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, 2017

ITEM 1. REPORT TO SHAREHOLDERS

 

SEMI-ANNUAL REPORT October 31, 2017 (unaudited)

 

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

 

	800.826.2333	vaneck.com

 

 

 

President’s Letter	1
Management Discussion	3
Performance Comparison
AMT-Free Intermediate Municipal Index ETF	5
AMT-Free Long Municipal Index ETF	5
AMT-Free Short Municipal Index ETF	6
CEF Municipal Income ETF	6
High-Yield Municipal Index ETF	7
Pre-Refunded Municipal Index ETF	7
Short High-Yield Municipal Index ETF	8
Explanation of Expenses	10
Schedule of Investments
AMT-Free Intermediate Municipal Index ETF	11
AMT-Free Long Municipal Index ETF	66
AMT-Free Short Municipal Index ETF	81
CEF Municipal Income ETF	96
High-Yield Municipal Index ETF	98
Pre-Refunded Municipal Index ETF	130
Short High-Yield Municipal Index ETF	133
Statements of Assets and Liabilities	144
Statements of Operations	146
Statements of Changes in Net Assets	148
Financial Highlights
AMT-Free Intermediate Municipal Index ETF	151
AMT-Free Long Municipal Index ETF	151
AMT-Free Short Municipal Index ETF	152
CEF Municipal Income ETF	152
High-Yield Municipal Index ETF	153
Pre-Refunded Municipal Index ETF	153
Short High-Yield Municipal Index ETF	154
Notes to Financial Statements	155
Approval of Investment Management Agreements	162

 

The information contained in the management discussion represents the opinions of VanEck Vectors ETFs and may differ from other persons. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. The information contained herein regarding each index has been provided by the relevant index provider. Also, unless otherwise specifically noted, any discussion of the Funds’ holdings and the Funds’ performance, and the views of VanEck Vectors ETFs are as of October 31, 2017, and are subject to change.

VANECK VECTORS ETFs

(unaudited)

 

Dear Shareholder,

 

Municipal bonds have offered investors solid performance and attractive yields in a year marked by a series of natural disasters which could have had a serious negative impact. High yield muni bonds, in particular, have been a bright spot. During the period under review, high yield municipal bonds performed well, coming off a post-election battering at the end of last year. One of the most significant drivers of positive performance of the VanEck Vectors High-Yield Municipal Index ETF (NYSE Arca: HYD), our flagship high yield municipal bond ETF, was perhaps surprisingly the State of Illinois.

 

Certainly in the first half of this year, there was major concern about what was going to happen with the state’s fiscal situation. Downgrade followed downgrade from the rating agencies and were often accompanied by swift declines in price. Many of Illinois’ bond ratings dropped to triple-B and many even below investment grade. This increased Illinois’ weight in the high yield municipal bond index, and HYD’s portfolio was adjusted in order to appropriately track the index.

 

By mid-summer, the prospect of some sort of resolution on the budget became more a part of the narrative. This had a positive impact on bond prices which not only stabilized, but, in fact, rose. As a result HYD actually received a very nice boost to performance.

 

Total Return of the Bloomberg Barclays Illinois Municipal Bond Index¹

 

 

Source: Bloomberg Barclays. As of 10/31/2017. This chart is for illustrative purposes only. Index performance is not illustrative of fund performance. An investor cannot invest directly in an index. Index returns do not represent fund returns. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. The performance data quoted represent past performance. Past performance is no guarantee of future results; current performance may be lower or higher than the performance data quoted.

VANECK VECTORS ETFs

(unaudited) (continued)

 

Dynamics in the muni market, such as those relating to Illinois, are one reason we are proud to offer such a wide variety of muni bond ETFs. With a suite of seven municipal bond ETFs, investors can target opportunities across the maturity and credit spectrum.

 

To help you stay in the know and make sense of the muni market consider subscribing to Muni Nation^®, our blog on the municipal bond market written by Jim Colby, senior municipal strategist and portfolio manager. To subscribe to the updates, please contact us at 800.826.2333 or visit vaneck.com/subscription to register.

 

Thank you for participating in the VanEck Vectors ETF Trust. You will find the performance comparison of each of the funds for the six months ended October 31, 2017 on the following pages. You will also find their respective financial statements. We value your continuing 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 20, 2017

 

Represents the opinions of the investment adviser. Past performance is no guarantee of future results. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue.

 

All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. Certain indices may take into account withholding taxes. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made. Bonds and bond funds will decrease in value as interest rates rise.

 

1	The Bloomberg Barclays Illinois Municipal Bond Index is considered representative of the broad market for tax-exempt bonds with a maturity of at least one year that are issued by issuers in the state of Illinois.

 

 

Management Discussion (unaudited)

 

Market Review

 

During the six-month period ended October 31, 2017, all seven funds in the suite of VanEck Vectors Municipal Income ETFs posted positive returns. The VanEck Vectors AMT-Free Long Municipal Index ETF (NYSE Arca: MLN) posted the highest performance and the VanEck Vectors Pre-Refunded Municipal Index ETF (NYSE Arca: PRB) posted the lowest.

 

May 1, 2017 through October 31, 2017

VanEck Vectors Municipal Income ETFs Total Return

 

 

Source: VanEck. Returns based on each Fund’s net asset value (NAV). The performance data quoted represent past performance. Past performance is not a guarantee of future results. Performance information for the Funds, except for Funds with unitary fees, reflects temporary waivers of expenses and/or fees. Had the Funds incurred all expenses, investment returns would have been reduced. Investment return and value of the shares of the Funds will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted.

 

AMT-Free Intermediate Municipal Index ETF

 

Munis from California and New York contributed the most to the total return of the Fund. When grouped by state/U.S. territory, none detracted from performance, but South Dakota contributed the least. The sector with the largest average weightings in the index, state general obligation, was the largest contributor to the Fund’s performance.

 

AMT-Free Long Municipal Index ETF

 

The hospital and transportation sectors contributed most to the Fund’s total return and while no sector detracted from performance, the resource recovery sector contributed the least. Municipal bonds issued by California and New York contributed the most to performance. Grouped by state/U.S. territory, municipal bonds issued by Kansas were the greatest detractors from performance, but then only minimally.

 

AMT-Free Short Municipal Index ETF/Pre-Refunded Municipal Index ETF

 

Among short munis, the state general obligation, local general obligation, transportation, and leasing sectors contributed most to the positive total return of the AMT-Free Short Municipal Index ETF. The resource recovery sector contributed the least to performance. In terms of state/U.S. territory, New Jersey contributed by far the most to the total return of the Fund, while Delaware detracted the most from performance, but, then, only minimally.

 

Munis from California contributed the most to the positive total return of the Pre-Refunded Municipal Index ETF. Grouped by state/U.S. territory, munis from Mississippi detracted the most from performance, but, then, only minimally.

VANECK VECTORS ETFs

(unaudited) (continued)

 

Short High-Yield Municipal Index ETF/High-Yield Municipal Index ETF

 

The industrial development revenue/pollution control revenue (IDR/PCR) sector was by far the largest contributor to performance in the Short High-Yield Municipal Index ETF, while the special tax sector was by far the largest detractor. Grouped by state/U.S. territory, Illinois was the greatest contributor to the Fund’s total return, while munis from Louisana and the Virgin Islands detracted the most from performance.

 

In the High-Yield Municipal Index ETF, the hospital, local general obligation, and IDR/PCR sectors contributed the most to the Fund’s positive total return. No sector detracted from performance, but the healthcare facilities sector contributed the least. Munis from Illinois made by far the greatest contribution to performance and those from the Virgin Islands detracted the most from performance.

 

CEF Municipal Income ETF

 

Over the six months under review, the average discount at which municipal closed-end funds (CEFs) traded within a very wide range. Starting the period at -3.81 on May 1, 2017, the discount narrowed to -2.18 on September 13, 2017 only to widen thereafter to as much as -6.02 on October 27-29, 2017, most probably as a result of uncertainties surrounding both the U.S. Republican party’s tax plans and the president’s appointment of a new chairperson of the U.S. Federal Reserve.

 

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS AMT-FREE INTERMEDIATE MUNICIPAL INDEX ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				LMT2TR1				Share Price				NAV				LMT2TR1
Six Months			2.99	%			2.98	%			3.06	%			2.99	%			2.98	%			3.06	%
One Year			1.37	%			1.71	%			2.31	%			1.37	%			1.71	%			2.31	%
Five Year			2.70	%			2.79	%			3.45	%			14.26	%			14.72	%			18.48	%
Life*			4.43	%			4.45	%			5.20	%			53.59	%			54.00	%			65.24	%

 

*

Commencement of Fund: 12/4/07; First Day of Secondary Market Trading: 12/6/07.

1

Bloomberg Barclays AMT-Free Intermediate Continuous Municipal Index (LMT2TR). The Intermediate Index is a market size weighted index comprised of publicly traded municipal bonds that cover the U.S. dollar denominated intermediate term tax-exempt bond market and must be rated Baa3/BBB- or higher by at least two of the following ratings agencies if all three agencies rate the security: Moody’s, S&P and Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be at least Baa3/BBB-. Potential Intermediate Index constituents must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. The bonds must be fixed rate, have a dated date within the last five years and have an effective maturity of 6 to 17 years. The following types of bonds are excluded from the Intermediate Index: bonds subject to the alternative minimum tax, taxable municipal bonds, floating rate bonds and derivatives.

 

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				LMT3TR1				Share Price				NAV				LMT3TR1
Six Months			4.08	%			4.08	%			4.18	%			4.08	%			4.08	%			4.18	%
One Year			1.68	%			1.77	%			2.71	%			1.68	%			1.77	%			2.71	%
Five Year			3.36	%			3.42	%			4.28	%			17.94	%			18.29	%			23.30	%
Life*			4.12	%			4.13	%			5.42	%			48.77	%			48.89	%			68.04	%

 

*

Commencement of Fund: 1/2/08; First Day of Secondary Market Trading: 1/7/08.

1

Bloomberg Barclays AMT-Free Long Continuous Municipal Index (LMT3TR). The Long Index is a market size weighted index comprised of publicly traded municipal bonds that cover the U.S. dollar denominated long-term tax-exempt bond market and must be rated Baa3/BBB- or higher by at least two of the following ratings agencies if all three agencies rate the security: Moody’s, S&P and Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be at least Baa3/BBB-. Potential Index constituents must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. The bonds must be fixed rate, have a dated date within the last five years and have an effective maturity of 17 or more years. The following types of bonds are excluded from the Index: bonds subject to the alternative minimum tax, taxable municipal bonds, floating rate bonds and derivatives.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 9 for more information.

 

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				LMT1TR1				Share Price				NAV				LMT1TR1
Six Months			0.84	%			0.72	%			0.91	%			0.84	%			0.72	%			0.91	%
One Year			0.71	%			0.94	%			1.32	%			0.71	%			0.94	%			1.32	%
Five Year			0.87	%			0.92	%			1.48	%			4.41	%			4.70	%			7.62	%
Life*			2.33	%			2.33	%			2.89	%			24.96	%			25.04	%			31.84	%

*

Commencement of Fund: 2/22/08; First Day of Secondary Market Trading: 2/26/08.

1

Bloomberg Barclays AMT-Free Short Continuous Municipal Index (LMT1TR). The Short Index is a market size weighted index comprised of publicly traded municipal bonds that cover the U.S. dollar denominated short-term tax-exempt bond market and must be rated Baa3/BBB- or higher by at least two of the following ratings agencies if all three agencies rate the security: Moody’s, S&P and Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be at least Baa3/BBB-. Potential Index constituents must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. The bonds must be fixed rate, have a dated date within the last five years and have an effective maturity of 1 to 6 years. The following types of bonds are excluded from the Index: bonds subject to the alternative minimum tax, taxable municipal bonds, floating rate bonds and derivatives.

 

VANECK VECTORS CEF MUNICIPAL INCOME ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				CEFMXTR1				Share Price				NAV				CEFMXTR1
Six Months			2.47	%			2.51	%			2.61	%			2.47	%			2.51	%			2.61	%
One Year			4.08	%			3.57	%			3.65	%			4.08	%			3.57	%			3.65	%
Five Year			3.36	%			3.38	%			3.74	%			17.98	%			18.11	%			20.14	%
Life*			6.53	%			6.52	%			6.89	%			49.04	%			48.92	%			52.21	%

*

Commencement of Fund: 7/12/11; First Day of Secondary Market Trading: 7/13/11

1

S-Network Municipal Bond Closed-End Fund IndexSM (CEFMXTR). The CEFMX Index is a rules-based index intended to serve as a benchmark for closed-end funds listed in the U.S. that are principally engaged in asset management processes designed to produce federally tax-exempt annual yield. CEFMXTR employs a modified total net assets weighting methodology designed to provide investment exposure across the various business segments that together comprise the federally tax-exempt annual yield sector of the closed-end fund market. The Index is divided into four main closed-end fund segments including: leveraged municipal fixed income closed-end funds; unleveraged municipal fixed income closed-end funds; leveraged high yield municipal fixed income closed-end funds; and unleveraged high yield municipal fixed income closed-end funds.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 9 for more information.

 

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				LMEHTR1				Share Price				NAV				LMEHTR1
Six Months			3.96	%			3.62	%			4.06	%			3.96	%			3.62	%			4.06	%
One Year			3.09	%			3.12	%			4.47	%			3.09	%			3.12	%			4.47	%
Five Year			3.81	%			3.86	%			5.39	%			20.58	%			20.84	%			29.99	%
Life*			8.03	%			8.03	%			9.27	%			96.37	%			96.44	%			117.01	%

*	Commencement of Fund: 2/4/09; First Day of Secondary Market Trading: 2/5/09.
1	Barclays Municipal Custom High Yield Composite Index (LMEHTR). The High Yield Index is a market size weighted index composed of publicly traded municipal bonds that cover the U.S. dollar denominated high yield long-term tax-exempt bond market. The majority of the High Yield Index’s constituents are from the revenue sector, with some constituents being from the general obligation sector. The revenue sector is divided into industry sectors that consist of but may not be limited to electric, health care, transportation, education, water & sewer, resource recovery, leasing and special tax. The High Yield Index tracks the high yield municipal bond market with a 75% weight in non-investment grade municipal bonds and a targeted 25% weight in Baa/BBB rated investment grade municipal bonds.
	To be included in the index, 50% weighting of bonds must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $100 million; 25% weighting of bonds must have an outstanding par value of at least $3 million and be issued as part of a transaction of under $100 million but over $20 million; 25% weighting of bonds must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $100 million. Remarketed issues are not allowed in the index.

 

VANECK VECTORS PRE-REFUNDED MUNICIPAL INDEX ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				LMPETR1				Share Price				NAV				LMPETR1
Six Months			0.63	%			0.54	%			0.62	%			0.63	%			0.54	%			0.62	%
One Year			0.89	%			0.88	%			1.01	%			0.89	%			0.88	%			1.01	%
Five Year			0.23	%			0.31	%			0.88	%			1.16	%			1.55	%			4.47	%
Life*			1.07	%			1.10	%			1.50	%			9.75	%			10.08	%			13.92	%

*

Commencement of Fund: 2/2/09; First Day of Secondary Market Trading: 2/3/09.

1

Bloomberg Barclays Municipal Pre-Refunded-Treasury-Escrowed Index (LMPETR). The Pre-Refunded Index is a market size weighted index comprised of publicly traded municipal bonds that cover the U.S. dollar denominated tax-exempt bond market and is comprised of pre-refunded and/or escrowed-to-maturity municipal bonds. Potential Pre-Refunded Index constituents must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million in market value. Each potential Pre-Refunded Index component must be pre-refunded or escrowed-to-maturity, provided that the underlying collateral in the escrow account is comprised of marketable U.S. Treasury securities, U.S. Treasury-issued State and Local Government Series (SLGS) securities and/or U.S. government agency-issued securities. In addition, each potential Pre-Refunded Index component must have a fixed rated coupon and be denominated in U.S. dollars. The following types of bonds are excluded from the Pre-Refunded Index: taxable municipal bonds, floating rate bonds and derivatives.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 9 for more information.

 

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				BMHYTR1				Share Price				NAV				BMHYTR1
Six Months			2.72	%			2.46	%			3.10	%			2.72	%			2.46	%			3.10	%
One Year			0.53	%			0.97	%			1.37	%			0.53	%			0.97	%			1.37	%
Life*			2.46	%			2.50	%			4.32	%			9.66	%			9.83	%			17.44	%

*	Commencement of Fund: 1/13/14; First Day of Secondary Market Trading: 1/14/14.
1	Bloomberg Barclays Municipal High Yield Short Duration Index (BMHYTR). The Short High Yield Index is a market size weighted index composed of publicly traded municipal bonds that cover the U.S. dollar denominated high yield short-term tax-exempt bond market. The majority of the Index’s constituents are from the revenue sector, with some constituents being from the general obligation sector. The revenue sector is divided into industry sectors that consist of but may not be limited to electric, health care, transportation, education, water & sewer, resource recovery, leasing and special tax. The Short High-Yield Index tracks the high yield municipal bond market with a targeted 65% weight in noninvestment grade municipal bonds, a targeted 25% weight in Baa/BBB rated investment grade municipal bonds and a targeted 10% weight in A1/A rated investment grade municipal bonds.
	To be included in the index, 40% weighting of bonds must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $100 million; 25% weighting of bonds must have an outstanding par value of at least $3 million and be issued as part of a transaction of under $100 million but over $20 million; 25% weighting of bonds must have must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $100 million; 10% weighting of bonds must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 9 for more information.

 

ABOUT FUND PERFORMANCE

(unaudited)

 

The price used to calculate market return (Share Price) is determined by using the closing price listed on its primary listing exchange. Since the shares of each Fund did not trade in the secondary market until after each Fund’s commencement, for the period from commencement to the first day of secondary market trading in shares of each Fund, the NAV of each Fund is used as a proxy for the secondary market trading price to calculate market returns.

 

The performance data quoted represents past performance. Past performance is not a guarantee of future results. Performance information for each Fund, except for a Fund with unitary fees, reflects temporary waivers of expenses and/or fees. Had each Fund incurred all expenses, investment returns would have been reduced. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the sale of Fund shares.

 

Investment return and value of the shares of each Fund will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund returns reflect reinvestment of dividends and capital gains distributions. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com.

 

Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Shares may trade at a premium or discount to their NAV in the secondary market.

 

The net asset value (NAV) of each VanEck Vectors exchange-traded fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of each fund; it is calculated by taking the total assets of each fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAVs are not necessarily the same as each ETF’s intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell fund shares at NAV.

 

Index returns assume the reinvestment of all income and do not reflect any management fees or brokerage expenses associated with Fund returns. Certain indices may take into account withholding taxes. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses. Past performance is no guarantee of future results.

 

The Intermediate Index, Long Index, Short Index, High Yield Index, Pre-Refunded index, and Short High Yield Index are published by Bloomberg Finance L.P. and its affiliates (Bloomberg). CEFMX Index is published by S-Network Global Indexes, LLC (S-Network).

 

Bloomberg and S-Network are referred to herein as the “Index Providers.” The Index Providers do not sponsor, endorse, or promote the Funds and bear no liability with respect to the Funds or any security.

 

Premium/discount information regarding how often the closing trading price of the Shares of each Fund were above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund for each of the four previous calendar quarters and the immediately preceding five years (if applicable) can be found at www.vaneck.com.

VANECK VECTORS ETF TRUST

EXPLANATION OF EXPENSES

(unaudited)

 

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 period, May 1, 2017 to October 31, 2017.

