UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM N-CSR

              CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

                              INVESTMENT COMPANIES

Investment Company Act file number  811-10325

                            VANECK VECTORS ETF TRUST
               (Exact name of registrant as specified in charter)

                      666 Third Avenue, New York, NY 10017
              (Address of principal executive offices) (Zip code)

                         Van Eck Associates Corporation
                      666 Third Avenue, New York, NY 10017
                    (Name and address of agent for service)

Registrant’s telephone number, including area code: (212) 293-2000

Date of fiscal year end:  APRIL 30

Date of reporting period: OCTOBER 31, 2018

ITEM 1. REPORT TO SHAREHOLDERS

 

SEMI-ANNUAL REPORT October 31, 2018 (unaudited)

 

VANECK VECTORS®
AMT-Free Intermediate Municipal Index ETF	ITM®
AMT-Free Long Municipal Index ETF	MLN®
AMT-Free Short Municipal Index ETF	SMB®
High-Yield Municipal Index ETF	HYD®
Pre-Refunded Municipal Index ETF	PRB®
Short High-Yield Municipal Index ETF	SHYD®
CEF Municipal Income ETF	XMPT®

 

	800.826.2333	vaneck.com

 

 

 

President’s Letter	1
Explanation of Expenses	2
Schedule of Investments
AMT-Free Intermediate Municipal Index ETF	3
AMT-Free Long Municipal Index ETF	48
AMT-Free Short Municipal Index ETF	61
High-Yield Municipal Index ETF	76
Pre-Refunded Municipal Index ETF	113
Short High-Yield Municipal Index ETF	116
CEF Municipal Income ETF	129
Statements of Assets and Liabilities	132
Statements of Operations	134
Statements of Changes in Net Assets	138
Financial Highlights
AMT-Free Intermediate Municipal Index ETF	141
AMT-Free Long Municipal Index ETF	141
AMT-Free Short Municipal Index ETF	142
High-Yield Municipal Index ETF	142
Pre-Refunded Municipal Index ETF	143
Short High-Yield Municipal Index ETF	143
CEF Municipal Income ETF	144
Notes to Financial Statements	145
Approval of Investment Management Agreements	152

 

Certain information contained in this shareholder letter represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Also, unless otherwise specifically noted, any discussion of the Funds’ holdings, the Funds’ performance, and the views of the investment adviser are as of October 31, 2018.

VANECK VECTORS ETFs

October 31, 2018 (unaudited)

 

Dear Shareholders:

 

We are pleased to present this semi-annual report, which affords us the opportunity to provide a review of the economic backdrop for the last six months.

 

As you may know, VanEck has a history of looking beyond the financial markets to identify historical, political, and/or technological trends that are likely to create or impact investment opportunities. We were one of the first U.S. asset managers to offer investors access to international markets, which set the tone for our drive to identify promising asset classes and trends. In this respect, our unconventional (at the time) efforts to introduce investors to gold investing in 1968, emerging markets (including China) in 1993, and ETFs in 2006, are now considered mainstream, permanently shaping the investment management industry as we now know it.

 

Today, we offer both active and passive strategies with compelling exposures supported by well-designed investment processes. Our firm’s capabilities range from strategies designed to strengthen core investment allocations, to more specialized exposures that enhance portfolio diversification and reduce volatility.

 

The main question that impacts the funds under review is the direction of interest rates. If rates rise too quickly, it could result in negative total returns for bond investors.

 

As we wrote in our Market Insights research, which can be found at https://www.vaneck.com/blogs/market-insights/, we began 2018 by noting that global growth had gone from “ticking up” to “firmly in place” and that, while central banks were tightening, Europe remained “two years” behind the U.S. in this trend. Thus, our base case was for 10-year interest rates to rise to 3.5%. In its third longest bull market ever, we remained bullish on U.S. equities in the short-term, but were prepared for a correction. Finally, we believed that investors should not be underweight commodities as global growth was supporting the bullish “grind trade” narrative from supply cutbacks.

 

The big shock to this growth story came in the second quarter of 2018, with concerns about European and Chinese growth. This led to U.S. dollar strength, commodity weakness, and emerging markets equity weakness. The result for income-oriented investors was that interest rates rose more slowly and impacted fixed income investors less negatively.

 

To keep you informed on an ongoing basis, we encourage you to stay in touch with us through the videos, email subscriptions, and research blogs available on our website, www.vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit www.vaneck.com.

 

We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find financial statements for each of the funds for the six month period ended October 31, 2018. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.

 

 

Jan F. van Eck
Trustee and President
VanEck Vectors ETF Trust

 

November 5, 2018

 

Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.

VANECK VECTORS ETF TRUST

EXPLANATION OF EXPENSES

(unaudited)

 

Hypothetical $1,000 investment at beginning of period

As a shareholder of a Fund, you incur operating expenses, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The disclosure is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, May 1, 2018 to October 31, 2018.

 

Actual Expenses

The first line in the table below provides information about account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period.”

 

Hypothetical Example for Comparison Purposes

The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

		Beginning Account Value May 1, 2018				Ending Account Value October 31, 2018				Annualized Expense Ratio During Period				Expenses Paid During the Period* May 1, 2018 – October 31, 2018
AMT-Free Intermediate Municipal Index ETF
Actual		$	1,000.00			$	1,000.40				0.24	%		$	1.21
Hypothetical**		$	1,000.00			$	1,024.00				0.24	%		$	1.22
AMT-Free Long Municipal Index ETF
Actual		$	1,000.00			$	992.50				0.24	%		$	1.21
Hypothetical**		$	1,000.00			$	1,024.00				0.24	%		$	1.22
AMT-Free Short Municipal Index ETF
Actual		$	1,000.00			$	1,006.50				0.20	%		$	1.01
Hypothetical**		$	1,000.00			$	1,024.20				0.20	%		$	1.02
High-Yield Municipal Index ETF
Actual		$	1,000.00			$	1,005.40				0.35	%		$	1.77
Hypothetical**		$	1,000.00			$	1,023.44				0.35	%		$	1.79
Pre-Refunded Municipal Index ETF
Actual		$	1,000.00			$	1,005.20				0.24	%		$	1.21
Hypothetical**		$	1,000.00			$	1,024.00				0.24	%		$	1.22
Short High-Yield Municipal Index ETF
Actual		$	1,000.00			$	1,009.60				0.35	%		$	1.77
Hypothetical**		$	1,000.00			$	1,023.44				0.35	%		$	1.79
CEF Municipal Income ETF
Actual		$	1,000.00			$	967.00				0.40	%		$	1.98
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%		$	2.04

 

*	Expenses are equal to the Fund’s annualized expense ratio (for the six months ended October 31, 2018) multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year divided by the number of days in the fiscal year (to reflect the one-half year period).
**	Assumes annual return of 5% before expenses

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

 

Definitions:
ACA	Credit Agricole SA
AGM	Assured Guaranty Municipal Corp.
CP	Certificate of Participation
GO	General Obligation
RB	Revenue Bond
SAW	State Aid Withholding
SBG	School Board Guaranteed
SD CRED PROG	Special District Credit Enhancement Program
ST	Special Tax
TA	Tax Allocation

Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
^	Zero Coupon Bond

 

Summary of Investments
By Sector			% of Investments				Value
Education				6.9	%		$	108,263,613
Health Care				5.6				87,928,348
Housing				0.8				11,862,361
Industrial Revenue				0.3				4,653,426
Leasing				6.9				108,066,641
Local				18.2				285,959,893
Power				5.1				80,468,044
Solid Waste/Resource Recovery				0.1				2,146,653
Special Tax				10.9				171,407,081
State				21.4				335,306,506
Tobacco				0.6				8,557,949
Transportation				13.1				205,062,309
Water & Sewer				10.0				157,291,334
Money Market Fund				0.1				1,951,209
				100.0	%		$	1,568,925,367

 

See Notes to Financial Statements

 

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

						Level 2				Level 3
		Level 1				Significant				Significant
		Quoted				Observable				Unobservable
		Prices				Inputs				Inputs					Value
Municipal Bonds*		$	—			$	1,566,974,158				$	—			$	1,566,974,158
Money Market Fund			1,951,209				—					—				1,951,209
Total		$	1,951,209			$	1,566,974,158				$	—			$	1,568,925,367

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

Definitions:

AGM	Assured Guaranty Municipal Corp.
CP	Certificate of Participation
GO	General Obligation
RB	Revenue Bond
SA	Special Assessment
SAW	State Aid Withholding
SBG	School Board Guaranteed
SD CRED PROG	Special District Credit Enhancement Program
ST	Special Tax
TA	Tax Allocation
Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
^	Zero Coupon Bond

 

Summary of Investments By Sector			% of Investments				Value
Education				9.6	%		$	13,274,228
Health Care				18.6				25,584,542
Housing				3.8				5,263,879
Industrial Revenue				0.2				336,509
Leasing				3.2				4,336,847
Local				13.1				18,085,499
Power				6.1				8,369,560
Special Tax				10.9				14,968,255
State				8.1				11,195,007
Tobacco				0.8				1,154,686
Transportation				14.0				19,328,974
Water & Sewer				11.6				15,970,202
				100.0	%		$	137,868,188

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

			Level 1 Quoted Prices				Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Total Municipal Bonds*			$	—			$	137,868,188			$	—			$	137,868,188

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

((unaudited) (continued)

 

 

 

Definitions:

AGM	Assured Guaranty Municipal Corp.
CP	Certificate of Participation
GO	General Obligation
RB	Revenue Bond
SAW	State Aid Withholding
SBG	School Board Guaranteed
SD CRED PROG	Special District Credit Enhancement Program
TA	Tax Allocation

Footnotes:

(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor

 

See Notes to Financial Statements

 

 

Summary of Investments By Sector			% of Investments				Value
Education				8.0	%		$	15,566,337
Health Care				4.1				7,992,475
Housing				0.5				1,033,921
Industrial Revenue				2.9				5,704,168
Leasing				6.0				11,757,647
Local				15.4				30,193,096
Power				4.2				8,102,472
Solid Waste/Resource Recovery				0.0				16,338
Special Tax				11.1				21,600,669
State				24.8				48,528,171
Tobacco				1.6				3,199,729
Transportation				12.2				23,920,627
Water & Sewer				8.6				16,879,781
Money Market Fund				0.6				1,194,250
				100.0	%		$	195,689,681

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

			Level 1 Quoted Prices				Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Municipal Bonds*			$	—			$	194,495,431			$	—			$	194,495,431
Money Market Fund				1,194,250				—				—				1,194,250
Total			$	1,194,250			$	194,495,431			$	—			$	195,689,681

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

Definitions:

ACA	Credit Agricole SA
AGM	Assured Guaranty Municipal Corp.
AMBAC	American Municipal Bond Assurance Corp.
CP	Certificate of Participation
FGIC	Financial Guaranty Insurance Co.
GO	General Obligation
RB	Revenue Bond
SA	Special Assessment
SAW	State Aid Withholding
ST	Special Tax
TA	Tax Allocation
XLCA	Syncora Guarantee, Inc.

 

Footnotes:

(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(d)	Security in default of coupon payment
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
^	Zero Coupon Bond
*	Non-income producing
#	Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $41,997 which represents 0.0% of net assets.
§	Illiquid Security — the aggregate value of illiquid securities is $3,734,550 which represents 0.2% of net assets.
¥	Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

 

Summary of Investments By Sector		% of Investments					Value
Education				8.0	%		$	184,094,750
Health Care				21.8				503,739,584
Housing				2.4				54,717,293
Industrial				0.0				41,997
Industrial Revenue				15.0				346,458,307
Leasing				5.2				119,780,860
Local				8.0				185,686,202
Power				0.4				8,933,570
Solid Waste/Resource Recovery				0.1				1,573,438
Special Tax				9.7				223,486,853
State				4.3				98,460,766
Tobacco				15.8				364,651,823
Transportation				7.2				166,327,395
Water & Sewer				2.0				46,627,192
Money Market Fund				0.1				1,268,224
				100.0	%		$	2,305,848,254

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Corporate Bonds*		$	—			$	—			$	41,997			$	41,997
Municipal Bonds*			—				2,304,538,033				—				2,304,538,033
Money Market Fund			1,268,224				—				—				1,268,224
Total		$	1,268,224			$	2,304,538,033			$	41,997			$	2,305,848,254

 

* See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

The following table reconciles the valuation of the Fund’s Level 3 investment securities and related transactions during the period ended October 31, 2018:

 

	Corporate Bonds
	South Carolina
Balance as of April 30, 2018		$	—
Realized gain (loss)			—
Net change in unrealized appreciation (depreciation)			—
Purchases			—
Sales			—
Transfers in and/or out of level 3			41,997
Balance as of October 31, 2018		$	41,997

 

Transfers to Level 3 resulted from a bankruptcy restructuring. The Fund received debt obligations issued by a private company.

 

See Notes to Financial Statements

VANECK VECTORS PRE-REFUNDED MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

VANECK VECTORS PRE-REFUNDED MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

Definitions:
CP	Certificate of Participation
GO	General Obligation
NATL	National Public Finance Guarantee Corp.
RB	Revenue Bond
SAW	State Aid Withholding
Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
^	Zero Coupon Bond

 

Summary of Investments By Sector		% of Investments					Value
Education			10.3	%			$	1,471,582
Health Care			6.0					852,835
Leasing			8.8					1,258,612
Local			5.9					845,128
Power			7.1					1,008,066
Special Tax			3.0					426,096
State			14.6					2,080,794
Transportation			27.8					3,970,087
Water & Sewer			15.8					2,247,536
Money Market Fund			0.7					97,085
			100.0	%			$	14,257,821

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices			Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Municipal Bonds*		$	—			$	14,160,736			$	—			$	14,160,736
Money Market Fund			97,085				—				—				97,085
Total		$	97,085			$	14,160,736			$	—			$	14,257,821

 

* See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

 

Definitions:

AGM	Assured Guaranty Municipal Corp.
AMBAC	American Municipal Bond Assurance Corp.
CP	Certificate of Participation
GO	General Obligation
NATL	National Public Finance Guarantee Corp.
RB	Revenue Bond
SA	Special Assessment
SAW	State Aid Withholding
SBG	School Board Guaranteed
ST	Special Tax
TA	Tax Allocation

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

Footnotes:

(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(d)	Security in default of coupon payment.
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
^	Zero Coupon Bond
*	Non-income producing
§	Illiquid Security — the aggregate value of illiquid securities is $8 which represents 0.0% of net assets.

 

Summary of Investments By Sector		% of Investments					Value
Education				7.9	%		$	13,223,297
Health Care				18.1				30,160,960
Housing				1.2				1,949,245
Industrial Revenue				15.2				25,203,301
Leasing				9.7				16,148,483
Local				6.9				11,409,020
Power				1.2				1,940,577
Solid Waste/Resource Recovery				0.3				589,538
Special Tax				11.1				18,398,163
State				14.0				23,316,266
Tobacco				7.9				13,102,038
Transportation				5.3				8,758,125
Water & Sewer				1.2				2,014,990
				100.0	%		$	166,214,003

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Total Municipal Bonds*		$	—			$	166,214,003			$	—			$	166,214,003

 

* See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS CEF MUNICIPAL INCOME ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

VANECK VECTORS CEF MUNICIPAL INCOME ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

Summary of Investments By Sector		% of Investments					Value
Financial				99.9	%		$	108,260,824
Money Market Fund				0.1				127,530
				100.0	%		$	108,388,354

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs					Level 3 Significant Unobservable Inputs					Value
Closed-End Funds		$	108,260,824				$	—				$	—			$	108,260,824
Money Market Fund			127,530					—					—				127,530
Total		$	108,388,354				$	—				$	—			$	108,388,354

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

[This page intentionally left blank.]

VANECK VECTORS ETF TRUST

STATEMENTS OF ASSETS AND LIABILITIES

October 31, 2018 (unaudited)

 

		AMT-Free Intermediate Municipal Index ETF					AMT-Free Long Municipal Index ETF					AMT-Free Short Municipal Index ETF
Assets:
Investments, at value
Unaffiliated issuers (1)			$	1,568,925,367				$	137,868,188				$	195,689,681
Receivables:
Investment securities sold				613,981					—					—
Interest				19,634,491					1,864,197					2,580,286
Prepaid expenses				—					—					—
Total assets				1,589,173,839					139,732,385					198,269,967
Liabilities:
Payables:
Investment securities purchased				784,424					—					—
Line of credit				—					574,295					—
Due to Adviser				327,903					29,503					33,682
Due to custodian				—					—					—
Deferred Trustee fees				3,000					1,517					1,600
Accrued expenses				—					1,798					—
Total liabilities				1,115,327					607,113					35,282
NET ASSETS			$	1,588,058,512				$	139,125,272				$	198,234,685
Shares outstanding				34,300,000					7,250,000					11,550,000
Net asset value, redemption and offering price per share			$	46.30				$	19.19				$	17.16
Net assets consist of:
Aggregate paid in capital			$	1,635,565,069				$	144,624,759				$	203,412,570
Total distributable earnings (loss) (a)				(47,506,557	)				(5,499,487	)				(5,177,885	)
			$	1,588,058,512				$	139,125,272				$	198,234,685
(1) Cost of investments			$	1,616,751,642				$	143,233,494				$	199,464,659

 

(a)	Effective in the current reporting period, the aggregate of Net unrealized appreciation (depreciation), Undistributed (accumulated) net investment income (loss), and Accumulated net realized gain (loss) are reported as Total distributable earnings (loss). See Note 2 – E.

 

See Notes to Financial Statements

 

 

High-Yield Municipal Index ETF					Pre-Refunded Municipal Index ETF					Short High-Yield Municipal Index ETF					CEF Municipal Income ETF
	$	2,305,848,254				$	14,257,821				$	166,214,003				$	108,388,354
		—					—					—					—
		39,132,334					233,159					2,532,568					351,446
		—					—					—					1,220
		2,344,980,588					14,490,980					168,746,571					108,741,020
		1,000,000					—					—					—
		—					—					1,185,558					65,392
		743,289					2,953					49,904					29,580
		—					—					—					127,530
		3,184					865					—					2,710
		537					—					2,678					45,141
		1,747,010					3,818					1,238,140					270,353
	$	2,343,233,578				$	14,487,162				$	167,508,431				$	108,470,667
		38,300,000					600,000					6,950,000					4,600,000
	$	61.18				$	24.15				$	24.10				$	23.58
	$	2,405,324,612				$	15,178,070				$	174,617,555				$	127,501,274
		(62,091,034	)				(690,908	)				(7,109,124	)				(19,030,607	)
	$	2,343,233,578				$	14,487,162				$	167,508,431				$	108,470,667
	$	2,333,193,488				$	14,386,295				$	169,372,850				$	123,737,106

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF OPERATIONS

For the Six Months Ended October 31, 2018 (unaudited)

 

		AMT-Free Intermediate Municipal Index ETF					AMT-Free Long Municipal Index ETF					AMT-Free Short Municipal Index ETF
Income:
Dividends			$	38,155				$	6,352				$	4,494
Interest				21,539,812					2,546,974					1,783,484
Total income				21,577,967					2,553,326					1,787,978
Expenses:
Management fees				1,993,498					186,598					207,877
Interest				30					2,330					165
Total expenses				1,993,528					188,928					208,042
Net investment income				19,584,439					2,364,398					1,579,936
Net realized loss on:
Investments				(243,752	)				(5,154	)				(415,176	)
In-kind redemptions				(1,070,878	)				(488,146	)				(305,282	)
Net realized loss				(1,314,630	)				(493,300	)				(720,458	)
Net change in unrealized appreciation (depreciation) on:
Investments				(17,081,207	)				(3,008,799	)				669,967
Net Increase (Decrease) in Net Assets Resulting from Operations			$	1,188,602				$	(1,137,701	)			$	1,529,445

 

See Notes to Financial Statements

 

 

High-Yield Municipal Index ETF					Pre-Refunded Municipal Index ETF					Short High-Yield Municipal Index ETF
	$	135,102				$	2,391				$	11,844
		60,001,878					123,537					2,892,024
		60,136,980					125,928					2,903,868
		4,569,391					17,620					285,942
		3,538					—					2,818
		4,572,929					17,620					288,760
		55,564,051					108,308					2,615,108
		984,613					(14,524	)				(788,388	)
		(8,381,653	)				—					—
		(7,397,040	)				(14,524	)				(788,388	)
		(34,867,273	)				(18,453	)				(552,858	)
	$	13,299,738				$	75,331				$	1,273,862

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF OPERATIONS

For the Six Months Ended October 31, 2018 (unaudited) (continued)

 

	CEF Municipal Income ETF
Income:
Dividends		$	2,789,913
Expenses:
Management fees			220,158
Professional fees			20,885
Insurance			453
Trustees’ fees and expenses			1,224
Reports to shareholders			12,530
Indicative optimized portfolio value fee			2,523
Custodian fees			2,553
Registration fees			3,078
Transfer agent fees			1,212
Fund accounting fees			2,683
Interest			2,454
Other			2,224
Total expenses			271,977
Waiver of management fees			(49,365	)
Net expenses			222,612
Net investment income			2,567,301
Net realized loss on:
Investments			(814,263	)
In-kind redemptions			(50,281	)
Net realized loss			(864,544	)
Net change in unrealized appreciation (depreciation) on:
Investments			(5,827,307	)
Net Decrease in Net Assets Resulting from Operations		$	(4,124,550	)

 

See Notes to Financial Statements

[This page intentionally left blank.]

