OF INVESTING IN SECURITIES GENERALLY OR IN THE FUNDS
PARTICULARLY OR THE ABILITY OF THE COAL INDEX OR THE GAMING INDEX TO TRACK GENERAL STOCK
MARKET PERFORMANCE. S&P’S AND ITS THIRD PARTY LICENSOR’S ONLY RELATIONSHIP
TO STOWE GLOBAL INDEXES, LLC IS THE LICENSING OF CERTAIN TRADEMARKS, SERVICE MARKS AND
TRADE NAMES OF S&P AND/OR ITS THIRD PARTY LICENSORS AND FOR THE PROVIDING OF
CALCULATION AND MAINTENANCE SERVICES RELATED TO THE COAL INDEX AND THE GAMING INDEX.
NEITHER S&P NOR ITS THIRD PARTY LICENSORS IS RESPONSIBLE FOR AND HAS NOT PARTICIPATED
IN THE DETERMINATION OF THE PRICES
- 23 -
AND AMOUNT OF THE FUNDS OR THE TIMING OF THE
ISSUANCE OR SALE OF THE FUNDS OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY
WHICH THE FUNDS ARE TO BE CONVERTED INTO CASH. S&P HAS NO OBLIGATION OR LIABILITY IN
CONNECTION WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE FUND.
NEITHER
S&P, ITS AFFILIATES NOR THEIR THIRD PARTY LICENSORS GUARANTEE THE ADEQUACY, ACCURACY,
TIMELINESS OR COMPLETENESS OF THE COAL INDEX OR THE GAMING INDEX OR ANY DATA INCLUDED
THEREIN OR ANY COMMUNICATIONS, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATIONS
(INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P, ITS AFFILIATES AND
THEIR THIRD PARTY LICENSORS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY
ERRORS, OMISSIONS OR DELAYS THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO ITS TRADEMARKS, THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P, ITS AFFILIATES OR
THEIR THIRD PARTY LICENSORS 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.
STANDARD
& POOR’S® AND S&P® ARE REGISTERED TRADEMARKS OF THE MCGRAW-HILL
COMPANIES, INC.; “CALCULATED BY S&P CUSTOM INDICES” AND ITS RELATED
STYLIZED MARK ARE SERVICE MARKS OF THE MCGRAW-HILL COMPANIES, INC. THESE MARKS HAVE BEEN
LICENSED FOR USE BY STOWE GLOBAL INDEXES, LLC.
INDICATIVE VALUE
CALCULATION
DOW
JONES, ITS AFFILIATES, SOURCES AND DISTRIBUTION AGENTS (TOGETHER, THE “INDICATIVE
VALUE CALCULATION AGENT”) SHALL NOT BE LIABLE TO THE ADVISER, ANY CUSTOMER OR ANY
THIRD PARTY FOR ANY LOSS OR DAMAGE, DIRECT, INDIRECT OR CONSEQUENTIAL, ARISING FROM (I) ANY
INACCURACY OR INCOMPLETENESS IN, OR DELAYS, INTERRUPTIONS, ERRORS OR OMISSIONS IN THE
DELIVERY OF THE INTRADAY INDICATIVE VALUE WITH RESPECT TO THE FUND (THE “INDICATIVE
VALUE”) OR ANY DATA RELATED THERETO (THE “DATA”) OR (II) ANY DECISION
MADE OR ACTION TAKEN BY THE ADVISER, ANY CUSTOMER OR THIRD PARTY IN RELIANCE UPON THE DATA.
THE INDICATIVE VALUE CALCULATION AGENT DOES NOT MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, TO
THE ADVISER, ANY INVESTOR IN THE FUND OR ANY ONE ELSE REGARDING THE DATA, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTIES WITH RESPECT TO THE TIMELINESS, SEQUENCE, ACCURACY,
COMPLETENESS, CORRECTNESS, MERCHANTABILITY, QUALITY OR FITNESS FOR A PARTICULAR PURPOSE OR
ANY WARRANTIES AS TO THE RESULTS TO BE OBTAINED BY THE ADVISER, ANY INVESTORS IN THE FUND
OR OTHER PERSON IN CONNECTION WITH THE USE OF THE DATA. THE INDICATIVE VALUE CALCULATION
AGENT SHALL NOT BE LIABLE TO THE ADVISER, ANY INVESTOR IN THE FUND OR OTHER THIRD PARTIES
FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS OF BUSINESS REVENUES, LOST PROFITS OR
ANY INDIRECT, CONSEQUENTIAL, SPECIAL OR SIMILAR DAMAGES WHATSOEVER, WHETHER IN CONTRACT,
TORT OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
- 24 -
FINANCIAL HIGHLIGHTS
The
Funds have not yet commenced operations as of the date of this Prospectus and therefore do
not have a financial history.
- 25 -
GENERAL 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 1940 Act and other applicable law. See the Funds’ SAI for more
information concerning the Trust’s form of organization. Section 12(d)(1) of the 1940
Act 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 Funds beyond the limits set forth in Section 12(d)(1) subject to certain
terms and conditions set forth in an SEC exemptive order issued to the Trust, including
that such investment companies enter into an agreement with a Fund.
Clifford
Chance US LLP serves as counsel to the Trust, including the Funds. _______ serves as the
Fund’s independent registered public accounting firm and will audit the Funds’
financial statements annually.
Additional Information
This
Prospectus does not contain all the information included in the Registration Statement
filed with the SEC with respect to the Funds’ Shares. Information about the Funds can
be reviewed and copied at the SEC’s Public Reference Room and information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1.202.551.8090. The Funds’ Registration Statement, including this Prospectus, the
Fund’s SAI and the exhibits may be examined at the offices of the SEC (100 F Street,
NE, Washington, DC 20549) or on the Edgar database at the SEC’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, or by writing the
SEC’s Public Reference Section, Washington, DC 20549-0102. These documents and other
information concerning the Trust also may be inspected at the offices of the
[ ] (_______________).
The
SAI for these Funds, which has been filed with the SEC, provides more information about the
Fund. The SAI for these Funds is incorporated herein by reference and is legally part of
this Prospectus. It may be obtained without charge by writing to the Fund at Van Eck
Securities Corporation, the Funds’ distributor, at 99 Park Avenue, New York, NY 10016
or by calling the distributor at the following number: Investor Information: 1.888.
MKT.VCTR (658-8287).
Shareholder
inquiries may be directed to a Fund in writing to 99 Park Avenue, 8th Floor, New York, New
York 10016.
The
Funds’ SAI will be available through their website at
www.vaneck.com/etf
.
- 26 -
THE INFORMATION IN THIS STATEMENT OF
ADDITIONAL INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. THE TRUST MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL
THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED.
MARKET
VECTORS ETF TRUST
STATEMENT OF ADDITIONAL INFORMATION
Dated ___________, 2007
This
Statement of Additional Information (“SAI”) is not a Prospectus. It should be
read in conjunction with the Prospectus dated ______, 2007 (the “Prospectus”)
for the Market Vectors ETF Trust (the “Trust”), relating to Market
Vectors—Coal ETF and Market Vectors—Gaming ETF (each, a “Fund” and
together, the “Funds”), as it may be revised from time to time. A copy of the
Prospectus for the Trust, relating to the Funds, may be obtained without charge by writing
to the Trust or the Distributor. The Trust’s address is 99 Park Avenue, 8th Floor,
New York, New York 10016. Capitalized terms used herein that are not defined have the same
meaning as in the Prospectus, unless otherwise noted.
TABLE OF CONTENTS
|
|
|
Page
|
|
General Description Of The
Trust
|
|
3
|
|
|
Investment Policies And
Restrictions
|
|
4
|
|
|
Special Considerations And
Risks
|
|
8
|
|
|
Exchange Listing And
Trading
|
|
12
|
|
|
Board Of Trustees Of The
Trust
|
|
14
|
|
|
Portfolio Holdings
Disclosure
|
|
20
|
|
|
Quarterly Portfolio
Schedule
|
|
20
|
|
|
Code Of Ethics
|
|
20
|
|
|
Proxy Voting Policies And
Procedures
|
|
20
|
|
|
Management
|
|
21
|
|
|
Brokerage Transactions
|
|
24
|
|
|
Book Entry Only System
|
|
24
|
|
|
Creation And Redemption Of
Creation Units
|
|
25
|
|
|
Settlement Periods Greater Than
Seven Days For Year 2007
|
|
32
|
|
|
Determination Of Net Asset
Value
|
|
34
|
|
|
Dividends And
Distributions
|
|
35
|
|
|
Dividend Reinvestment
Service
|
|
35
|
|
|
Control Persons
|
|
35
|
|
|
Taxes
|
|
35
|
|
|
Capital Stock And Shareholder
Reports
|
|
38
|
|
|
Counsel And Independent
Registered Public Accounting Firm
|
|
39
|
|
|
Van Eck Global Proxy Voting
Policies
|
|
40
|
|
i
The
information contained herein regarding the Stowe Coal
Index
SM
and the S-Network Global Gaming
Index
SM
(each, an “Index”) was provided by the Index
Provider, while the information contained herein regarding the securities markets and The
Depository Trust Company (“DTC”) was obtained from publicly available
sources.
THE
FUNDS ARE NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STOWE GLOBAL INDEXES, LLC
(“LICENSOR”). LICENSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
TO THE OWNERS OF THE FUNDS OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF
INVESTING IN SECURITIES GENERALLY OR IN THE FUNDS PARTICULARLY OR THE ABILITY OF THE COAL
INDEX TO TRACK THE PERFORMANCE OF THE PHYSICAL COMMODITIES MARKET. LICENSOR’S ONLY
RELATIONSHIP TO THE LICENSEE IS THE LICENSING OF CERTAIN SERVICE MARKS AND TRADE NAMES OF
LICENSOR AND OF THE COAL INDEX AND THE GAMING INDEX THAT IS DETERMINED, COMPOSED AND
CALCULATED BY LICENSOR WITHOUT REGARD TO THE LICENSEE OR THE FUND. LICENSOR HAS NO
OBLIGATION TO TAKE THE NEEDS OF THE LICENSEE OR THE OWNERS OF THE FUND INTO CONSIDERATION
IN DETERMINING, COMPOSING OR CALCULATING THE COAL INDEX OR THE GAMING INDEX. LICENSOR IS
NOT RESPONSIBLE FOR AND HAS NOT PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES
AT, OR QUANTITIES OF THE FUNDS TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE
EQUATION BY WHICH THE FUNDS ARE TO BE CONVERTED INTO CASH. LICENSOR HAS NO OBLIGATION OR
LIABILITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE
FUNDS.
LICENSOR
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE COAL INDEX OR THE GAMING
INDEX OR ANY DATA INCLUDED THEREIN AND LICENSOR SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. LICENSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE COAL INDEX, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE COAL INDEX OR ANY DATA INCLUDED THEREIN. LICENSOR 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 COAL INDEX OR THE GAMING INDEX OR ANY
DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL LICENSOR
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
THE
FUNDS ARE NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR’S, A
DIVISION OF THE MCGRAW-HILL COMPANIES, INC. (“S&P”) OR ITS THIRD PARTY
LICENSORS. NEITHER S&P NOR ITS THIRD PARTY LICENSORS MAKE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE FUND OR ANY MEMBER OF THE PUBLIC
REGARDING THE ADVISABILITY OF INVESTING IN SECURITIES GENERALLY OR IN THE FUNDS
PARTICULARLY OR THE ABILITY OF THE COAL INDEX OR THE GAMING INDEX TO TRACK GENERAL STOCK
MARKET PERFORMANCE. S&P’S AND ITS THIRD PARTY LICENSOR’S ONLY RELATIONSHIP
TO STOWE GLOBAL INDEXES, LLC IS THE LICENSING OF CERTAIN TRADEMARKS, SERVICE MARKS AND
TRADE NAMES OF S&P AND/OR ITS THIRD PARTY LICENSORS AND FOR THE PROVIDING OF
CALCULATION AND MAINTENANCE SERVICES RELATED TO THE COAL INDEX AND THE GAMING INDEX.
NEITHER S&P NOR ITS THIRD PARTY LICENSORS IS RESPONSIBLE FOR AND HAS NOT PARTICIPATED
IN THE DETERMINATION OF THE PRICES AND AMOUNT OF THE FUNDS OR THE TIMING OF THE ISSUANCE OR
SALE OF THE FUNDS
OR IN THE DETERMINATION OR CALCULATION OF
THE EQUATION BY WHICH THE FUNDS ARE TO BE CONVERTED INTO CASH. S&P HAS NO OBLIGATION OR
LIABILITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE
FUND.
NEITHER
S&P, ITS AFFILIATES NOR THEIR THIRD PARTY LICENSORS GUARANTEE THE ADEQUACY, ACCURACY,
TIMELINESS OR COMPLETENESS OF THE COAL INDEX OR THE GAMING INDEX OR ANY DATA INCLUDED
THEREIN OR ANY COMMUNICATIONS, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATIONS
(INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P, ITS AFFILIATES AND
THEIR THIRD PARTY LICENSORS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY
ERRORS, OMISSIONS OR DELAYS THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO ITS TRADEMARKS, THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P, ITS AFFILIATES OR
THEIR THIRD PARTY LICENSORS 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.
STANDARD
& POOR’S® AND S&P® ARE REGISTERED TRADEMARKS OF THE MCGRAW-HILL
COMPANIES, INC.; “CALCULATED BY S&P CUSTOM INDICES” AND ITS RELATED
STYLIZED MARK ARE SERVICE MARKS OF THE MCGRAW-HILL COMPANIES, INC. THESE MARKS HAVE BEEN
LICENSED FOR USE BY STOWE GLOBAL INDEXES, LLC.
2
GENERAL DESCRIPTION OF THE
TRUST
The
Trust is an open-end management investment company. The Trust currently consists of nine
investment series. This SAI relates to two investment series, Market Vectors—Coal ETF
and Market Vectors—Gaming ETF (each, a “Fund,” and together, the
“Funds”). The Funds invest in common stocks and depositary receipts consisting
of some or all of the component securities of each Fund’s respective benchmark Index.
The Trust was organized as a Delaware statutory trust on March 15, 2001. The shares of each
Fund are referred to herein as “Shares.”
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”), usually
in exchange for a basket of Deposit Securities (together with the deposit of a specified
cash payment). The Shares of the Funds will be listed on the ______________
(“[ ] ”), subject to official notice of issuance,
and will trade in the secondary market at market prices. Those prices may differ from the
Shares’ NAV. Similarly, Shares are also redeemable by the Funds only in Creation
Units, and generally in exchange for specified securities held by each Fund and a specified
cash payment. A Creation Unit consists of 50,000 Shares of each Fund.
The
Trust reserves the right to offer a “cash” option for creations and redemptions
of Shares (subject to applicable legal requirements). In each instance of such cash
creations or redemptions, the Trust may impose transaction fees based on transaction
expenses in the particular exchange that will be higher than the transaction fees
associated with in-kind purchases or redemptions. In all cases, such fees will be limited
in accordance with the requirements of the Securities and Exchange Commission (the
“SEC”) applicable to management investment companies offering redeemable
securities.
3
INVESTMENT POLICIES AND
RESTRICTIONS
Repurchase Agreements
The
Funds may invest in repurchase agreements with commercial banks, brokers or dealers to
generate income from its 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 Trust’s Board of Trustees (“Board” or
“Trustees”) monitors the Funds’ repurchase agreement transactions
generally and has established guidelines and standards for review of the creditworthiness
of any bank, broker or dealer counterparty to a repurchase agreement with a 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 and securities subject to legal or
contractual restrictions on resale, or for which there are no readily available market
quotations.