 

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 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 the 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, 2017				Ending Account Value October 31, 2017				Annualized Expense Ratio During Period				Expenses Paid During the Period* May 1, 2017- October 31, 2017
AMT-Free Intermediate Municipal Index ETF
Actual		$	1,000.00			$	1,029.80				0.24	%		$	1.23
Hypothetical**		$	1,000.00			$	1,024.00				0.24	%		$	1.22
AMT-Free Long Municipal Index ETF
Actual		$	1,000.00			$	1,040.80				0.24	%		$	1.23
Hypothetical**		$	1,000.00			$	1,024.00				0.24	%		$	1.22
AMT-Free Short Municipal Index ETF
Actual		$	1,000.00			$	1,007.20				0.20	%		$	1.01
Hypothetical**		$	1,000.00			$	1,024.20				0.20	%		$	1.02
CEF Municipal Income ETF
Actual		$	1,000.00			$	1,025.10				0.40	%		$	2.04
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%		$	2.04
High-Yield Municipal Index ETF
Actual		$	1,000.00			$	1,036.20				0.35	%		$	1.80
Hypothetical**		$	1,000.00			$	1,023.44				0.35	%		$	1.79
Pre-Refunded Municipal Index ETF
Actual		$	1,000.00			$	1,005.40				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			$	1,024.60				0.35	%		$	1.79
Hypothetical**		$	1,000.00			$	1,023.44				0.35	%		$	1.79

 

*	Expenses are equal to the Fund’s annualized expense ratio (for the six months ended October 31, 2017) 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, 2017 (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)

 

 

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

 

 

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				7.2	%		$	125,061,580
Health Care				5.1				87,881,813
Housing				0.5				8,644,118
Industrial Revenue				0.3				5,601,769
Leasing				7.7				133,861,456
Local				17.7				306,274,427
Power				5.8				100,770,297
Solid Waste/Resource Recovery				0.1				2,300,373
Special Tax				10.6				182,569,768
State				21.3				368,088,654
Tobacco				0.2				3,792,406
Transportation				13.8				239,147,793
Water & Sewer				9.5				164,210,948
Money Market Fund				0.2				3,295,052
				100.0	%		$	1,731,500,454

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

								Level 2				Level 3
			Level 1					Significant				Significant
			Quoted					Observable				Unobservable
			Prices					Inputs				Inputs						Value
Municipal Bonds*			$	—				$	1,728,205,402				$	—				$	1,728,205,402
Money Market Fund				3,295,052					—					—					3,295,052
Total			$	3,295,052				$	1,728,205,402				$	—				$	1,731,500,454

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE LONG MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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)

 

 

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
Q-SBLF	Qualified School Board Loan Fund
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
^	Zero Coupon Bond

 

Summary of Investments By Sector		% of Investments					Value
Education				10.5	%		$	18,417,351
Health Care				18.1				31,927,897
Housing				3.2				5,543,259
Leasing				3.8				6,664,850
Local				11.9				20,909,835
Power				7.3				12,908,096
Solid Waste/Resource Recovery				0.0				17,620
Special Tax				10.2				17,990,978
State				7.7				13,629,459
Tobacco				0.4				685,477
Transportation				15.5				27,359,180
Water & Sewer				11.2				19,823,308
Money Market Fund				0.2				438,885
				100.0	%		$	176,316,195

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

			Level 1 Quoted Prices					Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs						Value
Municipal Bonds*			$	—				$	175,877,310				$	—				$	175,877,310
Money Market Fund				438,885					—					—					438,885
Total			$	438,885				$	175,877,310				$	—				$	176,316,195

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS AMT-FREE SHORT MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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)

 

 

See Notes to Financial Statements

 

 

 

 

Definitions:
AGM	Assured Guaranty Municipal Corp.
CP	Certificate of Participation
GO	General Obligation
RB	Revenue Bond
SAW	State Aid Withholding
SBG	School Board Guaranteed
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

 

Summary of Investments By Sector		% of Investments					Value
Education				7.5	%		$	18,350,479
Health Care				4.4				10,812,670
Housing				0.1				149,222
Industrial Revenue				0.7				1,752,323
Leasing				7.1				17,497,805
Local				17.3				42,428,847
Power				5.1				12,453,277
Solid Waste/Resource Recovery				0.0				17,283
Special Tax				11.2				27,535,674
State				26.1				64,066,590
Tobacco				0.6				1,594,664
Transportation				11.6				28,571,061
Water & Sewer				6.5				15,932,874
Money Market Fund				1.8				4,375,366
				100.0	%		$	245,538,135

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

			Level 1 Quoted Prices					Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs						Value
Municipal Bonds*			$	—				$	241,162,769				$	—				$	241,162,769
Money Market Fund				4,375,366					—					—					4,375,366
Total			$	4,375,366				$	241,162,769				$	—				$	245,538,135

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS CEF MUNICIPAL INCOME ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

See Notes to Financial Statements

 

 

Summary of Investments by Sector			% of Investments				Value
Financial				99.9	%		$	99,622,484
Money Market Fund				0.1				109,074
				100.0	%		$	99,731,558

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

			Level 1 Quoted Prices				Level 2 Significant Observable Inputs					Level 3 Significant Unobservable Inputs						Value
Closed-End Funds			$	99,622,484				$	—				$	—				$	99,622,484
Money Market Fund				109,074					—					—					109,074
Total			$	99,731,558				$	—				$	—				$	99,731,558

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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

 

 

Definitions:
ACA	Credit Agricole SA
AMBAC	American Municipal Bond Assurance Corp.
CP	Certificate of Participation
FGIC	Financial Guaranty Insurance Co.
GO	General Obligation
RB	Revenue Bond
SA	Special Assessment
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
(e)	Convertible Capital Appreciation Bond
(f)	On the last coupon date only partial interest was paid
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
^	Zero Coupon Bond
*	Non-income producing
#	Indicates a fair valued security which has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $1,104,271 which represents 0.1% of net assets.
§	Illiquid Security — the aggregate value of illiquid securities is $3,217,957 which represents 0.1% of net assets.

 

Summary of Investments By Sector		% of Investments				Value
Education			8.3	%		$	178,023,819
Health Care			22.8				487,401,603
Housing			1.3				26,735,978
Industrial Revenue			15.8				338,931,198
Leasing			2.3				48,249,612
Local			6.1				130,649,443
Power			1.3				27,639,713
Solid Waste/Resource Recovery			0.0				693,038
Special Tax			8.2				174,390,487
State			3.2				68,730,549
Tobacco			21.3				455,097,798
Transportation			7.0				150,631,651
Water & Sewer			1.9				41,044,756
Money Market Fund			0.5				11,507,933
			100.0	%		$	2,139,727,578

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

			Level 1 Quoted Prices					Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs						Value
Municipal Bonds*			$	—				$	2,128,219,645				$	—				$	2,128,219,645
Money Market Fund				11,507,933					—					—					11,507,933
Total			$	11,507,933				$	2,128,219,645				$	—				$	2,139,727,578

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS PRE-REFUNDED MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

See Notes to Financial Statements

VANECK VECTORS PRE-REFUNDED MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

 

 

Definitions:

AGO	Assured Guaranty Ltd.
CP	Certificate of Participation
GO	General Obligation
NATL	National Public Finance Guarantee Corp.
RB	Revenue Bond

 

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				10.4	%		$	1,517,296
Health Care				11.3				1,646,263
Leasing				8.0				1,170,674
Local				9.4				1,362,006
Power				10.5				1,530,121
Special Tax				4.6				676,293
State				11.5				1,676,180
Transportation				16.8				2,448,195
Water & Sewer				14.2				2,064,907
Money Market Fund				3.3				474,267
				100.0	%		$	14,566,202

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

			Level 1 Quoted Prices					Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs						Value
Municipal Bonds*			$	—				$	14,091,935				$	—				$	14,091,935
Money Market Fund				474,267					—					—					474,267
Total			$	474,267				$	14,091,935				$	—				$	14,566,202

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS SHORT HIGH-YIELD MUNICIPAL INDEX ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

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.
AGO	Assured Guaranty Ltd.
AMBAC	American Municipal Bond Assurance Corp.
CP	Certificate of Participation
FHA	Federal Housing Association
GO	General Obligation
NATL	National Public Finance Guarantee Corp.
RB	Revenue Bond
SA	Special Assessment
ST	Special Tax
TA	Tax Allocation

 

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 $8,510 which represents 0.0% of net assets.

 

Summary of Investments By Sector		% of Investments					Value
Education				9.0	%		$	10,569,547
Health Care				17.5				20,547,714
Housing				0.9				1,055,257
Industrial Revenue				22.8				26,747,112
Leasing				4.7				5,569,722
Local				6.2				7,306,770
Power				2.3				2,726,142
Solid Waste/Resource Recovery				0.6				697,828
Special Tax				10.9				12,857,017
State				7.7				8,983,811
Tobacco				9.1				10,675,637
Transportation				5.5				6,513,094
Water & Sewer				2.1				2,443,367
Money Market Fund				0.7				780,096
				100.0	%		$	117,473,114

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Municipal Bonds*		$	—			$	116,693,018				$	—			$	116,693,018
Money Market Fund			780,096				—					—				780,096
Total		$	780,096			$	116,693,018				$	—			$	117,473,114

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF ASSETS AND LIABILITIES

October 31, 2017 (unaudited)

 

		AMT-Free Intermediate Municipal Index ETF					AMT-Free Long Municipal Index ETF					AMT-Free Short Municipal Index ETF
Assets:
Investments, at value (1)			$	1,731,500,454				$	176,316,195				$	245,538,135
Cash				—					—					—
Receivables:
Investment securities sold				—					424,220					15,828
Shares sold				2,414,106					—					—
Interest				20,484,070					2,225,066					2,954,904
Prepaid expenses				—					—					—
Total assets				1,754,398,630					178,965,481					248,508,867
Liabilities:
Payables:
Investment securities purchased				1,398,496					798,625					2,024,381
Due to Adviser				356,153					35,562					41,912
Due to custodian				—					—					—
Deferred Trustee fees				3,000					1,517					1,600
Accrued expenses				—					—					—
Total liabilities				1,757,649					835,704					2,067,893
NET ASSETS			$	1,752,640,981				$	178,129,777				$	246,440,974
Shares outstanding				72,600,000					8,850,000					14,050,000
Net asset value, redemption and offering price per share			$	24.14				$	20.13				$	17.54
Net assets consist of:
Aggregate paid in capital			$	1,721,572,646				$	176,840,214				$	246,893,578
Net unrealized appreciation (depreciation)				23,010,304					2,014,805					(174,736	)
Undistributed net investment income				3,442,342					473,844					267,549
Accumulated net realized gain (loss)				4,615,689					(1,199,086	)				(545,417	)
			$	1,752,640,981				$	178,129,777				$	246,440,974
(1) Cost of investments			$	1,708,490,150				$	174,301,390				$	245,712,871

 

See Notes to Financial Statements

 

 

CEF Municipal Income ETF					High-Yield Municipal Index ETF					Pre-Refunded Municipal Index ETF					Short High-Yield Municipal Index ETF
	$	99,731,558				$	2,139,727,578				$	14,566,202				$	117,473,114
		—					1,482,384					—					—
		—					3,251					—					—
		—					—					—					—
		303,537					36,248,359					203,046					1,783,621
		718					—					—					—
		100,035,813					2,177,461,572					14,769,248					119,256,735
		—					5,551,783					—					500,000
		25,787					635,214					3,013					35,307
		151,596					—					—					—
		2,428					3,184					865					—
		61,747					—					—					—
		241,558					6,190,181					3,878					535,307
	$	99,794,255				$	2,171,271,391				$	14,765,370				$	118,721,428
		3,750,000					69,600,000					600,000					4,850,000
	$	26.61				$	31.20				$	24.61				$	24.48
	$	105,689,084				$	2,173,913,904				$	15,178,026				$	123,522,509
		(3,574,437	)				26,969,127					115,006					(2,053,779	)
		368,201					14,523,847					11,376					650,491
		(2,688,593	)				(44,135,487	)				(539,038	)				(3,397,793	)
	$	99,794,255				$	2,171,271,391				$	14,765,370				$	118,721,428
	$	103,305,995				$	2,112,758,451				$	14,451,196				$	119,526,893

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF OPERATIONS

For the Six Months Ended October 31, 2017 (unaudited)

 

		AMT-Free Intermediate Municipal Index ETF					AMT-Free Long Municipal Index ETF					AMT-Free Short Municipal Index ETF
Income:
Dividends			$	—				$	4,774				$	—
Interest				20,617,585					2,757,208					1,782,696
Total income				20,617,585					2,761,982					1,782,696
Expenses:
Management fees				2,027,203					207,879					253,251
Professional fees				—					—					—
Insurance				—					—					—
Trustees’ fees and expenses				—					—					—
Reports to shareholders				—					—					—
Indicative optimized portfolio value fee				—					—					—
Custodian fees				—					—					—
Registration fees				—					—					—
Transfer agent fees				—					—					—
Fund accounting fees				—					—					—
Interest				181					12					—
Other				—					—					—
Total expenses				2,027,384					207,891					253,251
Waiver of management fees				—					—					—
Net expenses				2,027,384					207,891					253,251
Net investment income				18,590,201					2,554,091					1,529,445
Net realized gain (loss) on:
Investments				51,413					650,814					35,485
In-kind redemptions				4,660,919					324,383					101,704
Net realized gain (loss)				4,712,332					975,197					137,189
Net change in unrealized appreciation (depreciation) on:
Investments				25,129,938					3,139,434					269,802
Net change in unrealized appreciation (depreciation)				25,129,938					3,139,434					269,802
Net Increase in Net Assets Resulting from Operations			$	48,432,471				$	6,668,722				$	1,936,436

 

See Notes to Financial Statements

 

 

CEF Municipal Income ETF					High-Yield Municipal Index ETF					Pre-Refunded Municipal Index ETF					Short High-Yield Municipal Index ETF
	$	2,408,491				$	68,215				$	1,539				$	6,056
		—					49,261,844					104,079					1,955,984
		2,408,491					49,330,059					105,618					1,962,040
		188,626					3,726,070					17,907					207,773
		20,036					—					—					—
		556					—					—					—
		792					—					—					—
		12,623					—					—					—
		2,461					—					—					—
		2,361					—					—					—
		2,547					—					—					—
		1,210					—					—					—
		2,281					—					—					—
		1,437					285					—					151
		3,748					—					—					—
		238,678					3,726,355					17,907					207,924
		(48,615	)				—					—					—
		190,063					3,726,355					17,907					207,924
		2,218,428					45,603,704					87,711					1,754,116
		(331,608	)				(7,754,277	)				(8,232	)				(808,567	)
		—					6,678,482					—					—
		(331,608	)				(1,075,795	)				(8,232	)				(808,567	)
		176,325					29,971,436					(1,885	)				1,883,595
		176,325					29,971,436					(1,885	)				1,883,595
	$	2,063,145				$	74,499,345				$	77,594				$	2,829,144

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

 

		AMT-Free Intermediate Municipal Index ETF										AMT-Free Long Municipal Index ETF
		For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017
		(unaudited)										(unaudited)
Operations:
Net investment income			$	18,590,201				$	34,041,623				$	2,554,091				$	4,945,962
Net realized gain (loss)				4,712,332					6,453,189					975,197					188,901
Net change in unrealized appreciation (depreciation)				25,129,938					(58,493,964	)				3,139,434					(7,882,824	)
Net increase (decrease) in net assets resulting from operations				48,432,471					(17,999,152	)				6,668,722					(2,747,961	)
Dividends to shareholders:
Dividends from net investment income				(18,276,850	)				(33,484,380	)				(2,520,560	)				(4,932,080	)
Share transactions:**
Proceeds from sale of shares				346,658,225					599,111,932					46,045,121					58,358,486
Cost of shares redeemed				(216,684,702	)				(373,915,530	)				(34,028,810	)				(45,004,975	)
Increase (Decrease) in net assets resulting from share transactions				129,973,523					225,196,402					12,016,311					13,353,511
Total increase (decrease) in net assets				160,129,144					173,712,870					16,164,473					5,673,470
Net Assets, beginning of period				1,592,511,837					1,418,798,967					161,965,304					156,291,834
Net Assets, end of period†			$	1,752,640,981				$	1,592,511,837				$	178,129,777				$	161,965,304
† Including undistributed net investment income			$	3,442,342				$	3,128,991				$	473,844				$	440,313
** Shares of Common Stock Issued (no par value)
Shares sold				14,400,000					24,900,000					2,300,000					2,900,000
Shares redeemed				(9,000,000	)				(15,800,000	)				(1,700,000	)				(2,300,000	)
Net increase (decrease)				5,400,000					9,100,000					600,000					600,000

 

See Notes to Financial Statements

 

 

AMT-Free Short Municipal Index ETF										CEF Municipal Income ETF										High-Yield Municipal Index ETF
For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017
(unaudited)										(unaudited)										(unaudited)
	$	1,529,445				$	3,012,078				$	2,218,428				$	4,731,882				$	45,603,704				$	88,394,851
		137,189					(383,418	)				(331,608	)				(169,552	)				(1,075,795	)				(15,164,328	)
		269,802					(2,330,487	)				176,325					(8,528,807	)				29,971,436					(64,233,656	)
		1,936,436					298,173					2,063,145					(3,966,477	)				74,499,345					8,996,867
		(1,532,070	)				(2,990,775	)				(2,185,365	)				(4,809,840	)				(45,136,060	)				(87,268,300	)
		19,322,128					91,459,930					16,197,112					33,633,659					190,398,280					953,619,053
		(40,423,100	)				(85,921,138	)				—					(36,612,666	)				(155,231,239	)				(651,162,054	)
		(21,100,972	)				5,538,792					16,197,112					(2,979,007	)				35,167,041					302,456,999
		(20,696,606	)				2,846,190					16,074,892					(11,755,324	)				64,530,326					224,185,566
		267,137,580					264,291,390					83,719,363					95,474,687					2,106,741,065					1,882,555,499
	$	246,440,974				$	267,137,580				$	99,794,255				$	83,719,363				$	2,171,271,391				$	2,106,741,065
	$	267,549				$	270,174				$	368,201				$	335,138				$	14,523,847				$	14,056,203
		1,100,000					5,200,000					600,000					1,200,000					6,100,000					30,400,000
		(2,300,000	)				(4,900,000	)				—					(1,400,000	)				(5,000,000	)				(21,500,000	)
		(1,200,000	)				300,000					600,000					(200,000	)				1,100,000					8,900,000

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

(continued)

 

		Pre-Refunded Municipal Index ETF										Short High-Yield Municipal Index ETF
		For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017
		(unaudited)										(unaudited)
Operations:
Net investment income			$	87,711				$	174,172				$	1,754,116				$	3,754,971
Net realized loss				(8,232	)				(26,871	)				(808,567	)				(1,895,139	)
Net change in unrealized appreciation (depreciation)				(1,885	)				(69,335	)				1,883,595					(3,553,125	)
Net increase (decrease) in net assets resulting from operations				77,594					77,966					2,829,144					(1,693,293	)
Dividends to shareholders:
Dividends from net investment income				(86,340	)				(173,770	)				(1,790,985	)				(3,543,280	)
Share transactions:**
Proceeds from sale of shares				—					—					3,650,107					37,545,452
Cost of shares redeemed				—					(4,915,232	)				—					(28,947,558	)
Increase (Decrease) in net assets resulting from share transactions				—					(4,915,232	)				3,650,107					8,597,894
Total increase (decrease) in net assets				(8,746	)				(5,011,036	)				4,688,266					3,361,321
Net Assets, beginning of period				14,774,116					19,785,152					114,033,162					110,671,841
Net Assets, end of period†			$	14,765,370				$	14,774,116				$	118,721,428				$	114,033,162
† Including undistributed net investment income			$	11,376				$	10,005				$	650,491				$	687,360
** Shares of Common Stock Issued (no par value)
Shares sold				—					—					150,000					1,500,000
Shares redeemed				—					(200,000	)				—					(1,200,000	)
Net increase (decrease)				—					(200,000	)				150,000					300,000

 

See Notes to Financial Statements

 

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,
		2017					2017					2016					2015					2014					2013
		(unaudited)
Net asset value, beginning of period			$	23.70				$	24.42				$	23.49				$	23.07				$	23.78				$	23.22
Income from investment operations:
Net investment income				0.27	(a)				0.53					0.55					0.56					0.58					0.59
Net realized and unrealized gain (loss) on investments				0.43					(0.72	)				0.93					0.43					(0.71	)				0.57
Total from investment operations				0.70					(0.19	)				1.48					0.99					(0.13	)				1.16
Less:
Dividends from net investment income				(0.26	)				(0.53	)				(0.55	)				(0.57	)				(0.58	)				(0.60	)
Distributions from net realized capital gains				—					—					—					—					—					—	(f)
Net asset value, end of period			$	24.14				$	23.70				$	24.42				$	23.49				$	23.07				$	23.78
Total return (b)				2.98	%(c)				(0.80	)%				6.38	%				4.32	%				(0.45	)%				5.05	%
Ratios/Supplemental Data
Net assets, end of period (000’s)			$1,752,641					$1,592,512					$1,418,799					$1,042,806					$625,118					$746,575
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				2.20	%(d)				2.22	%				2.32	%				2.45	%				2.55	%				2.54	%
Portfolio turnover rate (e)				2	%(c)				7	%				2	%				3	%				1	%				1	%
		AMT-Free Long Municipal Index ETF
		For the Six Months Ended October 31,					For the Year Ended April 30,
		2017					2017					2016					2015					2014					2013
		(unaudited)
Net asset value, beginning of period			$	19.63				$	20.43				$	19.60				$	18.96				$	20.32				$	19.65
Income from investment operations:
Net investment income				0.30	(a)				0.60					0.66					0.71					0.79					0.77
Net realized and unrealized gain (loss) on investments				0.50					(0.79	)				0.83					0.65					(1.36	)				0.67
Total from investment operations				0.80					(0.19	)				1.49					1.36					(0.57	)				1.44
Less:
Dividends from net investment income				(0.30	)				(0.61	)				(0.66	)				(0.72	)				(0.79	)				(0.77	)
Net asset value, end of period			$	20.13				$	19.63				$	20.43				$	19.60				$	18.96				$	20.32
Total return (b)				4.08	%(c)				(0.99	)%				7.80	%				7.25	%				(2.62	)%				7.44	%
Ratios/Supplemental Data
Net assets, end of period (000’s)			$178,130					$161,965					$156,292					$108,772					$76,797					$120,905
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				2.95	%(d)				2.99	%				3.36	%				3.68	%				4.17	%				3.86	%
Portfolio turnover rate (e)				17	%(c)				17	%				3	%				4	%				5	%				3	%

 

(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

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,
		2017					2017					2016					2015					2014					2013
		(unaudited)
Net asset value, beginning of period			$	17.52				$	17.68				$	17.54				$	17.61				$	17.79				$	17.74
Income from investment operations:
Net investment income				0.11	(a)				0.20					0.20					0.20					0.24					0.26
Net realized and unrealized gain (loss) on investments				0.02					(0.17	)				0.14					(0.07	)				(0.18	)				0.06
Total from investment operations				0.13					0.03					0.34					0.13					0.06					0.32
Less:
Dividends from net investment income				(0.11	)				(0.19	)				(0.20	)				(0.20	)				(0.24	)				(0.26	)
Distributions from net realized capital gains				—					—					—					—					—					(0.01	)
Total dividends and distributions				(0.11	)				(0.19	)				(0.20	)				(0.20	)				(0.24	)				(0.27	)
Net asset value, end of period			$	17.54				$	17.52				$	17.68				$	17.54				$	17.61				$	17.79
Total return (b)				0.72	%(c)				0.20	%				1.95	%				0.75	%				0.36	%				1.83	%
Ratios/Supplemental Data
Net assets, end of period (000’s)			$246,441					$267,138					$264,291					$274,541					$242,131					$205,506
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				1.21	%(d)				1.11	%				1.13	%				1.14	%				1.37	%				1.46	%
Portfolio turnover rate (e)				23	%(c)				12	%				3	%				2	%				3	%				10	%
		CEF Municipal Income ETF
		For the Six Months Ended October 31,					For the Year Ended April 30,
		2017					2017					2016					2015					2014					2013
		(unaudited)
Net asset value, beginning of period			$	26.58				$	28.50				$	26.62				$	25.55				$	28.29				$	27.76
Income from investment operations:
Net investment income				0.64	(a)				1.37					1.39					1.41					1.46					1.49
Net realized and unrealized gain (loss) on investments				0.03					(1.90	)				1.88					1.08					(2.73	)				0.53
Total from investment operations				0.67					(0.53	)				3.27					2.49					(1.27	)				2.02
Less:
Dividends from net investment income				(0.64	)				(1.39	)				(1.39	)				(1.42	)				(1.47	)				(1.48	)
Distributions from net realized capital gains				—					—					—					—					—					(0.01	)
Total dividends and distributions				(0.64	)				(1.39	)				(1.39	)				(1.42	)				(1.47	)				(1.49	)
Net asset value, end of period			$	26.61				$	26.58				$	28.50				$	26.62				$	25.55				$	28.29
Total return (b)				2.51	%(c)				(1.93	)%				12.87	%				10.02	%				(4.08	)%				7.28	%
Ratios/Supplemental Data
Net assets, end of period (000’s)			$99,794					$83,719					$95,475					$47,921					$31,942					$25,463
Ratio of gross expenses to average net assets (f)				0.51	%(d)				0.51	%				0.54	%				0.57	%				0.79	%				1.03	%
Ratio of net expenses to average net assets (f)				0.40	%(d)				0.40	%				0.40	%				0.40	%				0.40	%				0.40	%
Ratio of net expenses to average net assets excluding interest expense (f)				0.40	%(d)				0.40	%				0.40	%				0.40	%				0.40	%				0.40	%
Ratio of net investment income to average net assets				4.70	%(d)				4.98	%				5.38	%				5.52	%				6.07	%				5.33	%
Portfolio turnover rate (e)				5	%(c)				12	%				10	%				6	%				9	%				3	%

 

(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)	The ratios presented do not reflect the Fund’s proportionate share of income and expenses from the Fund’s investment in underlying funds.

