March 2018 Investment case: municipal bonds
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ETF disclosure Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called creation units and otherwise can be bought and sold only through exchange trading. Shares may trade at a premium or discount to their NAV in the secondary market. You will incur brokerage expenses when trading Fund shares in the secondary market. Past performance is no guarantee of future results. Returns for actual Fund investments may differ from what is shown because of differences in timing, the amount invested and fees and expenses. Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing. Non-VanEck proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck. 2018 VanEck. Principal VanEck Vectors Municipal Income ETF Risk Factors: Municipal bonds are subject to risks related to litigation, legislation, political change, conditions in underlying sectors or in local business communities and economies, bankruptcy or other changes in the issuer s financial condition, and/or the discontinuance of taxes supporting the project or assets or the inability to collect revenues for the project or from the assets. Additional risks include credit, interest rate, call, reinvestment, tax, market and lease obligation risk. High-yield municipal bonds are subject to greater risk of loss of income and principal than higher-rated securities, and are likely to be more sensitive to adverse economic changes or individual municipal developments than those of higher-rated securities. Interest and principal payments for pre-refunded bonds are funded from securities in an escrow account. The escrowed securities do not guarantee the price of these bonds. Municipal bonds may be less liquid than taxable bonds. There is no guarantee that the Funds income will be exempt from federal or state income taxes, and changes in those tax rates or in alternative minimum tax rates or in the tax treatment of municipal bonds may make them less attractive as investments and cause them to lose value. Gains, if any, are subject to gains tax. Some portions of the distributions from HYD may be subject to the Alternative Minimum Tax (AMT). For a more complete description of these and other risks, please refer to each Fund s prospectus. 3
Contents Municipal bond market 5 Market size and growth Greater market access Default levels Investment-grade municipal bonds 9 Yield spreads Power of tax-exempt status Competitive risk/reward profile Pre-refunded bonds High-yield municipal bonds 14 Yield spreads Power of tax-exempt status Competitive risk/reward profile VanEck Vectors Municipal Bond ETFs 18 Fund and index characteristics 4
Municipal bond market overview 5
Municipal bond market The municipal bond market value has grown 30% from 2004 to 2017. The primary holder of municipal debt has consistently been the individual investor directly through bond holdings and indirectly via mutual funds. 4,500 Holders of U.S. Municipal Securities 2004-2017 Value Outstanding (Billions $) 4,000 3,500 3,000 2,500 2,000 1,500 2,850 3,044 3,212 3,448 3,543 3,695 3,796 3,743 3,882 3,814 3,772 3,715 3,832 3,803 1,000 500 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Individuals Mutual Funds Banking Institutions Insurance Companies Other Individuals: Household holdings is revised up by about $840 billion, on average, from 2004 forward. Mutual Funds: Includes mutual funds, money market funds, close-end funds and exchange traded funds. Banking Institutions: Includes commercial banks, savings institutions and brokers and dealers. Insurance Companies: Includes property-casualty and life insurance companies. Other: Includes nonfinancial corporate business, nonfinancial non-corporate business, state and local governments and retirement funds, government-sponsored enterprises and foreign holders. Source: SIFMA, Federal Reserve Z.1 Report. As of 12/31/17. See disclaimers on slides 2 and 3. 6
Funds have become more prevalent Mutual funds and ETFs have become an increasingly popular means of gaining exposure to municipal bonds. These funds offer investors convenient, diversified access to broad and targeted municipal markets. 800 ETF and Mutual Fund Assets 1993-2017 Assets Under Management 1 (Billions $) 700 600 500 400 300 200 100 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1 Assets under management includes all non-money market U.S. municipal bond open-end funds and exchange-traded funds that invest primarily in municipal securities. Source: Morningstar. As of 12/31/17. See disclaimers on slides 2 and 3. 7
Lower default rates than corporate bonds Municipal bonds: lower default rates than corporate bonds in all ratings categories. Average default rate for all rated municipal bonds was lower than Aaa-rated corporate bonds issuers deemed to have the highest credit quality. Default Rates* Municipal Bonds Corporate Bonds Investment Grade High Yield Aaa 0.00% 0.00% Aa 0.00% 0.02% A 0.00% 0.05% Baa 0.01% 0.18% Ba 0.28% 0.94% B 2.81% 3.57% Caa to C 9.52% 10.62% High Yield 1.36% 4.12% Totals Investment Grade 0.00% 0.09% All Rated 0.02% 1.54% *Average cumulative rates from 1970-2016 (annualized). Most recent annual study published July 2016, based on data from 1970-2016. Source: Moody s Investors Services; U.S. Municipal Bond Defaults and Recoveries, 1970-2016 Historical information is not indicative of future results; current data may differ from data quoted. The Moody s rating scale is as follows, from excellent (high grade) to poor (including default): Aaa to C, with intermediate ratings offered at each level between Aa and Caa. Anything lower than a Baa rating is considered a non-investment-grade or high-yield bond. See end for index descriptions. See disclaimers on pages 2 and 3. 8