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, a Fund 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 for a loan by a Fund not within the control of the Fund
and, therefore, the Fund 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. While
the Trust’s management acknowledges these risks, it is expected that they can be
controlled through careful monitoring procedures.
Futures Contracts, Options, Swap
Agreements and Currency Forwards
The
Funds may utilize futures contracts, options, swap agreements and currency forwards.
Futures contracts generally provide for the future sale by one party and purchase by
another party of a specified instrument, index or commodity at a specified future time and
at a specified price. Stock index futures contracts are settled daily with a payment by one
party to the other of a cash amount based on the difference between the level of the stock
index 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 based on
other indexes or combinations of indexes that the Adviser (defined below) believes to be
representative of a Fund’s respective benchmark Index.
Although
futures contracts (other than cash settled futures contracts including most stock 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” a contract which has previously been
“sold,” or “selling” a contract previously “purchased”)
in an
4
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 good faith margin deposit 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 which are higher than the exchange minimums. Futures contracts are customarily
purchased and sold on margin deposits which may range upward from less than 5% of the value
of the contract being traded.
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.
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.
The
Funds may use futures contracts and options thereon, together with positions in cash and
money market instruments, to simulate full investment in a Fund’s Index. Liquid
futures contracts are not currently available for the benchmark index of a Fund. Under such
circumstances, the Adviser may seek to utilize other instruments that it believes to be
correlated to a Fund’s Index components or a subset of the components.
Restrictions on the Use of Futures and
Options
Except
as otherwise specified in the Funds’ Prospectus or this SAI, there are no limitations
on the extent to which the Funds may engage in transactions involving futures and options
thereon. The Funds will take steps to prevent their futures positions from
“leveraging” its securities holdings. When a Fund has a long futures position,
it will maintain with its custodian bank, cash or liquid securities having a value equal to
the notional value of the contract (less any margin deposited in connection with the
position). When a Fund has a short futures position, as part of a complex stock replication
strategy the Fund will maintain with their custodian bank assets substantially identical to
those underlying the contract or cash and liquid securities (or a combination of the
foregoing) having a value equal to the net obligation of the Fund under the contract (less
the value of any margin deposits in connection with the position).
Swap Agreements
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. Although swap agreements entail the risk that a party
will default on its payment obligations thereunder, each Fund seeks to reduce this risk by
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 high liquid
securities having an aggregate value at least equal to the accrued excess is maintained in
an account at the Trust’s custodian bank.
5
Future Developments
The
Funds may take advantage of opportunities in the area of options, futures contracts,
options on futures contracts, options on the Funds, 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 Adviser.
Investment Restrictions
The
Trust has adopted the following investment restrictions as fundamental policies with
respect to each Fund. These restrictions cannot be changed without the approval of the
holders of a majority of the Fund’s outstanding voting securities. For purposes of
the Investment Company Act of 1940, as amended (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 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. Under these
restrictions:
|
|
1.
|
Each Fund may not make loans, except that the
Fund may (i) lend portfolio securities, (ii) enter into repurchase
agreements, (iii) purchase all or a portion of an issue of debt securities,
bank loan 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 Fund 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;
|
|
|
|
|
5.
|
Each Fund may not purchase or sell real estate,
except that the Fund may (i) invest in securities of issuers that invest in
real estate or interests therein; (ii) invest in mortgage- related
securities and other securities that are secured by real estate or
interests therein; and (iii) hold and sell real estate acquired by the Fund
as a result of the ownership of securities;
|
|
|
|
|
6.
|
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;
|
|
|
|
|
7.
|
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; or
|
|
|
6
|
|
8.
|
Each Fund 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 a Fund may invest 25% or more
of the value of its total assets in securities of issuers in any one
industry or group of industries if the index that the Fund replicates
concentrates in an industry or group of industries. This limit does not
apply to securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
|
In
addition to the investment restrictions adopted as fundamental policies as set forth above,
each Fund observes the following restrictions, which may be changed by the Board without a
shareholder vote. Each Fund will not:
|
|
1.
|
Invest in securities which are
“illiquid” securities, including repurchase agreements maturing
in more than seven days and options traded over-the-counter, if the result
is that more than 15% of a Fund’s net assets would be invested in
such securities.
|
|
|
|
|
2.
|
Mortgage, pledge or otherwise encumber its
assets, except to secure borrowing effected in accordance with the
fundamental restriction on borrowing set forth below.
|
|
|
|
|
3.
|
Make short sales of securities.
|
|
|
|
|
4.
|
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 or initial or variation
margin in connection with futures contracts or related options thereon is
not considered the purchase of a security on margin.
|
|
|
|
|
5.
|
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 the Fund and such account.
|
|
|
|
|
6.
|
Purchase securities of open-end or closed-end
investment companies except in compliance with the 1940 Act, although the
Fund may not acquire any securities of registered open-end investment
companies or registered unit investment trusts in reliance on Sections
12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.
|
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
limitations with respect to the borrowing of money and illiquid securities will be
continuously complied with.
As
long as the aforementioned investment restrictions are complied with, each Fund may invest
its remaining assets in money market instruments or funds which reinvest exclusively in
money market instruments, in stocks that are in the relevant market but not the 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 benchmark 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 also will not invest in money market instruments as part of a temporary
defensive strategy to protect against potential stock market declines.
7
SPECIAL CONSIDERATIONS AND
RISKS
A
discussion of the risks associated with an investment in each Fund is contained in the
Funds’ Prospectus under the headings “Market Vectors—Coal
ETF—“Principal Risks of Investing in the Fund” and “Market
Vectors—Gaming ETF—Principal Risks of Investing in the Fund.” The
discussion below supplements, and should be read in conjunction with, such sections of the
Prospectus.
General
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 common stocks generally and other
factors.
An
investment in each Fund should also 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.
Although
most of the securities in a Fund’s respective Index are 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 the Fund’s portfolio securities are limited
or absent or if bid/ask spreads are wide.
The
Funds are not actively managed by traditional methods, and therefore the adverse financial
condition of any one issuer will not result in the elimination of its securities from the
securities held by the Fund unless the securities of such issuer are removed from its
respective Index.
An
investment in each Fund should also be made with an understanding that the Fund will not be
able to replicate 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. It is also
possible that for short 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
8
secondary market or due to other
extraordinary circumstances. Such events are unlikely to continue for an extended period of
time because a 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 is
portfolio holdings in order to continue to qualify as a “regulated investment
company” under the Internal Revenue Code of 1986, as amended (the “Internal
Revenue Code”).
Shares
are subject to the risk of an investment in a portfolio of equity securities in an economic
sector in which the index is highly concentrated. In addition, because it is the policy of
each Fund to generally invest in the securities that comprise its respective Index, the
portfolio of securities held by such Fund (“Fund Securities”) also will be
concentrated in that industry.
Futures and Options
Transactions
Positions
in futures contracts and options may be closed out only on an exchange which 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 will 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.
The Funds, however, intend to utilize futures and options contracts in a manner designed to
limit their risk exposure to that which is comparable to what it would have incurred
through direct investment in stocks.
Utilization
of futures transactions by the Funds involves the risk of imperfect or even negative
correlation to each Fund’s respective benchmark Index if the index underlying the
futures contracts differs from the benchmark index. There is also the risk of loss by the
Funds of margin deposits in the event of bankruptcy of 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 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 future positions and subjecting some futures traders to substantial
losses.
9
Swaps
The
use of swap agreements involves certain risks. For example, if the counterparty, under a
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 delay.
U.S. Federal Tax Treatment of Futures
Contracts
The
Funds 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 futures
contracts as of the end of the year as well as those actually realized during the year. The
Fund may be required to defer the recognition of losses on futures contracts to the extent
of any unrecognized gains on related positions held by the Fund.
In
order for each Fund to continue to qualify for U.S. federal income tax treatment as a
regulated investment company, 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, gains from the sale of securities or of
foreign currencies or other income derived with respect to a Fund’s business of
investing in securities. It is anticipated that any net gain realized from the closing out
of futures contracts will be considered gain from the sale of securities and therefore will
be qualifying income for purposes of the 90% requirement.
The
Funds distribute 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 a
Fund’s fiscal year) on futures transactions. 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.
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, at any point a “distribution,” as such term is used in the
Securities Act, may occur. 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(3)(C) of the
Securities Act, would be unable to take advantage of the prospectus-delivery exemption
provided by Section 4(3) of the Securities Act. This is because the prospectus delivery
exemption in Section 4(3) of the Securities Act is not available in respect
10
of such transactions as a result of Section
24(d) of the 1940 Act. 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(3)(A) of the Securities Act would be unable
to take advantage of the prospectus delivery exemption provided by Section 4(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 [ ] is satisfied by the fact that the prospectus is available at
the [ ] upon request. The prospectus delivery mechanism provided in Rule 153
is only available with respect to transactions on an exchange.
11
EXCHANGE LISTING AND
TRADING
A
discussion of exchange listing and trading matters associated with an investment in the
Funds is contained under the headings “Market Vectors—Coal
ETF—“Principal Risks of Investing in the Fund,”
“Market—Vectors—Gaming ETF—Principal Risks of Investing in the
Fund,” “Shareholder Information—Determination of Net Asset Value”
and “Shareholder Information—Buying and Selling Exchange-Traded Shares.”
The discussion below supplements, and should be read in conjunction with, such sections of
the Funds’ Prospectus.
The
Shares of Market Vectors—Coal ETF and Market Vectors—Gaming ETF will be traded,
subject to notice of issuance, in the secondary market at prices that may differ to some
degree from their NAV. There can be no assurance that the requirements of the
[ ] necessary to maintain the listing of Shares of the Fund
will continue to be met.
The
[ ] 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 for 30 or more consecutive trading days, (2) the value of a Fund’s respective
underlying index or portfolio of securities on which the Funds is based is no longer
calculated or available or (3) such other event shall occur or condition exists that, in
the opinion of the [ ], makes further dealings on the
[ ] inadvisable. In addition, the
[ ] will remove the Shares from listing and trading upon
termination of the Trust.
As
in the case of other securities traded on the [ ],
brokers’ commissions on transactions 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 [ ] are approximately consistent with the current value of
the assets of the Funds on a per Share basis, an updated Indicative Per Share Portfolio
Value is disseminated intra-day through the facilities of the Consolidated Tape
Association’s Network B. Indicative Per Share Portfolio Values are disseminated every
15 seconds during regular [ ] trading hours based on the most
recently reported prices of Fund Securities. As the respective international local markets
close, the Indicative Per Share Portfolio Value will continue to be updated for foreign
exchange rates for the remainder of the U.S. trading day at the prescribed 15 second
interval. The Funds are not involved in or responsible for the calculation or dissemination
of the Indicative Per Share Portfolio Value and make no warranty as to the accuracy of the
Indicative Per Share Portfolio Value.
The
Indicative Per Share Portfolio Value has an equity securities value component and a net
other assets value component, each of which are summed and divided by the total estimated
Fund Shares outstanding, including Shares expected to be issued by each Fund on that day,
to arrive at an Indicative Per Share Portfolio Value.
The
equity securities value component of the Indicative Per Share Portfolio Value represents
the estimated value of the portfolio securities held by a Fund on a given day. While the
equity securities value component estimates the current market value of a Fund’s
portfolio securities, it does not necessarily reflect the precise composition or market
value of the current portfolio of securities held by the Trust for the Fund at a particular
point in time. Therefore, the Indicative Per Share Portfolio Value disseminated during
[ ] trading hours should be viewed only as an estimate of a
Fund’s NAV per share, which is calculated at the close of the regular trading session
on the [ ] (ordinarily 4:00 p.m. Eastern time) on each day
Business Day.
12
In
addition to the equity securities value component described in the preceding paragraph, the
Indicative Per Share Portfolio Value for each Fund includes a net other assets value
component consisting of estimates of all other assets and liabilities of the Fund
including, among others, current day estimates of dividend income and expense
accruals.
13
BOARD OF TRUSTEES OF THE
TRUST
Trustees and Officers of the
Trust
The
Board has responsibility for the overall management and operations of the Trust, including
general supervision of the duties performed by the Adviser and other service providers. The
Board currently consists of five Trustees.
Independent Trustees
|
|
|
|
|
Term
of
|
|
|
|
Number
of
|
|
|
|
|
|
|
|
Office
2
and
|
|
|
|
Portfolios in
|
|
Other
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Fund
|
|
Directorships
|
|
Name,
Address
1
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Complex
3
|
|
Held By
|
|
and Age
|
|
Fund
|
|
Served
|
|
During Past Five Years
|
|
Overseen
|
|
Trustee
|
|
David H. Chow
49
*
|
|
Trustee
|
|
Since 2006
|
|
Chief Investment
Officer,
|
|
9
|
|
None.
|
|
|
|
|
|
|
|
Torch Hill Investment
|
|
|
|
|
|
|
|
|
|
|
|
Partners (private equity
|
|
|
|
|
|
|
|
|
|
|
|
firm), September 2007 to
|
|
|
|
|
|
|
|
|
|
|
|
present; Managing
Partner,
|
|
|
|
|
|
|
|
|
|
|
|
Lithos Capital Partners
|
|
|
|
|
|
|
|
|
|
|
|
LLC (private equity
firm),
|
|
|
|
|
|
|
|
|
|
|
|
January 2006 to
September
|
|
|
|
|
|
|
|
|
|
|
|
2007; Managing Director,
|
|
|
|
|
|
|
|
|
|
|
|
DanCourt Management
|
|
|
|
|
|
|
|
|
|
|
|
LLC (strategy consulting
|
|
|
|
|
|
|
|
|
|
|
|
firm), March 1999 to
|
|
|
|
|
|
|
|
|
|
|
|
present; Managing
|
|
|
|
|
|
|
|
|
|
|
|
Director, AIG Horizon
|
|
|
|
|
|
|
|
|
|
|
|
Partners, LLC (venture
|
|
|
|
|
|
|
|
|
|
|
|
capital firm), May 2000
to
|
|
|
|
|
|
|
|
|
|
|
|
July 2002.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Alastair Short 54*
|
|
Trustee
|
|
Since 2006
|
|
Vice Chairman, W.P.
|
|
18
|
|
None.
|
|
|
|
|
|
|
|
Stewart & Co., Ltd.