 

See Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		High-Yield Municipal Index ETF
		For the Six Months Ended October 31,					For the Year Ended April 30,
		2017					2017					2016					2015					2014					2013
		(unaudited)
Net asset value, beginning of period			$	30.76				$	31.59				$	31.06				$	29.90				$	33.25				$	31.62
Income from investment operations:
Net investment income				0.67	(a)				1.34					1.48					1.54					1.68					1.61
Net realized and unrealized gain (loss) on investments				0.44					(0.82	)				0.49					1.12					(3.23	)				1.66
Total from investment operations				1.11					0.52					1.97					2.66					(1.55	)				3.27
Less:
Dividends from net investment income				(0.67	)				(1.35	)				(1.44	)				(1.50	)				(1.70	)				(1.64	)
Distributions from net realized capital gains				—					—					—					—					(0.10	)				—
Total dividends and distributions				(0.67	)				(1.35	)				(1.44	)				(1.50	)				(1.80	)				(1.64	)
Net asset value, end of period			$	31.20				$	30.76				$	31.59				$	31.06				$	29.90				$	33.25
Total return (b)				3.62	%(c)				1.69	%				6.59	%				9.08	%				(4.48	)%				10.55	%
Ratios/Supplemental Data
Net assets, end of period (000’s)			$2,171,271					$2,106,741					$1,882,555					$1,605,601					$977,813					$1,130,541
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				4.28	%(d)				4.36	%				4.86	%				5.19	%				5.57	%				5.22	%
Portfolio turnover rate (e)				6	%(c)				10	%				8	%				9	%				21	%				12	%
		Pre-Refunded Municipal Index ETF
		For the Six Months Ended October 31,					For the Year Ended April 30,
		2017					2017					2016					2015					2014					2013
		(unaudited)
Net asset value, beginning of period			$	24.62				$	24.73				$	24.62				$	24.70				$	25.40				$	25.35
Income from investment operations:
Net investment income				0.15	(a)				0.23					0.21					0.19					0.25					0.38
Net realized and unrealized gain (loss) on investments				(0.02	)				(0.11	)				0.10					(0.08	)				(0.67	)				0.05
Total from investment operations				0.13					0.12					0.31					0.11					(0.42	)				0.43
Less:
Dividends from net investment income				(0.14	)				(0.23	)				(0.20	)				(0.19	)				(0.28	)				(0.38	)
Net asset value, end of period			$	24.61				$	24.62				$	24.73				$	24.62				$	24.70				$	25.40
Total return (b)				0.54	%(c)				0.47	%				1.28	%				0.43	%				(1.64	)%				1.71	%
Ratios/Supplemental Data
Net assets, end of period (000’s)			$14,765					$14,774					$19,785					$22,160					$34,579					$33,020
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				1.18	%(d)				0.92	%				0.85	%				0.82	%				1.02	%				1.50	%
Portfolio turnover rate (e)				26	%(c)				36	%				41	%				51	%				61	%				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.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Short High-Yield Municipal Index ETF
		For the Six Months Ended October 31,					For the Year Ended April 30,															For the Period January 13, 2014 (a) through April 30,
		2017					2017					2016					2015					2014
		(unaudited)
Net asset value, beginning of period			$	24.26				$	25.15				$	25.43				$	25.24				$	24.94
Income from investment operations:
Net investment income				0.36	(b)				0.72					0.87					0.82					0.24
Net realized and unrealized gain (loss) on investments				0.23					(0.92	)				(0.34	)				0.15					0.22
Total from investment operations				0.59					(0.20	)				0.53					0.97					0.46
Less:
Dividends from net investment income				(0.37	)				(0.69	)				(0.81	)				(0.78	)				(0.16	)
Net asset value, end of period			$	24.48				$	24.26				$	25.15				$	25.43				$	25.24
Total return (c)				2.46	%(d)				(0.81	)%				2.14	%				3.91	%				1.82	%(d)
Ratios/Supplemental Data
Net assets, end of period (000’s)			$118,721					$114,033					$110,672					$99,171					$27,768
Ratio of expenses to average net assets				0.35	%(e)				0.35	%				0.35	%				0.35	%				0.35	%(e)
Ratio of expenses to average net assets excluding interest expense				0.35	%(e)				0.35	%				0.35	%				0.35	%				0.35	%(e)
Ratio of net investment income to average net assets				2.95	%(e)				2.93	%				3.55	%				3.48	%				4.10	%(e)
Portfolio turnover rate (f)				15	%(d)				20	%				16	%				26	%				6	%(d)

 

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

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

October 31, 2017 (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, 2017, offers fifty-six 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”), CEF Municipal Income ETF (“CEF Municipal”), High-Yield Municipal Index ETF (“High-Yield”), Pre-Refunded Municipal Index ETF (“Pre-Refunded”) and Short High-Yield Municipal Index ETF (“Short High-Yield”), 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
CEF Municipal	S-Network Municipal Bond Closed-End Fund IndexSM
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

 

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

(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.
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.	Other—Security transactions are accounted for on trade date. Realized gains and losses are calculated on the identified cost basis. 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, offering costs, trading expenses, taxes and extraordinary expenses.

 

For CEF Municipal, the Adviser has agreed, at least until September 1, 2018, to voluntarily 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 the expense limitation listed in the table below.

 

The current management fee rate and expense limitation for the period ended October 31, 2017, are as follows:

 

		Management		Expense
Fund		Fee Rate		Limitation
CEF Municipal		0.40%		0.40%

 

Refer to Statement of Operations for the amounts waived/assumed by the Adviser.

 

		Unitary Management
Fund		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, 2017, 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		$	259,072,807			$	26,085,459
Long			76,849,058				27,864,878
Short			64,098,503				56,903,665
CEF Municipal			4,282,954				4,281,679
High-Yield			282,449,204				107,012,015
Pre-Refunded			4,182,856				3,643,016
Short High-Yield			22,284,475				16,851,394

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(continued)

 

Note 5—Income Taxes—As of October 31, 2017, 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:

 

		Gross				Gross				Gross				Net Unrealized
		Cost of				Unrealized				Unrealized				Appreciation
Fund		Investments				Appreciation				Depreciation				(Depreciation)
Intermediate		$	1,708,510,348			$	31,889,948			$	(8,899,842	)		$	22,990,106
Long			174,294,727				3,004,603				(983,135	)			2,021,468
Short			245,713,467				858,373				(1,033,705	)			(175,332	)
CEF Municipal			103,303,143				113,067				(3,684,652	)			(3,571,585	)
High-Yield			2,109,280,063				84,554,923				(54,107,408	)			30,447,515
Pre-Refunded			14,451,153				135,288				(20,239	)			115,049
Short High-Yield			119,304,081				2,269,160				(4,100,127	)			(1,830,967	)

 

The tax character of dividends paid to shareholders during the year ended April 30, 2017 were as follows:

 

		Tax-Exempt				Ordinary
		Dividends				Income
Fund		April 30, 2017				April 30, 2017
Intermediate		$	33,471,797			$	12,583
Long			4,923,087				8,993
Short			2,987,470				3,305
CEF Municipal			4,783,569				26,271
High-Yield			85,842,615				1,425,685
Pre-Refunded			172,207				1,563
Short High-Yield			3,515,435				27,845

 

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

 

At April 30, 2017, the Funds had capital loss carryforwards available to offset future capital gains, as follows:

 

		Post-Effective- No Expiration Short-Term				Post-Effective- No Expiration Long-Term				Amount Expiring in the Year Ended April 30,
Fund		Capital Losses				Capital Losses				2019				2018
Intermediate		$	78,734			$	—			$	—			$	—
Long			541,256				—				78,825				1,554,202
Short			143,943				538,664				—				—
CEF Municipal			1,102,321				1,254,514				—				—
High-Yield			9,287,871				33,558,673				—				—
Pre-Refunded			231,072				299,734				—				—
Short High-Yield			829,534				1,759,692				—				—

 

During the year ended April 30, 2017, the following Funds utilized accumulated capital loss carryforwards: Intermediate utilized $1,692,763 and Long utilized $281,863.

 

During the year ended April 30, 2017, $603,978 of capital loss carryforwards expired for Long.

 

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 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, 2017, the Funds did not incur any interest or penalties.

 

Note 6—Capital Share Transactions—As of October 31, 2017, 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, except for Intermediate and High-Yield, which have Creation Units consisting of 100,000 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, 2017, the Funds had in-kind contributions and redemptions as follows:

 

Fund		In-Kind Contributions					In-Kind Redemptions
Intermediate			$	123,932,373				$	214,206,230
Long				1,024,839					33,741,907
Short				10,522,825					36,636,512
CEF Municipal				16,184,532					—
High-Yield				30,647,476					152,179,662
Pre-Refunded				—					—
Short High-Yield				—					—

 

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—Concentration and Other 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 (except Intermediate, Long, Short, CEF Municipal and High-Yield) is classified as 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.

 

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 maintains assets invested in Puerto Rican municipal securities that are currently experiencing significant financial difficulties. Particularly, the Fund 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-

 

159

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(continued)

 

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 the Fund’s portfolio 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 Fund could be adversely affected.

 

The Adviser continues to monitor the events in Puerto Rico surrounding the debt crisis. Over the past two years, Puerto Rico has defaulted on principal and interest payments due to municipal bond holders for a number of municipal issues. In September 2017, two hurricanes caused significant structural damage to Puerto Rico and left millions without power, drinking water or cell phone service. Recovery efforts may span months or years and will put significant stress and additional uncertainty on Puerto Rico’s ability to financially recover. The Fund may continue to be impacted by the overall increase in securities in default of interest and/or principal obligations due to the debt crisis and hurricane impacts.

 

The U.S. Congress passed legislation for Puerto Rico in 2016 enabling the Governor to suspend debt service payments on general obligation bonds and other constitutionally protected debt. The U.S. Congress also passed legislation in 2016 giving Puerto Rico a stay against creditor litigation that could have triggered cuts to public service. The legislation authorized an oversight board to oversee Puerto Rico’s finances and to approve any court-supervised debt restructuring. In May 2017, the oversight board initiated a bankruptcy-like process for the general government, general obligation debt, and a number of public corporations. Over the past two years, the Puerto Rican legislation and Governor have enacted legislation or executive orders to cut costs, raise tax revenue, prioritize payments for essential services, reduce debt and restructure debt payments. Some of these actions have been opposed by bond creditors and have been blocked by the courts.

 

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.

 

Effective September 1, 2010, 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 Statements of Operations. The liability for the Plan is shown as “Deferred Trustee fees” in the Statements 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, 2017, the following Funds borrowed under this facility:

 

160

 

 

Fund		Days Outstanding			Average Daily Loan Balance					Average Interest Rate
Intermediate		8				$	351,816			2.31	%
Long		1					175,066			2.56
CEF Municipal		141					145,818			2.50
High-Yield		5					801,252			2.56
Short High-Yield		7					302,636			2.56

 

As of October 31, 2017, the Funds had no outstanding loan balances.

 

Note 10—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, 2017, there were offsets to custodian fees and these amounts are reflected in custody expense in the Statements of Operations.

 

Note 11—Subsequent Events—The Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

 

161

VANECK VECTORS ETF TRUST

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS

October 31, 2017 (unaudited)

 

At a meeting held on June 9, 2017 (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 6-8 Year Municipal Index ETF, AMT-Free 8-12 Year Municipal Index ETF, AMT-Free 12-17 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 May 8, 2017. 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 (for those Funds which had begun operations) and expenses 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 generally invests in a different group of issuers than the funds in its designated peer group. They also considered the fact that VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF and AMT-Free 12-17 Year Municipal Index ETF had only recently commenced operations and therefore had a limited operational history that could be used for comparative purposes, since the expense information prepared by Broadridge was based on estimated amounts for the Funds. They also considered that the performance comparisons provided by Broadridge for VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF and AMT-Free 12-17 Year Municipal Index ETF covered approximately a five month period (September 19, 2016 (the date operations commenced for each Fund) through February 28, 2017). In addition, as noted below, the Trustees reviewed certain performance information for each Fund that was not provided by Broadridge. For these and other reasons, the Trustees noted that the peer group performance information did not necessarily provide meaningful direct comparisons to the Funds.

 

The Independent Trustees’ consideration of the Investment Management Agreements was based, in part, on their review of information obtained through discussions with the Adviser at the Renewal Meeting and with the Adviser at the May 8, 2017 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 over relevant periods 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

 

162

 

 

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 6-8 Year Municipal Index ETF, AMT-Free 12-17 Year Municipal Index ETF, AMT-Free Intermediate Municipal Index ETF, AMT-Free Long Municipal Index ETF and Pre-Refunded 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, except for each of VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF, AMT-Free 12-17 Year Municipal Index ETF, AMT-Free Intermediate Municipal Index ETF, AMT-Free Long Municipal Index ETF and Pre-Refunded Municipal Index ETF, which had a total expense ratio (after the effect of any applicable expense limitation) greater than the average but equal to or below the 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 of their respective peer groups. 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 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 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 Fund is reasonable and appropriate in relation to the current asset size of each Fund and the other factors discussed above and that the advisory fee rate for each Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist. The Trustees also determined that the profits earned by the Adviser in respect of 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 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.

 

163

VANECK VECTORS ETF TRUST

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS

October 31, 2017 (unaudited)

 

The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 8, 2017 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.

 

164

 

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, 2017 (unaudited)

 

VANECK VECTORS®
BDC Income ETF	BIZD®
ChinaAMC China Bond ETF	CBON®
EM Investment Grade + BB Rated USD Sovereign Bond ETF	IGEM®
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
Management Discussion	3
Performance Comparison
BDC Income ETF	7
ChinaAMC China Bond ETF	7
EM Investment Grade + BB Rated USD Sovereign Bond ETF	7
Emerging Markets Aggregate Bond ETF	8
Emerging Markets High Yield Bond ETF	8
Fallen Angel High Yield Bond ETF	9
Green Bond ETF	9
International High Yield Bond ETF	9
Investment Grade Floating Rate ETF	10
J.P. Morgan EM Local Currency Bond ETF	10
Mortgage REIT Income ETF	10
Preferred Securities ex Financials ETF	11
Explanation of Expenses	13
Schedule of Investments
BDC Income ETF	15
ChinaAMC China Bond ETF	17
EM Investment Grade + BB Rated USD Sovereign Bond ETF	18
Emerging Markets Aggregate Bond ETF	21
Emerging Markets High Yield Bond ETF	26
Fallen Angel High Yield Bond ETF	35
Green Bond ETF	40
International High Yield Bond ETF	43
Investment Grade Floating Rate ETF	54
J.P. Morgan EM Local Currency Bond ETF	61
Mortgage REIT Income ETF	66
Preferred Securities ex Financials ETF	68
Statements of Assets and Liabilities	72
Statements of Operations	76
Statements of Changes in Net Assets	80
Financial Highlights
BDC Income ETF	85
ChinaAMC China Bond ETF	85
EM Investment Grade + BB Rated USD Sovereign Bond ETF	86
Emerging Markets Aggregate Bond ETF	86
Emerging Markets High Yield Bond ETF	87
Fallen Angel High Yield Bond ETF	87
Green Bond ETF	88
International High Yield Bond ETF	88
Investment Grade Floating Rate ETF	89
J.P. Morgan EM Local Currency Bond ETF	89
Mortgage REIT Income ETF	90
Preferred Securities ex Financials ETF	90
Notes to Financial Statements	91
Approval of Investment Management Agreements	102

 

The information contained in the management discussion represents the opinions of VanEck Vectors ETF Trust and may differ from other persons. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. The information contained herein regarding each index has been provided by the relevant index provider. Also, unless otherwise specifically noted, any discussion of the Funds’ holdings and the Funds’ performance, and the views of VanEck Vectors ETF Trust are as of October 31, 2017, and are subject to change.

VANECK VECTORS ETFs

(unaudited)

 

Dear Shareholder:

 

When allocating to emerging markets bonds, we believe that investors should not overlook an allocation to local currency-denominated bonds. In addition to the attractive yields they provide, investors can also benefit from potential currency appreciation. With improving economic fundamentals in many emerging markets economies, controlled inflation, and vigilant central banks, we believe there are many reasons to include local currency exposure within a portfolio.

 

The diversification offered by emerging markets debt may be more important in an environment of rising interest rates. Both the U.S. Federal Reserve (Fed) and European Central Bank have announced plans to scale back their quantitative easing programs and begin reducing their balance sheets, and the Fed has continued to slowly but steadily raise its benchmark rate. In this environment, we believe investors may benefit from diversifying their interest rate exposure outside developed markets. One of the most attractive features of an allocation to local currency emerging markets bonds is the diversification they can provide within a bond portfolio.

 

Index Yields as of 10/31/2017

 

 

Source: J.P. Morgan, ICE, Bloomberg. This chart is for illustrative purposes only. An investor cannot invest directly in an index. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue.

 

EM Local Currency Sovereign Bonds is represented by the J.P. Morgan GBI-EMG Core Index; U.S. HY Corporate Bonds is represented by the ICE BofAML US High Yield Index; EM USD Sovereign Bonds is represented by the J.P. Morgan EMBI Global Diversified Index; U.S. Aggregate is represented by the Bloomberg Barclays U.S. Aggregate Bond Index; U.S. 10-Year Treasury is represented by the ICE BofAML US Treasury Current 10 Year Index; Global Aggregate is represented by the Bloomberg Barclays Global Aggregate Bond Index.

 

There is also tremendous diversity within emerging markets. This year alone, three new countries have been added to the J.P. Morgan GBI-EMG Core Index, which VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (NYSE Arca: EMLC) tracks, providing access to 18 distinct markets. The growth of the Index reflects the broader evolution in the emerging markets local debt market. Over the past several decades, many emerging markets countries have increasingly sought to develop their local currency bond markets. This helps reduce their vulnerability to external shocks which could impact their ability to repay U.S. dollar-denominated debt. As these markets continue to grow, we expect emerging markets local debt to play an increasingly large role within global bond portfolios.

 

Access investment and market insights from VanEck’s investment professionals by subscribing to our blogs. To subscribe to the updates, please contact us at 800.826.2333 or visit vaneck.com/subscription to register.

VANECK VECTORS ETFs

(unaudited) (continued)

 

Thank you for participating in the VanEck Vectors ETF Trust. You will find the performance comparison of each of the funds for the six months ended October 31, 2017 on the following pages. You will also find their respective financial statements. We value your continuing 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 20, 2017

 

Represents the opinions of the investment adviser. Past performance is no guarantee of future results. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue.

 

All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an. investment in the Fund. Certain indices may take into account withholding taxes. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made. Bonds and bond funds will decrease in value as interest rates rise.

 

J.P. Morgan GBI-EMG Core Index tracks bonds issued by emerging markets governments and denominated in the local currency of the issuer. The weighting scheme provides additional diversification by more evenly distributing weights among the countries in the index. Countries are capped at 10% and floored at 3%.