Investment-grade municipal bonds 9
Investment grade municipal bond spreads Investment grade muni bond spreads have dipped below their historical long-term average as a result of reduced supply coupled with increased demand. 4.5 4.0 3.5 BBB Muni Bond Yield vs. AAA Muni Bond Yield October 1995 - March 2018 Yield to Worst (%) 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Yield to Worst Average Source: FactSet. Yield spread is the difference between the yield to worst of Barclays Municipal BBB Index and the yield to worst of Barclays Municipal AAA Index. See end for index descriptions. Yield to worst is generally defined as being the lowest yield that a buyer can expect to receive. See disclaimers on slides 2 and 3. 10
Power of tax-exempt status Tax-exempt yield may potentially provide a compelling income opportunity. 5.0 Nominal vs. Taxable Equivalent Yields as of 3/31/2018 4.5 Yield to Worst (%) 4.0 3.5 3.0 Tax-Equivalent* 39.6% Tax Bracket 33% Tax Bracket 28% Tax Bracket 25% Tax Bracket 2.5 2.0 Index Yield Index Yield 1.5 U.S. Aggregate Bonds Municipal Investment Grade Bonds Source: Bloomberg. For illustrative purposes only. U.S. Aggregate Bonds: Based on Barclays U.S. Aggregate Bond Index and Municipal Investment Grade Bonds: Based on Barclays Municipal Bond Index. See end for index descriptions. Yield to worst is the lowest yield that a buyer can expect among the reasonable alternatives, such as yield to maturity, yield to call, and yield to refunding. *Tax-equivalent yield is used by investors to compare yields on taxable and tax-exempt securities after accounting for federal taxes (excluding AMT). Taxable-equivalent yield represents the yield a taxable bond would have to earn in order to match --after taxes--the yield available on a tax-exempt municipal bond. Taxable-Equivalent Yield = Tax Free Municipal Bond Yield/(1 Tax Rate). Tax equivalent yield calculated based on federal income tax rate. State, local and alterative minimum taxes have not been considered in the analysis. Please note that depending on your tax bracket, the potential tax equivalent returns may be higher or lower. See disclaimers on slides 2 and 3. 11
Risk/reward profile The tax-exempt status of municipal bonds provides a compelling risk/reward profile. Investment Grade Municipal Bond Taxable-Equivalent Returns March 2013 - March 2018 6 High Yield Corps. Annualized Return (%) 5 4 3 2 1 Agency 39.6% Tax Bracket 33% Tax Bracket 25% Tax Bracket MBS Munis U.S. Aggregate U.S. Gov 28% Tax Bracket Corps High Yield Munis Global Gov 0 0 1 2 3 4 5 6 7 Risk (Annualized Standard Deviation) Index performance is not illustrative of VanEck Vectors ETF performance. Fund performance available at www.vaneck.com. Source: FactSet. For illustrative purposes only. Taxable-equivalent return represents the return a taxable bond would have to earn in order to match after federal taxes the return available on a tax-exempt municipal bond (excluding AMT). Municipal bonds may be subject to state and local taxes as well as to federal taxes on gains and may be subject to alternative minimum tax. The chart displays the returns of the Barclays Municipal Bond Index on a tax-equivalent return basis and compares such returns to other asset classes as represented by the indexes described at the end of this presentation. Fixed income investments have interest rate risk, which refers to the risk that bond prices generally fall as interest rates rise and vice versa. U.S. government bonds are guaranteed by the full faith and credit of the United States government. Municipal, corporate, agency and mortgage-backed bonds are not guaranteed by the full faith and credit of the United States and carry the credit risk of the issuer. Municipal bonds are exempt from federal taxes and often state and local taxes. U.S. Treasuries are exempt from state and local taxes, but subject to federal taxes. Other securities listed are subject to federal, state and local taxes. Prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Prices of bonds change in response to factors such as interest rates and issuer s credit worthiness, among others. Investing in smaller companies involves risks not associated with investing in more established companies such as business risk, stock price fluctuations and illiquidity. Standard deviation is the statistical measure of the historical volatility of a portfolio. Historical information is not indicative of future results; current data may differ from data quoted. The listed indices are unmanaged and are not securities in which an investment can be made. See index descriptions at the end. See disclaimers on slides 2 and 3. 12
Highest quality available in the muni market Pre-refunded bonds (pre-res) offer a high-level of relative quality because they use cash flows from U.S. Treasury bonds to satisfy coupon and interest payments. Here is how it works: As interest rates fall, a municipality may choose to refinance higher-interest debt, issuing a new bond at a lower interest rate. Now, the municipality has sufficient funds to pay off the original bond. However, that original bond may not have reached it s first call date. In such an instance, the municipality may opt to buy Treasuries, place them in an escrow account and use the interest to pay the interest on the original muni until it is callable. The original bond becomes a pre-refunded bond and is typically considered of the highest quality available in the muni market, because the collateral carry the full faith and credit of the U.S. Treasury.* * Note: Issuers often do not pay to have a pre-refunded issue re-rated by a national rating agency such as Moody s, S&P or Fitch. For illustrative purposes only. See disclaimers on slides 2 and 3. 13