(asset
|
|
|
|
|
|
|
|
|
|
|
|
management firm),
|
|
|
|
|
|
|
|
|
|
|
|
September 2007 to
present;
|
|
|
|
|
|
|
|
|
|
|
|
Managing Director, The
|
|
|
|
|
|
|
|
|
|
|
|
GlenRock Group, LLC
|
|
|
|
|
|
|
|
|
|
|
|
(private equity
investment
|
|
|
|
|
|
|
|
|
|
|
|
firm), May 2004 to
|
|
|
|
|
|
|
|
|
|
|
|
September 2007;
President,
|
|
|
|
|
|
|
|
|
|
|
|
Apex Capital Corporation
|
|
|
|
|
|
|
|
|
|
|
|
(personal investment
|
|
|
|
|
|
|
|
|
|
|
|
vehicle), Jan. 1988 to
|
|
|
|
|
|
|
|
|
|
|
|
present; President,
Matrix
|
|
|
|
|
|
|
|
|
|
|
|
Global Investments, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
and predecessor company
|
|
|
|
|
|
|
|
|
|
|
|
(private investment
|
|
|
|
|
|
|
|
|
|
|
|
company), September 1995
|
|
|
|
|
|
|
|
|
|
|
|
to January 1999.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard D. Stamberger
48*
|
|
Trustee
|
|
Since 2006
|
|
Director, President
and
|
|
18
|
|
None.
|
|
|
|
|
|
|
|
CEO, SmartBrief, Inc.
|
|
|
|
|
|
1
|
The address for each Trustee and officer is 99 Park
Avenue, 8th Floor, New York, New York 10016.
|
14
|
2
|
Each Trustee serves until resignation, death,
retirement or removal. Officers are elected yearly by the Trustees.
|
|
|
|
|
3
|
The Fund Complex consists of the Van Eck Funds, Van
Eck Funds, Inc. , Van Eck Worldwide Insurance Trust and Market Vectors ETF
Trust.
|
|
|
|
|
*
|
Member of the Audit Committee.
|
Interested Trustees
|
|
|
|
|
Term
of
|
|
|
|
Number
of
|
|
Other
|
|
|
|
|
|
Office
2
and
|
|
|
|
Portfolios in
|
|
Directorships
|
|
|
|
Position(s)
|
|
Length of
|
|
|
|
Fund
|
|
Held Outside
|
|
Name,
Address
1
|
|
Held with
|
|
Time
|
|
Principal
Occupation(s)
|
|
Complex
3
|
|
the Fund
|
|
and Age
|
|
Fund
|
|
Served
|
|
During Past Five
Years
|
|
Overseen
|
|
Complex:
|
|
|
|
Jan F. van
Eck
4
43
|
|
Trustee
|
|
Since 2006
|
|
Director and Executive
Vice
|
|
18
|
|
Director,
|
|
|
|
|
|
|
|
President, Van Eck
|
|
|
|
Greylock
|
|
|
|
|
|
|
|
Associates Corporation;
|
|
|
|
Capital
|
|
|
|
|
|
|
|
Director, Executive Vice
|
|
|
|
Associates
|
|
|
|
|
|
|
|
President and Chief
|
|
|
|
LLC.
|
|
|
|
|
|
|
|
Compliance Officer, Van
|
|
|
|
|
|
|
|
|
|
|
|
Eck Securities
Corporation;
|
|
|
|
|
|
|
|
|
|
|
|
Director and President,
Van
|
|
|
|
|
|
|
|
|
|
|
|
Eck Absolute Return
|
|
|
|
|
|
|
|
|
|
|
|
Advisers Corp.
|
|
|
|
|
|
|
|
Phillip D.
DeFeo
5
61
|
|
Chairman
|
|
Since 2006
|
|
Managing Director,
Lithos
|
|
9
|
|
Director of Visa
|
|
|
|
and Trustee
|
|
|
|
Capital Trustee Partners
|
|
|
|
USA,
|
|
|
|
|
|
|
|
LLC., 2005 to present;
|
|
|
|
Computershare
|
|
|
|
|
|
|
|
Chairman and CEO,
Pacific
|
|
|
|
Limited,
|
|
|
|
|
|
|
|
Exchange, Inc., 1999 to
2005.
|
|
|
|
Reflow,
|
|
|
|
|
|
|
|
|
|
|
|
Forward Asset
|
|
|
|
|
|
|
|
|
|
|
|
Management,
|
|
|
|
|
|
|
|
|
|
|
|
LLC, Berea
|
|
|
|
|
|
|
|
|
|
|
|
College and
|
|
|
|
|
|
|
|
|
|
|
|
Interactive
|
|
|
|
|
|
|
|
|
|
|
|
Brokers LLC.
|
|
1
|
The address for each Trustee and officer is 99 Park
Avenue, 8th Floor, New York, New York 10016.
|
|
|
|
2
|
Each Trustee serves until resignation, death,
retirement or removal. Officers are elected yearly by the Trustees.
|
|
|
|
3
|
The Fund Complex consists of the Van Eck Funds, Van
Eck Funds, Inc., Van Eck Worldwide Insurance Trust and Market Vectors ETF
Trust.
|
|
|
|
4
|
“Interested person” of the Funds within
the meaning of the 1940 Act. Mr. van Eck is an officer of the Adviser.
|
|
|
|
5
|
Mr. DeFeo is an “interested person” of
the Funds within the meaning of the 1940 Act due to his directorship at Interactive
Brokers LLC
.
|
|
|
Officer Information
The
Officers of the Trust, their addresses, positions with the Funds, ages and principal
occupations during the past five years are set forth below.
15
|
|
|
|
|
Term
of
|
|
|
|
|
|
|
|
Office
2
and
|
|
|
|
Name,
Address
1
|
|
Position(s) Held
|
|
Length of
|
|
|
|
and Age
|
|
with Fund
|
|
Time Served
|
|
Principal Occupation(s)
During Past Five Years
|
|
|
|
Charles T. Cameron 47
|
|
Vice President
|
|
Since 2006
|
|
Director of Trading, Van Eck
Associates
|
|
|
|
|
|
|
|
Corporation; Co-Portfolio
Manager, Worldwide
|
|
|
|
|
|
|
|
Bond Fund Series; Officer of
three other
|
|
|
|
|
|
|
|
investment companies advised by
the Adviser.
|
|
|
|
Keith Carlson 51
|
|
Chief Executive
|
|
Since 2006
|
|
President, Van Eck Associates
Corporation and
|
|
|
|
Officer and
|
|
|
|
President, Van Eck Securities
Corporation since
|
|
|
|
President
|
|
|
|
February 2004; Private
Investor, June 2003 –
|
|
|
|
|
|
|
|
January 2004; Independent
Consultant, Waddell
|
|
|
|
|
|
|
|
& Reed, Inc., April 2003 -
May 2003; Senior
|
|
|
|
|
|
|
|
Vice President, Waddell &
Reed, Inc., December
|
|
|
|
|
|
|
|
2002 - March 2003;
President/Chief Executive
|
|
|
|
|
|
|
|
Officer/Director/Executive Vice
President/Senior
|
|
|
|
|
|
|
|
Vice President, Mackenzie
Investment
|
|
|
|
|
|
|
|
Management Inc., April
1985-December
|
|
|
|
|
|
|
|
2002.President/Chief Executive
Officer/Director,
|
|
|
|
|
|
|
|
Ivy Mackenzie Distributors,
Inc., June 1993 -
|
|
|
|
|
|
|
|
December 2002;
Chairman/Director/President,
|
|
|
|
|
|
|
|
Ivy Mackenzie Services
Corporation, June 1993 -
|
|
|
|
|
|
|
|
December 2002;
Chairman/Director/Senior
|
|
|
|
|
|
|
|
Vice President, Ivy Management
Inc., January
|
|
|
|
|
|
|
|
1992 - December 2002; Officer
of three other
|
|
|
|
|
|
|
|
investment companies advised by
the Adviser.
|
|
|
|
Susan C. Lashley 52
|
|
Vice President
|
|
Since 2006
|
|
Vice President, Van Eck
Associates Corporation;
|
|
|
|
|
|
|
|
Vice President, Mutual Fund
Operations, Van
|
|
|
|
|
|
|
|
Eck Securities Corporation;
Officer of three
|
|
|
|
|
|
|
|
other investment companies
advised by the
|
|
|
|
|
|
|
|
Adviser.
|
|
|
|
Thomas K. Lynch 50
|
|
Chief Compliance
|
|
Since 2006
|
|
Chief Compliance Officer, Van
Eck Associates
|
|
|
|
Officer
|
|
|
|
Corporation and Van Eck
Absolute Return
|
|
|
|
|
|
|
|
Advisers Corp., since December
2006; Vice
|
|
|
|
|
|
|
|
President, Van Eck Associates
Corporation and
|
|
|
|
|
|
|
|
Van Eck Absolute Return
Advisers Corp., since
|
|
|
|
|
|
|
|
April 2005; Second Vice
President, Investment
|
|
|
|
|
|
|
|
Reporting, TIAA-CREF, January
1996 - April
|
|
|
|
|
|
|
|
2005; Senior Manager, Audits,
Grant Thornton,
|
|
|
|
|
|
|
|
December 1993 – January
1996; Senior
|
|
|
|
|
|
|
|
Manager, Audits, McGladrey
& Pullen,
|
|
|
|
|
|
|
|
December 1986 - December 1993;
Officer of
|
|
|
|
|
|
|
|
three other investment
companies advised by the
|
|
|
|
|
|
|
|
Adviser.
|
16
|
|
|
|
|
Term
of
|
|
|
|
|
|
|
|
Office
2
and
|
|
|
|
Name,
Address
1
|
|
Position(s) Held
|
|
Length of
|
|
|
|
and Age
|
|
with Fund
|
|
Time Served
|
|
Principal Occupation(s)
During Past Five Years
|
|
|
|
Joseph J. McBrien 59
|
|
Senior Vice
|
|
Since 2006
|
|
Senior Vice President, General
Counsel and
|
|
|
|
President and
|
|
|
|
Secretary, Van Eck Associates
Corporation, Van
|
|
|
|
Secretary
|
|
|
|
Eck Securities Corporation and
Van Eck
|
|
|
|
|
|
|
|
Absolute Return Advisers Corp.,
since December
|
|
|
|
|
|
|
|
2005; Managing Director,
Chatsworth Securities
|
|
|
|
|
|
|
|
LLC, March 2001 - November
2005; Private
|
|
|
|
|
|
|
|
Investor/Consultant, September
2000 – February
|
|
|
|
|
|
|
|
2001; Executive Vice President
and General
|
|
|
|
|
|
|
|
Counsel, Mainstay Management
LLC,
|
|
|
|
|
|
|
|
September 1999 – August
2000; Officer of three
|
|
|
|
|
|
|
|
other investment companies
advised by the
|
|
|
|
|
|
|
|
Adviser.
|
|
|
|
Alfred J. Ratcliffe 59
|
|
Vice President and
|
|
Since 2006
|
|
Vice President, Van Eck
Associates Corporation
|
|
|
|
Treasurer
|
|
|
|
since November 2006; Vice
President and
|
|
|
|
|
|
|
|
Director of Mutual Fund
Accounting and
|
|
|
|
|
|
|
|
Administration, PFPC, March
2000 to November
|
|
|
|
|
|
|
|
2006; First Vice President and
Treasurer, Zweig
|
|
|
|
|
|
|
|
Mutual Funds, March 1995 to
December 1999;
|
|
|
|
|
|
|
|
Vice President and Director of
Mutual Fund
|
|
|
|
|
|
|
|
Accounting and Administration,
The Bank of
|
|
|
|
|
|
|
|
New York, December 1987 to
March 1995;
|
|
|
|
|
|
|
|
Officer of three other
investment companies
|
|
|
|
|
|
|
|
advised by the Adviser.
|
|
|
|
Jonathan R. Simon 33
|
|
Vice President and
|
|
Since 2006
|
|
Vice President, Associate
General Counsel, Van
|
|
|
|
Assistant Secretary
|
|
|
|
Eck Associates Corporation, Van
Eck Securities
|
|
|
|
|
|
|
|
Corporation and Van Eck
Absolute Return
|
|
|
|
|
|
|
|
Advisers Corp. since August
2006, Associate,
|
|
|
|
|
|
|
|
Schulte Roth & Zabel LLP,
July 2004 - July
|
|
|
|
|
|
|
|
2006; Associate, Carter Ledyard
& Milburn LLP,
|
|
|
|
|
|
|
|
September 2001 - July 2004;
Officer of three
|
|
|
|
|
|
|
|
other investment companies
advised by the
|
|
|
|
|
|
|
|
Adviser.
|
|
|
|
Bruce J. Smith 52
|
|
Senior Vice
|
|
Since 2006
|
|
Senior Vice President and Chief
Financial
|
|
|
|
President and
|
|
|
|
Officer, Van Eck Associates
Corporation; Senior
|
|
|
|
Chief Financial
|
|
|
|
Vice President, Chief Financial
Officer,
|
|
|
|
Officer
|
|
|
|
Treasurer and Controller, Van
Eck Securities
|
|
|
|
|
|
|
|
Corporation and Van Eck
Absolute Return
|
|
|
|
|
|
|
|
Advisers Corp.; Officer of
three other investment
|
|
|
|
|
|
|
|
companies advised by the
Adviser.
|
17
|
|
|
|
|
Term
of
|
|
|
|
|
|
|
|
Office
2
and
|
|
|
|
Name,
Address
1
|
|
Position(s) Held
|
|
Length of
|
|
|
|
and
Age
|
|
with Fund
|
|
Time Served
|
|
Principal Occupation(s)
During Past Five Years
|
|
|
|
Derek S. van Eck(3)
42
|
|
Executive Vice
|
|
Since 2006
|
|
President of Worldwide Hard
Assets Fund series
|
|
|
|
President
|
|
|
|
and the Worldwide Real Estate
Fund series of
|
|
|
|
|
|
|
|
Van Eck Worldwide Insurance
Trust and the
|
|
|
|
|
|
|
|
Global Hard Assets Fund series
of Van Eck
|
|
|
|
|
|
|
|
Funds; Director of Van Eck
Associates
|
|
|
|
|
|
|
|
Corporation; Director and
Executive Vice
|
|
|
|
|
|
|
|
President, Van Eck Securities
Corporation;
|
|
|
|
|
|
|
|
Director and Executive Vice
President, Van Eck
|
|
|
|
|
|
|
|
Absolute Return Advisers Corp.;
Director,
|
|
|
|
|
|
|
|
Greylock Capital Associates
LLC.
|
|
|
|
Jan F. van Eck (3)
43
|
|
Executive Vice
|
|
Since 2006
|
|
Director and Executive Vice
President, Van Eck
|
|
|
|
President
|
|
|
|
Associates Corporation;
Director, Executive Vice
|
|
|
|
|
|
|
|
President and Chief Compliance
Officer, Van
|
|
|
|
|
|
|
|
Eck Securities Corporation;
Director and
|
|
|
|
|
|
|
|
President, Van Eck Absolute
Return Advisers
|
|
|
|
|
|
|
|
Corporation; Director, Greylock
Capital
|
|
|
|
|
|
|
|
Associates LLC.
|
|
1
|
The address for each Officer is 99 Park Avenue, 8th
Floor, New York, New York 10016.
|
|
|
|
2
|
Officers are elected yearly by the Trustees.
|
|
|
|
3
|
Messrs. Jan F. van Eck and Derek S. van Eck are
brothers.
|
The
Board of the Trust met four times during the fiscal year ended December 31,
2006.
The
Board has an Audit Committee, consisting of four Trustees who are not “interested
persons” (as defined in the 1940 Act) of the Trust (an “Independent
Trustee”). Messrs. Chow, Short and Stamberger currently serve as members of the Audit
Committee and each has been designated as an “audit committee financial expert”
as defined under Item 407 of Regulation S-K of the Exchange Act. Mr. Short is the Chairman
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 and, as the Audit Committee deems appropriate, to inquire
into the internal control over financial reporting of certain third-party service
providers; (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 Audit Committee met three times during the fiscal year ended December
31, 2006.
The
officers and Trustees of the Trust, in the aggregate, own less than 1% of the Shares of the
Fund.
For
each Trustee, the dollar range of equity securities beneficially owned by the Trustee in
the Fund and in all registered investment companies overseen by the Trustee is shown
below.