 

ICE BofAML US High Yield Index tracks the performance of U.S. dollar-denominated below investment grade corporate debt publicly issued in the U.S. domestic market. Qualifying securities must have a below investment grade rating. Original issue zero coupon bonds, 144a securities, both with and without registration rights, and pay-in-kind securities, including toggle notes, qualify for inclusion.

 

J.P. Morgan EMBI Global Diversified Index tracks USD-denominated emerging markets sovereign bonds. The weighting scheme provides additional diversification by more evenly distributing weights among the countries in the index.

 

Bloomberg Barclays U.S. Aggregate Index tracks investment-grade debt U.S. dollar denominated fixed-rate taxable bond market. The index includes U.S. Treasuries, government-related and corporate securities, mortgage backed securities (MBS) including agency fixed-rate and hybrid ARM pass-throughs, asset backed securities (ABS) and commercial mortgage backed securities (CMBS) including agency and non-agency.

 

ICE BofAML US Treasury Current 10 Year Index is a one-security index comprised of the most recently issued 10-year U.S. Treasury bond. To qualify for inclusion, the 10-year bond must be auctioned on or before the third business day before the last business day of the month.

 

Bloomberg Barclays Global Aggregate Index tracks investment-grade debt from twenty-four local currency markets, and is comprised of treasury, government-related, corporate, and securitized fixed-rate bonds from developed and emerging markets issuers.

 

 

Management Discussion (unaudited)

 

The suite of VanEck Vectors Income ETFs can most accurately be divided into three groups: equity income, international bonds, and corporate bonds. Over the six months ended October 31, 2017, 11 out of the suite of 12 funds posted positive returns.

 

 

Source: VanEck. Returns based on each Fund’s net asset value (NAV). The performance data quoted represent past performance. Past performance is not a guarantee of future results. Performance information for the Funds reflects temporary waivers of expenses and/or fees. Had the Funds incurred all expenses, investment returns would have been reduced. Investment return and value of the shares of the Funds will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted.

 

EQUITY INCOME

 

Business Development Companies (BDCs)

 

BDCs typically lend to, and invest in, small privately held companies. An improving economy and increased lending benefit the industry, as do active buy-out and IPO markets.¹ BDCs had a disappointing six months, posting a loss of 7.72%. The sector endured BDC selloffs over this period triggered by some earnings misses and dividend cut announcements. However, a firmness in oil prices and an increase in interest rates helped support BDC valuations more recently. At the end of the period under review, BDCs were trading with a 1.0 average price-to-book value. The industry ended the period offering a dividend yield* of 9.3%, as measured by the MVIS^® US Business Development Companies Index.²

 

Mortgage REITs

 

Mortgage REITs (mREITs) borrow at short-term rates and lend at long-term rates, potentially profiting from the spread. As such, they can be affected by yield curve movements. A potential U.S. Federal Reserve rate increase combined with deteriorating markets could result in a flattening yield curve, which could hurt mREITs. However, if rates rise and markets strengthen, that could result in either a rate increase being reflected across the yield spectrum or a steepening curve, which could bode well for mREITs. While the yield curve has flattened slightly since the end of the last reporting period, spreads have also tightened, resulting in mREITs posting a gain of 1.22%, for the six-month period. The average price-to-book valuation was 1.0 on October 31, 2017. MREITs offered a dividend yield* of 10.1%, as measured by the MVIS^® Global Mortgage REITs Index.³

VANECK VECTORS ETFs

(unaudited) (continued)

 

Preferred Securities ex Financials

 

Preferred securities are considered hybrid securities because they have features of both debt and equity securities. Historically, a company’s preferred securities have offered higher yields than either its common stock or its senior debt. The Wells Fargo^® Hybrid and Preferred Securities ex Financials Index excludes traditional financial companies which have been more volatile than other sectors historically. Over the six-month period ending October 31, 2017, the utility and REIT preferred securities sectors contributed the most to performance, while the energy and telecommunications preferred securities sectors detracted from performance. The ex-financials subset of preferred securities ended the period offering a current yield** of 6.6%, as measured by the Wells Fargo Hybrid and Preferred Securities ex Financials Index.⁴

 

INTERNATIONAL BOND

 

China Onshore Bonds

 

Once closed to foreign investors, China is home to the largest bond market among the emerging economies. The size of the market is now approximately US$9.9 trillion.⁵ While it has increased in sheer size, a diverse array of bond categories spanning the yield curve has also evolved. Issuers include central and local governments, policy banks, state-owned enterprises, and listed/non-listed corporations.

 

Most sectors contributed positively to performance over the six-month period ending October 31, 2017. Industrial bonds provided the greatest positive contribution to total return, followed by financial and government-related bonds. Bonds of diversified issuers detracted modestly from total returns.

 

Emerging Markets Local Currency Bonds

 

Emerging markets governments issue bonds denominated in their own currencies, which can provide yield enhancement and diversification opportunities for investors. These include bonds from countries in Africa, Latin America, Eastern Europe, the Middle East, and Asia.

 

Over the six-month period ending October 31, 2017, three key themes continued to positively impact the emerging markets debt market: a benign interest rate environment in most developed economies; improving economic fundamentals in many emerging markets; and signs of accelerating and synchronized global growth.

 

Bonds denominated in Polish zloty, Hungarian forint, and Thai baht contributed most to the Fund’s total return. Bonds denominated in South African rand, Turkish lira, and Argentine pesos were the greatest detractors from performance.

 

Emerging Markets Aggregate Bonds

 

The diverse universe of emerging markets bonds includes sovereign and corporate bonds denominated in U.S. dollars, euros, or local emerging markets currencies.

 

Euro-denominated bonds made the greatest positive contribution to performance in terms of currency, followed by Polish zloty- and Thai baht-denominated bonds. South African rand-, Turkish lira-, and U.S. dollar-denominated bonds were the greatest detractors from total return. In terms of sector, communications, energy, and financial bonds were the greatest contributors to total return, while government, consumer non-cyclical, and utility bonds detracted from total return.

 

Emerging Markets High Yield Bonds

 

Emerging markets high yield corporate bonds offer investors exposure to corporations, quasi-sovereign, and agency issuers from emerging markets countries.

 

Bonds of Brazilian, Argentinian, and Ukrainian issuers were the greatest contributors to the Fund’s total return in terms of country of risk. Bonds of Venezuelan, Chinese, and Russian issuers were the greatest detractors from total return. On a sector level, basic materials, government, and communications bonds were the greatest contributors to total return while diversified, energy, and financial issuers detracted from performance.

 

 

International High Yield Bonds

 

Non-U.S. high yield bonds have continued to provide an opportunity to diversify not only geographically, but also in terms of currency, with bonds denominated, for example, in euros, sterling, and Canadian dollars, as well as U.S. dollars.

 

From a sector perspective, bonds of financial, communications, and basic materials issuers providing the largest contributions to total return, while energy-, diversified-, and technology-related bonds detracted from performance. Euro-, British pound-, and Canadian dollar-denominated bonds contributed positively to Fund total return, while U.S. dollar-denominated bonds detracted from performance. Italian, British, and French issuers provided the greatest positive contribution to total return in terms of country of risk, while Venezuelan, Chinese, and Croatian issuers detracted from performance.

 

Green Bonds

 

Green bonds are issued to finance projects with a positive environmental impact, but in the vast majority of cases, are backed by the issuer’s full balance sheet (rather than the projects financed). The green bond market has grown tremendously since 2013, and has also become more diverse as new types of issuers have entered the market.

 

All currency categories contributed positively to total return during the period, with bonds denominated in euros, U.S. dollars, and Swedish krona the highest contributors. From a country of risk perspective, French, German, and Dutch issuers contributed most to total return, while bonds issued by Mexican, Austrian, and Swedish issuers were the largest detractors from performance. Financial-, government-, and utilities-related bonds made the greatest positive contributions to returns, while energy and industrial bonds detracted from performance.

 

Emerging Markets Investment Grade Sovereign Bonds

 

Over 50% of the U.S. dollar-denominated emerging markets sovereign bond market is rated high yield. By focusing on the higher quality subset of the broad market, investors can limit exposure to the riskiest issuers, while potentially benefitting from a yield pickup versus other investment grade asset classes.

 

During the six-month period, Uruguayan, Indonesian, and Peruvian bonds contributed the most to performance, while Turkish, Russian, and Omani bonds were the greatest detractors from performance.

 

CORPORATE BOND

 

Fallen Angel Bonds

 

Fallen angels warrant distinction for an embedded value proposition that is not common to all of high yield. Fallen angels also tend to have a higher rate of ascension to investment grade than original-issue high yield bonds. The default rate in this segment has averaged 3.51% historically, below the 4.51% average for U.S. bonds originally issued as high yield bonds.⁶

 

Basic industry (metals and mining) and energy were the two best performing sectors during the period under review, while the retail and consumer goods sectors negatively contributed to total return.

 

Freeport-McMoRan, Inc. 5.45% 3/15/2043 bond (1.3% of Fund net assets^†) and Telecom Italia Capital SA 7.72% 6/4/38 bond (0.9% of Fund net assets^†) were the top two performing bonds. Weatherford International Ltd. 6.75% 9/15/40 bond (0.7% of Fund net assets^†) and J.C. Penney Company, Inc. 7.4% 4/1/37 bond (0.2% of Fund net assets^†) were the bottom two performing bonds.

 

Investment Grade Floating Rate Notes

 

Floating rate notes (FRNs) are investment grade-rated corporate debt issues with variable coupons that reset to current interest rates, based on a particular benchmark. The coupons on these securities fluctuate with that benchmark. The combination of low average years to maturity, typically in the 1-5 year range, and floating interest rates creates the potential for relatively low price fluctuations. In addition, as short-term interest rates rise, portfolio securities reset to higher yields. This was seen over the last six months as three-month LIBOR⁷ rates rose 21 basis points to 1.38% by October 31, 2017.

VANECK VECTORS ETFs

(unaudited) (continued)

 

The top two performing notes were Morgan Stanley FRN 10/24/23, rated BBB+ (1.9% of Fund net assets^†) and Wells Fargo & Company FRN 10/31/23, rated A (1.5% of Fund net assets^†). The bottom two performing notes were General Electric Capital Corporation FRN 5/5/26, rated AA- (0.7% of Fund net assets^†) and Toyota Motor Credit Corporation FRN 9/8/22, rated AA- (0.3% of Fund net assets^†).⁸

 

†	All Fund assets referenced are Total Net Assets as of October 31, 2017, unless otherwise stated.
*	Dividend Yield is calculated by dividing the annual dividends per share of a security by the price of that security.
**	Current Yield is calculated by dividing the annual cash flow by the price of that security.

 

All indices listed are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. Certain indices may take into account withholding taxes. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made.

 

 

1	Investopedia: Little Known Stocks And ETFs To Buy As Interest Rates Rise, http://www.investopedia.com/stock analysis/040314/little-known-stocks-and-etfs-buy-interest-rates-rise-bizd-acas-htgc-hrzn.aspx
2	VanEck Vectors BDC Income ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS US Business Development Companies Index (MVBIZDTG), which includes companies which are treated as Business Development Companies. To be eligible for the Index and qualify as a BDC, a company must be organized under the laws of, and have its principal place of business in the U.S., be registered with the Securities Exchange Commission and have elected to be regulated as a BDC under the Investment Company Act of 1940. As of October 31, 2017 the 30-day SEC yield for VanEck Vectors BDC Income ETF was 9.07%. 30-Day SEC Yield is calculated as of the most recent month end, and is a standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparisons primarily among bond funds. It is based on the most recent 30-day period. This yield figure reflects the interest and dividends earned during the period after deducting the Fund’s expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last six months assuming the most recent NAV. In the absence of temporary expense waivers or reimbursements, the 30-Day SEC Yield for VanEck Vectors BDC Income ETF would have been 8.97% as of October 31, 2017.
3	VanEck Vectors Mortgage REIT Income ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS US Mortgage REITs Index (MVMORTTG) which is a rules-based index intended to give investors a means of tracking the overall performance of publicly traded U.S. and non-U.S. mortgage REITs that derive at least 50% of their revenues from mortgage-related activity. As of October 31, 2017 the 30-day SEC yield for VanEck Vectors Mortgage REIT Income ETF was 9.65%. 30-Day SEC Yield is calculated as of the most recent month end, and is a standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparisons primarily among bond funds. It is based on the most recent 30-day period. This yield figure reflects the interest and dividends earned during the period after deducting the Fund’s expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last six months assuming the most recent NAV. In the absence of temporary expense waivers or reimbursements, the 30-Day SEC Yield for VanEck Vectors Mortgage REIT Income ETF would have been 9.56% as of October 31, 2017.
4	VanEck Vectors Preferred Securities ex Financials ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Wells Fargo® Hybrid and Preferred Securities ex Financials Index (WHPSL) which is a rules-based index designed to track the performance of convertible or exchangeable and non-convertible preferred securities, issued by U.S. or foreign issuers that are not financial services companies or banks and that are listed on U.S. national securities exchanges. As of October 31, 2017 the 30-day SEC yield for VanEck Vectors Preferred Securities ex Financials ETF was 5.96%. 30 Day SEC Yield is calculated as of the most recent month end, and is a standard yield calculation developed by the Securities and Exchange Commission that allows for fairer comparisons primarily among bond funds. It is based on the most recent 30-day period. This yield figure reflects the interest and dividends earned during the period after deducting the Fund’s expenses for the period. It does not reflect the yield an investor would have received if they had held the Fund over the last six months assuming the most recent NAV. In the absence of temporary expense waivers or reimbursements, the 30-Day SEC Yield for VanEck Vectors Preferred Securities ex Financials ETF would have been 5.90% as of October 31, 2017.
5	The Bank for International Settlements: Debt securities statistics, http://www.bis.org/statistics/secstats.htm. Data as at September 17, 2017.
6	Altman, Edward I. and Brenda J. Kuehne. “Defaults and Returns in the High-Yield Bond and Distressed Debt Market: The Year 2016 in Review and Outlook”. February 2017. NYU Salomon Center.
7	Source; FactSet. Data as of October 31, 2017. London Interbank Offer Rate (LIBOR) refers to the benchmark used by banks, securities houses and investors to gauge the cost of unsecured borrowing in the money markets for various periods of time and currencies.
8	Bloomberg Composite Rating: An evenly weighted blend of a security’s Moody’s, S&P, Fitch, and DBRS ratings. This composite is not intended to be a credit opinion.

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS BDC INCOME ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				MVBIZDTG1				Share Price				NAV				MVBIZDTG1
Six Months			(7.52	)%			(7.72	)%			(7.47	)%			(7.52	)%			(7.72	)%			(7.47	)%
One Year			6.80	%			7.05	%			7.22	%			6.80	%			7.05	%			7.22	%
Life*			4.47	%			4.43	%			4.54	%			22.90	%			22.69	%			23.29	%

 

*	Commencement of Fund: 2/11/13; First Day of Secondary Market Trading: 2/12/13.
1	MVIS® US Business Development Companies Index (MVBIZDTG). The BDC Index is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of BDCs. To be eligible for the BDC Index and qualify as a BDC, a company must be organized under the laws of, and have its principal place of business in, the United States, be registered with the SEC and have elected to be regulated as a BDC under the 1940 Act.

 

VANECK VECTORS CHINAAMC CHINA BOND ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				CDHATRID1				Share Price				NAV				CDHATRID1
Six Months			6.00	%			4.96	%			5.02	%			6.00	%			4.96	%			5.02	%
One Year			1.02	%			0.41	%			(0.33	)%			1.02	%			0.41	%			(0.33	)%
Life*			(0.38	)%			(0.15	)%			0.63	%			(1.11	)%			(0.44	)%			1.89	%

 

*	Commencement of Fund: 11/10/14; First Day of Secondary Market Trading: 11/11/14.
1	ChinaBond China High Quality Bond Index (CDHATRID) is comprised of fixed-rate, Renminbi–(RMB)-denominated bonds issued in the People’s Republic of China by Chinese credit, governmental and quasi-governmental (e.g., policy banks) issuers. Chinese credit issuers are generally considered to be issuers of central enterprise bonds, local enterprise bonds, medium-term notes, corporate bonds and railway debt. Credit RMB Bonds must have an issuer rating of AAA or equivalent by one or more of the Chinese local rating agencies recognized by the relevant authorities in the PRC to be included in the Index.

 

VANECK VECTORS EM INVESTMENT GRADE + BB RATED USD SOVEREIGN BOND ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				JPEGIGBB1				Share Price				NAV				JPEGIGBB1
Six Months			4.91	%			3.31	%			3.55	%			4.91	%			3.31	%			3.55	%
One Year			4.32	%			4.09	%			4.79	%			4.32	%			4.09	%			4.79	%
Life*			2.10	%			2.18	%			3.09	%			2.74	%			2.85	%			4.04	%

 

*	Commencement of Fund: 7/13/16; First Day of Secondary Market Trading: 7/14/16
1	J.P. Morgan Custom EM Investment Grade Plus BB-Rated Sovereign USD Bond Index (JPEGIGBB). The EM Investment Grade Index is based on the composition of the J.P. Morgan EMBI Global Diversified Index (EMBIGD) but removes the instruments that are closer to maturity (less than 24 months) and those with face amounts outstanding less than $750 million. In addition, eligibility to the Index is restricted to instruments that are currently rated investment grade (“IG”) or BB (i.e., BB-, BB or BB+) in the EMBIGD. After applying the liquidity and credit rating filters set forth above, the diversified country weights of the EMBIGD are applied proportionally on the eligible countries and instruments in the Index.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 12 for more information.

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS EMERGING MARKETS AGGREGATE BOND ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				MVEMAG1				Share Price				NAV				MVEMAG1
Six Months			2.36	%			3.00	%			3.72	%			2.36	%			3.00	%			3.72	%
One Year			4.57	%			5.03	%			6.21	%			4.57	%			5.03	%			6.21	%
Five Year			0.51	%			1.29	%			1.98	%			2.56	%			6.61	%			10.30	%
Life*			2.24	%			2.45	%			3.79	%			15.41	%			16.96	%			27.27	%

 

*	Commencement of Fund: 5/11/11; First Day of Secondary Market Trading: 5/12/11.
1	MVIS® EM Aggregate Bond Index (MVEMAG). The EM Aggregate Bond Index is comprised of emerging market sovereign bonds and corporate bonds denominated in U.S. dollars, euros or local emerging market currencies. MVEMAG includes both investment grade and below investment grade rated securities.

 

Effective December 10, 2013, Market Vectors^® LatAm Aggregate Bond ETF (BONO) changed its name to VanEck Vectors Emerging Markets Aggregate Bond ETF (EMAG). The Fund’s investment objective changed to seeking to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors^® EM Aggregate Bond Index (MVEMAG), from seeking to replicate as closely as possible, before fees and expenses, the price and yield performance of the BofA Merrill Lynch Broad Latin America Bond Index (LATS). Performance data prior to December 9, 2013, reflects that of BONO and LATS. Performance data from December 10, 2013, and on, reflects that of EMAG and MVEMAG. All Index history reflects a blend of the performance of the aforementioned Indexes (MVEMAG and LATS). LATS is a trademark of Merrill Lynch, Pierce, Fenner & Smith Incorporation, which neither sponsors nor endorses EMAG and makes no warranty or representation as to the accuracy and/or completeness of this Index.

 

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				EMLH1				Share Price				NAV				EMLH1
Six Months			2.92	%			2.80	%			3.21	%			2.92	%			2.80	%			3.21	%
One Year			8.12	%			7.68	%			8.61	%			8.12	%			7.68	%			8.61	%
Five Year			5.31	%			5.37	%			6.13	%			29.54	%			29.91	%			34.66	%
Life*			6.30	%			6.26	%			7.06	%			39.81	%			39.47	%			45.32	%

 

*	Commencement of Fund: 5/8/12; First Day of Secondary Market Trading: 5/9/12
1	ICE BofA Merrill Lynch Diversified High Yield US Emerging Markets Corporate Plus Index (EMLH). The Emerging Markets High Yield Index is comprised of U.S. dollar denominated bonds issued by non-sovereign emerging markets issuers that are rated BB1 or lower (based on an average of ratings from Moody’s, S&P and Fitch) and that are issued in the major domestic and Eurobond markets.

 

Index data prior to May 11, 2015 reflects that of the BofA Merrill Lynch High Yield US Emerging Markets Liquid Corporate Plus Index. From May 11, 2015, forward, the index data reflects that of the ICE BofA Merrill Lynch Diversified High Yield US Emerging Markets Corporate Plus Index. All Index history reflects a blend of the performance of the aforementioned Indexes.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 12 for more information.

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS FALLEN ANGEL HIGH YIELD BOND ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				HOFA1				Share Price				NAV				HOFA1
Six Months			4.39	%			4.60	%			4.97	%			4.39	%			4.60	%			4.97	%
One Year			11.02	%			10.02	%			10.83	%			11.02	%			10.02	%			10.83	%
Five Year			8.73	%			8.64	%			9.89	%			51.97	%			51.33	%			60.22	%
Life*			9.71	%			9.73	%			11.03	%			67.40	%			67.52	%			78.85	%

 

*	Commencement of Fund: 4/10/12; First Day of Secondary Market Trading: 4/11/12
1	ICE BofA Merrill Lynch US Fallen Angel High Yield Index (HOFA). The Fallen Angel Index is comprised of below investment grade corporate bonds denominated in U.S. dollars that were rated investment grade at the time of issuance.