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

 

		AMT-Free Intermediate Municipal Index ETF (a)										AMT-Free Long Municipal Index ETF
		For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
		(unaudited)										(unaudited)
Operations:
Net investment income			$	19,584,439				$	38,314,571				$	2,364,398				$	5,079,994
Net realized gain (loss)				(1,314,630	)				5,244,922					(493,300	)				1,115,009
Net change in unrealized appreciation (depreciation)				(17,081,207	)				(28,625,432	)				(3,008,799	)				(1,231,879	)
Net increase (decrease) in net assets resulting from operations				1,188,602					14,934,061					(1,137,701	)				4,963,124
Distributions to shareholders: (b)
Dividends and distributions				(19,587,980	)				(37,950,820	)				(2,361,650	)				(5,091,385	)
Share transactions:**
Proceeds from sale of shares				120,159,885					623,271,715					9,845,477					54,135,434
Cost of shares redeemed				(211,303,709	)				(495,165,079	)				(21,327,401	)				(61,865,930	)
Increase (Decrease) in net assets resulting from share transactions				(91,143,824	)				128,106,636					(11,481,924	)				(7,730,496	)
Total increase (decrease) in net assets				(109,543,202	)				105,089,877					(14,981,275	)				(7,858,757	)
Net Assets, beginning of period				1,697,601,714					1,592,511,837					154,106,547					161,965,304
Net Assets, end of period (c)			$	1,588,058,512				$	1,697,601,714				$	139,125,272				$	154,106,547
**Shares of Common Stock Issued (no par value)
Shares sold				2,550,000					13,000,000					500,000					2,700,000
Shares redeemed				(4,500,000	)				(10,350,000	)				(1,100,000	)				(3,100,000	)
Net increase (decrease)				(1,950,000	)				2,650,000					(600,000	)				(400,000	)

 

(a)	Share activity has been adjusted to reflect the 1 for 2 reverse share split which took place on October 26, 2018 (See Note 10).
(b)	Effective in the current reporting period, it is no longer required to separately present distributions from net investment income and distributions from net realized capital gains. See Note 2 – C.
(c)	Effective in the current reporting period, disclosure of undistributed net income is no longer required. See Note 2 – C.

 

See Notes to Financial Statements

 

 

AMT-Free Short Municipal Index ETF										High-Yield Municipal Index ETF (a)										Pre-Refunded Municipal Index ETF
For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
(unaudited)										(unaudited)										(unaudited)
	$	1,579,936				$	3,032,638				$	55,564,051				$	95,887,231				$	108,308				$	181,601
		(720,458	)				(427,488	)				(7,397,040	)				7,947,712					(14,524	)				(32,035	)
		669,967					(4,000,408	)				(34,867,273	)				10,524,348					(18,453	)				(226,911	)
		1,529,445					(1,395,258	)				13,299,738					114,359,291					75,331					(77,345	)
		(1,572,795	)				(3,033,695	)				(55,126,840	)				(93,925,370	)				(106,320	)				(178,620	)
		—					26,228,658					312,499,675					501,966,744					—					—
		(21,589,306	)				(69,069,944	)				(364,181,954	)				(192,398,771	)				—					—
		(21,589,306	)				(42,841,286	)				(51,682,279	)				309,567,973					—					—
		(21,632,656	)				(47,270,239	)				(93,509,381	)				330,001,894					(30,989	)				(255,965	)
		219,867,341					267,137,580					2,436,742,959					2,106,741,065					14,518,151					14,774,116
	$	198,234,685				$	219,867,341				$	2,343,233,578				$	2,436,742,959				$	14,487,162				$	14,518,151
		—					1,500,000					5,000,000					8,050,000					—					—
		(1,250,000	)				(3,950,000	)				(5,900,000	)				(3,100,000	)				—					—
		(1,250,000	)				(2,450,000	)				(900,000	)				4,950,000					—					—

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

(continued)

 

		Short High-Yield Municipal Index ETF										CEF Municipal Income ETF
		For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
		(unaudited)										(unaudited)
Operations:
Net investment income			$	2,615,108				$	3,725,976				$	2,567,301				$	4,588,611
Net realized loss				(788,388	)				(1,437,269	)				(864,544	)				(819,019	)
Net change in unrealized appreciation (depreciation)				(552,858	)				1,331,385					(5,827,307	)				(5,770,685	)
Net increase (decrease) in net assets resulting from operations				1,273,862					3,620,092					(4,124,550	)				(2,001,093	)
Distributions to shareholders: (a)
Dividends and distributions				(2,467,980	)				(3,692,380	)				(2,555,700	)				(4,593,845	)
Share transactions:**
Proceeds from sale of shares				34,165,509					20,576,166					23,917,509					26,744,310
Cost of shares redeemed				—					—					(3,642,781	)				(8,992,546	)
Increase in net assets resulting from share transactions				34,165,509					20,576,166					20,274,728					17,751,764
Total increase in net assets				32,971,391					20,503,878					13,594,478					11,156,826
Net Assets, beginning of period				134,537,040					114,033,162					94,876,189					83,719,363
Net Assets, end of period (b)			$	167,508,431				$	134,537,040				$	108,470,667				$	94,876,189
** Shares of Common Stock Issued (no par value)
Shares sold				1,400,000					850,000					950,000					1,000,000
Shares redeemed				—					—					(150,000	)				(350,000	)
Net increase				1,400,000					850,000					800,000					650,000

 

(a)	Effective in the current reporting period, it is no longer required to separately present distributions from net investment income and distributions from net realized capital gains. See Note 2 – C.
(b)	Effective in the current reporting period, disclosure of undistributed net income is no longer required. See Note 2 – C.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		AMT-Free Intermediate Municipal Index ETF #
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018					2017					2016					2015					2014
		(unaudited)
Net asset value, beginning of period			$	46.84				$	47.40				$	48.84				$	46.98				$	46.14				$	47.56
Income from investment operations:
Net investment income				0.56	(a)				1.08	(a)				1.06					1.10					1.12					1.16
Net realized and unrealized gain (loss) on investments				(0.54	)				(0.58	)				(1.44	)				1.86					0.86					(1.42	)
Total from investment operations				0.02					0.50					(0.38	)				2.96					1.98					(0.26	)
Less:
Dividends from net investment income				(0.56	)				(1.06	)				(1.06	)				(1.10	)				(1.14	)				(1.16	)
Net asset value, end of period			$	46.30				$	46.84				$	47.40				$	48.84				$	46.98				$	46.14
Total return (b)				0.04	%(c)				1.04	%				(0.80	)%				6.38	%				4.32	%				(0.45	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$1,588,059					$1,697,602					$1,592,512					$1,418,799					$1,042,806					$625,118
Ratio of expenses to average net assets				0.24	%(d)				0.24	%				0.24	%				0.24	%				0.24	%				0.24	%
Ratio of expenses to average net assets excluding interest expense				0.24	%(d)				0.24	%				0.24	%				0.24	%				0.24	%				0.24	%
Ratio of net investment income to average net assets				2.36	%(d)				2.24	%				2.22	%				2.32	%				2.45	%				2.55	%
Portfolio turnover rate (e)				3	%(c)				9	%				7	%				2	%				3	%				1	%
		AMT-Free Long Municipal Index ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018					2017					2016					2015					2014
		(unaudited)
Net asset value, beginning of period			$	19.63				$	19.63				$	20.43				$	19.60				$	18.96				$	20.32
Income from investment operations:
Net investment income				0.30	(a)				0.59	(a)				0.60					0.66					0.71					0.79
Net realized and unrealized gain (loss) on investments				(0.44	)				0.01					(0.79	)				0.83					0.65					(1.36	)
Total from investment operations				(0.14	)				0.60					(0.19	)				1.49					1.36					(0.57	)
Less:
Dividends from net investment income				(0.30	)				(0.60	)				(0.61	)				(0.66	)				(0.72	)				(0.79	)
Net asset value, end of period			$	19.19				$	19.63				$	19.63				$	20.43				$	19.60				$	18.96
Total return (b)				(0.75	)%(c)				3.02	%				(0.99	)%				7.80	%				7.25	%				(2.62	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$139,125					$154,107					$161,965					$156,292					$108,772					$76,797
Ratio of expenses to average net assets				0.24	%(d)				0.24	%				0.24	%				0.24	%				0.24	%				0.24	%
Ratio of expenses to average net assets excluding interest expense				0.24	%(d)				0.24	%				0.24	%				0.24	%				0.24	%				0.24	%
Ratio of net investment income to average net assets				3.04	%(d)				2.96	%				2.99	%				3.36	%				3.68	%				4.17	%
Portfolio turnover rate (e)				13	%(c)				33	%				17	%				3	%				4	%				5	%

 

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.
#	On October 26, 2018, the Fund effected a 1 for 2 reverse share split (See Note 10). Per share data has been adjusted to reflect the reverse share split.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		AMT-Free Short Municipal Index ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018					2017					2016					2015					2014
		(unaudited)
Net asset value, beginning of period			$	17.18				$	17.52				$	17.68				$	17.54				$	17.61				$	17.79
Income from investment operations:
Net investment income				0.13	(a)				0.22	(a)				0.20					0.20					0.20					0.24
Net realized and unrealized gain (loss) on investments				(0.02	)				(0.34	)				(0.17	)				0.14					(0.07	)				(0.18	)
Total from investment operations				0.11					(0.12	)				0.03					0.34					0.13					0.06
Less:
Dividends from net investment income				(0.13	)				(0.22	)				(0.19	)				(0.20	)				(0.20	)				(0.24	)
Net asset value, end of period			$	17.16				$	17.18				$	17.52				$	17.68				$	17.54				$	17.61
Total return (b)				0.65	%(c)				(0.70	)%				0.20	%				1.95	%				0.75	%				0.36	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$198,235					$219,867					$267,138					$264,291					$274,541					$242,131
Ratio of expenses to average net assets				0.20	%(d)				0.20	%				0.20	%				0.20	%				0.20	%				0.20	%
Ratio of expenses to average net assets excluding interest expense				0.20	%(d)				0.20	%				0.20	%				0.20	%				0.20	%				0.20	%
Ratio of net investment income to average net assets				1.51	%(d)				1.26	%				1.11	%				1.13	%				1.14	%				1.37	%
Portfolio turnover rate (e)				18	%(c)				41	%				12	%				3	%				2	%				3	%
		High-Yield Municipal Index ETF #
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018					2017					2016					2015					2014
		(unaudited)
Net asset value, beginning of period			$	62.16				$	61.52				$	63.18				$	62.12				$	59.80				$	66.50
Income from investment operations:
Net investment income				1.34	(a)				2.72	(a)				2.68					2.96					3.08					3.36
Net realized and unrealized gain (loss) on investments				(0.98	)				0.60					(1.64	)				0.98					2.24					(6.46	)
Total from investment operations				0.36					3.32					1.04					3.94					5.32					(3.10	)
Less:
Dividends from net investment income				(1.34	)				(2.68	)				(2.70	)				(2.88	)				(3.00	)				(3.40	)
Distributions from net realized capital gains				—					—					—					—					—					(0.20	)
Total dividends and distributions				(1.34	)				(2.68	)				(2.70	)				(2.88	)				(3.00	)				(3.60	)
Net asset value, end of period			$	61.18				$	62.16				$	61.52				$	63.18				$	62.12				$	59.80
Total return (b)				0.54	%(c)				5.48	%				1.69	%				6.59	%				9.08	%				(4.48	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$2,343,234					$2,436,743					$2,106,741					$1,882,555					$1,605,601					$977,813
Ratio of expenses to average net assets				0.35	%(d)				0.35	%				0.35	%				0.35	%				0.35	%				0.35	%
Ratio of expenses to average net assets excluding interest expense				0.35	%(d)				0.35	%				0.35	%				0.35	%				0.35	%				0.35	%
Ratio of net investment income to average net assets				4.26	%(d)				4.37	%				4.36	%				4.86	%				5.19	%				5.57	%
Portfolio turnover rate (e)				6	%(c)				14	%				10	%				8	%				9	%				21	%

 

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.
#	On October 26, 2018, the Fund effected a 1 for 2 reverse share split (See Note 10). Per share data has been adjusted to reflect the reverse share split.

 

See Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Pre-Refunded Municipal Index ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018					2017					2016					2015					2014
		(unaudited)
Net asset value, beginning of period			$	24.20				$	24.62				$	24.73				$	24.62				$	24.70				$	25.40
Income from investment operations:
Net investment income				0.18	(a)				0.30	(a)				0.23					0.21					0.19					0.25
Net realized and unrealized gain (loss) on investments				(0.05	)				(0.42	)				(0.11	)				0.10					(0.08	)				(0.67	)
Total from investment operations				0.13					(0.12	)				0.12					0.31					0.11					(0.42	)
Less:
Dividends from net investment income				(0.18	)				(0.30	)				(0.23	)				(0.20	)				(0.19	)				(0.28	)
Net asset value, end of period			$	24.15				$	24.20				$	24.62				$	24.73				$	24.62				$	24.70
Total return (b)				0.52	%(c)				(0.51	)%				0.47	%				1.28	%				0.43	%				(1.64	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$14,487					$14,518					$14,774					$19,785					$22,160					$34,579
Ratio of expenses to average net assets				0.24	%(d)				0.24	%				0.24	%				0.24	%				0.24	%				0.24	%
Ratio of expenses to average net assets excluding interest expense				0.24	%(d)				0.24	%				0.24	%				0.24	%				0.24	%				0.24	%
Ratio of net investment income to average net assets				1.48	%(d)				1.23	%				0.92	%				0.85	%				0.82	%				1.02	%
Portfolio turnover rate (e)				17	%(c)				47	%				36	%				41	%				51	%				61	%
		Short High-Yield Municipal Index ETF
																											For the Period
		For the Six																									January 13,
		Months Ended																									2014 through
		October 31,					For the Year Ended April 30,																				April 30,
		2018					2018					2017					2016					2015					2014 (f)
		(unaudited)
Net asset value, beginning of period			$	24.24				$	24.26				$	25.15				$	25.43				$	25.24				$	24.94
Income from investment operations:
Net investment income				0.39	(a)				0.76	(a)				0.72					0.87					0.82					0.24
Net realized and unrealized gain (loss) on investments				(0.16	)				(0.02	)				(0.92	)				(0.34	)				0.15					0.22
Total from investment operations				0.23					0.74					(0.20	)				0.53					0.97					0.46
Less:
Dividends from net investment income				(0.37	)				(0.76	)				(0.69	)				(0.81	)				(0.78	)				(0.16	)
Net asset value, end of period			$	24.10				$	24.24				$	24.26				$	25.15				$	25.43				$	25.24
Total return (b)				0.96	%(c)				3.07	%				(0.81	)%				2.14	%				3.91	%				1.82	%(c)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$167,508					$134,537					$114,033					$110,672					$99,171					$27,768
Ratio of expenses to average net assets				0.35	%(d)				0.35	%				0.35	%				0.35	%				0.35	%				0.35	%(d)
Ratio of expenses to average net assets excluding interest expense				0.35	%(d)				0.35	%				0.35	%				0.35	%				0.35	%				0.35	%(d)
Ratio of net investment income to average net assets				3.20	%(d)				3.11	%				2.93	%				3.55	%				3.48	%				4.10	%(d)
Portfolio turnover rate (e)				11	%(c)				27	%				20	%				16	%				26	%				6	%(c)

 

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.
(f)	Commencement of operations

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		CEF Municipal Income ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018					2017					2016					2015					2014
		(unaudited)
Net asset value, beginning of period			$	24.97				$	26.58				$	28.50				$	26.62				$	25.55				$	28.29
Income from investment operations:
Net investment income				0.59	(a)				1.27	(a)				1.37					1.39					1.41					1.46
Net realized and unrealized gain (loss) on investments				(1.39	)				(1.61	)				(1.90	)				1.88					1.08					(2.73	)
Total from investment operations				(0.80	)				(0.34	)				(0.53	)				3.27					2.49					(1.27	)
Less:
Dividends from net investment income				(0.59	)				(1.27	)				(1.39	)				(1.39	)				(1.42	)				(1.47	)
Net asset value, end of period			$	23.58				$	24.97				$	26.58				$	28.50				$	26.62				$	25.55
Total return (b)				(3.30	)%(c)				(1.45	)%				(1.93	)%				12.87	%				10.02	%				(4.08	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$108,471					$94,876					$83,719					$95,475					$47,921					$31,942
Ratio of gross expenses to average net assets (e)				0.49	%(d)				0.50	%				0.51	%				0.54	%				0.57	%				0.79	%
Ratio of net expenses to average net assets (e)				0.40	%(d)				0.40	%				0.40	%				0.40	%				0.40	%				0.40	%
Ratio of net expenses to average net assets excluding interest expense (e)				0.40	%(d)				0.40	%				0.40	%				0.40	%				0.40	%				0.40	%
Ratio of net investment income to average net assets				4.66	%(d)				4.78	%				4.98	%				5.38	%				5.52	%				6.07	%
Portfolio turnover rate (f)				6	%(c)				9	%				12	%				10	%				6	%				9	%

 

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not Annualized
(d)	Annualized
(e)	The ratios presented do not reflect the Fund’s proportionate share of income and expenses from the Fund’s investment in underlying funds.
(f)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

October 31, 2018 (unaudited)

 

Note 1—Fund Organization—VanEck Vectors ETF Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was incorporated in Delaware as a statutory trust on March 15, 2001. The Trust operates as a series fund, and as of October 31, 2018, offers fifty-eight investment portfolios, each of which represents a separate series of the Trust.

 

These financial statements relate only to the following investment portfolios: AMT-Free Intermediate Municipal Index ETF (“Intermediate”), AMT-Free Long Municipal Index ETF (“Long”), AMT-Free Short Municipal Index ETF (“Short”), High-Yield Municipal Index ETF (“High-Yield”), Pre-Refunded Municipal Index ETF (“Pre-Refunded”), Short High-Yield Municipal Index ETF (“Short High-Yield”) and CEF Municipal Income ETF (“CEF Municipal”), each a “Fund” and collectively the “Funds”. Each Fund’s investment objective is to replicate as closely as possible, before fees and expenses, the price and yield performance of its index. The Funds (except CEF Municipal) expect to use a sampling approach in seeking to achieve their objectives. Sampling means that Van Eck Associates Corporation (the “Adviser”) uses quantitative analysis to select bonds and other securities that represent a sample of securities in each Fund’s respective index in terms of key risk factors, performance attributes and other characteristics. The number of securities in each Fund will be based upon several factors, including asset size of the Fund. The Adviser generally expects each Fund to hold less than the total number of securities in its index, but reserves the right to hold as many securities as it believes necessary to achieve the Fund’s investment objective. CEF Municipal seeks to achieve its objectives through a portfolio of securities in substantially the same weighting as its index.

 

The Funds’ respective indices are presented below:

 

Fund		Index
Intermediate		Bloomberg Barclays AMT-Free Intermediate Continuous Municipal Index
Long		Bloomberg Barclays AMT-Free Long Continuous Municipal Index
Short		Bloomberg Barclays AMT-Free Short Continuous Municipal Index
High-Yield		Bloomberg Barclays Municipal Custom High Yield Composite Index
Pre-Refunded		Bloomberg Barclays Municipal Pre-Refunded-Treasury-Escrowed Index
Short High-Yield		Bloomberg Barclays Municipal High Yield Short Duration Index
CEF Municipal		S-Network Municipal Bond Closed-End Fund IndexSM

 

Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

The Funds are investment companies and are following accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services - Investment Companies.

 

The following is a summary of significant accounting policies followed by the Funds.

 

A.

