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 811-05083
VANECK VIP 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: DECEMBER 31
Date of reporting period: DECEMBER 31, 2019
Item 1. | REPORT TO SHAREHOLDERS. |
ANNUAL REPORT December 31, 2019 |
VanEck VIP Trust
VanEck VIP Emerging Markets Fund
800.826.2333 | vaneck.com |
Certain information contained in this report represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Also, unless otherwise specifically noted, any discussion of the Fund’s holdings, the Fund’s performance, and the views of the investment adviser are as of December 31, 2019.
(unaudited)
FACTS | WHAT DOES VAN ECK DO WITH YOUR PERSONAL INFORMATION? |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: ■ Social Security number and account balances ■ assets and payment history ■ risk tolerance and transaction history |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Van Eck chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does Van Eck share? | Can you limit this sharing? |
For our everyday business purposes— such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
For our marketing purposes— to offer our products and services to you | Yes | No |
For joint marketing with other financialcompanies | Yes | No |
For our affiliates’ everyday businesspurposes— information about your transactions and experiences | Yes | No |
For our affiliates’ everyday businesspurposes— information about your creditworthiness | No | We don’t share |
For our affiliates to market to you | Yes | Yes |
For nonaffiliates to market to you | No | We don’t share |
To limit our sharing | Call us at 1-800-826-2333. Please note: If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
Questions? | Call us at 1-800-826-2333. |
PRIVACY NOTICE
(unaudited) (continued)
Who we are | |
Who is providing this notice? | VanEck, its affiliates and funds sponsored or managed by VanEck (collectively “VanEck”). |
What we do | |
How does VanEck protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. |
How does VanEck collect my personal information? | We collect your personal information, for example, when you ■ open an account or give us your income information ■ provide employment information or give us your contact information ■ tell us about your investment or retirement portfolio We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
Why can’t I limit all sharing? | Federal law gives you the right to limit only ■ sharing for affiliates’ everyday business purposes—information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
What happens when I limit sharing for an account I hold jointly with someone else? | Your choices will apply to everyone on your account—unless you tell us otherwise. |
Definitions | |
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. ■ Our affiliates include companies with a VanEck name such as Van Eck Securities Corporation and others such as Market Vectors Index Solutions GmbH. |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. ■ VanEck does not share with nonaffiliates so they can market to you. |
Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. ■ Our joint marketing partners include financial services companies. |
Other important information |
California Residents—In accordance with California law, we will not share information we collect about California residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We also will limit the sharing of information about you with our affiliates to the extent required by applicable California law. Vermont Residents—In accordance with Vermont law, we will not share information we collect about Vermont residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We will not share creditworthiness information about Vermont residents among VanEck’s affiliates except with the authorization or consent of the Vermont resident. |
VANECK VIP EMERGING MARKETS FUND
December 31, 2019 (unaudited)
Dear Shareholders:
The story for 2019 was simple and familiar—slower economic growth was combated by expansive monetary policy.
But first a comment on global growth: the two engines of the global economy, the U.S. and China, continue to move forward and we now have the prospect of at least some resolution of the trade dispute between them in the phase-one agreement. The latest economic statistics from China are steady and there are signs of “green shoots.” China’s services sector is expanding robustly and manufacturing is struggling, but not collapsing. My blog,China’s Economic Growth: Continuing Despite Headlines, shows this in two charts.
The biggest event in the markets last summer was the surge in bonds in Europe with negative interest rates. At the end of September, nearly $15 trillion worth of debt globally carried a negative yield.1Despite moves by the European Central Bank to stimulate, not only is the European economy slowing down, but there are also concerns about just how effective central bank actions are. Looking forward, therefore, I think investors should assess their hedge against central bank uncertainty by considering, for example, their gold allocations. While high interest rate environments tend to be tough for gold (it does not pay any yield), against negative interest rates, gold and other hedges against central bank impotence should be strongly considered.
We encourage you to stay in touch with us through the videos, email subscriptions and research blogs available on our website, www.vaneck.com. I have started my own email subscription where I share interesting research—you can sign up on www.vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit ourwebsite.
We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find a performance discussion and financial statements for the fund for the twelve month period ended
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VANECK VIP EMERGING MARKETS FUND
PRESIDENT’S LETTER
(unaudited) (continued)
December 31, 2019. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Jan F. van Eck
CEO and President
VanEck VIP Trust
January 24, 2020
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
1 | Financial Times: September was the busiest month ever for corporate debt issuance, September 30, 2019, https://www.ft.com/content/eef8234c-e3c0-11e9-b112-9624ec9edc59 |
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December 31, 2019 (unaudited)
The Initial Class shares of the VanEck VIP Emerging Markets Fund (the Fund) gained 30.60% for the 12 months ended December 31, 2019, significantly outperforming the MSCI Emerging Markets Investment Market Index (MSCI EM IMI),1which gained 17.65%.
Fund Review
Stock selection was the main contributor to the outperformance of the Fund relative to its benchmark. On a country level, stocks from China, India and Indonesia contributed the most to the Fund’s relative performance, while issuers from Taiwan, United Arab Emirates and Spain detracted the most. On a sector level, exposures in the financials, industrials and consumer staples sectors helped the Fund’s performance on a relative basis, whereas information technology, energy and real estate detracted the most.
The Fund’s top three contributing individual positions during 2019 were:
1) Alibaba Group Holding (6.2% of Fund net assets*) is a leading Chinese e-commerce, cloud computing, digital media, entertainment and innovation company. We believe we have line of sight on fairly predictable growth momentum in its core businesses as well as a good understanding where and how current and future investment can leverage the current platform and enhance overall returns. In 2019, Alibaba continued to execute well and “fire on all cylinders.” This included not only its payment operations, but also its off-line businesses such as logistics. In addition, as the fourth quarter ended, people not only became more relaxed about China, but also had mildly better expectations for the economic growth.
2) A-Living Services (3.2% of Fund net assets*) is a top 10 property manager in China. The company primarily manages residential estates, charging fees for communal property management (e.g., security and landscaping) and for value-added services (e.g., O2O, kindergarten space, elderly care and property sales). We invested in this company because: a) the company operates in a consolidating industry benefitting from increased urbanization and limited management contracts; b) it has experienced a recent, substantial increase in square meters under management from parent companies, M&A activity and third-party party business; and c) as the industry is consolidating, property management fees are expected to increase. In 2019, A-Living benefited from further recognition not only of the sustainability of its earnings and the good use to which it has been putting its cash, but also the soundness of the
3 |
VANECK VIP EMERGING MARKETS FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
industry in which it operates. The company continues to add property management projects, including through third-party acquisitions, and has confirmed that accretive M&A expands its opportunity set. It has, in addition, moved into public facilities management, e.g., that of museums. As a rider, as the company’s performance illustrated, the property market in China was doing fine during 2019.
3) Ping An Insurance (Group) of China (5.6% of Fund net assets*) is one of the world’s largest financial institutions and China’s second largest insurance company with businesses spanning across life insurance, casualty business and banking. The company’s structural growth thesis is the following: a) in addition to its core life insurance business, Ping An is developing a host of disruptive and technology-driven business lines; b) its tech business includes an AI-driven healthcare platform, an online distributor of retail investments and a private cloud for SMEs; and c) the company collects and compiles highly relevant financial and medical data primarily from its ancillary businesses, Lufax and Ping An Good Doctor, which are all impressive businesses in their own right, but also serve as highly effective customer acquisition funnels to Ping An’s core insurance business. In 2019, Ping An benefited from a better appreciation in the market of the underlying value proposition of the company’s core life insurance business. In addition, capitalizing, among other things, on its position in the field of info tech, there was good execution among other of the group’s businesses, e.g., consumer banking.
The Fund’s three weakest contributing companies during 2019 were:
1) | NMC Health (1.1% of Fund net assets*) is a leading private hospital group in the UAE, with a growing presence in new markets including Saudi Arabia and Oman. We have high conviction in this company because: a) it is well-positioned in an attractive sector offering structural growth driven by rising demand, insufficient supply and a favorable regulatory environment; b) the company has increasing capabilities in high-value verticals including IVF/fertility, cosmetic surgery and long-term care, which allow NMC to continue growing revenue per patient through ongoing integration of the specialized services into existing facilities; and 3) its strong revenue and earnings growth outlook on the back of a ramp-up in utilization rates as new facilities opened in recent years along with the integration of acquired assets which enables the company to capitalize on synergies and economies of scale driving margins higher. In 2019, NMC faced not |
4 |
only an attack from a short seller, but also aggressively promoted negative market views. | |
2) | HUYA (0.6% of Fund net assets*) is a leading Chinese game live streaming platform, which is one of the only high-quality pure plays on the secular eSports opportunity. We invested in this company because: a) the eSports audience is expected to grow from 400 million to 700 million by the end of 2020; b) 80-85% of all domestic eSports events are broadcast on Huya and Douyu and the company has a huge base of content creators and broadcasters; and c) it is backed by Tencent. In 2019, HUYA suffered as it continued to face the prospect of increasing competition in the short-form video market. |
3) | Grupo Supervielle (sold by end of period) is a leading consumer lending bank in Argentina. The company’s structural growth thesis is the following: a) low penetration of the banking system in Argentina versus the region (approximately 16%) and also an opportunity for consolidation in the sector (approximately 77 players in the market); b) the bank has been on a growth trajectory, coupled with a successful acquisition and organic growth gaining a significant market share; and c) it is one of the leaders in consumer banking and SME - the country’s epicenter of growth opportunities. In 2019, Grupo Supervielle experienced pressure with loan growth declining and asset quality deteriorating due to the country’s macro situation and recent elections. The fundamentals of the bank were good, however the banking system in Argentina was negatively affected by high inflation and extremely high interest rates at the time. High inflation, coupled with low gross domestic product (GDP) growth prospects, hit the bank’s valuation and we made a decision to exit this position, given the ongoing uncertainty in the country. |
During the period under review, no single economic factor had an over-riding impact on either emerging markets or the Fund. As the year drew to a close (and even before in some instances), both were impacted by a combination of a number of factors. Among the most important was growing economic stabilization as a result of increasing monetary stimulus from developed markets’ central banks (and, indeed, some emerging markets countries’), together with both controlled and calibrated easing by the Chinese.
While it may not have dissipated, there has certainly been a diminution in the tail risk of geopolitical events. Whatever the eventual form of any
5 |
VANECK VIP EMERGING MARKETS FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
preliminary trade deal concluded between the U.S. and China, it may be enough to provide both sides with an opportunity to claim some kind of victory. That said, however, any such deal is unlikely to solve the persistent longer-term problems. However, as things stood as the year drew to a close, it could be opined that “any deal is a good deal.”
For more information or to access investment and market insights from the investment team, visit our web site or subscribe to our commentaries. To subscribe to VanEck’s emerging markets equity updates, please contact us at 800.826.2333 or visit www.vaneck.com/subscribe to register.
The Fund is subject to the risks associated with its investments in emerging markets securities, which tend to be more volatile and less liquid than securities traded in developed countries. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, including the takeover of property without adequate compensation or imposition of prohibitive taxation. The Fund is subject to risks associated with investments in derivatives, illiquid securities, and small- or mid-cap companies. The Fund is also subject to inflation risk, market risk, non-diversification risk, and leverage risk. Further, the Fund is subject to the risks associated with its investments in Chinese issuers, direct investments, emerging market securities which tends to be more volatile and less liquid than securities traded in developed countries, foreign currency transactions, foreign securities, other investment companies, Stock Connect, management, market, operational, sectors and small- and medium-capitalization companies risks. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, or political, economic or social instability. Please see the prospectus for information on these and other risk considerations.
We appreciate your participation in the VanEck VIP Emerging Markets Fund, and we look forward to helping you meet your investment goals in the future.
6 |
David Semple Portfolio Manager | Angus Shillington Deputy Portfolio Manager |
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.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits, which are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. Had these fees been included, returns would have been lower. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
* | All Fund assets referenced are Total Net Assets as of December 31, 2019. |
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.
1 | The MSCI Emerging Markets Investable Market Index captures large, mid and small cap representation across 26 emerging markets countries and covers approximately 99% of the free float adjusted market capitalization in each country. |
7 |
VANECK VIP EMERGING MARKETS FUND
December 31, 2019 (unaudited)
Average Annual Total Return 12/31/19 | Fund Initial Class | MSCI EM IMI | ||||||
One Year | 30.60 | % | 17.65 | % | ||||
Five Year | 5.38 | % | 5.30 | % | ||||
Ten Year | 5.89 | % | 3.60 | % | ||||
Average Annual Total Return 12/31/19 | Fund Class S | MSCI EM IMI | ||||||
One Year | 30.23 | % | 17.65 | % | ||||
Life* (annualized) | 11.54 | % | 10.22 | % |
* | Inception date for Class S was 5/2/16. |
This chart shows the value of a hypothetical $10,000 investment in the Fund over the past 10 fiscal years. The result is compared with the Fund’s benchmark, and may include a broad-based market index
Performance of Class S shares will vary from that of the Initial Class shares due to differences in class specific fees and any applicable sales charges. | Hypothetical Growth of $10,000 (Ten Year: Initial Class)
|
The performance quoted represents past performance. Past performance is no guarantee of future results; current performance may be lower or higher than the performance data quoted.Performance information reflects temporary waivers of expenses and/or fees, if any, and does not include insurance/annuity fees and expenses. Investment returns would have been reduced had these fees/expenses been included. Investment return and the value of the shares of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Performance information current to the most recent month end is available by calling 800.826.2333 or by visiting vaneck.com.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits that are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
8 |
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. Results reflect past performance and do not guarantee future results.
The MSCI Emerging Markets Investable Market Index captures large, mid and small cap representation across 26 emerging markets countries and covers approximately 99% of the free float adjusted market capitalization in each country.
9 |
VANECK VIP EMERGING MARKETS FUND
(unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including program fees on purchase payments; and (2) ongoing costs, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in the 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, July 1, 2019 to December 31, 2019.
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 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 fees on purchase payments. 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.
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Beginning Account Value July 1, 2019 | Ending Account Value December 31, 2019 | Expenses Paid During the Period* July 1, 2019 - December 31, 2019 | ||||||||||||
Initial Class | Actual | $ | 1,000.00 | $ | 1,069.20 | $6.73 | ||||||||
Hypothetical** | $ | 1,000.00 | $ | 1,018.70 | $6.56 | |||||||||
Class S | Actual | $ | 1,000.00 | $ | 1,067.90 | $8.08 | ||||||||
Hypothetical** | $ | 1,000.00 | $ | 1,017.39 | $7.88 |
* | Expenses are equal to the Fund’s annualized expense ratio (for the six months ended December 31, 2019), of 1.29% on Initial Class Shares and 1.55% on Class S Shares, 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 the days in the fiscal year (to reflect the one-half year period). |
** | Assumes annual return of 5% before expenses |
11 |
VANECK VIP EMERGING MARKETS FUND
December 31, 2019
Number of Shares | Value | |||||||
COMMON STOCKS: 95.9% | ||||||||
Brazil: 6.7% | ||||||||
351,400 | Fleury SA # | $ | 2,677,511 | |||||
565,900 | International Meal Co. Alimentacao SA # | 1,182,759 | ||||||
249,000 | IRB Brasil Resseguros SA # | 2,419,017 | ||||||
642,000 | Movida Participacoes SA # | 3,068,739 | ||||||
289,000 | Rumo SA * # | 1,881,206 | ||||||
11,229,232 | ||||||||
China / Hong Kong: 33.3% | ||||||||
48,890 | Alibaba Group Holding Ltd. (ADR) * | 10,369,569 | ||||||
1,545,000 | A-Living Services Co. Ltd. Reg S 144A # | 5,331,348 | ||||||
216,000 | Anta Sports Products Ltd. # | 1,933,888 | ||||||
34,870 | Baozun, Inc. (ADR) * † | 1,154,894 | ||||||
6,200 | BeiGene Ltd. (ADR) * | 1,027,712 | ||||||
466,000 | Beijing Enterprises Water Group Ltd. # | 235,697 | ||||||
3,588,969 | China Animal Healthcare Ltd. * # ∞ | 98,057 | ||||||
278,000 | China Conch Venture Holdings Ltd. # | 1,212,610 | ||||||
1,328,000 | China Education Group Holdings Ltd. Reg S # | 1,739,088 | ||||||
2,389,000 | Fu Shou Yuan International Group Ltd. # | 2,023,649 | ||||||
277,000 | Galaxy Entertainment Group Ltd. # | 2,039,167 | ||||||
32,000 | GDS Holdings Ltd. (ADR) * | 1,650,560 |
Number of Shares | Value | |||||||
China / Hong Kong: (continued) | ||||||||
58,100 | HUYA, Inc. (ADR) * † | $ | 1,042,895 | |||||
9,306 | Kweichow Moutai Co. Ltd. # | 1,583,670 | ||||||
7,050 | New Oriental Education & Technology Group, Inc. (ADR) * | 854,812 | ||||||
519,000 | Ping An Bank Co. Ltd. # | 1,227,993 | ||||||
154,000 | Ping An Healthcare and Technology Co. Ltd. Reg S 144A * † # | 1,123,998 | ||||||
784,000 | Ping An Insurance Group Co. of China Ltd. # | 9,277,433 | ||||||
110,000 | Shenzhou International Group Holdings Ltd. # | 1,607,657 | ||||||
159,200 | Tencent Holdings Ltd. # | 7,669,639 | ||||||
60,000 | Tencent Music Entertainment Group (ADR) * | 704,400 | ||||||
109,500 | Wuxi Biologics Cayman, Inc. Reg S 144A * # | 1,386,866 | ||||||
25,000 | Yifeng Pharmacy Chain Co. Ltd. # | 263,042 | ||||||
55,558,644 | ||||||||
Egypt: 2.2% | ||||||||
2,259,181 | Cleopatra Hospital * | 819,217 | ||||||
437,187 | Commercial International Bank Egypt SAE | 2,260,842 | ||||||
958,802 | Juhayna Food Industries | 513,751 | ||||||
3,593,810 | ||||||||
Georgia: 1.4% | ||||||||
75,700 | Bank of Georgia Group Plc (GBP) # | 1,635,147 |
See Notes to Financial Statements
12 |
Number of Shares | Value | |||||||
Georgia: (continued) | ||||||||
60,700 | Georgia Capital Plc (GBP) * | $ | 741,318 | |||||
2,376,465 | ||||||||
Germany: 1.9% | ||||||||
39,200 | Delivery Hero SE Reg S 144A * # | 3,106,961 | ||||||
Hungary: 0.9% | ||||||||
29,700 | OTP Bank Nyrt # | 1,555,092 | ||||||
India: 10.9% | ||||||||
227,678 | Bandhan Bank Ltd. Reg S 144A # | 1,626,761 | ||||||
494,400 | Cholamandalam Investment and Finance Co. Ltd. # | 2,116,696 | ||||||
249,200 | HDFC Bank Ltd. # | 4,458,496 | ||||||
51,400 | HDFC Bank Ltd. (ADR) | 3,257,218 | ||||||
1,420,073 | Lemon Tree Hotels Ltd. Reg S 144A * | 1,271,295 | ||||||
92,000 | Oberoi Realty Ltd. # | 683,943 | ||||||
145,800 | Phoenix Mills Ltd. # | 1,691,857 | ||||||
65,000 | Reliance Industries Ltd. # | 1,380,562 | ||||||
99,000 | Titan Co. Ltd. # | 1,651,187 | ||||||
18,138,015 | ||||||||
Indonesia: 2.5% | ||||||||
4,980,000 | Bank Rakyat Indonesia Tbk PT # | 1,576,299 | ||||||
8,450,000 | Bank Tabungan Pensiunan Nasional Syariah Tbk PT * # | 2,585,131 | ||||||
4,161,430 | ||||||||
Kenya: 0.8% | ||||||||
4,477,000 | Safaricom Plc | 1,395,887 | ||||||
Kuwait: 0.7% | ||||||||
118,455 | Human Soft Holding Co. KSC | 1,176,736 | ||||||
Malaysia: 1.2% | ||||||||
1,084,000 | Malaysia Airports Holdings Bhd # | 2,014,617 |
Number of Shares | Value | |||||||
Mexico: 3.2% | ||||||||
536,000 | Qualitas Controladora SAB de CV | $ | 2,257,678 | |||||
376,800 | Regional SAB de CV | 2,112,431 | ||||||
563,000 | Unifin Financiera SAB de CV SOFOM ENR | 923,073 | ||||||
5,293,182 | ||||||||
Netherlands: 2.3% | ||||||||
50,505 | Prosus NV * # | 3,779,872 | ||||||
Peru: 0.2% | ||||||||
1,665 | Credicorp Ltd. (USD) | 354,861 | ||||||
Philippines: 5.1% | ||||||||
3,789,000 | Ayala Land, Inc. # | 3,398,393 | ||||||
12,350,000 | Bloomberry Resorts Corp. # | 2,753,919 | ||||||
895,200 | International Container Terminal Services, Inc. # | 2,268,744 | ||||||
8,421,056 | ||||||||
Poland: 0.4% | ||||||||
13,639 | Kruk SA | 602,159 | ||||||
Russia: 3.4% | ||||||||
180,480 | Sberbank of Russia PJSC (ADR) # | 2,973,310 | ||||||
62,737 | Yandex NV (USD) * | 2,728,432 | ||||||
5,701,742 | ||||||||
Saudi Arabia: 0.1% | ||||||||
11,000 | Leejam Sports Co. JSC # | 237,676 | ||||||
South Africa: 2.7% | ||||||||
690,000 | Advtech Ltd. | 532,058 | ||||||
10,005 | Naspers Ltd. # | 1,637,287 | ||||||
1,561,924 | Transaction Capital Ltd. | 2,353,034 | ||||||
4,522,379 |
See Notes to Financial Statements
13 |
VANECK VIP EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS
(continued)
Number of Shares | Value | |||||||
South Korea: 2.8% | ||||||||
17,300 | Douzone Bizon Co. Ltd. # | $ | 1,209,370 | |||||
7,640 | Koh Young Technology, Inc. # | 696,205 | ||||||
13,385 | Samsung SDI Co. Ltd. * # | 2,726,702 | ||||||
4,632,277 | ||||||||
Spain: 1.6% | ||||||||
109,603 | CIE Automotive SA # | 2,601,049 | ||||||
Switzerland: 0.5% | ||||||||
17,300 | Wizz Air Holdings Plc Reg S 144A (GBP) * # | 894,247 | ||||||
Taiwan: 2.5% | ||||||||
331,000 | Chroma ATE, Inc. # | 1,609,806 | ||||||
154,010 | Poya International Co. Ltd. # | 2,165,429 | ||||||
99,000 | TaiMed Biologics, Inc. * # | 327,070 | ||||||
4,102,305 | ||||||||
Thailand: 2.4% | ||||||||
458,000 | CP ALL PCL # | 1,103,584 | ||||||
1,022,826 | Srisawad Corp. PCL (NVDR) # | 2,333,216 | ||||||
944,000 | Thai Beverage PCL (SGD) # | 625,059 | ||||||
4,061,859 | ||||||||
Turkey: 3.2% | ||||||||
232,296 | AvivaSA Emeklilik ve Hayat AS | 544,328 | ||||||
684,140 | MLP Saglik Hizmetleri AS Reg S 144A * # | 1,838,847 | ||||||
709,968 | Sok Marketler Ticaret AS * # | 1,283,670 | ||||||
377,000 | Tofas Turk Otomobil Fabrikasi AS # | 1,700,955 | ||||||
5,367,800 |
Number of Shares | Value | |||||||
United Arab Emirates: 1.1% | ||||||||
80,950 | NMC Health Plc (GBP) # | $ | 1,896,607 | |||||
United Kingdom: 0.7% | ||||||||
560,000 | Helios Towers Plc * † | 1,172,006 | ||||||
1,235,312 | Hirco Plc * #∞ | 0 | ||||||
1,172,006 | ||||||||
United States: 1.0% | ||||||||
91,300 | Laureate Education, Inc. * | 1,607,793 | ||||||
Uruguay: 0.2% | ||||||||
157,910 | Biotoscana Investments SA (BDR) * # | 390,919 | ||||||
Total Common Stocks (Cost: $119,834,745) | 159,946,678 | |||||||
PREFERRED STOCKS: 1.3% | ||||||||
Brazil: 1.3% (Cost: $1,617,741) | ||||||||
230,640 | Itau Unibanco Holding SA, 4.73% # | 2,136,174 | ||||||
MONEY MARKET FUND: 2.7% (Cost: $4,585,930) | ||||||||
4,585,930 | Invesco Treasury Portfolio — Institutional Class | 4,585,930 | ||||||
Total Investments Before Collateral for Securities Loaned: 99.9% (Cost: $126,038,416) | 166,668,782 | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 0.5% (Cost: $779,400) |
See Notes to Financial Statements
14 |
Number of Shares | Value | |||||||
Money Market Fund: 0.5% | ||||||||
779,400 | State Street Navigator Securities Lending Government Money Market Portfolio | $ | 779,400 | |||||
Total Investments: 100.4% (Cost: $126,817,816) | 167,448,182 | |||||||
Liabilities in excess of other assets: (0.4)% | (696,405 | ) | ||||||
NET ASSETS: 100.0% | $ | 166,751,777 |
Definitions:
ADR | American Depositary Receipt |
BDR | Brazilian Depositary Receipt |
GBP | British Pound |
NVDR | Non-Voting Depositary Receipt |
SGD | Singapore Dollar |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $2,010,167. |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $118,653,893 which represents 71.2% of net assets. |
∞ | Security is valued using significant unobservable inputs that factor in discount for lack of marketability 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 $16,580,323, or 9.9% of net assets. |
See Notes to Financial Statements
15 |
VANECK VIP EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS
(continued)
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | |||||||
Communication Services | 8.8 | % | $ | 14,713,259 | |||||
Consumer Discretionary | 28.3 | 47,127,700 | |||||||
Consumer Staples | 3.2 | 5,372,776 | |||||||
Energy | 0.8 | 1,380,562 | |||||||
Financials | 30.8 | 51,327,707 | |||||||
Health Care | 7.0 | 11,586,804 | |||||||
Industrials | 10.0 | 16,671,511 | |||||||
Information Technology | 4.7 | 7,892,643 | |||||||
Real Estate | 3.5 | 5,774,193 | |||||||
Utilities | 0.1 | 235,697 | |||||||
Money Market Fund | 2.8 | 4,585,930 | |||||||
100.0 | % | $ | 166,668,782 |
See Notes to Financial Statements
16 |
The summary of inputs used to value the Fund’s investments as of December 31, 2019 is as follows:
Level 2 | Level 3 | ||||||||||||||||
Level 1 | Significant | Significant | |||||||||||||||
Quoted | Observable | Unobservable | |||||||||||||||
Prices | Inputs | Inputs | Value | ||||||||||||||
Common Stocks | |||||||||||||||||
Brazil | $ | — | $ | 11,229,232 | $ | — | $ | 11,229,232 | |||||||||
China / Hong Kong | 16,804,842 | 38,655,745 | 98,057 | 55,558,644 | |||||||||||||
Egypt | 3,593,810 | — | — | 3,593,810 | |||||||||||||
Georgia | 741,318 | 1,635,147 | — | 2,376,465 | |||||||||||||
Germany | — | 3,106,961 | — | 3,106,961 | |||||||||||||
Hungary | — | 1,555,092 | — | 1,555,092 | |||||||||||||
India | 4,528,513 | 13,609,502 | — | 18,138,015 | |||||||||||||
Indonesia | — | 4,161,430 | — | 4,161,430 | |||||||||||||
Kenya | 1,395,887 | — | — | 1,395,887 | |||||||||||||
Kuwait | 1,176,736 | — | — | 1,176,736 | |||||||||||||
Malaysia | — | 2,014,617 | — | 2,014,617 | |||||||||||||
Mexico | 5,293,182 | — | — | 5,293,182 | |||||||||||||
Netherlands | — | 3,779,872 | — | 3,779,872 | |||||||||||||
Peru | 354,861 | — | — | 354,861 | |||||||||||||
Philippines | — | 8,421,056 | — | 8,421,056 | |||||||||||||
Poland | 602,159 | — | — | 602,159 | |||||||||||||
Russia | 2,728,432 | 2,973,310 | — | 5,701,742 | |||||||||||||
Saudi Arabia | — | 237,676 | — | 237,676 | |||||||||||||
South Africa | 2,885,092 | 1,637,287 | — | 4,522,379 | |||||||||||||
South Korea | — | 4,632,277 | — | 4,632,277 | |||||||||||||
Spain | — | 2,601,049 | — | 2,601,049 | |||||||||||||
Switzerland | — | 894,247 | — | 894,247 | |||||||||||||
Taiwan | — | 4,102,305 | — | 4,102,305 | |||||||||||||
Thailand | — | 4,061,859 | — | 4,061,859 | |||||||||||||
Turkey | 544,328 | 4,823,472 | — | 5,367,800 | |||||||||||||
United Arab Emirates | — | 1,896,607 | — | 1,896,607 | |||||||||||||
United Kingdom | 1,172,006 | — | 0 | 1,172,006 | |||||||||||||
United States | 1,607,793 | — | — | 1,607,793 | |||||||||||||
Uruguay | — | 390,919 | — | 390,919 | |||||||||||||
Preferred Stocks* | — | 2,136,174 | — | 2,136,174 | |||||||||||||
Money Market Funds | 5,365,330 | — | — | 5,365,330 | |||||||||||||
Total | $ | 48,794,289 | $ | 118,555,836 | $ | 98,057 | $ | 167,448,182 |
* | See Schedule of Investments for geographic sector breakouts. |