 

VANECK VECTORS GREEN BOND ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				SPGRNSLT1				Share Price				NAV				SPGRNSLT1
Six Months			4.80	%			5.34	%			5.83	%			4.80	%			5.34	%			5.83	%
Life*			8.34	%			8.35	%			8.86	%			8.34	%			8.35	%			8.86	%

 

*	Commencement of Fund: 3/3/17; First Day of Secondary Market Trading: 3/6/17
1	S&P Green Bond Select Index (SPGRNSLT). The Green Bond Index is comprised of bonds issued for qualified “green” purposes and seeks to measure the performance of green-labeled bonds issued globally. For a bond to be eligible for inclusion in the Index, the issuer of the bond must indicate the bond’s “green” label and the rationale behind it, such as the intended use of proceeds. As an additional filter, the bond must be flagged as “green” by Climate Bonds Initiative (“CBI”) to be eligible for inclusion in the Index.

 

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				HXUS1				Share Price				NAV				HXUS1
Six Months			5.50	%			5.38	%			6.22	%			5.50	%			5.38	%			6.22	%
One Year			10.85	%			10.14	%			11.79	%			10.85	%			10.14	%			11.79	%
Five Year			5.05	%			5.27	%			6.16	%			27.91	%			29.25	%			34.81	%
Life*			6.05	%			6.02	%			6.93	%			38.80	%			38.60	%			45.32	%

 

*	Commencement of Fund: 4/2/12; First Day of Secondary Market Trading: 4/3/12
1	ICE BofA Merrill Lynch Global ex-US Issuers High Yield Constrained Index (HXUS). The International High Yield Index tracks the performance of below investment grade debt issued by corporations located throughout the world (which may include emerging market countries) excluding the United States denominated in euros, U.S. dollars, Canadian dollars or pound sterling and issued in the major domestic or eurobond markets.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 12 for more information.

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				MVFLTR1				Share Price				NAV				MVFLTR1
Six Months			1.06	%			1.38	%			1.55	%			1.06	%			1.38	%			1.55	%
One Year			2.88	%			2.92	%			3.33	%			2.88	%			2.92	%			3.33	%
Five Year			1.05	%			1.36	%			1.80	%			5.34	%			7.00	%			9.31	%
Life*			1.19	%			1.20	%			1.68	%			7.99	%			8.11	%			11.44	%

 

*	Commencement of Fund: 4/25/11; First Day of Secondary Market Trading: 4/26/11
1	MVIS® US Investment Grade Floating Rate Index (MVFLTR). The Floating Rate Index is comprised of U.S. dollar-denominated floating rate notes issued by corporate entities or similar commercial entities that are public reporting companies in the United States with at least one investment grade rating by one of Moody’s, S&P, or Fitch, and must not be rated “below investment grade” by any one of Moody’s, S&P, or Fitch.

 

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

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				GBIEMCOR1				Share Price				NAV				GBIEMCOR1
Six Months			2.26	%			2.65	%			2.88	%			2.26	%			2.65	%			2.88	%
One Year			4.42	%			4.37	%			4.94	%			4.42	%			4.37	%			4.94	%
Five Year			(2.04	)%			(1.83	)%			(1.20	)%			(9.81	)%			(8.84	)%			(5.88	)%
Life*			0.87	%			0.89	%			1.66	%			6.53	%			6.67	%			12.71	%

 

*	Commencement of Fund: 7/22/10; First Day of Secondary Market Trading: 7/23/10
1	J.P. Morgan GBI-EMG Core Index (GBIEMCOR). The Emerging Markets Core Index is designed to track the performance of bonds issued by emerging markets governments and denominated in the local currency of the issuer.

 

VANECK VECTORS MORTGAGE REIT INCOME ETF

 

		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				MVMORTTG1				Share Price				NAV				MVMORTTG1
Six Months			1.17	%			1.22	%			1.32	%			1.17	%			1.22	%			1.32	%
One Year			17.52	%			17.74	%			18.13	%			17.52	%			17.74	%			18.13	%
Five Year			7.74	%			7.79	%			8.25	%			45.15	%			45.51	%			48.67	%
Life*			9.92	%			9.94	%			10.52	%			79.94	%			80.08	%			86.03	%

 

*	Commencement of Fund: 8/16/11; First Day of Secondary Market Trading: 8/17/11
1	MVIS® US Mortgage REITs Index (MVMORTTG). The Mortgage REITs Index is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of publicly traded U.S. REITs that derive at least 50% of their revenues (or, where applicable, have at least 50% of their assets) from mortgage-related activity.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 12 for more information.

PERFORMANCE COMPARISON

October 31, 2017 (unaudited)

 

VANECK VECTORS PREFERRED SECURITIES EX FINANCIALS ETF
		Average Annual Total Returns												Cumulative Total Returns
		Share Price				NAV				WHPSL1				Share Price				NAV				WHPSL1
Six Months			2.16	%			2.32	%			2.11	%			2.16	%			2.32	%			2.11	%
One Year			4.97	%			4.92	%			4.24	%			4.97	%			4.92	%			4.24	%
Five Year			5.30	%			5.41	%			5.31	%			29.45	%			30.15	%			29.53	%
Life*			5.88	%			5.86	%			5.77	%			35.31	%			35.19	%			34.57	%

 

*	Commencement of Fund: 7/16/12; First Day of Secondary Market Trading: 7/17/12
1	Wells Fargo® Hybrid and Preferred Securities ex Financials Index (WHPSL). The Preferred Securities Index is designed to track the performance of convertible or exchangeable and non-convertible preferred securities listed on U.S. exchanges.

 

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.

 

See “About Fund Performance” on page 12 for more information.

VANECK VECTORS ETF TRUST

ABOUT FUND PERFORMANCE

(unaudited)

 

The price used to calculate market return (Share Price) is determined by using the closing price listed on its primary listing exchange. Since the shares of each Fund did not trade in the secondary market until after each Fund’s commencement, for the period from commencement to the first day of secondary market trading in shares of each Fund, the NAV of each Fund is used as a proxy for the secondary market trading price to calculate market returns.

 

The performance data quoted represents past performance. Past performance is not a guarantee of future results. Performance information for each Fund reflects temporary waivers of expenses and/or fees. Had each Fund incurred all expenses, investment returns would have been reduced. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the sale of Fund shares.

 

Investment return and value of the shares of each Fund will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund returns reflect reinvestment of dividends and capital gains distributions. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com.

 

Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called “creation units” and otherwise can be bought and sold only through exchange trading. Shares may trade at a premium or discount to their NAV in the secondary market.

 

The net asset value (NAV) of each VanEck Vectors exchange-traded fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of each fund; it is calculated by taking the total assets of each fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAVs are not necessarily the same as each ETF’s intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell fund shares at NAV.

 

Index returns assume the reinvestment of all income and do not reflect any management fees or brokerage expenses associated with Fund returns. Certain indices may take into account withholding taxes. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses. Past performance is no guarantee of future results.

 

BDC Index, EM Aggregate Bond Index, Floating Rate Index, and Mortgage REITs Index are published by MV Index Solutions GmbH (MVIS^®), a wholly owned subsidiary of the Adviser, Van Eck Associates Corporation. ChinaBond Index is published by China Central Depository & Clearing Co., Ltd. (China Central Depository). Emerging Markets Core Index and EM Investment Grade Plus Index are published by JPMorgan Securities, Inc. (J.P. Morgan). Emerging Markets High Yield Index, Fallen Angel Index, and International High Yield Index are published by ICE Data Indices, LLC (ICE). Green Bond Index is published by S&P Dow Jones Indices (S&P). Preferred Securities Index is published by Wells Fargo & Company, LLC (Wells Fargo).

 

MVIS, China Central Depository, J.P. Morgan, ICE, S&P, and Wells Fargo are referred to herein as the “Index Providers.” The Index Providers do not sponsor, endorse, or promote the Funds and bear no liability with respect to the Funds or any security.

 

Premium/discount information regarding how often the closing trading price of the Shares of each Fund were above (i.e., at a premium) or below (i.e., at a discount) the NAV of the Fund for each of the four previous calendar quarters and the immediately preceding five years (if applicable) can be found at www.vaneck.com.

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, 2017 to October 31, 2017.

 

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, 2017				Ending Account Value October 31, 2017				Annualized Expense Ratio During Period				Expenses Paid During the Period* May 1, 2017- October 31, 2017
BDC Income ETF*
Actual		$	1,000.00			$	922.80				0.41	%			$1.99
Hypothetical**		$	1,000.00			$	1,023.14				0.41	%			$2.09
ChinaAMC China Bond ETF*
Actual		$	1,000.00			$	1,049.60				0.50	%			$2.58
Hypothetical**		$	1,000.00			$	1,022.68				0.50	%			$2.55
EM Investment Grade + BB Rated USD Sovereign Bond ETF*
Actual		$	1,000.00			$	1,033.10				0.40	%			$2.05
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%			$2.04
Emerging Markets Aggregate Bond ETF*
Actual		$	1,000.00			$	1,030.00				0.49	%			$2.51
Hypothetical**		$	1,000.00			$	1,022.74				0.49	%			$2.50
Emerging Markets High Yield Bond ETF*
Actual		$	1,000.00			$	1,028.00				0.40	%			$2.04
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%			$2.04
Fallen Angel High Yield Bond ETF*
Actual		$	1,000.00			$	1,046.00				0.35	%			$1.80
Hypothetical**		$	1,000.00			$	1,023.44				0.35	%			$1.79
Green Bond ETF*
Actual		$	1,000.00			$	1,053.40				0.40	%			$2.07
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%			$2.04

VANECK VECTORS ETF TRUST

EXPLANATION OF EXPENSES

(unaudited) (continued)

 

		Beginning Account Value May 1, 2017				Ending Account Value October 31, 2017				Annualized Expense Ratio During Period				Expenses Paid During the Period* May 1, 2017- October 31, 2017
International High Yield Bond ETF*
Actual		$	1,000.00			$	1,053.80				0.40	%		$	2.07
Hypothetical**		$	1,000.00			$	1,023.19				0.40	%		$	2.04
Investment Grade Floating Rate ETF*
Actual		$	1,000.00			$	1,013.80				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			$	1,026.50				0.44	%		$	2.25
Hypothetical**		$	1,000.00			$	1,022.99				0.44	%		$	2.24
Mortgage REIT Income ETF*
Actual		$	1,000.00			$	1,012.20				0.41	%		$	2.08
Hypothetical**		$	1,000.00			$	1,023.14				0.41	%		$	2.09
Preferred Securities ex Financials ETF*
Actual		$	1,000.00			$	1,023.20				0.41	%		$	2.09
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, 2017) 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 BDC INCOME ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

See Notes to Financial Statements

VANECK VECTORS BDC INCOME ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

Footnotes:

†	Security fully or partially on loan. Total market value of securities on loan is $25,089,154.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Financial			100.0	%		$	182,908,690
Money Market Fund			0.0				12,364
			100.0	%		$	182,921,054

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

			Level 1 Quoted Prices			Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Common Stocks*			$	182,908,690		$	—			$	—			$	182,908,690
Money Market Fund				12,364			—				—				12,364
Repurchase Agreements				—			26,209,846				—				26,209,846
Total			$	182,921,054		$	26,209,846			$	—			$	209,130,900

 

*	See Schedule of Investments for industry breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS CHINAAMC CHINA BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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
#	Indicates a fair valued security which has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $221,393 which represents 4.8% of net assets.

 

Summary of Investments by Sector		% of Investments				Value
Consumer, Non-cyclical			7.4	%		$	318,357
Energy			11.1				473,417
Financial			32.7				1,398,469
Government			23.7				1,014,586
Industrial			25.1				1,071,156
			100.0	%		$	4,275,985

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices					Level 2 Significant Observable Inputs					Level 3 Significant Unobservable Inputs					Value
Corporate Bonds*			$	—				$	3,261,399				$	—			$	3,261,399
Government Obligations*				—					1,014,586					—				1,014,586
Total			$	—				$	4,275,985				$	—			$	4,275,985

 

*	See Schedule of Investments for industry breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS EM INVESTMENT GRADE + BB RATED USD SOVEREIGN BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

See Notes to Financial Statements

 

 

See Notes to Financial Statements

VANECK VECTORS EM INVESTMENT GRADE + BB RATED USD SOVEREIGN BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

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 — coupon increases periodically based upon a predetermined schedule. The rate shown reflects the rate in effect at the end of the reporting period
†	Security fully or partially on loan. Total market value of securities on loan is $362,219.
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 $2,639,029, or 21.3% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Energy			15.8	%		$	1,945,877
Government			82.1				10,080,114
Utilities			1.4				165,945
Money Market Fund			0.7				86,780
			100.0	%		$	12,278,716

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices					Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Corporate Bonds*			$	—			$	2,111,822			$	—			$	2,111,822
Government Obligations*				—				10,080,114				—				10,080,114
Money Market Fund				86,780				—				—				86,780
Repurchase Agreement				—				374,307				—				374,307
Total			$	86,780			$	12,566,243			$	—			$	12,653,023

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS AGGREGATE BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

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:

(a)	Coupon is based upon predetermined growth targets for the Gross Domestic Product of Ukraine. The rate shown reflects the rate in effect at the end of the reporting period
(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 — coupon increases periodically based upon a predetermined schedule. The rate shown reflects the rate in effect at the end of the reporting period
^	Zero Coupon Bond
†	Security fully or partially on loan. Total market value of securities on loan is $363,710.
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 $2,025,251, or 13.3% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			1.6	%		$	241,141
Communications			6.0				899,397
Consumer, Non-cyclical			2.2				334,534
Diversified			0.7				105,644
Energy			13.3				1,994,959
Financial			9.1				1,366,306
Government			61.9				9,278,010
Industrial			0.7				106,000
Utilities			4.5				669,362
			100.0	%		$	14,995,353

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices					Level 2 Significant Observable Inputs			Level 3 Significant Unobservable Inputs					Value
Corporate Bonds*			$	—			$	5,717,343			$	—			$	5,717,343
Government Obligations*				—				9,278,010				—				9,278,010
Repurchase Agreement				—				376,657				—				376,657
Total			$	—			$	15,372,010			$	—			$	15,372,010

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS EMERGING MARKETS HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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)

 

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 principal default
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
(s)	Step Bond — coupon increases periodically based upon a predetermined schedule. The rate shown reflects the rate in effect at the end of the reporting period
*	Non-income producing
†	Security fully or partially on loan. Total market value of securities on loan is $22,983,784.
§	Illiquid Security — the aggregate value of illiquid securities is $270,300 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 $260,574,827, or 72.9% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned			% of Investments				Value
Basic Materials				9.3	%		$	33,016,264
Communications				5.9				20,709,739
Consumer, Cyclical				4.2				14,822,152
Consumer, Non-cyclical				3.7				12,963,261
Diversified				1.1				3,992,588
Energy				16.5				58,331,417
Financial				37.1				131,122,613
Government				9.6				34,079,988
Industrial				6.8				23,907,530
Technology				0.4				1,260,804
Utilities				4.6				16,191,731
Money Market Fund				0.8				2,996,765
				100.0	%		$	353,394,852

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

					Level 2			Level 3
		Level 1			Significant			Significant
		Quoted			Observable			Unobservable
		Prices			Inputs			Inputs					Value
Corporate Bonds*		$	—		$	316,318,099			$	—			$	316,318,099
Government Obligations*			—			34,079,988				—				34,079,988
Money Market Fund			2,996,765			—				—				2,996,765
Repurchase Agreements			—			24,056,005				—				24,056,005
Total		$	2,996,765		$	374,454,092			$	—			$	377,450,857

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS FALLEN ANGEL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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
(s)	Step Bond — coupon increases periodically based upon a predetermined schedule. The rate shown reflects the rate in effect at the end of the reporting period
†	Security fully or partially on loan. Total market value of securities on loan is $79,533,463.
§	Illiquid Security — the aggregate value of illiquid securities is $98,875 which represents 0.0% 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 $155,772,786, or 13.4% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned			% of Investments				Value
Basic Materials			23.0		%		$	262,973,224
Communications			18.0					205,354,908
Consumer, Cyclical			6.2					70,327,582
Consumer, Non-cyclical			4.0					45,566,218
Diversified			0.8					8,953,098
Energy			24.3					277,762,807
Financial			13.2					151,108,076
Industrial			3.8					43,348,847
Technology			5.4					61,048,126
Utilities				0.7				7,505,515
Money Market Fund				0.6				7,368,592
				100.0	%		$	1,141,316,993

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

					Level 2			Level 3
		Level 1			Significant			Significant
		Quoted			Observable			Unobservable
		Prices			Inputs			Inputs					Value
Corporate Bonds*		$	—		$	1,133,948,401			$	—			$	1,133,948,401
Money Market Fund			7,368,592			—				—				7,368,592
Repurchase Agreements			—			84,008,090				—				84,008,090
Total		$	7,368,592		$	1,217,956,491			$	—			$	1,225,325,083

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS GREEN BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

See Notes to Financial Statements

 

 

 

 

Definitions:

AUD	Australian Dollar
CAD	Canadian Dollar
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 — coupon increases periodically based upon a predetermined schedule. The rate shown reflects the rate in effect at the end of the reporting period
Reg S	Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
144A	Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, unless otherwise noted, and the value amounted to $1,406,307, or 13.2% of net assets.

 

See Notes to Financial Statements

VANECK VECTORS GREEN BOND ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

Summary of Investments by Sector			% of Investments				Value
Basic Materials				1.0	%		$	107,375
Consumer, Non-cyclical				4.2				443,096
Energy				2.1				223,255
Financial				26.0				2,759,949
Government				36.1				3,833,637
Industrial				7.3				775,438
Technology				2.4				253,296
Utilities				20.7				2,199,838
Money Market Fund				0.2				24,420
				100.0	%		$	10,620,304

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted  Prices				Level 2 Significant Observable Inputs				Level 3  Significant Unobservable  Inputs					Value
Corporate Bonds*		$	—			$	6,762,247				$	—			$	6,762,247
Government Obligations*			—				3,833,637					—				3,833,637
Money Market Fund			24,420				—					—				24,420
Total		$	24,420			$	10,595,884				$	—			$	10,620,304

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS INTERNATIONAL HIGH YIELD BOND ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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)

 

 

 

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
(e)	Security in principal default
(p)	Puttable Security — the redemption date shown is when the security may be redeemed by the investor
(s)	Step Bond — coupon increases periodically based upon a predetermined schedule. The rate shown reflects the rate in effect at the end of the reporting period
*	Non-income producing
†	Security fully or partially on loan. Total market value of securities on loan is $10,106,717.
#	Indicates a fair valued security which has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $2,093 which represents 0.0% of net assets.
§	Illiquid Security — the aggregate value of illiquid securities is $3,412 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 $72,981,403, or 44.4% of net assets.

 

See Notes to Financial Statements

 

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			9.9	%		$	15,999,680
Communications			18.6				30,049,776
Consumer, Cyclical			9.2				14,821,258
Consumer, Non-cyclical			7.4				11,909,806
Diversified			0.8				1,348,125
Energy			12.0				19,439,938
Financial			26.5				42,918,451
Government			1.7				2,703,901
Industrial			8.4				13,560,653
Technology			0.9				1,429,725
Utilities			4.2				6,812,081
Money Market Fund			0.4				670,606
			100.0	%		$	161,664,000

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Common Stock*		$	—			$	—				$	2,093			$	2,093
Corporate Bonds*			—				158,287,400					—				158,287,400
Government Obligations*			—				2,703,901					—				2,703,901
Warrants*			—				—					0				0
Money Market Fund			670,606				—					—				670,606
Repurchase Agreements			—				10,522,099					—				10,522,099
Total		$	670,606			$	171,513,400				$	2,093			$	172,186,099

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

The following table reconciles the valuation of the Fund’s Level 3 investment securities and related transactions during the period ended October 31, 2017:

 

		Common Stock					Warrants
		United States					Spain
Balance as of April 30, 2017			$	2,875				$	0
Realized gain (loss)				—					—
Net change in unrealized appreciation (depreciation)				(782	)				0
Purchases				—					—
Sales				—					—
Transfers in and/or out of level 3				—					—
Balance as of October 31, 2017			$	2,093				$	0

 

See Notes to Financial Statements

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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

 

 

 

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 $275,958.
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 $42,441,922, or 18.1% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Basic Materials			0.3	%		$	706,551
Communications			5.2				12,273,681
Consumer, Cyclical			4.9				11,570,479
Consumer, Non-cyclical			3.9				9,116,556
Energy			2.9				6,655,625
Financial			76.0				178,199,712
Industrial			1.0				2,303,129
Technology			5.7				13,439,391
Money Market Fund			0.1				212,577
			100.0	%		$	234,477,701

 

See Notes to Financial Statements

VANECK VECTORS INVESTMENT GRADE FLOATING RATE ETF

SCHEDULE OF INVESTMENTS

(unaudited) (continued)

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Floating Rate Notes*		$	—			$	234,265,124				$	—			$	234,265,124
Money Market Fund			212,577				—					—				212,577
Repurchase Agreement			—				283,473					—				283,473
Total		$	212,577			$	234,548,597				$	—			$	234,761,174

 

*	See Schedule of Investments for industry sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

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

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

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)

 

 

See Notes to Financial Statements

 

 

Definitions:
ARS	Argentine Peso
BRL	Brazilian Real
CLP	Chilean Peso
COP	Colombian Peso
CZK	Czech Koruna
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
TIPS	Treasury Inflation Protected Securities
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
^	Zero Coupon Bond
†	Security fully or partially on loan. Total market value of securities on loan is $69,950,055.
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 $81,138,798, or 1.9% of net assets.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned			% of Investments				Value
Consumer, Non-cyclical				0.0	%		$	472,931
Energy				0.2				6,917,154
Financial				0.5				20,714,152
Government				98.8				4,117,285,231
Industrial				0.2				8,106,257
Utilities				0.3				12,318,774
Money Market Fund				0.0				953,752
				100.0	%		$	4,166,768,251

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

						Level 2				Level 3
		Level 1				Significant				Significant
		Quoted				Observable				Unobservable
		Prices				Inputs				Inputs					Value
Corporate Bonds*		$	—			$	48,529,268				$	—			$	48,529,268
Government Obligations*			—				4,117,285,231					—				4,117,285,231
Money Market Fund			953,752				—					—				953,752
Repurchase Agreements			—				73,804,687					—				73,804,687
Total		$	953,752			$	4,239,619,186				$	—			$	4,240,572,938

 

*	See Schedule of Investments for geographic sector breakouts.