Security Valuation—The Funds value their investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Debt securities are valued on the basis of evaluated prices furnished by an independent pricing service approved by the Funds’ Board of Trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider: (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date and/or (ii) quotations from bond dealers to determine current value and are categorized as Level 2 in the fair value hierarchy (as described below). Short-term debt securities with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are categorized as Level 1 in the fair value hierarchy. Securities traded on national exchanges or traded on the NASDAQ National Market System are valued at the last sales price as reported at the close of each business day. Securities traded on the NASDAQ Stock Market are valued at the NASDAQ official closing price. Over-the-counter securities not included in the NASDAQ National Market System and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded, they are categorized as Level 1 in the fair value hierarchy. The Pricing Committee of the Adviser provides oversight of the Funds’ valuation policies and procedures, which are approved by the Funds’ Board of Trustees. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

	securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes it does not otherwise reflect the fair value of a security or asset, the security or asset will be fair valued by the Pricing Committee in accordance with the Funds’ valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis.
	Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be classified either as Level 2 or Level 3 in the fair value hierarchy. The price which the Funds may realize upon sale of an investment may differ materially from the value presented in the Schedules of Investments.
	The Funds utilize various methods to measure the fair value of their investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The transfers between levels of the fair value hierarchy assume the financial instruments where transferred at the beginning of the reporting period. The three levels of the fair value hierarchy are described below:
	Level 1 — Quoted prices in active markets for identical securities.
	Level 2 — Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
	Level 3 — Significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments).
	A summary of the inputs, the levels used to value the Funds’ investments, and transfers between levels are located in the Schedules of Investments. Additionally, tables that reconcile the valuation of the Funds’ Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Schedules of Investments.
B.	Federal Income Taxes—It is each Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.
C.	Dividends and Distributions to Shareholders—Dividends to shareholders from net investment income, if any, are declared and paid at least monthly by each Fund. Distributions of net realized capital gains, if any, generally are declared and paid annually. Income dividends and capital gain distributions are determined in accordance with income tax regulations, which may differ from such amounts determined in accordance with GAAP.
	Effective in the current reporting period, it is no longer required to separately present distributions from net investment income and distributions from net realized capital gains. Additionally, undistributed net investment income (loss) included in net assets is no longer disclosed separately in the Statement of Changes in Net Assets. The April 30, 2018 sources of distributions and undistributed net investment income were as follows:

 

 

Fund		Dividends to shareholders: Dividends from net investment income				Undistributed net investment income
Intermediate		$	37,950,820			$	3,477,424
Long			5,091,385				426,109
Short			3,033,695				269,388
High-Yield			93,925,370				12,173,135
Pre-Refunded			178,620				12,942
Short High-Yield			3,692,380				544,128
CEF Municipal			4,593,845				323,633

 

D.	Restricted Securities—The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included at the end of each Fund’s Schedule of Investments.
E.	Components of Capital—Effective with the current reporting period, the Net unrealized appreciation (depreciation), Undistributed net investment income (loss) and Accumulated net realized gain (loss) are aggregated and disclosed as Total distributable earnings (loss) in the Statement of Assets and Liabilities.
F.	Other—Security transactions are accounted for on trade date. Realized gains and losses are determined based on the specific identification method. Dividend income is recorded on the ex-dividend date. The Funds may record distributions received in excess of income from certain underlying investments as a reduction of cost of investments and/or an increase in realized gains. Such amounts are based upon estimates if actual amounts are not available, and actual amounts of income, realized gains and return of capital may differ from estimated amounts. Interest income, including amortization of premiums and discounts, is accrued as earned. Interest income is generally not earned on debt securities in default or upon determination that the income is not realizable.
	In the normal course of business, the Funds enter into contracts that contain a variety of general indemnifications. The Funds’ maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote.

 

Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Funds. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of each Fund’s average daily net assets. The Funds (except for CEF Municipal) utilize a unitary management fee where the Adviser is responsible for all expenses of the Funds, excluding the fee payment under the investment management agreement, acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses.

 

For CEF Municipal, the Adviser has agreed, until at least September 1, 2019 to waive management fees and assume expenses to prevent the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses) from exceeding 0.40% of average daily net assets. Refer to the Statement of Operations for the amounts waived/assumed by the Adviser for the period ended October 31, 2018.

 

The management fee rates for the period ended October 31, 2018 are as follows:

 

Fund		Management Fee Rate
CEF Municipal			0.40	%

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

Fund		Unitary Management Fee Rate
Intermediate			0.24	%
Long			0.24
Short			0.20
High-Yield			0.35
Pre-Refunded			0.24
Short High-Yield			0.35

 

In addition, Van Eck Securities Corporation, an affiliate of the Adviser, acts as the Funds’ distributor (“the Distributor”). Certain officers and a Trustee of the Trust are officers, directors or stockholders of the Adviser and Distributor.

 

Note 4—Investments—For the period ended October 31, 2018, the cost of purchases and proceeds from sales of investments other than U.S. government obligations and short-term obligations (excluding in-kind transactions described in Note 6) were as follows:

 

Fund		Cost of Investments Purchased				Proceeds from Investments Sold
Intermediate		$	84,769,698			$	53,683,047
Long			32,150,744				19,292,286
Short			38,730,718				37,374,819
High-Yield			421,403,881				141,429,222
Pre-Refunded			2,586,391				2,430,722
Short High-Yield			53,001,206				17,870,193
CEF Municipal			6,224,315				6,245,483

 

Note 5—Income Taxes—As of October 31, 2018, for Federal income tax purposes, the identified cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation (depreciation) of investments owned were as follows:

 

Fund		Cost of Investments				Gross Unrealized Appreciation				Gross Unrealized Depreciation				Net Unrealized Appreciation (Depreciation)
Intermediate		$	1,616,751,976			$	1,681,052			$	(49,507,661	)		$	(47,826,609	)
Long			143,224,407				202,642				(5,558,861	)			(5,356,219	)
Short			199,464,333				19,745				(3,794,397	)			(3,774,652	)
High-Yield			2,330,160,571				48,592,974				(72,905,291	)			(24,312,317	)
Pre-Refunded			14,393,688				58,616				(194,483	)			(135,867	)
Short High-Yield			169,216,910				1,077,396				(4,080,303	)			(3,002,907	)
CEF Municipal			123,731,361				—				(15,343,007	)			(15,343,007	)

 

The tax character of dividends paid to shareholders during the year ended April 30, 2018 follows:

 

Fund		Tax-Exempt Dividends				Ordinary Income
Intermediate		$	37,852,588			$	98,232
Long			5,072,712				18,673
Short			3,013,185				20,510
High-Yield			92,835,728				1,089,642
Pre-Refunded			175,910				2,710
Short High-Yield			3,646,155				46,225
CEF Municipal			4,555,917				37,928

 

The tax character of current year distributions will be determined at the end of the current fiscal year.

 

 

At April 30, 2018, the Funds had capital loss carryforwards available to offset future capital gains, as follows:

 

Fund		Short-Term Capital Losses with No Expirations				Long-Term Capital Losses with No Expirations				Short-Term Capital Losses Expiring in the Year Ending April 30, 2019				Total
Intermediate		$	(1,406,206	)		$	(432,997	)		$	—			$	(1,839,203	)
Long			—				—				(78,825	)			(78,825	)
Short			(235,310	)			(723,993	)			—				(959,303	)
High-Yield			(9,816,842	)			(33,175,181	)			—				(42,992,023	)
Pre-Refunded			(236,284	)			(319,164	)			—				(555,448	)
Short High-Yield			(862,833	)			(3,146,252	)			—				(4,009,085	)
CEF Municipal			(1,253,256	)			(1,905,032	)			—				(3,158,288	)

 

The Funds recognize the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. Therefore, no provision for income tax is required in the Funds’ financial statements.

 

The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the period ended October 31, 2018, the Funds did not incur any interest or penalties.

 

Note 6—Capital Share Transactions—As of October 31, 2018, there were an unlimited number of capital shares of beneficial interest authorized by the Trust with no par value. Fund shares are not individually redeemable and are issued and redeemed at their net asset value per share only through certain authorized broker-dealers (“Authorized Participants”) in blocks of shares (“Creation Units”), or multiples thereof, consisting of 50,000 shares, or multiples thereof. The consideration for the purchase or redemption of Creation Units of the Funds generally consists of the in-kind contribution or distribution of securities constituting the Funds’ underlying index (“Deposit Securities”) plus a balancing cash component to equate the transaction to the net asset value per share of the Fund on the transaction date. Cash may also be substituted in an amount equivalent to the value of certain Deposit Securities, generally as a result of market circumstances, or when the securities are not available in sufficient quantity for delivery, or are not eligible for trading by the Authorized Participant. The Funds may issue Creation Units in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit at the Custodian for the benefit of the Funds, collateral consisting of cash in the form of U.S. dollars at least equal to 115% of the daily marked to market value of the missing Deposit Securities.

 

Authorized Participants purchasing and redeeming Creation Units may pay transaction fees directly to The Bank of New York Mellon. In addition, the Funds may impose certain variable fees for creations and redemptions with respect to transactions in Creation Units for cash, or on transactions effected outside the clearing process, which are treated as increases in capital. These variable fees, if any, are reflected in share transactions in the Statements of Changes in Net Assets.

 

For the period ended October 31, 2018, the following Funds had in-kind contributions and redemptions:

 

Fund		In-Kind Contributions				In-Kind Redemptions
Intermediate		$	104,002,398			$	205,608,334
Long			—				21,417,610
Short			—				21,375,356
High-Yield			15,142,920				317,994,547
CEF Municipal			23,921,868				3,652,460

 

This table represent the accumulation of each Fund’s daily net in-kind shareholder transactions including rebalancing activity, while the Statements of Changes in Net Assets reflect shareholder transactions including any cash component of the transactions.

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

Note 7—Principal Risks—Investments in municipal securities involve risks similar to those of investing in any fund of fixed income securities traded on exchanges, such as market fluctuations caused by factors such as economic and political developments, changes in interest rates and perceived trends in security prices. The market for municipal bonds may be less liquid than for taxable bonds.

 

Each Fund is classified as diversified funds under the 1940 Act, except for Pre-Refunded, which is classified as non-diversified fund. Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.

 

High-Yield and Short High-Yield invest in non-investment grade securities, often referred to as “junk bonds.” Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. These high yield securities may involve greater risks and considerations not typically associated with investing in U.S. government bonds and other high quality fixed-income securities. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities. High-Yield and Short High-Yield may not be able to sell bonds at desired prices and that large purchases or sales of certain high-yield bond issues may cause substantial fluctuations in share price, yield and total return.

 

CEF Municipal invests in closed-end funds that may trade at a discount or premium to their net asset value. A closed-end fund may be leveraged as part of its investment strategy. As a result, the Fund may be indirectly exposed to the effects of leverage through its investment in the underlying funds. Investments in underlying funds that use leverage may cause the value of the Fund’s shares to be more volatile than if the Fund invested in underlying funds that do not utilize leverage.

 

High-Yield and Short High-Yield maintain assets invested in Puerto Rican municipal securities that currently experience significant financial difficulties. Particularly, the Funds may be affected by political, economic, regulatory and other developments within Puerto Rico and by the financial condition of Puerto Rico’s political subdivisions, agencies, instrumentalities and public authorities. As a result, certain securities issued by this municipality are currently considered below-investment-grade securities. The market for these investments may be limited, which may make them difficult to buy or sell. Municipal obligations issued by Puerto Rico are subject to heightened risks that may adversely affect the value of these Funds’ portfolios and the repayment of such bonds are subject to significant uncertainties. If the economic situation in Puerto Rico persists or worsens, the volatility, credit quality and performance of the Funds could be adversely affected.

 

A more complete description of risks is included in each Fund’s Prospectus and Statement of Additional Information.

 

Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Plan”) for Trustees under which the Trustees can elect to defer receipt of their trustee fees until retirement, disability or termination from the Board of Trustees. The fees otherwise payable to the participating Trustees are deemed invested in shares of the Funds as directed by the Trustees.

 

High Yield, Intermediate, Long, Pre-Refunded and Short Funds adopted a unitary management fee where the Adviser is responsible for all expenses of the Funds. Therefore, the expense for the Plan for these Funds and for Short High-Yield are included in “Management fees”. The liability for the Plan is shown as “Deferred Trustee fees” in the Statements of Assets and Liabilities for amounts accrued through September 1, 2010 and in “Due to Adviser” for amounts accrued after September 1, 2010.

 

For CEF Municipal, the expense for the Plan is included in “Trustees’ fees and expenses” in the Statement of Operations. The liability for the Plan is shown as “Deferred Trustee fees” in the Statement of Assets and Liabilities.

 

Note 9—Bank Line of Credit—Certain Funds may participate in a $200 million committed credit facility (“Facility”) to be utilized for temporary financing until the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Funds at the request of the shareholders and other temporary or emergency purposes. The Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the Funds at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 2018, the following Funds borrowed under this facility:

 

 

Fund		Days Outstanding				Average Daily Loan Balance				Average Interest Rate
Intermediate			3			$	108,755				3.31	%
Long			55				410,179				3.47
Short			7				256,134				3.32
High-Yield			18				2,127,941				3.38
Short High-Yield			33				799,118				3.59
CEF Municipal			142				184,322				3.32

 

The outstanding loan balance for each respective Fund as of October 31, 2018 is disclosed as Line of Credit in the Statement of Assets and Liabilities.

 

Note 10—Share Split—The Board of Trustees approved a 1 for 2 reverse share split for AMT-Free Intermediate Municipal Index ETF and High-Yield Municipal Index ETF. On October 26, 2018 shares began trading on a split-adjusted basis. The Statement of Changes in Net Assets and Financial Highlights prior to October 26, 2018 have been adjusted to reflect the 1 for 2 reverse share split.

 

Note 11—Custodian Fees—The Funds have entered into an expense offset agreement with the custodian wherein they receive a credit toward the reduction of custodian fees whenever there are uninvested cash balances. The Funds could have invested their cash balances elsewhere if they had not agreed to a reduction in fees under the expense offset agreement with the custodian. For the period ended October 31, 2018, there were offsets to custodian fees and these amounts are reflected in custody expense in the Statements of Operations.

 

Note 12—Recent Accounting Pronouncements and Regulatory Requirements—Tax reform legislation commonly known as the Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017 which contained certain provisions that may affect the Funds. Under prior law, the tax-exemption for interest from state and local bonds generally applied to refunded bonds with certain limitations on advance refunding bonds. Advance refunding bonds are bonds that are issued more than 90 days before the redemption of the refunded bond. Under the Act, interest income from advance refunding bonds will now be considered to be taxable interest income for any advance refundings that occur after December 31, 2017.

 

The Financial Accounting Standards Board issued an Accounting Standards Update ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, that shortens the amortization period for certain purchased callable debt securities held at premium to the earliest call date. The new guidance does not change the accounting for purchased callable debt securities held at a discount. The guidance is effective for public business entities for fiscal years beginning after 15 December 2018, and interim periods within those years. Early adoption is permitted. Management is currently evaluating the potential impact of this new guidance to the financial statements.

 

The Financial Accounting Standards Board issued Accounting Standards Update No. 2018-13 Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), a final guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. Public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years beginning after 15 December 2019 and for interim periods within those fiscal years. Early adoption is permitted of either the entire standard or only the provisions that eliminate or modify the requirements. Management is currently evaluating the potential impact of this new guidance to the financial statements.

 

Note 13—Subsequent Events—The Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

VANECK VECTORS ETF TRUST

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS

October 31, 2018 (unaudited)

 

At a meeting held on June 22, 2018 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors^® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved (i) the continuation of the investment management agreements (the “Municipal Investment Management Agreements”) between the Trust and Van Eck Associates Corporation (the “Adviser”) with respect to the VanEck Vectors AMT-Free 8-12 Year Municipal Index ETF, AMT-Free Intermediate Municipal Index ETF, AMT-Free Long Municipal Index ETF, AMT-Free National Municipal Index ETF, AMT-Free Short Municipal Index ETF, California Long Municipal Index ETF, High-Yield Municipal Index ETF, Massachusetts Municipal Index ETF, New Jersey Municipal Index ETF, New York Long Municipal Index ETF, Ohio Municipal Index ETF, Pennsylvania Municipal Index ETF, Pre-Refunded Municipal Index ETF, Puerto Rico Municipal Index ETF and Short High-Yield Municipal Index ETF (the “Municipal Funds”) and (ii) the continuation of the investment management agreement between the Trust and the Adviser (the “CEF Investment Management Agreement,” and together with the Municipal Investment Management Agreements, the “Investment Management Agreements”) with respect to VanEck Vectors CEF Municipal Income ETF (the “CEF Muni Fund” and together with the Municipal Funds, the “Funds”).

 

The Board’s approval of the Investment Management Agreements was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.

 

In preparation for the Renewal Meeting, the Trustees held a meeting on June 6, 2018. At that meeting, the Trustees discussed the information the Adviser and Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party data provider, had provided to them in advance. The information provided to the Trustees included, among other things, information about the performance and expenses (for those Funds which had begun operations) of the Funds and the Funds’ peer funds (other index-based exchange-traded funds (“ETFs”)), information about the advisory services provided to the Funds and the personnel providing those services, and the profitability and other benefits enjoyed by the Adviser and its affiliates as a result of the Adviser’s relationship with the Funds. In reviewing performance information for the Funds against their peer groups, the Trustees considered that each Fund seeks to track a different index than the funds in its designated peer group and, therefore, each Fund’s performance will differ from its peers. In addition, as noted below, the Trustees reviewed certain performance information for each Fund which was not provided by Broadridge and which did not compare each Fund’s performance to the performance of its peer group. For these and other reasons, the Trustees noted that the peer group performance information did not necessarily provide meaningful direct comparisons to the Funds.

 

The Independent Trustees’ consideration of the Investment Management Agreements was based, in part, on their review of information obtained through discussions with the Adviser at the Renewal Meeting and with the Adviser at the June 6, 2018 meeting regarding the management of the Funds and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser, including the background and experience of the portfolio manager(s) and others involved in the management and administration of the Funds. The Trustees also considered the terms of, and scope of services that the Adviser provides under, the Investment Management Agreements, including, with respect to the CEF Muni Fund, the Adviser’s commitment to waive certain fees and/or pay expenses of the CEF Muni Fund to the extent necessary to prevent the operating expenses of the CEF Muni Fund from exceeding agreed upon limits for a period of time and, with respect to the Municipal Funds, the Adviser’s agreement to pay all of the direct expenses of the Municipal Funds (excluding interest expense, offering costs, trading expenses, taxes and extraordinary expenses).

 

The Trustees concluded that the Adviser and its personnel have the requisite expertise and skill to manage the Funds’ portfolios. In evaluating the performance of each of the Funds that had commenced operations prior to the date of the Renewal Meeting (the “Operating Funds”), the Trustees reviewed various performance metrics but relied principally on a comparison of the “gross” performance of each Operating Fund (i.e., measured without regard to the impact of fees and expenses) to the performance of its benchmark index. Based on the foregoing, the Trustees concluded that the investment performance of the Operating Funds was satisfactory.

 

The Trustees also considered information relating to the financial condition of the Adviser and the current status, as they understood it, of the Adviser’s compliance environment.

 

 

As noted above, the Trustees were also provided various data from Broadridge comparing the Operating Funds’ expenses and performance to that of other ETFs. The Trustees noted that the information provided showed that each Operating Fund had management fees (after the effect of any applicable fee waiver) below or equal to the average and median of its respective peer group of funds, except for VanEck Vectors AMT-Free Intermediate Municipal Index ETF and AMT-Free Long Municipal Index ETF, which had management fees (after the effect of any applicable fee waiver) greater than the average but equal to or below the median of its peer group of funds. The Trustees also noted that the information provided showed that each Operating Fund had a total expense ratio (after the effect of any applicable expense limitation) below or equal to the average and median of its respective peer group of funds. With respect to these Operating Funds, the Trustees reviewed the amount by which these Operating Funds’ management fees (after the effect of any applicable expense limitation) exceeded the average of their respective peer groups and information provided by the Adviser providing context for these comparisons. The Trustees noted that the CEF Muni Fund had unique investment characteristics as a “fund of closed-end funds,” which differentiated the Fund from those funds contained in its Broadridge peer group because a portion of the fees attributable to the CEF Muni Fund were fees incurred by the funds in which it invests. The Trustees concluded, in light of this information and the other information available to them, that the fees paid by the Operating Funds were reasonable in light of the performance of the Operating Funds and the quality of services received.

 

The Trustees also considered the benefits, other than the fees under the Investment Management Agreements, received by the Adviser from serving as adviser to the Funds.

 

The Trustees also considered information provided by the Adviser about the overall profitability of the Adviser and its profitability or loss in respect of each Operating Fund. The Trustees reviewed each Operating Fund’s asset size, expense ratio and expense cap and noted that the Investment Management Agreements do not include breakpoints in the advisory fee rates as asset levels in a Fund increase. The Trustees considered the volatility of the asset classes in which certain of the Operating Funds invest, potential variability in the net assets of these Funds and the sustainability of any potential economies of scale which may exist given where fees are currently set. The Trustees also evaluated the extent to which management fees for the Operating Funds effectively incorporate the benefits of economies of scale. The Trustees also considered, with respect to the Municipal Funds, the risks being assumed by the Adviser under the unitary fee structure arrangement and the potential expense stability that may inure to the benefit of shareholders of the Municipal Funds. Based on the foregoing and the other information available to them, the Trustees determined that the advisory fee rate for each Operating Fund is reasonable and appropriate in relation to the current asset size of each Operating Fund and the other factors discussed above and that the advisory fee rate for each Operating Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist. The Trustees also determined that the profits earned by the Adviser with respect to the Funds that were profitable to the Adviser were reasonable in light of the nature and quality of the services received by such Funds.

 

The Trustees did not consider historical information about the cost of the services provided by the Adviser or the profitability to the Adviser of VanEck Vectors AMT-Free 8-12 Year Municipal Index ETF, AMT-Free National Municipal Index ETF, California Long Municipal Index ETF, Massachusetts Municipal Index ETF, New Jersey Municipal Index ETF, New York Long Municipal Index ETF, Ohio Municipal Index ETF, Pennsylvania Municipal Index ETF and Puerto Rico Municipal Index ETF because the Funds had not yet commenced operations at the time of the Renewal Meeting. The Trustees could not consider the historical performance or actual management fees or operating expenses of, or the quality of services previously provided to, each of these Funds although they concluded that the nature, quality and extent of the services to be provided by the Adviser were appropriate based on the Trustees’ knowledge of the Adviser and its personnel and the operations of the other series of the Trust.

 

The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their June 6, 2018 meeting, as part of their consideration of the Investment Management Agreements.

 

In voting to approve the continuation of the Investment Management Agreements, the Trustees, including the Independent Trustees, concluded that the terms of each Investment Management Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that each Investment Management Agreement is in the best interest of each Fund and such Fund’s shareholders.