18
|
|
|
|
|
Aggregate Dollar Range Of
Equity
|
|
|
|
Dollar Range of
Equity
|
|
Securities in all Registered
Investment
|
|
|
|
Securities in
Market
|
|
Companies Overseen By
Trustee In
|
|
|
|
Vectors ETF Trust
|
|
Family of Investment
Companies
|
|
Name Of Trustee
|
|
(As of December 31, 2006)
|
|
(As of December 31, 2006)
|
|
|
|
David H. Chow
|
|
None
|
|
None
|
|
Phillip D. DeFeo
|
|
None
|
|
None
|
|
R. Alastair Short
|
|
None
|
|
$10,001 – $50,000
|
|
Richard D. Stamberger
|
|
None
|
|
Over $100,000
|
|
Jan F. van Eck
|
|
None
|
|
Over $100,000
|
As
to each Independent Trustee and his immediate family members, no person owned beneficially
or of record securities in an investment adviser 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
The
Trust pays each Independent Trustee and Mr. DeFeo an annual retainer of $10,000, a per
meeting fee of $5,000 for scheduled quarterly meetings of the Board and each special
meeting of the Board and a per meeting fee of $2,500 for telephonic meetings. The Trust
pays the Chairman of the Board an annual retainer of $10,000 and each Trustee who acts as
chairman of a committee an annual retainer of $5,000. The Trust also reimburses each
Trustee 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 estimated compensation that is contemplated to be paid to the
Trustees by the Trust for the fiscal year ended December 31, 2007. Annual Trustee fees may
be reviewed periodically and changed by the Trust’s Board.
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
Pension or
Retirement
|
|
Annual
|
|
From the
Trust
|
|
|
|
Aggregate
|
|
Deferred
|
|
Benefits Accrued
as
|
|
Benefits
|
|
and the
Fund
|
|
|
|
Compensation
|
|
Compensation
|
|
Part of the
Trust’s
|
|
Upon
|
|
Complex
(1)
Paid
|
|
Name of Trustee
|
|
From the Trust
|
|
From the Trust
|
|
Expenses
|
|
Retirement
|
|
to Trustee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David H. Chow
|
|
$
|
0
|
|
$
|
35,000
|
|
N/A
|
|
N/A
|
|
$
|
35,000
|
|
Phillip D.
DeFeo
(2)
|
|
$
|
0
|
|
$
|
40,000
|
|
N/A
|
|
N/A
|
|
$
|
40,000
|
|
R. Alastair Short
|
|
$
|
35,000
|
|
$
|
0
|
|
N/A
|
|
N/A
|
|
$
|
78,000
|
|
Richard D.
Stamberger
|
|
$
|
26,250
|
|
$
|
8,750
|
|
N/A
|
|
N/A
|
|
$
|
85,000
|
|
Jan F. van Eck
|
|
$
|
0
|
|
$
|
0
|
|
N/A
|
|
N/A
|
|
$
|
0
|
|
(1)
|
The “Fund Complex“ consists of Van Eck
Funds, Van Eck Funds, Inc., Van Eck Worldwide Insurance Trust and Market Vectors
ETF Trust.
|
|
|
|
(2)
|
“Interested person” under the 1940
Act.
|
|
|
19
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. In addition, a basket
composition file, which includes the security names and share quantities
to deliver in exchange for Shares, together with estimates and actual
cash components is publicly disseminated daily prior to the opening of
the [ ] 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, Adviser, Custodian and Distributor
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-Q. Form N-Q for the
Funds will be available on the SEC’s website at http://www.sec.gov. The Funds’
Form N-Q may also be reviewed and copied at the SEC’s Public Reference Room in
Washington, D.C. and information on the operation of the Public Reference Room may be
obtained by calling 202.551.8090. The Funds’ Form N-Q will be available through the
Funds’ website, at www.vaneck.com or by writing to 99 Park Avenue, 8th Floor, New
York, New York 10016.
CODE OF ETHICS
The
Funds, the Adviser and the Distributor have each adopted a Code of Ethics pursuant to Rule
17j-1 under the 1940 Act, designed to monitor personal securities transactions by their
personnel (the “Personnel”). The Code of Ethics requires that all trading in
securities that are being purchased or sold, or are being considered for purchase or sale,
by the Funds must be approved in advance by the Head of Trading, the Director of Research
and the Chief Compliance Officer of the Adviser. Approval will be granted if the security
has not been purchased or sold or recommended for purchase or sale for a Fund within seven
days, or otherwise if it is determined that the personal trading activity will not have a
negative or appreciable impact on the price or market of the security, or is of such a
nature that it does not present the dangers or potential for abuses that are likely to
result in harm or detriment to the Funds. At the end of each calendar quarter, all
Personnel must file a report of all transactions entered into during the quarter. These
reports are reviewed by a senior officer of the Adviser.
Generally,
all Personnel must obtain approval prior to conducting any transaction in securities.
Independent Trustees, however, are not required to obtain prior approval of personal
securities transactions. Personnel may purchase securities in an initial public offering or
private placement,
provided
that he or she obtains preclearance of the purchase and makes
certain representations.
PROXY VOTING POLICIES AND
PROCEDURES
The
Funds’ proxy voting record will be available upon request 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 will be available through the Funds’ website, at
www.vaneck.com, or by writing to 99 Park Avenue, 8th Floor, New York, New York 10016. The
Funds’ Form N-PX will also be available on the SEC’s website at
www.sec.gov.
20
MANAGEMENT
The
following information supplements and should be read in conjunction with the section in the
Prospectus entitled “Management.”
The Investment Manager
Van
Eck Associates Corporation (the “Adviser”) acts as investment manager to the
Trust and, subject to the supervision of the Board, is responsible for the day-to-day
investment management of the Funds. The Adviser is a private company with headquarters in
New York and also manages mutual funds, other pooled investment vehicles and separate
accounts.
The
Adviser serves as investment manager to the Funds pursuant to the Investment Management
Agreement between the Trust and the Adviser. Under the Investment Management Agreement, the
Adviser, 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. The
Adviser is responsible for placing purchase and sale orders and providing continuous
supervision of the investment portfolio of the Funds.
Pursuant
to the Investment Management Agreement, the Trust has agreed to indemnify the 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 the Investment Management Agreement, the Adviser is paid a monthly fee based on a
percentage of each Fund’s average daily net assets at the annual rate of 0.50% . From
time to time, the Adviser may waive all or a portion of its fees. Until at least May 1,
2008, the Adviser has contractually agreed to waive fees and/or pay Fund expenses to the
extent necessary to prevent the operating expenses of each Fund (excluding interest
expense, brokerage commissions, offering costs and other trading expenses, fees, taxes and
extraordinary expenses) from exceeding 0.65% of average daily net assets per year. The
offering costs excluded from the expense caps are: (a) legal fees pertaining to a
Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial
fees paid to be listed on an exchange.
Term.
The Investment Management Agreement
continues in effect until May 12, 2008. Thereafter, the 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. The 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. The
Investment Management Agreement is also terminable upon 60 days notice by the Adviser and
will terminate automatically in the event of its assignment (as defined in the 1940
Act).
Legal Investigations and Proceedings.
In
connection with their investigations of practices identified as “market timing”
and “late trading” of mutual fund shares, the Office of the New York State
Attorney General (“NYAG“) and the SEC have requested and received information
from the Adviser. The Adviser will cooperate with such investigations. If it is determined
that the Adviser or its affiliates engaged in improper or wrongful activity that caused a
loss to a Fund, the Board of Trustees of the Fund will determine the amount of restitution
that should be made to a Fund or its shareholders. At the present time, the amount of such
restitution, if any, has not been determined.
21
In
July 2004, the Adviser received a “Wells Notice” from the SEC in connection
with the SEC’s investigation of market-timing activities. This Wells Notice informed
the Adviser that the SEC staff is considering recommending that the SEC bring a civil or
administrative action alleging violations of U.S. securities laws against the Adviser and
two of its senior officers. Under SEC procedures, the Adviser has an opportunity to respond
to the SEC staff before the staff makes a formal recommendation. The time period for the
Adviser’s response has been extended until further notice from the SEC. There cannot
be any assurance that, if the SEC and/or the NYAG were to assess sanctions against the
Adviser, such sanctions would not materially and adversely affect the Adviser.
The Administrator
Van
Eck Associates Corporation also serves as administrator for the Trust pursuant to the
Investment Management Agreement. Under the Investment Management Agreement, the 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.
The 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, 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.
Custodian and Transfer
Agent
The
Bank of New York serves as custodian for the Funds pursuant to a Custodian Agreement. As
Custodian, The Bank of New York holds the Funds’ assets. The Bank of New York serves
as each Fund’s transfer agent pursuant to a Transfer Agency Agreement. The Bank of
New York may be reimbursed by each Fund for its out-of-pocket expenses. In addition, The
Bank of New York provides various accounting services to each of the Funds pursuant to a
fund accounting agreement.
The Distributor
Van
Eck Securities Corporation (the “Distributor”) is the principal underwriter and
distributor of Shares. Its principal address is 99 Park Avenue, New York, New York 10016
and investor information can be obtained by calling 1-888-MKT-VCTR. The Distributor has
entered into an agreement with the Trust which will continue from its effective date unless
terminated by either party upon 60 days’ prior written notice to the other party by
the Trust and the Adviser, 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
22
NASD, Inc. (“NASD”). 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).
The Portfolio Managers
The
portfolio managers who are currently responsible for the day-to-day management of each
Fund’s portfolio are Hao-Hung (Peter) Liao and Edward M. Kuczma, Jr. Mr. Liao has
been employed by the Adviser since the summer of 2004. Mr. Liao attended New York
University from 2000 to 2004 where he received a Bachelor of Arts majoring in mathematics
and economics. Prior to Mr. Liao’s current role of portfolio manager to the funds of
the Trust, Mr. Liao served as investment analyst for the Worldwide Absolute Return Fund
where his role included manager review, performance attribution, changes in manager
mandates and risk management. Mr. Liao continues to serve in this capacity. Mr. Kuczma has
been employed by the Adviser since January of 2004. Prior to Mr. Kuczma’s current
role of investment analyst, he worked from January 2004 to June 2004 in Portfolio
Administration for the Adviser. After serving as a fund administrator for international
portfolios, Mr. Kuczma became an analyst for emerging market companies. He also serves on a
committee that reviews managers and changing mandates for a multi-manager absolute return
strategy. Mr. Kuczma attended Georgetown University from 1999 to 2003. Other than the 15
portfolios of the Trust, Messrs. Liao and Kuczma do not manage any other registered
investment companies, pooled investment vehicles or other accounts.
Although
the funds in the Trust that are managed by Messrs. Liao and Kuczma may have different
investment strategies, each has an investment objective of seeking to replicate, before
fees and expenses, its respective underlying index. The Adviser does not believe that
management of the 15 funds of the Trust presents a material conflict of interest for
Messrs. Liao and Kuczma or the Adviser.
Portfolio Manager
Compensation
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, 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 Adviser and
affiliates manage accounts with incentive fees.
Portfolio Manager Share
Ownership
As
of the date of this SAI, Messrs. Kuczma and Liao did not beneficially own any Shares of the
Funds.
23
BROKERAGE TRANSACTIONS
When
selecting brokers and dealers to handle the purchase and sale of portfolio securities, the
Adviser looks for prompt execution of the order at a favorable price. Generally, the
Adviser works with recognized dealers in these securities, except when a better price and
execution of the order can be obtained elsewhere. The Funds will not deal with affiliates
in principal transactions unless permitted by exemptive order or applicable rule or
regulation. The Adviser owes a duty to its clients to provide best execution on trades
effected. Since the investment objective of each Fund is investment performance that
corresponds to that of an index, the Adviser does 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.
The
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 the 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.
Portfolio
turnover may vary from year to year, as well as within a year. High turnover rates are
likely to result in comparatively greater brokerage expenses. The portfolio turnover rate
for the Fund is expected to be under 30%. See “Market Vectors—Coal
ETF—“Principal Investment Objective and Strategies” and “Market
Vectors—Gaming ETF—Principal Investment Objective and Strategies” in the
Funds’ Prospectus. The overall reasonableness of brokerage commissions is evaluated
by the Adviser based upon its knowledge of available information as to the general level of
commissions paid by other institutional investors for comparable services.
BOOK ENTRY ONLY SYSTEM
The
following information supplements and should be read in conjunction with the section in the
Prospectus entitled “Shareholder Information—Buying and Selling Exchange-Traded
Shares.”
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”), the
[ ] and the NASD. 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
24
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.
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 [ ].
CREATION AND REDEMPTION OF CREATION
UNITS
General
The
Trust issues and sells 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.
A
“Business Day” with respect to the Funds is any day on which the NYSE and the
[ ] are open for business. As of the date of the Prospectus,
the NYSE and the [ ] observe the following
holidays:
25
New Year’s Day, Martin Luther King,
Jr. Day, President’s Day (Washington’s Birthday), Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Fund Deposit
The
consideration for a purchase of Creation Units generally consists of the in-kind deposit of
a designated portfolio of equity securities (the “Deposit Securities”)
constituting a replication of the Fund’s benchmark Index and an amount of cash
computed as described below (the “Cash Component”). Together, the Deposit
Securities and the Cash Component constitute the “Fund Deposit,” which
represents the minimum initial and subsequent investment amount for Shares. The Cash
Component represents the difference between the NAV of a Creation Unit and the market value
of Deposit Securities and may include a Dividend Equivalent Payment. The “Dividend
Equivalent Payment” enables each Fund to make a complete distribution of dividends on
the next dividend payment date, and is an amount equal, on a per Creation Unit basis, to
the dividends on all the securities held by the Fund (“Fund Securities”) with
ex-dividend dates within the accumulation period for such distribution (the
“Accumulation Period”), net of expenses and liabilities for such period, as if
all of the Fund Securities had been held by the Trust for the entire Accumulation Period.
The Accumulation Period begins on the ex-dividend date for each Fund and ends on the next
ex-dividend date.
The
Administrator, through the NSCC (discussed below), makes available on each Business Day,
immediately prior to the opening of business on the [ ]
(currently 9:30 a.m., New York time), the list of the names and the required number of
shares of each Deposit Security to be included in the current Fund Deposit (based on
information at the end of the previous Business Day) as well as the Cash Component for each
Fund. Such Fund Deposit is applicable, subject to any adjustments as described below, in
order to effect creations of Creation Units of each Fund until such time as the
next-announced Fund Deposit composition is made available.
The
identity and number of shares of the Deposit Securities required for a Fund Deposit for
each Fund changes as rebalancing adjustments and corporate action events are reflected from
time to time by the Adviser with a view to the investment objective of the Fund. The
composition of the Deposit Securities may also change in response to adjustments to the
weighting or composition of the securities constituting each Fund’s respective
benchmark Index. In addition, the Trust reserves the right to permit or require the
substitution of an amount of cash
(
i.e.
, a
“cash in lieu” amount) to be added to the Cash Component to replace any Deposit
Security which may, among other reasons, not be available in sufficient quantity for
delivery, 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 which may not be
eligible for transfer through the Clearing Process (described below), or which may not be
eligible for trading by a Participating Party (defined below). In light of the foregoing,
in order to seek to replicate the in-kind creation order process, the Trust expects to
purchase the Deposit Securities represented by the cash in lieu amount in the secondary
market (“Market Purchases”). In such cases where the Trust makes Market
Purchases 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 Adviser’s
discretion, may be capped), applicable registration fees and taxes. Brokerage commissions
incurred in connection with the Trust’s acquisition of Deposit Securities will be at
the expense of each Fund and will affect the value of all Shares of the Fund; but the
Adviser may adjust the transaction fee to the extent the composition of the Deposit
Securities changes or cash in lieu is added to the Cash Component to protect ongoing
shareholders. The adjustments described above will reflect changes, known to the Adviser on
the date of announcement to be in effect by the time of delivery of the Fund Deposit, in
the composition of the index or resulting from stock splits and other corporate
actions.