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS MORTGAGE REIT INCOME ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (unaudited)

 

 

See Notes to Financial Statements

 

 

Footnotes:

*	Non-income producing
†	Security fully or partially on loan. Total market value of securities on loan is $19,120,467.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Financials			97.8	%		$	148,729,440
Real Estate			1.7				2,556,684
Money Market Fund			0.5				812,401
			100.0	%		$	152,098,525

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Real Estate Investment Trusts*		$	151,286,124			$	—				$	—			$	151,286,124
Money Market Fund			812,401				—					—				812,401
Repurchase Agreements			—				19,762,033					—				19,762,033
Total		$	152,098,525			$	19,762,033				$	—			$	171,860,558

 

*	See Schedule of Investments for geographic sector breakouts

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS PREFERRED SECURITIES EX FINANCIALS ETF

SCHEDULE OF INVESTMENTS

October 31, 2017 (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
(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 $37,512,685.

 

Summary of Investments by Sector Excluding Collateral for Securities Loaned		% of Investments				Value
Communications			20.0	%		$	101,577,913
Consumer, Non-cyclical			10.7				54,121,325
Energy			3.7				18,743,822
Financial			1.5				7,462,845
Government			0.5				2,561,446
Industrial			3.2				16,096,528
Real Estate Investment Trusts			30.5				154,371,823
Reinsurance			3.8				19,046,071
Technology			0.8				4,027,112
Utilities			25.0				126,813,792
Money Market Fund			0.3				1,581,470
			100.0	%		$	506,404,147

 

See Notes to Financial Statements

 

 

The summary of inputs used to value the Fund’s investments as of October 31, 2017 is as follows:

 

		Level 1 Quoted Prices				Level 2 Significant Observable Inputs				Level 3 Significant Unobservable Inputs					Value
Preferred Securities*		$	504,822,677			$	—				$	—			$	504,822,677
Money Market Fund			1,581,470				—					—				1,581,470
Repurchase Agreements			—				38,605,188					—				38,605,188
Total		$	506,404,147			$	38,605,188				$	—			$	545,009,335

 

*	See Schedule of Investments for industry breakouts

 

There were no transfers between levels during the period ended October 31, 2017.

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF ASSETS AND LIABILITIES

October 31, 2017 (unaudited)

 

		BDC Income ETF					ChinaAMC China Bond ETF					EM Investment Grade + BB Rated USD Sovereign Bond ETF					Emerging Markets Aggregate Bond ETF
Assets:
Investments, at value (1) (2)			$	182,921,054				$	4,275,985				$	12,278,716				$	14,995,353
Short-term investments held as collateral for securities loaned (3)				26,209,846					—					374,307					376,657
Cash				—					103,827					—					41,805
Cash denominated in foreign currency, at value (4)				—					167,881	(a)				—					85,799
Receivables:
Investment securities sold				—					—					—					—
Shares sold				—					—					—					—
Due from Adviser				—					7,117					4,767					4,086
Dividends and interest				271,183					89,813					130,876					260,798
Prepaid expenses				1,481					43					106					120
Total assets				209,403,564					4,644,666					12,788,772					15,764,618
Liabilities:
Payables:
Investment securities purchased				—					—					—					45,805
Collateral for securities loaned				26,209,846					—					374,307					376,657
Line of credit				588,504					—					—					—
Shares redeemed				—					—					—					—
Due to Adviser				48,171					—					—					—
Due to custodian				12,380					—					—					—
Deferred Trustee fees				2,263					152					33					1,209
Accrued expenses				78,688					74,347					37,794					96,909
Total liabilities				26,939,852					74,499					412,134					520,580
NET ASSETS			$	182,463,712				$	4,570,167				$	12,376,638				$	15,244,038
Shares outstanding				10,750,000					200,000					500,000					700,000
Net asset value, redemption and offering price per share			$	16.97				$	22.85				$	24.75				$	21.78
Net assets consist of:
Aggregate paid in capital			$	202,081,500				$	5,170,311				$	12,533,291				$	17,938,775
Net unrealized appreciation (depreciation)				(12,076,372	)				(260,880	)				(48,781	)				(783,229	)
Undistributed (accumulated) net investment income (loss)				800,541					(36,848	)				33,050					(64,644	)
Accumulated net realized gain (loss)				(8,341,957	)				(302,416	)				(140,922	)				(1,846,864	)
			$	182,463,712				$	4,570,167				$	12,376,638				$	15,244,038
(1) Value of securities on loan			$	25,089,154				$	—				$	362,219				$	363,710
(2) Cost of investments			$	194,997,426				$	4,543,256				$	12,327,497				$	15,779,951
(3) Cost of short-term investments held as collateral for securities loaned			$	26,209,846				$	—				$	374,307				$	376,657
(4) Cost of cash denominated in foreign currency			$	—				$	163,324				$	—				$	85,336

 

(a)	Includes $740 of foreign investor minimum settlement reserve funds

 

See Notes to Financial Statements

 

 

Emerging Markets High Yield Bond ETF					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
	$	353,394,852				$	1,141,316,993				$	10,620,304				$	161,664,000				$	234,477,701				$	4,166,768,251				$	152,098,525
		24,056,005					84,008,090					—					10,522,099					283,473					73,804,687					19,762,033
		1,185,095					2,381,639					—					—					205,263					679,648					—
		—					—					36,455					539,286					—					4,155,125					—
		2,435,137					7,136,794					495,038					1,863,631					—					140,615,937					—
		—					19,665,535					—					—					—					4,794					—
		—					—					4,508					—					—					—					—
		5,505,432					16,105,651					65,021					2,552,896					424,865					70,529,768					140,312
		2,662					18,732					57					986					1,198					60,350					1,185
		386,579,183					1,270,633,434					11,221,383					177,142,898					235,392,500					4,456,618,560					172,002,055
		4,827,028					21,501,478					523,846					2,073,430					5,169					121,657,577					—
		24,056,005					84,008,090					—					10,522,099					283,473					73,804,687					19,762,033
		—					—					—					—					—					284,873					—
		—					—					—					—					9,502					—					—
		98,196					271,339					—					35,263					13,269					1,081,244					40,787
		—					—					15					—					—					—					3,217
		20,326					2,689					5					20,256					5,333					99,654					8,209
		107,251					45,083					29,308					117,635					38,229					1,385,675					100,193
		29,108,806					105,828,679					553,174					12,768,683					354,975					198,313,710					19,914,439
	$	357,470,377				$	1,164,804,755				$	10,668,209				$	164,374,215				$	235,037,525				$	4,258,304,850				$	152,087,616
		14,400,000					38,500,000					400,000					6,400,000					9,300,000					229,000,000					6,350,000
	$	24.82				$	30.25				$	26.67				$	25.68				$	25.27				$	18.60				$	23.95
	$	383,443,088				$	1,106,961,689				$	10,289,076				$	168,446,332				$	233,177,329				$	4,420,290,622				$	177,175,826
		4,103,833					45,263,678					335,991					2,092,607					1,538,679					(74,840,206	)				782,197
		1,927,734					4,918,571					10,154					(530,953	)				374,677					(37,908,988	)				1,342,661
		(32,004,278	)				7,660,817					32,988					(5,633,771	)				(53,160	)				(49,236,578	)				(27,213,068	)
	$	357,470,377				$	1,164,804,755				$	10,668,209				$	164,374,215				$	235,037,525				$	4,258,304,850				$	152,087,616
	$	22,983,784				$	79,533,463				$	—				$	10,106,717				$	275,958				$	69,950,055				$	19,120,467
	$	349,291,019				$	1,096,053,315				$	10,284,072				$	159,589,051				$	232,939,022				$	4,241,297,112				$	151,316,498
	$	24,056,005				$	84,008,090				$	—				$	10,522,099				$	283,473				$	73,804,687				$	19,762,033
	$	—				$	—				$	36,815				$	535,591				$	—				$	4,147,454				$	—

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF ASSETS AND LIABILITIES

October 31, 2017 (unaudited) (continued)

 

	Preferred Securities ex Financials ETF
Assets:
Investments, at value (1)(2)		$	506,404,147
Short-term investments held as collateral for securities loaned (3)			38,605,188
Receivables:
Investment securities sold			13,729,048
Dividends			1,080,242
Prepaid expenses			3,500
Total assets			559,822,125
Liabilities:
Payables:
Investment securities purchased			2,316,627
Collateral for securities loaned			38,605,188
Line of credit			12,551,061
Shares redeemed			126
Due to Adviser			144,155
Deferred Trustee fees			12,973
Accrued expenses			101,012
Total liabilities			53,731,142
NET ASSETS		$	506,090,983
Shares outstanding			25,300,000
Net asset value, redemption and offering price per share		$	20.00
Net assets consist of:
Aggregate paid in capital		$	532,408,250
Net unrealized depreciation			(2,627,382	)
Undistributed net investment income			1,819
Accumulated net realized loss			(23,691,703	)
		$	506,090,983
(1) Value of securities on loan		$	37,512,685
(2) Cost of investments		$	509,031,529
(3) Cost of short-term investments held as collateral for securities loaned		$	38,605,188

 

See Notes to Financial Statements

[This Page Intentionally Left Blank.]

VANECK VECTORS ETF TRUST

STATEMENTS OF OPERATIONS

For the Six Months Ended October 31, 2017 (unaudited)

 

		BDC Income ETF					ChinaAMC China Bond ETF					EM Investment Grade + BB Rated USD Sovereign Bond ETF					Emerging Markets Aggregate Bond ETF					Emerging Markets High Yield Bond ETF
Income:
Dividends			$	8,439,389				$	—				$	532				$	223				$	11,780
Interest				—					96,735					249,698					390,422					10,954,750
Securities lending income				142,641					—					501					1,190					123,202
Foreign taxes withheld				—					(4,181	)				(307	)				(8,888	)				—
Total income				8,582,030					92,554					250,424					382,947					11,089,732
Expenses:
Management fees				383,336					9,671					23,423					27,068					718,991
Professional fees				31,140					32,037					19,869					33,739					35,827
Insurance				866					32					50					84					1,789
Trustees’ fees and expenses				1,480					73					150					148					3,469
Reports to shareholders				14,605					10,792					11,542					6,538					19,454
Indicative optimized portfolio value fee				2,520					5,516					5,520					5,516					5,516
Custodian fees				2,901					2,265					2,862					13,742					21,060
Registration fees				7,091					2,567					3,504					2,520					8,672
Transfer agent fees				1,210					1,210					1,210					1,210					1,210
Fund accounting fees				3,154					197					394					391					8,897
Interest				10,426					—					—					—					—
Other				9,018					3,185					2,261					3,879					8,235
Total expenses				467,747					67,545					70,785					94,835					833,120
Waiver of management fees				(74,003	)				(9,671	)				(23,423	)				(27,068	)				(114,160	)
Expenses assumed by the Adviser				—					(45,785	)				(20,593	)				(29,875	)				—
Net expenses				393,744					12,089					26,769					37,892					718,960
Net investment income				8,188,286					80,465					223,655					345,055					10,370,772
Net realized gain (loss) on:
Investments				(3,090,938	)				(298,233	)				(9,999	)				(89,532	)				(336,487	)
In-kind redemptions				777,222					—					(42,240	)				—					1,565,008
Foreign currency transactions and foreign denominated assets and liabilities				—					10,317					—					(6,270	)				—
Net realized gain (loss)				(2,313,716	)				(287,916	)				(52,239	)				(95,802	)				1,228,521
Net change in unrealized appreciation (depreciation) on:
Investments				(20,737,691	)				416,897					235,977					186,825	(a)				(1,905,501	)
Foreign currency transactions and foreign denominated assets and liabilities				—					2,089					—					12,145					—
Net change in unrealized appreciation (depreciation)				(20,737,691	)				418,986					235,977					198,970					(1,905,501	)
Net Increase (Decrease) in Net Assets Resulting from Operations			$	(14,863,121	)			$	211,535				$	407,393				$	448,223				$	9,693,792

 

(a)	Net of foreign taxes of $314
(b)	Net of foreign taxes of $525,612

 

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
	$	34,303				$	38				$	3,688				$	3,564				$	20,984				$	6,362,962
		25,718,349					58,695					3,352,676					1,831,211					119,487,861					—
		368,951					—					37,077					2,771					60,017					21,934
		—					(148	)				(72,939	)				(2,638	)				(2,844,226	)				(3,134	)
		26,121,603					58,585					3,320,502					1,834,908					116,724,636					6,381,762
		1,879,481					14,171					277,813					325,684					6,838,715					302,274
		36,689					18,705					35,874					19,040					66,004					35,546
		3,315					26					699					699					16,232					749
		5,541					136					1,631					906					25,958					1,149
		18,575					11,604					13,398					9,653					119,108					13,691
		5,516					5,468					5,516					5,516					5,516					2,166
		31,378					1,385					41,591					9,746					1,944,451					1,904
		41,568					2,798					2,550					6,458					115,884					4,276
		1,210					977					1,210					1,210					1,210					1,210
		12,943					378					3,660					2,178					65,623					2,707
		—					111					280					324					4,441					6,144
		7,334					2,014					5,142					4,254					37,920					4,212
		2,043,550					57,773					389,364					385,668					9,241,062					376,028
		(399,073	)				(14,171	)				(111,285	)				(255,082	)				(640,123	)				(67,626	)
		—					(27,294	)				—					—					—					—
		1,644,477					16,308					278,079					130,586					8,600,939					308,402
		24,477,126					42,277					3,042,423					1,704,322					108,123,697					6,073,360
		1,866,596					27,409					(676,242	)				68,876					(17,901,261	)				(1,079,882	)
		5,158,721					—					144,098					6,469					785,508					2,486,602
		—					5,579					66,153					—					868,138					10,079
		7,025,317					32,988					(465,991	)				75,345					(16,247,615	)				1,416,799
		10,517,013					209,843					4,515,365					792,235					(10,170,169	)(b)				(5,786,143	)
		—					(859	)				(38,957	)				—					(3,147,217	)				171
		10,517,013					208,984					4,476,408					792,235					(13,317,386	)				(5,785,972	)
	$	42,019,456				$	284,249				$	7,052,840				$	2,571,902				$	78,558,696				$	1,704,187

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF OPERATIONS

For the Six Months Ended October 31, 2017 (unaudited) (continued)

 

	Preferred
	Securities Ex
	Financials ETF
Income:
Dividends		$	14,736,425
Securities lending income			483,457
Total income			15,219,882
Expenses:
Management fees			944,693
Professional fees			39,710
Insurance			2,402
Trustees’ fees and expenses			4,419
Reports to shareholders			23,266
Indicative optimized portfolio value fee			2,520
Custodian fees			8,217
Registration fees			10,411
Transfer agent fees			1,210
Fund accounting fees			11,646
Interest			12,741
Other			11,235
Total expenses			1,072,470
Waiver of management fees			(115,080	)
Net expenses			957,390
Net investment income			14,262,492
Net realized gain (loss) on:
Investments			(1,919,466	)
In-kind redemptions			237,917
Net realized loss			(1,681,549	)
Net change in unrealized appreciation (depreciation) on:
Investments			(1,943,448	)
Net Increase in Net Assets Resulting from Operations		$	10,637,495

 

See Notes to Financial Statements

[This page intentionally left blank.]

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

 

		BDC Income ETF										ChinaAMC China Bond ETF
		For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017
		(unaudited)										(unaudited)
Operations:
Net investment income			$	8,188,286				$	11,095,196				$	80,465				$	247,641
Net realized gain (loss)				(2,313,716	)				186,580					(287,916	)				(171,609	)
Net change in unrealized appreciation (depreciation)				(20,737,691	)				17,806,372					418,986					(555,741	)
Net increase (decrease) in net assets resulting from operations				(14,863,121	)				29,088,148					211,535					(479,709	)
Dividends and Distributions to shareholders:
Dividends from net investment income				(7,980,370	)				(10,221,190	)				(85,870	)				—
Return of capital				—					—					—					(243,320	)
Total Dividends and Distributions				(7,980,370	)				(10,221,190	)				(85,870	)				(243,320	)
Share transactions:**
Proceeds from sale of shares				29,227,544					86,185,712					—					—
Cost of shares redeemed				(6,987,294	)				(7,439,275	)				(2,204,390	)				(4,767,696	)
Increase (decrease) in net assets resulting from share transactions				22,240,250					78,746,437					(2,204,390	)				(4,767,696	)
Total increase (decrease) in net assets				(603,241	)				97,613,395					(2,078,725	)				(5,490,725	)
Net Assets, beginning of period				183,066,953					85,453,558					6,648,892					12,139,617
Net Assets, end of period†			$	182,463,712				$	183,066,953				$	4,570,167				$	6,648,892
† Including undistributed (accumulated) net investment income (loss)			$	800,541				$	592,625				$	(36,848	)			$	(31,443	)
** Shares of Common Stock Issued (no par value)
Shares sold				1,600,000					4,750,000					—					—
Shares redeemed				(400,000	)				(400,000	)				(100,000	)				(200,000	)
Net increase (decrease)				1,200,000					4,350,000					(100,000	)				(200,000	)

 

(a)	Commencement of operations

 

See Notes to Financial Statements

 

 

EM Investment Grade + BB Rated USD Sovereign Bond ETF										Emerging Markets Aggregate Bond ETF										Emerging Markets High Yield Bond ETF
For the Six Months Ended October 31, 2017					For the Period July 13, 2016 (a) through April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017
(unaudited)										(unaudited)											(unaudited)
	$	223,655				$	336,481				$	345,055				$	688,770				$	10,370,772				$	19,750,808
		(52,239	)				(84,409	)				(95,802	)				(234,883	)				1,228,521					(4,871,147	)
		235,977					(284,758	)				198,970					173,573					(1,905,501	)				23,414,085
		407,393					(32,686	)				448,223					627,460					9,693,792					38,293,746
		(230,340	)				(301,020	)				(354,480	)				(429,846	)				(10,445,080	)				(19,269,040	)
		—					—					—					(226,334	)				—					—
		(230,340	)				(301,020	)				(354,480	)				(656,180	)				(10,445,080	)				(19,269,040	)
		—					14,955,782					—					—					24,679,637					173,587,153
		(2,422,491	)				—					—					—					(39,383,898	)				(67,394,651	)
		(2,422,491	)				14,955,782					—					—					(14,704,261	)				106,192,502
		(2,245,438	)				14,622,076					93,743					(28,720	)				(15,455,549	)				125,217,208
		14,622,076					—					15,150,295					15,179,015					372,925,926					247,708,718
	$	12,376,638				$	14,622,076				$	15,244,038				$	15,150,295				$	357,470,377				$	372,925,926
	$	33,050				$	39,735				$	(64,644	)			$	(55,219	)			$	1,927,734				$	2,002,042
		—					600,000					—					—					1,000,000					7,200,000
		(100,000	)				—					—					—					(1,600,000	)				(2,800,000	)
		(100,000	)				600,000					—					—					(600,000	)				4,400,000

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

(continued)

 

		Fallen Angel High Yield Bond ETF										Green Bond ETF
		For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Period March 5, 2017 (a) through April 30, 2017
		(unaudited)										(unaudited)
Operations:
Net investment income			$	24,477,126				$	24,065,392				$	42,277				$	7,946
Net realized gain (loss)				7,025,317					6,673,195					32,988					71
Net change in unrealized appreciation (depreciation)				10,517,013					25,903,199					208,984					127,007
Net increase in net assets resulting from operations				42,019,456					56,641,786					284,249					135,024
Dividends and Distributions to shareholders:
Dividends from net investment income				(22,881,975	)				(21,498,655	)				(36,840	)				(3,300	)
Distributions from net realized capital gains				—					(1,601,910	)				—					—
Return of capital				—					—					—					—
Total Dividends and Distributions				(22,881,975	)				(23,100,565	)				(36,840	)				(3,300	)
Share transactions:**
Proceeds from sale of shares				353,765,736					712,790,889					5,332,476					4,956,600
Cost of shares redeemed				(63,478,768	)				(36,133,995	)				—					—
Increase (decrease) in net assets resulting from share transactions				290,286,968				$	676,656,894					5,332,476					4,956,600
Total increase (decrease) in net assets				309,424,449					710,198,115					5,579,885					5,088,324
Net Assets, beginning of period				855,380,306					145,182,191					5,088,324					—
Net Assets, end of period†			$	1,164,804,755				$	855,380,306				$	10,668,209				$	5,088,324
† Including undistributed (accumulated) net investment income (loss)			$	4,918,571				$	3,323,420				$	10,154				$	4,717
** Shares of Common Stock Issued (no par value)
Shares sold				11,800,000					24,750,000					200,000					200,000
Shares redeemed				(2,150,000	)				(1,250,000	)				—					—
Net increase (decrease)				9,650,000					23,500,000					200,000					200,000