High-yield municipal bonds 14
High-yield municipal bond spreads High-yield muni bond spreads have dipped below their historical long-term average as a result of reduced supply coupled with increased demand. 7 High-Yield Muni Bond Yield vs. Investment Grade Muni Bond Yield October 1995 - March 2018 6 5 Yield to Worst (%) 4 3 2 1 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Yield to Worst Average Source: FactSet. Yield spread is the difference between the yield to worst of Barclays Municipal High Yield Index and the yield to worst of Barclays Municipal Index. See end for index descriptions. Yield to worst is generally defined as being the lowest yield that a buyer can expect to receive. See disclaimers on slides 2 and 3. 15
Power of tax-exempt status Tax-exempt yield may potentially provide a compelling income opportunity. 10.5 Nominal vs. Taxable Equivalent Yields as of 3/31/2018 Yield to Worst (%) 9.5 8.5 7.5 6.5 5.5 Tax-Equivalent * 39.6% Tax Bracket 33% Tax Bracket 28% Tax Bracket 25% Tax Bracket 4.5 3.5 2.5 1.5 Index Yield U.S. Corporate High-Yield Bonds Index Yield Municipal High-Yield Bonds Source: Bloomberg. For illustrative purposes only. U.S. Corporate High Yield Bonds: Based on Barclays U.S. Corporate High Yield Bond Index and Municipal High-Yield Bonds: Based on Barclays Municipal High-Yield Bond Index. See end for index descriptions. Yield to worst is the lowest yield that a buyer can expect among the reasonable alternatives, such as yield to maturity, yield to call, and yield to refunding. *Tax-equivalent yield is used by investors to compare yields on taxable and tax-exempt securities after accounting for federal taxes (excluding AMT). Taxable-equivalent yield represents the yield a taxable bond would have to earn in order to match --after taxes--the yield available on a tax-exempt municipal bond. Taxable-Equivalent Yield = Tax Free Municipal Bond Yield/(1 Tax Rate). Tax equivalent yield calculated based on federal income tax rate. State, local and alterative minimum taxes have not been considered in the analysis. Please note that depending on your tax bracket, the potential tax equivalent returns may be higher or lower. See disclaimers on slides 2 and 3. 16
Risk/reward profile The tax-exempt status of municipal bonds provides a compelling risk/reward profile. 8 High-Yield Municipal Bond Taxable-Equivalent Returns March 2013 - March 2018 Annualized Return (%) 7 6 5 4 3 2 1 0 39.6% Tax Bracket 33% Tax Bracket 28% Tax Bracket High Yield Corps 25% Tax Bracket High Yield Muni Muni Corps MBS U.S. Aggregate Agency U.S. Gov Global Gov 0 1 2 3 4 5 6 7 Risk (Annualized Standard Deviation) Index performance is not illustrative of VanEck Vectors ETF performance. Fund performance available at www.vaneck.com. Source: FactSet. For illustrative purposes only. Taxable-equivalent return represents the return a taxable bond would have to earn in order to match after federal taxes the return available on a tax-exempt municipal bond (excluding AMT). Municipal bonds may be subject to state and local taxes as well as to federal taxes on gains and may be subject to alternative minimum tax. The chart displays the returns of the Barclays Municipal Bond Index on a tax-equivalent return basis and compares such returns to other asset classes as represented by the indexes described at the end of this presentation. Fixed income investments have interest rate risk, which refers to the risk that bond prices generally fall as interest rates rise and vice versa. U.S. government bonds are guaranteed by the full faith and credit of the United States government. Municipal, corporate, agency and mortgage-backed bonds are not guaranteed by the full faith and credit of the United States and carry the credit risk of the issuer. Municipal bonds are exempt from federal taxes and often state and local taxes. U.S. Treasuries are exempt from state and local taxes, but subject to federal taxes. Other securities listed are subject to federal, state and local taxes. Prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Prices of bonds change in response to factors such as interest rates and issuer s credit worthiness, among others. Investing in smaller companies involves risks not associated with investing in more established companies such as business risk, stock price fluctuations and illiquidity. Standard deviation is the statistical measure of the historical volatility of a portfolio. Historical information is not indicative of future results; current data may differ from data quoted. The listed indices are unmanaged and are not securities in which an investment can be made. See index descriptions at the end. See disclaimers on slides 2 and 3. 17
VanEck Vectors Municipal Bond ETFs 18