See Notes to Financial Statements
17 |
VANECK VIP EMERGING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2019
Assets: | |||||
Investments, at value (Cost $126,038,416) (1) | $ | 166,668,782 | |||
Short-term investment held as collateral for securities loaned (2) | 779,400 | ||||
Cash | 52 | ||||
Cash denominated in foreign currency, at value (Cost $6,973) | 6,957 | ||||
Receivables: | |||||
Shares of beneficial interest sold | 346,598 | ||||
Dividends and interest | 77,272 | ||||
Prepaid expenses | 9,448 | ||||
Other assets | 34,526 | ||||
Total assets | 167,923,035 | ||||
Liabilities: | |||||
Payables: | |||||
Collateral for securities loaned | 779,400 | ||||
Shares of beneficial interest redeemed | 73,344 | ||||
Due to Adviser | 135,842 | ||||
Due to Distributor | 61 | ||||
Deferred Trustee fees | 85,269 | ||||
Accrued expenses | 97,342 | ||||
Total liabilities | 1,171,258 | ||||
NET ASSETS | $ | 166,751,777 | |||
Initial Class Shares: | |||||
Net Assets | $ | 166,479,465 | |||
Shares of beneficial interest outstanding | 10,994,112 | ||||
Net asset value, redemption and offering price per share | $ | 15.14 | |||
Class S Shares: | |||||
Net Assets | $ | 272,312 | |||
Shares of beneficial interest outstanding | 18,211 | ||||
Net asset value, redemption and offering price per share | $ | 14.95 | |||
Net Assets consist of: | |||||
Aggregate paid in capital | $ | 118,552,673 | |||
Total distributable earnings (loss) | 48,199,104 | ||||
$ | 166,751,777 | ||||
(1) | Value of securities on loan | $ | 2,010,167 | ||
(2) | Cost of short-term investment held as collateral for securities loaned | $ | 779,400 |
See Notes to Financial Statements
18 |
VANECK VIP EMERGING MARKETS FUND
For the Year Ended December 31, 2019
Income: | ||||||||
Dividends (net of foreign taxes withheld of $261,838) | $ | 5,162,197 | ||||||
Securities lending income | 49,208 | |||||||
Total income | 5,211,405 | |||||||
Expenses: | ||||||||
Management fees | $ | 1,524,507 | ||||||
Distribution fees – Class S Shares | 566 | |||||||
Transfer agent fees – Initial Class Shares | 23,062 | |||||||
Transfer agent fees – Class S Shares | 13,618 | |||||||
Custodian fees | 61,371 | |||||||
Professional fees | 123,713 | |||||||
Reports to shareholders | 57,387 | |||||||
Insurance | 13,234 | |||||||
Trustees’ fees and expenses | 58,752 | |||||||
Interest | 1,279 | |||||||
Other | 63,560 | |||||||
Total expenses | 1,941,049 | |||||||
Waiver of management fees | (13,506 | ) | ||||||
Net expenses | 1,927,543 | |||||||
Net investment income | 3,283,862 | |||||||
Net realized gain (loss) on: | ||||||||
Investments | 4,558,617 | |||||||
Forward foreign currency contracts | 37 | |||||||
Foreign currency transactions and foreign denominated assets and liabilities | (60,116 | ) | ||||||
Net realized gain | 4,498,538 | |||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments | 32,016,137 | |||||||
Foreign currency transactions and foreign denominated assets and liabilities | 1,094 | |||||||
Net change in unrealized appreciation (depreciation) | 32,017,231 | |||||||
Net Increase in Net Assets Resulting from Operations | $ | 39,799,631 |
See Notes to Financial Statements
19 |
VANECK VIP EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31, 2019 | Year Ended December 31, 2018 | ||||||||
Operations: | |||||||||
Net investment income | $ | 3,283,862 | $ | 797,327 | |||||
Net realized gain | 4,498,538 | 5,389,117 | |||||||
Net change in unrealized appreciation (depreciation) | 32,017,231 | (47,881,284 | ) | ||||||
Net increase (decrease) in net assets resulting from operations | 39,799,631 | (41,694,840 | ) | ||||||
Dividends to shareholders: | |||||||||
Dividends and distributions | |||||||||
Initial Class Shares | (4,169,713 | ) | (485,467 | ) | |||||
Class S Shares | (4,581 | ) | — | ||||||
Total dividends and distributions | (4,174,294 | ) | (485,467 | ) | |||||
Share transactions*: | |||||||||
Proceeds from sale of shares | |||||||||
Initial Class Shares | 28,998,936 | 35,110,654 | |||||||
Class S Shares | 146,782 | 144,250 | |||||||
29,145,718 | 35,254,904 | ||||||||
Reinvestment of dividends and distributions | |||||||||
Initial Class Shares | 4,169,713 | 485,467 | |||||||
Class S Shares | 4,581 | — | |||||||
4,174,294 | 485,467 | ||||||||
Cost of shares redeemed | |||||||||
Initial Class Shares | (36,709,497 | ) | (46,872,965 | ) | |||||
Class S Shares | (74,436 | ) | (6,629 | ) | |||||
(36,783,933 | ) | (46,879,594 | ) | ||||||
Net decrease in net assets resulting from share transactions | (3,463,921 | ) | (11,139,223 | ) | |||||
Total increase (decrease) in net assets | 32,161,416 | (53,319,530 | ) | ||||||
Net Assets: | |||||||||
Beginning of year | 134,590,361 | 187,909,891 | |||||||
End of year | $ | 166,751,777 | $ | 134,590,361 | |||||
* | Shares of beneficial interest issued, reinvested and redeemed (unlimited number of $.001 par value shares authorized): | ||||||||
Initial Class Shares: | |||||||||
Shares sold | 2,113,170 | 2,471,078 | |||||||
Shares reinvested | 325,504 | 29,053 | |||||||
Shares redeemed | (2,716,189 | ) | (3,245,170 | ) | |||||
Net decrease | (277,515 | ) | (745,039 | ) | |||||
Class S Shares: | |||||||||
Shares sold | 10,531 | 10,848 | |||||||
Shares reinvested | 361 | — | |||||||
Shares redeemed | (5,432 | ) | (542 | ) | |||||
Net increase | 5,460 | 10,306 |
See Notes to Financial Statements
20 |
VANECK VIP EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year:
Initial Class Shares | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||
Net asset value, beginning of year | $11.93 | $15.63 | $10.40 | $10.50 | $12.95 | ||||||||||||||||||||
Income from investment operations: | |||||||||||||||||||||||||
Net investment income | 0.29 | (b) | 0.07 | (b) | 0.04 | (b) | 0.08 | 0.09 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments | 3.29 | (3.73 | ) | 5.24 | (0.08 | ) | (1.80 | ) | |||||||||||||||||
Total from investment operations | 3.58 | (3.66 | ) | 5.28 | (0.00 | )(c) | (1.71 | ) | |||||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||||
Net investment income | (0.06 | ) | (0.04 | ) | (0.05 | ) | (0.05 | ) | (0.07 | ) | |||||||||||||||
Net realized capital gains | (0.31 | ) | — | — | (0.05 | ) | (0.67 | ) | |||||||||||||||||
Total dividends and distributions | (0.37 | ) | (0.04 | ) | (0.05 | ) | (0.10 | ) | (0.74 | ) | |||||||||||||||
Net asset value, end of year | $15.14 | $11.93 | $15.63 | $10.40 | $10.50 | ||||||||||||||||||||
Total return (a) | 30.60 | % | (23.49 | )% | 51.03 | % | 0.10 | % | (13.99 | )% | |||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||
Net assets, end of year (000’s) | $166,479 | $134,440 | $187,872 | $121,723 | $ 128,025 | ||||||||||||||||||||
Ratio of gross expenses to average net assets | 1.26 | % | 1.21 | % | 1.19 | % | 1.18 | % | 1.14 | % | |||||||||||||||
Ratio of net expenses to average net assets | 1.26 | % | 1.21 | % | 1.19 | % | 1.18 | % | 1.14 | % | |||||||||||||||
Ratio of net expenses to average net assets excluding interest expense | 1.26 | % | 1.21 | % | 1.19 | % | 1.19 | %(d) | 1.13 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.15 | % | 0.48 | % | 0.27 | % | 0.70 | % | 0.71 | % | |||||||||||||||
Portfolio turnover rate | 24 | % | 34 | % | 42 | % | 62 | % | 65 | % |
(a) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distribution payment date and a redemption at the net asset value on the last day of the year. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. Total returns do not include fees and expenses imposed under your variable annuity contract and/or life insurance policy. If these amounts were reflected, the returns would be lower than those shown. |
(b) | Calculated based upon average shares outstanding |
(c) | Amount represents less than $0.005 per share |
(d) | Excludes reimbursement from prior year custodial charge of 0.02% |
See Notes to Financial Statements
21 |
VANECK VIP EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
Class S Shares | ||||||||||||||||
May 2, 2016 (f) | ||||||||||||||||
Year Ended | through | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2019 | 2018 | 2017 | 2016 | |||||||||||||
Net asset value, beginning of period | $11.80 | $15.48 | $10.36 | $10.35 | ||||||||||||
Income from investment operations: | ||||||||||||||||
Net investment income (loss) | 0.28 | (b) | (0.04 | )(b) | (0.04 | )(b) | 0.01 | |||||||||
Net realized and unrealized gain (loss) on investments | 3.22 | (3.64 | ) | 5.21 | — | (e) | ||||||||||
Total from investment operations | 3.50 | (3.68 | ) | 5.17 | 0.01 | |||||||||||
Less dividends and distributions from: | ||||||||||||||||
Net investment income | (0.04 | ) | — | (0.05 | ) | — | ||||||||||
Net realized capital gains | (0.31 | ) | — | — | — | |||||||||||
Total dividends and distributions | (0.35 | ) | — | (0.05 | ) | — | ||||||||||
Net asset value, end of period | $14.95 | $11.80 | $15.48 | $10.36 | ||||||||||||
Total return (a) | 30.23 | % | (23.77 | )% | 50.16 | % | 0.10 | %(c) | ||||||||
Ratios/Supplemental Data | ||||||||||||||||
Net assets, end of period (000’s) | $272 | $150 | $38 | $10 | ||||||||||||
Ratio of gross expenses to average net assets | 7.50 | % | 19.19 | % | 51.45 | % | 30.43 | %(d) | ||||||||
Ratio of net expenses to average net assets | 1.55 | % | 1.59 | % | 1.75 | % | 1.75 | %(d) | ||||||||
Ratio of net expenses to average net assets excluding interest expense | 1.55 | % | 1.59 | % | 1.75 | % | 1.75 | %(d) | ||||||||
Ratio of net investment income (loss) to average net assets | 2.05 | % | (0.27 | )% | (0.33 | )% | 0.12 | %(d) | ||||||||
Portfolio turnover rate | 24 | % | 34 | % | 42 | % | 62 | %(c)(g) |
(a) | 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/distribution 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. Total returns do not include fees and expenses imposed under your variable annuity contract and/or life insurance policy. If these amounts were reflected, the returns would be lower than those shown. |
(b) | Calculated based upon average shares outstanding |
(c) | Not annualized |
(d) | Annualized |
(e) | Amount represents less than $0.005 per share |
(f) | Commencement of operations |
(g) | Portfolio turnover is calculated at the fund level and represents a one year period. |
See Notes to Financial Statements
22 |
VANECK VIP EMERGING MARKETS FUND
December 31, 2019
Note 1—Fund Organization—VanEck VIP Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was organized as a Massachusetts business trust on January 7, 1987. The VanEck VIP Emerging Markets Fund (the “Fund”) is a diversified series of the Trust and seeks long-term capital appreciation by investing primarily in equity securities in emerging markets around the world. The Fund currently offers two classes of shares: Initial Class Shares and Class S Shares. The two classes are substantially the same, except Class S Shares are subject to a distribution fee.
Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The Fund is an investment company and is following accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946Financial Services — Investment Companies.
The following is a summary of significant accounting policies followed by the Fund.
A. | Security Valuation—The Fund values its investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Securities traded on national exchanges are valued at the closing price on the markets in which the securities trade. Securities traded on the NASDAQ Stock Market LLC (“NASDAQ”) are valued at the NASDAQ official closing price. Over-the-counter securities not included on NASDAQ and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded, they are categorized as Level 1 in the fair value hierarchy (described below). Certain foreign securities, whose values may be affected by market direction or events occurring before the Fund’s pricing time (4:00 p.m. Eastern Time) but after the last close of the securities’ primary market, are fair valued using a pricing service and are categorized as Level 2 in the fair value hierarchy. The pricing service, using methods approved by the Board of Trustees, considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. markets, based on indices of domestic securities and other appropriate indicators such as prices of relevant ADR’s and futures contracts. The Fund may also fair value securities in other situations, |
23 |
VANECK VIP EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
such as when a particular foreign market is closed but the Fund is open. Short-term obligations with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are categorized as Level 1 in the fair value hierarchy. The Pricing Committee of Van Eck Associates Corporation (the “Adviser”) provides oversight of the Fund’s valuation policies and procedures, which are approved by the Fund’s Board of Trustees. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes 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 Fund’s valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis. | |
Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be classified either as Level 2 or Level 3 in the fair value hierarchy. The price which the Fund may realize upon sale of an investment may differ materially from the value presented in the Schedule of Investments. | |
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three levels of the fair value hierarchy are described below: |
Level 1 – Quoted prices in active markets for identical securities. |
24 |
Level 2 – Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). | |
Level 3 – Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
A summary of the inputs and the levels used to value the Fund’s investments are located in the Schedule of Investments. Additionally, tables that reconcile the valuation of the Fund’s Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Schedule of Investments. | |
B. | Federal Income Taxes—It is the Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income and net realized capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. |
C. | Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Statement of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments, and liabilities are recorded as net realized gain (loss) and net change in unrealized appreciation (depreciation) on foreign currency transactions and foreign denominated assets and liabilities in the Statement of Operations. |
D. | Dividends and Distributions to Shareholders—Dividends to shareholders from net investment income and distributions from net realized capital gains, if any, are declared and paid annually. Income dividends and capital gain distributions are determined in accordance with U.S. income tax regulations, which may differ from such amounts determined in accordance with GAAP. |
25 |
VANECK VIP EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
E. | Restricted Securities—The Fund 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 the Fund’s Schedule of Investments. |
F. | Use of Derivative Instruments—The Fund may invest in derivative instruments, including, but not limited to, options, futures, swaps and forward foreign currency contracts. 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 or commodities 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 instrument. The Fund held no derivative instruments at December 31, 2019. |
Forward Foreign Currency Contracts—The Fund may buy and sell forward foreign currency contracts to settle purchases and sales of foreign denominated securities, gain currency exposure or to hedge foreign denominated assets. Realized gains and losses from forward foreign currency contracts, if any, are included in net realized gain (loss) on forward foreign currency contracts in the Statement of Operations. During the year ended December 31, 2019, the Fund held forward foreign currency contracts for 12 days. The average amounts purchased and sold (in U.S dollars) were $77,695 and $77,690, respectively. At December 31, 2019, the Fund held no forward foreign currency contracts.
The impact of transactions in derivative instruments during the year ended December 31, 2019, was as follows:
26 |
Foreign Currency Risk | ||||
Realized gain (loss): | ||||
Forward foreign currency contracts1 | $37 |
1 | Statement of Operations location: Net realized gain (loss) on forward foreign currency contracts |
G. | Offsetting Assets and Liabilities—In the ordinary course of business, the Fund enters into transactions subject to enforceable master netting or other similar agreements. Generally, the right of offset in those agreements allows the Fund to offset any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of the agreements. The Fund may pledge or receive cash and/or securities as collateral for derivative instruments and securities lending. For financial reporting purposes, the Fund presents securities lending assets and liabilities on a gross basis in the Statements of Assets and Liabilities. Cash collateral held in the form of money market investments, if any, at December 31, 2019 is presented in the Schedule of Investments and in the Statement of Assets and Liabilities. Non-cash collateral is disclosed in Note 9 (Securities Lending). |
H. | Other—Security transactions are accounted for on trade date. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized upon notification of the ex-dividend date. Realized gains and losses are determined based on the specific identification method. |
Income, non-class specific expenses, gains and losses on investments are allocated to each class of shares based on its relative net assets. Expenses directly attributable to a specific class are charged to that class. | |
In the normal course of business, the Fund enters into contracts that contain a variety of general indemnifications. The Fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote. |
Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Fund. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of 1.00% of the Fund’s average daily net assets. The Adviser has agreed, until at least May 1, 2020, to waive management fees and assume expenses to prevent the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest expense, trading expenses, dividend and interest payments
27 |
VANECK VIP EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
on securities sold short, taxes, and extraordinary expenses) from exceeding 1.30% and 1.55% of average daily net assets for Initial Class Shares and for Class S Shares, respectively. For the year ended December 31, 2019, the adviser waived management fees in the amount of $13,506 for Class S shares.
In addition, Van Eck Securities Corporation (the “Distributor”), an affiliate of the Adviser, acts as the Fund’s distributor. Certain officers and trustees of the Trust are officers, directors or stockholders of the Adviser and Distributor.
State Street Bank and Trust Company is the Fund’s custodian and securities lending agent.
Note 4—12b-1 Plan of Distribution—Pursuant to a Rule 12b-1 Plan of Distribution (the “Plan”), the Fund is authorized to incur distribution expenses for its Class S Shares which will principally be payments to securities dealers who have sold shares and serviced shareholder accounts, and payments to the Distributor for reimbursement of other actual promotion and distribution expenses incurred by the Distributor on behalf of the Fund. The amount paid under the Plan in any one year is 0.25% of average daily net assets for Class S Shares and is recorded as Distribution Fees in the Statement of Operations.
Note 5—Investments—For the year ended December 31, 2019, the cost of purchases and proceeds from sales of investments, excluding U.S. government securities and short-term obligations, aggregated to $36,563,159 and $45,329,748, respectively.
Note 6—Income Taxes—As of December 31, 2019, for Federal income tax purposes, the identified cost, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) of investments owned were as follows:
Tax Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||
$126,969,636 | $51,341,502 | $(10,862,956) | $40,478,546 |
At December 31, 2019, the components of distributable earnings (loss) on a tax basis, for the Fund, were as follows:
Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Other Temporary Differences | Unrealized Appreciation (Depreciation) | Total Distributable Earnings | ||||
$ 3,119,392 | $4,686,613 | $(85,269) | $40,478,368 | $48,199,104 |
28 |
The tax character of dividends paid to shareholders were as follows:
Year Ended December 31, 2019 | Year Ended December 31, 2018 | |||||||
Ordinary income | $ 700,565 | $485,467 | ||||||
Long-Term Capital Gains | 3,473,729 | — | ||||||
Total Dividends Paid | $4,174,294 | $485,467 |
Each year, the Fund assesses the need for any reclassifications due to permanent book to tax differences that affect distributable earnings / (losses) and aggregate paid in capital. Net assets are not affected by these reclassifications. During the year ended December 31, 2019, the Fund did not have any reclassifications.
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Fund does not have exposure for additional years that might still be open in certain foreign jurisdictions. Therefore, no provision for income tax is required in the Fund’s financial statements. However, the Fund is subject to foreign taxes on the appreciation in value of certain investments. The Fund provides for such taxes on both realized and unrealized appreciation.
The Fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended December 31, 2019, the Fund did not incur any interest or penalties.
Note 7—Principal Risks—The Fund may purchase securities on foreign exchanges. Securities of foreign issuers involve special risks and considerations not typically associated with investing in U.S. issuers. These risks include devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and future adverse political and economic developments. These risks are heightened for investments in emerging market countries. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of comparable U.S. issuers.
At December 31, 2019, the shareholder accounts of two insurance companies owned approximately 84%, and 14%, of the Fund’s Class S Shares, respectively. The aggregate shareholder accounts of two insurance companies owned approximately 64% and 21% of the Initial Class Shares.
29 |
VANECK VIP EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
A more complete description of risks is included in the Fund’s Prospectus and Statement of Additional Information.
Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Deferred 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 eligible funds of the Trust and the VanEck Funds (another registered investment company managed by the Adviser) as directed by the Trustees.
The expense for the Deferred Plan is included in “Trustees’ fees and expenses” on the Statement of Operations. The liability for the Deferred Plan is shown as “Deferred Trustee fees” on the Statement of Assets and Liabilities.
Note 9—Securities Lending—To generate additional income, the Fund may lend its securities pursuant to a securities lending agreement with the securities lending agent. The Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, cash equivalents, U.S. government securities, or any combination of cash and such securities at all times equal to at least 102% (105% for foreign securities) of the market value plus accrued interest on the securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Fund will continue to receive any dividends, interest or amounts equivalent thereto, on the securities loaned while receiving a fee from the borrower and/or earning interest on the investment of the cash collateral. Such fees and interest are shared with the securities lending agent under the terms of the securities lending agreement. Securities lending income is disclosed as such in the Statement of Operations. The cash collateral is maintained on the Fund’s behalf by the lending agent and is invested in the State Street Navigator Securities Lending Government Money Market Portfolio. Non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities, and is not disclosed in the Fund’s Schedule of Investments or Statement of Assets and Liabilities as it is held by the agent on behalf of the Fund, and the Fund does not have the ability to re-hypothecate those securities. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the securities loaned. The Fund 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 cash collateral at December 31, 2019 is presented on a gross basis in the Schedule of Investments and Statement of Assets and
30 |
Liabilities. The following is a summary of the Fund’s securities on loan and related collateral as of December 31, 2019:
Market Value of Securities on Loan | Cash Collateral | Non-Cash Collateral | Total Collateral | |||
$2,010,167 | $779,400 | $1,314,845 | $2,094,245 |
The following table presents money market fund investments held as collateral by type of security on loan as of December 31, 2019:
Gross Amount of Recognized Liabilities for Securities Loaned in the Statements of Assets and Liabilities* | ||
Equity Securities | $779,400 |
* | Remaining contractual maturity of the agreements: overnight and continuous |
Note 10—Bank Line of Credit—The Trust participates with VanEck Funds (collectively the “VE/VIP Funds”) in a $30 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 Fund and other temporary or emergency purposes. The participating VE/VIP Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the VE/VIP Funds at rates based on prevailing market rates in effect at the time of borrowings. During the year ended December 31, 2019, the average daily loan balance during the 4 day period for which a loan was outstanding amounted to $1,294,508 and the average interest rate was 3.76%. At December 31, 2019, the Fund had no outstanding borrowings under the Facility.
Note 11—Recent Accounting Pronouncements—The Fund early adopted certain provisions of Accounting Standards Update No. 2018-13Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”) that eliminate and modify certain disclosure requirements for fair value measurements. The adoption of certain provisions of ASU 2018-13 had no material effect on the financial statements and related disclosures. Management evaluated the additional requirements, not yet adopted, and they are not expected to have a material impact to the financial statements. Public companies will be required to disclose the range and weighted average of significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years.
31 |
VANECK VIP EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
Note 12—Subsequent Event Review—The Fund has evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued.
32 |
VANECK VIP EMERGING MARKETS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of VanEck VIP Emerging Markets Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of VanEck VIP Emerging Markets Fund (the “Fund”) (one of the series constituting VanEck VIP Trust (the “Trust”)), including the schedule of investments, as of December 31, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of VanEck VIP Emerging Markets Fund (one of the series constituting VanEck VIP Trust) at December 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
33 |
VANECK VIP EMERGING MARKETS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(continued)
in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the VanEck investment companies since 1999.
New York, New York
February 14, 2020
34 |
VANECK VIP EMERGING MARKETS FUND
(unaudited)
The following information is provided with respect to the distributions paid during the taxable year ended December 31, 2019:
Record Date: | 01/30/2019 | ||
Ex and Payable Date: | 01/31/2019 | ||
Ordinary Income Paid Per Share–Initial Class | $0.062500 | ||
Ordinary Income Paid Per Share–Class S | $0.044200 | ||
Long-Term Capital Gains Paid Per Share–Initial Class and Class S | $0.309800 | ||
Dividends Qualifying for the Dividends Received Deduction for Corporations | 0.00%* | ||
Foreign Source Income | 100.00%* | ||
Foreign Taxes Paid Per Share–Initial Class and Class S | $0.026973 |
* | Expressed as a percentage of the ordinary income distribution grossed-up for foreign taxes. |
The foreign taxes paid represent taxes incurred by the Fund on income received by the Fund from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax adviser regarding the appropriate treatment of foreign taxes paid.
Please retain this information for your records.
35 |
VANECK VIP TRUST
SPECIAL MEETING OF SHAREHOLDERS
October 11, 2019 (unaudited)
VANECK VIP TRUST
VanEck VIP Emerging Markets Fund
VanEck VIP Global Gold Fund
VanEck VIP Global Hard Assets Fund
VanEck VIP Unconstrained Emerging Markets Bond Fund
A Special Meeting of Shareholders of VanEck VIP Trust (the “Trust”) was held at the offices of the Trust, 666 Third Avenue, 9th Floor, New York, New York 10017 on October 11, 2019. The purpose of the meeting was to elect Trustees of the Trust. At the meeting, the following persons were elected by the shareholders to serve as Trustees of the Trust: Jon Lukomnik, Jane DiRenzo Pigott, R. Alastair Short, Richard D. Stamberger, Robert L. Stelzl, and Jan F. van Eck. No other business was transacted at the meeting.
The results of the voting at the meeting are as follows:
Proposal: To elect a Board of Trustees*:
Name | For | Withheld |
Jon Lukomnik | 25,514,194.941 | 842,144.970 |
Jane DiRenzo Pigott | 25,490,919.107 | 865,420.804 |
R. Alastair Short | 25,505,009.742 | 851,330.169 |
Richard D. Stamberger | 25,502,062.215 | 854,277.696 |
Robert L. Stelzl | 25,466,422.851 | 889,917.060 |
Jan F. van Eck | 25,492,557.910 | 863,782.001 |
Total Trust Shares Outstanding**: 31,477,728.439 |
* | Results are for all series portfolios within the Trust. |
** | As of the record date. |
36 |
VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited)
The Trustees of the Trust, their address, position with the Trust, age and principal occupations during the past five years, as of January 1, 2020, are set forth below:
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex(3) Overseen By Trustee | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years | ||||
Independent Trustees: | ||||||||
Jon Lukomnik 1956 (A)(I) | Trustee (since 2006) | Managing Partner, Sinclair Capital LLC (consulting firm). Formerly, Executive Director, Investor Responsibility Research Center Institute. | 11 | Member of the Deloitte Audit Quality Advisory Committee; Chairman of the Advisory Committee of Legion Partners; Member of the Standing Advisory Group to the Public Company Accounting Oversight Board; Director of VanEck ICAV (an Irish UCITS); VanEck Vectors UCITS ETF plc (an Irish UCITS). Formerly, Director of VanEck (a Luxembourg UCITS); Chairman of the Board of the New York Classical Theatre. | ||||
Jane DiRenzo Pigott 1957 (I) | Trustee (since 2007); Chairperson of the Board (since 2020) | Managing Director, R3 Group LLC (consulting firm). | 11 | Trustee of Northwestern University, Lyric Opera of Chicago and the Chicago Symphony Orchestra.