26
In
addition to the list of names and numbers of securities constituting the current Deposit
Securities of a Fund Deposit, the Administrator, through the NSCC (discussed below), also
makes available (i) on each Business Day, the Dividend Equivalent Payment, if any,
effective through and including the previous Business Day, per outstanding Shares of the
Fund, and (ii) on a continuous basis throughout the day, the Indicative Per Share Portfolio
Value.
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 either must be (1) a “Participating Party,”
i.e.
, a broker-dealer
or other participant in the Clearing Process through the Continuous Net Settlement System
of the NSCC; or (2) a DTC Participant (see “Book Entry Only System”); and, in
either case, must have executed an agreement with the Trust and with the Distributor with
respect to creations and redemptions of Creation Units outside the Clearing Process
(“Participant Agreement”) (discussed below). All Creation Units of the Funds,
however created, will be entered on the records of the Depository in the name of Cede &
Co. for the account of a DTC Participant.
All
orders to create Creation Units must be placed in multiples of 50,000 Shares
(
i.e.
a
Creation Unit). 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 [ ]
(“Closing Time”) (ordinarily 4:00 p.m. New York time) (3:00 p.m. for
“Custom Orders” (as defined below)) in each case on the date such order is
placed in order for creation of Creation Units to be effected based on the NAV of the Fund
as determined on such date. A “Custom Order” may be placed by an Authorized
Participant in the event that the Trust permits or requires the substitution of an amount
of cash to be added to the Cash Component to replace any Deposit Security which may not be
available in sufficient quantity for delivery or which may not be eligible for trading by
such Authorized Participant or the investor for which it is acting, or other relevant
reason. The date 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
pursuant to procedures set forth in the Participant Agreement, as 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, a Participating Party or a DTC
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 Participating Party 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) that is specified in the Participant Agreement. The Participant
Agreement for any Participating Party intending to follow such procedures will contain
terms and conditions permitting the Trust to use such collateral to buy the missing
portion(s) of the Fund Deposit at any time and will subject such Participating Party 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 Participating Party once the
entire Fund Deposit has been properly received by the Distributor and deposited into the
Trust.
Orders
to create Creation Units of the Funds shall be placed with a Participating Party or DTC
Participant, as applicable, in the form required by such Participating Party or DTC
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 a Participating Party or a DTC
Participant who has executed a Participant Agreement. At any
27
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 the Funds 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 DTC 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.
Orders
to create Creation Units of the Fund may be placed through the Clearing
Process utilizing procedures applicable to domestic funds for 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 foreign funds for foreign securities
(see “—Placement
of Creation Orders Outside Clearing Process—Domestic Funds” and “—Placement
of Creation Orders Outside Clearing Process—Foreign
Funds”).
Placement of Creation Orders Using
Clearing Process
Fund
Deposits created through the Clearing Process must be delivered through a Participating
Party that has executed a Participant Agreement with the Distributor and with the Trust (as
the same may be from time to time amended in accordance with its terms).
The
Participant Agreement authorizes the Distributor to transmit to NSCC on behalf of the
Participating Party such trade instructions as are necessary to effect the Participating
Party’s creation order. Pursuant to such trade instructions from the Distributor to
NSCC, the Participating Party 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 by the third (3rd) Business Day) and the Cash Component to
the Trust, together with such additional information as may be required by the Distributor.
An order to create Creation Units of the Funds 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.
Placement of Creation Orders Outside
Clearing Process—Domestic Funds
Fund
Deposits created outside the Clearing Process must be delivered through a DTC Participant
that has executed a Participant Agreement with the Distributor and with the Trust. A DTC
Participant who wishes to place an order creating Creation Units of the Funds to be
effected outside the Clearing Process need not be a Participating Party, but such orders
must state that the DTC 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 DTC Participant in a timely fashion so as to
ensure the delivery of the requisite number of Deposit Securities through DTC to the
account of the Trust by no later than 11:00 a.m. of the next Business Day immediately
following the Transmittal Date. All questions as to the number 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 so
as to be received by the Distributor no later than 2:00 p.m. on the next Business Day
immediately following the Transmittal Date. An order to create Creation Units of the Funds
outside the
28
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 on the next Business Day immediately following the Transmittal Date, such order
will be cancelled. Upon written notice to the Distributor, such cancelled order may be
resubmitted the following Business Day using a Fund Deposit as newly constituted to reflect
the current NAV of the applicable Fund. The delivery of Creation Units so created will
occur no later than the third (3rd) Business Day following the day on which the creation
order is deemed received by the Distributor.
Placement of Creation Orders Outside
Clearing Process—Foreign Funds
A
standard order must be placed by 4:00 p.m., New York time for purchases of Shares. In the
case of custom orders, the order must be received by the Distributor no later than 3:00
p.m., New York time. The Distributor will inform the Transfer Agent, the Adviser and the
Custodian upon receipt of a Creation Order. The Custodian will then provide such
information to the appropriate custodian. For each Fund, the Custodian will cause the
subcustodian of such Fund to maintain an account into which the Deposit Securities 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 Trust has accepted a creation order, the Trust will confirm the issuance of a Creation
Unit of the Fund against receipt of payment, at such net asset value as will have been
calculated after receipt in proper form of such order. The Distributor will then transmit a
confirmation of acceptance of such order.
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 subcustodian
has confirmed to the Custodian that the required Deposit Securities (or the cash value
thereof) have been delivered to the account of the relevant subcustodian, the Distributor
and the Adviser will be notified of such delivery and the Trust will issue and cause the
delivery of the Creation Units.
Acceptance of Creation
Order
The
Trust reserves the absolute right to reject a creation order transmitted to it by the
Distributor if, for any reason, (a) the order is not in proper form; (b) the creator or
creators, upon obtaining the Shares ordered, would own 80% or more of the currently
outstanding Shares of the Funds; (c) the Deposit Securities delivered are not as specified
by the Administrator, as described above; (d) acceptance of the Deposit Securities would
have certain adverse tax consequences to the Fund; (e) the acceptance of the Fund Deposit
would, in the opinion of counsel, be unlawful; (f) the acceptance of the Fund Deposit would
otherwise, in the discretion of the Trust or the Adviser, have an adverse effect on the
Trust or the rights of beneficial owners; or (g) in the event that circumstances outside
the control of the Trust, the Distributor and the Adviser make it for all practical
purposes impossible to process creation orders. Examples of such circumstances include acts
of God or public service or utility problems such as fires, floods, extreme weather
conditions and power outages resulting in telephone, telecopy and computer failures; market
conditions or activities causing trading halts; systems failures involving computer or
other information systems affecting the Trust, the Adviser, the Distributor, DTC, the NSCC
or any other participant in the creation process, and similar extraordinary events. The
Trust shall notify a prospective creator of its rejection of the order of such person. The
Trust and the Distributor are under no duty, however, to give
29
notification of any defects or
irregularities in the delivery of Fund Deposits nor shall either of them incur any
liability for the failure to give any such notification.
All
questions as to the number of shares of each security in 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
fixed creation transaction fee of $______ payable to the Custodian is imposed on each
creation transaction. In addition, a variable charge for cash creations or for creations
outside the Clearing Process currently of up to four times the basic creation fee will be
imposed. Where the Trust permits a creator to substitute cash in lieu of depositing a
portion of the Deposit Securities, the creator will be assessed the additional variable
charge for cash creations on the “cash in lieu” portion of its investment.
Creators of Creation Units are responsible for the costs of transferring the securities
constituting the Deposit Securities to the account of the Trust.
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 a Participating Party or DTC 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 “Market Vectors—Coal
ETF—Principal Risks of Investing in the Fund” and “Market
Vectors—Gaming ETF—Principal Risks of Investing in the Fund” in the
Prospectus.
The
Administrator, through NSCC, makes available immediately prior to the opening of business
on the [ ] (currently 9:30 a.m., Eastern time) on each day
that the [ ] is open for business, the Fund Securities that
will be applicable (subject to possible amendment or correction) to redemption requests
received in proper form (as defined below) on that day. Unless cash redemptions are
available or specified for the Funds, the redemption proceeds for a Creation Unit generally
consist of Fund Securities as announced by the 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 described below.
The redemption transaction fee of $_____ is deducted from such redemption proceeds. 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 fee will be required to be arranged for by or on behalf of the redeeming
shareholder.
The
basic redemption transaction fees are the same no matter how many Creation Units are being
redeemed pursuant to any one redemption request. The Funds may adjust these fees from time
to time based upon actual experience. An additional charge up to four times the redemption
transaction fee may be charged with respect to redemptions outside of the Clearing Process.
An additional variable charge for cash redemptions or partial cash redemptions (when cash
redemptions are available) may also be imposed. Investors who use the services of a broker
or other such intermediary may be charged a fee for such services.
30
Placement of Redemption Orders Using
Clearing Process
Orders
to redeem Creation Units of the Funds through the Clearing Process must be delivered
through a Participating Party that has executed the Participant Agreement with the
Distributor and with the Trust (as the case may be from time to time amended in accordance
with its terms). An order to redeem Creation Units of the Funds using the Clearing Process
is deemed received on the Transmittal Date if (i) such order is received by the Distributor
not later than 4:00 p.m. (3:00 p.m. for Custom Orders) 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 the Funds using the Clearing Process made in proper form but
received by the Fund after 4:00 p.m. 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) will be transferred by the third (3rd) NSCC Business Day following the
date on which such request for redemption is deemed received, and the applicable cash
payment.
Placement of Redemption Orders Outside
Clearing Process—Domestic Funds
Orders
to redeem Creation Units of the Funds outside the Clearing Process must be delivered
through a DTC Participant that has executed the Participant Agreement with the Distributor
and with the Trust. A DTC Participant who wishes to place an order for redemption of
Creation Units of the Funds to be effected outside the Clearing Process need not be a
Participating Party, but such orders must state that the DTC Participant is not using the
Clearing Process and that redemption of Creation Units of the Funds will instead be
effected through transfer of Creation Units of the Funds directly through DTC. An order to
redeem Creation Units of the Funds outside the Clearing Process is deemed received by the
Administrator on the Transmittal Date if (i) such order is received by the Administrator
not later than 4:00 p.m., New York time (3:00 p.m. for Custom Orders) 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
Administrator no later than 11:00 a.m. on such Transmittal Date (the “DTC
Cut-Off-Time”); and (iii) all other procedures set forth in the Participant Agreement
are properly followed.
After
the Administrator has deemed an order for redemption outside the Clearing Process received,
the Administrator will initiate procedures to transfer the requisite Fund Securities (or
contracts to purchase such Fund Securities) which are expected to be delivered within three
Business Days and the cash redemption payment to the redeeming Beneficial Owner by the
third Business Day following the Transmittal Date on which such redemption order is deemed
received by the Administrator. An additional variable redemption transaction fee of up to
four times the basic transaction fee is applicable to redemptions outside the Clearing
Process.
Placement of Redemption Orders Outside
Clearing Process—Foreign Funds
A
standard order for redemption must be received by 4:00 p.m., New York time for redemptions
of Shares. In the case of custom redemptions, the order must be received by the Distributor
no later than 3:00 p.m., New York time. Arrangements satisfactory to the Trust must be in
place for the Participating Party 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 the Funds (whether or
not they otherwise permit cash redemptions) reserve 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.
31
In
connection with taking delivery of Shares of 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.
Deliveries
of redemption proceeds generally will be made within three business days. Due to the
schedule of holidays in certain countries, however, the delivery of in-kind redemption
proceeds may take longer than three business days after the day on which the redemption
request is received in proper form. In such cases, the local market settlement procedures
will not commence until the end of the local holiday periods. The dates in calendar year
2007 in which the regular holidays affecting the relevant securities markets of the below
listed countries are as follows:
SETTLEMENT PERIODS GREATER THAN SEVEN DAYS
FOR YEAR 2007
|
|
|
|
|
|
|
Number
of
|
|
|
|
Beginning of
|
|
End of
|
|
Days in
|
|
|
|
Settlement
Period
|
|
Settlement
Period
|
|
Settlement
Period
|
|
|
|
Argentina
|
|
3/30/2007
|
|
4/9/2007
|
|
10
|
|
|
|
Austria
|
|
12/19/2007
|
|
12/27/2007
|
|
8
|
|
|
|
12/20/2007
|
|
12/28/2007
|
|
8
|
|
|
|
12/21/2007
|
|
1/2/2008
|
|
12
|
|
|
|
China
|
|
2/12/2007
|
|
2/26/2007
|
|
14
|
|
|
|
2/13/2007
|
|
2/27/2007
|
|
14
|
|
|
|
2/14/2007
|
|
2/28/2007
|
|
14
|
|
|
|
4/26/2007
|
|
5/8/2007
|
|
12
|
|
|
|
4/27/2007
|
|
5/9/2007
|
|
12
|
|
|
|
4/30/2007
|
|
5/10/2007
|
|
10
|
|
|
|
9/26/2007
|
|
10/9/2007
|
|
13
|
|
|
|
9/27/2007
|
|
10/10/2007
|
|
13
|
|
|
|
9/28/2007
|
|
10/11/2007
|
|
13
|
|
|
|
Denmark
|
|
4/2/2007
|
|
4/10/2007
|
|
8
|
|
|
|
4/3/2007
|
|
4/11/2007
|
|
8
|
|
|
|
4/4/2007
|
|
4/12/2007
|
|
8
|
|
|
|
12/19/2007
|
|
12/27/2007
|
|
8
|
|
|
|
12/20/2007
|
|
12/28/2007
|
|
8
|
|
|
|
12/21/2007
|
|
1/2/2008
|
|
12
|
|
|
|
Indonesia
|
|
10/10/2007
|
|
10/22/1007
|
|
12
|
|
|
|
10/11/2007
|
|
10/23/2007
|
|
12
|
|
|
|
10/12/2007
|
|
10/24/2007
|
|
12
|
|
|
|
12/18/2007
|
|
12/27/2007
|
|
9
|
|
|
|
12/19/2007
|
|
12/28/2007
|
|
9
|
32
|
|
|
|
|
|
|
Number
of
|
|
|
|
Beginning of
|
|
End of
|
|
Days in
|
|
|
|
Settlement
Period
|
|
Settlement
Period
|
|
Settlement
Period
|
|
|
|
|
|
12/21/2007
|
|
1/2/2008
|
|
12
|
|
|
|
Japan
|
|
4/27/2007
|
|
5/7/2007
|
|
10
|
|
|
|
12/26/2007
|
|
|
|
|
|
|
|
12/27/2007
|
|
|
|
|
|
|
|
12/28/2007
|
|
|
|
|
|
|
|
Malaysia
|
|
5/25/2007
|
|
6/4/2007
|
|
10
|
|
|
|
5/28/2007
|
|
6/5/2007
|
|
8
|
|
|
|
5/29/2007
|
|
6/6/2007
|
|
8
|
|
|
|
Norway
|
|
4/2/2007
|
|
4/10/2007
|
|
8
|
|
|
|
4/3/2007
|
|
4/11/2007
|
|
8
|
|
|
|
4/4/2007
|
|
4/12/2007
|
|
8
|
|
|
|
12/19/2007
|
|
12/27/2007
|
|
8
|
|
|
|
12/20/2007
|
|
12/28/2007
|
|
8
|
|
|
|
12/21/2007
|
|
1/2/2008
|
|
12
|
|
|
|
Philippines
|
|
4/2/2007
|
|
4/10/2007
|
|
8
|
|
|
|
4/3/2007
|
|
4/11/2007
|
|
8
|
|
|
|
4/4/2007
|
|
4/12/2007
|
|
8
|
|
|
|
Portugal
|
|
12/19/2007
|
|
12/27/2007
|
|
8
|
|
|
|
12/20/2007
|
|
12/28/2007
|
|
8
|
|
|
|
12/21/2007
|
|
12/31/2007
|
|
10
|
|
|
|
South Africa
|
|
4/4/2007
|
|
4/13/2007
|
|
9
|
|
|
|
4/5/2007
|
|
4/16/2007
|
|
11
|
|
|
|
4/20/2007
|
|
4/30/2007
|
|
10
|
|
|
|
4/23/2007
|
|
5/2/2007
|
|
9
|
|
|
|
4/24/2007
|
|
5/3/2007
|
|
9
|
|
|
|
4/25/2007
|
|
5/4/2007
|
|
9
|
|
|
|
4/26/2007
|
|
5/7/2007
|
|
11
|
|
|
|
12/14/2007
|
|
12/24/2007
|
|
10
|
|
|
|
12/18/2007
|
|
12/27/2007
|
|
9
|
|
|
|
12/19/2007
|
|
12/28/2007
|
|
9
|
|
|
|
12/20/2007
|
|
12/31/2007
|
|
11
|
|
|
|
12/21/2007
|
|
1/2/2008
|
|
12
|
|
|
|
12/24/2007
|
|
1/3/2008
|
|
10
|
|
|
|
Spain
|
|
4/2/2007
|
|
4/10/2007
|
|
8
|
|
|
|
4/3/2007
|
|
4/11/2007
|
|
8
|
|
|
|
4/4/2007
|
|
4/12/2007
|
|
8
|
|
|
|
Switzerland
|
|
12/19/2007
|
|
12/27/2007
|
|
8
|
|
|
|
12/20/2007
|
|
12/28/2007
|
|
8
|
|
|
|
12/21/2007
|
|
1/3/2008
|
|
13
|
|
|
|
|
|
|
|
|
|
Taiwan
|
|
2/14/2007
|
|
2/23/2007
|
|
9
|
33
The
right of redemption may be suspended or the date of payment postponed (1) for any period
during which the [ ] is closed (other than customary weekend
and holiday closings); (2) for any period during which trading on the
[ ] is suspended or restricted; (3) for any period during
which an emergency exists as a result of which disposal of the Shares of a Fund or
determination of its NAV is not reasonably practicable; or (4) in such other circumstance
as is permitted by the SEC.