VanEck Vectors AMT-Free Long Municipal Index ETF (MLN) The VanEck Vectors AMT-Free Long Municipal Index ETF (MLN) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays AMT-Free Long Continuous Municipal Index (LMT3TR), a market value weighted index designed to replicate the price movements of longduration bonds with a nominal maturity of 17 years or more. Fund Characteristics Fund Ticker MLN Intraday NAV Ticker MLN.IV Index Ticker LMT3TR Inception Date 1/2/2008 Net Expense Ratio * (%) 0.24 Exchange NYSE Arca Portfolio Managers James T. Colby III Subject to AMT No Anticipated Dividend Frequency Monthly Tax-Free Yields Income generally exempt from federal taxes and offers AMT-free constituents Targeted Interest Rate Risk Index designed to replicate movements of long-duration munis Quality Investment-grade index constituents with high overall credit quality All information as of 3/31/2018 and subject to change. The Index is unmanaged and not securities in which investments can be made. You cannot invest in an Index. *The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. 19
VanEck Vectors AMT-Free Long Municipal Index ETF (MLN) All Data as of 3/31/2018 Characteristics 1 Fund Index Number of Constituents 611 8,098 30 Day SEC Yield (%) 3.09 Average Maturity (Years) 23.98 24.21 Average Duration to Worst (Years) 7.25 7.04 Credit Quality 2 Fund (%) Barclays Credit Ratings Aaa 11.35 Aa 49.60 A 31.14 Baa 7.91 Ba -- Sector (Top 5 of the Fund) Fund (%) Barclays Sector Classifications Health Care 18.07 Transportation 16.08 Local 12.90 Water & Sewer 11.76 Education 9.86 B -- Caa1-c -- NR -- Unassigned -- All information is subject to change. Indexes are unmanaged and are not securities in which an investment can be made. 1 Averages are market weighted. Averages are market weighted. 30-Day SEC Yield is a standard calculation developed by the Securities and Exchange Commission that allows for fairer comparisons among funds. It is based on the most recent 30-day period and reflects the investment income earned after deducting a fund s expenses for the period. Duration to Worst measures the responsiveness of a bond s price to interest rate changes. It is defined as the percentage change in price for a 100 basis point change in interest rates. Years to Maturity is a measure of the time period, in years, until a bond matures. Average Coupon is measured by weighting the coupon of each bond by its relative size in the portfolio. Coupons are fixed percentages paid out on a fixed-income security on an annual basis. 2 Barclays composite. Equivalent S&P and Moody s ratings are AAA/Aaa, AA/Aa, A/A, BBB/Baa, BB/Ba, B/B, CCC/Caa, CC/Ca, C/Ca and D/C. Not Rated indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that the rating agency does not rate a particular obligation as a matter of policy. See disclaimers on pages 2 and 3. 20
Fund performance MLN Performance History (%) as of 3/31/2018 YTD 1YR 3YR 5YR LIFE 1/2/2008 30-Day SEC Yield NAV -1.96 4.64 3.05 3.37 3.93 Share Price -1.47 4.71 3.11 3.56 3.97 3.09% LMT3TR (Index) -1.83 5.17 3.58 4.19 5.21 Fees and Expenses 1 Management Fee 0.24% Other Expenses -- Gross Expense Ratio 0.24% Fee Waivers and Expense Reimbursement -- Net Expense Ratio 0.24% Source: VanEck and FactSet. 1 The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. Performance data quoted represents past performance which is no guarantee of future results and which may be lower or higher than current performance. Investment returns and ETF share values will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. ETF returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. The "Net Asset Value" (NAV) of a VanEck Vectors Exchange Traded Fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell shares at NAV. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com. 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. An index s performance is not illustrative of the Fund s performance. Indices are not securities in which investments can be made. See disclaimers on pages 2 and 3. 21
VanEck Vectors AMT-Free Intermediate Municipal Index ETF (ITM) The VanEck Vectors AMT-Free Intermediate Municipal Index ETF (ITM) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays AMT-Free Intermediate Continuous Municipal Index (LMT2TR). The Index is a market value weighted index designed to replicate the price movements of medium-duration bonds with a nominal maturity of 6-17 years. Fund Characteristics Fund Ticker ITM Intraday NAV Ticker ITM.IV Index Ticker LMT2TR Inception Date 12/4/2007 Net Expense Ratio* (%) 0.24 Exchange NYSE Arca Portfolio Managers James T. Colby III Subject to AMT No Anticipated Dividend Frequency Monthly Tax-Free Yields Income generally exempt from federal taxes and offers AMT-free constituents Targeted Interest Rate Risk Index designed to replicate movements of medium-duration munis Quality Investment-grade index constituents with high overall credit quality All information as of 3/31/18 and subject to change. The Index is unmanaged and not securities in which investments can be made. You cannot invest in an Index. *The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. 22
VanEck Vectors AMT-Free Intermediate Municipal Index ETF (ITM) All Data as of 3/31/2018 Characteristics 1 Fund Index Number of Constituents 3,257 17,511 30 Day SEC Yield (%) 2.49 Average Maturity (Years) 11.15 11.44 Average Duration to Worst (Years) 6.46 6.38 Credit Quality 2 Fund (%) Barclays Credit Ratings Aaa 16.72 Aa 55.63 A 22.20 Baa 5.08 Ba 0.04 Sector (Top 5 of the Fund) Fund (%) Barclays Sector Classifications State 20.77 Local 17.97 Transportation 12.39 Special Tax 10.45 Water & Sewer 10.28 B -- Caa1-c -- NR -- Unassigned 0.34 All information is subject to change. Indexes are unmanaged and are not securities in which an investment can be made. 1 Averages are market weighted. Averages are market weighted. 