VANECK VECTORS SEMICONDUCTOR ETF (SMH)

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1 VANECK VECTORS SEMICONDUCTOR ETF (SMH) $89.68 USD Risk: High Zacks ETF Rank 3 - Hold Fund Type Issuer Benchmark Index Technology ETFs VAN ECK MVIS US LISTED SEMICONDUCTOR 25 INDEX SMH Sector Weights Date of Inception 12/20/2011 AUM (million) $1, Number of holdings in the ETF 26 Assets in top ten holdings 64.21% Expense Ratio 0.35% Price Chart Dividend Yield 1.56% Price Fundamentals of SMH Current Price $ Week High $ Week Low $88.82 NAV (09/30/2018) $ Yr ETF Ret (10/26/2018) -7.65% Risk Statistics Beta (against S&P 500) 1.18 Standard Deviation 21.21% R % Zacks Opinion This ETF is appropriate for investors seeking broad exposure to U.S. semiconductor markets. Though declining PC shipments is a concern, semiconductors sales should also benefit from their emerging technology applications like tablets, smartphones and Internet of Things (IoT).The move to cloud computing and growing data consumption on mobile devices is leading to strong demand for suitable wireless and computing networks. This is currently one of the most important semiconductor markets. While the popularity of cryptocurrencies should benefit semiconductor ETFs as the mining of cryptocurrencies needs the usage of semiconductors, any slump in that segment may weigh on semiconductor ETFs like SMH. However, overvaluation concerns may hurt the sector. Key Points Popular technology equities ETF High company-specific concentration risk Low expense ratio and trading costs Reasons to Buy Semi industry to improve meaningfully in 2018 Reasons to Sell PC market growth will be moderate in the next few quarters The data on the front page and all the charts (except the sector weights chart) in the report represent market data as of 10/26/2018, while the report's text and the sector weights chart are as of 06/04/2018.

2 Holdings Breakdown The fund holds 26 securities in total, most of which are large cap (95%). The top 10 holdings of the ETF contribute 55.63% to the fund. Intel Corp (8.29%), Taiwan Semiconductor Manufacturing Co Ltd (6.77%), and Micron Technology (5.79%) are the top three holding of the fund. The fund is fully concentrated in Information technology sector. The country exposure of the fund is the United States (80.8%), Netherlands (9.5%) and Taiwan (7.4%). Performance The fund gained about 28.8% in the last one year (as of Jun 1, 2018) thanks to better corporate earnings, higher consolidation activities and emerging technologies. The bitcoin rally has helped the fund to soar in The fund had a rocky start to 2018 and nosedived in early February due to a broader market selloff on rising rate worries. Then the fund gained momentum only to fall again in late March on a broadbased tech rout originated from Facebook data debacle. Nvidia's suspension of self-driving car tests on public roads also caused pain in the fund. Just as the fund started to recover, it again dropped in late April on waning smartphone demand but finally rebounded in May. Overall, the fund is up 13.1% so far this year. The fund is up about 12% so far this year. SMH Top 5 Holdings Weight % Taiwan Semiconductor Manufacturing Co L 11.11% 2-Year Comparative Intel Corp 11.01% Nvidia Corp 7.21% Broadcom Inc 5.45% Asml Holding Nv 5.40% Investment Objective The investment seeks to replicate the MVIS US Listed Semiconductor 25 Index. The index looks to track the largest companies in the industry. Analysis This ETF is appropriate for investors seeking broad exposure to U.S. semiconductor markets with a major focus on large cap equities and a very small proportion assigned to mid cap securities. The fund charges 35 bps in fees. The fund is liquid as it trades in about 2,650,000 shares per day on an average resulting in a tight bid-ask spread and low trading costs. Fundamentals SMH VGT XLK Zacks Rank Price $89.68 $ $68.09 AUM (million) $1, $20, $19, Expense Ratio 0.35% 0.10% 0.13% Dividend Yield 1.56% 1.07% 1.42% Assets in top % NA 66.48% Beta YTD % Price Change -8.31% 11.21% 7.61% Description Launched in December 2011, Van Eck Market Vectors Semiconductor ETF (SMH) is a passively managed fund. The ETF is designed to deliver the returns of the top semiconductor companies.