Formerly, Director and Chair of Audit Committee of 3E Company (services relating to hazardous material safety); Director of MetLife Investment Funds, Inc. | ||||
R. Alastair Short 1953 (A)(I) | Trustee (since 2004); Chairperson of the Audit Committee (since 2006) | President, Apex Capital Corporation (personal investment vehicle). | 66 | Chairman and Independent Director, EULAV Asset Management; Trustee, Kenyon Review; Trustee, Children’s Village. Formerly, Independent Director, Tremont offshore funds. |
37 |
VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited) (continued)
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex(3) Overseen By Trustee | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years | ||||
Richard D. Stamberger 1959 (G)(I) | Trustee (since 1995) | President and CEO, SmartBrief, Inc. (business media company). | 66 | Director, Food and Friends, Inc. | ||||
Robert L. Stelzl 1945 (G)(I) | Trustee (since 2007); Chairperson of the Governance Committee (since 2017) | Co-Trustee, the estate of Donald Koll; Trustee, Robert D. MacDonald Trust; Trustee, GH Insurance Trusts. Formerly, Trustee, Joslyn Family Trusts; President, Rivas Capital, Inc. (real estate property management services company). | 11 | Director, Brookfield Office Properties, Inc., Brookfield Residential Properties, Inc., Brookfield DTLA Fund Office Trust Investor, Inc., Brookfield Property Finance ULC and Brookfield Property Split Corp. | ||||
Interested Trustee: | ||||||||
Jan F. van Eck(4) 1963 (I) | Trustee (Since 2019); Chairperson of the Investment Oversight Committee (since 2020); Chief Executive Officer and President (Since 2010) | Director, President and Chief Executive Officer of Van Eck Associates Corporation (VEAC), Van Eck Absolute Return Advisers Corporation (VEARA) and Van Eck Securities Corporation (VESC); Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | 66 | Director, National Committee on US China Relations. |
(1) | The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
(2) | Trustee serves until resignation, death, retirement or removal. |
(3) | The Fund Complex consists of VanEck Funds, VanEck VIP Trust and VanEck Vectors ETF Trust. |
(4) | “Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC. In addition, Mr. van Eck and members of his family own 100% of the voting stock of VEAC, which in turns owns 100% of the voting stock of each of VEARA and VESC. |
(A) | Member of the Audit Committee. |
(G) | Member of the Governance Committee. |
(I) | Member of the Investment Oversight Committee. |
38 |
The executive officers of the Trust, their age and address, the positions they hold with the Trust, their term of office and length of time served and their principal business occupations during the past five years are shown below:
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years | |||
Matthew A. Babinsky, 1983 | Assistant Vice President and Assistant Secretary | Since 2016 | Assistant Vice President, Assistant General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Associate, Clifford Chance US LLP. | |||
Russell G. Brennan, 1964 | Assistant Vice President and Assistant Treasurer | Since 2008 | Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA. | |||
Charles T. Cameron, 1960 | Vice President | Since 1996 | Portfolio Manager for VEAC; Officer and/or Portfolio Manager of other investment companies advised by VEAC and VEARA. Formerly, Director of Trading of VEAC. | |||
John J. Crimmins, 1957 | Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (since 2012); Treasurer (since 2009) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. | |||
F. Michael Gozzillo, 1965 | Chief Compliance Officer | Since 2018 | Vice President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance Officer of VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC and City National Rochdale Funds. | |||
Laura Hamilton, 1977 | Vice President | Since 2019 | Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates. |
39 |
VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited) (concluded)
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years | |||
Laura I. Martínez, 1980 | Vice President and Assistant Secretary | Vice President (since 2016); Assistant Secretary (since 2008) | Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of VEAC, VEARA and VESC. | |||
James Parker, 1969 | Assistant Treasurer | Since 2014 | Assistant Vice President of VEAC, Manager, Portfolio Administration of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. | |||
Jonathan R. Simon, 1974 | Senior Vice President; Secretary and Chief Legal Officer | Senior Vice President (since 2016); Secretary and Chief Legal Officer (since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
(1) | The address for each Executive Officer is 666 Third Avenue, 9th Floor, New York, NY 10017. |
(2) | Officers are elected yearly by the Board. |
40 |
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the Fund’s prospectus, which includes more complete information. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, and charges and expenses of the Fund carefully before investing. To obtain a prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus carefully before investing.
Additional information about the VanEck VIP (the “Trust”) Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Trust’s Form N-PORT filings are available on the Commission’s website at https://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Fund’s complete schedule of portfolio holdings is also available by calling 800.826.2333 or by visiting vaneck.com.
Investment Adviser: | Van Eck Associates Corporation | |
Distributor: | Van Eck Securities Corporation | |
666 Third Avenue, New York, NY 10017 | ||
vaneck.com | ||
Account Assistance: | 800.544.4653 | VIPEMAR |
ANNUAL REPORT December 31, 2019 |
VanEck VIP Trust
VanEck VIP Global Gold Fund
800.826.2333 | vaneck.com |
Certain information contained in this report represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Also, unless otherwise specifically noted, any discussion of the Fund’s holdings, the Fund’s performance, and the views of the investment adviser are as of December 31, 2019.
(unaudited)
FACTS | WHAT DOES VAN ECK DO WITH YOUR |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: ■ Social Security number and account balances ■ assets and payment history ■ risk tolerance and transaction history |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Van Eck chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does Van Eck share? | Can you limit this sharing? |
For our everyday business purposes— such as to process your transactions, maintainyour account(s), respond to court orders andlegal investigations, or report to credit bureaus | Yes | No |
For our marketing purposes— to offer our products and services to you | Yes | No |
For joint marketing with other financial companies | Yes | No |
For our affiliates’ everyday business purposes— information about your transactions and experiences | Yes | No |
For our affiliates’ everyday business purposes— information about your creditworthiness | No | We don’t share |
For our affiliates to market to you | Yes | Yes |
For nonaffiliates to market to you | No | We don’t share |
To limit our
| Call us at 1-800-826-2333. Please note: If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
Questions? | Call us at 1-800-826-2333. |
PRIVACY NOTICE
(unaudited) (continued)
Who we are | |
Who is providing this notice? | Van Eck Global, its affiliates and funds sponsored or managed by Van Eck (collectively “Van Eck”). |
What we do | |
How does Van Eck protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. |
How does Van Eck collect my personal information? | We collect your personal information, for example, when you ■ open an account or give us your income information ■ provide employment information or give us your contact information ■ tell us about your investment or retirement portfolio We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
Why can’t I limit all sharing? | Federal law gives you the right to limit only ■ sharing for affiliates’ everyday business purposes—information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
What happens when I limit sharing for an account I hold jointly with someone else? | Your choices will apply to everyone on your account – unless you tell us otherwise |
Definitions | |
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. ■ Our affiliates include companies with a Van Eck name such as Van Eck Securities Corporation and others such as Market Vectors Index Solutions GmbH. |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. ■ Van Eck does not share with nonaffiliates so they can market to you. |
Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. ■ Our joint marketing partners include financial services companies |
Other important information | |
California Residents— In accordance with California law, we will not share information we collect about California residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We also will limit the sharing of information about you with our affiliates to the extent required by applicable California law. Vermont Residents— In accordance with Vermont law, we will not share information we collect about Vermont residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We will not share creditworthiness information about Vermont residents among Van Eck’s affiliates except with the authorization or consent of the Vermont resident. |
VANECK VIP GLOBAL GOLD FUND
December 31, 2019 (unaudited)
Dear Shareholders:
The story for 2019 was simple and familiar—slower economic growth was combated by expansive monetary policy.
But first a comment on global growth: the two engines of the global economy, the U.S. and China, continue to move forward and we now have the prospect of at least some resolution of the trade dispute between them in the phase-one agreement. The latest economic statistics from China are steady and there are signs of “green shoots.” China’s services sector is expanding robustly and manufacturing is struggling, but not collapsing. My blog,China’s Economic Growth: Continuing Despite Headlines, shows this in two charts.
The biggest event in the markets last summer was the surge in bonds in Europe with negative interest rates. At the end of September, nearly $15 trillion worth of debt globally carried a negative yield.1Despite moves by the European Central Bank to stimulate, not only is the European economy slowing down, but there are also concerns about just how effective central bank actions are. Looking forward, therefore, I think investors should assess their hedge against central bank uncertainty by considering, for example, their gold allocations. While high interest rate environments tend to be tough for gold (it does not pay any yield), against negative interest rates, gold and other hedges against central bank impotence should be strongly considered.
We encourage you to stay in touch with us through the videos, email subscriptions and research blogs available on our website, www.vaneck.com. I have started my own email subscription where I share interesting research—you can sign up on www.vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit ourwebsite.
We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find a performance discussion and financial statements for the fund for the twelve month period ended
1 |
VANECK VIP GLOBAL GOLD FUND
PRESIDENT’S LETTER
(unaudited) (continued)
December 31, 2019. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Jan F. van Eck
CEO and President
VanEck VIP Trust
January 24, 2020
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
1 | Financial Times: September was the busiest month ever for corporate debt issuance, September 30, 2019, https://www.ft.com/content/eef8234c-e3c0-11e9-b112-9624ec9edc59 |
2 |
December 31, 2019 (unaudited)
The Class S shares of the VanEck VIP Global Gold Fund (the “Fund”) gained 38.75% during the 12 months ended December 31, 2019, slightly underperforming the NYSE Arca Gold Miners Index1(GDMNTR) which posted returns of 40.89% during the same period. The smaller cap gold mining stocks, as represented by the MVIS Global Junior Gold Miners Index2(MVGDXJTR) gained 42.18%.
Market Review
In 2019, the gold market was positively impacted, on the one hand, by fears around global growth and the continuing trade dispute between the U.S. and China and, on the other hand, by the policy shifts of central banks around the world, in particular the U.S. Federal Reserve (Fed), toward a more accommodative stance. In June, the gold price experienced a significant and possibly historic breakout, blowing through two formidable technical barriers: the first was $1,365 an ounce on June 20; followed by $1,400 on June 21. The Fed kicked off the global easing cycle, as expected, on July 31 with its first interest rate cut since 2008. In August, gold’s rally continued as markets reacted to retaliatory threats and actions between the United States and China. Gold advanced to a six-year high of $1,557 on September 4. The gold price found support on September 12 when the European Central Bank cut deposit rates to -0.5% and announced that it would start buying $22 billion worth of debt beginning in November to try to avoid a eurozone recession. The gold market showed resilience until September 30, when U.S. dollar strength seemed to overwhelm the metal. Gold fell, entering what we view as an interim correction, consolidating its 2019 gains and trading in a narrow range between $1,450 and $1,520 per ounce during the last quarter of 2019.
The gold market appears resilient given the lack of strong catalysts lately. Although many measures of the U.S. economy have deteriorated, third quarter gross domestic product (GDP) growth, while anemic, came in above expectations and unemployment remains at historic lows. Nonetheless, we believe the potential for systemic financial stress is keeping the gold price elevated as a safe haven asset. Gold closed at $1,517.27 per ounce on December 31, recording an annual gain of $234.78 (18.31%).
Fund Review
At the end of December 2019, the Fund was almost fully invested in equities, with cash holdings representing 1.17% of net assets. The Fund held no gold bullion at the end of the period under review. The Fund
3 |
VANECK VIP GLOBAL GOLD FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
underperformed the benchmark by 2.14% largely due to positions in several majors. South African majors AngloGold Ashanti (1.8% of Fund net assets) and Gold Fields (0.7% of Fund net assets) performed well for the benchmark, however, the Fund has historically underweighted or avoided South African stocks due to elevated levels of operating, political, and social risk. Also, Mexican silver major Fresnillo (sold by the Fund during the period) underperformed due to geologic and operating issues that we believe may persist. As a result the Fund has exited its position.
The Fund’s top holding, Kirkland Lake (9.1% of Fund net assets) was able to continue its outperformance (+69.6%) despite share price weakness in the fourth quarter brought on by its announced agreement to acquire Detour Gold in an all-stock deal. This acquisition will see the company join the ranks of the senior producers with pro forma 2019 production targeted at more than 1.5 million ounces of gold.
The Fund’s top junior holding, Continental Gold (2.2% of Fund net assets) entered into an agreement to be acquired by Zijin Mining in an all-cash offer, propelling Continental’s share price to post a yearly gain of 149.6%. Continental’s Buritica mine in Colombia is expected to commence production in 2020.
Our largest Australian producer Evolution Mining (4.4% of Fund net assets) underperformed (up 5.8% during 2019). The company reported slightly weaker than expected Q3 operating results, and increased its financial year 2020 cost guidance slightly, although its production guidance was unchanged. The company entered an agreement to purchase the Red Lake gold complex in Canada from Newmont (5.3% of Fund net assets), which we view positively. However, the market tends to price in shorter-term risk for these transactions, resulting in weaker relative performance for the asset-acquiring company. Evolution Mining continues to be one of our preferred gold companies.
Access investment and market insights from VanEck’s investment professionals by subscribing to our commentaries. To subscribe to the gold and precious metals update, please visit vaneck.com/subscription.
We appreciate your continued investment in the VanEck VIP Global Gold Fund, and we look forward to helping you meet your investment goals in the future.
The Fund is subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international
4 |
economic, monetary and political developments. The Fund’s overall portfolio may decline in value due to developments specific to the gold industry. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, including the takeover of property without adequate compensation or imposition of prohibitive taxation. The Fund is subject to risks associated with investments in derivatives, commodity linked instruments, illiquid securities, and small- or mid-cap companies.
The Fund is also subject to inflation risk, market risk, non-diversification risk, leverage risk, and risks of investments in a wholly owned subsidiary. Please see the prospectus for information on these and other risk considerations.
Joseph M. Foster | Imaru Casanova | |
Portfolio Manager | Deputy Portfolio Manager |
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.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits, which are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. Had these fees been included, returns would have been lower. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
† | All Fund assets referenced are Total Net Assets as of December 31, 2019. |
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.
5 |
VANECK VIP GLOBAL GOLD FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
1 | NYSE Arca Gold Miners (GDMNTR) Index is a market capitalization-weighted index comprised of publicly traded companies involved primarily in the mining for gold. |
2 | MVIS Global Junior Gold Miners Index (MVGDXJTR) is a rules-based, modified market capitalization-weighted, float-adjusted index comprised of a global universe of publicly traded small- and medium-capitalization companies that generate at least 50% of their revenues from gold and/or silver mining, hold real property that has the potential to produce at least 50% of the company’s revenue from gold or silver mining when developed, or primarily invest in gold or silver. |
6 |
VANECK VIP GLOBAL GOLD FUND
December 31, 2019 (unaudited)
Average Annual Total Return 12/31/19 | Fund Class S | GDMNTR | MSCI ACWI | |||||||||
One Year | 38.75 | % | 40.89 | % | 27.30 | % | ||||||
Five Year | 7.94 | % | 10.84 | % | 9.00 | % | ||||||
Life* | 0.90 | % | 1.02 | % | 9.52 | % |
* | Inception date for the Fund was 4/26/13 (Class S). |
This chart shows the value of a hypothetical $10,000 investment in the Fund since inception. The result is compared with the Fund’s benchmark, and may include a broad-based market index. | Hypothetical Growth of $10,000 (Since Inception: Class S) |
The performance quoted represents past performance. Past performance is no guarantee of future results; current performance may be lower or higher than the performance data quoted.Performance information reflects temporary waivers of expenses and/or fees, if any, and does not include insurance/annuity fees and expenses. Investment returns would have been reduced had these fees/expenses been included. Investment return and the value of the shares of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Performance information current to the most recent month end is available by calling 800.826.2333 or by visiting vaneck.com.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits that are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
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. Results reflect past performance and do not guarantee future results.
The NYSE Arca Gold Miners Index (GDMNTR) is a modified market capitalization-weighted index comprised of publicly traded companies involved primarily in mining for gold (reflects no deduction for expenses or taxes, except withholding taxes).
MSCI All Country World Index (MSCI ACWI) represents large- and mid-cap companies across developed and emerging market countries (reflects no deduction for expenses or taxes).
7 |
VANECK VIP GLOBAL GOLD FUND
(unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including program fees on purchase payments; and (2) ongoing costs, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in the 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, July 1, 2019 to December 31, 2019.
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 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 fees on purchase payments. 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.
8 |
Beginning Account Value July 1, 2019 | Ending Account Value December 31, 2019 | Expenses Paid During the Period* July 1, 2019 - December 31, 2019 | ||||||||||
Van Eck VIP Global Gold Fund | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,137.00 | $ | 7.81 | ||||||
Hypothetical** | $ | 1,000.00 | $ | 1,017.90 | $ | 7.37 |
* | Expenses are equal to the Fund’s annualized expense ratio (for the six months ended December 31, 2019), of 1.45%, 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 |
9 |
VANECK VIP GLOBAL GOLD FUND
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2019
Number of Shares | Value | |||||||
COMMON STOCKS: 104.2% | ||||||||
Australia: 20.4% | ||||||||
1,349,800 | Bellevue Gold Ltd. * # | $ | 507,701 | |||||
1,007,118 | Cardinal Resources Ltd. * | 212,023 | ||||||
572,192 | Evolution Mining Ltd. # | 1,521,134 | ||||||
989,510 | Gold Road Resources Ltd. * # | 926,446 | ||||||
36,700 | Newcrest Mining Ltd. # | 775,066 | ||||||
167,100 | Northern Star Resources Ltd. # | 1,316,892 | ||||||
192,139 | OceanaGold Corp. (CAD) | 377,309 | ||||||
311,109 | Saracen Mineral Holdings Ltd. * # | 721,479 | ||||||
2,121,500 | West African Resources Ltd. * # | 638,514 | ||||||
6,996,564 | ||||||||
Canada: 73.7% | ||||||||
34,087 | Agnico-Eagle Mines Ltd. (USD) † | 2,100,100 | ||||||
112,940 | Alamos Gold, Inc. (USD) | 679,899 | ||||||
52,566 | Auryn Resources, Inc. * | 75,901 | ||||||
685,088 | B2Gold Corp. (USD) † | 2,747,203 | ||||||
139,128 | Barrick Gold Corp. (USD) | 2,586,389 | ||||||
171,600 | Bear Creek Mining Corp. * | 362,084 | ||||||
186,314 | Bonterra Resources, Inc. * | 322,827 | ||||||
170,900 | Columbus Gold Corp. * | 21,057 | ||||||
180,943 | Continental Gold, Inc. * | 745,481 | ||||||
336,525 | Corvus Gold, Inc. * | 557,182 | ||||||
21,180 | Detour Gold Corp. * | 410,046 | ||||||
263,000 | Eastmain Resources, Inc. * | 21,266 |
Number of Shares | Value | |||||||
Canada: (continued) | ||||||||
53,600 | Equinox Gold Corp. (USD) * | $ | 412,720 | |||||
148,819 | First Mining Gold Corp. * | 29,224 | ||||||
234,106 | Gold Standard Ventures Corp. (USD) * | 200,395 | ||||||
221,900 | Kinross Gold Corp. (USD) * | 1,051,806 | ||||||
70,652 | Kirkland Lake Gold Ltd. (USD) | 3,113,634 | ||||||
188,209 | Leagold Mining Corp. * | 468,149 | ||||||
932,642 | Liberty Gold Corp. * | 782,858 | ||||||
155,000 | Liberty Gold Corp. * # ø | 127,456 | ||||||
38,400 | Lundin Gold, Inc. * | 246,330 | ||||||
15,300 | Marathon Gold Corp * | 20,030 | ||||||
168,000 | Marathon Gold Corp. * # ø | 215,470 | ||||||
124,700 | Midas Gold Corp. * | 60,499 | ||||||
136,200 | Nighthawk Gold Corp. * | 54,541 | ||||||
26,700 | NovaGold Resources, Inc. (USD) * | 239,232 | ||||||
558,888 | Orezone Gold Corp. * | 284,060 | ||||||
99,000 | Orezone Gold Corp. * # | 50,318 | ||||||
17,700 | Osisko Gold Royalties Ltd. (USD) | 171,867 | ||||||
243,000 | Osisko Mining, Inc. * | 757,884 | ||||||
142,800 | Otis Gold Corp. * | 13,746 | ||||||
117,100 | Premier Gold Mines Ltd. * | 177,650 | ||||||
42,600 | Pretium Resources, Inc. (USD) * | 474,138 | ||||||
177,100 | Probe Metals, Inc. * | 156,840 | ||||||
789,100 | Pure Gold Mining, Inc. * | 492,219 | ||||||
469,506 | Rio2 Ltd. * | 144,625 | ||||||
469,300 | Sabina Gold and Silver Corp. * | 693,894 | ||||||
224,000 | Semafo, Inc. * | 465,750 |
See Notes to Consolidated Financial Statements
10 |
Number of Shares | Value | |||||||
Canada: (continued) | ||||||||
41,700 | SSR Mining, Inc. (USD) * | $ | 803,142 | |||||
63,500 | TMAC Resources, Inc. Reg S * | 184,845 | ||||||
56,700 | Wheaton Precious Metals Corp. (USD) | 1,686,825 | ||||||
277,748 | Yamana Gold, Inc. (USD) | 1,097,105 | ||||||
25,306,687 | ||||||||
Monaco: 0.5% | ||||||||
9,740 | Endeavour Mining Corp. (CAD) * | 183,991 | ||||||
South Africa: 2.4% | ||||||||
27,040 | AngloGold Ashanti Ltd. (ADR) | 604,074 | ||||||
35,300 | Gold Fields Ltd. (USD) | 232,980 | ||||||
837,054 | ||||||||
United States: 7.2% | ||||||||
98,900 | Argonaut Gold, Inc. (CAD) * | 148,516 | ||||||
42,168 | Newmont Mining Corp. | 1,832,200 | ||||||
3,940 | Royal Gold, Inc. | 481,665 | ||||||
2,462,381 | ||||||||
Total Common Stocks (Cost: $23,281,621) | 35,786,677 | |||||||
WARRANTS: 0.5% | ||||||||
Canada: 0.5% | ||||||||
61,000 | Alio Gold, Inc. (CAD 3.44, expiring 01/22/20) * # ∞ | 0 | ||||||
42,000 | Allegiant Gold Ltd. (CAD 1.20, expiring 01/30/20) * # ø ∞ | 0 | ||||||
16,000 | Bonterra Resources, Inc. (CAD 3.10, expiring 08/20/21) * # ø ∞ | 4,066 | ||||||
27,985 | Leagold Mining Corp. (CAD 3.70, expiring 05/24/20) * # ∞ | 5,011 |
Number of Shares | Value | |||||||
Canada: (continued) | ||||||||
352,000 | Liberty Gold Corp. (CAD 0.60, expiring 10/02/21) * # ∞ | $ | 121,982 | |||||
84,000 | Marathon Gold Corp. (CAD 1.60, expiring 09/30/21) * # ø ∞ | 23,287 | ||||||
61,000 | Probe Metals, Inc. (CAD 1.45, expiring 06/19/20) * # ∞ | 2,818 | ||||||
159,000 | Pure Gold Mining, Inc. (CAD 0.85, expiring 05/24/20) * # ∞ | 8,265 | ||||||
144,500 | Pure Gold Mining, Inc. (CAD 0.85, expiring 07/18/22) * # ∞ | 23,368 | ||||||
Total Warrants (Cost: $71,496) | 188,797 | |||||||
MONEY MARKET FUND: 1.2% (Cost: $401,430) | ||||||||
401,430 | Invesco Treasury Portfolio — Institutional Class | 401,430 | ||||||
Total Investments Before Collateral for Securities Loaned: 105.9% (Cost: $23,754,547) | 36,376,904 | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 7.7% (Cost: $2,627,775) | ||||||||
Money Market Fund: 7.7% | ||||||||
2,627,775 | State Street Navigator Securities Lending Government Money Market Portfolio | 2,627,775 | ||||||
Total Investments: 113.6% (Cost: $26,382,322) | 39,004,679 | |||||||
Liabilities in excess of other assets: (13.6)% | (4,669,414 | ) | ||||||
NET ASSETS: 100.0% | $ | 34,335,265 |
See Notes to Consolidated Financial Statements
11 |
VANECK VIP GLOBAL GOLD FUND
CONSOLIDATED SCHEDULE OF INVESTMENTS
(continued)
Definitions:
ADR | American Depositary Receipt |
CAD | Canadian Dollar |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $4,424,044. |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $6,989,273 which represents 20.4% of net assets. |
ø | Restricted Security – the aggregate value of restricted securities is $370,279, or 1.1% of net assets. |
∞ | Security is valued using pricing models and significant unobservable inputs that factor in volatility and discount for lack of marketability 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. |
Restricted securities held by the Fund as of December 31, 2019 are as follows:
Security | Acquisition Date | Number of Shares | Acquisition Cost | Value | % of Net Assets | |||||||||||||||||
Allegiant Gold Ltd. Warrants | 11/20/2017 | 42,000 | $ | 0 | $ | 0 | 0.0 | % | ||||||||||||||
Bonterra Resources, Inc. Warrants | 08/16/2019 | 16,000 | 6,551 | 4,066 | 0.0 | |||||||||||||||||
Liberty Gold Corp. | 09/06/2019 | 155,000 | 64,669 | 127,456 | 0.4 | |||||||||||||||||
Marathon Gold Corp. | 09/26/2019 | 168,000 | 157,762 | 215,470 | 0.6 | |||||||||||||||||
Marathon Gold Corp. Warrants | 09/26/2019 | 84,000 | 9,289 | 23,287 | 0.1 | |||||||||||||||||
$ | 238,271 | $ | 370,279 | 1.1 | % |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Diversified Metals & Mining | 0.3 | % | $ | 97,167 | ||||
Gold | 90.9 | 33,071,514 | ||||||
Precious Metals & Minerals | 3.1 | 1,119,968 | ||||||
Silver | 4.6 | 1,686,825 | ||||||
Money Market Fund | 1.1 | 401,430 | ||||||
100.0 | % | $ | 36,376,904 |
See Notes to Consolidated Financial Statements
12 |
The summary of inputs used to value the Fund’s investments as of December 31, 2019 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks | |||||||||||||||||
Australia | $ | 589,332 | $ | 6,407,232 | $ | — | $ | 6,996,564 | |||||||||
Canada | 24,913,443 | 393,244 | — | 25,306,687 | |||||||||||||
Monaco | 183,991 | — | — | 183,991 | |||||||||||||
South Africa | 837,054 | — | — | 837,054 | |||||||||||||
United States | 2,462,381 | — | — | 2,462,381 | |||||||||||||
Warrants* | — | — | 188,797 | 188,797 | |||||||||||||
Money Market Funds | 3,029,205 | — | — | 3,029,205 | |||||||||||||
Total | $ | 32,015,406 | $ | 6,800,476 | $ | 188,797 | $ | 39,004,679 |
* | See Consolidated Schedule of Investments for geographic sector breakouts. |
See Notes to Consolidated Financial Statements
13 |
VANECK VIP GLOBAL GOLD FUND
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
December 31, 2019
Assets: | ||||
Investments, at value (Cost $23,754,547) (1) | $ | 36,376,904 | ||
Short-term investment held as collateral for securities loaned (2) | 2,627,775 | |||
Cash denominated in foreign currency, at value (Cost $236) | 236 | |||
Receivables: | ||||
Investments sold | 292,153 | |||
Dividends and interest | 7,863 | |||
Prepaid expenses | 3,037 | |||
Total assets | 39,307,968 | |||
Liabilities: | ||||
Payables: | ||||
Investments purchased | 257,897 | |||
Collateral for securities loaned | 2,627,775 | |||
Shares of beneficial interest redeemed | 1,985,759 | |||
Due to Adviser | 5,143 | |||
Due to Custodian | 17 | |||
Due to Distributor | 7,347 | |||
Deferred Trustee fees | 13,826 | |||
Accrued expenses | 74,939 | |||
Total liabilities | 4,972,703 | |||
NET ASSETS | $ | 34,335,265 | ||
Shares of beneficial interest outstanding | 3,980,616 | |||
Net asset value, redemption and offering price per share | $ | 8.63 | ||
Net Assets consist of: | ||||
Aggregate paid in capital | $ | 29,348,797 | ||
Total distributable earnings (loss) | 4,986,468 | |||
$ | 34,335,265 | |||
(1) Value of securities on loan | $ | 4,424,044 | ||
(2) Cost of short-term investment held as collateral for securities loaned | $ | 2,627,775 |
See Notes to Consolidated Financial Statements
14 |
VANECK VIP GLOBAL GOLD FUND
CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2019
Income: | ||||||||
Dividends (net of foreign taxes withheld of $14,018) | $ | 243,222 | ||||||
Securities lending income | 915 | |||||||
Total income | 244,137 | |||||||
Expenses: | ||||||||
Management fees | $ | 221,505 | ||||||
Distribution fees | 73,837 | |||||||
Transfer agent fees | 15,120 | |||||||
Administration fees | 73,837 | |||||||
Custodian fees | 26,453 | |||||||
Professional fees | 114,762 | |||||||
Reports to shareholders | 22,170 | |||||||
Insurance | 3,438 | |||||||
Trustees’ fees and expenses | 17,110 | |||||||
Interest | 490 | |||||||
Other | 128 | |||||||
Total expenses | 568,850 | |||||||
Waiver of management fees | (139,639 | ) | ||||||
Net expenses | 429,211 | |||||||
Net investment loss | (185,074 | ) | ||||||
Net realized loss on: | ||||||||
Investments | (81,072 | ) | ||||||
Foreign currency transactions and foreign denominated assets and liabilities | (2,289 | ) | ||||||
Net realized loss | (83,361 | ) | ||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments | 9,637,562 | |||||||
Foreign currency transactions and foreign denominated assets and liabilities | (139 | ) | ||||||
Net change in unrealized appreciation (depreciation) | 9,637,423 | |||||||
Net Increase in Net Assets Resulting from Operations | $ | 9,368,988 |
See Notes to Consolidated Financial Statements
15 |
VANECK VIP GLOBAL GOLD FUND
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2019 | 2018 | |||||||
Operations: | ||||||||
Net investment loss | $ | (185,074 | ) | $ | (102,671 | ) | ||
Net realized loss | (83,361 | ) | (907,738 | ) | ||||
Net change in unrealized appreciation (depreciation) | 9,637,423 | (2,380,859 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 9,368,988 | (3,391,268 | ) | |||||
Distributions to shareholders from: | ||||||||
Dividends and distributions | — | (628,368 | ) | |||||
Share transactions*: | ||||||||
Proceeds from sale of shares | 19,263,357 | 13,149,811 | ||||||
Reinvestment of dividends and distributions | — | 628,368 | ||||||
Cost of shares redeemed | (16,503,073 | ) | (8,912,469 | ) | ||||
Net increase in net assets resulting from share transactions | 2,760,284 | 4,865,710 | ||||||
Total increase in net assets | 12,129,272 | 846,074 | ||||||
Net Assets: | ||||||||
Beginning of year | 22,205,993 | 21,359,919 | ||||||
End of year | $ | 34,335,265 | $ | 22,205,993 | ||||
* Shares of beneficial interest issued, reinvested and redeemed (unlimited number of $.001 par value shares authorized): | ||||||||
Shares sold | 2,585,780 | 1,997,299 | ||||||
Shares reinvested | — | 86,088 | ||||||
Shares redeemed | (2,177,905 | ) | (1,319,350 | ) | ||||
Net increase | 407,875 | 764,036 |
See Notes to Consolidated Financial Statements
16 |
VANECK VIP GLOBAL GOLD FUND
CONSOLIDATED FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year:
Year Ended December 31, | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||
Net asset value, beginning of year | $ | 6.22 | $ | 7.60 | $ | 7.11 | $ | 4.83 | $ | 6.42 | |||||||||||||||
Income from investment operations: | |||||||||||||||||||||||||
Net investment loss | (0.05 | )(b) | (0.03 | )(b) | (0.07 | )(b) | (0.04 | ) | (0.02 | ) | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.46 | (1.13 | ) | 0.91 | 2.35 | (1.54 | ) | ||||||||||||||||||
Total from investment operations | 2.41 | (1.16 | ) | 0.84 | 2.31 | (1.56 | ) | ||||||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||||
Net investment income | — | (0.22 | ) | (0.35 | ) | (0.03 | ) | — | |||||||||||||||||
Net realized capital gains | — | — | — | — | (0.03 | ) | |||||||||||||||||||
Total dividends and distributions | — | (0.22 | ) | (0.35 | ) | (0.03 | ) | (0.03 | ) | ||||||||||||||||
Net asset value, end of year | $ | 8.63 | $ | 6.22 | $ | 7.60 | $ | 7.11 | $ | 4.83 | |||||||||||||||
Total return (a) | 38.75 | % | (15.70 | )% | 11.63 | % | 48.25 | % | (24.43 | )% | |||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||
Net assets, end of year (000’s) | $34,335 | $22,206 | $21,360 | $19,524 | $ | 7,750 | |||||||||||||||||||
Ratio of gross expenses to average net assets | 1.92 | % | 2.18 | % | 2.03 | % | 1.84 | % | 2.46 | % | |||||||||||||||
Ratio of net expenses to average net assets | 1.45 | % | 1.45 | % | 1.45 | % | 1.45 | % | 1.45 | % | |||||||||||||||
Ratio of net expenses to average net assets excluding interest expense | 1.45 | % | 1.45 | % | 1.45 | % | 1.45 | % | 1.45 | % | |||||||||||||||
Ratio of net investment loss to average net assets | (0.63 | )% | (0.51 | )% | (0.96 | )% | (1.00 | )% | (0.57 | )% | |||||||||||||||
Portfolio turnover rate | 32 | % | 45 | % | 65 | % | 57 | % | 44 | % |
(a) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distribution payment date and a redemption at the net asset value on the last day of the year. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. Total returns do not include fees and expenses imposed under your variable annuity contract and/or life insurance policy. If these amounts were reflected, the returns would be lower than those shown. |
(b) | Calculated based upon average shares outstanding. |
See Notes to Consolidated Financial Statements
17 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019
Note 1—Fund Organization—VanEck VIP Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was organized as a Massachusetts business trust on January 7, 1987. The VanEck VIP Global Gold Fund (the “Fund”) is a non-diversified series of the Trust and seeks long-term capital appreciation by investing in common stocks of gold-mining companies or directly in gold bullion and other metals. The Fund may effect certain investments through the wholly owned VIP Gold Fund Subsidiary (the “Subsidiary”). The Fund currently offers a single class of shares: Class S shares.
Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The Fund is an investment company and is following accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946Financial Services — Investment Companies.
The following is a summary of significant accounting policies followed by the Fund.
A. | Security Valuation—The Fund values its investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. |
Securities traded on national exchanges are valued at the closing price on the markets in which the securities trade. Securities traded on the NASDAQ Stock Market LLC (“NASDAQ”) are valued at the NASDAQ official closing price. Over-the-counter securities not included on NASDAQ and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded, they are categorized as Level 1 in the fair value hierarchy (described below). Certain foreign securities, whose values may be affected by market direction or events occurring before the Fund’s pricing time (4:00 p.m. Eastern Time) but after the last close of the securities’ primary market, are fair valued using a pricing service and are categorized as Level 2 in the fair value hierarchy. The pricing service, using methods approved by the Board of Trustees, considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. market, based on indices of domestic securities and other appropriate indicators such as prices of relevant ADR’s and futures contracts. The Fund may also fair value securities in other situations, |
18 |
such as when a particular foreign market is closed but the Fund is open. Short-term obligations with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are categorized as Level 1 in the fair value hierarchy. The Pricing Committee of Van Eck Associates Corporation (the “Adviser”) provides oversight of the Fund’s valuation policies and procedures, which are approved by the Fund’s Board of Trustees. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes 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 Fund’s valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis. | |
Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be classified either as Level 2 or Level 3 in the fair value hierarchy. The price which the Fund may realize upon sale of an investment may differ materially from the value presented in the Consolidated Schedule of Investments. | |
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three levels of the fair value hierarchy are described below: | |
Level 1 – Quoted prices in active markets for identical securities. |
19 |
VANECK VIP GLOBAL GOLD FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Level 2 – | Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
Level 3 – | Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
A summary of the inputs and the levels used to value the Fund’s investments are located in the Consolidated Schedule of Investments. Additionally, tables that reconcile the valuation of the Fund’s Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Consolidated Schedule of Investments. | |
B. | Basis for Consolidation—The Subsidiary, a Cayman Islands exempted company, was incorporated on January 25, 2013. The Subsidiary acts as an investment vehicle in order to effect certain investments on behalf of the Fund. All interfund account balances and transactions between the Fund and Subsidiary have been eliminated in consolidation. As of December 31, 2019, the Fund held $20,223 in its Subsidiary, representing 0.06% of the Fund’s net assets. |
C. | Federal Income Taxes—It is the Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income and net realized capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. |
D. | Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Consolidated Statement of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments, and liabilities are recorded as net realized gain (loss) and net change in unrealized appreciation (depreciation) on foreign currency transactions and foreign denominated assets and liabilities in the Consolidated Statement of Operations. |
20 |
E. | Dividends and Distributions to Shareholders—Dividends to shareholders from net investment income and distributions from net realized capital gains, if any, are declared and paid annually. Income dividends and capital gain distributions are determined in accordance with U.S. income tax regulations, which may differ from such amounts determined in accordance with GAAP. |
F. | Restricted Securities—The Fund 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 the Fund’s Consolidated Schedule of Investments. |
G. | Warrants—The Fund may invest in warrants whose values are linked to indices or underlying instruments. The Fund 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 held at December 31, 2019 are reflected in the Consolidated Schedule of Investments. |
H. | Use of Derivative Instruments—The Fund may invest in derivative instruments, including, but not limited to, options, futures, swaps and forward foreign currency contracts. 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 or commodities 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 instrument. The Fund held no derivative instruments during the year ended December 31, 2019. |
21 |
VANECK VIP GLOBAL GOLD FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
I. | Offsetting Assets and Liabilities—In the ordinary course of business, the Fund enters into transactions subject to enforceable master netting or other similar agreements. Generally, the right of offset in those agreements allows the Fund to offset any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of the agreements. The Fund may pledge or receive cash and/or securities as collateral for derivative instruments and securities lending. For financial reporting purposes, the Fund presents securities lending assets and liabilities on a gross basis in the Statement of Assets and Liabilities. Cash collateral held in the form of money market investments, if any, at December 31, 2019 is presented in the Consolidated Schedule of Investments and in the Consolidated Statement of Assets and Liabilities. Non-cash collateral is disclosed in Note 9 (Securities Lending). |
J. | Other—Security transactions are accounted for on trade date. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized upon notification of the ex-dividend date. Realized gains and losses are determined based on the specific identification method. |
In the normal course of business, the Fund enters into contracts that contain a variety of general indemnifications. The Fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote. | |
Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Fund. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of 0.75% of the first $500 million of the Fund’s average daily net assets, 0.65% of the next $250 million of average daily net assets and 0.50% of the average daily net assets in excess of $750 million. The Adviser has agreed, until at least May 1, 2020, to waive management fees and assume expenses to prevent the Fund’s total annual operating expense (excluding acquired fund fees and expenses, interest expense, trading expenses, dividend and interest payments on securities sold short, taxes, and extraordinary expenses) from exceeding 1.45% of the Fund’s average daily net assets. Refer to the Consolidated Statement of Operations for the amounts waived/assumed by the Adviser for the year ended December 31, 2019.
The Adviser also performs accounting and administrative services for the Fund. The Adviser is paid a monthly fee at a rate of 0.25% of the average daily net assets for the Fund per year on the first $750 million of the average daily net
22 |
assets, and 0.20% per year of the average daily net assets in excess of $750 million. The amount received by the Adviser pursuant to this contract for the year ended December 31, 2019 is recorded as Administration fees in the Consolidated Statement of Operations.
In addition, Van Eck Securities Corporation (the “Distributor”), an affiliate of the Adviser, acts as the Fund’s distributor. Certain officers and trustees of the Trust are officers, directors or stockholders of the Adviser and Distributor.
State Street Bank and Trust Company is the Fund’s custodian and securities lending agent.
Note 4—12b-1 Plan of Distribution—Pursuant to a Rule 12b-1 Plan of Distribution (the “Plan”), the Fund is authorized to incur distribution expenses which will principally be payments to securities dealers who have sold shares and serviced shareholder accounts, and payments to the Distributor for reimbursement of other actual promotion and distribution expenses incurred by the Distributor on behalf of the Fund. The amount paid under the Plan in any one year is 0.25% of the Fund’s average daily net assets and is recorded as Distribution Fees in the Consolidated Statement of Operations.
Note 5—Investments—For the year ended December 31, 2019, the cost of purchases and proceeds from sales of investments, excluding U.S. government securities and short-term obligations, aggregated to $14,600,918 and $9,299,988, respectively.
Note 6—Income Taxes—As of December 31, 2019, for Federal income tax purposes, the identified cost, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) of investments owned were as follows:
Gross | Gross | Net Unrealized | ||||
Tax Cost | Unrealized | Unrealized | Appreciation | |||
of Investments | Appreciation | Depreciation | (Depreciation) | |||
$30,651,255 | $10,626,567 | $(2,252,920) | $8,373,647 |
At December 31, 2019, the components of distributable earnings (loss) on a tax basis, for the Fund, were as follows:
Undistributed | Accumulated | Other | Unrealized | Total | ||||
Ordinary | Capital | Temporary | Appreciation | Distributable | ||||
Income | Losses | Differences | (Depreciation) | Earnings (Loss) | ||||
$2,499,616 | $(5,936,113) | $(13,826) | $8,436,791 | $4,986,468 |
The tax character of dividends paid to shareholders were as follows:
Year Ended | Year Ended | |||
December 31, 2019 | December 31, 2018 | |||
Ordinary income | $ — | $628,368 |
23 |
VANECK VIP GLOBAL GOLD FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
At December 31, 2019, the Fund had capital loss carryforwards available to offset future capital gains, as follows:
Short-Term Capital Losses with No Expiration | Long-Term Capital Losses with No Expiration | Total | ||
$(2,129,472) | $(3,806,641) | $(5,936,113) |
During the year ended December 31, 2019, as a result of permanent book to tax differences due to a net operating loss and losses from the Fund’s Subsidiary, the Fund incurred differences that affected distributable earnings and aggregate paid in capital by the amounts in the table below. Net assets were not affected by these reclassifications.
Increase (Decrease) in Distributable Earnings | Increase (Decrease) in Aggregate Paid in Capital | |
$4,492 | $(4,492) |
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Fund does not have exposure for additional years that might still be open in certain foreign jurisdictions. Therefore, no provision for income tax is required in the Fund’s financial statements. However, the Fund is subject to foreign taxes on the appreciation in value of certain investments. The Fund provides for such taxes on both realized and unrealized appreciation.
The Fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended December 31, 2019, the Fund did not incur any interest or penalties.
Note 7—Principal Risks—The Fund may purchase securities on foreign exchanges. Securities of foreign issuers involve special risks and considerations not typically associated with investing in U.S. issuers. These risks include devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and future adverse political and economic developments. These risks are heightened for investments in emerging market countries. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of comparable U.S. issuers.
24 |
The Fund may concentrate its investments in companies which are significantly engaged in the exploration, development, production and distribution of gold and other natural resources such as strategic and other metals, minerals, forest products, oil, natural gas and coal, and by investing in gold bullion and coins. In addition, the Fund may invest up to 25% of its net assets in gold and silver coins, gold, silver, platinum and palladium bullion and exchange traded funds that invest in such coins and bullion and derivatives on the foregoing. Since the Fund may so concentrate, it may be subject to greater risks and market fluctuations than other more diversified portfolios. The production and marketing of gold and other natural resources may be affected by actions and changes in governments. In addition, gold and natural resources may be cyclical in nature.
At December 31, 2019, the aggregate shareholder accounts of three insurance companies owned approximately 72%, 17% and 9% of the Fund’s outstanding shares of beneficial interest.
A more complete description of risks is included in the Fund’s Prospectus and Statement of Additional Information.
Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Deferred 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 eligible funds of the Trust and the Van Eck Funds (another registered investment company managed by the Adviser) as directed by the Trustees.
The expense for the Deferred Plan is included in “Trustees’ fees and expenses” in the Consolidated Statement of Operations. The liability for the Deferred Plan is shown as “Deferred Trustee fees” in the Consolidated Statement of Assets and Liabilities.
Note 9—Securities Lending—To generate additional income, the Fund may lend its securities pursuant to a securities lending agreement with the securities lending agent. The Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, cash equivalents, U.S. government securities, or any combination of cash and such securities at all times equal to at least 102% (105% for foreign securities) of the market value plus accrued interest on the securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Fund will continue to receive any dividends, interest or amounts equivalent thereto, on the securities
25 |
VANECK VIP GLOBAL GOLD FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
loaned while receiving a fee from the borrower and/or earning interest on the investment of the cash collateral. Such fees and interest are shared with the securities lending agent under the terms of the securities lending agreement. Securities lending income is disclosed as such in the Consolidated Statement of Operations. The cash collateral is maintained on the Fund’s behalf by the lending agent and is invested in the State Street Navigator Securities Lending Government Money Market Portfolio. Non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities, and is not disclosed in the Fund’s Consolidated Schedule of Investments or Consolidated Statement of Assets and Liabilities as it is held by the agent on behalf of the Fund, and the Fund does not have the ability to re-hypothecate those securities. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the securities loaned. The Fund 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 cash collateral at December 31, 2019 is presented on a gross basis in the Consolidated Schedule of Investments and Consolidated Statement of Assets and Liabilities. The following is a summary of the Fund’s securities on loan and related collateral as of December 31, 2019:
Market Value | ||||||
of Securities | Cash | Non-Cash | ||||
on Loan | Collateral | Collateral* | Total Collateral | |||
$4,424,044 | $2,627,775 | $2,070,532 | $4,698,307 |
* | The non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities |
The following table presents money market fund investments held as collateral by type of security on loan as of December 31, 2019:
Gross Amount of Recognized Liabilities for Securities Loaned in the Statement of Assets and Liabilities* | ||
Equity Securities | $2,627,775 |
* | Remaining contractual maturity of the agreements: overnight and continuous |
Note 10—Bank Line of Credit—The Trust participates with VanEck Funds (collectively the “VE/VIP Funds”) in a $30 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 Fund and other temporary or emergency purposes. The participating VE/VIP Funds have agreed to pay commitment fees, pro rata, based on the
26 |
unused but available balance. Interest is charged to the VE/VIP Funds at rates based on prevailing market rates in effect at the time of borrowings. During the year ended December 31, 2019, the average daily loan balance during the 23 day period for which a loan was outstanding amounted to $235,642 and the average interest rate was 3.45%. At December 31, 2019, the Fund had no outstanding borrowings under the Facility.
Note 11—Recent Accounting Pronouncements—The Fund early adopted certain provisions of Accounting Standards Update No. 2018-13Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”) that eliminate and modify certain disclosure requirements for fair value measurements. The adoption of certain provisions of ASU 2018-13 had no material effect on the financial statements and related disclosures. Management evaluated the additional requirements, not yet adopted, and they are not expected to have a material impact to the financial statements. Public companies will be required to disclose the range and weighted average of significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years.
Note 12—Subsequent Event Review—The Fund has evaluated subsequent events and transactions for potential recognition or disclosure through the date the consolidated financial statements were issued.
27 |
VANECK VIP GLOBAL GOLD FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of VanEck VIP Global Gold Fund
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities of VanEck VIP Global Gold Fund (the “Fund”) (one of the series constituting VanEck VIP Trust (the “Trust”)), including the consolidated schedule of investments, as of December 31, 2019, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of VanEck VIP Global Gold Fund (one of the series constituting VanEck VIP Trust) at December 31, 2019, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended and its consolidated financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
28 |
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the VanEck investment companies since 1999.
New York, New York
February 14, 2020
29 |
VANECK VIP TRUST
SPECIAL MEETING OF SHAREHOLDERS
October 11, 2019 (unaudited)
VANECK VIP TRUST
VanEck VIP Emerging Markets Fund
VanEck VIP Global Gold Fund
VanEck VIP Global Hard Assets Fund
VanEck VIP Unconstrained Emerging Markets Bond Fund
A Special Meeting of Shareholders of VanEck VIP Trust (the “Trust”) was held at the offices of the Trust, 666 Third Avenue, 9th Floor, New York, New York 10017 on October 11, 2019. The purpose of the meeting was to elect Trustees of the Trust. At the meeting, the following persons were elected by the shareholders to serve as Trustees of the Trust: Jon Lukomnik, Jane DiRenzo Pigott, R. Alastair Short, Richard D. Stamberger, Robert L. Stelzl, and Jan F. van Eck. No other business was transacted at the meeting.
The results of the voting at the meeting are as follows:
Proposal: To elect a Board of Trustees*:
Name | For | Withheld |
Jon Lukomnik | 25,514,194.941 | 842,144.970 |
Jane DiRenzo Pigott | 25,490,919.107 | 865,420.804 |
R. Alastair Short | 25,505,009.742 | 851,330.169 |
Richard D. Stamberger | 25,502,062.215 | 854,277.696 |
Robert L. Stelzl | 25,466,422.851 | 889,917.060 |
Jan F. van Eck | 25,492,557.910 | 863,782.001 |
Total Trust Shares Outstanding**: 31,477,728.439 |
* | Results are for all series portfolios within the Trust. |
** | As of the record date. |
30 |
VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited)
The Trustees of the Trust, their address, position with the Trust, age and principal occupations during the past five years, as of January 1, 2020, are set forth below:
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex(3) Overseen By Trustee | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years |
Independent Trustees: | ||||
Jon Lukomnik 1956 (A)(I) | Trustee (since 2006) | Managing Partner, Sinclair Capital LLC (consulting firm). Formerly, Executive Director, Investor Responsibility Research Center Institute. | 11 | Member of the Deloitte Audit Quality Advisory Committee; Chairman of the Advisory Committee of Legion Partners; Member of the Standing Advisory Group to the Public Company Accounting Oversight Board; Director of VanEck ICAV (an Irish UCITS); VanEck Vectors UCITS ETF plc (an Irish UCITS). Formerly, Director of VanEck (a Luxembourg UCITS); Chairman of the Board of the New York Classical Theatre. |
Jane DiRenzo Pigott 1957 (I) | Trustee (since 2007); Chairperson of the Board (since 2020) | Managing Director, R3 Group LLC (consulting firm). | 11 | Trustee of Northwestern University, Lyric Opera of Chicago and the Chicago Symphony Orchestra.
Formerly, Director and Chair of Audit Committee of 3E Company (services relating to hazardous material safety); Director of MetLife Investment Funds, Inc.
|
R. Alastair Short 1953 (A)(I) | Trustee (since 2004); Chairperson of the Audit Committee (since 2006) | President, Apex Capital Corporation (personal investment vehicle). | 66 | Chairman and Independent Director, EULAV Asset Management; Trustee, Kenyon Review; Trustee, Children’s Village. Formerly, Independent Director, Tremont offshore funds. |
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VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited) (continued)
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex(3) Overseen By Trustee | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years |
Richard D. Stamberger 1959 (G)(I) | Trustee (since 1995) | President and CEO, SmartBrief, Inc. (business media company). | 66 | Director, Food and Friends, Inc. |
Robert L. Stelzl 1945 (G)(I) | Trustee (since 2007); Chairperson of the Governance Committee (since 2017) | Co-Trustee, the estate of Donald Koll; Trustee, Robert D. MacDonald Trust; Trustee, GH Insurance Trusts. Formerly, Trustee, Joslyn Family Trusts; President, Rivas Capital, Inc. (real estate property management services company). | 11 | Director, Brookfield Office Properties, Inc., Brookfield Residential Properties, Inc., Brookfield DTLA Fund Office Trust Investor, Inc., Brookfield Property Finance ULC and Brookfield Property Split Corp. |
Interested Trustee: | ||||
Jan F. van Eck(4) 1963 (I) | Trustee (Since 2019); Chairperson of the Investment Oversight Committee (since 2020); Chief Executive Officer and President (Since 2010) | Director, President and Chief Executive Officer of Van Eck Associates Corporation (VEAC), Van Eck Absolute Return Advisers Corporation (VEARA) and Van Eck Securities Corporation (VESC); Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | 66 | Director, National Committee on US China Relations. |
(1) | The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
(2) | Trustee serves until resignation, death, retirement or removal. |
(3) | The Fund Complex consists of VanEck Funds, VanEck VIP Trust and VanEck Vectors ETF Trust. |
(4) | “Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC. In addition, Mr. van Eck and members of his family own 100% of the voting stock of VEAC, which in turns owns 100% of the voting stock of each of VEARA and VESC. |
(A) | Member of the Audit Committee. |
(G) | Member of the Governance Committee. |
(I) | Member of the Investment Oversight Committee. |
32 |
The executive officers of the Trust, their age and address, the positions they hold with the Trust, their term of office and length of time served and their principal business occupations during the past five years are shown below:
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years |
Matthew A. Babinsky, 1983 | Assistant Vice President and Assistant Secretary | Since 2016 | Assistant Vice President, Assistant General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Associate, Clifford Chance US LLP. |
Russell G. Brennan, 1964 | Assistant Vice President and Assistant Treasurer | Since 2008 | Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA. |
Charles T. Cameron, 1960 | Vice President | Since 1996 | Portfolio Manager for VEAC; Officer and/or Portfolio Manager of other investment companies advised by VEAC and VEARA. Formerly, Director of Trading of VEAC. |
John J. Crimmins, 1957 | Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (since 2012); Treasurer (since 2009) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. |
F. Michael Gozzillo, 1965 | Chief Compliance Officer | Since 2018 | Vice President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance Officer of VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC and City National Rochdale Funds. |
Laura Hamilton, 1977 | Vice President | Since 2019 | Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates. |
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VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited) (continued)
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years |
Laura I. Martínez, 1980 | Vice President and Assistant Secretary | Vice President (since 2016); Assistant Secretary (since 2008) | Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of VEAC, VEARA and VESC. |
James Parker, 1969 | Assistant Treasurer | Since 2014 | Assistant Vice President of VEAC, Manager, Portfolio Administration of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. |
Jonathan R. Simon, 1974 | Senior Vice President; Secretary and Chief Legal Officer | Senior Vice President (since 2016); Secretary and Chief Legal Officer (since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
(1) | The address for each Executive Officer is 666 Third Avenue, 9th Floor, New York, NY 10017. |
(2) | Officers are elected yearly by the Board. |
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This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the Fund’s prospectus, which includes more complete information. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, and charges and expenses of the Fund carefully before investing. To obtain a prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus carefully before investing.
Additional information about the VanEck VIP (the “Trust”) Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Trust’s Form N-PORT filings are available on the Commission’s website at https://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Fund’s complete schedule of portfolio holdings is also available by calling 800.826.2333 or by visiting vaneck.com.
Investment Adviser: | Van Eck Associates Corporation | |
Distributor: | Van Eck Securities Corporation | |
666 Third Avenue, New York, NY 10017 | ||
vaneck.com | ||
Account Assistance: | 800.544.4653 | VIPGGAR |
ANNUAL REPORT December 31, 2019 |
VanEck VIP Trust
VanEck VIP Global Hard Assets Fund
800.826.2333 | vaneck.com |
Certain information contained in this report represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Also, unless otherwise specifically noted, any discussion of the Fund’s holdings, the Fund’s performance, and the views of the investment adviser are as of December 31, 2019.