30-Day SEC Yield is a standard calculation developed by the Securities and Exchange Commission that allows for fairer comparisons among funds. It is based on the most recent 30-day period and reflects the investment income earned after deducting a fund s expenses for the period. Duration to Worst measures the responsiveness of a bond s price to interest rate changes. It is defined as the percentage change in price for a 100 basis point change in interest rates. Years to Maturity is a measure of the time period, in years, until a bond matures. Average Coupon is measured by weighting the coupon of each bond by its relative size in the portfolio. Coupons are fixed percentages paid out on a fixed-income security on an annual basis. 2 Barclays composite. Equivalent S&P and Moody s ratings are AAA/Aaa, AA/Aa, A/A, BBB/Baa, BB/Ba, B/B, CCC/Caa, CC/Ca, C/Ca and D/C. Not Rated indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that the rating agency does not rate a particular obligation as a matter of policy. See disclaimers on pages 2 and 3. 23
Fund performance ITM Performance History (%) as of 3/31/2018 YTD 1YR 3YR 5YR LIFE 12/4/2007 30-Day SEC Yield NAV -1.77 2.55 2.03 2.43 4.12 Share Price -1.69 2.64 1.86 2.48 4.10 2.49% LMT2TR (Index) -1.81 2.90 2.51 3.10 4.86 Fees and Expenses 1 Management Fee 0.24% Other Expenses -- Gross Expense Ratio 0.24% Fee Waivers and Expense Reimbursement -- Net Expense Ratio 0.24% Source: VanEck and FactSet. 1 The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. Performance data quoted represents past performance which is no guarantee of future results and which may be lower or higher than current performance. Investment returns and ETF share values will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. ETF returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. The "Net Asset Value" (NAV) of a VanEck Vectors Exchange Traded Fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell shares at NAV. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com. 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. An index s performance is not illustrative of the Fund s performance. Indices are not securities in which investments can be made. See disclaimers on pages 2 and 3. 24
VanEck Vectors AMT-Free Short Municipal Index ETF (SMB) The VanEck Vectors AMT-Free Short Municipal Index ETF (SMB) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays AMT-Free Short Continuous Municipal Index (LMT1TR), a market value weighted index designed to replicate the price movements of short-duration bonds with a nominal maturity of 1-6 years. Fund Characteristics Fund Ticker SMB Intraday NAV Ticker SMB.IV Index Ticker LMT1TR Inception Date 2/22/2008 Net Expense Ratio * (%) 0.20 Exchange NYSE Arca Portfolio Managers James T. Colby III Subject to AMT No Anticipated Dividend Frequency Monthly Tax-Free Yields Income generally exempt from federal taxes and offers AMT-free constituents Targeted Interest Rate Risk Index designed to replicate movements of short-duration munis Quality Investment-grade index constituents with high overall credit quality All information as of 3/31/18 and subject to change. The Index is unmanaged and not securities in which investments can be made. You cannot invest in an Index. *The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. 25
VanEck Vectors AMT-Free Short Municipal Index ETF (SMB) All Data as of 3/31/2018 Characteristics 1 Fund Index Number of Constituents 631 7,462 30 Day SEC Yield (%) 1.80 Average Maturity (Years) 4.48 6.31 Average Duration to Worst (Years) 3.17 3.25 Credit Quality 2 Fund (%) Barclays Credit Ratings Aaa 16.55 Aa 49.72 A 28.24 Baa 5.42 Ba -- Sector (Top 5 of the Fund) Fund (%) Barclays Sector Classifications State 25.42 Local 16.55 Transportation 13.34 Special Tax 10.48 Education 8.17 B -- Caa1-c -- NR -- Unassigned 0.08 All information is subject to change. Indexes are unmanaged and are not securities in which an investment can be made. 1 Averages are market weighted. Averages are market weighted. 30-Day SEC Yield is a standard calculation developed by the Securities and Exchange Commission that allows for fairer comparisons among funds. It is based on the most recent 30-day period and reflects the investment income earned after deducting a fund s expenses for the period. Duration to Worst measures the responsiveness of a bond s price to interest rate changes. It is defined as the percentage change in price for a 100 basis point change in interest rates. Years to Maturity is a measure of the time period, in years, until a bond matures. Average Coupon is measured by weighting the coupon of each bond by its relative size in the portfolio. Coupons are fixed percentages paid out on a fixed-income security on an annual basis. 2 Barclays composite. Equivalent S&P and Moody s ratings are AAA/Aaa, AA/Aa, A/A, BBB/Baa, BB/Ba, B/B, CCC/Caa, CC/Ca, C/Ca and D/C. Not Rated indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that the rating agency does not rate a particular obligation as a matter of policy. See disclaimers on pages 2 and 3. 26
Fund performance SMB Performance History (%) as of 3/31/2018 YTD 1YR 3YR 5YR LIFE 2/22/2008 30-Day SEC Yield NAV -0.19 0.09 0.55 0.62 2.13 Share Price 0.21-0.08 0.51 0.53 2.10 1.80% LMT1TR (Index) -0.26 0.46 0.98 1.18 2.68 Fees and Expenses 1 Management Fee 0.20% Other Expenses -- Gross Expense Ratio 0.20% Fee Waivers and Expense Reimbursement -- Net Expense Ratio 0.20% Source: VanEck and FactSet. 1 The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. Performance data quoted represents past performance which is no guarantee of future results and which may be lower or higher than current performance. Investment returns and ETF share values will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. ETF returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. The "Net Asset Value" (NAV) of a VanEck Vectors Exchange Traded Fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell shares at NAV. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com. 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. An index s performance is not illustrative of the Fund s performance. Indices are not securities in which investments can be made. See disclaimers on pages 2 and 3. 27