VANECK VECTORS ETF TRUST

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS

October 31, 2018 (unaudited)(continued)

 

VanEck Vectors Municipal Allocation ETF

 

At a meeting held on June 22, 2018 (the “Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors^® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), considered and approved an investment management agreement between the Trust and Van Eck Associates Corporation (the “Adviser”) (the “Investment Management Agreement”) with respect to the VanEck Vectors Municipal Allocation ETF (the “Fund”).

 

The Board’s approval of the Investment Management Agreement was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.

 

In advance of the Meeting, the Trustees received materials from the Adviser, including expense information for other funds. The Adviser provided the Trustees with information regarding, among other things, the various aspects of the Fund’s proposed investment program, fee arrangements and service provider arrangements. The Independent Trustees’ consideration of the Investment Management Agreement was based, in part, on their review of information obtained through discussions with the Adviser at the Meeting regarding the management of the Fund, information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser, including the background and experience of the portfolio managers and others proposed to be involved in the management and administration of the Fund. The Trustees also considered the terms and scope of services that the Adviser would provide under the Investment Management Agreement.

 

The Trustees considered the benefits, other than the fees under the Investment Management Agreement, that the Adviser would receive from serving as adviser to the Fund. The Trustees did not consider historical information about the cost of the services provided by the Adviser or the profitability of the Fund to the Adviser because the Fund had not yet commenced operations. In addition, because the Fund had not yet commenced operations, the Trustees could not consider the historical performance or actual management fees or operating expenses of, or the quality of services previously provided to, the Fund by the Adviser, although they concluded that the nature, quality, and extent of the services to be provided by the Adviser were appropriate based on the Trustees’ knowledge of the Adviser and its personnel and the operations of the other series of the Trust.

 

The Independent Trustees were advised by and met in executive session with their independent counsel at the Meeting as part of their consideration of the Investment Management Agreement.

 

In voting to approve the Investment Management Agreement, the Trustees, including the Independent Trustees, concluded that the terms of the Investment Management Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that the Investment Management Agreement is in the best interest of the Fund and the Fund’s shareholders.

[This page intentionally left blank.]

 

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by a VanEck Vectors ETF Trust (the “Trust”) Prospectus, which includes more complete information. An investor should consider the investment objective, risks, and charges and expenses of the Funds carefully before investing. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing.

 

Additional information about the Trust’s Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at http://www.sec.gov.

 

The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Trust’s Form N-Qs are available on the Commission’s website at http://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Funds’ complete schedules of portfolio holdings are also available by calling 800.826.2333 or by visiting vaneck.com.

 

 

 

Investment Adviser:	Van Eck Associates Corporation
Distributor:	Van Eck Securities Corporation 666 Third Avenue, New York, NY 10017 vaneck.com
Account Assistance:	800.826.2333	MUNISAR

SEMI-ANNUAL REPORT October 31, 2018 (unaudited)

 

VANECK VECTORS®
BDC Income ETF	BIZD®
ChinaAMC China Bond ETF	CBON®
Emerging Markets Aggregate Bond ETF	EMAG®
Emerging Markets High Yield Bond ETF	HYEM®
Fallen Angel High Yield Bond ETF	ANGL®
Green Bond ETF	GRNB®
International High Yield Bond ETF	IHY®
Investment Grade Floating Rate ETF	FLTR®
J.P. Morgan EM Local Currency Bond ETF	EMLC®
Mortgage REIT Income ETF	MORT®
Preferred Securities ex Financials ETF	PFXF®

 

	800.826.2333	vaneck.com

 

 

President’s Letter	1
Explanation of Expenses	2
Schedule of Investments
BDC Income ETF	4
ChinaAMC China Bond ETF	6
Emerging Markets Aggregate Bond ETF	8
Emerging Markets High Yield Bond ETF	14
Fallen Angel High Yield Bond ETF	25
Green Bond ETF	30
International High Yield Bond ETF	35
Investment Grade Floating Rate ETF	50
J.P. Morgan EM Local Currency Bond ETF	60
Mortgage REIT Income ETF	66
Preferred Securities ex Financials ETF	68
Statements of Assets and Liabilities	72
Statements of Operations	74
Statements of Changes in Net Assets	76
Financial Highlights
BDC Income ETF	81
ChinaAMC China Bond ETF	81
Emerging Markets Aggregate Bond ETF	82
Emerging Markets High Yield Bond ETF	82
Fallen Angel High Yield Bond ETF	83
Green Bond ETF	83
International High Yield Bond ETF	84
Investment Grade Floating Rate ETF	84
J.P. Morgan EM Local Currency Bond ETF	85
Mortgage REIT Income ETF	85
Preferred Securities ex Financials ETF	86
Notes to Financial Statements	87
Approval of Investment Management Agreements	98

 

Certain information contained in this shareholder letter represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Also, unless otherwise specifically noted, any discussion of the Funds’ holdings, the Funds’ performance, and the views of the investment adviser are as of October 31, 2018.

VANECK VECTORS ETFs

(unaudited)

 

Dear Shareholders:

 

We are pleased to present this semi-annual report, which affords us the opportunity to provide a review of the economic backdrop for the last six months.

 

As you may know, VanEck has a history of looking beyond the financial markets to identify historical, political, and/or technological trends that are likely to create or impact investment opportunities. We were one of the first U.S. asset managers to offer investors access to international markets, which set the tone for our drive to identify promising asset classes and trends. In this respect, our unconventional (at the time) efforts to introduce investors to gold investing in 1968, emerging markets (including China) in 1993, and ETFs in 2006, are now considered mainstream, permanently shaping the investment management industry as we now know it.

 

Today, we offer both active and passive strategies with compelling exposures supported by well-designed investment processes. Our firm’s capabilities range from strategies designed to strengthen core investment allocations, to more specialized exposures that enhance portfolio diversification and reduce volatility.

 

The main question that impacts the funds under review is the direction of interest rates. If rates rise too quickly, it could result in negative total returns for bond investors.

 

As we wrote in our Market Insights research, which can be found at https://www.vaneck.com/blogs/market-insights/, we began 2018 by noting that global growth had gone from “ticking up” to “firmly in place” and that, while central banks were tightening, Europe remained “two years” behind the U.S. in this trend. Thus, our base case was for 10-year interest rates to rise to 3.5%. In its third longest bull market ever, we remained bullish on U.S. equities in the short-term, but were prepared for a correction. Finally, we believed that investors should not be underweight commodities as global growth was supporting the bullish “grind trade” narrative from supply cutbacks.

 

The big shock to this growth story came in the second quarter of 2018, with concerns about European and Chinese growth. This led to U.S. dollar strength, commodity weakness, and emerging markets equity weakness. The result for income-oriented investors was that interest rates rose more slowly and impacted fixed income investors less negatively.

 

To keep you informed on an ongoing basis, we encourage you to stay in touch with us through the videos, email subscriptions, and research blogs available on our website, www.vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit www.vaneck.com.

 

We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find financial statements for each of the funds for the six month period ended October 31, 2018. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.

 

 

Jan F. van Eck

Trustee and President

VanEck Vectors ETF Trust

 

November 5, 2018

 

Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.

VANECK VECTORS ETF TRUST

EXPLANATION OF EXPENSES

(unaudited)

 

Hypothetical $1,000 investment at beginning of period

As a shareholder of a Fund, you incur operating expenses, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The disclosure is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, May 1, 2018 to October 31, 2018.

 

Actual Expenses

The first line in the table below provides information about account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period.”

 

Hypothetical Example for Comparison Purposes

The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

		Beginning Account Value May 1, 2018				Ending Account Value October 31, 2018				Annualized Expense Ratio During Period				Expenses Paid During the Period* May 1, 2018 — October 31, 2018
BDC Income ETF
Actual		$	1,000.00			$	1,038.10				0.41	%		$	2.11
Hypothetical**		$	1,000.00			$	1,023.14				0.41	%		$	2.09
ChinaAMC China Bond ETF
Actual		$	1,000.00			$	930.40				0.50	%		$	2.43
Hypothetical**		$	1,000.00			$	1,022.68				0.50	%		$	2.55
Emerging Markets Aggregate Bond ETF
Actual		$	1,000.00			$	957.10				0.38	%		$	1.87
Hypothetical**		$	1,000.00			$	1,023.29				0.38	%		$	1.94
Emerging Markets High Yield Bond ETF
Actual		$	1,000.00			$	981.00				0.40	%		$	2.00
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%		$	2.04
Fallen Angel High Yield Bond ETF
Actual		$	1,000.00			$	999.20				0.35	%		$	1.76
Hypothetical**		$	1,000.00			$	1,023.44				0.35	%		$	1.79
Green Bond ETF
Actual		$	1,000.00			$	957.00				0.36	%		$	1.78
Hypothetical**		$	1,000.00			$	1,023.39				0.36	%		$	1.84
International High Yield Bond ETF
Actual		$	1,000.00			$	967.60				0.40	%		$	1.98
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%		$	2.04
Investment Grade Floating Rate ETF
Actual		$	1,000.00			$	1,010.30				0.14	%		$	0.71
Hypothetical**		$	1,000.00			$	1,024.50				0.14	%		$	0.71
J.P. Morgan EM Local Currency Bond ETF
Actual		$	1,000.00			$	884.50				0.33	%		$	1.57
Hypothetical**		$	1,000.00			$	1,023.54				0.33	%		$	1.68
Mortgage REIT Income ETF
Actual		$	1,000.00			$	1,050.50				0.42	%		$	2.17
Hypothetical**		$	1,000.00			$	1,023.09				0.42	%		$	2.14
Preferred Securities ex Financials ETF
Actual		$	1,000.00			$	1,011.10				0.41	%		$	2.08
Hypothetical**		$	1,000.00			$	1,023.14				0.41	%		$	2.09

 

*	Expenses are equal to the Fund’s annualized expense ratio (for the six months ended October 31, 2018) multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year divided by the number of days in the fiscal year (to reflect the one-half year period).
**	Assumes annual return of 5% before expenses

 

See Notes to Financial Statements

VANECK VECTORS BDC INCOME ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

Footnotes:

†	Security fully or partially on loan. Total market value of securities on loan is $26,975,470.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned			% of Investments				Value
Financial				100.0	%		$	210,078,801
Money Market Fund				0.0				9,393
				100.0	%		$	210,088,194

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices			Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Common Stocks*		$	210,078,801		$	—			$	—			$	210,078,801
Money Market Fund			9,393			—				—				9,393
Repurchase Agreements			—			27,401,340				—				27,401,340
Total		$	210,088,194		$	27,401,340			$	—			$	237,489,534

 

*	See Schedule of Investments for industry sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS CHINAAMC CHINA BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

 

Definitions:
CNY	Chinese Yuan
Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
#	Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $185,321 which represents 4.2% of net assets.

 

Summary of Investments by Sector			% of Investments				Value
Consumer, Cyclical				7.3	%		$	272,375
Consumer, Non-cyclical				4.5				167,788
Energy				4.8				177,046
Financial				38.8				1,435,921
Government				28.5				1,056,217
Industrial				16.1				594,948
				100.0	%		$	3,704,295

 

See Notes to Financial Statements

 

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices			Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Corporate Bonds*		$	—			$	2,648,078			$	—			$	2,648,078
Government Obligations*			—				1,056,217				—				1,056,217
Total		$	—			$	3,704,295			$	—			$	3,704,295

 

*	See Schedule of Investments for industry sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS AGGREGATE BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS AGGREGATE BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS AGGREGATE BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

Definitions:
BRL	Brazilian Real
CLP	Chilean Peso
COP	Colombian Peso
CZK	Czech Koruna
EUR	Euro
HUF	Hungarian Forint
IDR	Indonesian Rupiah
ILS	Israeli Sheqel
MXN	Mexican Peso
MYR	Malaysian Ringgit
NGN	Nigerian Naira
PEN	Peruvian Nuevo Sol
PLN	Polish Zloty
RON	Romanian Leu
RUB	Russian Ruble
THB	Thai Baht
TRY	Turkish Lira
USD	United States Dollar
UYU	Uruguayan Peso
ZAR	South African Rand

 

Footnotes:

(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
(s)	Step Bond — The rate shown reflects the rate in effect at the end of the reporting period. Coupon adjusts periodically based upon a predetermined schedule.
^	Zero Coupon Bond
†	Security fully or partially on loan. Total market value of securities on loan is $209,663.
Reg S	Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $3,406,305, or 22.6% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			3.4	%		$	509,769
Communications			3.6				528,320
Consumer, Non-cyclical			3.6				529,757
Diversified			1.0				149,727
Energy			9.9				1,468,949
Financial			9.3				1,380,084
Government			64.0				9,525,897
Industrial			1.0				154,357
Utilities			3.9				580,877
Money Market Fund			0.3				51,254
			100.0	%		$	14,878,991

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

			Level 1 Quoted Prices					Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs						Value
Corporate Bonds*			$	—				$	5,301,840				$	—				$	5,301,840
Government Obligations*				—					9,525,897					—					9,525,897
Money Market Fund				51,254					—					—					51,254
Repurchase Agreements				—					223,543					—					223,543
Total			$	51,254				$	15,051,280				$	—				$	15,102,534

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

 

Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(d)	Security in default of coupon payment
(e)	Security in default of principal
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
(s)	Step Bond — The rate shown reflects the rate in effect at the end of the reporting period. Coupon adjusts periodically based upon a predetermined schedule.
*	Non-income producing
†	Security fully or partially on loan. Total market value of securities on loan is $18,181,136.
§	Illiquid Security — the aggregate value of illiquid securities is $334,845 which represents 0.1% of net assets.
Reg S	Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and
	sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed
	pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may
	be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $190,946,788, or 70.1% of net assets.

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			11.3	%		$	30,371,735
Communications			7.2				19,421,717
Consumer, Cyclical			4.4				11,948,050
Consumer, Non-cyclical			7.9				21,230,924
Diversified			1.1				3,048,370
Energy			13.3				35,724,934
Financial			35.7				96,131,825
Government			6.2				16,710,688
Industrial			6.2				16,653,612
Technology			0.3				802,150
Utilities			5.0				13,553,939
Money Market Fund			1.4				3,825,384
			100.0	%		$	269,423,328

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

								Level 2				Level 3
			Level 1					Significant				Significant
			Quoted					Observable				Unobservable
			Prices					Inputs				Inputs						Value
Corporate Bonds*			$	—				$	248,887,256				$	—				$	248,887,256
Government Obligations*				—					16,710,688					—					16,710,688
Money Market Fund				3,825,384					—					—					3,825,384
Repurchase Agreements				—					18,677,487					—					18,677,487
Total			$	3,825,384				$	284,275,431				$	—				$	288,100,815

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS FALLEN ANGEL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

VANECK VECTORS FALLEN ANGEL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS FALLEN ANGEL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer.
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor.
†	Security fully or partially on loan. Total market value of securities on loan is $80,126,240.
Reg S	Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $90,843,613, or 8.4% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			18.2	%		$	195,037,720
Communications			16.3				173,852,160
Consumer, Cyclical			9.9				105,672,189
Consumer, Non-cyclical			4.8				50,912,183
Energy			23.7				253,993,755
Financial			15.3				163,847,218
Industrial			3.3				35,484,314
Technology			7.0				74,989,035
Utilities			1.2				12,505,182
Money Market Fund			0.3				3,011,976
			100.0	%		$	1,069,305,732

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Corporate Bonds*		$	—			$	1,066,293,756			$	—			$	1,066,293,756
Money Market Fund			3,011,976				—				—				3,011,976
Repurchase Agreements			—				82,940,495				—				82,940,495
Total		$	3,011,976			$	1,149,234,251			$	—			$	1,152,246,227

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS GREEN BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS GREEN BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS GREEN BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

Definitions:
AUD	Australian Dollar
CAD	Canadian Dollar
CHF	Swiss Franc
EUR	Euro
GBP	British Pound
SEK	Swedish Krona
USD	United States Dollar
Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(s)	Step Bond — The rate shown reflects the rate in effect at the end of the reporting period. Coupon adjusts periodically based upon a
	predetermined schedule.
†	Security fully or partially on loan. Total market value of securities on loan is $361,404.
Reg S	Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $4,716,949, or 18.7% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			1.6	%		$	389,658
Consumer, Cyclical			0.8				210,831
Consumer, Non-cyclical			3.0				765,472
Energy			1.2				304,766
Financial			32.8				8,247,175
Government			35.1				8,831,281
Industrial			3.6				892,769
Technology			1.2				288,860
Utilities			20.6				5,175,401
Money Market Fund			0.1				27,079
			100.0	%		$	25,133,292

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Corporate Bonds*		$	—			$	16,274,932			$	—			$	16,274,932
Government Obligations*			—				8,831,281				—				8,831,281
Money Market Fund			27,079				—				—				27,079
Repurchase Agreements			—				372,947				—				372,947
Total		$	27,079			$	25,479,160			$	—			$	25,506,239

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

 

Definitions:
CAD	Canadian Dollar
EUR	Euro
GBP	British Pound
USD	United States Dollar
Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
(d)	Security in default of coupon payment
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
(s)	Step Bond — The rate shown reflects the rate in effect at the end of the reporting period. Coupon adjusts periodically based upon a predetermined schedule.
*	Non-income producing
†	Security fully or partially on loan. Total market value of securities on loan is $9,967,004.
#	Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $5,442 which represents 0.0% of net assets.
§	Illiquid Security — the aggregate value of illiquid securities is $24,303 which represents 0.0% of net assets.
∞	Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.
Reg S	Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $52,421,953, or 40.6% of net assets.

 

See Notes to Financial Statements

 

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned			% of Investments				Value
Basic Materials				9.2	%		$	11,749,809
Communications				17.3				21,963,037
Consumer, Cyclical				9.2				11,744,472
Consumer, Non-cyclical				9.5				12,080,881
Diversified				1.1				1,356,736
Energy				10.5				13,347,553
Financial				27.1				34,496,378
Government				0.7				920,279
Industrial				9.0				11,512,174
Technology				1.3				1,594,072
Utilities				3.7				4,760,408
Money Market Fund				1.4				1,809,538
				100.0	%		$	127,335,337

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

						Level 2				Level 3
		Level 1				Significant				Significant
		Quoted				Observable				Unobservable
		Prices				Inputs				Inputs					Value
Common Stock*		$	—			$	5,442				$	—			$	5,442
Corporate Bonds*			—				124,600,078					—				124,600,078
Government Obligations*			—				920,279					—				920,279
Warrants*			—				—					0				0
Money Market Fund			1,809,538				—					—				1,809,538
Repurchase Agreements			—				10,540,352					—				10,540,352
Total		$	1,809,538			$	136,066,151				$	—			$	137,875,689

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

The following table reconciles the valuation of the Fund’s Level 3 investment securities and related transactions during the period ended October 31, 2018:

 

		Warrants
		Spain
Balance as of April 30, 2018			$	0
Realized gain (loss)				—
Net change in unrealized appreciation (depreciation)				0
Purchases				—
Sales				—
Transfers in and/or out of level 3				—
Balance as of October 31, 2018			$	0

 

See Notes to Financial Statements

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

 

Footnotes:

(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
†	Security fully or partially on loan. Total market value of securities on loan is $5,358,092.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $111,057,241, or 17.9% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			0.1	%		$	836,981
Communications			6.6				40,864,751
Consumer, Cyclical			5.8				35,904,368
Consumer, Non-cyclical			5.5				33,768,012
Energy			1.8				11,234,815
Financial			73.2				453,302,099
Industrial			2.2				13,869,294
Technology			3.5				21,323,315
Utilities			1.1				6,921,475
Money Market Fund			0.2				1,166,630
			100.0	%		$	619,191,740

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

			Level 1 Quoted Prices			Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Floating Rate Notes*			$	—		$	618,025,110			$	—			$	618,025,110
Money Market Fund				1,166,630			—				—				1,166,630
Repurchase Agreements				—			5,518,566				—				5,518,566
Total			$	1,166,630		$	623,543,676			$	—			$	624,710,306

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS J.P. MORGAN EM LOCAL CURRENCY BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS J.P. MORGAN EM LOCAL CURRENCY BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS J.P. MORGAN EM LOCAL CURRENCY BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

 

Definitions:
ARS	Argentine Peso
BRL	Brazilian Real
CLP	Chilean Peso
COP	Colombian Peso
CZK	Czech Koruna
DOP	Dominican Peso
HUF	Hungarian Forint
IDR	Indonesian Rupiah
MXN	Mexican Peso
MYR	Malaysian Ringgit
PEN	Peruvian Nuevo Sol
PHP	Philippine Peso
PLN	Polish Zloty
RON	Romanian Leu
RUB	Russian Ruble
THB	Thai Baht
TRY	Turkish Lira
UYU	Uruguayan Peso
ZAR	South African Rand
Footnotes:
(c)	Callable Security — the redemption date shown is when the security may be redeemed by the issuer
^	Zero Coupon Bond
†	Security fully or partially on loan. Total market value of securities on loan is $112,721,661.
Reg S	Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $62,385,281, or 1.4% of net assets.