3 Detailed Analysis Semiconductor stocks were the star performers in 2017 in the broader technology space thanks to upbeat earnings, consolidation activities and innovative technologies. Areas like autonomous cars, 3D printers, health and fitness devices and IoT are fueling growth in the sector, offsetting struggling traditional businesses like PCs and smartphones. The PC market witnessed shipment declines over the past few years. The increased longevity of PC due to ample consumer devices and lower PC consumer demand in emerging markets are held responsible for this slowdown. Though shipment of smartphones has cooled down lately, the continued shift toward 4G LTE in high-end smartphones has given a boost to wafer demand for advanced process technologies, as per research agency Gartner. Overall, the consumer and computing markets consume two-thirds of all semiconductors. Thus, the rapid deployment of fingerprint sensors and active-matrix dynamic light-emitting diodes (AMOLEDs) by Chinese smartphones should also give the space a boost, as per several research agencies including Gartner. After generating record annual sales in 2017, the global semiconductor industry was off to a great Per the Semiconductor Industry Association (SIA), global sales of semiconductors grew 20% year over year to $111.1 billion in the first quarter of Maybe PC sales are not up to the mark and there is saturation in smartphone demand in the developed market, but that is not likely to hold back the demand for semiconductors. The rapid adoption of advanced information technologies including cloud, Internet of Things, autonomous cars, gaming, wearables, drones and artificial intelligence should keep on fueling semiconductor ETFs. In any case, semiconductor is the value-centric traditional tech area, which is likely to have an upper hand in an edgy investing backdrop. However, semiconductors for mobile devices have their own set of challenges. They have to be priced lower. After a stupendous rally in 2017, most semiconductor stocks are overvalued at the current level. ishares PHLX Semiconductor ETF (SOXX) Founded in 2001, the ishares PHLX Semiconductor ETF is based on U.S.-listed semiconductor stocks represented by the PHLX Semiconductor Sector Index. The product is currently invested in 30 securities. It charges 48 basis points in expenses. Powershares Dynamic Semiconductors ETF (PSI) The Powershares Dynamic Semiconductors ETF was launched in 2005 to track the performance of the Dynamic Semiconductors Intellidex Index. This 30-stock product charges 63 basis points in expenses. 06/04/2018

4 Glossary ACTIVE MANAGEMENT: ALPHA: AMERICAN DEPOSITORY RECEIPT: AUTHORIZED PARTICIPANTS: AVERAGE YIELD TO MATURITY: BASKET: BETA: BID/ASK SPREAD: CONTRARIAN: CREATION UNIT: DIVIDEND YIELD: EFFECTIVE DURATION: ENHANCED INDEXING: EXCHANGE TRADED FUND: EXCHANGE-TRADED NOTE: EXPENSE RATIO: FUND OF FUNDS: FUNDAMENTAL INDEXING: INDEX: INVERSE ETF: INVESTMENT STYLE: LEVERAGED ETF: A portfolio management strategy where the manager uses variety of skills and attributes (like top-down approach, bottom-up approach, value investing, growth investing or absolute returns strategy) in the portfolio so that the fund outperforms the benchmark index. A measure of outperformance that can be calculated as the return of the fund minus the benchmark s return. A positive alpha indicates the fund has outperformed the benchmark index whereas negative alpha means underperformance. A negotiable non-us security that trades in the US financial market. An entity chosen by an ETF sponsor to undertake the responsibility of obtaining the underlying assets needed to create an ETF. Authorized participants are typically large institutional organizations, such as market makers or specialists. The expected rate of return on a fund s portfolio if it is held until the maturity while reinvesting all coupon payments at the bond yield. A portfolio of several stocks or securities that are selected for the inclusion in the fund with different weightings. A measure of risk compared to the market benchmark. A beta of less than 1 indicates that the fund is less volatile than the market and vice versa. The difference between the highest price that a buyer is willing to pay (often called bid price) for the underlying assets of securities of the fund and the lowest price that a seller is willing to accept (often called as offer or ask price) for it. An investment style that goes against prevailing market trends (i.e. against the thinking of many) by buying assets that are performing poorly and then selling when they perform well. A set of securities or underlying assets that can be created or redeemed by Authorized Participants for a certain number of ETF shares with the fund or trust. The creation units can vary in size ranging from 25,000 to 600,000 shares each. A financial ratio that measures how much a company pays out in dividends each year relative to its share price. It can be calculated as annual dividend per share divided by price per share. A measure of a fund s interest-rate sensitivity. The longer the duration, the more sensitive is the fund to the changes in interest rates. An investment idea that attempts to amplify the returns of an underlying asset or the fund with lower tracking error. Enhanced indexing combines elements of both passive and active management. The fund represents a basket of securities (that typically track an index), and is listed and trades like stocks on an exchange. ETFs can be traded throughout the day in amounts as little as one share. The note is a senior, unsecured, unsubordinated debt issued by a major bank. It has a maturity date and is backed only by the credit of the issuer. The ETN however, do not actually hold any security, instead an issuing bank promises to pay to investors the amount reflected by the index s performance (minus fees). An annual fee that the fund or ETF charge from the investors in order to provide exposure to the underlying asset. A fund that invests in other funds instead of investing directly in stocks, bonds or other securities. A type of equity index in which stocks or securities are selected based on fundamental metrics such as revenue, dividend rates, earnings or book value. An imaginary portfolio of securities representing a particular market or a portion of it. An ETF that provides opposite (inverse) exposure in the underlying index though use of various financial and money market instruments over a specified period of time. This ETF is similar to holding a short position in order to take profit from the falling prices. A different style of investing such as growth, value and blend in a basket of asset. An ETF that uses various financial instruments to amplify the returns (up to 3 times) of the underlying index over a specified period of time.