 

(a)	Commencement of operations

 

See Notes to Financial Statements

 

 

International High Yield Bond ETF										Investment Grade Floating Rate ETF										J.P. Morgan EM Local Currency Bond ETF
For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017
(unaudited)										(unaudited)										(unaudited)
	$	3,042,423				$	6,749,823				$	1,704,322				$	1,243,916				$	108,123,697				$	126,407,989
		(465,991	)				(4,039,441	)				75,345					45,197					(16,247,615	)				(79,456,164	)
		4,476,408					7,692,437					792,235					1,128,632					(13,317,386	)				52,827,371
		7,052,840					10,402,819					2,571,902					2,417,745					78,558,696					99,779,196
		(2,900,020	)				(4,625,006	)				(1,528,560	)				(1,118,580	)				(103,594,840	)				(32,790,499	)
		—					—					—					—					—					—
		—					(2,034,794	)				—					—					—					(79,569,141	)
		(2,900,020	)				(6,659,800	)				(1,528,560	)				(1,118,580	)				(103,594,840	)				(112,359,640	)
		35,713,308					38,864,275					88,199,652					70,225,526					958,721,716					1,955,982,420
		(4,970,100	)				(43,815,444	)				(2,527,285	)				(2,476,311	)				(30,131,552	)				(78,292,655	)
		30,743,208					(4,951,169	)				85,672,367					67,749,215					928,590,164					1,877,689,765
		34,896,028					(1,208,150	)				86,715,709					69,048,380					903,554,020					1,865,109,321
		129,478,187					130,686,337					148,321,816					79,273,436					3,354,750,830					1,489,641,509
	$	164,374,215				$	129,478,187				$	235,037,525				$	148,321,816				$	4,258,304,850				$	3,354,750,830
	$	(530,953	)			$	(673,356	)			$	374,677				$	198,915				$	(37,908,988	)			$	(42,437,845	)
		1,400,000					1,600,000					3,500,000					2,800,000					50,400,000					105,800,000
		(200,000	)				(1,800,000	)				(100,000	)				(100,000	)				(1,600,000	)				(4,200,000	)
		1,200,000					(200,000	)				3,400,000					2,700,000					48,800,000					101,600,000

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

STATEMENTS OF CHANGES IN NET ASSETS

(continued)

 

		Mortgage REIT Income ETF										Preferred Securities ex Financials ETF
		For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017					For the Six Months Ended October 31, 2017					For the Year Ended April 30, 2017
		(unaudited)										(unaudited)
Operations:
Net investment income			$	6,073,360				$	8,929,483				$	14,262,492				$	23,856,731
Net realized gain (loss)				1,416,799					(3,097,246	)				(1,681,549	)				(2,831,492	)
Net change in unrealized appreciation (depreciation)				(5,785,972	)				24,450,189					(1,943,448	)				(5,378,935	)
Net increase in net assets resulting from operations				1,704,187					30,282,426					10,637,495					15,646,304
Dividends to shareholders:
Dividends from net investment income				(5,226,375	)				(8,294,740	)				(13,442,335	)				(24,396,400	)
Share transactions:**
Proceeds from sale of shares				23,326,814					35,547,221					74,199,444					174,245,882
Cost of shares redeemed				(15,860,022	)				(5,541,685	)				(3,019,987	)				(37,917,755	)
Increase in net assets resulting from share transactions				7,466,792					30,005,536					71,179,457					136,328,127
Total increase in net assets				3,944,604					51,993,222					68,374,617					127,578,031
Net Assets, beginning of period				148,143,012					96,149,790					437,716,366					310,138,335
Net Assets, end of period†			$	152,087,616				$	148,143,012				$	506,090,983				$	437,716,366
† Including undistributed (accumulated) net investment income (loss)			$	1,342,661				$	495,676				$	1,819				$	(818,338	)
** Shares of Common Stock Issued (no par value)
Shares sold				950,000					1,500,000					3,700,000					8,450,000
Shares redeemed				(650,000	)				(250,000	)				(150,000	)				(1,950,000	)
Net increase				300,000					1,250,000					3,550,000					6,500,000

 

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																				For the Period February 11, 2013(a) through
		October 31,				For the Year Ended April 30,																April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$19.17				$16.43				$18.56				$19.84				$20.72				$19.98
Income from investment operations:
Net investment income			0.77	(b)			1.54				1.59				1.51				1.37				0.21
Net realized and unrealized gain (loss) on investments			(2.23	)			2.67				(2.20	)			(1.27	)			(0.97	)			0.74
Total from investment operations			(1.46	)			4.21				(0.61	)			0.24				0.40				0.95
Less:
Dividends from net investment income			(0.74	)			(1.47	)			(1.52	)			(1.52	)			(1.28	)			(0.21	)
Net asset value, end of period			$16.97				$19.17				$16.43				$18.56				$19.84				$20.72
Total return (c)			(7.72	)%(d)			26.67	%			(2.98	)%			1.28	%			1.94	%			4.79	%(d)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$182,464				$183,067				$85,454				$74,259				$33,728				$11,398
Ratio of gross expenses to average net assets (g)			0.49	%(e)			0.52	%			0.58	%			0.58	%			0.81	%			4.82	%(e)
Ratio of net expenses to average net assets (g)			0.41	%(e)			0.41	%			0.41	%			0.41	%			0.40	%			0.40	%(e)
Ratio of net expenses to average net assets excluding interest expense (g)			0.40	%(e)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%(e)
Ratio of net investment income to average net assets			8.54	%(e)			9.12	%			9.87	%			8.59	%			7.38	%			6.67	%(e)
Portfolio turnover rate (f)			8	%(d)			23	%			23	%			20	%			14	%			0	%(d)

 

		ChinaAMC China Bond ETF
		For the Six Months Ended												For the Period November 10, 2014 (a) through
		October 31,				For the Year Ended April 30,								April 30,
		2017				2017				2016				2015
		(unaudited)
Net asset value, beginning of period			$22.16				$24.28				$24.94				$25.00
Income from investment operations:
Net investment income			0.38	(b)			0.21				0.70				0.29
Net realized and unrealized gain (loss) on investments			0.71				(1.64	)			(0.65	)			(0.12	)
Total from investment operations			1.09				(1.43	)			0.05				0.17
Less:
Dividends from net investment income			(0.40	)			—				(0.37	)			(0.15	)
Return of capital			—				(0.69	)			(0.34	)			(0.08	)
Total dividends and distributions			(0.40	)			(0.69	)			(0.71	)			(0.23	)
Net asset value, end of period			$22.85				$22.16				$24.28				$24.94
Total return (c)			4.96	%(d)			(6.00	)%			0.20	%			0.71	%(d)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$4,570				$6,649				$12,140				$19,955
Ratio of gross expenses to average net assets			2.80	%(e)			1.90	%			1.12	%			1.22	%(e)
Ratio of net expenses to average net assets			0.50	%(e)			0.50	%			0.50	%			0.50	%(e)
Ratio of net expenses to average net assets excluding interest expense			0.50	%(e)			0.50	%			0.50	%			0.50	%(e)
Ratio of net investment income to average net assets			3.34	%(e)			3.04	%			2.88	%			2.61	%(e)
Portfolio turnover rate (f)			20	%(d)			9	%			58	%			58	%(d)

 

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

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		EM Investment Grade + BB Rated USD Sovereign Bond ETF
		For the Six Months Ended October 31, 2017				For the Period July 13, 2016 (a) through April 30, 2017
		(unaudited)
Net asset value, beginning of period			$24.37				$24.99
Income from investment operations:
Net investment income			0.41	(b)			0.56
Net realized and unrealized gain (loss) on investments			0.39				(0.68	)
Total from investment operations			0.80				(0.12	)
Less:
Dividends from net investment income			(0.42	)			(0.50	)
Net asset value, end of period			$24.75				$24.37
Total return (c)			3.31	%(d)			(0.44	)%(d)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$12,377				$14,622
Ratio of gross expenses to average net assets			1.06	%(e)			1.11	%(e)
Ratio of net expenses to average net assets			0.40	%(e)			0.40	%(e)
Ratio of net expenses to average net assets excluding interest expense			0.40	%(e)			0.40	%(e)
Ratio of net investment income to average net assets			3.34	%(e)			2.93	%(e)
Portfolio turnover rate (f)			13	%(d)			26	%(d)

 

		Emerging Markets Aggregate Bond ETF
		For the Six Months Ended
		October 31,				For the Year Ended April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$21.64				$21.68				$22.41				$23.95				$26.43				$25.28
Income from investment operations:
Net investment income			0.49	(b)			0.98				0.95				1.04				1.19				1.16
Net realized and unrealized gain (loss) on investments			0.16				(0.08	)			(0.70	)			(1.63	)			(2.49	)			1.10
Total from investment operations			0.65				0.90				0.25				(0.59	)			(1.30	)			2.26
Less:
Dividends from net investment income			(0.51	)			(0.62	)			(0.37	)			(0.72	)			(0.61	)			(1.10	)
Distributions from net realized capital gains			—				—				—				—				—				(0.01	)
Return of capital			—				(0.32	)			(0.61	)			(0.23	)			(0.57	)			—
Total dividends and distributions			(0.51	)			(0.94	)			(0.98	)			(0.95	)			(1.18	)			(1.11	)
Net asset value, end of period			$21.78				$21.64				$21.68				$22.41				$23.95				$26.43
Total return (c)			3.00	%(d)			4.27	%			1.33	%			(2.52	)%			(4.78	)%			9.25	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$15,244				$15,150				$15,179				$17,928				$21,556				$47,571
Ratio of gross expenses to average net assets			1.23	%(e)			1.26	%			1.21	%			1.01	%			1.34	%			1.26	%
Ratio of net expenses to average net assets			0.49	%(e)			0.49	%			0.49	%			0.49	%			0.50	%			0.49	%
Ratio of net expenses to average net assets excluding interest expense			0.49	%(e)			0.49	%			0.49	%			0.49	%			0.49	%			0.49	%
Ratio of net investment income to average net assets			4.46	%(e)			4.60	%			4.61	%			4.41	%			4.57	%			4.92	%
Portfolio turnover rate (f)			13	%(d)			11	%			13	%			24	%			58	%			11	%

 

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

 

See Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Emerging Markets High Yield Bond ETF
																						For the Period
		For the Six Months Ended																				May 8, 2012 (a) through
		October 31,				For the Year Ended April 30,																April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$24.86				$23.37				$24.51				$25.68				$26.86				$25.03
Income from investment operations:
Net investment income			0.72	(b)			1.46				1.64				1.64				1.51				1.54
Net realized and unrealized gain (loss) on investments			(0.04	)			1.50				(1.13	)			(1.18	)			(1.21	)			1.75
Total from investment operations			0.68				2.96				0.51				0.46				0.30				3.29
Less:
Dividends from net investment income			(0.72	)			(1.47	)			(1.65	)			(1.63	)			(1.48	)			(1.45	)
Distributions from net realized capital gains			—				—				—				—				—				(0.01	)
Total dividends and distributions			(0.72	)			(1.47	)			(1.65	)			(1.63	)			(1.48	)			(1.46	)
Net asset value, end of period			$24.82				$24.86				$23.37				$24.51				$25.68				$26.86
Total return (c)			2.80	%(d)			13.04	%			2.38	%			1.94	%			1.34	%			13.47	%(d)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$357,470				$372,926				$247,709				$387,262				$339,021				$247,080
Ratio of gross expenses to average net assets			0.46	%(e)			0.47	%			0.50	%			0.47	%			0.53	%			0.69	%(e)
Ratio of net expenses to average net assets			0.40	%(e)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%(e)
Ratio of net expenses to average net assets excluding interest expense			0.40	%(e)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%(e)
Ratio of net investment income to average net assets			5.77	%(e)			6.13	%			6.93	%			6.64	%			6.05	%			6.09	%(e)
Portfolio turnover rate (f)			20	%(d)			39	%			42	%			35	%			16	%			20	%(d)

 

		Fallen Angel High Yield Bond ETF
		For the Six Months Ended
		October 31,				For the Year Ended April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$29.65				$27.14				$27.66				$27.82				$27.54				$25.20
Income from investment operations:
Net investment income			0.78	(b)			1.56				1.39				1.43				1.54				1.62
Net realized and unrealized gain (loss) on investments			0.56				2.62				(0.51	)			0.17				0.37				2.39
Total from investment operations			1.34				4.18				0.88				1.60				1.91				4.01
Less:
Dividends from net investment income			(0.74	)			(1.58	)			(1.34	)			(1.48	)			(1.55	)			(1.55	)
Distributions from net realized capital gains			—				(0.09	)			(0.06	)			(0.28	)			(0.08	)			(0.12	)
Total dividends and distributions			(0.74	)			(1.67	)			(1.40	)			(1.76	)			(1.63	)			(1.67	)
Net asset value, end of period			$30.25				$29.65				$27.14				$27.66				$27.82				$27.54
Total return (c)			4.60	%(d)			15.86	%			3.59	%			5.98	%			7.31	%			16.40	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$1,164,805				$855,380				$145,182				$26,279				$16,695				$11,017
Ratio of gross expenses to average net assets			0.43	%(e)			0.46	%			0.65	%			0.90	%			1.47	%			1.48	%
Ratio of net expenses to average net assets			0.35	%(e)			0.35	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net expenses to average net assets excluding interest expense			0.35	%(e)			0.35	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			5.20	%(e)			5.61	%			6.27	%			5.27	%			5.72	%			6.16	%
Portfolio turnover rate (f)			14	%(d)			32	%			39	%			50	%			35	%			34	%

 

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

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Green Bond ETF
		For the Six Months Ended October 31, 2017				For the Period March 3, 2017 (a) through April 30, 2017
		(unaudited)
Net asset value, beginning of period			$25.44				$24.75
Income from investment operations:
Net investment income			0.14	(b)			0.04
Net realized and unrealized gain on investments			1.22				0.67
Total from investment operations			1.36				0.71
Less:
Dividends from net investment income			(0.13	)			(0.02	)
Net asset value, end of period			$26.67				$25.44
Total return (c)			5.34	%(d)			2.86	%(d)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$10,668				$5,088
Ratio of gross expenses to average net assets			1.42	%(e)			5.49	%(e)
Ratio of net expenses to average net assets			0.40	%(e)			0.40	%(e)
Ratio of net expenses to average net assets excluding interest expense			0.40	%(e)			0.40	%(e)
Ratio of net investment income to average net assets			1.04	%(e)			1.03	%(e)
Portfolio turnover rate (f)			15	%(d)			0	%(d)

 

		International High Yield Bond ETF
		For the Six Months Ended
		October 31,				For the Year Ended April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$24.90				$24.20				$25.00				$27.73				$27.37				$24.93
Income from investment operations:
Net investment income			0.56	(b)			1.24				1.30				1.32				1.66				1.43
Net realized and unrealized gain (loss) on investments			0.77				0.65				(0.80	)			(2.67	)			0.44				2.43
Total from investment operations			1.33				1.89				0.50				(1.35	)			2.10				3.86
Less:
Dividends from net investment income			(0.55	)			(0.83	)			(1.00	)			(1.09	)			(1.69	)			(1.42	)
Distributions from net realized capital gains			—				—				—				—				(0.05	)			—
Return of capital			—				(0.36	)			(0.30	)			(0.29	)			—				—
Total dividends and distributions			(0.55	)			(1.19	)			(1.30	)			(1.38	)			(1.74	)			(1.42	)
Net asset value, end of period			$25.68				$24.90				$24.20				$25.00				$27.73				$27.37
Total return (c)			5.38	%(d)			8.04	%			2.29	%			(4.94	)%			8.06	%			16.01	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$164,374				$129,478				$130,686				$155,003				$160,853				$273,736
Ratio of gross expenses to average net assets			0.56	%(e)			0.54	%			0.61	%			0.54	%			0.58	%			0.52	%
Ratio of net expenses to average net assets			0.40	%(e)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net expenses to average net assets excluding interest expense			0.40	%(e)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			4.37	%(e)			4.95	%			5.48	%			5.13	%			5.59	%			5.81	%
Portfolio turnover rate (f)			20	%(d)			34	%			20	%			37	%			27	%			11	%

 

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

 

See Notes to Financial Statements

 

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Investment Grade Floating Rate ETF
		For the Six Months Ended
		October 31,				For the Year Ended April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$25.14				$24.77				$24.94				$25.02				$24.95				$24.27
Income from investment operations:
Net investment income			0.23	(a)			0.33				0.20				0.16				0.15				0.23
Net realized and unrealized gain (loss) on investments			0.12				0.36				(0.18	)			(0.07	)			0.07				0.69
Total from investment operations			0.35				0.69				0.02				0.09				0.22				0.92
Less:
Dividends from net investment income			(0.22	)			(0.32	)			(0.19	)			(0.16	)			(0.15	)			(0.24	)
Distributions from net realized capital gains			—				—				—				(0.01	)			—				—
Total dividends and distributions			(0.22	)			(0.32	)			(0.19	)			(0.17	)			(0.15	)			(0.24	)
Net asset value, end of period			$25.27				$25.14				$24.77				$24.94				$25.02				$24.95
Total return (b)			1.38	%(c)			2.80	%			0.10	%			0.35	%			0.88	%			3.82	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$235,038				$148,322				$79,273				$99,769				$97,584				$17,462
Ratio of gross expenses to average net assets			0.41	%(d)			0.46	%			0.48	%			0.48	%			0.54	%			1.48	%
Ratio of net expenses to average net assets			0.14	%(d)			0.14	%			0.14	%			0.17	%			0.19	%			0.19	%
Ratio of net expenses to average net assets excluding interest expense			0.14	%(d)			0.14	%			0.14	%			0.17	%			0.19	%			0.19	%
Ratio of net investment income to average net assets			1.83	%(d)			1.40	%			0.81	%			0.63	%			0.62	%			0.91	%
Portfolio turnover rate (e)			14	%(c)			46	%			36	%			33	%			13	%			5	%

 

		J.P. Morgan EM Local Currency Bond ETF
		For the Six Months Ended
		October 31,								For the Year Ended April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$18.62				$18.95				$20.55				$23.69				$27.56				$26.28
Income from investment operations:
Net investment income			0.53	(a)			1.28				1.04	(a)			1.23				1.38				1.36
Net realized and unrealized gain (loss) on investments			(0.03	)			(0.67	)			(1.62	)			(3.26	)			(3.98	)			1.13
Total from investment operations			0.50				0.61				(0.58	)			(2.03	)			(2.60	)			2.49
Less:
Dividends from net investment income			(0.52	)			(0.30	)			—				(0.62	)			(0.87	)			(1.14	)
Return of capital			—				(0.64	)			(1.02	)			(0.49	)			(0.40	)			(0.07	)
Total dividends and distributions			(0.52	)			(0.94	)			(1.02	)			(1.11	)			(1.27	)			(1.21	)
Net asset value, end of period			$18.60				$18.62				$18.95				$20.55				$23.69				$27.56
Total return (b)			2.65	%(c)			3.41	%			(2.47	)%			(8.85	)%			(9.35	)%			9.75	%
Ratios/Supplemental Data
Net assets, end of period (000’s)			$4,258,305			$3,354,751				$1,489,642				$1,093,524				$810,369				$1,504,998
Ratio of gross expenses to average net assets			0.47	%(d)			0.48	%			0.51	%			0.49	%			0.52	%			0.48	%
Ratio of net expenses to average net assets			0.44	%(d)			0.47	%			0.47	%			0.47	%			0.47	%			0.47	%
Ratio of net expenses to average net assets excluding interest expense			0.44	%(d)			0.47	%			0.47	%			0.47	%			0.47	%			0.47	%
Ratio of net investment income to average net assets			5.53	%(d)			5.60	%			5.69	%			5.49	%			5.47	%			5.28	%
Portfolio turnover rate (e)			14	%(c)			37	%			34	%			36	%			16	%			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

VANECK VECTORS ETF TRUST

FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

 

		Mortgage REIT Income ETF
		For the Six Months Ended
		October 31,				For the Year Ended April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$24.49				$20.03				$23.59				$24.40				$29.41				$25.35
Income from investment operations:
Net investment income			1.00	(b)			1.81				2.12				2.03				3.06				2.84
Net realized and unrealized gain (loss) on investments			(0.69	)			4.38				(3.71	)			(0.55	)			(4.85	)			4.08
Total from investment operations			0.31				6.19				(1.59	)			1.48				(1.79	)			6.92
Less:
Dividends from net investment income			(0.85	)			(1.73	)			(1.90	)			(2.29	)			(2.61	)			(2.72	)
Distributions from net realized capital gains			—				—				—				—				—				(0.14	)
Return of capital			—				—				(0.07	)			—				(0.61	)			—
Total dividends and distributions			(0.85	)			(1.73	)			(1.97	)			(2.29	)			(3.22	)			(2.86	)
Net asset value, end of period			$23.95				$24.49				$20.03				$23.59				$24.40				$29.41
Total return (c)			1.22	%(d)			32.15	%			(6.66	)%			6.23	%			(4.87	)%			28.75	%
Ratios/Supplemental Data
Net assets, end of period (000’s)		$152,088				$148,143				$96,150				$117,960				$106,140				$130,884
Ratio of gross expenses to average net assets			0.50	%(e)			0.54	%			0.57	%			0.51	%			0.60	%			0.58	%
Ratio of net expenses to average net assets			0.41	%(e)			0.41	%			0.41	%			0.41	%			0.41	%			0.41	%
Ratio of net expenses to average net assets excluding interest expense			0.40	%(e)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%
Ratio of net investment income to average net assets			8.04	%(e)			8.25	%			10.27	%			8.65	%			12.22	%			11.60	%
Portfolio turnover rate (f)			10	%(d)			24	%			16	%			29	%			26	%			6	%