 

See Notes to Financial Statements

 

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Energy			0.1	%		$	6,257,799
Financial			0.2				7,588,347
Government			99.1				4,325,137,390
Industrial			0.2				7,647,566
Utilities			0.3				12,796,370
Money Market Fund			0.1				4,913,949
			100.0	%		$	4,364,341,421

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

			Level 1 Quoted Prices					Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs						Value
Corporate Bonds*			$	—				$	34,290,082				$	—				$	34,290,082
Government Obligations*				—					4,325,137,390					—					4,325,137,390
Money Market Fund				4,913,949					—					—					4,913,949
Repurchase Agreements				—					123,546,144					—					123,546,144
Total			$	4,913,949				$	4,482,973,616				$	—				$	4,487,887,565

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS MORTGAGE REIT INCOME ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

Footnotes:

†	Security fully or partially on loan. Total market value of securities on loan is $9,620,709.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Financials			97.9	%		$	141,284,756
Real Estate			1.6				2,344,419
Money Market Fund			0.5				653,603
			100.0	%		$	144,282,778

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Common Stocks		$	143,629,175			$	—				$	—			$	143,629,175
Money Market Fund			653,603				—					—				653,603
Repurchase Agreements			—				9,883,007					—				9,883,007
Total		$	144,282,778			$	9,883,007				$	—			$	154,165,785

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

VANECK VECTORS PREFERRED SECURITIES EX FINANCIALS ETF

SCHEDULE OF INVESTMENTS

October 31, 2018 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS PREFERRED SECURITIES EX FINANCIALS ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

 

Footnotes:

(c)	Callable Security – the redemption date shown is when the security may be redeemed by the issuer
†	Security fully or partially on loan. Total market value of securities on loan is $16,553,618.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			2.0	%		$	10,451,979
Communications			13.3				70,449,025
Consumer, Non-cyclical			9.9				52,794,417
Energy			4.6				24,476,615
Financial			3.7				19,794,040
Industrial			3.7				19,512,689
Real Estate Investment Trusts			25.0				132,384,509
Reinsurance			3.8				20,308,974
Technology			0.8				4,122,479
Utilities			31.8				168,396,585
Money Market Fund			1.4				7,487,226
			100.0	%		$	530,178,538

 

The summary of inputs used to value the Fund’s investments as of October 31, 2018 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Preferred Securities*		$	522,691,312			$	—				$	—			$	522,691,312
Money Market Fund			7,487,226				—					—				7,487,226
Repurchase Agreements			—				17,023,450					—				17,023,450
Total		$	530,178,538			$	17,023,450				$	—			$	547,201,988

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2018.

 

See Notes to Financial Statements

[This Page Intentionally Left Blank.]

VANECK VECTORS ETF TRUST

STATEMENTS OF ASSETS AND LIABILITIES

October 31, 2018 (unaudited)

 

			BDC Income ETF					ChinaAMC China Bond ETF					Emerging Markets Aggregate Bond ETF					Emerging Markets High Yield Bond ETF
Assets:
Investments, at value
Unaffiliated issuers (1)(2)				$	210,088,194				$	3,704,295				$	14,878,991				$	269,423,328
Short-term investments held as collateral for securities loaned (3)					27,401,340					—					223,543					18,677,487
Cash					—					74,245					—					843,433
Cash denominated in foreign currency, at value (4)					—					659,154	(a)				19,030					—
Receivables:
Investment securities sold					—					—					—					2,650,090
Shares sold					—					—					—					—
Due from Adviser					—					5,677					4,487					—
Interest					288,622					55,283					248,797					4,067,008
Prepaid expenses					2,184					73					194					4,516
Total assets					237,780,340					4,498,727					15,375,042					295,665,862
Liabilities:
Payables:
Investment securities purchased					—					—					—					4,238,618
Collateral for securities loaned					27,401,340					—					223,543					18,677,487
Line of credit					709,563					—					—					—
Due to Adviser					58,707					—					—					78,025
Due to custodian					9,394					—					—					—
Deferred Trustee fees					2,716					158					1,266					22,104
Accrued expenses					71,865					66,837					76,601					90,502
Total liabilities					28,253,585					66,995					301,410					23,106,736
NET ASSETS				$	209,526,755				$	4,431,732				$	15,073,632				$	272,559,126
Shares outstanding					13,100,000					200,000					750,000					12,000,000
Net asset value, redemption and offering price per share				$	15.99				$	22.16				$	20.10				$	22.71
Net assets consist of:
Aggregate paid in capital				$	242,675,457				$	4,856,225				$	18,687,739				$	332,830,123
Total distributable earnings (loss) (b)					(33,148,702	)				(424,493	)				(3,614,107	)				(60,270,997	)
				$	209,526,755				$	4,431,732				$	15,073,632				$	272,559,126
(1)	Value of securities on loan			$	26,975,470				$	—				$	209,663				$	18,181,136
(2)	Cost of investments			$	227,887,991				$	4,010,260				$	16,217,547				$	288,024,233
(3)	Cost of short-term investments held as collateral for securities loaned			$	27,401,340				$	—				$	223,543				$	18,677,487
(4)	Cost of cash denominated in foreign currency			$	—				$	667,099				$	19,744				$	—
(a)	Includes $665 of foreign investor minimum settlement reserve funds (See Note 2J)
(b)	Effective in the current reporting period, the aggregate of Net unrealized appreciation (depreciation), Undistributed (accumulated) net investment income (loss), and Accumulated net realized gain (loss) are reported as Total distributable earnings (loss). See Note 2 - F.

 

See Notes to Financial Statements

 

 

Fallen Angel High Yield Bond ETF					Green Bond ETF					International High Yield Bond ETF					Investment Grade Floating Rate ETF					J.P. Morgan EM Local Currency Bond ETF					Mortgage REIT Income ETF					Preferred Securities ex Financials ETF
	$	1,069,305,732				$	25,133,292				$	127,335,337				$	619,191,740				$	4,364,341,421				$	144,282,778				$	530,178,538
		82,940,495					372,947					10,540,352					5,518,566					123,546,144					9,883,007					17,023,450
		247,640					95,303					97,963					1,265,893					1,711,805					—					—
		—					124,970					432,671					—					7,929,851					—					—
		11,639,821					—					1,912,787					453,401					244,969,951					—					10,938,986
		—					—					—					—					4,794					—					—
		—					3,504					—					—					—					—					—
		16,668,665					152,480					1,960,759					2,364,436					82,028,245					185,950					1,441,353
		41,675					127					1,961					23,997					139,361					1,660					6,147
		1,180,844,028					25,882,623					142,281,830					628,818,033					4,824,671,572					154,353,395					559,588,474
		10,430,807					210,207					2,430,798					2,356,664					241,569,035					—					19,323,094
		82,940,495					372,947					10,540,352					5,518,566					123,546,144					9,883,007					17,023,450
		—					—					—					—					—					—					—
		289,384					—					31,119					53,415					623,945					38,981					159,262
		—					—					—					—					—					619,429					—
		4,939					33					21,636					6,206					111,801					8,798					14,467
		14,490					35,218					85,858					9,738					580,042					80,625					83,681
		93,680,115					618,405					13,109,763					7,944,589					366,430,967					10,630,840					36,603,954
	$	1,087,163,913				$	25,264,218				$	129,172,067				$	620,873,444				$	4,458,240,605				$	143,722,555				$	522,984,520
		38,300,000					1,000,000					5,400,000					24,600,000					137,800,000					6,250,000					27,900,000
	$	28.39				$	25.26				$	23.92				$	25.24				$	32.35				$	23.00				$	18.74
	$	1,121,576,719				$	26,078,540				$	144,911,677				$	620,033,841				$	5,307,033,617				$	178,780,815				$	583,911,734
		(34,412,806	)				(814,322	)				(15,739,610	)				839,603					(848,793,012	)				(35,058,260	)				(60,927,214	)
	$	1,087,163,913				$	25,264,218				$	129,172,067				$	620,873,444				$	4,458,240,605				$	143,722,555				$	522,984,520
	$	80,126,240				$	361,404				$	9,967,004				$	5,358,092				$	112,721,661				$	9,620,709				$	16,553,618
	$	1,113,120,509				$	25,951,246				$	135,489,232				$	619,747,778				$	4,956,787,848				$	146,594,075				$	555,447,072
	$	82,940,495				$	372,947				$	10,540,352				$	5,518,566				$	123,546,144				$	9,883,007				$	17,023,450
	$	—				$	129,767				$	436,735				$	—				$	7,929,744				$	—				$	—

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF OPERATIONS

For the Six Months Ended October 31, 2018 (unaudited)

 

			BDC Income ETF					ChinaAMC China Bond ETF					Emerging Markets Aggregate Bond ETF					Emerging Markets High Yield Bond ETF
Income:
Dividends				$	9,298,876				$	514				$	1,826				$	22,080
Interest					—					89,531					407,300					9,504,235
Securities lending income					225,937					—					575					90,370
Foreign taxes withheld					—					(6,194	)				(7,202	)				—
Total income					9,524,813					83,851					402,499					9,616,685
Expenses:
Management fees					398,935					9,234					27,912					631,244
Professional fees					29,665					32,755					34,262					37,133
Insurance					905					18					71					1,673
Trustees’ fees and expenses					2,392					39					113					4,914
Reports to shareholders					14,593					10,760					6,448					19,637
Indicative optimized portfolio value fee					2,523					3,576					3,576					3,576
Custodian fees					3,703					2,048					9,739					12,270
Registration fees					3,379					2,523					2,524					2,979
Transfer agent fees					1,212					1,212					1,212					1,212
Fund accounting fees					4,990					100					252					9,628
Interest					12,441					—					43					126
Other					6,444					2,123					4,095					8,678
Total expenses					481,182					64,388					90,247					733,070
Waiver of management fees					(69,806	)				(9,234	)				(27,912	)				(101,700	)
Expenses assumed by the Adviser					—					(43,611	)				(32,233	)				—
Net expenses					411,376					11,543					30,102					631,370
Net investment income					9,113,437					72,308					372,397					8,985,315
Net realized gain (loss) on:
Investments					(1,716,431	)				(33,997	)				(118,363	)				(1,680,755	)
In-kind redemptions					589,505					—					(143,223	)				(2,630,345	)
Foreign currency transactions and foreign denominated assets and liabilities					—					(16,806	)				(6,964	)				—
Net realized gain (loss)					(1,126,926	)				(50,803	)				(268,550	)				(4,311,100	)
Net change in unrealized appreciation (depreciation) on:
Investments					(1,506,107	)				(337,812	)				(681,478	)(a)				(11,953,125	)
Foreign currency transactions and foreign denominated assets and liabilities					—					(18,650	)				(226	)				—
Net change in unrealized appreciation (depreciation)					(1,506,107	)				(356,462	)				(681,704	)				(11,953,125	)
Net Increase (Decrease) in Net Assets Resulting from Operations				$	6,480,404				$	(334,957	)			$	(577,857	)			$	(7,278,910	)
(a)	Net of foreign taxes of $3,525
(b)	Net of foreign taxes of $735,478

 

See Notes to Financial Statements

 

 

Fallen Angel High Yield Bond ETF					Green Bond ETF					International High Yield Bond ETF					Investment Grade Floating Rate ETF					J.P. Morgan EM Local Currency Bond ETF					Mortgage REIT Income ETF					Preferred Securities ex Financials ETF
	$	53,450				$	295				$	75,872				$	11,069				$	37,304				$	5,225,814				$	17,052,902
		32,859,162					157,031					3,770,955					7,339,509					150,568,640					—					—
		534,159					143					89,179					9,683					399,977					30,101					403,933
		—					(819	)				—					(13,414	)				(4,245,608	)				(114	)				—
		33,446,771					156,650					3,936,006					7,346,847					146,760,313					5,255,801					17,456,835
		2,315,628					34,439					314,920					861,549					6,526,948					288,369					1,070,732
		35,976					24,779					36,577					20,562					67,299					36,673					39,824
		5,206					67					699					1,517					22,639					676					2,323
		13,447					168					2,060					3,719					65,758					1,810					6,328
		24,492					12,917					13,360					9,681					155,140					11,881					23,167
		3,576					2,822					3,576					3,576					3,576					1,687					2,523
		28,831					5,123					31,020					13,110					1,903,911					2,892					11,595
		14,761					2,898					3,796					9,617					79,786					2,523					5,251
		3,222					1,118					1,212					1,212					1,212					1,212					1,212
		30,131					306					4,191					6,468					122,171					4,068					13,532
		42					—					—					—					25,720					14,136					38,324
		14,181					1,853					3,827					3,829					70,766					3,852					12,605
		2,489,493					86,490					415,238					934,840					9,044,926					369,779					1,227,416
		(463,276	)				(34,439	)				(100,319	)				(590,221	)				(1,597,536	)				(67,274	)				(118,359	)
		—					(16,537	)				—					—					—					—					—
		2,026,217					35,514					314,919					344,619					7,447,390					302,505					1,109,057
		31,420,554					121,136					3,621,087					7,002,228					139,312,923					4,953,296					16,347,778
		(351,141	)				(44,997	)				(924,757	)				(116,124	)				(168,116,530	)				(3,284,792	)				(12,608,608	)
		5,750,111					—					(515,661	)				83,220					(17,041,102	)				773,159					249,424
		—					(3,506	)				(80,278	)				—					(15,883,881	)				84					—
		5,398,970					(48,503	)				(1,520,696	)				(32,904	)				(201,041,513	)				(2,511,549	)				(12,359,184	)
		(37,746,296	)				(1,042,902	)				(7,419,167	)				(2,112,244	)				(543,596,366	)(b)				4,014,930					933,793
		—					(315	)				32,644					—					845,433					(109	)				—
		(37,746,296	)				(1,043,217	)				(7,386,523	)				(2,112,244	)				(542,750,933	)				4,014,821					933,793
	$	(926,772	)			$	(970,584	)			$	(5,286,132	)			$	4,857,080				$	(604,479,523	)			$	6,456,568				$	4,922,387

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

 

		BDC Income ETF										ChinaAMC China Bond ETF
		For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
		(unaudited)										(unaudited)
Operations:
Net investment income			$	9,113,437				$	16,415,931				$	72,308				$	152,302
Net realized gain (loss)				(1,126,926	)				(7,149,825	)				(50,803	)				(316,223	)
Net change in unrealized appreciation (depreciation)				(1,506,107	)				(24,955,009	)				(356,462	)				720,058
Net increase (decrease) in net assets resulting from operations				6,480,404					(15,688,903	)				(334,957	)				556,137
Distributions to shareholders: (a)
Dividends and Distributions				(8,873,460	)				(16,864,170	)				(61,500	)				—
Return of capital				—					—					—					(172,450	)
Total Dividends and distributions				(8,873,460	)				(16,864,170	)				(61,500	)				(172,450	)
Share transactions:**
Proceeds from sale of shares				41,622,107					50,998,687					—					—
Cost of shares redeemed				(7,628,005	)				(23,586,858	)				—					(2,204,390	)
Increase (Decrease) in net assets resulting from share transactions				33,994,102					27,411,829					—					(2,204,390	)
Total increase (decrease) in net assets				31,601,046					(5,141,244	)				(396,457	)				(1,820,703	)
Net Assets, beginning of period				177,925,709					183,066,953					4,828,189					6,648,892
Net Assets, end of period (b)			$	209,526,755				$	177,925,709				$	4,431,732				$	4,828,189
** Shares of Common Stock Issued (no par value)
Shares sold				2,500,000					2,900,000					—					—
Shares redeemed				(450,000	)				(1,400,000	)				—					(100,000	)
Net increase (decrease)				2,050,000					1,500,000					—					(100,000	)

 

(a)	Effective with the current reporting period, it is no longer required to present the sources of distributions to shareholders. See Note 2 – D.
(b)	Effective with the current reporting period, undistributed net income is no longer disclosed separately. See Note 2 – D.

 

See Notes to Financial Statements

 

 

Emerging Markets Aggregate Bond ETF										Emerging Markets High Yield Bond ETF										Fallen Angel High Yield Bond ETF
For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
(unaudited)										(unaudited)										(unaudited)
	$	372,397				$	670,966				$	8,985,315				$	19,877,935				$	31,420,554				$	54,727,332
		(268,550	)				(424,243	)				(4,311,100	)				(3,070,087	)				5,398,970					18,729,137
		(681,704	)				319,780					(11,953,125	)				(12,657,114	)				(37,746,296	)				(40,815,147	)
		(577,857	)				566,503					(7,278,910	)				4,150,734					(926,772	)				32,641,322
		(315,555	)				(498,718	)				(9,193,660	)				(19,986,740	)				(31,211,065	)				(56,791,560	)
		—					(225,432	)				—					—					—					—
		(315,555	)				(724,150	)				(9,193,660	)				(19,986,740	)				(31,211,065	)				(56,791,560	)
		6,178,120					—					—					97,684,846					40,570,488					585,632,345
		(5,203,724	)				—					(82,646,414	)				(83,096,656	)				(144,375,465	)				(193,755,686	)
		974,396					—					(82,646,414	)				14,588,190					(103,804,977	)				391,876,659
		80,984					(157,647	)				(99,118,984	)				(1,247,816	)				(135,942,814	)				367,726,421
		14,992,648					15,150,295					371,678,110					372,925,926					1,223,106,727					855,380,306
	$	15,073,632				$	14,992,648				$	272,559,126				$	371,678,110				$	1,087,163,913				$	1,223,106,727
		300,000					—					—					4,000,000					1,400,000					19,600,000
		(250,000	)				—					(3,600,000	)				(3,400,000	)				(5,000,000	)				(6,550,000	)
		50,000					—					(3,600,000	)				600,000					(3,600,000	)				13,050,000

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

(continued)

 

		Green Bond ETF										International High Yield Bond ETF
		For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
			(unaudited)										(unaudited)
Operations:
Net investment income			$	121,136				$	118,819				$	3,621,087				$	6,494,868
Net realized gain (loss)				(48,503	)				57,049					(1,520,696	)				(44,150	)
Net change in unrealized appreciation (depreciation)				(1,043,217	)				94,460					(7,386,523	)				1,598,166
Net increase (decrease) in net assets resulting from operations				(970,584	)				270,328					(5,286,132	)				8,048,884
Dividends and Distributions to shareholders: (a)
Dividends and Distributions				(103,970	)				(141,820	)				(3,008,680	)				(6,003,821	)
Return of capital				—					—					—					(951,959	)
Total Dividends and distributions				(103,970	)				(141,820	)				(3,008,680	)				(6,955,780	)
Share transactions:**
Proceeds from sale of shares				9,085,096					12,036,844					14,757,781					61,340,929
Cost of shares redeemed				—					—					(48,649,385	)				(20,553,737	)
Increase (Decrease) in net assets resulting from share transactions				9,085,096					12,036,844					(33,891,604	)				40,787,192
Total increase (decrease) in net assets				8,010,542					12,165,352					(42,186,416	)				41,880,296
Net Assets, beginning of period				17,253,676					5,088,324					171,358,483					129,478,187
Net Assets, end of period (b)			$	25,264,218				$	17,253,676				$	129,172,067				$	171,358,483
** Shares of Common Stock Issued (no par value)
Shares sold				350,000					450,000					600,000					2,400,000
Shares redeemed				—					—					(2,000,000	)				(800,000	)
Net increase (decrease)				350,000					450,000					(1,400,000	)				1,600,000

 

(a)	Effective with the current reporting period, it is no longer required to present the sources of distributions to shareholders. See Note 2 – D.
(b)	Effective with the current reporting period, undistributed net income is no longer disclosed separately. See Note 2 – D.
(c)	Share activity has been adjusted to reflect the 1 for 2 reverse share split which took place on October 26, 2018 (See Note 10).