5 LIQUIDITY: MARKET CAPITALIZATION: NET ASSET VALUE: PASSIVE MANAGEMENT: PORTFOLIO TURNOVER: R-SQUARED: SECTOR ROTATION: The degree to which an asset or security can be bought or sold in the market without affecting the asset s price. Liquidity is characterized by a high level of trading activity. Represents the aggregate value of the fund or underlying asset. Value of an ETF on per share basis and is calculated as total asset minus total liabilities divided by number of shares. A portfolio management strategy where the fund is the mirror image of the performance of the benchmark index. A percentage of underlying assets bought and sold in a given year. A measure of correlation with the market benchmark. An R-Squared of 100 indicates perfect correlation of the fund that of market while an R-Squared of 0 indicates no correlation. A strategy that involves moving from one sector to another by selling the underlying assets or securities of a sector and purchasing securities or assets in another. SEC YIELD: A standard yield that the bond funds must pay to its shareholders based on the most recent 30- day period covered by the fund s filings with the SEC. SHORT ETF: STYLE BOX: TARGET DATE FUND: TRACKING ERROR: TREASURY INFLATION PROTECTED SECURITIES: VOLATILITY: VOLUME: YIELD CURVE: WEIGHTED MATURITY: An investment strategy that offers to take short position in the underlying index through various financial instruments. A visual representation of the fund, created by Morningstar, to determine risk-return structures of the portfolio. A style box is comprised of nine squares, or categories, that classify securities by size (small, mid and large cap) along the vertical axis and by value, growth and blend characteristics along the horizontal axis. A fund that invests exclusively in the assets or securities with a certain defined maturity. A measure of how closely a portfolio follows the benchmark index. It is calculated as the difference between the returns of fund portfolio and the benchmark index. The bonds that are issued by the U.S. Treasury to protect against inflation. These securities pay interest on an inflated-principal amount (principal rises with inflation) and when the securities mature, investors get either the inflation-adjusted principal or the original principal, whichever is greater. A measure of risk calculated by the annualized daily movement in the fund price. The lower the volatility of the fund the better it is. The number of shares traded in the market during a given period of time. A line that plots the interest rates of bonds having equal credit quality but differing maturity dates. The yield curve provides an idea of future interest rate change and economic activity. It generally compares the three-month, two-year, five-year and 30-year U.S. Treasury debt The remaining time to maturity of the underlying securities in a portfolio. A fund with a short average maturity is more sensitive to current interest rate fluctuations than one with longer average maturity. 06/04/2018 Disclosure This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Please read the prospectus carefully. The data on the front page and all the charts (except the sector weights chart) in the report represent market data as of 10/26/2018, while the report's text and the sector weights chart are as of 06/04/2018.