(unaudited)
FACTS | WHAT DOES VAN ECK DO WITH YOUR PERSONAL INFORMATION? |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: ■ Social Security number and account balances ■ assets and payment history ■ risk tolerance and transaction history |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Van Eck chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does Van Eck share? | Can you limit this sharing? |
For our everyday business purposes— such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
For our marketing purposes— to offer our products and services to you | Yes | No |
For joint marketing with other financialcompanies | Yes | No |
For our affiliates’ everyday businesspurposes— information about your transactions and experiences | Yes | No |
For our affiliates’ everyday businesspurposes— information about your creditworthiness | No | We don’t share |
For our affiliates to market to you | Yes | Yes |
For nonaffiliates to market to you | No | We don’t share |
To limit our sharing | Call us at 1-800-826-2333. Please note: If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
Questions? | Call us at 1-800-826-2333. |
PRIVACY NOTICE
(unaudited) (continued)
Who we are | |
Who is providing this notice? | Van Eck Global, its affiliates and funds sponsored or managed by Van Eck (collectively “Van Eck”). |
What we do | |
How does Van Eck protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. |
How does Van Eck collect my personal information? | We collect your personal information, for example, when you ■ open an account or give us your income information ■ provide employment information or give us your contact information ■ tell us about your investment or retirement portfolio We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
Why can’t I limit all sharing? | Federal law gives you the right to limit only ■ sharing for affiliates’ everyday business purposes—information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
What happens when I limit sharing for an account I hold jointly with someone else? | Your choices will apply to everyone on your account – unless you tell us otherwise |
Definitions | |
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. ■ Our affiliates include companies with a Van Eck name such as Van Eck Securities Corporation and others such as Market Vectors Index Solutions GmbH. |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. ■ Van Eck does not share with nonaffiliates so they can market to you. |
Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. ■ Our joint marketing partners include financial services companies |
Other important information |
California Residents— In accordance with California law, we will not share information we collect about California residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We also will limit the sharing of information about you with our affiliates to the extent required by applicable California law. Vermont Residents— In accordance with Vermont law, we will not share information we collect about Vermont residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We will not share creditworthiness information about Vermont residents among Van Eck’s affiliates except with the authorization or consent of the Vermont resident. |
VANECK VIP GLOBAL HARD ASSETS FUND
December 31, 2019 (unaudited)
Dear Shareholders:
The story for 2019 was simple and familiar—slower economic growth was combated by expansive monetary policy.
But first a comment on global growth: the two engines of the global economy, the U.S. and China, continue to move forward and we now have the prospect of at least some resolution of the trade dispute between them in the phase-one agreement. The latest economic statistics from China are steady and there are signs of “green shoots.” China’s services sector is expanding robustly and manufacturing is struggling, but not collapsing. My blog,China’s Economic Growth: Continuing Despite Headlines, shows this in two charts.
The biggest event in the markets last summer was the surge in bonds in Europe with negative interest rates. At the end of September, nearly $15 trillion worth of debt globally carried a negative yield.1Despite moves by the European Central Bank to stimulate, not only is the European economy slowing down, but there are also concerns about just how effective central bank actions are. Looking forward, therefore, I think investors should assess their hedge against central bank uncertainty by considering, for example, their gold allocations. While high interest rate environments tend to be tough for gold (it does not pay any yield), against negative interest rates, gold and other hedges against central bank impotence should be strongly considered.
We encourage you to stay in touch with us through the videos, email subscriptions and research blogs available on our website, www.vaneck.com. I have started my own email subscription where I share interesting research—you can sign up on www.vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit ourwebsite.
We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find a performance discussion and financial statements for the fund for the twelve month period ended
1 |
VANECK VIP GLOBAL HARD ASSETS FUND
(PRESIDENT’S LETTER
(unaudited) (continued)
December 31, 2019. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Jan F. van Eck
CEO and President
VanEck VIP Trust
January 24, 2020
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
1 | Financial Times: September was the busiest month ever for corporate debt issuance, September 30, 2019, https://www.ft.com/content/eef8234c-e3c0-11e9-b112-9624ec9edc59 |
2 |
December 31, 2019 (unaudited)
The Initial Class shares of the VanEck VIP Global Hard Assets Fund (the Fund) gained 11.87% for the 12 months ended December 31, 2019, underperforming the S&P®North American Natural Resources Sector Index (SPGINRTR)1which gained 17.63%. The most significant impact on the natural resources market and the Fund stemmed from continuing concerns around trade and how they weighed on global growth. In addition, fears around a slowdown in growth in China and a strong U.S. dollar led to less than ideal conditions in emerging markets. In the second half of the year, these were joined by concerns both around Brexit (and what it might mean for an already weak Europe) and political events in the U.S.
Market Review
The biggest takeaway for crude oil and energy stocks was that, on the one hand, the price of crude oil rose during the year, West Texas Intermediate (WTI) was up over 34% and, on the other hand, the performance of energy equities was disappointing. Despite the fact that any lasting effect on the price of oil due to the September attacks on both Saudi Arabia’s largest oil-processing center at Abqaiq and its Khurais oil field appeared to be minimal, crude oil prices firmed on the back of a number of other developments in the market during the year, including “OPEC+” quota cuts and the huge Saudi Aramco IPO in early December. (We believe we shall see further positive ramifications of this offering in 2020.) In addition, oil consumption in the fourth quarter of 2019 was forecast by U.S. Energy Information Administration to hit an all-time record high of 101.6 million barrels per day (mbd), over 1 mbd greater than in 2018.2Despite increasing evidence of the effectiveness of capital discipline (optimizing cash generation from current operations) and with the industry starting to deliver free cash flow, energy stocks continued to languish.
We also saw some further consolidation within the shale oil and gas exploration and production space during the year. Of particular note was the completion, in early-August, of Occidental Petroleum Corporation’s purchase of Anadarko Petroleum Corporation, in a deal that was seen as further diversifying Occidental’s asset base. In another example, on October 14, in a deal seen as enhancing 2020 free cash flow and bolting on further acreage, Parsley Energy Inc. (4.2% of Fund net assets*) announced its acquisition of Jagged Peak Energy in all-stock transaction. In mid-December, as it sought to add acreage in the Delaware region of the field, Permian basin operator WPX Energy, Inc. (1.9% of Fund net assets*) announced it would purchase privately held Denver-based Felix
3 |
VANECK VIP GLOBAL HARD ASSETS FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
Energy in a $2.5 billion deal.3Because of the deal, WPX Energy was able not only to initiate a dividend, but also to accelerate financial metrics.
After a volatile year, copper and aluminum finished the year somewhat stronger on the back of some alleviation of trade and geopolitical concerns. However, while, on the year, copper was up very slightly, 3.50%, aluminum ended the year down 1.95%. Nickel rallied significantly during 2019 (driven in particular by a reconfirmation by the Indonesian government of its restrictive export policy), to end up 31.20% on the year. Lead and zinc were, however, down on the year: 4.65% and 7.90% respectively.
In 2019, with the shift in the U.S. Federal Reserve’s policies and its funding rates, the interest environment became very favorable for gold. Real interest rates turned negative and such rates are nearly always a positive environment for gold. In addition, gold’s rise against most currencies in 2019 underlined rising risks, both financially and geopolitically, across the world.
As the industry appeared to consolidate further, in the fourth quarter of the year we also witnessed an unprecedented level of mergers and acquisitions (M&A) activity among gold mining companies. In November and December alone, announcements were made of seven M&A deals (involving 12 companies). Four of the deals were asset sales, with mid-tier companies buying non-core mining properties located in Canada, Australia and Senegal. The other three deals were mergers or acquisitions, each with a different structure.
Among other things, grains were negatively impacted by restrictions resulting from the trade stand-off. However, less than ideal weather during the overall planting and growing season provided some support for prices. On the fertilizer front, because of the weather, applications were way down on the year. That said, this bodes well for applications in 2020. However, while there has been oversupply (particularly of potash), the industry has responded, somewhat surprisingly, by shuttering some production. The nitrogen market, though, remains stable.
The energy transition continued, and distinctively changed pace during 2019, with everyone from integrated oil majors to the largest diversified mining companies implementing targeted strategies towards mitigating environmental impacts. We have, in addition, seen further investment in sustainably profitable alternative energy businesses.
4 |
Fund Review
Three key aspects that contributed to underperformance of the Fund relative to its benchmark were: significantly underweight positions and underperformance in the strongly performing oil and gas storage and transportation sub-industry (exposure to which remains, essentially, an interest rate “play”); overweight positions and underperformance in the oil and gas exploration and production sub-industry; and significantly underweight positions and underperformance in the oil and gas refining and marketing subindustries.
The sub-industries that made the strongest relative positive contributions were: gold; semiconductor equipment (solar energy); and packaged food and meat (to which the benchmark had no exposure).
The Fund’s top three performing individual positions were: semiconductor equipment company SolarEdge Technologies (3.0% of Fund net assets*), whose excellent performance was driven by strong global solar inverter demand and excellent cost control; gold mining company Barrick Gold (5.7% of Fund net assets*) for whom the integration with Randgold went well during 2019, following the completion of its merger at the very start of the year; and Agnico Eagle Mines (4.0% of Fund net assets*) which saw the successful start-ups of its Meliadine and Amaruq gold mines in Canada’s Nunavut territory.
The Fund’s three weakest performing companies were oil and gas exploration and production company Encana (1.9% of Fund net assets*), oil and gas storage and transport company Golar LNG (1.3% of Fund net assets*) and diversified metals and mining company Glencore (sold during the year). While Encana failed to dispel concerns about both its acquisition of Newfield and the sustainability of reserves in one of its key areas, the SCOOP/STACK in Oklahoma, for Golar, underperformance resulted from investor fatigue around the slow pace in recognizing cash flows as customer contracts (all already with long lead times) were pushed out because of the lack of urgency in securing capacity in a low gas price environment. The Fund exited its position in Glencore because of increased governance concerns after the announcement of a bribery investigation by U.K.’s Serious Fraud Office (SFO).
As a team staffed with former geologist and engineers, we have and will continue to emphasize a bottom-up investment approach-seeking to identify natural resource companies that we believe have the highest quality management teams and assets, trade at a significant discount to
5 |
VANECK VIP GLOBAL HARD ASSETS FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
their intrinsic value and their peers, and that are well-positioned to deliver shareholder value over the long run.
Access investment and market insights from VanEck’s investment professionals by subscribing to our commentaries. To subscribe to the natural resources and commodities updates, please visitwww.vaneck.com/subscribe.
We very much appreciate your continued investment in the VanEck VIP Global Hard Assets Fund, and we look forward to helping you meet your investment goals in the future.
As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Shawn Reynolds Portfolio Manager | Charles T. Cameron Deputy Portfolio Manager |
The Fund is subject to risks associated with concentrating its investments in Canadian issuers, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, derivatives, direct investments, emerging market securities, foreign currency transactions, foreign securities, other investment companies, management, market, operational, small- and medium-capitalization companies and hard assets sectors risks, including, precious metals and natural resources, that can be significantly affected by events relating to these industries, including international political and economic developments, inflation, and other factors. The Fund’s portfolio securities may experience substantial price fluctuations as a result of these factors, and may move independently of the trends of industrialized companies. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, including the takeover of property without adequate compensation or imposition of prohibitive taxation. Please see the prospectus for information on these and other risk considerations.
6 |
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.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits, which are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. Had these fees been included, returns would have been lower. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
* | All Fund assets referenced are Total Net Assets as of December 31, 2019. |
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.
1 S&P®North American Natural Resources Sector (SPGINRTR) Index includes mining, energy, paper and forest products, and plantation-owning companies, but excludes the chemicals industry and steel sub-industry.
2 U.S. Energy Information Administration:Short-Term Energy Outlook (STEO), December 2019, https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf
3 Reuters:WPX Energy expands in Delaware basin with $2.5 billion Felix deal, December 16, 2019, https://www.reuters.com/article/us-felix-energy-m-a-wpx-energy/wpx-energy-to-buy-delaware-basin-operator-felix-in-25-billion-deal-idUSKBN1YK14N
7 |
VANECK VIP GLOBAL HARD ASSETS FUND
December 31, 2019 (unaudited)
Average Annual Total Return 12/31/19 | Fund Initial Class | SPGINRTR | MSCI ACWI | |||||||||
One Year | 11.87 | % | 17.63 | % | 27.30 | % | ||||||
Five Year | (5.48 | %) | (1.41 | %) | 9.00 | % | ||||||
Ten Year | (2.80 | %) | 1.39 | % | 9.37 | % | ||||||
Average Annual Total Return 12/31/19 | Fund Class S | SPGINRTR | MSCI ACWI | |||||||||
One Year | 11.55 | % | 17.63 | % | 27.30 | % | ||||||
Five Year | (5.72 | %) | (1.41 | %) | 9.00 | % | ||||||
Ten Year | (3.06 | %) | 1.39 | % | 9.37 | % |
This chart shows the value of a hypothetical $10,000 investment in the Fund over the past 10 fiscal years. The result is compared with the Fund’s benchmark, and may include a broad-based market index.
Performance of Class S shares will vary from that of the Initial Class shares due to differences in class specific fees and any applicable sales charges. | Hypothetical Growth of $10,000 (Ten Year: Initial Class)
|
The performance quoted represents past performance. Past performance is no guarantee of future results; current performance may be lower or higher than the performance data quoted.Performance information reflects temporary waivers of expenses and/or fees, if any, and does not include insurance/annuity fees and expenses. Investment returns would have been reduced had these fees/expenses been included. Investment return and the value of the shares of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Performance information current to the most recent month end is available by calling 800.826.2333 or by visiting vaneck.com.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits that are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
8 |
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. Results reflect past performance and do not guarantee future results.
The S&P®North American Natural Resources Sector (SPGINRTR) Index includes mining, energy, paper and forest products, and plantation-owning companies (reflects no deduction for expenses or taxes).
MSCI All Country World Index (MSCI ACWI) represents large- and mid-cap companies across developed and emerging market countries (reflects no deduction for expenses or taxes).
9 |
VANECK VIP GLOBAL HARD ASSETS FUND
(unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including program fees on purchase payments; and (2) ongoing costs, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in the 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, July 1, 2019 to December 31, 2019.
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 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 fees on purchase payments. 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.
10 |
Beginning Account Value July 1, 2019 | Ending Account Value December 31, 2019 | Expenses Paid During the Period* July 1, 2019 - December 31, 2019 | ||||||||||||
Van Eck VIP Global Hard Assets Fund | ||||||||||||||
Initial Class | Actual | $ | 1,000.00 | $ | 994.30 | $5.88 | ||||||||
Hypothetical** | $ | 1,000.00 | $ | 1,019.31 | $5.96 | |||||||||
Class S | Actual | $ | 1,000.00 | $ | 992.40 | $7.13 | ||||||||
Hypothetical** | $ | 1,000.00 | $ | 1,018.05 | $7.22 |
* | Expenses are equal to the Fund’s annualized expense ratio (for the six months ended December 31, 2019), of 1.17% on Initial Class, and 1.42% on Class S Shares, 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 |
11 |
VANECK VIP GLOBAL HARD ASSETS FUND
SCHEDULE OF INVESTMENTS
December 31, 2019
Number of Shares | Value | |||||||
COMMON STOCKS: 96.0% | ||||||||
Bermuda: 1.3% | ||||||||
235,400 | Golar LNG Ltd. (USD) † | $ | 3,347,388 | |||||
Canada: 23.7% | ||||||||
164,722 | Agnico-Eagle Mines Ltd. (USD) † | 10,148,522 | ||||||
769,274 | Barrick Gold Corp. (USD) | 14,300,804 | ||||||
1,044,865 | Encana Corp. (USD) † | 4,900,417 | ||||||
951,300 | First Quantum Minerals Ltd. | 9,648,162 | ||||||
794,200 | Kinross Gold Corp. (USD) * | 3,764,508 | ||||||
456,200 | Lundin Mining Corp. † | 2,726,204 | ||||||
177,265 | Nutrien Ltd. (USD) † | 8,492,766 | ||||||
333,300 | Teck Resources Ltd. (USD) | 5,789,421 | ||||||
59,770,804 | ||||||||
Cayman Islands: 0.5% | ||||||||
110,200 | Alussa Energy Acquisition Corp. (USD) * | 1,110,816 | ||||||
Israel: 3.0% | ||||||||
79,000 | SolarEdge Technologies, Inc. (USD) * | 7,512,110 | ||||||
Netherlands: 1.3% | ||||||||
55,800 | Royal Dutch Shell Plc (ADR) † | 3,346,326 | ||||||
United Kingdom: 7.4% | ||||||||
332,100 | Anglo American Plc # | 9,540,540 | ||||||
155,200 | Rio Tinto Plc (ADR) | 9,212,672 | ||||||
18,753,212 |
Number of Shares | Value | |||||||
United States: 58.8% | ||||||||
65,200 | Brigham Minerals, Inc. | $ | 1,397,888 | |||||
42,000 | Bunge Ltd. | 2,417,100 | ||||||
161,300 | Cabot Oil & Gas Corp. | 2,808,233 | ||||||
203,200 | CF Industries Holdings, Inc. | 9,700,768 | ||||||
41,500 | Chart Industries, Inc. * | 2,800,835 | ||||||
61,200 | Chevron Corp. | 7,375,212 | ||||||
50,400 | Cimarex Energy Co. | 2,645,496 | ||||||
297,100 | CNX Resources Corp. * | 2,629,335 | ||||||
95,294 | Concho Resources, Inc. | 8,344,896 | ||||||
88,133 | Corteva, Inc. | 2,605,212 | ||||||
108,147 | Diamondback Energy, Inc. | 10,042,530 | ||||||
15,633 | Dow, Inc. | 855,594 | ||||||
15,633 | DuPont de Nemours, Inc. | 1,003,639 | ||||||
67,400 | EOG Resources, Inc. | 5,645,424 | ||||||
203,900 | Hannon Armstrong Sustainable Infrastructure Capital, Inc. † | 6,561,502 | ||||||
18,200 | IPG Photonics Corp. * | 2,637,544 | ||||||
78,600 | Kirby Corp. * | 7,037,058 | ||||||
106,300 | Louisiana-Pacific Corp. | 3,153,921 | ||||||
240,096 | Newmont Mining Corp. | 10,432,171 | ||||||
48,000 | Ormat Technologies, Inc. | 3,576,960 | ||||||
563,200 | Parsley Energy, Inc. | 10,650,112 | ||||||
137,100 | PBF Energy, Inc. | 4,300,827 | ||||||
132,900 | PDC Energy, Inc. * | 3,477,993 | ||||||
66,300 | Pioneer Natural Resources Co. | 10,035,831 | ||||||
141,100 | ProPetro Holding Corp. * | 1,587,375 | ||||||
63,026 | Solaris Oilfield Infrastructure, Inc. † | 882,364 |
See Notes to Financial Statements
12 |
Number of Shares | Value | |||||||
United States: (continued) | ||||||||
87,300 | Steel Dynamics, Inc. | $ | 2,971,692 | |||||
354,700 | Sunrun, Inc. * † | 4,898,407 | ||||||
245,100 | Transocean Ltd. * † | 1,686,288 | ||||||
69,400 | Tyson Foods, Inc. | 6,318,176 | ||||||
121,600 | Viper Energy Partners LP | 2,998,656 | ||||||
353,100 | WPX Energy, Inc. * | 4,851,594 | ||||||
148,330,633 | ||||||||
Total Common Stocks (Cost: $204,856,190) | 242,171,289 | |||||||
MONEY MARKET FUND: 4.1% (Cost: $10,370,947) | ||||||||
10,370,947 | Invesco Treasury Portfolio – Institutional Class | 10,370,947 | ||||||
Total Investments Before Collateral for Securities Loaned: 100.1% (Cost: $215,227,137) | 252,542,236 |
Number of Shares | Value | |||||||
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR SECURITIES ON LOAN: 4.5% (Cost: $11,404,319) | ||||||||
Money Market Fund: 4.5% | ||||||||
11,404,319 | State Street Navigator Securities Lending Government Money Market Portfolio | $ | 11,404,319 | |||||
Total Investments: 104.6% (Cost: $226,631,456) | 263,946,555 | |||||||
Liabilities in excess of other assets: (4.6)% | (11,529,213 | ) | ||||||
NET ASSETS: 100.0% | $ | 252,417,342 |
Definitions:
ADR | American Depositary Receipt |
USD | United States Dollar |
Footnotes:
* | Non-income producing |
† | Security fully or partially on loan. Total market value of securities on loan is $25,883,352. |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $9,540,540 which represents 3.8% of net assets. |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | ||||||
Consumer Staples | 3.5 | % | $ | 8,735,276 | ||||
Energy | 37.3 | 94,065,001 | ||||||
Industrials | 5.8 | 14,736,300 | ||||||
Information Technology | 4.0 | 10,149,654 | ||||||
Materials | 41.3 | 104,346,596 | ||||||
Real Estate | 2.6 | 6,561,502 | ||||||
Utilities | 1.4 | 3,576,960 | ||||||
Money Market Fund | 4.1 | 10,370,947 | ||||||
100.0 | % | $ | 252,542,236 |
See Notes to Financial Statements
13 |
VANECK VIP GLOBAL HARD ASSETS FUND
SCHEDULE OF INVESTMENTS
(continued)
The summary of inputs used to value the Fund’s investments as of December 31, 2019 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Common Stocks | |||||||||||||||||
Bermuda | $ | 3,347,388 | $ | — | $ | — | $ | 3,347,388 | |||||||||
Canada | 59,770,804 | — | — | 59,770,804 | |||||||||||||
Cayman Islands | 1,110,816 | — | — | 1,110,816 | |||||||||||||
Israel | 7,512,110 | — | — | 7,512,110 | |||||||||||||
Netherlands | 3,346,326 | — | — | 3,346,326 | |||||||||||||
United Kingdom | 9,212,672 | 9,540,540 | — | 18,753,212 | |||||||||||||
United States | 148,330,633 | — | — | 148,330,633 | |||||||||||||
Money Market Funds | 21,775,266 | — | — | 21,775,266 | |||||||||||||
Total | $ | 254,406,015 | $ | 9,540,540 | $ | — | $ | 263,946,555 |
See Notes to Financial Statements
14 |
VANECK VIP GLOBAL HARD ASSETS FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2019
Assets: | |||||
Investments, at value (Cost $215,227,137) (1) | $ | 252,542,236 | |||
Short-term investment held as collateral for securities loaned (2) | 11,404,319 | ||||
Cash | 30,490 | ||||
Cash denominated in foreign currency, at value (Cost $21) | 21 | ||||
Receivables: | |||||
Shares of beneficial interest sold | 462,133 | ||||
Dividends and interest | 204,233 | ||||
Prepaid expenses | 10,203 | ||||
Other assets | 21,913 | ||||
Total assets | 264,675,548 | ||||
Liabilities: | |||||
Payables: | |||||
Investments purchased | 212,620 | ||||
Collateral for securities loaned | 11,404,319 | ||||
Shares of beneficial interest redeemed | 168,133 | ||||
Due to Adviser | 207,840 | ||||
Due to Distributor | 25,207 | ||||
Deferred Trustee fees | 148,552 | ||||
Accrued expenses | 91,535 | ||||
Total liabilities | 12,258,206 | ||||
NET ASSETS | $ | 252,417,342 | |||
Initial Class Shares: | |||||
Net Assets | $ | 132,329,537 | |||
Shares of beneficial interest outstanding | 6,950,407 | ||||
Net asset value, redemption and offering price per share | $ | 19.04 | |||
Class S Shares: | |||||
Net Assets | $ | 120,087,805 | |||
Shares of beneficial interest outstanding | 6,575,605 | ||||
Net asset value, redemption and offering price per share | $ | 18.26 | |||
Net Assets consist of: | |||||
Aggregate paid in capital | $ | 376,444,869 | |||
Total distributable earnings (loss) | (124,027,527 | ) | |||
$ | 252,417,342 | ||||
(1) | Value of securities on loan | $ | 25,883,352 | ||
(2) | Cost of short-term investment held as collateral for securities loaned | $ | 11,404,319 |
See Notes to Financial Statements
15 |
VANECK VIP GLOBAL HARD ASSETS FUND
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2019
Income: | ||||||||
Dividends (net of foreign taxes withheld of $96,814) | $ | 4,885,691 | ||||||
Securities lending income | 3,814 | |||||||
Total income | 4,889,505 | |||||||
Expenses: | ||||||||
Management fees | $ | 2,470,160 | ||||||
Distribution fees – Class S | 287,745 | |||||||
Transfer agent fees – Initial Class | 30,272 | |||||||
Transfer agent fees – Class S Shares | 23,294 | |||||||
Custodian fees | 25,530 | |||||||
Professional fees | 109,340 | |||||||
Reports to shareholders | 120,255 | |||||||
Insurance | 17,243 | |||||||
Trustees’ fees and expenses | 31,978 | |||||||
Other | 2,984 | |||||||
Total expenses | 3,118,801 | |||||||
Net investment income | 1,770,704 | |||||||
Net realized loss on: | ||||||||
Investments | (29,976,382 | ) | ||||||
Foreign currency transactions and foreign denominated assets and liabilities | (3,849 | ) | ||||||
Net realized loss | (29,980,231 | ) | ||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments | 55,750,371 | |||||||
Net Increase in Net Assets Resulting from Operations | $ | 27,540,844 |
See Notes to Financial Statements
16 |
VANECK VIP GLOBAL HARD ASSETS FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31, 2019 | Year Ended December 31, 2018 | ||||||||
Operations: | |||||||||
Net investment income (loss) | $ | 1,770,704 | $ | (10,361 | ) | ||||
Net realized loss | (29,980,231 | ) | (13,708,679 | ) | |||||
Net change in unrealized appreciation (depreciation) | 55,750,371 | (79,867,969 | ) | ||||||
Net increase (decrease) in net assets resulting from operations | 27,540,844 | (93,587,009 | ) | ||||||
Share transactions*: | |||||||||
Proceeds from sale of shares | |||||||||
Initial Class Shares | 25,344,496 | 34,932,920 | |||||||
Class S Shares | 29,955,189 | 27,127,504 | |||||||
55,299,685 | 62,060,424 | ||||||||
Cost of shares redeemed | |||||||||
Initial Class Shares | (40,126,391 | ) | (51,066,791 | ) | |||||
Class S Shares | (26,780,250 | ) | (29,225,061 | ) | |||||
(66,906,641 | ) | (80,291,852 | ) | ||||||
Net decrease in net assets resulting from share transactions | (11,606,956 | ) | (18,231,428 | ) | |||||
Total increase (decrease) in net assets | 15,933,888 | (111,818,437 | ) | ||||||
Net Assets: | |||||||||
Beginning of year | 236,483,454 | 348,301,891 | |||||||
End of year | $ | 252,417,342 | $ | 236,483,454 | |||||
* | Shares of beneficial interest issued, reinvested and redeemed (unlimited number of $.001 par value shares authorized): | ||||||||
Initial Class Shares: | |||||||||
Shares sold | 1,381,122 | 1,576,548 | |||||||
Shares redeemed | (2,189,815 | ) | (2,258,568 | ) | |||||
Net decrease | (808,693 | ) | (682,020 | ) | |||||
Class S Shares: | |||||||||
Shares sold | 1,709,863 | 1,263,288 | |||||||
Shares redeemed | (1,512,475 | ) | (1,347,376 | ) | |||||
Net increase (decrease) | 197,388 | (84,088 | ) |
See Notes to Financial Statements
17 |
VANECK VIP GLOBAL HARD ASSETS FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year:
Initial Class Shares | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||
Net asset value, beginning of year | $17.02 | $23.74 | $24.14 | $16.88 | $25.37 | ||||||||||||||||||||
Income from investment operations: | |||||||||||||||||||||||||
Net investment income (loss) | 0.15 | (b) | 0.02 | (b) | (0.05 | )(b) | (0.05 | ) | 0.10 | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.87 | (6.74 | ) | (0.35 | ) | 7.39 | (8.58 | ) | |||||||||||||||||
Total from investment operations | 2.02 | (6.72 | ) | (0.40 | ) | 7.34 | (8.48 | ) | |||||||||||||||||
Less dividends from: | |||||||||||||||||||||||||
Net investment income | — | — | — | (0.08 | ) | (0.01 | ) | ||||||||||||||||||
Net asset value, end of year | $19.04 | $17.02 | $23.74 | $24.14 | $16.88 | ||||||||||||||||||||
Total return (a) | 11.87 | % | (28.31 | )% | (1.66 | )% | 43.71 | % | (33.45 | )% | |||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||
Net assets, end of year (000’s) | $132,330 | $132,081 | $200,403 | $224,612 | $176,087 | ||||||||||||||||||||
Ratio of gross expenses to average net assets | 1.15 | % | 1.10 | % | 1.09 | % | 1.06 | % | 1.05 | % | |||||||||||||||
Ratio of net expenses to average net assets | 1.15 | % | 1.10 | % | 1.09 | % | 1.06 | % | 1.05 | % | |||||||||||||||
Ratio of net expenses to average net assets excluding interest expense | 1.15 | % | 1.10 | % | 1.09 | % | 1.06 | % | 1.05 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.84 | % | 0.10 | % | (0.21 | )% | (0.24 | )% | 0.43 | % | |||||||||||||||
Portfolio turnover rate | 32 | % | 15 | % | 15 | % | 45 | % | 21 | % |
(a) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distribution payment date and a redemption at the net asset value on the last day of the year. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. Total returns do not include fees and expenses imposed under your variable annuity contract and/or life insurance policy. If these amounts were reflected, the returns would be lower than those shown. |
(b) | Calculated based upon average shares outstanding |
See Notes to Financial Statements
18 |
VANECK VIP GLOBAL HARD ASSETS FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year:
Class S Shares | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||
Net asset value, beginning of year | $16.37 | $22.89 | $23.33 | $16.35 | $24.64 | ||||||||||||||||||||
Income from investment operations: | |||||||||||||||||||||||||
Net investment income (loss) | 0.10 | (b) | (0.03 | )(b) | (0.10 | )(b) | (0.09 | ) | 0.04 | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.79 | (6.49 | ) | (0.34 | ) | 7.15 | (8.32 | ) | |||||||||||||||||
Total from investment operations | 1.89 | (6.52 | ) | (0.44 | ) | 7.06 | (8.28 | ) | |||||||||||||||||
Less dividends from: | |||||||||||||||||||||||||
Net investment income | — | — | — | (0.08 | ) | (0.01 | ) | ||||||||||||||||||
Net asset value, end of year | $18.26 | $16.37 | $22.89 | $23.33 | $16.35 | ||||||||||||||||||||
Total return (a) | 11.55 | % | (28.48 | )% | (1.89 | )% | 43.41 | % | (33.62 | )% | |||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||
Net assets, end of year (000’s) | $120,088 | $104,402 | $147,898 | $172,185 | $91,635 | ||||||||||||||||||||
Ratio of gross expenses to average net assets | 1.40 | % | 1.35 | % | 1.34 | % | 1.30 | % | 1.31 | % | |||||||||||||||
Ratio of net expenses to average net assets | 1.40 | % | 1.35 | % | 1.34 | % | 1.30 | % | 1.31 | % | |||||||||||||||
Ratio of net expenses to average net assets excluding interest expense | 1.40 | % | 1.35 | % | 1.34 | % | 1.30 | % | 1.31 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.58 | % | (0.14 | )% | (0.47 | )% | (0.50 | )% | 0.17 | % | |||||||||||||||
Portfolio turnover rate | 32 | % | 15 | % | 15 | % | 45 | % | 21 | % |
(a) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distribution payment date and a redemption at the net asset value on the last day of the year. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. Total returns do not include fees and expenses imposed under your variable annuity contract and/or life insurance policy. If these amounts were reflected, the returns would be lower than those shown. |
(b) | Calculated based upon average shares outstanding |
See Notes to Financial Statements
19 |
VANECK VIP GLOBAL HARD ASSETS FUND
December 31, 2019
Note 1—Fund Organization—VanEck VIP Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was organized as a Massachusetts business trust on January 7, 1987. The VanEck VIP Global Hard Assets Fund (the “Fund”) is a diversified series of the Trust and seeks long-term capital appreciation by investing primarily in hard asset securities. The Fund offers two classes of shares: Initial Class Shares and Class S Shares. The two classes are identical except Class S Shares are subject to a distribution fee.
Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The Fund is an investment company and is 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 Fund.
A. | Security Valuation—The Fund values its investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Securities traded on national exchanges are valued at the closing price on the markets in which the securities trade. Securities traded on the NASDAQ Stock Market LLC (“NASDAQ”) are valued at the NASDAQ official closing price. Over-the-counter securities not included on NASDAQ and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. To the extent these securities are actively traded they are categorized as Level 1 in the fair value hierarchy (described below). Certain foreign securities, whose values may be affected by market direction or events occurring before the Fund’s pricing time (4:00 p.m. Eastern Time) but after the last close of the securities’ primary market, are fair valued using a pricing service and are categorized as Level 2 in the fair value hierarchy. The pricing service, using methods approved by the Board of Trustees, considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. market, based on indices of domestic securities and other appropriate indicators such as prices of relevant ADR’s and futures contracts. The Fund may also fair value securities in other situations, |
20 |
such as when a particular foreign market is closed but the Fund is open. Short-term obligations with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are categorized as Level 1 in the fair value hierarchy. The Pricing Committee of Van Eck Associates Corporation (the “Adviser”) provides oversight of the Fund’s valuation policies and procedures, which are approved by the Fund’s Board of Trustees. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes 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 Fund’s valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis. | |
Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be classified either as Level 2 or Level 3 in the fair value hierarchy. The price which the Fund may realize upon sale of an investment may differ materially from the value presented in the Schedule of Investments. | |
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three levels of the fair value hierarchy are described below: | |
Level 1 – Quoted prices in active markets for identical securities. |
Level 2 – | Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
21 |
VANECK VIP GLOBAL HARD ASSETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
Level 3 – | Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). | |
A summary of the inputs and the levels used to value the Fund’s investments are located in the Schedule of Investments. Additionally, tables that reconcile the valuation of the Fund’s Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Schedule of Investments. | ||
B. | Federal Income Taxes—It is the Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income and net realized capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. | |
C. | Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Statement of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments, and liabilities are recorded as net realized gain (loss) and net change in unrealized appreciation (depreciation) on foreign currency transactions and foreign denominated assets and liabilities in the Statement of Operations. | |
D. | Dividends and Distributions to Shareholders—Dividends to share holders from net investment income and distributions from net realized capital gains, if any, are declared and paid annually. Income dividends and capital gain distributions are determined in accordance with U.S. income tax regulations, which may differ from such amounts determined in accordance with GAAP. | |
E. | Use of Derivative Instruments—The Fund may invest in derivative instruments, including, but not limited to, options, futures, swaps and forward foreign currency contracts. A derivative is an instrument whose value is derived from underlying assets, indices, reference rates or a |
22 |
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 or commodities 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 instrument. The Fund held no derivative instruments during the year ended December 31, 2019. | |
F. | Offsetting Assets and Liabilities—In the ordinary course of business, the Fund enters into transactions subject to enforceable master netting or other similar agreements. Generally, the right of offset in those agreements allows the Fund to offset any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of the agreements. The Fund may pledge or receive cash and/or securities as collateral for derivative instruments and securities lending. For financial reporting purposes, the Fund presents securities lending assets and liabilities on a gross basis in the Statement of Assets and Liabilities. Cash collateral held in the form of money market investments, if any, at December 31, 2019 is presented in the Schedule of Investments and in the Statement of Assets and Liabilities. Non-cash collateral is disclosed in Note 9 (Securities Lending). |
G. | Other—Security transactions are accounted for on trade date. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized upon notification of the ex-dividend date. Interest income, including amortization of premiums and discounts, is accrued as earned. Realized gains and losses are determined based on the specific identification method. |
Income, non-class specific expenses, gains and losses on investments are allocated to each class of shares based on its relative net assets. Expenses directly attributable to a specific class are charged to that class. |
23 |
VANECK VIP GLOBAL HARD ASSETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
In the normal course of business, the Fund enters into contracts that contain a variety of general indemnifications. The Fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote. |
Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Fund. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of 1.00% of the first $500 million of average daily net assets, 0.90% of the next $250 million of average daily net assets and 0.70% of the average daily net assets in excess of $750 million. The Adviser has agreed, until at least May 1, 2020, to waive management fees and assume expenses to prevent the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest expense, trading expenses, dividend and interest payments on securities sold short, taxes, and extraordinary expenses) from exceeding 1.20% and 1.45% of average daily net assets for Initial Class Shares and Class S Shares, respectively. During the year ended December 31, 2019, there were no waivers or expense reimbursements.
In addition, Van Eck Securities Corporation (the “Distributor”), an affiliate of the Adviser, acts as the Fund’s distributor. Certain officers and trustees of the Trust are officers, directors or stockholders of the Adviser and Distributor.
State Street Bank and Trust Company is the Fund’s custodian and securities lending agent.
Note 4—12b-1 Plan of Distribution—Pursuant to a Rule 12b-1 Plan of Distribution (the “Plan”), the Fund is authorized to incur distribution expenses for its Class S Shares which will principally be payments to securities dealers who have sold shares and serviced shareholder accounts, and payments to the Distributor for reimbursement of other actual promotion and distribution expenses incurred by the Distributor on behalf of the Fund. The amount paid under the Plan in any one year is 0.25% of average daily net assets for Class S Shares and is recorded as Distribution Fees in the Statement of Operations.
Note 5—Investments—For the year ended December 31, 2019, the cost of purchases and proceeds from sales of investments, excluding U.S. government securities and short-term obligations, aggregated to $74,798,596 and $76,543,901, respectively.
Note 6—Income Taxes—As of December 31, 2019, for Federal income tax purposes, the identified cost, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) of investments owned were as follows:
24 |
Tax Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||
$234,635,828 | $63,076,395 | $(33,765,668) | $29,310,727 |
At December 31, 2019, the components of distributable earnings (loss) on a tax basis, for the Fund, were as follows:
Undistributed Ordinary Income | Accumulated Capital Losses | Other Temporary Differences | Unrealized Appreciation (Depreciation) | Total Distributable Earnings (Loss) | ||||
$1,886,128 | $(155,075,830) | $(148,552) | $29,310,727 | $(124,027,527) |
There were no distributions paid by the Fund during the years ended December 31, 2019 and December 31, 2018.
At December 31, 2019, the Fund had capital loss carryforwards available to offset future capital gains, as follows:
Short-Term Capital Losses with No Expiration | Long-Term Capital Losses with No Expiration | Total | ||
$(9,201,502) | $(145,874,328) | $(155,075,830) |
Each year, the Fund assesses the need for any reclassifications due to permanent book to tax differences that affect distributable earnings / (losses) and aggregate paid in capital. Net assets are not affected by these reclassifications. During the year ended December 31, 2019, the Fund did not have any reclassifications.
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Fund does not have exposure for additional years that might still be open in certain foreign jurisdictions. Therefore, no provision for income tax is required in the Fund’s financial statements. However, the Fund is subject to foreign taxes on the appreciation in value of certain investments. The Fund provides for such taxes on both realized and unrealized appreciation.
The Fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended December 31, 2019, the Fund did not incur any interest or penalties.
Note 7—Principal Risks—The Fund may purchase securities on foreign exchanges. Securities of foreign issuers involve special risks and considerations not typically associated with investing in U.S. issuers. These risks include
25 |
VANECK VIP GLOBAL HARD ASSETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and future adverse political and economic developments. These risks are heightened for investments in emerging market countries. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of comparable U.S. issuers.
The Fund may concentrate its investments in companies which are significantly engaged in the exploration, development, production and distribution of gold and other natural resources such as strategic and other metals, minerals, forest products, oil, natural gas and coal, and by investing in gold bullion and coins. Since the Fund may so concentrate, it may be subject to greater risks and market fluctuations than other more diversified portfolios. The production and marketing of gold and other natural resources may be affected by actions and changes in governments. In addition, gold and natural resources may be cyclical in nature.
At December 31, 2019, the aggregate shareholder accounts of three insurance companies owned approximately 47%, 23% and 10%, of the Initial Class Shares and three insurance companies owned approximately 40%, 31% and 12% of the Class S Shares.
A more complete description of risks is included in the Fund’s prospectus and Statement of Additional Information.
Note 8—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Deferred 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 eligible funds of the Trust and the VanEck Funds (another registered investment company managed by the Adviser) as directed by the Trustees.
The expense for the Deferred Plan is included in “Trustees’ fees and expenses” on the Statement of Operations. The liability for the Deferred Plan is shown as “Deferred Trustee fees” on the Statement of Assets and Liabilities.
Note 9—Securities Lending—To generate additional income, the Fund may lend its securities pursuant to a securities lending agreement with the securities lending agent. The Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, cash equivalents, U.S. government securities, or any combination of cash and such securities at all times equal to at least 102% (105% for foreign securities) of the market value plus accrued interest on the securities loaned. Daily market fluctuations could
26 |
cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Fund will continue to receive any dividends, interest or amounts equivalent thereto, on the securities loaned while receiving a fee from the borrower and/or earning interest on the investment of the cash collateral. Such fees and interest are shared with the securities lending agent under the terms of the securities lending agreement. Securities lending income is disclosed as such in the Statement of Operations. The cash collateral is maintained on the Fund’s behalf by the lending agent and is invested in the State Street Navigator Securities Lending Government Money Market Portfolio. Non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities, and is not disclosed in the Fund’s Schedule of Investments or Statement of Assets and Liabilities as it is held by the agent on behalf of the Fund, and the Fund does not have the ability to re-hypothecate those securities. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the securities loaned. The Fund 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 December 31, 2019 is presented on a gross basis in the Schedule of Investments and Statement of Assets and Liabilities. The following is a summary of the Fund’s securities on loan and related collateral as of December 31, 2019:
Market Value of Securities on Loan | Cash Collateral | Non-Cash Collateral* | Total Collateral | |||
$25,883,352 | $11,404,319 | $15,134,370 | $26,538,689 |
* | The non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities |
The following table presents money market fund investments held as collateral by type of security on loan as of December 31, 2019:
Gross Amount of Recognized Liabilities for Securities Loaned in the Statement of Assets and Liabilities* | ||
Equity Securities | $11,404,319 |
* | Remaining contractual maturity of the agreements: overnight and continuous |
Note 10—Bank Line of Credit—The Trust participates with VanEck Funds (collectively the “VE/VIP Funds”) in a $30 million committed credit facility (the “Facility”) to be utilized for temporary financing until the settlement of sales or
27 |
VANECK VIP GLOBAL HARD ASSETS FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
purchases of portfolio securities, the repurchase or redemption of shares of the Fund and other temporary or emergency purposes. The participating VE/VIP Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the VE/VIP Funds at rates based on prevailing market rates in effect at the time of borrowings. During the year ended December 31, 2019, the Fund did not borrow under the Facility.
Note 11—Recent Accounting Pronouncements—The Fund early adopted certain provisions of Accounting Standards Update No. 2018-13Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”) that eliminate and modify certain disclosure requirements for fair value measurements. The adoption of certain provisions of ASU 2018-13 had no material effect on the financial statements and related disclosures. Management evaluated the additional requirements, not yet adopted, and they are not expected to have a material impact to the financial statements. Public companies will be required to disclose the range and weighted average of significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years.
Note 12—Subsequent Event Review—The Fund has evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued.
28 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of VanEck VIP Global Hard Assets Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of VanEck VIP Global Hard Assets Fund (the “Fund”) (one of the series constituting VanEck VIP Trust (the “Trust”)), including the schedule of investments, as of December 31, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of VanEck VIP Global Hard Assets Fund (one of the series constituting VanEck VIP Trust) at December 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
29 |
VANECK VIP GLOBAL HARD ASSETS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(continued)
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the VanEck investment companies since 1999.
New York, New York
February 14, 2020
30 |
VANECK VIP TRUST
SPECIAL MEETING OF SHAREHOLDERS
October 11, 2019 (unaudited)
VANECK VIP TRUST
VanEck VIP Emerging Markets Fund
VanEck VIP Global Gold Fund
VanEck VIP Global Hard Assets Fund
VanEck VIP Unconstrained Emerging Markets Bond Fund
A Special Meeting of Shareholders of VanEck VIP Trust (the “Trust”) was held at the offices of the Trust, 666 Third Avenue, 9th Floor, New York, New York 10017 on October 11, 2019. The purpose of the meeting was to elect Trustees of the Trust. At the meeting, the following persons were elected by the shareholders to serve as Trustees of the Trust: Jon Lukomnik, Jane DiRenzo Pigott, R. Alastair Short, Richard D. Stamberger, Robert L. Stelzl, and Jan F. van Eck. No other business was transacted at the meeting.
The results of the voting at the meeting are as follows:
Proposal: To elect a Board of Trustees*:
Name | For | Withheld |
Jon Lukomnik | 25,514,194.941 | 842,144.970 |
Jane DiRenzo Pigott | 25,490,919.107 | 865,420.804 |
R. Alastair Short | 25,505,009.742 | 851,330.169 |
Richard D. Stamberger | 25,502,062.215 | 854,277.696 |
Robert L. Stelzl | 25,466,422.851 | 889,917.060 |
Jan F. van Eck | 25,492,557.910 | 863,782.001 |
Total Trust Shares Outstanding**: 31,477,728.439 |
* | Results are for all series portfolios within the Trust. |
** | As of the record date. |
31 |
VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited)
The Trustees of the Trust, their address, position with the Trust, age and principal occupations during the past five years, as of January 1, 2020, are set forth below:
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex(3) Overseen By Trustee | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years | ||||
Independent Trustees: | ||||||||
Jon Lukomnik 1956 (A)(I) | Trustee (since 2006) | Managing Partner, Sinclair Capital LLC (consulting firm). Formerly, Executive Director, Investor Responsibility Research Center Institute. | 11 | Member of the Deloitte Audit Quality Advisory Committee; Chairman of the Advisory Committee of Legion Partners; Member of the Standing Advisory Group to the Public Company Accounting Oversight Board; Director of VanEck ICAV (an Irish UCITS); VanEck Vectors UCITS ETF plc (an Irish UCITS). Formerly, Director of VanEck (a Luxembourg UCITS); Chairman of the Board of the New York Classical Theatre. | ||||
Jane DiRenzo Pigott 1957 (I) | Trustee (since 2007); Chairperson of the Board (since 2020) | Managing Director, R3 Group LLC (consulting firm). | 11 | Trustee of Northwestern University, Lyric Opera of Chicago and the Chicago Symphony Orchestra.
Formerly, Director and Chair of Audit Committee of 3E Company (services relating to hazardous material safety); Director of MetLife Investment Funds, Inc. | ||||
R. Alastair Short 1953 (A)(I) | Trustee (since 2004); Chairperson of the Audit Committee (since 2006) | President, Apex Capital Corporation (personal investment vehicle). | 66 | Chairman and Independent Director, EULAV Asset Management; Trustee, Kenyon Review; Trustee, Children’s Village. Formerly, Independent Director, Tremont offshore funds. |
32 |
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex(3) Overseen By Trustee | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years | ||||
Richard D. Stamberger 1959 (G)(I) | Trustee (since 1995) | President and CEO, SmartBrief, Inc. (business media company). | 66 | Director, Food and Friends, Inc. | ||||
Robert L. Stelzl 1945 (G)(I) | Trustee (since 2007); Chairperson of the Governance Committee (since 2017) | Co-Trustee, the estate of Donald Koll; Trustee, Robert D. MacDonald Trust; Trustee, GH Insurance Trusts. Formerly, Trustee, Joslyn Family Trusts; President, Rivas Capital, Inc. (real estate property management services company). | 11 | Director, Brookfield Office Properties, Inc., Brookfield Residential Properties, Inc., Brookfield DTLA Fund Office Trust Investor, Inc., Brookfield Property Finance ULC and Brookfield Property Split Corp. | ||||
Interested Trustee: | ||||||||
Jan F. van Eck(4) 1963 (I) | Trustee (Since 2019); Chairperson of the Investment Oversight Committee (since 2020); Chief Executive Officer and President (Since 2010) | Director, President and Chief Executive Officer of Van Eck Associates Corporation (VEAC), Van Eck Absolute Return Advisers Corporation (VEARA) and Van Eck Securities Corporation (VESC); Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | 66 | Director, National Committee on US China Relations. |
(1) | The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
(2) | Trustee serves until resignation, death, retirement or removal. |
(3) | The Fund Complex consists of VanEck Funds, VanEck VIP Trust and VanEck Vectors ETF Trust. |
(4) | “Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC. In addition, Mr. van Eck and members of his family own 100% of the voting stock of VEAC, which in turns owns 100% of the voting stock of each of VEARA and VESC. |
(A) | Member of the Audit Committee. |
(G) | Member of the Governance Committee. |
(I) | Member of the Investment Oversight Committee. |
33 |
VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited) (continued)
The executive officers of the Trust, their age and address, the positions they hold with the Trust, their term of office and length of time served and their principal business occupations during the past five years are shown below:
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years | |||
Matthew A. Babinsky, 1983 | Assistant Vice President and Assistant Secretary | Since 2016 | Assistant Vice President, Assistant General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Associate, Clifford Chance US LLP. | |||
Russell G. Brennan, 1964 | Assistant Vice President and Assistant Treasurer | Since 2008 | Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA. | |||
Charles T. Cameron, 1960 | Vice President | Since 1996 | Portfolio Manager for VEAC; Officer and/or Portfolio Manager of other investment companies advised by VEAC and VEARA. Formerly, Director of Trading of VEAC. | |||
John J. Crimmins, 1957 | Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (since 2012); Treasurer (since 2009) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. | |||
F. Michael Gozzillo, 1965 | Chief Compliance Officer | Since 2018 | Vice President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance Officer of VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC and City National Rochdale Funds. | |||
Laura Hamilton, 1977 | Vice President | Since 2019 | Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates. |
34 |
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years | |||
Laura I. Martínez, 1980 | Vice President and Assistant Secretary | Vice President (since 2016); Assistant Secretary (since 2008) | Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of VEAC, VEARA and VESC. | |||
James Parker, 1969 | Assistant Treasurer | Since 2014 | Assistant Vice President of VEAC, Manager, Portfolio Administration of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. | |||
Jonathan R. Simon, 1974 | Senior Vice President; Secretary and Chief Legal Officer | Senior Vice President (since 2016); Secretary and Chief Legal Officer (since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
(1) | The address for each Executive Officer is 666 Third Avenue, 9th Floor, New York, NY 10017. |
(2) | Officers are elected yearly by the Board. |
35 |
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the Fund’s prospectus, which includes more complete information. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, and charges and expenses of the Fund carefully before investing. To obtain a prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus carefully before investing.
Additional information about the VanEck VIP (the “Trust”) Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Trust’s Form N-PORT filings are available on the Commission’s website at https://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Fund’s complete schedule of portfolio holdings is also available by calling 800.826.2333 or by visiting vaneck.com.
Investment Adviser: | Van Eck Associates Corporation | |
Distributor: | Van Eck Securities Corporation | |
666 Third Avenue, New York, NY 10017 | ||
vaneck.com | ||
Account Assistance: | 800.544.4653 | VIPGHAAR |
ANNUAL REPORT December 31, 2019 |
VanEck VIP Trust
VanEck VIP Unconstrained Emerging Markets Bond Fund
800.826.2333 | vaneck.com |
Certain information contained in this report represents the opinion of the investment adviser which may change at any time. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Also, unless otherwise specifically noted, any discussion of the Fund’s holdings, the Fund’s performance, and the views of the investment adviser are as of December 31, 2019.
(unaudited)
FACTS | WHAT DOES VAN ECK DO WITH YOUR PERSONAL INFORMATION? |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: ■ Social Security number and account balances ■ assets and payment history ■ risk tolerance and transaction history |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Van Eck chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does Van Eck share? | Can you limit this sharing? |
For our everyday business purposes— such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
For our marketing purposes— to offer our products and services to you | Yes | No |
For joint marketing with other financialcompanies | Yes | No |
For our affiliates’ everyday businesspurposes— information about your transactions and experiences | Yes | No |
For our affiliates’ everyday businesspurposes— information about your creditworthiness | No | We don’t share |
For our affiliates to market to you | Yes | Yes |
For nonaffiliates to market to you | No | We don’t share |
To limit our sharing | Call us at 1-800-826-2333. Please note: If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing. |
Questions? | Call us at 1-800-826-2333. |
PRIVACY NOTICE
(unaudited) (continued)
Who we are | |
Who is providing this notice? | Van Eck Global, its affiliates and funds sponsored or managed by Van Eck (collectively “Van Eck”). |
What we do | |
How does Van Eck protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. |
How does Van Eck collect my personal information? | We collect your personal information, for example, when you ■ open an account or give us your income information ■ provide employment information or give us your contact information ■ tell us about your investment or retirement portfolio We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
Why can’t I limit all sharing? | Federal law gives you the right to limit only ■ sharing for affiliates’ everyday business purposes—information about your creditworthiness ■ affiliates from using your information to market to you ■ sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law. |
What happens when I limit sharing for an account I hold jointly with someone else? | Your choices will apply to everyone on your account – unless you tell us otherwise |
Definitions | |
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. ■ Our affiliates include companies with a Van Eck name such as Van Eck Securities Corporation and others such as Market Vectors Index Solutions GmbH. |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. ■ Van Eck does not share with nonaffiliates so they can market to you. |
Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. ■ Our joint marketing partners include financial services companies |
Other important information |
California Residents— In accordance with California law, we will not share information we collect about California residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We also will limit the sharing of information about you with our affiliates to the extent required by applicable California law. Vermont Residents— In accordance with Vermont law, we will not share information we collect about Vermont residents with nonaffiliates except as permitted by law, such as with the consent of the customer or to service the customer’s accounts. We will not share creditworthiness information about Vermont residents among Van Eck’s affiliates except with the authorization or consent of the Vermont resident. |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
December 31, 2019 (unaudited)
Dear Shareholders:
The story for 2019 was simple and familiar—slower economic growth was combated by expansive monetary policy.
But first a comment on global growth: the two engines of the global economy, the U.S. and China, continue to move forward and we now have the prospect of at least some resolution of the trade dispute between them in the phase-one agreement. The latest economic statistics from China are steady and there are signs of “green shoots.” China’s services sector is expanding robustly and manufacturing is struggling, but not collapsing. My blog,China’s Economic Growth: Continuing Despite Headlines, shows this in two charts.
The biggest event in the markets last summer was the surge in bonds in Europe with negative interest rates. At the end of September, nearly $15 trillion worth of debt globally carried a negative yield.1Despite moves by the European Central Bank to stimulate, not only is the European economy slowing down, but there are also concerns about just how effective central bank actions are. Looking forward, therefore, I think investors should assess their hedge against central bank uncertainty by considering, for example, their gold allocations. While high interest rate environments tend to be tough for gold (it does not pay any yield), against negative interest rates, gold and other hedges against central bank impotence should be strongly considered.
We encourage you to stay in touch with us through the videos, email subscriptions and research blogs available on our website, www.vaneck.com. I have started my own email subscription where I share interesting research—you can sign up on www.vaneck.com. Should you have any questions regarding fund performance, please contact us at 800.826.2333 or visit ourwebsite.
We sincerely thank you for investing in VanEck’s investment strategies. On the following pages, you will find a performance discussion and financial statements for the fund for the twelve month period ended
1 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
PRESIDENT’S LETTER
(unaudited) (continued)
December 31, 2019. As always, we value your continued confidence in us and look forward to helping you meet your investment goals in the future.
Jan F. van Eck
CEO and President
VanEck VIP Trust
January 24, 2020
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Funds carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
1 | Financial Times: September was the busiest month ever for corporate debt issuance, September 30, 2019, https://www.ft.com/content/eef8234c-e3c0-11e9-b112-9624ec9edc59 |
2 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
December 31, 2019 (unaudited)
The Initial Class shares of the VanEck VIP Unconstrained Emerging Markets Bond Fund (the Fund) gained 12.61% over the 12 month period ended December 31, 2019, while the Fund’s benchmark-a blended index consisting of 50% J.P. Morgan Emerging Markets Bond Index Global Diversified Index1(EMBI) and 50% J.P. Morgan Government Bond Index Emerging Markets Global Diversified Index2(GBI-EM)-gained 14.31% over the same period. (The EMBI gained 15.04% and the GBI-EM gained 13.47%.) The Fund gradually increased its local currency exposure during 2019, but kept it below 50%. Fund duration was generally lower than that of the benchmarks. The Fund’s underperformance in 2019 was due to low, or no, ownership of Mexico, Indonesia, Thailand, Colombia and Turkey.