 

See Notes to Financial Statements

 

 

Investment Grade Floating Rate ETF										J.P. Morgan EM Local Currency Bond ETF (c)										Mortgage REIT Income ETF
For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018					For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
	(unaudited)										(unaudited)										(unaudited)
	$	7,002,228				$	4,819,375				$	139,312,923				$	258,089,519				$	4,953,296				$	10,282,939
		(32,904	)				217,454					(201,041,513	)				(20,238,436	)				(2,511,549	)				3,076,232
		(2,112,244	)				809,762					(542,750,933	)				9,665,291					4,014,821					(12,894,284	)
		4,857,080					5,846,591					(604,479,523	)				247,516,374					6,456,568					464,887
		(6,301,830	)				(4,284,650	)				(115,593,820	)				(227,606,627	)				(5,274,120	)				(10,915,551	)
		—					—					—					(43,548,533	)				—					(449,699	)
		(6,301,830	)				(4,284,650	)				(115,593,820	)				(271,155,160	)				(5,274,120	)				(11,365,250	)
		255,230,192					245,012,075					525,623,108					2,611,250,831					15,615,600					26,705,716
		(10,110,965	)				(17,696,865	)				(992,347,555	)				(297,324,480	)				(4,807,455	)				(32,216,403	)
		245,119,227					227,315,210					(466,724,447	)				2,313,926,351					10,808,145					(5,510,687	)
		243,674,477					228,877,151					(1,186,797,790	)				2,290,287,565					11,990,593					(16,411,050	)
		377,198,967					148,321,816					5,645,038,395					3,354,750,830					131,731,962					148,143,012
	$	620,873,444				$	377,198,967				$	4,458,240,605				$	5,645,038,395				$	143,722,555				$	131,731,962
		10,100,000					9,700,000					15,800,000					68,000,000					650,000					1,100,000
		(400,000	)				(700,000	)				(28,300,000	)				(7,800,000	)				(200,000	)				(1,350,000	)
		9,700,000					9,000,000					(12,500,000	)				60,200,000					450,000					(250,000	)

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

(continued)

 

		Preferred Securities ex Financials ETF
		For the Six Months Ended October 31, 2018					For the Year Ended April 30, 2018
			(unaudited)
Operations:
Net investment income			$	16,347,778				$	27,113,527
Net realized loss				(12,359,184	)				(637,130	)
Net change in unrealized appreciation (depreciation)				933,793					(25,003,486	)
Net increase in net assets resulting from operations				4,922,387					1,472,911
Distributions to shareholders: (a)
Dividends and Distributions				(15,668,250	)				(28,076,858	)
Return of capital				—					(208,987	)
Total Dividends and distributions				(15,668,250	)				(28,285,845	)
Share transactions:**
Proceeds from sale of shares				48,677,028					103,794,398
Cost of shares redeemed				(13,194,786	)				(16,449,689	)
Increase in net assets resulting from share transactions				35,482,242					87,344,709
Total increase in net assets				24,736,379					60,531,775
Net Assets, beginning of period				498,248,141					437,716,366
Net Assets, end of period (b)			$	522,984,520				$	498,248,141
** Shares of Common Stock Issued (no par value)
Shares sold				2,500,000					5,200,000
Shares redeemed				(700,000	)				(850,000	)
Net increase				1,800,000					4,350,000

 

(a)	Effective with the current reporting period, it is no longer required to present the sources of distributions to shareholders. See Note 2 – D.
(b)	Effective with the current reporting period, undistributed net income is no longer disclosed separately. See Note 2 – D.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		BDC Income ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$16.10				$19.17				$16.43				$18.56				$19.84				$20.72
Income from investment operations:
Net investment income			0.77	(a)			1.52	(a)			1.54				1.59				1.51				1.37
Net realized and unrealized gain (loss) on investments			(0.14	)			(3.04	)			2.67				(2.20	)			(1.27	)			(0.97	)
Total from investment operations			0.63				(1.52	)			4.21				(0.61	)			0.24				0.40
Less:
Dividends from net investment income			(0.74	)			(1.55	)			(1.47	)			(1.52	)			(1.52	)			(1.28	)
Net asset value, end of period			$15.99				$16.10				$19.17				$16.43				$18.56				$19.84
Total return (b)			3.81	%(c)			(8.08	)%			26.67	%			(2.98	)%			1.28	%			1.94	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$209,527				$177,926				$183,067				$85,454				$74,259				$33,728
Ratio of gross expenses to average net assets			0.48	%(d)			0.49	%			0.52	%			0.58	%			0.58	%			0.81	%
Ratio of net expenses to average net assets			0.41	%(d)			0.41	%			0.41	%			0.41	%			0.41	%			0.40	%
Ratio of net expenses to average net assets excluding interest expense			0.40	%(d)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			9.66	%(d)			8.85	%			9.12	%			9.87	%			8.59	%			7.38	%
Portfolio turnover rate(e)			4	%(c)			19	%			23	%			23	%			20	%			14	%
		ChinaAMC China Bond ETF
																		For the Period
		For the Six																November 10,
		Months Ended																2014(f) through
		October 31,					For the Year Ended April 30,											April 30,
		2018					2018				2017				2016			2015
		(unaudited)
Net asset value, beginning of period			$24.14				$22.16				$24.28				$24.94				$25.00
Income from investment operations:
Net investment income			0.36	(a)			0.74	(a)			0.21				0.70				0.29
Net realized and unrealized gain (loss) on investments			(2.03	)			2.07				(1.64	)			(0.65	)			(0.12	)
Total from investment operations			(1.67	)			2.81				(1.43	)			0.05				0.17
Less:
Dividends from net investment income			(0.31	)			—				—				(0.37	)			(0.15	)
Return of capital			—				(0.83	)			(0.69	)			(0.34	)			(0.08	)
Total dividends			(0.31	)			(0.83	)			(0.69	)			(0.71	)			(0.23	)
Net asset value, end of period			$22.16				$24.14				$22.16				$24.28				$24.94
Total return (b)			(6.96	)%(c)			12.94	%			(6.00	)%			0.20	%			0.71	%(c)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$4,432				$4,828				$6,649				$12,140				$19,955
Ratio of gross expenses to average net assets			2.79	%(d)			2.59	%			1.90	%			1.12	%			1.22	%(d)
Ratio of net expenses to average net assets			0.50	%(d)			0.50	%			0.50	%			0.50	%			0.50	%(d)
Ratio of net expenses to average net assets excluding interest expense			0.50	%(d)			0.50	%			0.50	%			0.50	%			0.50	%(d)
Ratio of net investment income to average net assets			3.13	%(d)			3.21	%			3.04	%			2.88	%			2.61	%(d)
Portfolio turnover rate(e)			19	%(c)			39	%			9	%			58	%			58	%(c)

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.
(f)	Commencement of operations

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Emerging Markets Aggregate Bond ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$21.42				$21.64				$21.68				$22.41				$23.95				$26.43
Income from investment operations:
Net investment income			0.48	(a)			0.96	(a)			0.98				0.95				1.04				1.19
Net realized and unrealized loss on investments			(1.39	)			(0.15	)			(0.08	)			(0.70	)			(1.63	)			(2.49	)
Total from investment operations			(0.91	)			0.81				0.90				0.25				(0.59	)			(1.30	)
Less:
Dividends from net investment income			(0.41	)			(0.71	)			(0.62	)			(0.37	)			(0.72	)			(0.61	)
Return of capital			—				(0.32	)			(0.32	)			(0.61	)			(0.23	)			(0.57	)
Total dividends			(0.41	)			(1.03	)			(0.94	)			(0.98	)			(0.95	)			(1.18	)
Net asset value, end of period			$20.10				$21.42				$21.64				$21.68				$22.41				$23.95
Total return (b)			(4.29	)%(c)			3.78	%			4.27	%			1.33	%			(2.52	)%			(4.78	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$15,074				$14,993				$15,150				$15,179				$17,928				$21,556
Ratio of gross expenses to average net assets			1.13	%(d)			1.12	%			1.26	%			1.21	%			1.01	%			1.34	%
Ratio of net expenses to average net assets			0.38	%(d)			0.49	%			0.49	%			0.49	%			0.49	%			0.50	%
Ratio of net expenses to average net assets excluding interest expense			0.38	%(d)			0.49	%			0.49	%			0.49	%			0.49	%			0.49	%
Ratio of net investment income to average net assets			4.66	%(d)			4.38	%			4.60	%			4.61	%			4.41	%			4.57	%
Portfolio turnover rate (e)			10	%(c)			20	%			11	%			13	%			24	%			58	%
		Emerging Markets High Yield Bond ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$23.83				$24.86				$23.37				$24.51				$25.68				$26.86
Income from investment operations:
Net investment income			0.66	(a)			1.33	(a)			1.46				1.64				1.64				1.51
Net realized and unrealized gain (loss) on investments			(1.12	)			(1.01	)			1.50				(1.13	)			(1.18	)			(1.21	)
Total from investment operations			(0.46	)			0.32				2.96				0.51				0.46				0.30
Less:
Dividends from net investment income			(0.66	)			(1.35	)			(1.47	)			(1.65	)			(1.63	)			(1.48	)
Net asset value, end of period			$22.71				$23.83				$24.86				$23.37				$24.51				$25.68
Total return (b)			(1.90	)%(c)			1.28	%			13.04	%			2.38	%			1.94	%			1.34	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$272,559				$371,678				$372,926				$247,709				$387,262				$339,021
Ratio of gross expenses to average net assets			0.46	%(d)			0.45	%			0.47	%			0.50	%			0.47	%			0.53	%
Ratio of net expenses to average net assets			0.40	%(d)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net expenses to average net assets excluding interest expense			0.40	%(d)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			5.69	%(d)			5.43	%			6.13	%			6.93	%			6.64	%			6.05	%
Portfolio turnover rate (e)			10	%(c)			40	%			39	%			42	%			35	%			16	%

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.

 

See Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Fallen Angel High Yield Bond ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$29.19				$29.65				$27.14				$27.66				$27.82				$27.54
Income from investment operations:
Net investment income			0.79	(a)			1.54	(a)			1.56				1.39				1.43				1.54
Net realized and unrealized gain (loss) on investments			(0.81	)			(0.40	)			2.62				(0.51	)			0.17				0.37
Total from investment operations			(0.02	)			1.14				4.18				0.88				1.60				1.91
Less:
Dividends from net investment income			(0.78	)			(1.51	)			(1.58	)			(1.34	)			(1.48	)			(1.55	)
Distributions from net realized capital gains			—				(0.09	)			(0.09	)			(0.06	)			(0.28	)			(0.08	)
Total dividends and distributions			(0.78	)			(1.60	)			(1.67	)			(1.40	)			(1.76	)			(1.63	)
Net asset value, end of period			$28.39				$29.19				$29.65				$27.14				$27.66				$27.82
Total return (b)			(0.08	)%(c)			3.86	%			15.86	%			3.59	%			5.98	%			7.31	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$1,087,164				$1,223,107				$855,380				$145,182				$26,279				$16,695
Ratio of gross expenses to average net assets			0.43	%(d)			0.44	%			0.46	%			0.65	%			0.90	%			1.47	%
Ratio of net expenses to average net assets			0.35	%(d)			0.35	%			0.35	%			0.40	%			0.40	%			0.40	%
Ratio of net expenses to average net assets excluding interest expense			0.35	%(d)			0.35	%			0.35	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			5.43	%(d)			5.16	%			5.61	%			6.27	%			5.27	%			5.72	%
Portfolio turnover rate (e)			16	%(c)			20	%			32	%			39	%			50	%			35	%
		Green Bond ETF
										For the Period
		For the Six				For the				March 5, 2017(f)
		Months Ended				Year Ended				through
		October 31,				April 30,				April 30,
		2018				2018				2017
		(unaudited)
Net asset value, beginning of period			$26.54				$25.44				$24.75
Income from investment operations:
Net investment income			0.16	(a)			0.29	(a)			0.04
Net realized and unrealized gain (loss) on investments			(1.30	)			1.16				0.67
Total from investment operations			(1.14	)			1.45				0.71
Less:
Dividends from net investment income			(0.14	)			(0.35	)			(0.02	)
Distributions from net realized capital gains			—				0.00	(g)			—
Total dividends and distributions			(0.14	)			(0.35	)			(0.02	)
Net asset value, end of period			$25.26				$26.54				$25.44
Total return (b)			(4.30	)%(c)			5.72	%			2.86	%(c)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$25,264				$17,254				$5,088
Ratio of gross expenses to average net assets			0.88	%(d)			1.56	%			5.49	%(d)
Ratio of net expenses to average net assets			0.36	%(d)			0.40	%			0.40	%(d)
Ratio of net expenses to average net assets excluding interest expense			0.36	%(d)			0.40	%			0.40	%(d)
Ratio of net investment income to average net assets			1.23	%(d)			1.10	%			1.03	%(d)
Portfolio turnover rate (e)			10	%(c)			26	%			0	%(c)

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.
(f)	Commencement of operations
(g)	Amount represents less than $0.005 per share.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		International High Yield Bond ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$25.20				$24.90				$24.20				$25.00				$27.73				$27.37
Income from investment operations:
Net investment income			0.57	(a)			1.07	(a)			1.24				1.30				1.32				1.66
Net realized and unrealized gain (loss) on investments			(1.38	)			0.39				0.65				(0.80	)			(2.67	)			0.44
Total from investment operations			(0.81	)			1.46				1.89				0.50				(1.35	)			2.10
Less:
Dividends from net investment income			(0.47	)			(1.02	)			(0.83	)			(1.00	)			(1.09	)			(1.69	)
Distributions from net realized capital gains			—				—				—				—				—				(0.05	)
Return of capital			—				(0.14	)			(0.36	)			(0.30	)			(0.29	)			—
Total dividends and distributions			(0.47	)			(1.16	)			(1.19	)			(1.30	)			(1.38	)			(1.74	)
Net asset value, end of period			$23.92				$25.20				$24.90				$24.20				$25.00				$27.73
Total return (b)			(3.24	)%(c)			5.91	%			8.04	%			2.29	%			(4.94	)%			8.06	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$129,172				$171,358				$129,478				$130,686				$155,003				$160,853
Ratio of gross expenses to average net assets			0.53	%(d)			0.52	%			0.54	%			0.61	%			0.54	%			0.58	%
Ratio of net expenses to average net assets			0.40	%(d)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net expenses to average net assets excluding interest expense			0.40	%(d)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			.4.60	%(d)			4.19	%			4.95	%			5.48	%			5.13	%			5.59	%
Portfolio turnover rate (e)			16	%(c)			41	%			34	%			20	%			37	%			27	%
		Investment Grade Floating Rate ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$25.32				$25.14				$24.77				$24.94				$25.02				$24.95
Income from investment operations:
Net investment income			0.36	(a)			0.52	(a)			0.33				0.20				0.16				0.15
Net realized and unrealized gain (loss) on investments			(0.10	)			0.13				0.36				(0.18	)			(0.07	)			0.07
Total from investment operations			0.26				0.65				0.69				0.02				0.09				0.22
Less:
Dividends from net investment income			(0.34	)			(0.47	)			(0.32	)			(0.19	)			(0.16	)			(0.15	)
Distributions from net realized capital gains			—				—				—				—				(0.01	)			—
Total dividends and distributions			(0.34	)			(0.47	)			(0.32	)			(0.19	)			(0.17	)			(0.15	)
Net asset value, end of period			$25.24				$25.32				$25.14				$24.77				$24.94				$25.02
Total return (b)			1.03	%(c)			2.59	%			2.80	%			0.10	%			0.35	%			0.88	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$620,873				$377,199				$148,322				$79,273				$99,769				$97,584
Ratio of gross expenses to average net assets			0.38	%(d)			0.41	%			0.46	%			0.48	%			0.48	%			0.54	%
Ratio of net expenses to average net assets			0.14	%(d)			0.14	%			0.14	%			0.14	%			0.17	%			0.19	%
Ratio of net expenses to average net assets excluding interest expense			0.14	%(d)			0.14	%			0.14	%			0.14	%			0.17	%			0.19	%
Ratio of net investment income to average net assets			.2.84	%(d)			2.06	%			1.40	%			0.81	%			0.63	%			0.62	%
Portfolio turnover rate (e)			19	%(c)			28	%			46	%			36	%			33	%			13	%

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.

 

See Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		J.P. Morgan EM Local Currency Bond ETF #
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$37.56				$37.24				$37.90				$41.10				$47.38				$55.12
Income from investment operations:
Net investment income			1.06	(a)			2.18	(a)			2.56				2.08	(a)			2.46				2.76
Net realized and unrealized gain (loss) on investments			(5.37	)			0.40				(1.34	)			(3.24	)			(6.52	)			(7.96	)
Total from investment operations			(4.31	)			2.58				1.22				(1.16	)			(4.06	)			(5.20	)
Less:
Dividends from net investment income			(0.90	)			(1.98	)			(0.60	)			—				(1.24	)			(1.74	)
Return of capital			—				(0.28	)			(1.28	)			(2.04	)			(0.98	)			(0.80	)
Total dividends			(0.90	)			(2.26	)			(1.88	)			(2.04	)			(2.22	)			(2.54	)
Net asset value, end of period			$32.35				$37.56				$37.24				$37.90				$41.10				$47.38
Total return (b)			(11.55	)%(c)			7.05	%			3.41	%			(2.47	)%			(8.85	)%			(9.35	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$4,458,241				$5,645,038				$3,354,751				$1,489,642				$1,093,524				$810,369
Ratio of gross expenses to average net assets			0.40	%(d)			0.46	%			0.48	%			0.51	%			0.49	%			0.52	%
Ratio of net expenses to average net assets			0.33	%(d)			0.44	%			0.47	%			0.47	%			0.47	%			0.47	%
Ratio of net expenses to average net assets excluding interest expense			0.33	%(d)			0.44	%			0.47	%			0.47	%			0.47	%			0.47	%
Ratio of net investment income to average net assets			6.17	%(d)			5.69	%			5.60	%			5.69	%			5.49	%			5.47	%
Portfolio turnover rate (e)			21	%(c)			28	%			37	%			34	%			36	%			16	%
		Mortgage REIT Income ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$22.71				$24.49				$20.03				$23.59				$24.40				$29.41
Income from investment operations:
Net investment income			0.82	(a)			1.70	(a)			1.81				2.12				2.03				3.06
Net realized and unrealized gain (loss) on investments			0.33				(1.59	)			4.38				(3.71	)			(0.55	)			(4.85	)
Total from investment operations			1.15				0.11				6.19				(1.59	)			1.48				(1.79	)
Less:
Dividends from net investment income			(0.86	)			(1.81	)			(1.73	)			(1.90	)			(2.29	)			(2.61	)
Return of capital			—				(0.08	)			—				(0.07	)			—				(0.61	)
Total dividends			(0.86	)			(1.89	)			(1.73	)			(1.97	)			(2.29	)			(3.22	)
Net asset value, end of period			$23.00				$22.71				$24.49				$20.03				$23.59				$24.40
Total return (b)			5.05	%(c)			0.32	%			32.15	%			(6.66	)%			6.23	%			(4.87	)%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$143,723				$131,732				$148,143				$96,150				$117,960				$106,140
Ratio of gross expenses to average net assets			0.51	%(d)			0.49	%			0.54	%			0.57	%			0.51	%			0.60	%
Ratio of net expenses to average net assets			0.42	%(d)			0.41	%			0.41	%			0.41	%			0.41	%			0.41	%
Ratio of net expenses to average net assets excluding interest expense			0.40	%(d)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			9.71	%(d)			7.13	%			8.25	%			10.27	%			8.65	%			12.22	%
Portfolio turnover rate (e)			20	%(c)			21	%			24	%			16	%			29	%			26	%

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.
#	On October 26, 2018, The Fund effected a 1 for 2 reverse share split (See Note 10). Per share data has been adjusted to reflect the reverse share split.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Preferred Securities ex Financials ETF
		For the Six
		Months Ended
		October 31,					For the Year Ended April 30,
		2018					2018				2017				2016				2015				2014
		(unaudited)
Net asset value, beginning of period			$19.09				$20.12				$20.34				$20.75				$20.70				$20.69
Income from investment operations:
Net investment income			0.59	(a)			1.10	(a)			1.15				1.20				1.22				1.25
Net realized and unrealized gain (loss) on investments			(0.37	)			(0.98	)			(0.19	)			(0.48	)			—	(f)			—	(f)
Total from investment operations			0.22				0.12				0.96				0.72				1.22				1.25
Less:
Dividends from net investment income			(0.57	)			(1.14	)			(1.18	)			(1.13	)			(1.17	)			(1.24	)
Return of capital			—				(0.01	)			—				—				—				—
Total dividends			(0.57	)			(1.15	)			(1.18	)			(1.13	)			(1.17	)			(1.24	)
Net asset value, end of period			$18.74				$19.09				$20.12				$20.34				$20.75				$20.70
Total return (b)			1.11	%(c)			0.57	%			4.88	%			3.77	%			6.08	%			6.59	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$522,985				$498,248				$437,716				$310,138				$287,354				$162,519
Ratio of gross expenses to average net assets			0.46	%(d)			0.45	%			0.46	%			0.49	%			0.47	%			0.53	%
Ratio of net expenses to average net assets			0.41	%(d)			0.41	%			0.41	%			0.41	%			0.40	%			0.40	%
Ratio of net expenses to average net assets excluding interest expense			0.40	%(d)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			6.11	%(d)			5.57	%			5.70	%			6.05	%			6.04	%			6.40	%
Portfolio turnover rate (e)			16	%(c)			47	%			31	%			27	%			16	%			19	%

(a)	Calculated based upon average shares outstanding
(b)	Total return is calculated assuming an initial investment made at the net asset value at the beginning of period, reinvestment of any dividends and distributions at net asset value on the dividend/distributions payment date and a redemption at the net asset value on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
(c)	Not annualized
(d)	Annualized
(e)	Portfolio turnover rates exclude securities received or delivered as a result of processing in-kind capital share transactions.
(f)	Amount represents less than $0.005 per share.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

October 31, 2018 (unaudited)

 

Note 1—Fund Organization—VanEck Vectors ETF Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was incorporated in Delaware as a statutory trust on March 15, 2001. The Trust operates as a series fund, and as of October 31, 2018, offers fifty-eight investment portfolios, each of which represents a separate series of the Trust.