VanEck Vectors High-Yield Municipal Index ETF (HYD) The VanEck Vectors High-Yield Municipal Index ETF (HYD) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays Capital Municipal Custom High Yield Composite Index (LMEHTR). The Index is calculated using a market value weighting methodology and it tracks the high yield municipal bond market with a 75% weight in non-investment grade municipal bonds and a 25% weight in Baa/BBB-rated investment grade municipal bonds, for liquidity and balance. Fund Characteristics Fund Ticker HYD Intraday NAV Ticker HYD.IV Index Ticker LMEHTR Inception Date 2/4/2009 Net Expense Ratio* (%) 0.35 Exchange NYSE Arca Portfolio Managers James T. Colby III Subject to AMT Yes Anticipated Dividend Frequency Monthly High Yield Focus Index holding drawn from highest-yielding securities in municipal bond market Enhanced Liquidity Index has investment-grade exposure and focuses on liquid issue sizes Diverse Sector Exposure Index covers a wide range of high-yield municipal sectors All information as of 3/31/18 and subject to change. The Index is unmanaged and not securities in which investments can be made. You cannot invest in an Index. *The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. 28
VanEck Vectors High-Yield Municipal Index ETF (HYD) All Data as of 3/31/2018 Characteristics 1 Fund Index Number of Constituents 1,687 6,315 30 Day SEC Yield (%) 4.18 Average Maturity (Years) 20.41 19.36 Average Duration to Worst (Years) 6.34 6.33 Credit Quality 2 Fund (%) Barclays Credit Ratings Aaa -- Aa -- A 0.02 Baa 29.04 Ba 20.47 Sector (Top 5 of the Fund) Fund (%) Barclays Sector Classifications Industrial Revenue 35.14 Health Care 23.20 Education 8.87 Special Tax 8.10 Transportation 7.06 B 18.91 Caa1-c 5.63 NR 25.20 Unassigned 0.74 All information is subject to change. Indexes are unmanaged and are not securities in which an investment can be made. 1 Averages are market weighted. Averages are market weighted. 30-Day SEC Yield is a standard calculation developed by the Securities and Exchange Commission that allows for fairer comparisons among funds. It is based on the most recent 30-day period and reflects the investment income earned after deducting a fund s expenses for the period. Duration to Worst measures the responsiveness of a bond s price to interest rate changes. It is defined as the percentage change in price for a 100 basis point change in interest rates. Years to Maturity is a measure of the time period, in years, until a bond matures. Average Coupon is measured by weighting the coupon of each bond by its relative size in the portfolio. Coupons are fixed percentages paid out on a fixed-income security on an annual basis. 2 Barclays composite. Equivalent S&P and Moody s ratings are AAA/Aaa, AA/Aa, A/A, BBB/Baa, BB/Ba, B/B, CCC/Caa, CC/Ca, C/Ca and D/C. Not Rated indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that the rating agency does not rate a particular obligation as a matter of policy. See disclaimers on pages 2 and 3. 29
Fund performance HYD Performance History (%) as of 3/31/2018 YTD 1YR 3YR 5YR LIFE 2/4/2009 30-Day SEC Yield NAV 0.33 6.16 4.40 3.68 7.83 Share Price 0.40 5.83 4.17 3.77 7.78 4.18% LMEHTR (Index) 0.27 6.82 5.51 5.03 9.04 Fees and Expenses 1 Management Fee 0.35% Other Expenses -- Gross Expense Ratio 0.35% Fee Waivers and Expense Reimbursement -- Net Expense Ratio 0.35% Source: VanEck and FactSet. 1 The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. Performance data quoted represents past performance which is no guarantee of future results and which may be lower or higher than current performance. Investment returns and ETF share values will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. ETF returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. The "Net Asset Value" (NAV) of a VanEck Vectors Exchange Traded Fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell shares at NAV. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com. 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. An index s performance is not illustrative of the Fund s performance. Indices are not securities in which investments can be made. See disclaimers on pages 2 and 3. 30
VanEck Vectors Short High-Yield Municipal Index ETF (SHYD) The VanEck Vectors Short High-Yield Municipal Index ETF (SHYD) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays Municipal High Yield Short Duration Index (BMHYTR). The Index is calculated using a market value weighting methodology and it tracks the high yield municipal bond market with a 65% weight in non-investment grade municipal bonds, a 25% weight in Baa/BBB-rated, and 10% A-rated investment grade municipal bonds, for liquidity and balance. Fund Characteristics Fund Ticker Intraday NAV Ticker SHYD SHYD.IV Shorter Duration Focus Lower sensitivity to interest rates than traditional high yield municipal bond funds Index Ticker BMHYTR Inception Date 1/13/2014 Net Expense Ratio * (%) 0.35 Exchange NYSE Arca Portfolio Managers James T. Colby III Enhanced Liquidity Feature Index includes 25% exposure for enhanced liquidity High-Yield Muni Focus Index comprised of high yielding municipal bonds with income generally exempt from federal taxes Subject to AMT Anticipated Dividend Frequency Yes Monthly All information as of 3/31/18 and subject to change. The Index is unmanaged and not securities in which investments can be made. You cannot invest in an Index. *The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. 31