Market Review
Emerging markets (EM) debt’s strong overall performance in 2019 was based on the steady, strong performance of hard currency debt (EMBI) combined with a more a volatile path for local currency debt (GBI-EM), though both ended the year near highs. Hard currency debt was anchored by steadily declining U.S. Treasury yields. Local currency debt ultimately benefited from these lower yields, but was buffeted by currency weakness due to escalations of trade tension between the U.S. and China.
The big drivers of EM debt markets for 2019 were lower U.S. interest rates and trade tension between the U.S. and China. The year saw U.S. 10-year yields decline by around 70bps to approximately 1.9% by year-end. This drove all fixed income asset classes higher, including strong returns for investment grade bonds. These lower yields were due to higher uncertainty, and high-rated bonds did very well relative to lower-rated bonds. Because China’s currency is so central to anchoring EM currencies and because Chinese demand is so central to commodity imports, developments on the trade front were closely watched by EM debt markets. Setbacks were generally met with weaker EM currencies. Nonetheless, as the trade narrative for 2019 increasingly became one of eventual agreement, EM currencies were ultimately able to stabilize.
Another big driver for EM debt markets in 2019 was Argentina, which saw the imposition of capital controls that effectively shut the country’s local currency bond market and a collapse in hard currency bond prices as default risk rose. By the end of 2019, it was hard to see broader evidence of this Argentine dislocation, but its initial impact in the second quarter was serious, particularly for the peso. Capital controls resulted in local currency bonds being excluded from the GBI-EM. Also, the Fitch rating agency briefly and mistakenly assigned a “selective default” rating on
3 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
Argentina’s foreign-law hard currency bonds, forcing sales by European pension funds which are not allowed to hold such bonds (the rating action was eventually reversed). By the end of 2019, though, a newly-elected government was finally inaugurated and formed a cabinet, which turned out to be more market-friendly than had been priced in and there turned out to be almost no lasting contagion to broader EM markets.
Fund Review
In 2019, Ukraine and Brazil, followed by Venezuela, El Salvador, Belarus and Peru contributed most to the Fund’s performance. Ukraine was by far the largest contributor (contributing over 2% to Fund performance). The Fund was invested in corporate and sovereign bonds in hard currency, as well as in local currency government bonds. Ukraine’s performance was driven by a newly elected government that implemented an extremely aggressive reform program and which appears to be negotiating peace with neighboring Russia. For the second large contributor, Brazil, the Fund was also invested in corporate and sovereign bonds in hard currency, as well as in local currency government bonds. Here, too, asset prices were boosted by the successful implementation of pension reform by a newly-elected government, as well as ongoing reform and growth momentum. Ukraine and Brazil’s contributions highlight the Fund’s preference for uncorrelated exposures based on country-specific drivers.
We should provide a brief note on Argentina, given its importance to the overall market for a portion of 2019, as well as the Fund’s large exposure to country. In 2019, the Fund had a significant overweight exposure to Argentina. It tactically reduced this exposure before the acute selloff in July and August of 2019, but still maintained an overweight after this tactical reduction. Following the acute selloff, though, the Fund increased its exposure. By the end of 2019, Argentina’s policy became clearer and more market-friendly than many had anticipated, boosting bond prices. Despite its large exposure for the year, the Fund lost just under 1.25% in Argentina for 2019, while the 50/50 benchmark had much smaller allocations to Argentina and lost approximately 1.5%.
During the year, the Fund took forward positions in a number of currencies that permitted long positions in securities. Forward positions in the Chilean peso, Korean won and South African rand contributed positively to the Fund’s performance. Forward positions in the Euro, Thailand baht, Mexican peso, Turkish lira and Brazilian real detracted.
4 |
Forwards as a whole slightly reduced the Fund’s positive performance for the period.
The Fund’s underperformance was due to not owning some countries that exhibited very strong performance. Although the Fund had exposure to Mexico in 2019, it was underweight local currency Mexican bonds that did exceptionally well. The same was true for Indonesia. Turkey also did very well in 2019, but the Fund continues to avoid exposure to the country due to what we see as yet-unrealized risks. One could also argue that the Fund lost by not investing in Russia in 2019. However, the Fund had exposure to Ukraine and Belarus as quasi-proxies, which more than compensated for Russia’s missed gains.
Access investment and market insights from VanEck’s investment professionals by subscribing to our commentaries. To subscribe to the emerging markets bonds updates, please visitwww.vaneck.com/subscribe.
We thoroughly appreciate your participation in the VanEck VIP Unconstrained Emerging Markets Bond Fund, and we look forward to helping you meet your investment goals in the future.
The Fund is subject to risks associated with its investments in emerging markets debt securities. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. As the Fund may invest in securities denominated in foreign currencies and some of the income received by the Fund will be in foreign currencies, changes in currency exchange rates may negatively impact the Fund’s return. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. The Fund may also be subject to credit risk, counterparty risk, interest rate risk, sovereign debt risk, tax risk, hedging risk, non-diversification risk, and risks associated with noninvestment grade securities. Please see the prospectus for information on these and other risk considerations.
5 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
MANAGEMENT’S DISCUSSION
(unaudited) (continued)
Eric Fine Portfolio Manager | David Austerweil Deputy Portfolio Manager |
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.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits, which are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. Had these fees been included, returns would have been lower. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
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.
1 | J.P Morgan Emerging Markets Bond Index (EMBI) Global Diversified Index tracks returns for actively traded external debt instruments in emerging markets, and is also J.P. Morgan’s most liquid U.S.-dollar emerging markets debt benchmark (reflects no deduction for expenses or taxes). |
2 | The J.P. Morgan Government Bond Index-Emerging Markets Global Diversified (GBI-EM) tracks local currency bonds issued by Emerging Markets governments. The index spans over 15 countries (reflects no deduction for expenses or taxes). |
6 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
December 31, 2019 (unaudited)
Average Annual | ||||||||||||||||
Total Return | Fund | 50% GBI-EM | ||||||||||||||
12/31/19 | Initial Class | 50% EMBI | GBI-EM | EMBI | ||||||||||||
One Year | 12.61 | % | 14.31 | % | 13.47 | % | 15.04 | % | ||||||||
Five Year | 1.88 | % | 4.57 | % | 2.78 | % | 6.24 | % | ||||||||
Ten Year | 2.13 | % | 4.86 | % | 2.71 | % | 6.90 | % |
This chart shows the value of a hypothetical $10,000 investment in the Fund over the past 10 years. The result is compared with the Fund’s benchmark, and may include a broad-based market index. | Hypothetical Growth of $10,000
|
On May 1, 2013, the Van Eck VIP Global Bond Fund implemented changes to its principal investment strategies and changed its name to the Van Eck VIP Unconstrained Emerging Markets Bond Fund. On May 1, 2015, the Van Eck VIP Unconstrained Emerging Markets Bond Fund changed its primary benchmark from the GBI-EM to the blended benchmark of 50% EMBI and 50% GBI-EM to reflect the unconstrained long-only nature of the Fund.
The performance quoted represents past performance. Past performance is no guarantee of future results; current performance may be lower or higher than the performance data quoted.Performance information reflects temporary waivers of expenses and/or fees, if any, and does not include insurance/annuity fees and expenses. Investment returns would have been reduced had these fees/expenses been included. Investment return and the value of the shares of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Performance information current to the most recent month end is available by calling 800.826.2333 or by visiting vaneck.com.
The Fund is only available to life insurance and annuity companies to fund their variable annuity and variable life insurance products. These contracts offer life insurance and tax benefits to the beneficial owners of the Fund. Your insurance or annuity company charges fees and expenses for these benefits that are not reflected in this report or in the Fund’s performance, since they are not direct expenses of the Fund. For insurance products, performance figures do not reflect the cost for insurance and if they did, the performance shown would be significantly lower. A review of your particular life and/or annuity contract will provide you with much greater detail regarding these costs and benefits.
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
7 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
PERFORMANCE COMPARISON
(unaudited) (continued)
index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made. Results reflect past performance and do not guarantee future results.
The 50/50 benchmark (“the Index”) is a blended index consisting of 50% J.P Morgan Emerging Markets Bond Index (EMBI) Global Diversified and 50% J.P. Morgan Government Bond Index-Emerging Markets Global Diversified (GBI-EM) (reflects no deduction for expenses or taxes).
J.P Morgan Emerging Markets Bond Index (EMBI) Global Diversified Index tracks returns for actively traded external debt instruments in emerging markets, and is also J.P. Morgan’s most liquid U.S.-dollar emerging markets debt benchmark (reflects no deduction for expenses or taxes).
The J.P. Morgan Government Bond Index-Emerging Markets Global Diversified Index (GBI-EM) tracks local currency bonds issued by Emerging Markets governments. The index spans over 15 countries (reflects no deduction for expenses or taxes).
8 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
(unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including program fees on purchase payments; and (2) ongoing costs, including management fees and other Fund expenses. This disclosure is intended to help you understand the ongoing costs (in dollars) of investing in the 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, July 1, 2019 to December 31, 2019.
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 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 fees on purchase payments. 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.
9 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
EXPLANATION OF EXPENSES
(unaudited) (continued)
Expenses Paid | ||||||||||||
Ending | During the Period* | |||||||||||
Beginning | Account Value | July 1, 2019 - | ||||||||||
Account Value | December 31, | December 31, | ||||||||||
July 1, 2019 | 2019 | 2019 | ||||||||||
Actual | $ | 1,000.00 | $ | 1,024.70 | $5.61 | |||||||
Hypothetical** | $ | 1,000.00 | $ | 1,019.66 | $5.60 |
* | Expenses are equal to the Fund’s annualized expense ratio (for the six months ended December 31, 2019), of 1.10%, 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 the days in the fiscal year (to reflect the one-half year period). |
** | Assumes annual return of 5% before expenses |
10 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
SCHEDULE OF INVESTMENTS
December 31, 2019
Principal Amount | Value | |||||||
CORPORATE BONDS: 21.6% | ||||||||
Argentina: 1.5% | ||||||||
USD | 292,000 | Cia General de Combustibles SA Reg S 9.50%, 11/07/21 | $ | 244,667 | ||||
69,000 | IRSA Inversiones y Representaciones SA Reg S 11.50%, 07/20/20 | 68,310 | ||||||
312,977 | ||||||||
Cayman Islands: 2.4% | ||||||||
CAR, Inc. Reg S | ||||||||
134,000 | 6.00%, 02/11/21 | 124,643 | ||||||
CNY | 1,000,000 | 6.50%, 04/04/21 | 132,076 | |||||
USD | 244,000 | NagaCorp. Ltd. 144A 9.38%, 05/21/21 | 259,012 | |||||
515,731 | ||||||||
Georgia: 1.3% | ||||||||
272,000 | TBC Bank JSC 144A 5.75%, 06/19/24 | 281,534 | ||||||
Indonesia: 1.1% | ||||||||
233,000 | Chandra Asri Petrochemical Tbk PT Reg S 4.95%, 11/08/24 | 229,198 | ||||||
Ireland: 2.3% | ||||||||
227,000 | Aragvi Finance International DAC 144A 12.00%, 04/09/24 | 242,890 | ||||||
231,000 | Eurotorg LLC via Bonitron DAC 144A 8.75%, 10/30/22 | 246,824 | ||||||
489,714 | ||||||||
Luxembourg: 2.5% | ||||||||
263,000 | CSN Resources SA 144A 7.63%, 04/17/26 † | 280,580 | ||||||
271,000 | Puma International Financing SA Reg S 5.00%, 01/24/26 | 255,006 | ||||||
535,586 | ||||||||
Mexico: 0.5% | ||||||||
120,000 | Corp. GEO SAB de CV Reg S 9.25%, 06/30/20 (d) *∞ | 2 | ||||||
105,000 | Cydsa SAB de CV 144A 6.25%, 10/04/27 | 108,188 | ||||||
108,190 | ||||||||
Mongolia: 1.1% | ||||||||
264,000 | Mongolian Mining Corp./Energy Resources LLC 144A 9.25%, 04/15/24 | 241,135 |
See Notes to Financial Statements
11 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
SCHEDULE OF INVESTMENTS
(continued)
Principal Amount | Value | |||||||
Netherlands: 3.4% | ||||||||
IHS Netherlands Holdco BV 144A | ||||||||
USD | 106,000 | 7.13%, 03/18/25 | $ | 112,042 | ||||
143,000 | 8.00%, 09/18/27 | 152,431 | ||||||
267,000 | Mong Duong Finance Holdings BV 144A 5.13%, 05/07/29 | 274,009 | ||||||
176,505 | MV24 Capital BV 144A 6.75%, 06/01/34 | 186,768 | ||||||
725,250 | ||||||||
Nigeria: 1.2% | ||||||||
246,000 | Seplat Petroleum Development Co. Plc 144A 9.25%, 04/01/23 | 257,729 | ||||||
Norway: 1.0% | ||||||||
200,000 | DNO ASA Reg S 144A 8.75%, 05/31/23 | 204,500 | ||||||
Singapore: 1.1% | ||||||||
237,000 | Medco Oak Tree Pte Ltd. 144A 7.38%, 05/14/26 | 241,916 | ||||||
United Arab Emirates: 1.2% | ||||||||
237,000 | ADES International Holding Plc 144A 8.63%, 04/24/24 | 247,072 | ||||||
United Kingdom: 1.0% | ||||||||
182,000 | Tullow Oil Plc 144A 7.00%, 03/01/25 † | 153,664 | ||||||
66,000 | Tullow Oil Plc Reg S 7.00%, 03/01/25 | 55,724 | ||||||
209,388 | ||||||||
Total Corporate Bonds (Cost: $4,554,691) | 4,599,920 | |||||||
FOREIGN GOVERNMENT OBLIGATIONS: 73.8% | ||||||||
Angola: 4.0% | ||||||||
Angolan Government International Bonds 144A | ||||||||
263,000 | 8.00%, 11/26/29 † | 281,336 | ||||||
525,000 | 9.13%, 11/26/49 † | 563,079 | ||||||
844,415 | ||||||||
Argentina: 9.4% | ||||||||
CHF | 650,000 | Argentine Republic Government International Bond Reg S 3.38%, 10/12/20 | 399,584 | |||||
Argentine Republic Government International Bonds | ||||||||
USD | 447,000 | 5.63%, 01/26/22 | 232,579 | |||||
2,037,000 | 6.88%, 04/22/21 | 1,105,887 |
See Notes to Financial Statements
12 |
Principal Amount | Value | |||||||
Argentina: (continued) | ||||||||
USD | 524,000 | Provincia de Buenos Aires Reg S 9.95%, 06/09/21 | $ | 255,450 | ||||
1,993,500 | ||||||||
Azerbaijan: 2.9% | ||||||||
571,000 | Republic of Azerbaijan International Bond 144A 5.13%, 09/01/29 | 623,531 | ||||||
Belarus: 4.7% | ||||||||
BYN | 488,000 | Development Bank of the Republic of Belarus JSC 144A 12.00%, 05/15/22 | 233,633 | |||||
USD | 291,000 | Republic of Belarus International Bond 144A 6.20%, 02/28/30 | 309,870 | |||||
421,000 | Republic of Belarus International Bond Reg S 6.88%, 02/28/23 | 450,100 | ||||||
993,603 | ||||||||
Brazil: 4.3% | ||||||||
Brazil Notas do Tesouro Nacional, Series F | ||||||||
BRL | 2,380,000 | 10.00%, 01/01/27 | 696,325 | |||||
756,000 | 10.00%, 01/01/29 | 227,123 | ||||||
923,448 | ||||||||
Chile: 3.1% | ||||||||
CLP | 435,000,000 | Bonos de la Tesoreria de la Republica de Chile Reg S 144A 4.70%, 09/01/30 | 659,393 | |||||
Czech Republic: 2.8% | ||||||||
CZK | 12,290,000 | Czech Republic Government Bond 2.75%, 07/23/29 | 597,170 | |||||
Dominican Republic: 1.9% | ||||||||
DOP | 10,500,000 | Dominican Republic International Bond 144A 9.75%, 06/05/26 | 203,642 | |||||
10,920,000 | Dominican Republic International Bond Reg S 8.90%, 02/15/23 | 205,927 | ||||||
409,569 | ||||||||
El Salvador: 6.5% | ||||||||
El Salvador Government International Bonds Reg S | ||||||||
USD | 213,000 | 5.88%, 01/30/25 | 225,070 | |||||
325,000 | 7.65%, 06/15/35 † | 371,616 | ||||||
401,000 | 8.25%, 04/10/32 | 478,833 | ||||||
245,000 | 8.63%, 02/28/29 | 294,698 | ||||||
1,370,217 | ||||||||
Indonesia: 4.9% | ||||||||
Indonesia Treasury Bonds | ||||||||
IDR | 9,695,000,000 | 8.25%, 05/15/29 | 754,405 | |||||
3,645,000,000 | 8.38%, 03/15/34 | 281,596 | ||||||
1,036,001 |
See Notes to Financial Statements
13 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
SCHEDULE OF INVESTMENTS
(continued)
Principal Amount | Value | |||||||
Laos: 1.0% | ||||||||
USD | 212,000 | Lao People’s Democratic Republic International Bond 144A 6.88%, 06/30/21 | $ | 208,820 | ||||
Malaysia: 3.0% | ||||||||
MYR | 2,594,000 | Malaysia Government Bond 3.48%, 06/14/24 | 641,663 | |||||
Mexico: 5.9% | ||||||||
Petroleos Mexicanos | ||||||||
USD | 533,000 | 6.63%, 06/15/35 | 547,889 | |||||
MXN | 13,780,000 | 7.47%, 11/12/26 | 641,073 | |||||
USD | 64,000 | Petroleos Mexicanos 144A 6.49%, 01/23/27 | 68,176 | |||||
1,257,138 | ||||||||
South Africa: 7.0% | ||||||||
Republic of South Africa Government Bonds | ||||||||
ZAR | 11,114,000 | 8.00%, 01/31/30 | 741,300 | |||||
9,251,000 | 10.50%, 12/21/26 | 739,382 | ||||||
1,480,682 | ||||||||
Ukraine: 2.8% | ||||||||
UAH | 4,019,000 | Ukraine Government Bond 17.00%, 05/11/22 | 184,044 | |||||
USD | 81,000 | Ukraine Government International Bond 144A 7.38%, 09/25/32 | 86,607 | |||||
310,000 | Ukraine Government International Bond Reg S 7.38%, 09/25/32 | 331,457 | ||||||
602,108 | ||||||||
United Kingdom: 2.8% | ||||||||
UAH | 13,900,000 | Ukreximbank Via Biz Finance Plc Reg S 16.50%, 03/02/21 | 594,055 | |||||
Uruguay: 6.8% | ||||||||
Uruguay Government International Bonds Reg S | ||||||||
UYU | 40,699,000 | 8.50%, 03/15/28 | 943,458 | |||||
18,789,000 | 9.88%, 06/20/22 | 496,271 | ||||||
1,439,729 | ||||||||
Total Foreign Government Obligations (Cost: $15,544,107) | 15,675,042 |
See Notes to Financial Statements
14 |
Number of Shares | Value | |||||||
COMMON STOCK: 0.0% | ||||||||
Mexico: 0.0% (Cost: $0) | ||||||||
3,236 | Corp. GEO SAB de CV * # ∞ | $ | 0 | |||||
MONEY MARKET FUND: 2.8% (Cost: $584,428) | ||||||||
584,428 | Invesco Treasury Portfolio—Institutional Class | 584,428 | ||||||
Total Investments Before Collateral for Securities Loaned: 98.2% (Cost: $20,683,226) | 20,859,390 | |||||||
SHORT-TERM INVESTMENTS HELD AS COLLATERAL FOR SECURITIES ON LOAN: 3.8% (Cost: $814,970) | ||||||||
MONEY MARKET FUND: 3.8% | ||||||||
814,970 | State Street Navigator Securities Lending Government Money Market Portfolio | 814,970 | ||||||
Total Investments: 102.0% (Cost: $21,498,196) | 21,674,360 | |||||||
Liabilities in excess of other assets: (2.0)% | (428,057 | ) | ||||||
NET ASSETS: 100.0% | $ | 21,246,303 |
Definitions:
BRL | Brazilian Real |
BYN | Belarusian Ruble |
CHF | Swiss Franc |
CLP | Chilean Peso |
CNY | Chinese Yuan |
CZK | Czech Koruna |
DOP | Dominican Peso |
IDR | Indonesian Rupiah |
MXN | Mexican Peso |
MYR | Malaysian Ringgit |
UAH | Ukrainian Hryvnia |
USD | United States Dollar |
UYU | Uruguayan Peso |
ZAR | South African Rand |
See Notes to Financial Statements
15 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
SCHEDULE OF INVESTMENTS
(continued)
Footnotes:
(d) | Security in default of coupon payment |
* | Non-income producing |
∞ | Security is valued using significant unobservable inputs that factor in discount for lack of marketability and is classifed as Level 3 in the fair value hierarchy. |
† | Security fully or partially on loan. Total market value of securities on loan is $1,563,523. |
# | Security has been valued in good faith pursuant to guidelines established by the Board of Trustees. The aggregate value of fair valued securities is $0 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 $6,728,381, or 31.7% of net assets. |
Summary of Investments by Sector Excluding Collateral for Securities Loaned | % of Investments | Value | |||||||
Basic Materials | 3.0 | % | $ | 617,966 | |||||
Consumer, Cyclical | 2.4 | 505,836 | |||||||
Consumer, Non-cyclical | 1.2 | 256,719 | |||||||
Energy | 10.0 | 2,088,181 | |||||||
Financial | 2.8 | 592,734 | |||||||
Government | 75.2 | 15,675,042 | |||||||
Industrial | 1.3 | 264,475 | |||||||
Utilities | 1.3 | 274,009 | |||||||
Money Market Fund | 2.8 | 584,428 | |||||||
100.0 | % | $ | 20,859,390 |
See Notes to Financial Statements
16 |
The summary of inputs used to value the Fund’s investments as of December 31, 2019 is as follows:
Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | Value | ||||||||||||||
Corporate Bonds* | $ | — | $ | 4,599,918 | $ | 2 | $ | 4,599,920 | |||||||||
Foreign Government Obligations* | — | 15,675,042 | — | 15,675,042 | |||||||||||||
Common Stocks* | — | — | 0 | 0 | |||||||||||||
Money Market Funds | 1,399,398 | — | — | 1,399,398 | |||||||||||||
Total | $ | 1,399,398 | $ | 20,274,960 | $ | 2 | $ | 21,674,360 |
* | See Schedule of Investments for geographic sector breakouts. |
See Notes to Financial Statements
17 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2019
Assets: | |||||
Investments, at value (Cost $20,683,226) (1) | $ | 20,859,390 | |||
Short-term investment held as collateral for securities loaned (2) | 814,970 | ||||
Cash | 760,486 | ||||
Receivables: | |||||
Investments sold | 437,044 | ||||
Shares of beneficial interest sold | 33,546 | ||||
Due from Adviser | 4,015 | ||||
Dividends and interest | 364,141 | ||||
Prepaid expenses | 3,005 | ||||
Other assets | 2,374 | ||||
Total assets | 23,278,971 | ||||
Liabilities: | |||||
Payables: | |||||
Investments purchased | 1,117,003 | ||||
Collateral for securities loaned | 814,970 | ||||
Shares of beneficial interest redeemed | 23,547 | ||||
Deferred Trustee fees | 13,510 | ||||
Accrued expenses | 63,638 | ||||
Total liabilities | 2,032,668 | ||||
NET ASSETS | $ | 21,246,303 | |||
Shares of beneficial interest outstanding | 2,439,460 | ||||
Net asset value, redemption and offering price per share | $ | 8.71 | |||
Net Assets consist of: | |||||
Aggregate paid in capital | $ | 22,382,154 | |||
Total distributable earnings (loss) | (1,135,851 | ) | |||
$ | 21,246,303 | ||||
(1) | Value of securities on loan | $ | 1,563,523 | ||
(2) | Cost of short-term investment held as collateral for securities loaned | $ | 814,970 |
See Notes to Financial Statements
18 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
For the Year Ended December 31, 2019
Income: | ||||||||
Dividends | $ | 8,511 | ||||||
Interest (net of foreign taxes withheld of $12,372) | 1,760,875 | |||||||
Securities lending income | 130 | |||||||
Total income | 1,769,516 | |||||||
Expenses: | ||||||||
Management fees | $ | 209,972 | ||||||
Transfer agent fees | 19,169 | |||||||
Custodian fees | 27,923 | |||||||
Professional fees | 106,148 | |||||||
Reports to shareholders | 30,899 | |||||||
Insurance | 3,540 | |||||||
Trustees’ fees and expenses | 5,997 | |||||||
Interest | 317 | |||||||
Total expenses | 403,965 | |||||||
Waiver of management fees | (172,747 | ) | ||||||
Net expenses | 231,218 | |||||||
Net investment income | 1,538,298 | |||||||
Net realized gain (loss) on: | ||||||||
Investments (net of foreign taxes of $12,574) | 570,383 | |||||||
Forward foreign currency contracts | (61,770) | |||||||
Foreign currency transactions and foreign denominated assets and liabilities | 1,275 | |||||||
Net realized gain | 509,888 | |||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments (net of foreign taxes of $228) | 429,974 | |||||||
Foreign currency transactions and foreign denominated assets and liabilities | 4,893 | |||||||
Net change in unrealized appreciation (depreciation) | 434,867 | |||||||
Net Increase in Net Assets Resulting from Operations | $ | 2,483,053 |
See Notes to Financial Statements
19 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31, 2019 | Year Ended December 31, 2018 | |||||||||
Operations: | ||||||||||
Net investment income | $ | 1,538,298 | $ | 1,400,466 | ||||||
Net realized gain (loss) | 509,888 | (2,204,064 | ) | |||||||
Net change in unrealized appreciation (depreciation) | 434,867 | (721,396 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | 2,483,053 | (1,524,994 | ) | |||||||
Distributions to shareholders: | ||||||||||
Dividends and distributions | (74,755 | ) | (1,862,609 | ) | ||||||
Share transactions*: | ||||||||||
Proceeds from sale of shares | 3,868,075 | 4,519,613 | ||||||||
Reinvestment of dividends and distributions | 74,755 | 1,862,609 | ||||||||
Cost of shares redeemed | (6,710,717 | ) | (8,435,072 | ) | ||||||
Net decrease in net assets resulting from share transactions | (2,767,887 | ) | (2,052,850 | ) | ||||||
Total decrease in net assets | (359,589 | ) | (5,440,453 | ) | ||||||
Net Assets: | ||||||||||
Beginning of year | 21,605,892 | 27,046,345 | ||||||||
End of year | $ | 21,246,303 | $ | 21,605,892 | ||||||
* Shares of beneficial interest issued, reinvested and redeemed (unlimited number of $.001 par value shares authorized): | ||||||||||
Initial Class Shares: | ||||||||||
Shares sold | 463,835 | 549,933 | ||||||||
Shares reinvested | 9,184 | 222,003 | ||||||||
Shares redeemed | (816,298 | ) | (1,027,203 | ) | ||||||
Net decrease | (343,279 | ) | (255,267 | ) |
See Notes to Financial Statements
20 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
For a share outstanding throughout each year:
Initial Class Shares | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||
Net asset value, beginning of year | $ | 7.76 | $ | 8.90 | $ | 8.12 | $ | 7.63 | $ | 9.33 | |||||||||||||||
Income from investment operations: | |||||||||||||||||||||||||
Net investment income | 0.61 | (b) | 0.47 | (b) | 0.60 | (b) | 0.36 | 0.56 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.37 | (0.97 | ) | 0.37 | 0.13 | (1.70 | ) | ||||||||||||||||||
Total from investment operations | 0.98 | (0.50 | ) | 0.97 | 0.49 | (1.14 | ) | ||||||||||||||||||
Less dividends and distributions from: | |||||||||||||||||||||||||
Net investment income | (0.03 | ) | (0.64 | ) | (0.19 | ) | — | (0.56 | ) | ||||||||||||||||
Net asset value, end of year | $ | 8.71 | $ | 7.76 | $ | 8.90 | $ | 8.12 | $ | 7.63 | |||||||||||||||
Total return (a) | 12.61 | % | (6.14 | )% | 12.24 | % | 6.42 | % | (13.09 | )% | |||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||
Net assets, end of year (000’s) | $21,246 | $21,606 | $27,046 | $26,977 | $29,483 | ||||||||||||||||||||
Ratio of gross expenses to average net assets | 1.92 | % | 1.67 | % | 1.57 | % | 1.34 | % | 1.34 | % | |||||||||||||||
Ratio of net expenses to average net assets | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | |||||||||||||||
Ratio of net expenses to average net assets excluding interest expense | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | |||||||||||||||
Ratio of net investment income to average net assets | 7.33 | % | 5.80 | % | 7.04 | % | 4.06 | % | 6.38 | % | |||||||||||||||
Portfolio turnover rate | 276 | % | 286 | % | 586 | % | 595 | % | 572 | % |
(a) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of year, reinvestment of any dividends and distributions at net asset value on the dividend/distribution payment date and a redemption at the net asset value on the last day of the year. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares. Total returns do not include fees and expenses imposed under your variable annuity contract and/or life insurance policy. If these amounts were reflected, the returns would be lower than those shown. |
(b) | Calculated based upon average shares outstanding. |
See Notes to Financial Statements
21 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
December 31, 2019
Note 1—Fund Organization—VanEck VIP Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was organized as a Massachusetts business trust on January 7, 1987. The VanEck VIP Unconstrained Emerging Markets Bond Fund (the “Fund”) is a non-diversified series of the Trust and seeks high total return (income plus capital appreciation) by investing globally, primarily in a variety of debt securities. The Fund currently offers a single class of shares: Initial Class Shares.