 

These financial statements relate only to the following investment portfolios: BDC Income ETF (“BDC Income”), ChinaAMC China Bond ETF (“ChinaAMC China Bond”), Emerging Markets Aggregate Bond ETF (“Emerging Markets Aggregate”), Emerging Markets High Yield Bond ETF (“Emerging Markets High Yield”), Fallen Angel High Yield Bond ETF (“Fallen Angel”), Green Bond ETF (“Green Bond”), International High Yield Bond ETF (“International High Yield”), Investment Grade Floating Rate ETF (“Investment Grade”), J.P. Morgan EM Local Currency Bond ETF (“J.P. Morgan EM”), Mortgage REIT Income ETF (“Mortgage REIT”) and Preferred Securities ex Financials ETF (“Preferred Securities”), each a “Fund” and collectively the “Funds”. Each Fund’s investment objective is to replicate as closely as possible, before fees and expenses, the price and yield performance of its index. The Funds (except BDC Income, Mortgage REIT and Preferred Securities) expect to use a sampling approach in seeking to achieve their objectives. Sampling means that Van Eck Associates Corporation (the “Adviser”) uses quantitative analysis to select bonds and other securities that represent a sample of securities in the index in terms of key risk factors, performance attributes and other characteristics. The number of securities in each Fund will be based upon several factors, including asset size of the Fund. The Adviser generally expects each Fund to hold less than the total number of securities in the index, but reserves the right to hold as many securities as it believes necessary to achieve the Fund’s investment objective. China Asset Management (Hong Kong) Limited (the “Sub-Adviser”) is the sub-adviser to ChinaAMC China Bond. ChinaAMC China Bond seeks to achieve its investment objective by primarily investing in bonds issued in the People’s Republic of China (“PRC”) via the Sub-Adviser. BDC Income, Mortgage REIT and Preferred Securities each seek to achieve their investment objective through a portfolio of securities in substantially the same weighting as their index.

 

The Funds’ respective indices are presented below:

 

Fund	Index
BDC Income	MVIS® US Business Development Companies Index*
ChinaAMC China Bond	ChinaBond China High Quality Bond Index
Emerging Markets Aggregate	MVIS® EM Aggregate Bond Index*
Emerging Markets High Yield	ICE BofAML Diversified High Yield US Emerging Markets Corporate Plus Index
Fallen Angel	ICE BofAML US Fallen Angel High Yield Index
Green Bond	S&P Green Bond Select Index
International High Yield	ICE BofAML Global ex-US Issuers High Yield Constrained Index
Investment Grade	MVIS® US Investment Grade Floating Rate Index*
J.P. Morgan EM	J.P. Morgan GBI-EM Global Core Index
Mortgage REIT	MVIS® US Mortgage REITs Index*
Preferred Securities	Wells Fargo® Hybrid & Preferred Securities ex Financials Index

 

*	Published by MV Index Solutions GmbH, an indirect, wholly-owned subsidiary of the Adviser.

 

Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

The Funds are investment companies and are following accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies.

 

The following is a summary of significant accounting policies followed by the Funds.

 

A.

Security Valuation—The Funds value their investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Debt securities are valued on the basis of evaluated prices furnished by an independent pricing service approved by the Funds’ Board of Trustees or provided by securities dealers. The pricing services may use valuation models or matrix pricing, which consider: (i) yield or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date and/or (ii) quotations from bond dealers to determine current value and are categorized as Level 2 in

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

the fair value hierarchy (as described below). Short-term debt securities with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are categorized as Level 1 in the fair value hierarchy. Securities traded on national exchanges or traded on the NASDAQ National Market System are valued at the last sales price as reported at the close of each business day. Securities traded on the NASDAQ Stock Market are valued at the NASDAQ official closing price. Over-the-counter securities not included in the NASDAQ National Market System and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded, they are categorized as Level 1 in the fair value hierarchy. The Pricing Committee of the Adviser provides oversight of the Funds’ valuation policies and procedures, which are approved by the Funds’ Board of Trustees. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes it does not otherwise reflect the fair value of a security or asset, the security or asset will be fair valued by the Pricing Committee in accordance with the Funds’ valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis.

 

Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be classified either as Level 2 or Level 3 in the fair value hierarchy. The price which the Funds may realize upon sale of an investment may differ materially from the value presented in the Schedules of Investments.

 

The Funds utilize various methods to measure the fair value of their investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The transfers between levels of the fair value hierarchy assume the financial instruments where transferred at the beginning of the reporting period. The three levels of the fair value hierarchy are described below:

 

Level 1 — Quoted prices in active markets for identical securities.

 

Level 2 — Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

 

Level 3 — Significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments).

 

A summary of the inputs, the levels used to value the Funds’ investments, and transfers between levels are located in the Schedules of Investments. Additionally, tables that reconcile the valuation of the Funds’ Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Schedules of Investments.

 

B.	Federal Income Taxes—It is each Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income to its shareholders. Therefore, no federal income tax provision is required.
C.	Dividends and Distributions to Shareholders—Dividends to shareholders from net investment income, if any, are declared and paid at least monthly by each Fund (except BDC Income and Mortgage REIT, which are declared and paid quarterly). Distributions of net realized capital gains, if any, generally are declared and paid annually. Income dividends and capital gain distributions are determined in accordance with income tax regulations, which may differ from such amounts determined in accordance with GAAP.

 

 

Effective in the current reporting period, it is no longer required to separately present distributions from net investment income and distributions from net realized capital gains. Additionally, undistributed net investment income (loss) included in net assets is no longer disclosed separately in the Statement of Changes in Net Assets. The April 30, 2018 sources of distributions and undistributed net investment income were as follows:

 

		Dividends to shareholders
Fund		Dividends from net investment income				Distributions from net realized capital gains				Undistributed net investment income (loss)
BDC Income		$	16,864,170			$	—			$	401,268
ChnaAMC China Bond			—				—				(30,653	)
Emerging Markets Aggregate			498,718				—				(231,823	)
Emerging Markets High Yield			19,986,740				—				1,902,342
Fallen Angel			53,367,560				3,424,000				4,683,192
Green Bond			140,320				1,500				51,968
International High Yield			6,003,821				—				(69,618	)
Investment Grade			4,284,650				—				733,640
J.P. Morgan EM			227,606,627				—				(37,975,743	)
Mortgage REIT			10,915,551				—				(8,681	)
Preferred Securities			28,076,858				—				(1,901,628	)

 

D.	Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed in the financial statements. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Statement of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments, and liabilities are recorded as net realized gain (loss) on foreign currency transactions and foreign denominated assets and liabilities in the Statements of Operations. The total net realized gains and losses from fluctuations on foreign exchange rates on investments and other foreign currency denominated assets and liabilities are disclosed in Note 5 - Income Taxes.
E.	Restricted Securities—The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included at the end of each Fund’s Schedule of Investments.
F.	Components of Capital—Effective with the current reporting period, the Net unrealized appreciation (depreciation), Undistributed net investment income (loss) and Accumulated net realized gain (loss) are aggregated and disclosed as Total distributable earnings (loss) in the Statement of Assets and Liabilities.
G.	Repurchase Agreements—The Funds may enter into repurchase agreements with financial institutions, deemed to be creditworthy by the Adviser, to generate income from their excess cash balances and to invest securities lending cash collateral. A repurchase agreement is an agreement under which a Fund acquires securities from a seller, subject to resale to the seller at an agreed upon price and date. A Fund, through its custodian/securities lending agent, takes possession of securities collateralizing the repurchase agreement. Pursuant to the terms of the repurchase agreement, such securities must have an aggregate market value greater than or equal to the terms of the repurchase price plus accrued interest at all times. If the value of the underlying securities falls below the value of the repurchase price plus accrued interest, the Funds will require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults on its repurchase obligation, the Funds maintain their right to sell the underlying securities at market value and may claim any resulting loss against the seller. Repurchase agreements held as of October 31, 2018 are reflected in the Schedules of Investments.

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NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

H.	Warrants—The Funds may invest in warrants whose values are linked to indices or underlying instruments. The Funds may use these warrants to gain exposure to markets that might be difficult to invest in through conventional securities. Warrants may be more volatile than their linked indices or underlying instruments. Potential losses are limited to the amount of the original investment. Warrants are obligations of the issuer and are not secured by any collateral. Warrants may be exercised by the Funds during the exercise period. If the warrants have not been exercised on the last day of the exercise period, the warrants will be automatically exercised on that day. Warrants held at October 31, 2018, if any, are reflected in the Schedules of Investments.
I.	Offsetting Assets and Liabilities—In the ordinary course of business, the Funds enter into transactions subject to enforceable master netting or other similar agreements. Generally, the right of setoff in those agreements allows the Funds to set off any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of the agreements. The Funds may pledge or receive cash and/or securities as collateral for derivative instruments, securities lending and repurchase agreements. For financial reporting purposes, the Funds present securities lending and repurchase agreement assets and liabilities on a gross basis in the Statements of Assets and Liabilities. Collateral held at October 31, 2018 is presented in the Schedules of Investments. Refer to related disclosures in Note 2F (Repurchase Agreements) and Note 9 (Securities Lending).
J.	Other—Security transactions are accounted for on trade date. Realized gains and losses are determined based on the specific identification method. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premiums and discounts, is accrued as earned. Interest income is generally not earned on debt securities in default or upon determination that the income is not realizable.
	In the normal course of business, the Funds enter into contracts that contain a variety of general indemnifications. The Funds’ maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote.
	The character of distributions received from Real Estate Investment Trusts (“REITs”) and Business Development Corporations (“BDCs”) held by the Funds are generally comprised of net investment income, capital gains, and return of capital. It is the policy of the Funds to estimate the character of distributions received from these underlying investments based on historical data provided by the companies if actual amounts are not available. After each calendar year end, the REITs and BDCs report the actual tax character of these distributions. Differences between the estimated and actual amounts are reflected in the Funds’ records in the year in which they are reported by adjusting the related cost basis of investments, capital gains and income, as necessary.
	At October 31, 2018, ChinaAMC China Bond included $665 in cash denominated in foreign currency, at value on the Statements of Assets and Liabilities which represents foreign investor minimum settlement reserve funds required by China Securities Depository and Clearing Corporation Limited.

 

Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Funds. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of each Fund’s average daily net assets. The Adviser has agreed, until at least September 1, 2019, to waive management fees and assume expenses to prevent each Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest expense, trading expenses, offering costs, and taxes and extraordinary expenses) from exceeding the expense limitations listed in the table below. Refer to the Statements of Operations for the amounts waived/assumed by the Adviser for the period ended October 31, 2018.

 

 

The current expense limitations and management fee rates are as follows:

 

Fund		Expense Limitations		Management Fee Rate
BDC Income		0.40%		0.40%
ChinaAMC China Bond		0.50		0.40
Emerging Markets Aggregate		0.35*		0.35
Emerging Markets High Yield		0.40		0.40
Fallen Angel		0.35		0.40
Green Bond		0.30***		0.35
International High Yield		0.40		0.40
Investment Grade		0.14		0.35
J.P. Morgan EM		0.30**		0.27
Mortgage REIT		0.40		0.40
Preferred Securities		0.40		0.40

 

*	Effective June 8, 2018 the expense limitation for Emerging Markets Aggregate was reduced from 0.49% to 0.35%
**	Effective June 8, 2018 the expense limitation for J.P. Morgan EM was reduced from 0.42% to 0.30%
***	Effective September 1, 2018 the expense limitation for Green Bond was reduced from 0.40% to 0.30%

 

In addition, Van Eck Securities Corporation (the “Distributor”), an affiliate of the Adviser, acts as the Funds’ distributor. Certain officers and a Trustee of the Trust are officers, directors or stockholders of the Adviser and Distributor.

 

Note 4—Investments—For the period ended October 31, 2018, the cost of purchases and proceeds from sales of investments other than U.S. government obligations and short-term obligations (excluding in-kind transactions described in Note 6) were as follows:

 

Fund		Cost of Investments Purchased					Proceeds from Investments Sold
BDC Income			$	8,755,582			$	7,735,900
ChinaAMC China Bond				757,116				891,323
Emerging Markets Aggregate				7,003,560				1,586,795
Emerging Markets High Yield				30,776,782				35,177,586
Fallen Angel				212,433,114				175,549,652
Green Bond				11,154,871				1,944,816
International High Yield				37,926,099				24,833,812
Investment Grade				349,017,330				93,514,368
J.P. Morgan EM				960,681,686				943,385,216
Mortgage REIT				30,816,593				28,665,897
Preferred Securities				84,660,961				82,700,705

 

Note 5—Income Taxes—As of October 31, 2018, for Federal income tax purposes, the identified cost of investments owned, net unrealized appreciation (depreciation), gross unrealized appreciation, and gross unrealized depreciation of investments were as follows:

 

Fund		Cost of Investments				Gross Unrealized Appreciation				Gross Unrealized Depreciation				Net Unrealized Appreciation (Depreciation)
BDC Income		$	256,577,759			$	3,310,507			$	(22,398,732	)		$	(19,088,225	)
ChinaAMC China Bond			4,010,260				—				(305,965	)			(305,965	)
Emerging Markets Aggregate			16,441,090				120,270				(1,458,826	)			(1,338,556	)
Emerging Markets High Yield			306,710,553				983,817				(19,593,555	)			(18,609,738	)
Fallen Angel			1,196,734,788				7,248,741				(51,737,302	)			(44,488,561	)
Green Bond			26,327,662				122,132				(943,555	)			(821,423	)
International High Yield			146,129,243				640,399				(8,893,953	)			(8,253,554	)
Investment Grade			625,271,837				656,799				(1,218,330	)			(561,531	)
J.P. Morgan EM			5,127,905,738				3,331,046				(643,349,219	)			(640,018,173	)
Mortgage REIT			160,470,952				4,400,419				(10,705,586	)			(6,305,167	)
Preferred Securities			573,186,002				4,214,969				(30,198,983	)			(25,984,014	)

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NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

The tax character of dividends paid to shareholders during the year ended April 30, 2018 was as follows:

 

Fund		Ordinary Income				Long-Term Capital Gains				Return of Capital
BDC Income		$	16,864,170			$	—			$	—
ChinaAMC China Bond			—				—				172,450
Emerging Markets Aggregate			441,240				—				225,432
Emerging Markets High Yield			19,986,740				—				—
Fallen Angel			56,099,560	*			692,000				—
Green Bond			141,820	*			—				—
International High Yield			6,003,821				—				951,959
Investment Grade			4,284,650				—				—
J.P. Morgan EM			227,606,627				—				43,548,533
Mortgage REIT			10,915,551				—				449,699
Preferred Securities			28,076,858				—				208,987

 

*	Includes short-term capital gains

 

The tax character of current year distributions will be determined at the end of the current fiscal year.

 

At April 30, 2018, the Funds had capital loss carryforwards available to offset future capital gains, as follows:

 

Fund		Short-Term Capital Losses with No Expiration				Long-Term Capital Losses with No Expiration				Total
BDC Income		$	(4,207,948	)		$	(9,633,345	)		$	(13,841,293	)
ChinaAMC China Bond			(24,600	)			(12,975	)			(37,575	)
Emerging Markets Aggregate			(1,577,363	)			(249,090	)			(1,826,453	)
Emerging Markets High Yield			(7,556,812	)			(31,487,345	)			(39,044,157	)
International High Yield			(357,471	)			(6,180,867	)			(6,538,338	)
J.P. Morgan EM			(9,283,383	)			(19,897,993	)			(29,181,376	)
Mortgage REIT			(2,493,222	)			(25,934,310	)			(28,427,532	)
Preferred Securities			(7,721,519	)			(14,335,082	)			(22,056,601	)

 

Realized gains or losses attributable to fluctuations in foreign exchange rates on investments and other foreign currency denominated assets and liabilities result in permanent book to tax differences, which may affect the tax character of distributions and undistributed net investment income at the end of the Funds’ fiscal year and may result in a tax return of capital. For the period May 1, 2018 to October 31, 2018, the net realized gains (losses) from foreign currency translations were as follows:

 

ChinaAMC China Bond		$	(44,712	)
Emerging Markets Aggregate			(285,065	)
Green Bond			(34,632	)
International High Yield			(405,419	)
J.P. Morgan EM			(159,845,846	)

 

The Funds recognize the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Funds do not have exposure for additional years that might still be open in certain foreign jurisdictions. Therefore, no provision for income tax is required in the Funds’ financial statements. The Funds may be subject to foreign taxes on the appreciation in value of certain investments. The Funds provide for such taxes on both realized and unrealized appreciation.

 

The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the period ended October 31, 2018, the Funds did not incur any interest or penalties.

 

Prior to August 2018, there were uncertainties in the Chinese tax rules governing the taxation of interest income on corporate bonds due to the lack of formal guidance from the PRC’s tax authorities. China generally imposes withholding tax (“WHT”) at a rate of 10% (which may be reduced by the double taxation agreement/arrangement) on interest income

 

 

derived by nonresidents in the Chinese corporate bond market, including Qualified Foreign Institutional Investors (“QFII”) and Renminbi Qualified Foreign Institutional Investors (“RQFIIs”). On August 30, 2018, the PRC State Council announced a temporary three-year exemption of withholding income tax and value added tax on bond interest derived by foreign institutional investors from the onshore bond market. The PRC authorities are expected to issue a circular to provide further details on the implementation and effective date.

 

Additionally, under the PRC Corporate Income Tax regime, China also imposes WHT at a rate of 10% (subject to treaty relief) on PRC-sourced capital gains derived by nonresident enterprises, provided that the nonresident enterprises (i) do not have places of business, establishments or permanent establishments in the PRC; and (ii) are not PRC tax resident enterprises. ChinaAMC China Bond currently considers capital gains derived from Chinese bonds to be non PRC-sourced and therefore not subject to WHT.

 

PRC rules for taxation of RQFIIs (and QFIIs) are evolving and future tax guidance issued by the PRC State Administration of Taxation and/or PRC Ministry of Finance may apply retroactively, even if such rules are adverse to ChinaAMC China Bond and its shareholders. If the PRC tax authorities were to issue differing formal guidance or tax rules regarding capital gains from Chinese Bonds to RQFIIs, such as the Sub-Adviser, and begin collecting WHT, ChinaAMC China Bond could be subject to WHT liability. The impact of any such tax liability on ChinaAMC China Bond’s return could be substantial. ChinaAMC China Bond may also be liable to the Sub-Adviser for any tax that is imposed on the Sub-Adviser by the PRC with respect to its investments.

 

Note 6—Capital Share Transactions—As of October 31, 2018, there were an unlimited number of capital shares of beneficial interest authorized by the Trust with no par value. Fund shares are not individually redeemable and are issued and redeemed at their net asset value per share only through certain authorized broker-dealers (“Authorized Participants”) in blocks of shares (“Creation Units”), or multiples thereof, as follows:

 

Fund		Creation Units
BDC Income			50,000
ChinaAMC China Bond			100,000
Emerging Markets Aggregate			50,000
Emerging Markets High Yield			200,000
Fallen Angel			50,000
Green Bond			50,000
International High Yield			200,000
Investment Grade*			50,000
J.P. Morgan EM*			100,000
Mortgage REIT			50,000
Preferred Securities			50,000

 

*	Effective October 26, 2018, Investment Grade and J.P. Morgan EM creation units changed from 100,000 to 50,000 shares and 200,000 to 100,000 shares, respectively.

 

The consideration for the purchase or redemption of Creation Units of the Funds generally consists of the in-kind contribution or distribution of securities constituting the Funds’ underlying index (“Deposit Securities”) plus a balancing cash component to equate the transaction to the net asset value per share of the Fund on the transaction date. Cash may also be substituted in an amount equivalent to the value of certain Deposit Securities, generally as a result of market circumstances, or when the securities are not available in sufficient quantity for delivery, or are not eligible for trading by the Authorized Participant. The Funds may issue Creation Units in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit at the Custodian for the benefit of the Funds, collateral consisting of cash in the form of U.S. dollars at least equal to 115% of the daily marked to market value of the missing Deposit Securities.

 

Authorized Participants purchasing and redeeming Creation Units may pay transaction fees directly to The Bank of New York Mellon. In addition, the Funds may impose certain variable fees for creations and redemptions with respect to transactions in Creation Units for cash, or on transactions effected outside the clearing process, which are treated as increases in capital. These variable fees, if any, are reflected in share transactions in the Statements of Changes in Net Assets.

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

For the period ended October 31, 2018, the Funds had in-kind contributions and redemptions as follows:

 

Fund		In-Kind Contributions				In-Kind Redemptions
BDC Income		$	41,614,326			$	7,623,599
ChinaAMC China Bond			—				—
Emerging Markets Aggregate			—				4,377,988
Emerging Markets High Yield			751				79,062,472
Fallen Angel			—				136,550,823
Green Bond			—				—
International High Yield			—				46,237,355
Investment Grade			—				9,972,419
J.P. Morgan EM			206,806,176				676,516,804
Mortgage REIT			15,608,474				4,807,619
Preferred Securities			48,660,754				13,190,320

 

The in-kind contributions and in-kind redemptions in this table represent the accumulation of each Fund’s daily net shareholder transactions including rebalancing activity, while the Statements of Changes in Net Assets reflect shareholder transactions including any cash component of the transactions.

 

Note 7—Principal and Other Risks—Each Fund (except BDC Income, Emerging Markets High Yield, Fallen Angel, and International High Yield) is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer issuers than diversified funds and may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.

 

Investments in the Funds involve risks similar to those of investing in any bond fund, such as market fluctuations caused by factors such as economic and political developments, changes in interest rates and perceived trends in security prices.

 

The Funds (except ChinaAMC China Bond, Investment Grade, Mortgage REIT and Preferred Securities) may directly or indirectly invest in non-investment grade securities, often referred to as “junk bonds.” Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. These high yield securities may involve greater risks and considerations not typically associated with investing in U.S. government bonds and other high quality fixed-income securities. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities. These Funds may not be able to sell bonds at desired prices and large purchases or sales of certain high-yield bond issues may cause substantial fluctuations in share price, yield and total return.

 

BDC Income invests in business development companies which generally invest in less mature private companies or thinly traded U.S. public companies which involve greater risk than well-established publicly-traded companies.