DETERMINATION OF NET ASSET
VALUE
The
following information supplements and should be read in conjunction with the section in the
Funds’ Prospectus entitled “Shareholder Information—Determination of Net
Asset Value.”
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, rounded to the nearest cent. 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 as of the close of the regular trading session on the
[ ] (ordinarily 4:00 p.m., Eastern time) on each day that such
exchange is open. 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.
The
value of each Fund’s portfolio securities is based on the securities’ closing
price on local markets when available. If a security’s market price is not readily
available or does not otherwise accurately reflect the fair value of the security, the
security will be valued by another method that the Adviser believes will better reflect
fair value in accordance with the Trust’s valuation policies and procedures approved
by the Board of Trustees. Each Fund may use fair value pricing in a variety of
circumstances, including but not limited to, situations when the value of a security in the
Fund’s portfolio has been materially affected by events occurring after the close of
the market on which the security is principally traded (such as a corporate action or other
news that may materially affect the price of a security) or trading in a security has been
suspended or halted. In addition, each Fund currently expects that it will fair value
foreign equity securities held by the Fund each day the Fund calculates its NAV.
Accordingly, a Fund’s NAV is expected to reflect certain portfolio securities’
fair values rather than their market prices. Fair value pricing involves subjective
judgments and it is possible that a fair value determination for a security is materially
different than the value that could be realized upon the sale of the security. In addition,
fair value pricing could result in a difference between the prices used to calculate a
Fund’s NAV and the prices used by the Fund’s benchmark index. This may
adversely affect a Fund’s ability to track its benchmark index. With respect to
securities that are primarily listed 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.
In
computing each Fund’s NAV, the Fund’s securities holdings are valued based on
market quotations. When market quotations are not readily available for a portfolio
security a Fund must use the security’s fair value as determined in good faith in
accordance with the Fund’s Fair Value Pricing Procedures which are approved by the
Board of Trustees.
34
DIVIDENDS AND DISTRIBUTIONS
The
following information supplements and should be read in conjunction with the section in the
Prospectus entitled “Shareholder Information—Distributions.”
General Policies
Dividends
from net investment income are declared and paid at least annually by each 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 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. In
addition, the Trust may 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 in
which case some portion of each distribution may result in a return of capital for tax
purposes for certain shareholders.
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. The Trust makes additional distributions to the minimum extent necessary (i) to
distribute the entire annual taxable 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 regulated investment company (“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.
CONTROL PERSONS
As
of the date of this SAI, the Adviser beneficially owned all of the voting securities of
each Fund.
TAXES
The
following information also supplements and should be read in conjunction with the section
in the Prospectus entitled “Shareholder Information—Tax
Matters.”
Each
Fund intends to qualify for and to elect treatment as a RIC under Subchapter M of the
Internal Revenue Code. To qualify for treatment as an RIC, a company must annually
distribute at least 90% of its net investment company taxable income (which includes
dividends, interest and net short-term
35
capital gains) and meet several other
requirements relating to the nature of its income and the diversification of its assets,
among others.
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 at least 98% of its ordinary income
for the calendar year plus 98% of its capital gain net income for the twelve months ended
October 31 of such year. Each Fund 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.
As
a result of U.S. federal income tax requirements, the Trust on behalf of the Fund, 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
the Fund and if, pursuant to Section 351 of the Internal Revenue Code, the Fund 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—Procedures for Creation of Creation
Units.”
Dividends
and interest 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.
Each
Fund will report to shareholders annually the amounts of dividends received from ordinary
income, the amount of distributions received from capital gains and the portion of
dividends which may qualify for the dividends received deduction. Certain ordinary
dividends paid to non-corporate shareholders may qualify for taxation at a lower tax rate
applicable to long-term capital gains.
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. Under current law, the maximum tax rate on long-term capital gains available to
non-corporate shareholders generally is 15%. Without future congressional action, the
maximum tax rate on long-term capital gains will return to 20% in 2011.
Special
tax rules may change the normal treatment of gains and losses recognized by a Fund if and
when the Fund invests in forward foreign currency exchange contracts, options, futures
transactions, and non-U.S. corporations classified as “passive foreign investment
companies.” 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 the Fund has to take these items
into account. The application of these special rules would therefore also affect the timing
and character of distributions made by the Fund.
Gain
or loss on the sale or redemption of Fund Shares is measured by the difference between the
amount 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 the tax basis of their Shares.
A
loss realized on a sale or exchange of Shares of the Fund may be disallowed if other Fund
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
36
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
state and local taxes.
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.
Distributions
reinvested in additional Fund Shares through the means of the 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.
Distributions
of ordinary income paid to shareholders who are nonresident aliens or foreign entities will
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. Nonresident shareholders are
urged to consult their own tax advisors concerning the applicability of the U.S.
withholding tax. A RIC may, under certain circumstances, designate all or a portion of a
dividend as an “interest-related dividend” that if received by a nonresident
alien or foreign entity generally would be exempt from the 30% U.S. withholding tax,
provided
that certain
other requirements are met. A RIC may also, under certain circumstances, designate all or a
portion of a dividend as a “short-term capital gain dividend” which if received
by a nonresident alien or foreign entity generally would be exempt from the 30% U.S.
withholding tax, unless the foreign person is a nonresident alien individual present in the
United States for a period or periods aggregating 183 days or more during the taxable year.
Each Fund will elect to be treated as a regulated investment company under the Internal
Revenue Code and thereby avoid taxation at the Fund level. In order to qualify as a
regulated investment company, the Fund, among other things, must derive at least 90% of its
gross income from dividends, interest and gains for the sale or other disposition of stock,
securities or foreign currencies or other income derived with respect to the business of
investing in such securities or currencies. The provisions discussed above relating to
dividends to foreign persons apply to dividends with respect to taxable years beginning
before January 1, 2008. Prospective investors are urged to consult their tax advisors
regarding the specific tax consequences relating to the rules discussed above.
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 28%.
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 Internal Revenue Service.
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
37
authority and administrative interpretations
in effect on the date hereof. Changes in applicable authority could materially affect the
conclusions discussed above, and such changes often occur.
Reportable Transactions
Under
promulgated Treasury regulations, if a shareholder recognizes a loss on disposition of a
Fund’s Shares of $2 million or more for an individual shareholder or $10 million or
more for a corporate shareholder, the shareholder must file with the IRS a disclosure
statement on Form 8886. Direct shareholders 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, pursuant to recently enacted legislation, 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.
CAPITAL STOCK AND SHAREHOLDER
REPORTS
The
Trust currently is comprised of nine investment funds. 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 Fund, and in the net distributable assets of the
Fund on liquidation.
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.
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, shareholders of a statutory trust may have similar limitation liabilities as
shareholders of a corporation.
The
Trust will issue through DTC Participants to its shareholders semi-annual reports
containing unaudited financial statements and annual reports containing financial
statements audited by independent auditor approved by the Trust’s Trustees and by the
shareholders when meetings are held and such other information as may be required by
applicable laws, rules and regulations. Beneficial Owners also receive annually
notification as to the tax status of the Trust’s distributions.
Shareholder
inquiries may be made by writing to the Trust, c/o Van Eck Associates Corporation, 99 Park
Avenue, 8th Floor, New York, NY 10016.
38
COUNSEL AND INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Clifford
Chance US LLP is counsel to the Trust and have passed upon the validity of the Fund’s
Shares.
_______________________
serves as the Trust’s independent registered public accounting firm.
39
APPENDIX A
VAN ECK GLOBAL PROXY VOTING
POLICIES
Adopted July 30, 2003
Amended April 20, 2004
Amended April 14, 2005
INTRODUCTION
Effective March 10, 2003, the Securities and
Exchange Commission (the “Commission”) adopted Rule 206(4)-6 under the
Investment Advisers Act of 1940 (“Advisers Act”), requiring each investment
adviser registered with the Commission to adopt and implement written policies and
procedures for voting client proxies, to disclose information about the procedures to its
clients, and to inform clients how to obtain information about how their proxies were
voted. The Commission also amended Rule 204-2 under the Advisers Act to require advisers to
maintain certain proxy voting records. Both rules apply to all investment advisers
registered with the Commission that have proxy voting authority over their clients’
securities. 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.
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.
PROXY VOTING POLICIES AND
PROCEDURES
|
|
Resolving Material Conflicts Of
Interest
|
|
|
|
|
•
|
A “material conflict” means the
existence of a business relationship between a portfolio company or an affiliate
and Van Eck Associates Corporation, any affiliate or subsidiary (individually and
together, as the context may require, “Adviser”), or an
“affiliated person” of a Van Eck mutual fund in excess of $60,000.
Examples of when a material conflict exists include the 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 Van Eck’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.
|
|
|
|
|
•
|
Conflict Resolution. When a material conflict
exists proxies will be voted in the following manner:
|
|
|
|
|
|
Where the written guidelines set out a
pre-determined voting policy, proxies will be voted in accordance with that policy,
with no deviations (if a deviation is advisable, one of the other methods may be
used);
|
40
|
|
Where the guidelines permit
discretion and an independent third party has been retained to vote proxies,
proxies will be voted in accordance with the predetermined policy based on the
recommendations of that party; or
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 VEAC 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 Compliance Officer with a
written explanation of the reason for the deviation.
Reasonable Research
Efforts
When determining whether a vote
is in the best interest of the client, the Adviser will use reasonable research
efforts. Investment personnel may rely on public documents about the company
and other readily available information, which is easily accessible to the
investment personnel at the time the vote is cast. Information on proxies by
foreign companies may not be readily available.
|
|
|
|
|
|
Voting Client
Proxies
|
|
|
|
|
|
|
•
|
The Adviser generally will vote proxies
on behalf of clients, unless clients instruct otherwise. There may be times when
refraining from voting a proxy is in a client’s best interest, such as when
the Adviser determines that the cost of voting the proxy exceeds the expected
benefit to the client. (For example, casting a vote on a foreign security may
involve additional costs such as hiring a translator or traveling to a foreign
country to vote the security in person).
|
|
|
|
|
|
|
•
|
The portfolio manager or analyst
covering the security is responsible for making 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.
|
|
|
|
|
|
|
Client
Inquiries
All inquiries by
clients as to how Van Eck has voted proxies must immediately be forwarded to
Portfolio Administration.
DISCLOSURE TO
CLIENTS
|
|
|
|
|
|
•
|
Notification of
Availability of Information Client Brochure.
|
The
Client Brochure or Part II of Form ADV will inform clients that they can obtain information
from VEAC 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.
41
|
|
•
|
Availability of Proxy Voting Information at the
client’s request or if the information is not available on
VEAC’s website, a hard copy of the account’s proxy votes will
be mailed to each client.
|
|
|
|
|
|
|
Recordkeeping
Requirements
|
|
|
|
|
|
|
•
|
VEAC 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:
|
|
|
|
|
|
|
|
-
|
proxy statements received;
|
|
|
|
|
|
|
|
|
-
|
identifying number for the portfolio security;
|
|
|
|
|
|
|
|
|
-
|
shareholder meeting
date;
|
|
|
|
|
|
|
|
|
-
|
brief identification
of the matter voted on;
|
|
|
|
|
|
|
|
|
-
|
whether
the vote was cast on the matter and how the vote was cast;
|
|
|
|
|
|
|
|
|
-
|
how the
vote was cast
(
e.g.
,
for or against proposal, or abstain; for or withhold regarding election of
directors);
|
|
|
|
|
|
|
|
|
-
|
records of written client requests for
information on how VEAC voted proxies on behalf of the client;
|
|
|
|
|
|
|
|
|
-
|
a copy of written responses from VEAC to any
written or oral client request for information on how VEAC voted proxies on
behalf of the client; and
|
|
|
|
|
|
|
|
|
-
|
any documents prepared by VEAC that were
material to the decision on how to vote or that memorialized the basis for
the decision, if such documents were prepared.
|
|
|
|
|
|
|
|
•
|
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.
|
|
|
|
|
|
|
•
|
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.
|
|
|
|
|
|
|
•
|
Proxy voting records will be maintained in an
easily accessible place for five years, the first two at the office of
VEAC. 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.
|
42
|
|
Proxy Voting
Guidelines
|
|
|
|
|
|
I.
|
General Information
|
|
|
|
|
Generally, the Adviser will vote
in accordance with the following guidelines. Where the proxy vote decision
maker determines, however, that voting in such a manner would not be in the
best interest of the client, the investment personnel will vote
differently.
If there is a conflict of
interest on any management or shareholder proposals that are voted on a case by
case basis, we will follow the recommendations of an independent proxy service
provider.
|
|
|
|
|
II.
|
Officers and Directors
|
|
|
|
|
|
A.
The
Board of Directors
|
|
|
|
|
Director Nominees in Uncontested
Elections
Vote on a case-by-case basis for
director nominees, examining factors such as:
|
|
|
|
|
|
•
|
long-term corporate performance record relative to
a market index;
|
|
|
|
|
|
|
•
|
composition of board and key board
committees;
|
|
|
|
|
|
|
•
|
nominee’s investment in the
company;
|
|
|
|
|
|
|
•
|
whether a retired CEO sits on the board;
and
|
|
|
|
|
|
|
•
|
whether the chairman is also serving as
CEO.
|
|
|
|
|
|
In cases of significant votes and when
information is readily available, we also review:
|
|
|
|
|
|
|
•
|
corporate governance provisions and takeover
activity;
|
|
|
|
|
|
|
•
|
board decisions regarding executive pay;
|
|
|
|
|
|
|
•
|
director compensation;
|
|
|
|
|
|
|
•
|
number of other board seats held by nominee;
and
|
|
|
|
|
|
|
•
|
interlocking directorships.
|
|
|
|
|
|
|
B.