Note 2—Significant Accounting Policies—The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The Fund is an investment company and follow accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946Financial Services-Investment Companies.
The following summarizes the Fund’s significant accounting policies.
A. | Security Valuation—The Fund values its investments in securities and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Debt securities are valued on the basis of evaluated prices furnished by an independent pricing service approved by the Fund’s 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 (described below). Short-term obligations with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates fair value. Money market fund investments are valued at net asset value and are categorized as Level 1 in the fair value hierarchy. Forward foreign currency contracts are valued at the spot currency rate plus an amount (“points”), which reflects the differences in interest rates between the U.S. and foreign markets and are categorized as Level 2 in the fair value hierarchy. Securities traded on national exchanges are valued at the closing price on the markets in which the securities trade. Securities traded on the NASDAQ Stock Market LLC (“NASDAQ”) are valued at the NASDAQ official closing price. Over-the-counter securities not included on NASDAQ and listed securities for which no sale was reported are valued at |
22 |
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 Van Eck Associates Corporation (the “Adviser”) provides oversight of the Fund’s valuation policies and procedures, which are approved by the Fund’s Board of Trustees. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities dealers, and other market sources to determine fair value. The Pricing Committee convenes regularly to review the fair value of financial instruments or other assets. If market quotations for a security or other asset are not readily available, or if the Adviser believes 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 Fund’s valuation policies and procedures. The Pricing Committee employs various methods for calibrating the valuation approaches utilized to determine fair value, including a regular review of key inputs and assumptions, periodic comparisons to valuations provided by other independent pricing services, transactional back-testing and disposition analysis. | ||
Certain factors such as economic conditions, political events, market trends, the nature of and duration of any restrictions on disposition, trading in similar securities of the issuer or comparable issuers and other security specific information are used to determine the fair value of these securities. Depending on the relative significance of valuation inputs, these securities may be classified either as Level 2 or Level 3 in the fair value hierarchy. The price which the Fund may realize upon sale of an investment may differ materially from the value presented in the Schedule of Investments. | ||
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis, which includes a hierarchy that prioritizes inputs to valuation methods used to measure fair value. The fair value hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three levels of the fair value hierarchy are described below: | ||
Level 1 – | Quoted prices in active markets for identical securities. | |
Level 2 – | Significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). | |
Level 3 – | Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
23 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
A summary of the inputs and the levels used to value the Fund’s investments are located in the Schedule of Investments. Additionally, tables that reconcile the valuation of the Fund’s Level 3 investments and that present additional information about valuation methodologies and unobservable inputs, if applicable, are located in the Schedule of Investments. | |
B. | Federal Income Taxes—It is the Fund’s policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income and net realized capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. |
C. | Currency Translation—Assets and liabilities denominated in foreign currencies and commitments under foreign currency contracts are translated into U.S. dollars at the closing prices of such currencies each business day as quoted by one or more sources. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are acquired or sold. Foreign denominated income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed in the financial statements. Such amounts are included with the net realized and unrealized gains and losses on investment securities in the Statement of Operations. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets, other than investments and forward foreign currency contracts, and liabilities are recorded as net realized gain (loss) and net change in unrealized appreciation (depreciation) on foreign currency transactions and foreign denominated assets and liabilities in the Statement of Operations. |
D. | Dividends and Distributions to Shareholders—Dividends to shareholders from net investment income and distributions from net realized capital gains, if any, are declared and paid annually. Income dividends and capital gain distributions are determined in accordance with U.S. income tax regulations, which may differ from such amounts determined in accordance with GAAP. |
E. | Use of Derivative Instruments—The Fund may invest in derivative instruments, including, but not limited to, options, futures, swaps and forward foreign currency contracts. 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”) |
24 |
derivatives) or they may be listed and traded on an exchange. Derivative contracts may involve future commitments to purchase or sell financial instruments or commodities 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 instrument. GAAP requires enhanced disclosures about the Fund’s derivative instruments and hedgeing activities. Details of this disclosure are found below as well as in the Schedule of Investments. The Fund held no derivative instruments at December 31, 2019. |
Forward Foreign Currency Contracts—The Fund may buy and sell forward foreign currency contracts to settle purchases and sales of foreign denominated securities, gain currency exposure or to hedge foreign denominated assets. Realized gains and losses from forward foreign currency contracts, if any, are included in realized gain (loss) on forward foreign currency contracts, foreign currency transactions and foreign denominated assets and liabilities in the Statement of Operations. During the year ended December 31, 2019, the Fund held forward foreign currency contracts for 12 months. The average amount purchased and sold (in U.S. dollars) were $422,156 and $423,165, respectively. At December 31, 2019, the Fund held no forward foreign currency contracts. |
The impact of transactions in derivative instruments during the year ended December 31, 2019, was as follows: |
ForeignCurrency Risk | ||
Realized gain (loss): | ||
Forward foreign currency contracts1 | $(61,770) |
1 | Statement of Operations location: Net realized gain (loss) on forward foreign currency contracts |
F. | Offsetting Assets and Liabilities—In the ordinary course of business, the Fund enters into transactions subject to enforceable master netting or other similar agreements. Generally, the right of offset in those agreements allows the Fund to offset any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of |
25 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
the agreements. The Fund may pledge or receive cash and/or securities as collateral for derivative instruments and securities lending. For financial reporting purposes, the Fund presents securities lending assets and liabilities on a gross basis in the Statement of Assets and Liabilities. Cash collateral held in the form of money market investments, if any, at December 31, 2019 is presented in the Schedule of Investments and in the Statement of Assets and Liabilities. Non-cash collateral is disclosed in Note 8 (Securities Lending). | |
G. | Other—Security transactions are accounted for on trade date. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized upon notification of the ex-dividend date. Interest income, including amortization of premiums and discounts, is accrued as earned. Realized gains and losses are determined based on the specific identification method. |
In the normal course of business, the Fund enters into contracts that contain a variety of general indemnifications. The Fund’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Adviser believes the risk of loss under these arrangements to be remote. |
Note 3—Investment Management and Other Agreements—The Adviser is the investment adviser to the Fund. The Adviser receives a management fee, calculated daily and payable monthly based on an annual rate of 1.00% of the first $500 million of average daily net assets, 0.90% of the next $250 million of average daily net assets and 0.70% of the average daily net assets in excess of $750 million. The Adviser has agreed, until at least May 1, 2020, to waive management fees and assume expenses to prevent the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest expense, trading expenses, dividend and interest payments on securities sold short, taxes, and extraordinary expenses) from exceeding 1.10% of the Fund’s average daily net assets. Refer to the Statement of Operations for the amounts waived/assumed by the Adviser for the year ended December 31, 2019.
In addition, Van Eck Securities Corporation (the “Distributor”), an affiliate of the Adviser, acts as the Fund’s distributor. Certain officers and trustees of the Trust are officers, directors or stockholders of the Adviser and Distributor.
State Street Bank and Trust Company is the Fund’s custodian and securities lending agent.
Note 4—Investments—For the year ended December 31, 2019, the cost of purchases and proceeds from sales of investments, excluding U.S.
26 |
government securities and short-term obligations, aggregated to $55,387,239 and $57,658,547 respectively.
Note 5—Income Taxes—As of December 31, 2019, for Federal income tax purposes, the identified cost, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation (depreciation) of investments were as follows:
Tax Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | |||
$21,547,113 | $830,770 | $(703,523) | $127,247 |
At December 31, 2019, the components of accumulated distributable earnings (loss) on a tax basis, for the Fund, were as follows:
Undistributed Ordinary Income | Accumulated Capital Losses | Other Temporary Differences | Unrealized Appreciation (Depreciation) | Total Earnings (Loss) | ||||
$1,386,737 | $(2,638,175) | $(13,509) | $129,097 | $(1,135,850) |
The tax character of dividends paid to shareholders were as follows:
Year Ended December 31, 2019 | Year Ended December 31, 2018 | ||
Ordinary income | $74,755 | $1,862,609 |
At December 31, 2019, the Fund had capital loss carryforwards available to offset future capital gains, as follows:
Short-Term Capital Losses with No Expiration | ||
$(2,638,175) |
During the year ended December 31, 2019, the Fund utilized $672,267 of capital loss carryovers available from prior years.
Each year, the Fund assesses the need for any reclassifications due to permanent book to tax differences that affect distributable earnings / (losses) and aggregate paid in capital. Net assets are not affected by these reclassifications. During the year ended December 31, 2019, the Fund did not have any reclassifications.
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more-likely-than-not” to be sustained assuming examination by applicable tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on return filings for all open tax years. The Fund does not have exposure for additional years that might still be open in certain foreign jurisdictions. Therefore, no provision for income
27 |
VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
tax is required in the Fund’s financial statements. However, the Fund is subject to foreign taxes on the appreciation in value of certain investments. The Fund provides for such taxes on both realized and unrealized appreciation.
The Fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended December 31, 2019, the Fund did not incur any interest or penalties.
Note 6—Principal Risks—The Fund may purchase securities on foreign exchanges. Securities of foreign issuers involve special risks and considerations not typically associated with investing in U.S. issuers. These risks include devaluation of currencies, less reliable information about issuers, different security transaction clearance and settlement practices and future adverse political and economic developments. These risks are heightened for investments in emerging markets countries. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of comparable U.S. issuers. The Fund may invest in debt securities which are rated below investment grade by rating agencies. Such securities involve more risk of default than higher rated securities and are subject to greater price variability.
At December 31, 2019, the aggregate shareholder accounts of five insurance companies owned approximately 51%, 19%, 12%, 10%, and 5% of the Fund’s outstanding shares of beneficial interest.
A more complete description of risks is included in the Fund’s Prospectus and Statement of Additional Information.
Note 7—Trustee Deferred Compensation Plan—The Trust has a Deferred Compensation Plan (the “Deferred 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 eligible funds of the Trust and the VanEck Funds (another registered investment company managed by the Adviser) as directed by the Trustees.
The expense for the Deferred Plan is included in “Trustees’ fees and expenses” on the Statement of Operations. The liability for the Deferred Plan is shown as “Deferred Trustee fees” on the Statement of Assets and Liabilities.
Note 8—Securities Lending—To generate additional income, the Fund may lend its securities pursuant to a securities lending agreement with the securities lending agent. The Fund may lend up to 33% of its investments requiring that the loan be continuously collateralized by cash, cash equivalents, U.S. government securities, or any combination of cash and such securities at all
28 |
times equal to at least 102% (105% for foreign securities) of the market value plus accrued interest on the securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled on the next business day. During the term of the loan, the Fund will continue to receive any dividends, interest or amounts equivalent thereto, on the securities loaned while receiving a fee from the borrower and/or earning interest on the investment of the cash collateral. Such fees and interest are shared with the securities lending agent under the terms of the securities lending agreement. Securities lending income is disclosed as such in the Statement of Operations. The cash collateral is maintained on the Fund’s behalf by the lending agent and is invested in the State Street Navigator Securities Lending Government Money Market Portfolio. Non-cash collateral consists of U.S. Treasuries and U.S. Government Agency securities, and is not disclosed in the Fund’s Schedule of Investments or Statement of Assets and Liabilities as it is held by the agent on behalf of the Fund, and the Fund does not have the ability to re-hypothecate those securities. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the securities loaned. The Fund 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 cash collateral at December 31, 2019 is presented on a gross basis in the Schedule of Investments and Statement of Assets and Liabilities. The following is a summary of the Fund’s securities on loan and related collateral as of December 31, 2019:
Market Value of Securities on Loan | Cash Collateral | Non-Cash Collateral | TotalCollateral | |||
$1,563,523 | $814,970 | $786,045 | $1,601,015 |
The following table presents money market fund investments held as collateral by type of security on loan as of December 31, 2019:
Gross Amount of Recognized Liabilities for Securities Loaned in the Statement of Assets and Liabilities* | |||
Equity Securities | $814,970 |
* | Remaining contractual maturity of the agreements: overnight and continuous |
Note 9—Bank Line of Credit—The Trust participates with VanEck Funds (collectively the “VE/VIP Funds”) in a $30 million committed credit facility (the “Facility”) to be utilized for temporary financing until the settlement of sales or
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VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
NOTES TO FINANCIAL STATEMENTS
(continued)
purchases of portfolio securities, the repurchase or redemption of shares of the Fund and other temporary or emergency purposes. The participating VE/VIP Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the VE/VIP Funds at rates based on prevailing market rates in effect at the time of borrowings. During the year ended December 31, 2019, the average daily loan balance during the 15 day period of which a loan was outstanding amounted to $226,713 and the average interest rate was 3.75%. At December 31, 2019, the Fund had no outstanding borrowings under the Facility.
Note 10—Recent Accounting Pronouncements—The Fund early adopted certain provisions of Accounting Standards Update No. 2018-13Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”) that eliminate and modify certain disclosure requirements for fair value measurements. The adoption of certain provisions of ASU 2018-13 had no material effect on the financial statements and related disclosures. Management evaluated the additional requirements, not yet adopted, and they are not expected to have a material impact to the financial statements. Public companies will be required to disclose the range and weighted average of significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years.
Effective January 1, 2019, the Fund adopted Accounting Standards Update ASU 2017-08,Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities(the “ASU 2017-08”), that shortened the amortization period for certain purchased callable debt securities held at premium to the earliest call date. The new guidance has not changed the accounting for purchased callable debt securities held at a discount. Based on management’s evaluation, the adoption of the ASU 2017-08 had no material effect on the financial statements and related disclosures.
Note 11—Subsequent Event Review—The Fund has evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued.
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VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of VanEck VIP Unconstrained Emerging Markets Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of VanEck VIP Unconstrained Emerging Markets Bond Fund (the “Fund”) (one of the series constituting VanEck VIP Trust (the “Trust”)), including the schedule of investments, as of December 31, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of VanEck VIP Unconstrained Emerging Markets Bond Fund (one of the series constituting VanEck VIP Trust) at December 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
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VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(continued)
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the VanEck investment companies since 1999.
New York, New York
February 14, 2020
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VANECK VIP UNCONSTRAINED EMERGING MARKETS BOND FUND
(unaudited)
The following information is provided with respect to the distributions paid during the taxable year ended December 31, 2019:
Record Date: | 01/30/2019 | ||
Payable Date: | 01/31/2019 | ||
Ordinary Income Paid Per Share | $0.027100 | ||
Dividends Qualifying for the Dividends Received Deduction for Corporations | 0.00% | * | |
Foreign Source Income | 100.00% | * | |
Foreign Taxes Paid Per Share | $0.001380 |
* | Expressed as a percentage of the ordinary income distribution grossed-up for foreign taxes. |
The foreign taxes paid represent taxes incurred by the Fund on income received by the Fund from foreign sources. Foreign taxes paid may be included in taxable income with an offsetting deduction from gross income or may be taken as a credit for taxes paid to foreign governments. You should consult your tax adviser regarding the appropriate treatment of foreign taxes paid.
Please retain this information for your records.
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VANECK VIP TRUST
SPECIAL MEETING OF SHAREHOLDERS
October 11, 2019 (unaudited)
VANECK VIP TRUST
VanEck VIP Emerging Markets Fund
VanEck VIP Global Gold Fund
VanEck VIP Global Hard Assets Fund
VanEck VIP Unconstrained Emerging Markets Bond Fund
A Special Meeting of Shareholders of VanEck VIP Trust (the “Trust”) was held at the offices of the Trust, 666 Third Avenue, 9th Floor, New York, New York 10017 on October 11, 2019. The purpose of the meeting was to elect Trustees of the Trust. At the meeting, the following persons were elected by the shareholders to serve as Trustees of the Trust: Jon Lukomnik, Jane DiRenzo Pigott, R. Alastair Short, Richard D. Stamberger, Robert L. Stelzl, and Jan F. van Eck. No other business was transacted at the meeting.
The results of the voting at the meeting are as follows:
Proposal: To elect a Board of Trustees*:
Name | For | Withheld | |||
Jon Lukomnik | 25,514,194.941 | 842,144.970 | |||
Jane DiRenzo Pigott | 25,490,919.107 | 865,420.804 | |||
R. Alastair Short | 25,505,009.742 | 851,330.169 | |||
Richard D. Stamberger | 25,502,062.215 | 854,277.696 | |||
Robert L. Stelzl | 25,466,422.851 | 889,917.060 | |||
Jan F. van Eck | 25,492,557.910 | 863,782.001 | |||
Total Trust Shares Outstanding**: 31,477,728.439 |
* | Results are for all series portfolios within the Trust. |
** | As of the record date. |
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VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited)
The Trustees of the Trust, their address, position with the Trust, age and principal occupations during the past five years, as of January 1, 2020, are set forth below:
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Complex(3) | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years | ||||
Independent Trustees: | ||||||||
Jon Lukomnik 1956 (A)(I) | Trustee (since 2006) | Managing Partner, Sinclair Capital LLC (consulting firm). Formerly, Executive Director, Investor Responsibility Research Center Institute. | 11 | Member of the Deloitte Audit Quality Advisory Committee; Chairman of the Advisory Committee of Legion Partners; Member of the Standing Advisory Group to the Public Company Accounting Oversight Board; Director of VanEck ICAV (an Irish UCITS); VanEck Vectors UCITS ETF plc (an Irish UCITS). Formerly, Director of VanEck (a Luxembourg UCITS); Chairman of the Board of the New York Classical Theatre. | ||||
Jane DiRenzo Pigott 1957 (I) | Trustee (since 2007); Chairperson of the Board (since 2020) | Managing Director, R3 Group LLC (consulting firm). | 11 | Trustee of Northwestern University, Lyric Opera of Chicago and the Chicago Symphony Orchestra. | ||||
Formerly, Director and Chair of Audit Committee of 3E Company (services relating to hazardous material safety); Director of MetLife Investment Funds, Inc. | ||||||||
R. Alastair Short 1953 (A)(I) | Trustee (since 2004); Chairperson of the Audit Committee since 2006) | President, Apex Capital Corporation (personal investment vehicle). | 66 | Chairman and Independent Director, EULAV Asset Management; Trustee, Kenyon Review; Trustee, Children’s Village. Formerly, Independent Director, Tremont offshore funds. |
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VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited) (continued)
Trustee’s Name, Address(1)and Year of Birth | Position(s) Held With Trust, Term of Office(2)and Length of Time Served | Principal Occupation(s) During Past Five Years | Number of Portfolios In Fund Complex(3) Overseen By Trustee | Other Directorships Held Outside The Fund Complex(3)During The Past Five Years | ||||
Richard D. Stamberger 1959 (G)(I) | Trustee (since 1995) | President and CEO, SmartBrief, Inc. (business media company). | 66 | Director, Food and Friends, Inc. | ||||
Robert L. Stelzl 1945 (G)(I) | Trustee (since 2007); Chairperson of the Governance Committee (since 2017) | Co-Trustee, the estate of Donald Koll; Trustee, Robert D. MacDonald Trust; Trustee, GH Insurance Trusts. Formerly, Trustee, Joslyn Family Trusts; President, Rivas Capital, Inc. (real estate property management services company). | 11 | Director, Brookfield Office Properties, Inc., Brookfield Residential Properties, Inc., Brookfield DTLA Fund Office Trust Investor, Inc., Brookfield Property Finance ULC and Brookfield Property Split Corp. | ||||
Interested Trustee: | ||||||||
Jan F. van Eck(4) 1963 (I) | Trustee (Since 2019); Chairperson of the Investment Oversight Committee (since 2020); Chief Executive Officer and President (Since 2010) | Director, President and Chief Executive Officer of Van Eck Associates Corporation (VEAC), Van Eck Absolute Return Advisers Corporation (VEARA) and Van Eck Securities Corporation (VESC); Officer and/or Director of other companies affiliated with VEAC and/or the Trust. | 66 | Director, National Committee on US China Relations. |
(1) | The address for each Trustee and officer is 666 Third Avenue, 9th Floor, New York, New York 10017. |
(2) | Trustee serves until resignation, death, retirement or removal. |
(3) | The Fund Complex consists of VanEck Funds, VanEck VIP Trust and VanEck Vectors ETF Trust. |
(4) | “Interested person” of the Trust within the meaning of the 1940 Act. Mr. van Eck is an officer of VEAC, VEARA and VESC. In addition, Mr. van Eck and members of his family own 100% of the voting stock of VEAC, which in turns owns 100% of the voting stock of each of VEARA and VESC. |
(A) | Member of the Audit Committee. |
(G) | Member of the Governance Committee. |
(I) | Member of the Investment Oversight Committee. |
36 |
The executive officers of the Trust, their age and address, the positions they hold with the Trust, their term of office and length of time served and their principal business occupations during the past five years are shown below:
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years | |||
Matthew A. Babinsky, 1983 | Assistant Vice President and Assistant Secretary | Since 2016 | Assistant Vice President, Assistant General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Associate, Clifford Chance US LLP. | |||
Russell G. Brennan, 1964 | Assistant Vice President and Assistant Treasurer | Since 2008 | Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA. | |||
Charles T. Cameron, 1960 | Vice President | Since 1996 | Portfolio Manager for VEAC; Officer and/or Portfolio Manager of other investment companies advised by VEAC and VEARA. Formerly, Director of Trading of VEAC. | |||
John J. Crimmins, 1957 | Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer | Vice President, Chief Financial Officer and Principal Accounting Officer (since 2012); Treasurer (since 2009) | Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. | |||
F. Michael Gozzillo, 1965 | Chief Compliance Officer | Since 2018 | Vice President and Chief Compliance Officer of VEAC and VEARA; Chief Compliance Officer of VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Chief Compliance Officer of City National Rochdale, LLC and City National Rochdale Funds. | |||
Laura Hamilton, 1977 | Vice President | Since 2019 | Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates. |
37 |
VANECK VIP TRUST
BOARD OF TRUSTEES AND OFFICERS
December 31, 2019 (unaudited) (continued)
Officer’s Name, Address(1) And Year of Birth | Position(s) Held With Trust | Term of Office And Length of Time Served(2) | Principal Occupations During The Past Five Years | |||
Laura I. Martínez, 1980 | Vice President and Assistant Secretary | Vice President (since 2016); Assistant Secretary (since 2008) | Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of VEAC, VEARA and VESC. | |||
James Parker, 1969 | Assistant Treasurer | Since 2014 | Assistant Vice President of VEAC, Manager, Portfolio Administration of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. | |||
Jonathan R. Simon, 1974 | Senior Vice President; Secretary and Chief Legal Officer | Senior Vice President (since 2016); Secretary and Chief Legal Officer (since 2014) | Senior Vice President, General Counsel and Secretary of VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust. Formerly, Vice President of VEAC, VEARA and VESC. |
(1) | The address for each Executive Officer is 666 Third Avenue, 9th Floor, New York, NY 10017. |
(2) | Officers are elected yearly by the Board. |
38 |
This report is intended for the Fund’s shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the Fund’s prospectus, which includes more complete information. Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, and charges and expenses of the Fund carefully before investing. To obtain a prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus carefully before investing.
Additional information about the VanEck VIP (the “Trust”) Board of Trustees/Officers and a description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities are provided in the Statement of Additional Information. The Statement of Additional Information and information regarding how the Trust voted proxies relating to portfolio securities during the most recent twelve month period ending June 30 is available, without charge, by calling 800.826.2333, or by visiting vaneck.com, or on the Securities and Exchange Commission’s website at https://www.sec.gov.
The Trust files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Trust’s Form N-PORT filings are available on the Commission’s website at https://www.sec.gov and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 202.942.8090. The Fund’s complete schedule of portfolio holdings is also available by calling 800.826.2333 or by visiting vaneck.com.
Investment Adviser: | Van Eck Associates Corporation | |
Distributor: | Van Eck Securities Corporation | |
666 Third Avenue, New York, NY 10017 | ||
vaneck.com | ||
Account Assistance: | 800.544.4653 | VIPUEMBAR |
Item 2. | CODE OF ETHICS. |
(a) | The Registrant has adopted a code of ethics (the “Code of Ethics”) that applies to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. |
(b) | The Registrant’s code of ethics is reasonably described in this Form N-CSR. |
(c) | The Registrant has not amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto. |
(d) | The Registrant has not granted a waiver or an implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto. |
(e) | Not applicable. |
(f) | The Registrant’s Code of Ethics is attached as an Exhibit hereto. |
Item 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Registrant’s Board of Trustees has determined that R. Alastair Short, member of the Audit Committee, is an “audit committee financial expert” and “independent” as such terms are defined in the instructions to Form N-CSR Item 3(a)(2).
Item 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
The principal accountant fees disclosed in Item 4(a), 4(b), 4(c), 4(d) and 4(g) are for the Funds of the Registrant for which the fiscal year end is December 31.
(a) | Audit Fees. The aggregate Audit Fees of Ernst & Young for professional services billed for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2019 and December 31, 2018, were $121,750 and $123,750, respectively. |
(b) | Audit-Related Fees. Not applicable. |
(c) | Tax Fees. The aggregate Tax Fees of Ernst & Young for professional services billed for the review of Federal, state and excise tax returns and other tax compliance consultations for the fiscal years ended December 31, 2019 and December 31, 2018, were $32,098 and $50,906, respectively. |
(d) | All Other Fees |
None. |
(e) | The Audit Committee will pre-approve all audit and non-audit services, to be provided to the Funds, by the independent accountants as required by Section 10A of the Securities Exchange Act of 1934. The Audit Committee has authorized the Chairman of the Audit Committee to approve, between meeting dates, appropriate non-audit services. |
The Audit Committee after considering all factors, including a review of independence issues, will recommend to the Board of Trustees the independent auditors to be selected to audit the financial statements of the Funds. |
(f) | Not applicable. |
(g) | Not applicable. |
(h) | Not applicable. |
Item 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
The Registrant’s Board has an Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)) consisting of two Independent Trustees. Jon Lukomnik and R. Alastair Short currently serve as members of the Audit Committee. Mr. Short is the Chairman of the Audit Committee.
Item 6. | SCHEDULE OF INVESTMENTS. |
Information included in Item 1.
Item 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
Item 8. | PORTFOLIO 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. |
None.
Item 11. | CONTROLS AND PROCEDURES. |
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3 (c)) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15 (b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
(a) | Not applicable. |
(b) | Not applicable. |
Item 13. | EXHIBITS. |
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 VIP TRUST | |
By (Signature and Title) | /s/ John J. Crimmins, Treasurer and CFO |
DateMarch 6, 2020 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | |
By (Signature and Title) | /s/ Jan F. van Eck, CEO |
DateMarch 6, 2020 | |
By (Signature and Title) | /s/ John J. Crimmins, Treasurer and CFO |
DateMarch 6, 2020 |