 

		Preferred Securities ex Financials ETF
		For the Six Months Ended
		October 31,				For the Year Ended April 30,
		2017				2017				2016				2015				2014				2013
		(unaudited)
Net asset value, beginning of period			$20.12				$20.34				$20.75				$20.70				$20.69				$20.06
Income from investment operations:
Net investment income			0.61	(b)			1.15				1.20				1.22				1.25				0.89
Net realized and unrealized gain (loss) on investments			(0.15	)			(0.19	)			(0.48	)			—	(g)			—	(g)			0.57
Total from investment operations			0.46				0.96				0.72				1.22				1.25				1.46
Less:
Dividends from net investment income			(0.58	)			(1.18	)			(1.13	)			(1.17	)			(1.24	)			(0.83	)
Net asset value, end of period			$20.00				$20.12				$20.34				$20.75				$20.70				$20.69
Total return (c)			2.32	%(d)			4.88	%			3.77	%			6.08	%			6.59	%			7.38	%(d)
Ratios/Supplemental Data
Net assets, end of period (000’s)		$506,091				$437,716				$310,138				$287,354				$162,519				$163,471
Ratio of gross expenses to average net assets			0.45	%(e)			0.46	%			0.49	%			0.47	%			0.53	%			0.51	%(e)
Ratio of net expenses to average net assets			0.41	%(e)			0.41	%			0.41	%			0.40	%			0.40	%			0.40	%(e)
Ratio of net expenses to average net assets excluding interest expense			0.40	%(e)			0.40	%			0.40	%			0.40	%			0.40	%			0.40	%(e)
Ratio of net investment income to average net assets			6.03	%(e)			5.70	%			6.05	%			6.04	%			6.40	%			6.25	%(e)
Portfolio turnover rate (f)			25	%(d)			31	%			27	%			16	%			19	%			21	%(d)

 

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

 

See Notes to Financial Statements

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

October 31, 2017 (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, 2017, offers fifty-six 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”), EM Investment Grade + BB Rated USD Sovereign Bond ETF (“EM Investment Grade + BB Rated USD Sovereign 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
EM Investment Grade + BB Rated USD Sovereign Bond		J.P. Morgan Custom EM Investment Grade Plus BB-Rated Sovereign USD Bond Index
Emerging Markets Aggregate		MVIS® EM Aggregate Bond Index*
Emerging Markets High Yield		ICE BofA Merrill Lynch Diversified High Yield US Emerging Markets Corporate Plus Index(1)
Fallen Angel		ICE BofA Merrill Lynch US Fallen Angel High Yield Index(1)
Green Bond		S&P Green Bond Select Index
International High Yield		ICE BofA Merrill Lynch Global Ex-US Issuers High Yield Constrained Index(1)
Investment Grade		MVIS® US Investment Grade Floating Rate Index*
J.P. Morgan EM		J.P. Morgan GBI-EMG Core Index
Mortgage REIT		MVIS® US Mortgage REITs Index*(2)
Preferred Securities		Wells Fargo® Hybrid & Preferred Securities ex Financials Index

 

*		Published by MV Index Solutions GmbH, an indirect, wholly-owned subsidiary of the Adviser.
(1)		Index names changed from The BofA Merrill Lynch Diversified High Yield US Emerging Markets Corporate Plus Index, The BofA Merrill Lynch US Fallen Angel High Yield Index and The BofA Merrill Lynch Global Ex-US Issuers High Yield Constrained Index, to ICE BofA Merrill Lynch Diversified High Yield US Emerging Markets Corporate Plus Index, ICE BofA Merrill Lynch US Fallen Angel High Yield Index and ICE BofA Merrill Lynch Global Ex-US Issuers High Yield Constrained Index, respectively.
(2)		Index named changed from MVIS Global Mortgage REITs Index to MVIS US Mortgage REITs Index.

 

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

 

The Funds are investment companies and 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.

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

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 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 (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.
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. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, excluding 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 in foreign exchange rates on investments, in addition to 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.	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, 2017 are reflected in the Schedules of Investments.
G.	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, 2017, if any, are reflected in the Schedules of Investments.
H.	Use of Derivative Instruments—The Funds may make investments in derivative instruments, including, but not limited to, options, futures, swaps and other derivatives relating to foreign currency transactions. A derivative is an instrument whose value is derived from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be privately negotiated contracts (often referred to as over-the-counter (“OTC”) derivatives) or they may be listed and traded on an exchange. Derivative contracts may involve future commitments to purchase or sell financial instruments at specified terms on a specified date, or to exchange interest payment streams or currencies based on a notional or contractual amount. Derivative instruments may involve a high degree of financial risk. The use of derivative instruments also involves the risk of loss if the investment adviser is incorrect in its expectation of the timing or level of fluctuations in securities prices, interest rates or currency prices. Investments in derivative instruments also include the risk of default by the counterparty, the risk that the investment may not be liquid and the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instruments. The Funds held no derivative instruments during the period ended October 31, 2017.

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

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, 2017 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 calculated on the identified cost basis. 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.
	At October 31, 2017, ChinaAMC China Bond included $740 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, 2018, to voluntarily 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, 2017.

 

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

 

Fund		Expense Limitation				Management Fee Rate
BDC Income			0.40	%			0.40	%
ChinaAMC China Bond			0.50				0.40
EM Investment Grade + BB Rated USD Sovereign Bond			0.40				0.35
Emerging Markets Aggregate			0.49				0.35
Emerging Markets High Yield			0.40				0.40
Fallen Angel			0.35				0.40
Green Bond			0.40				0.35
International High Yield			0.40				0.40
Investment Grade			0.14				0.35
J.P. Morgan EM			0.44				0.35
Mortgage REIT			0.40				0.40
Preferred Securities			0.40				0.40

 

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, 2017, 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		$	16,706,647			$	15,576,071
ChinaAMC China Bond			922,161				2,928,594
EM Investment Grade + BB Rated USD Sovereign Bond			1,789,277				1,703,472
Emerging Markets Aggregate			2,143,459				1,908,442
Emerging Markets High Yield			81,116,073				69,175,646
Fallen Angel			438,168,236				127,631,982
Green Bond			6,529,362				1,241,158
International High Yield			28,219,051				26,984,831
Investment Grade			114,042,285				25,767,677
J.P. Morgan EM			1,268,910,513				547,030,636
Mortgage REIT			16,207,852				14,971,161
Preferred Securities			118,372,582				118,857,573

 

Note 5—Income Taxes—As of October 31, 2017, 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		$	222,388,746			$	4,991,185			$	(18,249,031	)		$	(13,257,846	)
ChinaAMC China Bond			4,549,342				10,119				(283,476	)			(273,357	)
EM Investment Grade + BB Rated USD Sovereign Bond			12,701,804				144,373				(193,154	)			(48,781	)
Emerging Markets Aggregate			16,160,724				557,509				(1,346,223	)			(788,714	)
Emerging Markets High Yield			373,371,359				11,602,279				(7,522,781	)			4,079,498
Fallen Angel			1,180,734,049				50,675,205				(6,084,171	)			44,591,034
Green Bond			10,284,072				393,501				(57,269	)			336,232
International High Yield			170,174,849				6,139,685				(4,128,435	)			2,011,250
Investment Grade			233,222,543				1,560,011				(21,380	)			1,538,631
J.P. Morgan EM			4,355,076,395				110,257,045				(224,760,502	)			(114,503,457	)
Mortgage REIT			173,545,618				5,649,985				(7,335,045	)			(1,685,060	)
Preferred Securities			547,129,172				17,515,468				(19,635,305	)			(2,119,837	)

 

The tax character of dividends and distributions paid to shareholders during the year ended April 30, 2017 was as follows:

 

Fund		Ordinary Income				Long-Term Capital Gains				Return of Capital
BDC Income		$	10,221,190			$	—			$	—
ChnaAMC China Bond			—				—				243,320
EM Investment Grade + BB Rated USD  Sovereign Bond			301,020				—				—
Emerging Markets Aggregate			429,846				—				226,334
Emerging Markets High Yield			19,269,040				—				—
Fallen Angel			22,967,945	*			132,620				—
Green Bond			3,300				—				—
International High Yield			4,625,006				—				2,034,794
Investment Grade			1,118,580				—				—
J.P. Morgan EM			32,790,499				—				79,569,141
Mortgage REIT			8,294,740				—				—
Preferred Securities			24,396,400				—				—

* Includes short-term capital gains

 

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

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

Qualified late-year losses comprised of post-October capital losses incurred after October 31, 2016, and certain late-year ordinary losses. Late-year ordinary losses represent ordinary losses incurred after December 31, 2016 and specified losses incurred after October 31, 2016. These losses are deemed to arise on the first day of the Funds’ next taxable year. For the year ended April 30, 2017, the Funds deferred to May 1, 2017 for federal tax purposes qualified late-year losses as follows:

 

Fund		Late-Year Ordinary Losses
ChinaAMC China Bond		$	26,883
Emerging Markets Aggregate			54,071
International High Yield			615,331
J.P. Morgan EM			8,470,201
Preferred Securities			488,434

 

At April 30, 2017, the Funds had capital loss carryforwards available to offset future capital gains, as follows:

 

Fund		No Expiration Short-Term Capital Losses				No Expiration Long-Term Capital Losses
BDC Income		$	2,138,507			$	2,684,089
ChinaAMC China Bond			12,832				—
EM Investment Grade + BB Rated USD Sovereign Bond			88,683				—
Emerging Markets Aggregate			1,565,167				181,779
Emerging Markets High Yield			5,987,765				27,220,699
International High Yield			363,621				4,779,289
Investment Grade			128,457				—
J.P. Morgan EM			9,439,750				17,449,357
Mortgage REIT			1,703,973				24,164,529
Preferred Securities			8,252,571				12,906,983

 

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, 2017 to October 31, 2017, the net realized gains (losses) from foreign currency translations were as follows:

 

ChinaAMC China Bond		$	(267,843	)
Emerging Markets Aggregate			(118,296	)
Green Bond			31,490
International High Yield			(264,344	)
J.P. Morgan EM			(14,527,819	)

 

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 are subject to foreign taxes on the appreciation in value of certain investments. The Funds provide for such taxes on both realized and unrealized appreciation.

 

The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the period ended October 31, 2017, the Funds did not incur any interest or penalties.

 

There are still some uncertainties in the Chinese tax rules governing taxation of income and gains from investments in the PRC due to the lack of formal guidance from the PRC’s tax authorities that could result in unexpected tax liabilities for ChinaAMC China Bond. China generally imposes withholding income tax (“WHT”) at a rate of 10% (which may be reduced by the double taxation agreement/arrangement) on dividends and interest derived by nonresidents, including

 

 

Qualified Foreign Institutional Investors (“QFII”) and Renminbi Qualified Foreign Institutional Investors (“RQFIIs”), from issuers resident in China. 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 not subject to WHT.

 

PRC rules for taxation of RQFIIs (and QFIIs) are evolving and certain of the tax regulations to be issued by the PRC State Administration of Taxation and/or PRC Ministry of Finance to clarify the subject matter may apply retrospectively, even if such rules are adverse to the Fund and their shareholders.

 

If the PRC tax authorities were to issue differing formal guidance or tax rules regarding the taxation of capital gains from Chinese Bonds to RQFIIs, such as the Sub-Adviser, and/or begin collecting WHT on gains from such investments, ChinaAMC China Bond could be subject to WHT liability. The impact of any such tax liability on the Fund’s return could be substantial. The Fund may also be liable to the Sub-Adviser for any tax that is imposed on the Sub-Adviser by the PRC with respect to the Fund’s investments.

 

Note 6—Capital Share Transactions—As of October 31, 2017, 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
EM Investment Grade + BB Rated USD Sovereign 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			100,000
J.P. Morgan EM			200,000
Mortgage REIT			50,000
Preferred Securities			50,000

 

*	Effective September 1, 2017 Green Bond creation units changed from 100,000 to 50,000 shares

 

The consideration for the purchase or redemption of Creation Units of the Funds generally consists of the in-kind contribution or distribution of securities constituting the Funds’ underlying index (“Deposit Securities”) plus a balancing cash component to equate the transaction to the net asset value per share of the Fund on the transaction date. Cash may also be substituted in an amount equivalent to the value of certain Deposit Securities, generally as a result of market circumstances, or when the securities are not available in sufficient quantity for delivery, or are not eligible for trading by the Authorized Participant. The Funds may issue Creation Units in advance of receipt of Deposit Securities subject to various conditions, including 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, 2017, the Funds had in-kind contributions and redemptions as follows:

 

Fund		In-Kind Contributions				In-Kind Redemptions
BDC Income		$	29,245,196			$	6,987,294
ChinaAMC China Bond			—				—
EM Investment Grade + BB Rated USD Sovereign Bond			—				2,420,008
Emerging Markets Aggregate			—				—
Emerging Markets High Yield			12,090,493				37,441,177
Fallen Angel			24,808,098				56,758,635
Green Bond			—				—
International High Yield			34,112,681				3,664,024
Investment Grade			—				2,512,614
J.P. Morgan EM			302,298,035				18,541,442
Mortgage REIT			23,225,302				15,872,176
Preferred Securities			74,193,286				3,014,102

 

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—Concentration 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, EM Investment Grade + BB Rated USD Sovereign 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.

 

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.

 

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.

 

In March 2017, the United Kingdom triggered Article 50, and is now scheduled to leave the European Union (“EU”) by the end of March 2019. Significant uncertainty exists on how the withdrawal will take place, the terms of the withdrawal and the effects such withdrawal will have on the EU and the United Kingdom. This may further impact the value of the Euro and the British pound sterling, and has caused volatility and uncertainty in European and global markets.

 

As a result of events involving Ukraine and the Russian Federation, the United States and the EU have imposed sanctions on certain Russian individuals and companies. These sanctions do not currently impact any of 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.

 

In August 2017, the U.S. government imposed sanctions on Venezuela, which prohibited financial institutions from providing new money to the Venezuelan government or to Petróleos de Venezuela, S.A. (“PDVSA”), the Venezuelan state-owned oil and natural gas company, restricted Citgo (PDVSA’s U.S. subsidiary) from paying dividends to Venezuela and banned trading in certain bonds. Additionally, certain Venezuelan bonds have missed the payment due date for interest payments. Venezuela is more likely to default on its government bonds than on bonds issued by PDVSA, given that approximately 90% of Venezuela’s foreign exchange capacity comes from PDVSA. If the economic situation in Venezuela persists or worsens, it may adversely impact the likelihood of interest payment defaults on these bonds.

 

At October 31, 2017, the Adviser owned approximately 77% and 57% of EM Investment Grade + BB Rated USD Sovereign Bond and Emerging Markets Aggregate, respectively.

 

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

VANECK VECTORS ETF TRUST

NOTES TO FINANCIAL STATEMENTS

(unaudited) (continued)

 

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, 2017 is presented on a gross basis in the Schedules of Investments and Statements of Assets and Liabilities.

 

The following table presents repurchase agreements held as collateral by type of security on loan as of October 31, 2017:

 

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		$	—			$	26,209,846			$	—			$	26,209,846
EM Investment Grade + BB Rated USD Sovereign Bond			374,307				—				—				374,307
Emerging Markets Aggregate			319,437				—				57,220				376,657
Emerging Markets High Yield			24,056,005				—				—				24,056,005
Fallen Angel			84,008,090				—				—				84,008,090
International High Yield			10,522,099				—				—				10,522,099
Investment Grade			283,473				—				—				283,473
J.P. Morgan EM			—				—				73,804,687				73,804,687
Mortgage REIT			—				19,762,033				—				19,762,033
Preferred Securities			—				38,605,188				—				38,605,188

 

*	Remaining contractual maturity of the agreements: overnight and continuous

 

Note 10—Bank Line of Credit—The Funds may participate in a $200 million committed credit facility (the “Facility”) to be utilized for temporary financing 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, 2017, the following Funds borrowed under this Facility:

 

Fund		Days Outstanding				Average Daily Loan Balance				Average Interest Rate				Outstanding Loan Balance as of October 31, 2017
BDC Income			167			$	890,666				2.49	%		$	588,504
Green Bond			7				129,895				2.56				—
International High Yield			14				282,975				2.54				—
Investment Grade			8				122,424				2.56				—
J.P. Morgan EM			46				408,557				2.49				284,873
Mortgage REIT			82				1,042,288				2.46				—
Preferred Securities			65				2,746,167				2.48				12,551,061

 

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, 2017, there were offsets to custodian fees and these amounts are reflected in custody expense in the Statement of Operations.

 

Note 12—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, 2017 (unaudited)

 

At a meeting held on June 9, 2017 (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 I 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, 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, Treasury-Hedged High Yield Bond 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 May 8, 2017. 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 (for those Funds which had begun operations) and expenses 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 generally invests in a different group of issuers than the funds in its designated peer group. They also considered the fact that VanEck Vectors EM Investment Grade + BB Rated USD Sovereign Bond ETF had only recently commenced operations and therefore had a limited operational history that could be used for comparative purposes, since the expense information prepared by Broadridge was based on estimated amounts for the Fund and the performance comparisons provided by Broadridge covered approximately a seven month period (July 13, 2016 (the date operations commenced for the Fund) through February 28, 2017). Furthermore, they also considered the fact that VanEck Vectors Green Bond ETF had only recently commenced operations and therefore had a limited operational history that could be used for comparative purposes, since the expense information prepared by Broadridge was based on estimated amounts for the Fund and covered approximately a two week period (March 3, 2017 (the date operations commenced for the Fund) through March 15, 2017). The Trustees could not consider the historical performance of VanEck Vectors Green Bond ETF due to the Fund’s limited operational history. In addition, as noted below, the Trustees reviewed certain performance information for each Fund that was not provided by Broadridge. 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 May 8, 2017 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., China’s largest asset management company 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 over relevant periods 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 each of VanEck Vectors Emerging Markets High Yield Bond ETF and BDC Income 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 or equal to the average and median of its respective peer group of funds, except for each of VanEck Vectors Emerging Markets Aggregate Bond ETF, Mortgage REIT Income ETF and Treasury-Hedged High Yield Bond 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. 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 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 Fund and the sub-advisory fee rate for the China Fund are reasonable and appropriate in relation to the current asset size of each Fund and the other factors discussed above and that the advisory fee rate for each Fund currently reflects an appropriate sharing with shareholders of any economies of scale which may exist. The Trustees also determined that the profits earned by the Adviser with respect to the Funds that were profitable to the Adviser were reasonable in light of the nature and quality of the services received by such Funds. The Trustees also considered information from the Sub-Adviser informing them that the Sub-Adviser did not earn any profits from managing the China Fund.

VANECK VECTORS ETF TRUST

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS

October 31, 2017 (unaudited) (continued)

 

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 I 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, 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 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 (and the Sub-Adviser, with respect to those Funds in respect of which the Sub-Adviser had been retained) were appropriate based on the Trustees’ knowledge of the Adviser and its personnel and the operations of the other series of the Trust.

 

The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 8, 2017 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.

 

At a meeting held on June 9, 2017 (the “Renewal Meeting”), the Board of Trustees (the “Board”) of VanEck Vectors^® ETF Trust (the “Trust”), including all of the Trustees that are not interested persons of the Trust (the “Independent Trustees”), approved the continuation of the investment management agreement between the Trust and Van Eck Absolute Return Advisers Corporation (the “Adviser”) (the “Investment Management Agreement”) with respect to the VanEck Vectors Dynamic Put Write ETF (the “Fund”).

 

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

 

In preparation for the Renewal Meeting, the Trustees held a meeting on May 8, 2017. At that meeting, the Trustees received materials from the Adviser, including expense information for other funds. The Independent Trustees’ consideration of the Investment Management Agreement was based, in part, on information obtained through discussions with the Adviser and its affiliates at the Renewal Meeting and the May 8, 2017 meeting regarding the management of the Fund and information obtained at other meetings of the Trustees and/or based on their review of the materials provided by the Adviser and its affiliates, including the background and experience of the portfolio managers and others proposed to be involved in the management and administration of the Fund. In evaluating the terms of the Investment Management Agreement at each Meeting, the Trustees considered the terms and scope of services that the Adviser would provide under the Investment Management Agreement, including the Adviser’s agreement to pay all of the direct expenses of the Fund (excluding interest expense, trading expenses, taxes, accrued deferred tax liability and extraordinary expenses). The Trustees concluded that the Adviser and its personnel have the requisite expertise and skill to manage the Fund’s portfolio.

 

The Trustees did not consider historical information about the cost of the services provided by the Adviser or the profitability of the Fund to the Adviser because the Fund has not yet commenced operations. The Trustees could not consider the historical performance or the quality of services previously provided to the Fund by the Adviser, although they concluded that the nature, quality, and extent of the services to be provided by the Adviser were appropriate based on the Trustees’ knowledge of the Adviser and its personnel and the operations of the other series of the Trust.

 

The Independent Trustees were advised by and met in executive session with their independent counsel at the Renewal Meeting and at their May 8, 2017 meeting as part of their consideration of the Investment Management Agreement.

 

 

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

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
         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.

---

                                   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 9, 2018
     ---------------

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 9, 2018
     ---------------

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

Date January 9, 2018
     ---------------

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