Chairman
and CEO are the Same Person
|
|
|
|
|
|
Vote on a case-by-case basis on
shareholder proposals that would require the positions of chairman and CEO to be
held by different persons.
|
|
|
|
|
|
|
C.
Majority
of Independent Directors
|
|
|
|
|
Vote on a case-by-case basis
shareholder proposals that request that the board be comprised of a majority of
independent directors.
|
43
Vote for shareholder proposals that request
that the board audit, compensation and/or nominating committees include independent
directors exclusively.
D.
Stock Ownership Requirements
Vote on a case-by-case basis shareholder
proposals requiring directors to own a minimum amount of company stock in order to qualify
as a director, or to remain on the board.
E.
Term of Office
Vote on a case-by-case basis shareholder
proposals to limit the tenure of outside directors.
F.
Director and Officer Indemnification and Liability
Protection
Vote on a case-by-case basis proposals
concerning director and officer indemnification and liability protection.
Generally, vote against proposals to
eliminate entirely director and officer liability for monetary damages for violating the
duty of care.
Vote for only those proposals that provide
such expanded coverage in cases when a director’s or officer’s legal defense
was unsuccessful if: (1) the director was found to have acted in good faith and in a manner
that he reasonably believed was in the best interests of the company, AND (2) only if the
director’s legal expenses would be covered.
G.
Director Nominees in Contested Elections
Vote on a case-by-case basis when the
election of directors is contested, examining the following factors:
|
|
•
|
long-term financial performance of the target
company relative to its industry;
|
|
|
|
|
|
|
•
|
management’s track record;
|
|
|
|
|
|
|
•
|
background to the proxy contest;
|
|
|
|
|
|
|
•
|
qualifications of director nominees (both
slates);
|
|
|
|
|
|
|
•
|
evaluation of what each side is offering
shareholders, as well as the likelihood that the proposed objectives and goals can
be met; and
|
|
|
|
|
|
|
•
|
stock ownership positions.
|
H.
Board Structure: Staggered vs. Annual Elections
Generally, vote against proposals to stagger
board elections.
Generally, vote for proposals to repeal
classified boards and to elect all directors annually.
I.
Shareholder Ability to Remove Directors
Vote against proposals that provide that
directors may be removed only for cause.
44
Vote for proposals to restore shareholder
ability to remove directors with or without cause.
Vote against proposals that provide that
only continuing directors may elect replacements to fill board vacancies.
Vote for proposals that permit shareholders
to elect directors to fill board vacancies.
J.
Shareholder Ability to Alter the Size of the
Board
Vote for proposals that seek to fix the size
of the board.
Vote against proposals that give management
the ability to alter the size of the board without shareholder approval.
|
III.
|
Proxy Contests
|
|
|
|
|
A.
Reimburse Proxy Solicitation
Expenses
Vote on a case-by-case basis
proposals to provide full reimbursement for dissidents waging a proxy
contest.
|
|
|
|
|
IV.
|
Auditors
|
|
|
|
|
A.
Ratifying Auditors
Vote for proposals to ratify
auditors, unless information that is readily available to the vote
decision-maker demonstrates that an auditor has a financial interest in or
association with the company, and is therefore clearly not independent; or such
readily available information creates a reasonable basis to believe that the
independent auditor has rendered an opinion which is neither accurate nor
indicative of the company’s financial position.
Vote for shareholder proposals
asking for audit firm rotation unless the rotation period is so short (less
than five years) that it would be unduly burdensome to the company.
|
|
|
|
|
V.
|
Shareholder Voting and Control
Issues
|
|
|
|
|
A.
Cumulative Voting
Generally, vote against
proposals to eliminate cumulative voting.
Generally, vote for proposals to
permit cumulative voting.
B.
Shareholder Ability to Call Special
Meetings
Generally, vote against
proposals to restrict or prohibit shareholder ability to call special
meetings.
Generally, vote for proposals
that remove restrictions on the right of shareholders to act independently of
management.
|
45
C.
Shareholder Ability to Act by Written Consent
Generally, vote against proposals to
restrict or prohibit shareholder ability to take action by written consent.
Generally, vote for proposals to allow or
make easier shareholder action by written consent.
D.
Poison Pills
Vote for shareholder proposals that ask a
company to submit its poison pill for shareholder ratification. Vote on a case-by-case
basis shareholder proposals to redeem a company’s poison pill.
Vote on a case-by-case basis management
proposals to ratify a poison pill.
E.
Fair Price Provision
Vote on a case-by-case basis when examining
fair price proposals, (where market quotations are not readily available) taking into
consideration whether the shareholder vote requirement embedded in the provision is no more
than a majority of disinterested Shares.
Generally, vote for shareholder proposals to
lower the shareholder vote requirement in existing fair price provisions.
F.
Greenmail
Generally, vote for proposals to adopt
anti-greenmail charter or bylaw amendments or otherwise restrict a company’s ability
to make greenmail payments.
Generally, vote on a case-by-case basis
anti-greenmail proposals when they are bundled with other charter or bylaw
amendments.
G.
Unequal Voting Rights
Vote against dual class exchange
offers.
Vote against dual class
recapitalizations.
H.
Supermajority Shareholder Vote Requirement to Amend the Charter
or Bylaws
Vote against management proposals to require
a supermajority shareholder vote to approve charter and bylaw amendments.
Vote for shareholder proposals to lower
supermajority shareholder vote requirements for charter and bylaw amendments.
I.
Supermajority Shareholder Vote Requirement to Approve
Mergers
Vote against management proposals to require
a supermajority shareholder vote to approve mergers and other significant business
combinations.
46
J.
White Knight Placements
Vote for shareholder proposals to require
approval of blank check preferred stock issues for other than general corporate purposes or
similar corporate actions.
K.
Confidential Voting
Generally, vote for shareholder proposals
that request corporations to adopt confidential voting, use independent tabulators and use
independent inspectors of election as long as the proposals include clauses for proxy
contests as follows: In the case of a contested election, management is permitted to
request that the dissident group honor its confidential voting policy. If the dissidents
agree, the policy remains in place. If the dissidents do not agree, the confidential voting
policy is waived.
Generally, vote for management proposals to
adopt confidential voting.
L.
Equal Access
Generally, vote for shareholders proposals
that would allow significant company shareholders equal access to management’s proxy
material in order to evaluate and propose voting recommendations on proxy proposals and
director nominees, and in order to nominate their own candidates to the board.
M.
Bundled Proposals
Generally, vote on a case-by-case basis
bundled or “conditioned“ proxy proposals. In the case of items that are
conditioned upon each other, we examine the benefits and costs of the packaged items. In
instances when the joint effect of the conditioned items is not in shareholders’ best
interests, we vote against the proposals. If the combined effect is positive, we support
such proposals.
N.
Shareholder Advisory Committees
Vote on a case-by-case basis proposals to
establish a shareholder advisory committee.
VI.
Capital Structure
A.
Common Stock Authorization
Vote on a case-by-case basis proposals to
increase the number of Shares of common stock authorized for issue.
Generally, vote against proposed common
stock authorizations that increase the existing authorization by more than 100% unless a
clear need for the excess Shares is presented by the company.
B.
Stock Distributions: Splits and Dividends
Generally, vote for management proposals to
increase common share authorization for a stock split, provided that the split does not
result in an increase of authorized but unissued Shares of more than 100% after giving
effect to the Shares needed for the split.
47
C.
Reverse Stock Splits
Generally, vote for management proposals to
implement a reverse stock split, provided that the reverse split does not result in an
increase of authorized but unissued Shares of more than 100% after giving effect to the
Shares needed for the reverse split.
D.
Blank Check Preferred Authorization
Generally, vote for proposals to create
blank check preferred stock in cases when the company expressly states that the stock will
not be used as a takeover defense or carry superior voting rights.
Vote on a case-by-case basis proposals that
would authorize the creation of new classes of preferred stock with unspecified voting,
conversion, dividend and distribution, and other rights.
Vote on a case-by-case basis proposals to
increase the number of authorized blank check preferred Shares.
E.
Shareholder Proposals Regarding Blank Check Preferred
Stock
Generally, vote for shareholder proposals to
have blank check preferred stock placements, other than those Shares issued for the purpose
of raising capital or making acquisitions in the normal course of business, submitted for
shareholder ratification.
F.
Adjust Par Value of Common Stock
Vote on a case-by-case basis management
proposals to reduce the par value of common stock.
G.
Preemptive Rights
Vote on a case-by-case basis proposals to
create or abolish preemptive rights. In evaluating proposals on preemptive rights, we look
at the size of a company and the characteristics of its shareholder base.
H.
Debt Restructurings
Vote on a case-by-case basis proposals to
increase common and/or preferred Shares and to issue Shares as part of a debt restructuring
plan. We consider the following issues:
|
|
•
|
Dilution - How much will ownership interest of
existing shareholders be reduced, and how extreme will dilution to any future
earnings be?
|
|
|
|
|
|
|
•
|
Change In Control - Will the transaction result in
a change in control of the company?
|
|
|
|
|
|
|
•
|
Bankruptcy - Is the threat of bankruptcy, which
would result in severe losses in shareholder value, the main factor driving the
debt restructuring?
|
|
|
|
|
|
|
Generally, we approve
proposals that facilitate debt restructurings unless there are clear signs of
self-dealing or other abuses.
|
I.
Share Repurchase Programs
Vote for management proposals to institute
open-market share repurchase plans in which all shareholders may participate on equal
terms.
48
|
VII.
|
Executive Compensation
|
|
|
|
|
In general, we vote on a
case-by-case basis on executive compensation plans, with the view that viable
compensation programs reward the creation of stockholder wealth by having a
high payout sensitivity to increases in shareholder value.
|
|
|
|
|
VIII.
|
Compensation
Proposals
|
A.
Amendments That Place a Cap on Annual Grants
Vote for plans that place a cap on the
annual grants any one participant may receive.
B.
Amend Administrative Features
Vote for plans that simply amend
shareholder-approved plans to include administrative features.
C.
Amendments to Added Performance-Based Goals
Generally, vote for amendments to add
performance goals to existing compensation plans.
D.
Amendments to Increase Shares and Retain Tax
Deductions
Vote on amendments to existing plans to
increase Shares reserved and to qualify the plan for favorable tax treatment should be
evaluated on a case-by-case basis.
E.
Approval of Cash or Cash-and-Stock Bonus Plans
Vote for cash or cash-and-stock bonus plans
to exempt the compensation from taxes.
F.
Shareholder Proposals to Limit Executive Pay
Vote on a case-by-case basis all shareholder
proposals that seek additional disclosure of executive pay information.
Vote on a case-by-case basis all other
shareholder proposals that seek to limit executive pay.
Vote for shareholder proposals to expense
options, unless the company has already publicly committed to expensing options by a
specific date.
G.
Golden and Tin Parachutes
Vote for shareholder proposals to have
golden and tin parachutes submitted for shareholder ratification.
Vote on a case-by-case basis all proposals
to ratify or cancel golden or tin parachutes.
H.
Employee Stock Ownership Plans (ESOPS)
Vote on a case-by-case basis proposals that
request shareholder approval in order to implement an ESOP or to increase authorized Shares
for existing ESOPs, except in cases when the number of Shares allocated to the ESOP is
“excessive” (i.e., generally greater than 5% of outstanding Shares).
49
I.
401(k) Employee Benefit Plans
Generally, vote for proposals to implement a
401(k) savings plan for employees.
|
IX.
|
State Of
Incorporation
|
|
|
|
|
|
A.
Voting on State Takeover
Statutes
Vote on a case-by-case basis
proposals to opt in or out of state takeover statutes (including control share
acquisition statutes, control share cash-out statutes, freezeout provisions,
fair price provisions, stakeholder laws, poison pill endorsements, severance
pay and labor contract provisions, anti-greenmail provisions, and disgorgement
provisions).
B.
Voting on Reincorporation
Proposals
Vote on a case-by-case basis
proposals to change a company’s state of incorporation.
|
|
|
|
|
|
X.
|
Mergers and Corporate
Restructurings
|
|
|
|
|
A.
Mergers and
Acquisitions
Vote on a case-by-case basis
proposals related to mergers and acquisitions, taking into account at least the
following:
|
|
|
|
|
|
|
•
|
anticipated financial and operating
benefits;
|
|
|
|
|
|
|
•
|
offer price (cost vs. premium);
|
|
|
|
|
|
|
•
|
prospects of the combined companies;
|
|
|
|
|
|
|
•
|
how the deal was negotiated; and
|
|
|
|
|
|
|
•
|
changes in corporate governance and their impact on
shareholder rights.
|
|
|
|
|
B.
Corporate Restructuring
Vote on a case-by-case basis proposals
related to a corporate restructuring, including minority squeezeouts, leveraged buyouts,
spin-offs, liquidations and asset sales.
C.
Spin-Offs
Vote on a case-by-case basis proposals
related to spin-offs depending on the tax and regulatory advantages, planned use of sale
proceeds, market focus and managerial incentives.
D.
Asset Sales
Vote on a case-by-case basis proposals
related to asset sales after considering the impact on the balance sheet/working capital,
value received for the asset, and potential elimination of diseconomies.
50
E.
Liquidations
Vote on a case-by-case basis proposals
related to liquidations after reviewing management’s efforts to pursue other
alternatives, appraisal value of assets, and the compensation plan for executives managing
the liquidation.
F.
Appraisal Rights
Vote for proposals to restore, or provide
shareholders with, rights of appraisal.
G.
Changing Corporate Name
Vote on a case-by-case basis proposal to
change the corporate name.
|
XI.
|
Mutual Fund Proxies
|
|
|
|
|
A.
Election of Trustees
Vote on trustee nominees on a
case-by-case basis.
B.
Investment Advisory
Agreement
Vote on investment advisory
agreements on a case-by-case basis.
C.
Fundamental Investment
Restrictions
Vote on amendments to a
fund’s fundamental investment restrictions on a case-by-case
basis.
D.
Distribution
Agreements
Vote on distribution agreements
on a case-by-case basis.
|
|
|
|
|
XII.
|
Social and Environmental
Issues
|
|
|
|
|
In general we vote on a
case-by-case basis on shareholder social and environmental proposals, on the
basis that their impact on share value can rarely be anticipated with any high
degree of confidence.
In most cases, however, we vote
for disclosure reports that seek additional information, particularly when it
appears companies have not adequately addressed shareholders’ social and
environmental concerns.
In determining our vote on
shareholder social and environmental proposals, we analyze factors such
as:
|
|
|
|
|
|
•
|
whether adoption of the proposal would have
either a positive or negative impact on the company’s short-term or
long-term share value;
|
|
|
|
|
|
|
•
|
the percentage of sales, assets and earnings
affected;
|
|
|
|
|
|
|
•
|
the degree to which the company’s stated
position on the issues could affect its reputation or sales, or leave it
vulnerable to boycott or selective purchasing; whether the issues presented
should be dealt with through government or company—specific
action;
|
|
|
|
|
51
|
|
•
|
whether the company has already responded in some
appropriate manner to the request embodied in a proposal;
|
|
|
|
|
|
|
•
|
whether the company’s analysis and voting
recommendation to shareholders is persuasive;
|
|
|
|
|
|
|
•
|
what other companies have done in response to the
issue;
|
|
|
|
|
|
|
•
|
whether the proposal itself is well framed and
reasonable; whether implementation of the proposal would achieve the objectives
sought in the proposal; and
|
|
|
|
|
|
|
•
|
whether the subject of the proposal is best left to
the discretion of the board.
|
|
|
|
|
52
PART C: OTHER INFORMATION
Item 23. Exhibits:
|
(a)
|
|
Amended and Restated Declaration of
Trust.