VanEck Vectors Short High-Yield Municipal Index ETF (SHYD) All Data as of 3/31/2018 Characteristics 1 Fund Index Number of Constituents 417 9,944 30 Day SEC Yield (%) 3.39 Average Maturity (Years) 8.06 8.30 Average Duration to Worst (Years) 4.14 3.85 Credit Quality 2 Fund (%) Barclays Credit Ratings Aaa -- Aa -- A 16.92 Baa 28.81 Ba 16.67 Sector (Top 5 of the Fund) Fund (%) Barclays Sector Classifications Industrial Revenue 28.39 Health Care 18.98 Special Tax 11.80 Education 8.92 State 8.89 B 9.48 Caa1-c 6.57 NR 20.44 Unassigned 1.11 All information is subject to change. Indexes are unmanaged and are not securities in which an investment can be made. 1 Averages are market weighted. Averages are market weighted. 30-Day SEC Yield is a standard calculation developed by the Securities and Exchange Commission that allows for fairer comparisons among funds. It is based on the most recent 30-day period and reflects the investment income earned after deducting a fund s expenses for the period. Duration to Worst measures the responsiveness of a bond s price to interest rate changes. It is defined as the percentage change in price for a 100 basis point change in interest rates. Years to Maturity is a measure of the time period, in years, until a bond matures. Average Coupon is measured by weighting the coupon of each bond by its relative size in the portfolio. Coupons are fixed percentages paid out on a fixed-income security on an annual basis. 2 Barclays composite. Equivalent S&P and Moody s ratings are AAA/Aaa, AA/Aa, A/A, BBB/Baa, BB/Ba, B/B, CCC/Caa, CC/Ca, C/Ca and D/C. Not Rated indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that the rating agency does not rate a particular obligation as a matter of policy. See disclaimers on pages 2 and 3. 32
Fund performance SHYD Performance History (%) as of 3/31/2018 YTD 1YR 3YR 5YR LIFE 1/13/2014 30-Day SEC Yield NAV 0.21 3.70 1.28 0.00 2.31 Share Price 0.87 4.02 1.43 0.00 2.30 3.39% BMHYTR (Index) 0.27 4.39 2.37 3.01 3.92 Fees and Expenses 1 Management Fee 0.35% Other Expenses -- Gross Expense Ratio 0.35% Fee Waivers and Expense Reimbursement -- Net Expense Ratio 0.35% Source: VanEck and FactSet. 1 The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. Performance data quoted represents past performance which is no guarantee of future results and which may be lower or higher than current performance. Investment returns and ETF share values will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. ETF returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. The "Net Asset Value" (NAV) of a VanEck Vectors Exchange Traded Fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell shares at NAV. Performance current to the most recent month-end is available by calling 800.826.2333 or by visiting vaneck.com. 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. An index s performance is not illustrative of the Fund s performance. Indices are not securities in which investments can be made. See disclaimers on pages 2 and 3. 33
VanEck Vectors Pre-Refunded Municipal Index ETF (PRB) The VanEck Vectors Pre-Refunded Municipal Index ETF (PRB) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays Municipal Pre-Refunded Treasury-Escrowed Index (LMPETR). The Index is comprised of pre-refunded and escrowed-to-maturity municipal securities secured by an escrow or trust account containing obligations directly issued or unconditionally guaranteed by the U.S. government. Fund Characteristics Fund Ticker PRB Intraday NAV Ticker PRB.IV Index Ticker LMPETR Inception Date 2/2/2009 Net Expense Ratio * (%) 0.24 Exchange NYSE Arca Tax-Free Yields Yields typically exceed those on Treasuries on taxable-equivalent basis, and income is generally exempt from federal and, in some cases, state and local taxes Quality** Highest available in the municipal bond market Portfolio Managers Subject to AMT Anticipated Dividend Frequency James T. Colby III No Monthly Liquidity Most liquid segment of municipal bond market All information as of 3/31/18 and subject to change. The Index is unmanaged and not securities in which investments can be made. You cannot invest in an Index. *The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. **Issuers often choose not to pay to have a pre-refunded bond re-rated by a national rating agency such as Moody s, S&P or Fitch. Pre-refunded bonds are typically considered the highest quality available in the muni market because the collateral carries the full faith and credit of the U.S. Treasury. 34