 

ChinaAMC China Bond, Emerging Markets Aggregate, Emerging Markets High Yield, Fallen Angel, Green Bond, International High Yield, Investment Grade and J.P. Morgan EM invest in foreign securities. Investments in foreign securities may involve a greater degree of risk than investments in domestic securities due to political, economic or social instability. Foreign investments may also be subject to foreign taxes and settlement delays. Since the Funds may have significant investments in foreign debt securities, they may be subject to greater credit and interest risks and greater currency fluctuations than portfolios with significant investments in domestic debt securities.

 

Green Bond may invest in bonds whose proceeds are used principally for climate mitigation, climate adaption or other environmentally beneficial projects. Some “green” investments may be dependent on government tax incentives and subsidies and on political support for certain environmental technologies and companies.

 

Mortgage REIT invests directly in mortgage real estate investment trusts (“mortgage REITs”) and is exposed to the risks specific to the real estate market as well as the risks that relate specifically to the way in which mortgage REITs are organized and operated. Mortgage REITs receive principal and interest payments from the owners of the mortgaged properties. Accordingly, mortgage REITs are subject to the credit risk of the borrowers to whom they extend credit. To the extent that a mortgage REIT invests in mortgage-backed securities, it may be subject to default risk or interest rate risk.

 

 

Mortgage REIT may invest in mortgage REITs that may trade at a discount or premium to their net asset value.

 

Preferred Securities invests in preferred securities which are essentially contractual obligations that declare distributions but permit the issuer to defer or suspend distributions. This may require the Fund to account for the distribution that has been deferred or suspended for tax purposes, even though it may not have received this income. Preferred securities are also subject to credit risk. Credit risk refers to the possibility that the issuer of a security will be unable and/or unwilling to make timely distributions of dividends. In addition, preferred securities are subject to interest rate risk. Preferred securities interest rates may move in an inverse direction to that of general interest rates.

 

Preferred Securities may invest directly in real estate investment trusts (“REITs”) and is exposed to the risk of owning real estate directly, as well as to risks that relate specifically to the way in which REITs are organized and operated. REITs generally invest directly in real estate, in mortgages or in some combination of the two. The Fund indirectly bears management expenses along with the direct expenses of the Fund. Individual REITs may own a limited number of properties and may concentrate in a particular region or property type. REITs may also be subject to heavy cash flow dependency, default by borrowers and self-liquidation.

 

Should the Chinese government impose restrictions on the ability of ChinaAMC China Bond to repatriate funds associated with direct investment in bonds issued in the PRC, the Fund may be unable to satisfy distribution requirements applicable to regulated investment companies (“RICs”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and the Fund may therefore be subject to Fund-level U.S. federal taxes.

 

As a result of certain events the United States and the EU have imposed sanctions on certain Russian individuals and companies. These sanctions do not currently impact the Funds. Additional economic sanctions may be imposed or other actions may be taken that may adversely affect the value and liquidity of the Russian-related issuers’ held by the Funds.

 

At October 31, 2018, the Adviser owned approximately 57% of Emerging Markets Aggregate.

 

Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Plan”) for Trustees under which the Trustees can elect to defer receipt of their trustee fees until retirement, disability or termination from the Board of Trustees. The fees otherwise payable to the participating Trustees are deemed invested in shares of the Funds as directed by the Trustees.

 

For each Fund, the expense for the Plan is included in “Trustees’ fees and expenses” in the Statements of Operations. The liability for the Plan is shown as “Deferred Trustee fees” in the Statements of Assets and Liabilities.

 

Note 9—Securities Lending—To generate additional income, each of the Funds may lend its securities pursuant to a securities lending agreement with The Bank of New York Mellon, the securities lending agent and also the Funds’ custodian. Each Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, U.S. government or U.S. government agency securities, shares of an investment trust or mutual fund, or any combination of cash and such securities at all times equal to at least 102% (105% for foreign securities) of the market value plus accrued interest on the securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Funds will continue to receive any dividends, interest or amounts equivalent thereto, on the securities loaned while receiving a fee from the borrower and/or earning interest on the investment of the cash collateral. Such fees and collateral earned are shared with the securities lending agent under the terms of the securities lending agreement. The Funds may pay reasonable finders’, administrative and custodial fees in connection with a loan of its securities. Securities lending income is disclosed as such in the Statements of Operations. The collateral for securities loaned is recognized in the Schedules of Investments and the Statements of Assets and Liabilities. The cash collateral is maintained on the Funds’ behalf by the lending agent and is invested in repurchase agreements collateralized by obligations of the U.S. Treasury and/or Government Agencies. Loans are subject to termination at the option of the borrower or the Funds. Upon termination of the loan, the borrower will return to the lender securities identical to the securities loaned. The Funds bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower of the securities fail financially. The value of loaned securities and related collateral outstanding at October 31, 2018 is presented on a gross basis in the Schedules of Investments and Statements of Assets and Liabilities.

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (concluded)

 

The following table presents repurchase agreements held as collateral by type of security on loan pledged as of October 31, 2018:

 

Fund		Corporate Bonds				Equity Securities				Foreign Government Obligations				Gross amount of Recognized Liabilities for Securities Loaned in the Statements of Assets and Liabilities*
BDC Income		$	—			$	27,401,340			$	—			$	27,401,340
Emerging Markets Aggregate			84,843				—				138,670				223,543
Emerging Markets High Yield			18,574,117				—				103,370				18,677,487
Fallen Angel			82,940,495				—				—				82,940,495
Green Bond			372,947				—				—				372,947
International High Yield			10,540,352				—				—				10,540,352
Investment Grade			5,518,566				—				—				5,518,566
J.P. Morgan EM			—				—				123,546,144				123,546,144
Mortgage REIT			—				9,883,007				—				9,883,007
Preferred Securities			—				17,023,450				—				17,023,450

 

*	Remaining contractual maturity of the agreements: overnight and continuous

 

Note 10—Share Split—The Board of Trustees approved a 1 for 2 reverse share split for J.P Morgan EM Local Currency Bond ETF. On October 26, 2018 shares began trading on a split-adjusted basis. The Statement of Changes in Net Assets and Financial Highlights prior to October 26, 2018 have been adjusted to reflect the 1 for 2 reverse share split.

 

Note 11—Bank Line of Credit—The Funds may participate in a $200 million committed credit facility (the “Facility”) to be utilized for temporary financing until the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Funds at the request of the shareholders and other temporary or emergency purposes. The Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the Funds at rates based on prevailing market rates in effect at the time of borrowings. The outstanding loan balance for each respective fund as of October 31, 2018 is disclosed as Line of Credit in the Statement of Assets and Liabilities. During the period ended October 31, 2018, the following Funds borrowed under this Facility:

 

Fund		Days Outstanding				Average Daily Loan Balance				Average Interest Rate
BDC Income			156			$	847,309				3.30	%
Emerging Markets High Yield			1				1,461,940				3.10
Fallen Angel			1				486,601				3.10
J.P. Morgan EM			66				3,428,928				3.20
Mortgage REIT			144				1,039,477				3.31
Preferred Securities			129				2,455,506				3.33

 

Note 12—Custodian Fees—The Funds have entered into an expense offset agreement with the custodian wherein they receive a credit toward the reduction of custodian fees whenever there are uninvested cash balances. The Funds could have invested their cash balances elsewhere if they had not agreed to a reduction in fees under the expense offset agreement with the custodian. For the period ended October 31, 2018, there were offsets to custodian fees and these amounts are reflected in custody expense in the Statement of Operations.

 

Note 13—Recent Accounting Pronouncements and Regulatory Requirements—Tax reform legislation, commonly known as the Tax Cuts and Jobs Act (the “Act”), was enacted on December 22, 2017. Under the Act, individuals (and certain other noncorporate entities) are generally eligible for a 20% deduction with respect to taxable ordinary dividends from REITs and certain taxable income from publicly traded partnerships. Currently there is not a mechanism for RICs to pass through the 20% deduction to shareholders, although it is possible that a legislative or regulatory approach to do so may be provided in the future. As a result, in comparison, investors investing directly in REITs or publicly traded partnerships would generally be eligible for the 20% deduction for such dividends and taxable income from these investments while investors investing in REITs or publicly traded partnerships indirectly through a Fund would not be eligible for the 20% deduction for their share of such taxable income.

 

 

The Financial Accounting Standards Board issued an Accounting Standards Update ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, that shortens the amortization period for certain purchased callable debt securities held at premium to the earliest call date. The new guidance does not change the accounting for purchased callable debt securities held at a discount. The guidance is effective for public business entities for fiscal years beginning after 15 December 2018, and interim periods within those years. Early adoption is permitted. Management is currently evaluating the potential impact of this new guidance to the financial statements.

 

The Financial Accounting Standards Board issued Accounting Standards Update No. 2018-13 Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), a final guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. Public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years beginning after 15 December 2019 and for interim periods within those fiscal years. Early adoption is permitted of either the entire standard or only the provisions that eliminate or modify the requirements. Management is currently evaluating the potential impact of this new guidance to the financial statements.

 

Note 14—Subsequent Events—The Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

 

On November 7, 2018, the PRC issued guidance (Circular 108) clarifying that QFIIs, and RQFIIs are exempted from withholding income tax and value added tax with respect to bond interest income derived in the Chinese domestic bond market from November 7, 2018 to November 6, 2021.

VANECK VECTORS ETF TRUST

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS

October 31, 2018 (unaudited)

 

At a meeting held on June 22, 2018 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors^® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved the continuation of (i) the investment management agreements between the Trust and Van Eck Associates Corporation (the “Adviser”) (the “Investment Management Agreements”) with respect to the VanEck Vectors Asia ex-Japan Aggregate Bond ETF, BDC Income ETF, Business Development Company/Specialty Finance ETF, ChinaAMC China Bond ETF (the “China Fund”), Defaulted & Distressed Bond ETF, EM Investment Grade + BB Rated USD Sovereign Bond ETF, Emerging Markets Aggregate Bond ETF, Emerging Markets Corporate Bond ETF, Emerging Markets High Yield Bond ETF, Emerging Markets Short-Term Corporate Bond ETF, European High Yield Bond ETF, European Sovereign Bond ETF, Fallen Angel High Yield Bond ETF, Fixed Income II ETF, Global Fallen Angel Bond ETF, Global High Yield Bond ETF, Global High Yield US$Bond ETF, Greater China Corporate Bond ETF, Greater China High Yield Bond ETF, Green Bond ETF, High Yield Floating Rate ETF, International High Yield Bond ETF, International US$ High Yield Bond ETF, Investment Grade Floating Rate ETF, Japanese Bond ETF, J.P. Morgan EM Local Currency Bond ETF, Mortgage REIT Income ETF, MV Emerging Markets Aggregate Bond ETF, Non-Agency RMBS ETF, Preferred Securities ex Financials ETF, REIT Preferred Securities ETF and USD Emerging Markets Aggregate Bond ETF (each, a “Fund” and together, the “Funds”) and (ii) a sub-advisory agreement between the Adviser and China Asset Management (Hong Kong) Limited (the “Sub-Adviser”) (the “Sub-Advisory Agreement”) with respect to the China Fund. The Investment Management Agreements and the Sub-Advisory Agreement are collectively referred to as the “Agreements.”

 

The Board’s approval of the Agreements was based on a comprehensive consideration of all of the information available to the Trustees and was not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered those factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors.

 

In preparation for the Renewal Meeting, the Trustees held a meeting on June 6, 2018. At that meeting, the Trustees discussed the information the Adviser, the Sub-Adviser (with respect to the China Fund) and Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third party data provider, had provided to them in advance. The information provided to the Trustees included, among other things, information about the performance and expenses (for those Funds which had begun operations) of the Funds and the Funds’ peer funds (other index-based exchange-traded funds (“ETFs”)), information about the advisory services provided to the Funds and the personnel providing those services, and the profitability and other benefits enjoyed by the Adviser and its affiliates as a result of the Adviser’s relationship with the Funds. In reviewing performance information for the Funds against their peer groups, the Trustees considered that each Fund seeks to track a different index than the funds in its designated peer group and, therefore, each Fund’s performance will differ from its peers. In addition, as noted below, the Trustees reviewed certain performance information for each Fund which was not provided by Broadridge and which did not compare each Fund’s performance to the performance of its peer group. For these and other reasons, the Trustees noted that the peer group performance information did not necessarily provide meaningful direct comparisons to the Funds.

 

The Independent Trustees’ consideration of the Agreements was based, in part, on their review of information obtained through discussions with the Adviser at the Renewal Meeting and with the Adviser at the June 6, 2018 meeting regarding the management of the Funds and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser and the Sub-Adviser (with respect to the China Fund), including the background and experience of the portfolio managers and others involved in the management and administration of the Funds. The Trustees considered the terms of, and scope of services that the Adviser and Sub-Adviser (with respect to the China Fund) provide under, the Agreements, including the Adviser’s commitment to waive certain fees and/or pay expenses of each of the Funds to the extent necessary to prevent the operating expenses of each of the Funds from exceeding agreed upon limits for a period of time. With respect to the Sub-Advisory Agreement, the Trustees took into account the unique legal and operational aspects of the China Fund and the Sub-Adviser’s experience with respect to Renminbi Qualified Institutional Investors Scheme funds. The Trustees also noted that the Sub-Adviser is a wholly-owned subsidiary of China Asset Management Co. Ltd., one of China’s largest asset management companies measured by fund assets under management.

 

The Trustees concluded that the Adviser, the Sub-Adviser (with respect to the China Fund) and their personnel have the requisite expertise and skill to manage the Funds’ portfolios. In evaluating the performance of each of the Funds that had commenced operations prior to the date of the Renewal Meeting (the “Operating Funds”), the Trustees

 

 

reviewed various performance metrics but relied principally on a comparison of the “gross” performance of each Operating Fund (i.e., measured without regard to the impact of fees and expenses) to the performance of its benchmark index. Based on the foregoing, the Trustees concluded that the investment performance of the Operating Funds was satisfactory.

 

The Trustees also considered information relating to the financial condition of the Adviser and the Sub-Adviser (with respect to the China Fund) and the current status, as they understood it, of the Adviser’s and Sub-Adviser’s (with respect to the China Fund) compliance environment.

 

As noted above, the Trustees were also provided various data from Broadridge comparing the Operating Funds’ expenses and performance to that of other ETFs. The Trustees noted that the information provided showed that each Operating Fund had management fees (after the effect of any applicable fee waiver) below or equal to the average and median of its respective peer group of funds, except for VanEck Vectors Emerging Markets High Yield Bond ETF, which had management fees (after the effect of any applicable fee waiver) greater than the average, but below the median, of its peer group of funds. The Trustees also noted that the information provided showed that each Operating Fund had a total expense ratio (after the effect of any applicable expense limitation) below the average and median of its respective peer group of funds, except for each of VanEck Vectors BDC Income ETF, Emerging Markets Aggregate Bond ETF, International High Yield Bond ETF and Mortgage REIT Income ETF, which had a total expense ratio (after the effect of any applicable expense limitation) greater than the average and/or median of its peer group of funds. With respect to these Operating Funds, the Trustees reviewed the amount by which these Operating Funds’ management fees and/or total expense ratios (after the effect of any applicable expense limitation) exceeded the average and/or median of their respective peer groups and information provided by the Adviser providing context for these comparisons. The Trustees concluded, in light of this information and the other information available to them, that the fees paid by the Operating Funds were reasonable in light of the performance of the Operating Funds and the quality of services received.

 

The Trustees also considered the benefits, other than the fees under the Investment Management Agreements, received by the Adviser from serving as adviser to the Funds.

 

The Trustees also considered information provided by the Adviser about the overall profitability of the Adviser and its profitability or loss in respect of each Operating Fund. The Trustees reviewed each Operating Fund’s asset size, expense ratio and expense cap and noted that the Investment Management Agreements do not include breakpoints in the advisory fee rates as asset levels in a Fund increase. The Trustees considered the volatility of the asset classes in which certain of the Operating Funds invest, potential variability in the net assets of these Funds and the sustainability of any potential economies of scale which may exist given where fees are currently set. The Trustees also evaluated the extent to which management fees for the Operating Funds effectively incorporate the benefits of economies of scale. The Trustees noted that the Adviser has capped expenses on each Operating Fund since its inception. Based on the foregoing and the other information available to them, the Trustees determined that the advisory fee rate for each Operating Fund and the sub-advisory fee rate for the China Fund are reasonable and appropriate in relation to the current asset size of each Operating Fund and the other factors discussed above and that the advisory fee rate for each Operating Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist. The Trustees also determined that the profits earned by the Adviser with respect to the Funds that were profitable to the Adviser were reasonable in light of the nature and quality of the services received by such Funds. The Trustees also considered information from the Sub-Adviser informing them that the Sub-Adviser did not earn any profits from managing the China Fund.

 

The Trustees did not consider historical information about the cost of the services provided by the Adviser or the profitability to the Adviser of VanEck Vectors Asia ex-Japan Aggregate Bond ETF, Business Development Company/Specialty Finance ETF, Defaulted & Distressed Bond ETF, Emerging Markets Corporate Bond ETF, Emerging Markets Short-Term Corporate Bond ETF, European High Yield Bond ETF, European Sovereign Bond ETF, Fixed Income II ETF, Global Fallen Angel Bond ETF, Global High Yield Bond ETF, Global High Yield US$Bond ETF, Greater China Corporate Bond ETF, Greater China High Yield Bond ETF, High Yield Floating Rate ETF, International US$ High Yield Bond ETF, Japanese Bond ETF, MV Emerging Markets Aggregate Bond ETF, Non-Agency RMBS ETF, REIT Preferred Securities ETF and USD Emerging Markets Aggregate Bond ETF because the Funds had not yet commenced operations at the time of the Renewal Meeting. The Trustees could not consider the historical performance or actual management fees or operating expenses of, or the quality of services previously provided to, each of these Funds

VANECK VECTORS ETF TRUST

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS

(unaudited) (continued)

 

although they concluded that the nature, quality and extent of the services to be provided by the Adviser (and the Sub-Adviser, with respect to the China Fund) were appropriate based on the Trustees’ knowledge of the Adviser and its personnel and the operations of the other series of the Trust.

 

The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their June 6, 2018 meeting as part of their consideration of the Agreements.

 

In voting to approve the continuation of the Agreements, the Trustees, including the Independent Trustees, concluded that the terms of each Agreement are reasonable and fair in light of the services to be performed, expenses to be incurred and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. The Trustees further concluded that each Agreement is in the best interest of each Fund and such Fund’s shareholders.

 

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by a VanEck Vectors ETF Trust (the “Trust”) Prospectus, which includes more complete information. An investor should consider the investment objective, risks, and charges and expenses of the Funds carefully before investing. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing.

 

Additional information about the Trust’s Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at http://www.sec.gov.

 

The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Trust’s Form N-Qs are available on the Commission’s website at http://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Funds’ complete schedules of portfolio holdings are also available by calling 800.826.2333 or by visiting vaneck.com.

 

 

Investment Adviser:	Van Eck Associates Corporation
Distributor:	Van Eck Securities Corporation 666 Third Avenue, New York, NY 10017 vaneck.com
Account Assistance:	800.826.2333		INCOMESAR

Item 2. CODE OF ETHICS.

  Not applicable.

Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.

  Not applicable.

Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

  Not applicable.

Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

     Not applicable.

Item 6. SCHEDULE OF INVESTMENTS.

     Information included in Item 1.

Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
        MANAGEMENT INVESTMENT COMPANIES.

     Not applicable.

Item 8. PORTFOLIO MANAGER OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

     Not applicable.

Item 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
        COMPANY AND AFFILIATED PURCHASERS.

     Not applicable.

Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable.

Item 11. CONTROLS AND PROCEDURES.

(a)  The registrant's principal executive and principal financial officers, or
     persons performing similar functions, have concluded that the registrant's
     disclosure controls and procedures (as defined in Rule 30a-3(c) under the
     Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
     270.30a-3(c)) are effective, as of a date within 90 days of the filing
     date of the report that includes the disclosure required by this paragraph,
     based on their evaluation of these controls and procedures required
     by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules
     13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934,
     as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b)  There were no changes in the registrant's internal control over financial
     reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
     270.30a-3(d)) that occurred during the period covered by this report that
     has materially affected, or is reasonably likely to materially affect,
     the registrant's internal control over financial reporting.

Item 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT
         INVESTMENT COMPANIES.

     Not applicable.

Item 13. EXHIBITS.

(a)(1) Not applicable.

(a)(2) A separate certification for each principal executive officer and
       principal financial officer of the registrant as required by Rule 30a-2
       under the Act (17 CFR 270.30a-2(a)) is attached as Exhibit 99.CERT.

(b)  Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
     furnished as Exhibit 99.906CERT.

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                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) VANECK VECTORS ETF TRUST

By (Signature and Title) /s/ John J. Crimmins, Treasurer & Chief Financial Officer
                         ---------------------------------------------------------
Date January 8, 2019
     ---------------

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By (Signature and Title) /s/ Jan F. van Eck, Chief Executive Officer
                        --------------------------------------------
Date January 8, 2019
     ---------------

By (Signature and Title)  /s/ John J. Crimmins, Treasurer & Chief Financial Officer
                        -----------------------------------------------------------

Date January 8, 2019
     ---------------

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