*
|
|
(b)
|
|
Bylaws of the
Trust.
*
|
|
(c)
|
|
Not applicable.
|
|
(d)(1)
|
|
Form of Investment Management Agreement between
the Trust and Van Eck Associates Corporation (with respect to Market
Vectors – Gold Miners ETF).
*
|
|
(d)(2)
|
|
Form of Investment Management Agreement between
the Trust and Van Eck Associates Corporation (with respect to all
portfolios except for Market Vectors – Gold Miners
ETF).
***
|
|
(e)(1)
|
|
Form of Distribution Agreement between
the Trust and Van Eck Securities
Corporation.
**
|
|
(e)(2)
|
|
Form of Participant
Agreement.
*
|
|
(f)
|
|
Not applicable.
|
|
(g)
|
|
Form of Custodian Agreement between the Trust and
The Bank of New York.
*
|
|
(h)(1)
|
|
Form of Fund Accounting Agreement
between the Trust and The Bank of New
York.
*
|
|
(h)(2)
|
|
Form of Transfer Agency Services
Agreement between the Trust and The Bank of New
York.
*
|
|
(h)(3)
|
|
Form of Sub-License Agreement between
the Trust and the Van Eck Associates
Corp.
*
|
|
(i)(1)
|
|
Opinion and consent of Clifford Chance US LLP
(with respect to Market Vectors – Environmental Services ETF, Market
Vectors – Gold Miners ETF and Market Vectors – Steel
ETF).
***
|
|
(i)(2)
|
|
Opinion of Clifford Chance US LLP (with respect
to Market Vectors – Global Alternative Energy ETF and Market Vectors
– Russia
ETF).
****
|
|
(i)(3)
|
|
Opinion of Clifford Chance US LLP (with respect
to Market Vectors – Global Agribusiness ETF and Market Vectors
– Global Nuclear Energy
ETF).
*****
|
|
(i)(4)
|
|
Opinion of Clifford Chance US LLP (with respect
to Market Vectors–Lehman Brothers
Intermediate Municipal ETF, Market
Vectors–Lehman Brothers Long Municipal ETF, Market
Vectors–Lehman Brothers 1-5 Year
Municipal ETF, Market Vectors–Lehman Brothers Non-Investment Grade
Municipal ETF, Market Vectors–Lehman Brothers California
Municipal
ETF and Market
Vectors–Lehman Brothers New York Municipal ETF).†
|
|
(j)(1)
|
|
Consent of Ernst & Young LLP, independent
registered public accounting firm (with respect to Market Vectors –
Environmental Services ETF, Market Vectors – Gold Miners ETF and
Market Vectors – Steel
ETF).
****
|
|
(j)(2)
|
|
Consent of Ernst & Young LLP, independent
registered public accounting firm (with respect to Market Vectors –
Global Alternative Energy ETF and Market Vectors – Russia
ETF).
****
|
|
(j)(3)
|
|
Consent of Ernst & Young LLP, independent
registered public accounting firm (with respect to Market Vectors –
Global Agribusiness ETF and Market Vectors – Global Nuclear Energy
ETF).
*****
|
|
(j)(4)
|
|
Consent of _______________, independent
registered public accounting firm (with respect to
Market Vectors–Lehman Brothers
Intermediate Municipal ETF, Market Vectors–Lehman
Brothers Long Municipal ETF, Market
Vectors–Lehman Brothers 1-5 Year Municipal ETF,
Market Vectors–Lehman Brothers
Non-Investment Grade Municipal ETF, Market Vectors–
Lehman Brothers California Municipal ETF and
Market Vectors–Lehman Brothers New York
Municipal ETF) †
|
|
(k)
|
|
Not applicable.
|
|
(l)
|
|
Not applicable.
|
|
(m)
|
|
Not applicable.
|
|
(n)
|
|
Not applicable.
|
|
(o)
|
|
Not applicable.
|
|
(p)(1)
|
|
Code of
Ethics.
***
|
C-1
|
*
|
Incorporated by the reference to the
Registrant’s Registration Statement filed on April 28, 2006.
|
|
**
|
Incorporated by reference to the Registrant’s
Registration Statement filed on May 11, 2006.
|
|
***
|
Incorporated by reference to the Registrant’s
Registration Statement filed on October 6, 2006.
|
|
****
|
Incorporated by reference to the Registrant’s
Registration Statement filed on April 9, 2007.
|
|
*****
|
Incorporated by reference to the Registrant’s
Registration Statement filed on April 27, 2007.
|
|
******
|
Incorporated by reference to the Registrant’s
Registration Statement filed on July 30, 2007.
|
|
†
|
To be filed by amendment.
|
Item 24. Persons Controlled by or Under
Common Control with Registrant
None.
Item 25. Indemnification
Pursuant
to Section 10.2 of the Amended and Restated Declaration of Trust, all persons that are or
have been a Trustee or officer of the Trust (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, or proceeding 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 will 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.
Article
XII of the Trust’s Bylaws, to the maximum extent permitted by Delaware law in effect
from time to time, the Trust shall indemnify and, without requiring a preliminary
determination of the ultimate entitlement to indemnification, shall pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (a) any individual
who is a present or former trustee or officer of the Trust and who is made a party to the
proceeding by reason of his or her service in that capacity or (b) any individual who,
while a director of the Trust and at the request of the Trust, serves or has served as a
trustee, officer, partner or trustee of another corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or other enterprise and who is
made a party to the proceeding by reason of his or her service in that capacity. The Trust
may, with the approval of its Board of Trustees, provide such indemnification and advance
for expenses to a person who served a predecessor of the Trust in any of the capacities
described in (a) or (b) above and to any employee or agent of the Trust or a predecessor of
the Trust;
provided
that no provision of Article XII shall be effective to protect
or purport to protect any trustee or officer of the Trust against liability to the Trust or
its stockholders to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of his or her 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 and Bylaws of the Fund and
Title 12, Part V, Chapter 38 of the Delaware Code, and applicable law.
C-2
Item 26. 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 27. 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: Van Eck Funds (which is comprised of three series: Emerging
Markets Fund, Global Hard Assets Fund and International Investors Gold Fund);
Worldwide Insurance Trust (which is comprised of five series: Worldwide Absolute
Return Fund, Worldwide Bond Fund, Worldwide Emerging Markets Fund, Worldwide Hard
Assets Fund and Worldwide Real Estate Fund); and Van Eck Funds, Inc. (which has one
series, Mid Cap Value Fund).
|
|
|
|
|
(b)
|
The following is a list of the
executive officers, directors and partners of Van Eck Securities
Corporation:
|
|
|
|
|
|
|
|
|
|
Name and
Principal
|
|
Positions and
|
|
|
|
Business Address
|
|
Offices with Underwriter
|
|
|
|
Keith J. Carlson
|
|
President
|
|
|
|
99 Park Avenue
|
|
|
|
|
|
New York, NY 10016
|
|
|
|
|
|
|
|
Susan Lashey
|
|
Vice President
|
|
|
|
99 Park Avenue
|
|
|
|
|
|
New York, NY 10016
|
|
|
|
|
|
|
|
Joseph McBrien
|
|
Senior Vice President, General
Counsel and
|
|
|
|
99 Park Avenue
|
|
Secretary
|
|
|
|
New York, NY 10016
|
|
|
|
|
|
|
|
Peter Moeller
|
|
Senior Vice President
|
|
|
|
99 Park Avenue
|
|
|
|
|
|
New York, NY 10016
|
|
|
|
|
|
|
|
Jonathan R. Simon
|
|
Vice President and Associate
General Counsel
|
|
|
|
99 Park Avenue
|
|
|
|
|
|
New York, NY 10016
|
|
|
|
|
|
|
|
Bruce J. Smith
|
|
Senior Vice President, Chief
Financial Officer,
|
|
|
|
99 Park Avenue
|
|
Treasurer and Controller
|
|
|
|
New York, NY 10016
|
|
|
|
|
|
|
|
Jan F. van Eck
|
|
Director, Executive Vice
President and Chief
|
|
|
|
99 Park Avenue
|
|
Compliance Officer
|
|
|
|
New York, NY 10016
|
|
|
|
|
|
|
|
Derek S. van Eck
|
|
Director and Executive Vice
President
|
C-3
|
|
|
Name and
Principal
|
|
Positions
and
|
|
|
|
Business Address
|
|
Offices with Underwriter
|
|
|
|
99 Park Avenue
|
|
|
|
|
|
New York, NY 10016
|
|
|
Item 28. Location of Accounts and
Records
All
accounts, books and other documents required to be maintained by Section 31(a) of the 1940
Act and the Rules thereunder will be maintained at the offices of The Bank of New York, 101
Barclay Street, New York, New York 10286.
Item 29. Management Services
Not
applicable.
Item 30. Undertakings
Not
applicable.
C-4
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940,
the Registrant certifies that it has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 18th day of October, 2007.
|
|
MARKET VECTORS ETF TRUST
By:
/s/ Keith J.
Carlson*
Keith J. Carlson
President and Chief
Executive Officer
|
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/ Phillip D. DeFeo*
|
|
Chairman
|
|
October 18,
2007
|
|
Phillip D.
DeFeo
|
|
|
|
|
|
|
|
/s/ David H. Chow*
|
|
Trustee
|
|
October 18,
2007
|
|
David H.
Chow
|
|
|
|
|
|
|
|
/s/ R. Alastair Short*
|
|
Trustee
|
|
October 18,
2007
|
|
R. Alastair
Short
|
|
|
|
|
|
|
|
/s/ Richard D. Stamberger*
|
|
Trustee
|
|
October 18,
2007
|
|
Richard D.
Stamberger
|
|
|
|
|
|
|
|
/s/ Jan F. van Eck*
|
|
Trustee
|
|
October 18,
2007
|
|
Jan F. van
Eck
|
|
|
|
|
|
|
|
|
|
President
and
|
|
October 18,
2007
|
|
/s/ Keith J. Carlson*
|
|
Chief Executive
Officer
|
|
|
|
Keith J.
Carlson
|
|
|
|
|
|
|
|
/s/ Bruce J. Smith*
|
|
Chief Financial
Officer
|
|
October 18,
2007
|
|
Bruce J.
Smith
|
|
|
|
|
|
|
|
*By:/s/ Joseph J. McBrien
|
|
|
|
|
|
Joseph J.
McBrien
|
|
|
|
|
|
Attorney-in-Fact
|
|
|
|
|
C-5
EXHIBIT INDEX
|
(a)
|
|
Amended and Restated Declaration of
Trust.
*
|
|
(b)
|
|
Bylaws of the
Trust.
*
|
|
(c)
|
|
Not applicable.
|
|
(d)(1)
|
|
Form of Investment Management Agreement between
the Trust and Van Eck Associates Corporation (with respect to Market
Vectors – Gold Miners ETF).
*
|
|
(d)(2)
|
|
Form of Investment Management Agreement between
the Trust and Van Eck Associates Corporation (with respect to all
portfolios except for Market Vectors – Gold Miners
ETF).
***
|
|
(e)(1)
|
|
Form of Distribution Agreement between
the Trust and Van Eck Securities
Corporation.
**
|
|
(e)(2)
|
|
Form of Participant
Agreement.
*
|
|
(f)
|
|
Not applicable.
|
|
(g)
|
|
Form of Custodian Agreement between the Trust and
The Bank of New York.
*
|
|
(h)(1)
|
|
Form of Fund Accounting Agreement
between the Trust and The Bank of New
York.
*
|
|
(h)(2)
|
|
Form of Transfer Agency Services
Agreement between the Trust and The Bank of New
York.
*
|
|
(h)(3)
|
|
Form of Sub-License Agreement between
the Trust and the Van Eck Associates
Corp.
*
|
|
(i)(1)
|
|
Opinion and consent of Clifford Chance US LLP
(with respect to Market Vectors – Environmental Services ETF, Market
Vectors – Gold Miners ETF and Market Vectors – Steel
ETF).
***
|
|
(i)(2)
|
|
Opinion of Clifford Chance US LLP (with respect
to Market Vectors – Global Alternative Energy ETF and Market Vectors
– Russia
ETF).
****
|
|
(i)(3)
|
|
Opinion of Clifford Chance US LLP (with respect
to Market Vectors – Global Agribusiness ETF and Market Vectors
– Global Nuclear Energy
ETF).
*****
|
|
(i)(4)
|
|
Opinion of Clifford Chance US LLP (with respect
to Market Vectors–Lehman Brothers
Intermediate Municipal ETF, Market
Vectors–Lehman Brothers Long Municipal ETF, Market
Vectors–Lehman Brothers 1-5 Year
Municipal ETF, Market Vectors–Lehman Brothers Non-Investment Grade
Municipal ETF, Market Vectors–Lehman Brothers California
Municipal
ETF and Market
Vectors–Lehman Brothers New York Municipal ETF).†
|
|
(j)(1)
|
|
Consent of Ernst & Young LLP, independent
registered public accounting firm (with respect to Market Vectors –
Environmental Services ETF, Market Vectors – Gold Miners ETF and
Market Vectors – Steel
ETF).
****
|
|
(j)(2)
|
|
Consent of Ernst & Young LLP, independent
registered public accounting firm (with respect to Market Vectors –
Global Alternative Energy ETF and Market Vectors – Russia
ETF).
****
|
|
(j)(3)
|
|
Consent of Ernst & Young LLP, independent
registered public accounting firm (with respect to Market Vectors –
Global Agribusiness ETF and Market Vectors – Global Nuclear Energy
ETF).
*****
|
|
(j)(4)
|
|
Consent of _______________, independent
registered public accounting firm (with respect to
Market Vectors–Lehman Brothers
Intermediate Municipal ETF, Market Vectors–Lehman
Brothers Long Municipal ETF, Market
Vectors–Lehman Brothers 1-5 Year Municipal ETF,
Market Vectors–Lehman Brothers
Non-Investment Grade Municipal ETF, Market Vectors–
Lehman Brothers California Municipal ETF and
Market Vectors–Lehman Brothers New York
Municipal ETF) †
|
|
(k)
|
|
Not applicable.
|
|
(l)
|
|
Not applicable.
|
|
(m)
|
|
Not applicable.
|
|
(n)
|
|
Not applicable.
|
|
(o)
|
|
Not applicable.
|
|
(p)(1)
|
|
Code of
Ethics.
***
|
|
*
|
Incorporated by the reference to the
Registrant’s Registration Statement filed on April 28, 2006.
|
|
**
|
Incorporated by reference to the Registrant’s
Registration Statement filed on May 11, 2006.
|
|
***
|
Incorporated by reference to the Registrant’s
Registration Statement filed on October 6, 2006.
|
|
****
|
Incorporated by reference to the Registrant’s
Registration Statement filed on April 9, 2007.
|
|
*****
|
Incorporated by reference to the Registrant’s
Registration Statement filed on April 27, 2007.
|
|
******
|
Incorporated by reference to the Registrant’s
Registration Statement filed on July 30, 2007.
|
|
†
|
To be filed by amendment.
|
VanEck Environmental Ser... (AMEX:EVX)
Historical Stock Chart
From Nov 2024 to Dec 2024
VanEck Environmental Ser... (AMEX:EVX)
Historical Stock Chart
From Dec 2023 to Dec 2024