VanEck Vectors Pre-Refunded Municipal Index ETF (PRB) All Data as of 3/31/2018 Characteristics 1 Fund Index Number of Constituents 61 3,741 30 Day SEC Yield (%) 1.64 Average Maturity (Years) 11.20 13.24 Average Duration to Worst (Years) 2.66 2.59 Credit Quality 2 Fund (%) Barclays Credit Ratings Aaa 17.42 Aa 58.00 A 14.59 Baa 6.92 Ba 3.06 Sector (Top 5 of the Fund) Fund (%) Barclays Sector Classifications Transportation 21.85 Water & Sewer 17.32 State 14.01 Health Care 10.66 Power 10.20 B -- Caa1-c -- NR -- Unassigned -- All information is subject to change. Indexes are unmanaged and are not securities in which an investment can be made. 1 Averages are market weighted. Averages are market weighted. 30-Day SEC Yield is a standard calculation developed by the Securities and Exchange Commission that allows for fairer comparisons among funds. It is based on the most recent 30-day period and reflects the investment income earned after deducting a fund s expenses for the period. Duration to Worst measures the responsiveness of a bond s price to interest rate changes. It is defined as the percentage change in price for a 100 basis point change in interest rates. Years to Maturity for pre-refunded bonds is calculated using the first call date unless they are escrowed to final maturity Average Coupon is measured by weighting the coupon of each bond by its relative size in the portfolio. Coupons are fixed percentages paid out on a fixed-income security on an annual basis. 2 Barclays composite. Equivalent S&P and Moody s ratings are AAA/Aaa, AA/Aa, A/A, BBB/Baa, BB/Ba, B/B, CCC/Caa, CC/Ca, C/Ca and D/C. Not Rated indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that the rating agency does not rate a particular obligation as a matter of policy. See disclaimers on pages 2 and 3. 35
Fund performance PRB Performance History (%) as of 3/31/2018 YTD 1YR 3YR 5YR LIFE 2/2/2009 30-Day SEC Yield NAV 0.11 0.06 0.48 0.21 0.98 Share Price 0.64 1.05 0.80 0.34 1.01 1.64% LMPETR (Index) -0.04 0.32 0.61 0.72 1.37 Fees and Expenses 1 Management Fee 0.24% Other Expenses -- Gross Expense Ratio 0.24% Fee Waivers and Expense Reimbursement -- Net Expense Ratio 0.24% Source: VanEck and FactSet. 1 The Investment Management Agreement between VanEck Vectors ETF Trust (the Trust ) and VanEck Associates Corporation (the Adviser ) provides that the Adviser will pay all expenses of the Fund, except for the fee payment under the Investment Management Agreement, interest expense, offering costs, trading expenses, taxes and extraordinary expenses. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. Performance data quoted represents past performance which is no guarantee of future results and which may be lower or higher than current performance. Investment returns and ETF share values will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. ETF returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. The "Net Asset Value" (NAV) of a VanEck Vectors Exchange Traded Fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. VanEck Vectors ETF investors should not expect to buy or sell shares at NAV. Performance current to most recent monthend is available by calling 800.826.2333 or by visiting vaneck.com. 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. An index s performance is not illustrative of the Fund s performance. Indices are not securities in which investments can be made. See disclaimers on pages 2 and 3. 36
Municipal income ETF investment process Our optimization process allows us to successfully track very large indexes without holding the entire set of constituents Adjust Constraint Filters (Optional) Inventory Index Match Filter Constraint Filter Optimization Preliminary Buy List Final Buy List Receive daily inventory from over 75 dealers Optimization model can accommodate as many as 10,000 bonds CUSIPs and prices matched against daily index constituents file Bonds not matched are excluded Portfolio manager inputs selective constraints (if additional control is required) Exclusions may include: states, sectors, issuers, price vs. IDC* price, etc. Multi-variable factor program tests each index eligible bond Step 1 Comparative Analysis: Test the result of adding each bond to the portfolio to analyze impact on characteristics vs. the index (duration, coupon, yield, maturity, quality) Model built with acceptable thresholds bonds with impact beyond thresholds are excluded Step 2 Yield Curve Scenarios: Test the result of adding each bond that passes the comparative analysis filter against different interest rate scenarios (potential changes to the previous day yield curve) to determine impact on portfolio Model built with acceptable thresholds bonds with impact beyond thresholds are excluded Portfolio manager can adjust price thresholds to broaden the buy list Set a range above or below IDC* price Model delivers optimized list of the best-matched index eligible bonds available for purchase in the market on that day (portfolio manager makes final determination as to the bonds to be purchased) *International Data Corporation (third party pricing service) The municipal income ETF investment process is subject to change at any time. For illustrative purposes only. 37
Portfolio manager biography James T. Colby III Serves as portfolio manager and senior municipal strategist, responsible for VanEck Vectors non-taxable exchange traded funds, including market strategy and security analysis. Prior to joining VanEck, held several senior municipal fixed income positions, including director and senior portfolio manager for High Yield Municipal Fixed Income at Lord Abbett; director and senior portfolio manager for Municipal Fixed Income at John Hancock Funds; director for fixed income management at Old Harbor Capital; and comanager/senior portfolio manager for municipal funds at Evergreen Asset Management. Featured speaker at various industry conference roundtables; has made appearances on and/or been quoted by various media, including CNBC, Bloomberg and Daily Bond Buyer. Member of National Municipal Buyers Conference (Chairman, 1996), Municipal Forum of New York and Boston Fixed Income Management Society. MBA, Finance, Hofstra University, 1979; BA, Economics and International Relations, Brown University, 1972. 38